EX. 2
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "AGREEMENT") dated as of
March _, 2002 is given by the undersigned in favor of Bank of America,
N.A., as Agent (as defined below), and the Lenders (as defined below).
WHEREAS, Xxxxx & Xxxxx Company (the "COMPANY"), various financial
institutions (together with their respective successors and assigns, the
"LENDERS") and Bank of America, N.A., as administrative agent (in such capacity,
the "AGENT"), have entered into a Credit Agreement dated as of December 31, 2000
(as amended, restated or refinanced or otherwise modified from time to time, the
"CREDIT AGREEMENT") pursuant to which the Lenders may make loans and other
financial accommodations to the Company from time to time;
WHEREAS, the Company may from time to time enter into Hedge Agreements
(as defined in the Guaranty and Collateral Agreement referred to in the Credit
Agreement) with one or more Lenders or affiliates thereof (the Lenders, together
with all affiliates thereof which are parties to Hedge Agreements with the
Company, are collectively called the "LENDER PARTIES");
WHEREAS, the Company has issued a promissory note dated the date hereof
in the original principal amount of $6,000,000 (as amended or otherwise modified
from time to time, the "NOTE") to the undersigned;
WHEREAS, all obligations of the Company to the undersigned under the
Note are to be subordinated to the obligations of the Company to the Agent and
the Lender Parties as more fully set forth below;
NOW, THEREFORE, for good and valuable consideration, receipt whereof is
hereby acknowledged, the undersigned agrees as follows:
1 All obligations of the Company, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, are called "LIABILITIES".
All Liabilities to the Agent and the Lender Parties under or in
connection with the Credit Agreement are called "SENIOR LIABILITIES";
and all Liabilities to the undersigned under or in connection with the
Note are called "JUNIOR LIABILITIES"; it being expressly understood and
agreed that the term "Senior Liabilities", as used herein, shall
include, without limitation, any and all interest accruing on any of
the Senior Liabilities after the commencement of any proceedings
referred to in SECTION 3, notwithstanding any provision or rule of law
which might restrict the rights of the Agent or any Lender Party, as
against the Company or anyone else, to collect such interest.
2 Except as expressly otherwise provided herein or as the Agent may
hereafter otherwise expressly consent in writing, the payment of all
Junior Liabilities shall be postponed and subordinated to the payment
in full in cash of all Senior Liabilities, and no payment or
other distribution whatsoever in respect of any Junior Liabilities
shall be made, nor shall any property or assets of the Company be
applied to the purchase or other acquisition or retirement of any
Junior Liabilities until all Senior Liabilities have been paid in full
in cash.
3 In the event of any dissolution, winding up, liquidation,
reorganization or other similar proceeding relating to the Company or
to its creditors, as such, or to its property (whether voluntary or
involuntary, partial or complete, and whether in bankruptcy, insolvency
or receivership, or upon an assignment for the benefit of creditors, or
any other marshalling of the assets and liabilities of the Company, or
any sale of all or substantially all of the assets of the Company, or
otherwise), all Senior Liabilities shall first be paid in full in cash
before the undersigned shall be entitled to receive and to retain any
payment or distribution in respect of any of the Junior Liabilities,
and, in order to implement the foregoing,
3.1 the undersigned shall cause all payments and distributions of
any kind or character in respect of the Junior Liabilities to
which the undersigned would be entitled if the Junior
Liabilities were not subordinated pursuant to this Agreement
to be made directly to the Agent,
3.2 the undersigned shall promptly file a claim or claims, in the
form required in such proceeding, for the full outstanding
amount of the Junior Liabilities, and shall cause said claim
or claims to be approved and all payments and other
distributions in respect thereof to be made directly to the
Agent and
3.3 the undersigned hereby irrevocably agrees that the Agent may,
at its sole discretion, in the name of the undersigned or
otherwise, demand, xxx for, collect, receive and receipt for
any and all such payments or distributions, and file and
prove, and vote or consent in any such proceedings with
respect to, any and all claims of the undersigned relating to
the Junior Liabilities.
4 In the event that the undersigned receives any payment or other
distribution of any kind or character from the Company or from any
other source whatsoever in respect of any of the Junior Liabilities,
other than as expressly permitted by the terms of this Agreement, such
payment or other distribution shall be received in trust for the Agent
and the Lender Parties and promptly turned over by the undersigned to
the Agent. The undersigned will cause to be clearly inserted in the
Note or in any other promissory note or other instrument which at any
time evidences any of the Junior Liabilities a statement to the effect
that the payment thereof is subordinated in accordance with the terms
of this Agreement. The undersigned will execute such further documents
or instruments and take such further action as the Agent may reasonably
from time to time request to carry out the intent of this Agreement.
