Exhibit 10.7
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement"), dated as of December 18,
1996, is among FLEET NATIONAL BANK, a national banking association (the "Second
Trustee"), not in its individual capacity, but as trustee for the holders of all
15% Senior Subordinated Pay-in-Kind Notes Due March 18, 2002, issued pursuant to
that certain Indenture dated as of December 18, 1996 between Xxxxx Cable
Communications, Inc., as Issuer, and the Second Trustee (the "New Restructured
Second Secured PIK Note Indenture"), FLEET NATIONAL BANK, a national banking
association (the "Third Trustee"), not in its individual capacity, but as
trustee for the holders of all 16% Junior Subordinated Pay-in-Kind Notes Due
July 18, 2002 issued pursuant to that certain Indenture dated as of December 18,
1996 between Xxxxx Cable Communications, Inc., as Issuer, and the Third Trustee
(the "New Restructured Third Secured PIK Note Indenture"), and XXXXX CABLE
COMMUNICATIONS, INC., a Texas corporation ("Issuer"). All capitalized terms used
but not elsewhere defined herein shall have the respective meanings ascribed to
such terms in Section 1 below.
R E C I T A L S
B. Issuer has issued the New Restructured Second Secured PIK Notes in the
initial aggregate principal amount of $49,500,000 pursuant to the terms of the
New Restructured Second Secured PIK Note Indenture.
C. Issuer has issued the New Restructured Third Secured PIK Notes in the
initial aggregate principal amount of $38,925,797 pursuant to the terms of the
New Restructured Third Secured PIK Note Indenture.
D. One of the conditions precedent to the obligations of Lenders under
the Loan Agreement is that the parties hereto shall have executed and delivered
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms used but not elsewhere defined in
this Agreement shall have the respective meanings ascribed to such terms in the
New Restructured Second Secured PIK Note Indenture. The following terms shall
have the following meanings in this Agreement:
Proceeding shall mean any (i) judicial proceeding or other creditor
remedies initiated by Second Trustee to collect Issuer's Obligations or
foreclose the Security Interests or (ii) insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization, assignment for
the benefit of creditors or other proceeding for the liquidation,
dissolution or other winding up of Issuer or its properties.
SUBORDINATION AGREEMENT
(Junior)
Senior Indebtedness shall mean, as of any given time, all of Issuer's
Obligations.
2. Subordination of Subordinated Indebtedness to Senior Indebtedness and
Subordination of Subordinated Liens to Security Interests.
2.1 Subordination. The payment of any and all of the Subordinated
Indebtedness hereby expressly is subordinated to the prior payment in full
of the Senior Indebtedness and the Subordinated Liens hereby expressly are
subordinated to the Security Interests.
2.2 Restriction on Payments. Notwithstanding any provision of the
Subordinated Credit Instruments to the contrary and in addition to any
other limitations set forth herein or therein, no payment of principal,
interest, fees or any other amount due with respect to the Subordinated
Indebtedness shall be made, and neither Third Trustee nor any Subordinated
Creditor shall exercise any right of set-off or recoupment with respect to
any of the Subordinated Indebtedness, until all of the Senior Indebtedness
is paid in full; except that Issuer may make and each holder of a New
Restructured Third Secured PIK Note may receive regularly scheduled accrued
and unpaid interest at a rate per annum not in excess of 16% in the form of
additional new restructured secured payment-in-kind notes pursuant to the
terms of the New Restructured Third Secured PIK Notes.
