EXHIBIT 10.1
SUBORDINATION AGREEMENT
TO: LASALLE BUSINESS CREDIT, A DIVISION OF ABN AMRO BANK N.V.,
CANADA BRANCH
Maritime Life Tower, TD Centre,
00 Xxxxxxxxxx Xxxxxx Xxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx, X0X 0X0
Dear Sirs/Mesdames:
RE: STEELBANK TUBULAR INC. AND TARPON INDUSTRIES, INC.
This is to confirm our agreement concerning Steelbank Tubular Inc. ("Steelbank")
and Tarpon Industries, Inc. ("Tarpon"):
1. For the purposes hereof, the following terms shall have the following
meanings:
(a) "Companies" means, collectively, Steelbank Tubular Inc. and Tarpon
Industries, Inc.;
(b) "Equitable Trust" means The Equitable Trust Company;
(c) "Other Equitable Trust Debt" means any and all indebtedness, direct
or indirect, present and future, contingent or otherwise, of the
Companies to Equitable Trust, other than the Existing Equitable
Trust Debt;
(d) "Equitable Trust Security" means the security described on the
attached Schedule "B" to secure the Existing Equitable Trust Debt
and any other security held from time to time as security for the
Other Equitable Trust Debt (excluding the Mortgage and the GAR);
(e) "Event of Default" has the same meaning ascribed to such term in the
Loan Agreement;
(f) "Existing Equitable Trust Debt" means:
(i) the obligations of Steelbank Tubular Inc., pursuant to the
commitment letter dated as of May 12, 2005 between the
Companies and First National Financial Corporation, as may be
amended, and
(ii) the contingent obligations of Tarpon pursuant to the guarantee
and postponement of claim dated as of the date hereof executed
by Tarpon in favour of Equitable Trust (the "Guarantee"),
and attached hereto at Schedule "A";
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(g) "Equitable GSA" means the general security agreement executed by
Steelbank in favour of Equitable Trust dated the date hereof;
(h) "Equitable GAR" means the general assignment of rents and leases
executed by Steelbank in favour of Equitable Trust dated the date
hereof
(i) "LaSalle" means LaSalle Business Credit, a division of ABN AMRO Bank
N.V., Canada Branch;
(j) "LaSalle Assets" means all personal and moveable property, assets,
rights and undertakings of the Companies of whatsoever nature and
kind, now owned or hereafter acquired by or on behalf of the
Companies and wherever located and does not include, for greater
certainty, as at the date hereof, any of the Companies' real
property including the Property;
(k) "LaSalle Debt" means any and all debts, liabilities and
indebtedness, direct or indirect, present and future, of the
Companies to LaSalle, whether arising from dealings between LaSalle
and the Companies or from dealings with any third party by which
LaSalle may be or become in any manner whatsoever a creditor of the
Companies, including, without limitation, any and all indebtedness
existing under or in connection with the Loan Agreement;
(1) "LaSalle Security" means the security from time to time held by or
for the benefit of LaSalle on the LaSalle Assets to secure the
LaSalle Debt;
(m) "Loan Agreement" means the loan agreement by and among LaSalle and
Steelbank Tubular Inc. dated as of February 17, 2005, as the same
may be amended, supplemented, revised, restated or replaced from
time to time.
(n) "Mortgage" means the mortgage and charge given by Steelbank in
favour of Equitable Trust registered the date hereof over the real
(and not personal or moveable) property located at 0000 Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxx (the "Property") being instrument
no.____________________________;
2. Insofar as may be necessary, Equitable Trust hereby acknowledges to the
existence of the LaSalle Debt, the LaSalle Security and the LaSalle Charge
and declares that the existence thereof will not constitute a default
under the terms of the Existing Equitable Trust Debt, the Equitable Trust
Security or the Mortgage. LaSalle hereby consents to the creation and
existence of the Existing Equitable Trust Debt, the Mortgage, the
Equitable Trust Security and the Guarantee and declares that same does not
constitute an Event of Default under the terms of the LaSalle Security or
the Loan Agreement.
3. Unless and until the LaSalle Debt has been fully and finally repaid,
Equitable Trust hereby agrees that all payments of or in respect of the
Other Equitable Trust Debt, whether on account of principal or interest or
otherwise shall be postponed and
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subordinated to full and final payment of the LaSalle Debt, and Equitable
Trust shall not request or accept any payment or distribution of any kind
on or in respect of the Other Equitable Trust Debt, including but not
limited to principal, interest or other payments in respect of the Other
Equitable Trust Debt.