5 All payments and distributions received by the Agent in respect of the
Junior Liabilities, to the extent received in or converted into cash,
may be applied by the Agent first to the payment of any and all
expenses (including reasonable attorneys' fees and legal expenses) paid
or incurred by the Agent in enforcing this Agreement or in endeavoring
to collect or realize upon any of the Junior Liabilities or any
security therefor, and any balance thereof shall, solely as between the
undersigned and the Agent, be applied by the Agent, in such order of
application as the Agent may from time to time select, toward the
payment of the Senior Liabilities remaining unpaid; but, as between the
Company and its creditors, no such payment or distribution of any kind
or character shall be deemed to be a payment or distribution in respect
of the Senior Liabilities; and, notwithstanding any such payment or
distribution received by the Agent in respect of the Junior Liabilities
and so applied by the Agent toward the payment of the Senior
Liabilities, the undersigned shall be subrogated to the then existing
rights of the Agent and Lender Parties, if any, in respect of the
Senior Liabilities only at such time as this Agreement shall have been
discontinued and the Senior Liabilities shall have been finally paid in
full in cash.
6 The undersigned hereby waives:
6 .1 notice of acceptance by the Agent or any Lender Party of
this Agreement;
6.2 notice of the existence or creation or non-payment of all or
any of the Senior Liabilities; and
6.3 all diligence in collection or protection of or realization
upon the Senior Liabilities or any thereof or any security
therefor.
7 The undersigned will not without the prior written consent of the
Agent:
7.1 cancel, waive, forgive, transfer or assign, or attempt to
enforce or collect, or subordinate to any Liabilities other
than the Senior Liabilities, any Junior Liabilities or any
rights in respect thereof;
7.2 take any action to foreclose upon, or exercise any other
right with respect to, any collateral securing the Junior
Liabilities; or
7.3 commence, or join with any other creditor in commencing, any
bankruptcy, reorganization or insolvency proceeding with
respect to the Company.
8 This Agreement shall in all respects be a continuing agreement and
shall remain in full force and effect (notwithstanding, without
limitation, the dissolution of the undersigned or that at any time or
from time to time all Senior Liabilities may have been paid in full)
until all Senior Liabilities shall have been finally paid in full in
cash and all Commitments under and as defined in the Credit Agreement
shall have terminated.
9 The Agent or any Lender Party may, from time to time, at its sole
discretion and without notice to the undersigned, take
any or all of the following actions:
9.1 retain or obtain security interest in any property to secure
any of the Senior Liabilities,
9.2 retain or obtain the primary or secondary obligation of any
other obligor or obligors with respect to any of the Senior
Liabilities,
9.3 extend or renew for one or more periods (whether or not longer
than the original period), alter or exchange any of the Senior
Liabilities, or release or compromise any obligation of any
nature of any obligor with respect to any of the Senior
Liabilities, and
9.4 release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of
any property securing any of the Senior Liabilities, or extend
or renew for one or more periods (whether or not longer than
the original period) or release, compromise, alter or exchange
any obligation of any nature of any obligor with respect to
any such property.
10 Any Lender Party may, from time to time, without notice to the
undersigned, assign or transfer its interest in any or all of the
Senior Liabilities; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Senior
Liabilities shall be and remain Senior Liabilities for the purposes of
this Agreement, and every immediate and successive assignee or
transferee of any of the Senior Liabilities or of any interest therein
shall, to the extent of the interest of such assignee or transferee in
the Senior Liabilities, be entitled to the benefits of this Agreement
to the same extent as the applicable assignor or transferor.
11 Neither the Agent nor any Lender Party shall be prejudiced in its
rights under this Agreement by any act or failure to act of the Company
or the undersigned, or any noncompliance of the Company or the
undersigned with any agreement or obligation, regardless of any
knowledge thereof which the Agent or any Lender Party may have or with
which the Agent or any Lender Party may be charged; and no action of
the Agent or any Lender Party permitted hereunder shall in any way
affect or impair the rights of the Agent or any Lender Party and the
obligations of the undersigned under this Agreement.
12 No delay on the part of the Agent or any Lender Party in the exercise
of any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Agent or any Lender Party of any right or
remedy shall preclude other or further exercise thereof or the exercise
of any other right or remedy; nor shall any modification or waiver of
any provision of this Agreement be binding upon the Agent or any Lender
Party except as
expressly set forth in a writing duly signed and delivered on behalf of
the Agent.
13 This Agreement shall be binding upon the undersigned and upon the
successors and assigns of the undersigned; and all references herein to
the Company and to the undersigned, respectively, shall be deemed to
include any successor or assign to such entity.
14 This Agreement shall be construed in accordance with and governed by
the laws of the State of Illinois applicable to contracts made and to
be performed entirely within such State. Wherever possible each
provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
15 The undersigned (and, by accepting the benefits hereof, the Agent and
each Lender Party) expressly waives any right to a trial by jury in any
action or proceeding to enforce or defend any rights under this
Agreement or under any amendment, instrument, document or agreement
delivered or which may in the future be delivered in connection
herewith or arising from any banking relationship existing in
connection with this Agreement and agrees that any such action or
proceeding shall be tried before a court and not before a jury.
IN WITNESS WHEREOF, this Agreement has been delivered as of the day
first above written.
WARBURG, XXXXXX INVESTORS, L.P.
By /s/ Xxxx X. Xxxxxxxxx
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Title Partner
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