2.3 Proceedings. In the event of any Proceeding (i) all Senior
Indebtedness first shall be paid in full in cash before any payment of or
with respect to any of the Subordinated Indebtedness shall be made; (ii)
any payment which, but for the terms hereof, otherwise would be payable or
deliverable in respect of any of the Subordinated Indebtedness shall be
paid or delivered directly to Second Trustee (to be held and/or applied by
Second Trustee in accordance with the terms of the New Restructured Second
Secured PIK Indenture) until all Senior Indebtedness is paid in full, and
each Subordinated Creditor and Third Trustee irrevocably authorizes,
empowers and directs (A) all receivers, trustees, liquidators, custodians,
conservators and others having authority in the premises to effect all such
payments and deliveries and (B) Second Trustee to demand, xxx for, collect
and receive every such payment or distribution; (iii) each Subordinated
Creditor and Third Trustee agrees to execute and deliver to Second Trustee
or its representative all such further instruments confirming the
authorization referred to in the foregoing clause (ii) as Second Trustee
reasonably shall request, and agrees to take all such other actions as
Second Trustee reasonably shall request in order to enable Second Trustee
to enforce all claims upon or in respect of the Subordinated Indebtedness,
and (iv) each Subordinated Creditor and Third Trustee shall execute,
verify, deliver and file any proofs of claim in respect
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SUBORDINATION AGREEMENT
(Junior)
of the Subordinated Indebtedness requested by Second Trustee in connection
with any such Proceeding and hereby irrevocably authorizes, empowers and
appoints Second Trustee its agent and attorney-in-fact to (A) execute,
verify, deliver and file such proofs of claim upon the failure of such
Subordinated Creditor or Third Trustee to do so and (B) vote such proofs of
claim in any such proceeding.
2.4 Incorrect Payments. If any payment is received by any Subordinated
Creditor or Third Trustee on account of any Subordinated Indebtedness
before all Senior Indebtedness is paid in full, such payment promptly shall
be paid over to Second Trustee, or its designated representative, for
application (in accordance with the Loan Agreement) to the payment of the
Senior Indebtedness then remaining unpaid, until all of the Senior
Indebtedness is paid in full. No Subordinated Creditor or Third Trustee
shall commingle any such payment with any other asset of such Person and
such Subordinated Creditor or Third Trustee shall hold such payment in
trust for the benefit of Lenders until paid over to Second Trustee or its
designated representative.
2.5 Legends. Until the Senior Indebtedness is paid in full, each
Subordinated Credit Instrument at all times shall contain in a conspicuous
manner the following legend:
"The indebtedness evidenced hereby is subordinate in the manner and to
the extent set forth in that certain Subordination Agreement (the
"Subordination Agreement") dated as of December 18, 1996 among Xxxxx
Cable Communications, Inc. ("Issuer"), Fleet National Bank, as
trustee, and Fleet National Bank, as trustee."
2.6 Amendments of Subordinated Credit Instruments. Until the Senior
Indebtedness is paid in full and notwithstanding anything contained in the
Subordinated Credit Instruments to the contrary, no Subordinated Creditor
or Third Trustee shall agree to any amendment or modification of, or
supplement to, the Subordinated Credit Instruments, the effect of which is
to (i) increase the amount of any of the Subordinated Indebtedness or the
rate of interest with respect to any of the Subordinated Indebtedness, (ii)
shorten the maturity date of any of the Subordinated Indebtedness, (iii)
accelerate the scheduled payments on or the required amortization of any of
the Subordinated Indebtedness or (iv) increase the fees payable under the
Subordinated Credit Instruments, if any.
2.7 Restrictions on Action. Until the Senior Indebtedness is paid in
full no Subordinated Creditor or Third Trustee shall take any action to
collect any of the Subordinated Indebtedness or exercise any of the
remedies with respect to any of the
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SUBORDINATION AGREEMENT
(Junior)
Subordinated Indebtedness set forth in any of the Subordinated Credit
Instruments or that otherwise may be available to such Subordinated
Creditor or Third Trustee, either at law or in equity, provided that (i) in
the event Issuer's Obligations are accelerated pursuant to Section 5.2 of
the New Restructured Second Secured PIK Note Indenture, such Subordinated
Creditor or Third Trustee may accelerate the Subordinated Indebtedness, and
(ii) in the event of any Proceeding not initiated by any Subordinated
Creditor or Third Trustee, subject to Section 2.3, such Subordinated
Creditor or Third Trustee may participate in such Proceeding .