4. Equitable Trust hereby agrees that it will not be entitled to accelerate
the maturity of the principal of the Other Equitable Trust Debt or enforce
any rights or remedies under or in respect of the Other Equitable Trust
Debt and the Equitable Trust Security or, for greater certainty, against
any of the LaSalle Assets until such time as the LaSalle Debt has been
fully and finally repaid; provided that Equitable Trust shall be entitled,
at all times, enforce the Mortgage, the Equitable GAR and the Guarantee on
a default thereunder; provided, however, that, Equitable Trust shall not
pursue, commence or participate in any action or proceeding against Tarpon
under or pursuant to any bankruptcy or insolvency laws of any
jurisdiction.
5. Without prejudice to the prohibitions in this Subordination Agreement:
(a) if Equitable Trust receives any payment in violation of this
Subordination Agreement, Equitable Trust shall receive such payment
in trust for LaSalle and shall remit it to LaSalle forthwith upon
receipt. Equitable Trust shall be liable to LaSalle for the LaSalle
Debt to the extent of an amount equivalent to any such sums received
and not remitted to LaSalle; and
(b) if Equitable Trust takes possession or causes possession to be taken
of the LaSalle Assets or otherwise enforces the Equitable Trust
Security in violation of this Subordination Agreement, Equitable
Trust shall yield or shall cause any party holding the security for
its benefit to yield, on demand, possession thereof and any proceeds
resulting from the realization thereupon to LaSalle or any party
acting for LaSalle.
6. In the event that any of the LaSalle Security shall become enforceable,
LaSalle or any party acting for LaSalle or for its benefit will be
entitled to take possession of the LaSalle Assets to the exclusion of
Equitable Trust and parties acting for it or for its benefit.
7. LaSalle will be entitled to receive proceeds resulting from the
realization upon and collection of the LaSalle Assets in priority to
Equitable Trust.
8. In the event that any of the LaSalle Assets subject to the LaSalle
Security are sold by LaSalle or for the benefit of LaSalle, such assets
shall be sold free of any rights held by Equitable Trust under the
Equitable Trust Security and the Mortgage. Provided that there is LaSalle
Debt owing and outstanding, upon LaSalle's request, Equitable Trust shall
so confirm to any prospective buyer of such assets and shall grant a
discharge of its rights under the Equitable Trust Security and the
Mortgage on such assets at the time of the sale.
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9. The priorities herein referred to shall apply notwithstanding any contrary
priority or registration or filing of any personal property claim and
without the necessity of any further documentation on the part of either
LaSalle or Equitable Trust. However, it is understood that Equitable Trust
shall at the expense of the Companies enter into any documentation which
LaSalle may reasonably require in order to confirm or formalize the
priorities herein referred to.
10. The Companies may not set-off any amount the Companies are required to pay
to Equitable Trust in respect of the Other Equitable Trust Debt against
any amount payable by Equitable Trust to the Companies pursuant to or in
connection with the Equitable Trust Security.
11. This agreement will continue in force as long as the Companies are
indebted or liable (either directly, indirectly or contingently) to
LaSalle and Equitable Trust.
12. This agreement will be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.
13. This agreement will enure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto.
14. This Subordination Agreement may be executed in any number of and by
different parties hereto, on separate counterparts, all of which when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement.
AT______________________________AS OF THIS_______________________DAY
OF_________________________________, 2005.
THE EQUITABLE TRUST COMPANY
Per: ____________________________
Name:
Title:
Per: ____________________________
Name:
Title:
We hereby confirm and agree to the above.
AT______________________________AS OF THIS_______________________DAY
OF_________________________________, 2005.
LASALLE BUSINESS CREDIT, A
DIVISION OF ABN AMRO BANK N.V.,
CANADA BRANCH
Per: ____________________________
Name:
Title:
Per: ____________________________
Name:
Title:
The undersigned acknowledges that:
1. it has taken communication of the foregoing Subordination Agreement, is in
agreement with the terms thereof to the extent that it is affected thereby
and undertakes to cooperate with respect thereto;
2. notwithstanding anything to the contrary in this Subordination Agreement
until all LaSalle Debt has been fully and finally repaid, it shall not pay
or prepay any of the Other Equitable Trust Debt;
3. this Subordination Agreement is for the benefit of the parties thereto
only as between themselves and in no manner diminishes, as between either
of the parties and the undersigned, any security or rights now or
hereafter existing; and
4. no rights or commitments have been created or implied in favour of the
undersigned by this Subordination Agreement, and the parties to this
Subordination Agreement may, as between themselves, in their sole
discretion, alter the terms thereof as they see fit, without reference to
the undersigned.
AT______________________________AS OF THIS_______________________DAY
OF________________________________, 2005.
STEELBANK TUBULAR INC.
Per: ____________________________
Name:
Title:
Per: ____________________________
Name:
Title:
TARPON INDUSTRIES, INC.
Per: ____________________________
Name:
Title:
Per: ____________________________
Name:
Title:
SCHEDULE "A"
EXISTING EQUITABLE TRUST DEBT
(see attached)
SCHEDULE "B"
SECURITY
1. The Guarantee.
2. The Equitable GSA.
3. The GAR.