3. Continued Effectiveness of this Agreement. The terms of this
Agreement, the subordination effected hereby, and the rights and the obligations
of each Subordinated Creditor and Third Trustee and Second Trustee arising
hereunder, shall not be affected, modified or impaired in any manner or to any
extent by: (i) any amendment or modification of or supplement to any of the
Subordinated Credit Instruments; (ii) the validity or enforceability of any of
such documents; or (iii) any exercise or non-exercise of any right, power or
remedy under or in respect of the Senior Indebtedness or the Subordinated
Indebtedness or any of the instruments or documents referred to in clause (i)
above.
4. Cumulative Rights; No Waivers. Each and every right, remedy and power
granted to Second Trustee hereunder shall be cumulative and in addition to any
other right, remedy or power specifically granted herein, in the New
Restructured Second Secured PIK Note Indenture or the Security Instruments or
now or hereafter existing in equity, at law, by virtue of statute or otherwise,
and may be exercised by Second Trustee, from time to time, concurrently or
independently and as often and in such order as Second Trustee may deem
expedient. Any failure or delay on the part of Second Trustee in exercising any
such right, remedy or power, or abandonment or discontinuance of steps to
enforce the same, shall not operate as a waiver thereof or affect Second
Trustee's right thereafter to exercise the same, and any single or partial
exercise of any such right, remedy or power shall not preclude any other or
further exercise thereof or the exercise of any other right, remedy or power,
and no such failure, delay, abandonment or single or partial exercise of Second
Trustee's rights hereunder shall be deemed to establish a custom or course of
dealing or performance among the parties hereto.
5. Modification. Any modification or waiver of any provision of this
Agreement, or any consent to any departure by any Subordinated Creditor or Third
Trustee therefrom, shall not be effective in any event unless the same is in
writing and signed by Second Trustee, and then such modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose given. Any notice to or demand on any Subordinated Creditor or Third
Trustee in any event not specifically required of Second Trustee hereunder shall
not entitle any Subordinated Creditor or Third Trustee to any other or further
notice or demand in the same, similar or other circumstances unless specifically
required hereunder.
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SUBORDINATION AGREEMENT
(Junior)
6. Additional Documents and Actions. Third Trustee at any time, and from
time to time, after the execution and delivery of this Agreement, upon the
request of Second Trustee and at the expense of Issuer, promptly will execute
and deliver such further documents and do such further acts and things as Second
Trustee reasonably may request in order to effect fully the purposes of this
Agreement.
7. Notices. All notices and communications under this Agreement shall be
in writing and shall be (i) delivered in person or (ii) mailed, postage prepaid,
either by registered or certified mail, return receipt requested, or by
overnight express courier, addressed in each case as follows:
To Second Trustee Fleet Bank
and Corporate Trust Administration
To Third Trustee: Administration MAOFDOSM
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Mr. Xxxxxx Xxxx
Copy to: Xxxxxxx & Xxxxxxx
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Copy to: Xxxxx Xxxx & Xxxxx
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esquire
To Issuer: Xxxxx Cable Communications, Inc.
Four Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxxx
Chief Executive Officer
Copy to: Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
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SUBORDINATION AGREEMENT
(Junior)
and copy to: Xxxxx Xxxx & Xxxxx
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esquire
or to any other address, as to any of the parties hereto, as such party shall
designate in a written notice to the other parties hereto. All notices sent
pursuant to the terms of this Section 7 shall be deemed received (i) if
personally delivered, then on the Business Day of delivery, (ii) if sent by
overnight, express carrier, on the next Business Day immediately following the
day sent, or (iii) if sent by registered or certified mail, on the earlier of
the fifth Business Day following the day sent or when actually received.
8. Severability. In the event that any provision of this Agreement is
deemed to be invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court or governmental authority, this
Agreement shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provisions hereof,
and any and all other provisions hereof which otherwise are lawful and valid
shall remain in full force and effect.
9. Successors and Assigns. This Agreement shall inure to the benefit of
the successors and assigns of Second Trustee and shall be binding upon the
successors and assigns of each Subordinated Creditor, Third Trustee and Issuer.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall be one and the same instrument.
12. Defines Rights of Creditors. The provisions of this Agreement are
solely for the purpose of defining the relative rights of Subordinated
Creditors, Second Trustee and Third Trustee shall not be deemed to create any
rights or priorities in favor of any other Person, including, without
limitation, Issuer. Nothing contained in this Agreement is intended to or shall
impair, as among Issuer, Subordinated Creditors and Third Trustee, the
obligation of Issuer, which is absolute and unconditional, to pay the
Subordinated Creditors the principal of and interest on the Subordinated
Indebtedness as and when the same shall become due and payable in accordance
with the terms of the Subordinated Credit Instruments.
13. Conflict. In the event of any conflict between any term, covenant or
condition of this Agreement and any term, covenant or condition of any of the
Subordinated Credit Instruments, the provisions of this Agreement shall control
and govern. For purposes of this Section 13, to the extent that any provisions
of any of the Subordinated Credit Instruments
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SUBORDINATION AGREEMENT
(Junior)
provide rights, remedies and benefits to Second Trustee that exceed the rights,
remedies and benefits provided to Second Trustee under this Agreement, such
provisions of the applicable Subordinated Credit Instruments shall be deemed to
supplement (and not to conflict with) the provisions hereof.
14. Headings. The paragraph headings used in this Agreement are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.
15. Termination. This Agreement shall terminate upon the indefeasible
payment in full of the Senior Indebtedness.
16. No Contest of Liens; Release of Collateral. Each Subordinated Creditor
and Third Trustee agrees that it will not at any time contest the validity,
perfection, priority or enforceability of the Liens in the Collateral granted to
Second Trustee pursuant to the New Restructured Second PIK Note Indenture and
the other Security Instruments. Any Collateral which is subject to the
Subordinated Liens shall be deemed to have been released from all such
Subordinated Liens in the event that such Collateral is sold by Issuer with the
consent of Second Trustee, provided the net proceeds of sale are first applied
to the payment of the Senior Indebtedness. Each Subordinated Creditor and Third
Trustee agrees that it shall execute, deliver and file any and all termination
statements, lien releases and other agreements and instruments as Second Trustee
deems necessary or appropriate in order to give effect to the preceding
sentence. Each Subordinated Creditor and Third Trustee hereby irrevocably
appoints Second Trustee its attorney in fact for the purpose of effectuating any
such execution, deliveries and filings.
17. Subrogation. Upon the payment in full in cash of all Senior
Indebtedness, Third Trustee and Subordinated Creditors shall be subrogated to
the rights of Second Trustee and Lenders under the Loan Instruments until the
Subordinated Indebtedness shall be paid in full in cash, provided that neither
Third Trustee nor Subordinated Creditors shall have any claim against Second
Trustee or any Lender for impairment of the subrogation rights of Third Trustee
or Subordinated Creditors arising out of any act or omission of Second Trustee
or any Lender. For purposes of such subrogation, no payments or distributions to
Second Trustee or any Lender of any cash, property or securities to which
Subordinated Creditors or Third Trustee would be entitled except for the
provisions of this Agreement, and no payments by Third Trustee or Subordinated
Creditors to Second Trustee or any Lender required pursuant to the terms of this
Agreement, shall, as among Issuer and its creditors other than Second Trustee
and Lenders, be deemed to be a payment or distribution by Issuer to or on
account of the Senior Indebtedness.
18. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS AND DECISIONS OF THE
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SUBORDINATION AGREEMENT
(Junior)
STATE OF NEW YORK NOTWITHSTANDING THAT THERE ALSO MAY BE OTHER JURISDICTIONS
WHICH MAY BEAR A REASONABLE RELATIONSHIP TO THE TRANSACTIONS CONTEMPLATED
HEREBY. FOR PURPOSES OF THIS SECTION 17, THE NEW RESTRUCTURED SECOND SECURED PIK
NOTE AGREEMENT, THE OTHER INDENTURE INSTRUMENTS, THE SUBORDINATED CREDIT
INSTRUMENTS AND THIS AGREEMENT SHALL BE DEEMED TO BE PERFORMED AND MADE IN THE
STATE OF NEW YORK.
19. JURISDICTION AND VENUE. ISSUER AND EACH TRUSTEE HEREBY AGREE THAT ALL
ACTIONS OR PROCEEDINGS INITIATED BY ISSUER OR ANY TRUSTEE AND ARISING DIRECTLY
OR INDIRECTLY OUT OF THIS AGREEMENT SHALL BE LITIGATED IN THE SUPREME COURT OF
NEW YORK, NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK OR, IF SECOND TRUSTEE OR ANY HOLDER INITIATES SUCH ACTION, IN
ADDITION TO THE FOREGOING COURTS, ANY COURT IN WHICH SECOND TRUSTEE OR HOLDERS
SHALL INITIATE OR TO WHICH SECOND TRUSTEE OR HOLDERS SHALL REMOVE SUCH ACTION,
TO THE EXTENT SUCH COURT HAS JURISDICTION. ISSUER AND EACH TRUSTEE HEREBY
EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED BY FINOVA OR LENDERS IN ANY OF SUCH COURTS, AND HEREBY
AGREE THAT PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR
PAPERS ISSUED THEREIN MAY BE SERVED IN THE MANNER PROVIDED FOR NOTICES HEREIN,
AND AGREE THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO ISSUER OR SUCH TRUSTEE,
AS THE CASE MAY BE, AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO
SECTION 8. ISSUER AND EACH TRUSTEE WAIVE ANY CLAIM THAT NEW YORK COUNTY, NEW
YORK OR THE SOUTHERN DISTRICT OF NEW YORK IS AN INCONVENIENT FORUM OR AN
IMPROPER FORUM BASED ON LACK OF VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD
ISSUER OR ANY TRUSTEE, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY
SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS
PRESCRIBED BY LAW AFTER THE MAILING THEREOF, SUCH PERSON SHALL BE DEEMED IN
DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST SUCH
PERSON AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS.
THE EXCLUSIVE CHOICE OF FORUM FOR ISSUER AND TRUSTEES SET FORTH IN THIS SECTION
18 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY SECOND TRUSTEE AND/OR
HOLDERS, OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING, BY SECOND
TRUSTEE AND/OR HOLDERS, OF ANY ACTION TO ENFORCE THE SAME
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SUBORDINATION AGREEMENT
(Junior)
IN ANY OTHER APPROPRIATE JURISDICTION, AND ISSUER AND EACH TRUSTEE HEREBY WAIVE
THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
20. WAIVER OF RIGHT TO JURY TRIAL. SECOND TRUSTEE, ISSUER AND EACH TRUSTEE
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT
OR WITH RESPECT TO THE TRANSACTIONS DESCRIBED IN OR AFFECTED HEREBY WOULD BE
BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT
ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
21. This Agreement is executed and delivered by Second Trustee and Third
Trustee not in its own right, but solely in the exercise of the powers conferred
upon such Person as or Second Trustee or Third Trustee, and that no personal
liability or personal responsibility is assumed by nor shall at any time be
asserted or enforceable against such Second Trustee or Third Trustee on account
of this Agreement.
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SUBORDINATION AGREEMENT
(Junior)
IN WITNESS WHEREOF, each Trustee and Issuer have caused this Agreement to
be executed as of the date first above written.
FLEET NATIONAL BANK, a National
Banking Association, not in its individual
capacity, but solely as Trustee under the
New Restructured Second Secured PIK
Note Indenture
By: /s/ Xxxxxx X. Xxxx, XX
-----------------------------
Name: Xxxxxx X. Xxxx, XX
Its: Vice President
FLEET NATIONAL BANK, a National
Banking Association, not in its individual
capacity, but solely as Trustee under the
New Restructured Third Secured PIK Note
Indenture
By: /s/ Xxxxxx X. Xxxx, XX
-----------------------------
Name: Xxxxxx X. Xxxx, XX
Its: Vice President
XXXXX CABLE COMMUNICATIONS,
INC., a Texas corporation
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxxx
Its: Chief Executive Officer
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