SUBORDINATION AGREEMENT
EXHIBIT
10.3
THIS
SUBORDINATION AGREEMENT, dated as of August 21, 2007, is made by and
among GE Commercial Distribution Finance Corporation
(“Agent”), for itself and in its capacity as agent for the
Lenders under the Financing Agreement (as such terms are hereinafter defined)
and National Electrical Benefit Fund (the “Columbia
Lender”) and Columbia Partners, L.L.C. Investment
Management, in its capacity as investment manager (the
“Investment Manager” and together with the Columbia Lender,
collectively referred to herein as, “Junior
Creditor”).
RECITALS
A. Agent,
together with those financial institutions which are or shall become parties
to
the Financing Agreement, as hereinafter defined (collectively referred to
herein
as the “Lenders” and each a “Lender”) have
entered into that certain Credit Facilities Agreement dated as of August
21,
2007 (as amended, modified, supplemented or restated from time to time, the
“Financing Agreement”) with MTM Technologies, Inc.
(“MTM”), MTM Technologies (US), Inc. (“MTM
US”), MTM Technologies (Massachusetts), LLC (“MTM MA”)
and Info Systems, Inc. (“Info Systems” and together with MTM,
MTM US, and MTM MA, collectively referred to herein as the
“Borrowers” and each a
“Borrower”).
B. Junior
Creditor and the Borrowers have entered into that certain Credit Agreement,
dated on or about November 23, 2005 (as amended, modified, supplemented or
restated from time to time, the “Junior Credit
Agreement”).
C. Agent
and the Lenders, on the one hand, and the Junior Creditor, on the other hand,
wish to agree as to the priority of the repayment of the Senior Obligations
and
the Junior Obligations (as such terms are hereinafter defined), the rights
of
each with respect thereto, their respective liens upon and security interests
in
the Collateral (as such term is hereinafter defined) and as to certain other
rights, priorities, and interests as between them.
NOW,
THEREFORE, in consideration of the foregoing, and the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which the parties hereto acknowledge, the parties hereto hereby
agree as follows:
1. Definitions
and Rules of Construction.
Definitions. The
following terms, as used in this Agreement, shall have the following
meanings:
“Agreement”
means this Subordination Agreement, as amended, modified, supplemented or
restated from time to time, together with any and all riders, addenda, exhibits,
and schedules hereto.
“Bankruptcy
Case” means any proceeding commenced by or against any Borrower under any
provision of the Bankruptcy Code or under any other federal or state bankruptcy
or insolvency law, including proceedings seeking reorganization, arrangement,
liquidation, assignment for the benefit of creditors or other similar relief,
and all converted or succeeding cases in respect thereof.
“Bankruptcy
Code” means Title 11 of United States Code (11 U.S.C. §101,
etseq.), as amended, and any successor statute.
“Borrower”
and “Borrowers” have the meaning set forth in the recitals to this
Agreement.
“Blockage
Notice” means a written notice given to Junior Creditor in accordance with
the notice provisions of this Agreement set forth in Section 15 below
pursuant to which rights to block Permitted
Junior
Interest Payments and Permitted Junior Principal Payments under
Section 2(c) below are permitted.
“CDF”
means GE Commercial Distribution Finance Corporation in its individual capacity
and not as Agent or as a Lender.
“CDF
Exposure” means all of the following; (i) any deposits accepted by CDF and
its Affiliates, from Borrower and/or any Subsidiary (as such term is defined
in
the Senior Loan Documents) of any Borrower, and (ii) the extension of any
other
credit to Borrower and/or any Subsidiary (as such term is defined in the
Senior
Loan Documents) of any Borrower other than as set forth in the Senior Loan
Documents, including without limitation, purchase order financing provided
by
CDF to Borrower for CDF’s own account pursuant to CDF’s “Star” program (or other
similar programs created in the future, collectively, the “Star
Program”).
“Collateral”
means all of each Borrower’s presently existing and hereafter acquired, arising
or created property and assets, whether personal, real or mixed, of any kind
whatsoever, whether tangible or intangible, and wherever located, including
the
proceeds and products of any of the foregoing, including proceeds of insurance
covering any or all of the foregoing.
“Covenant
Violation Blockage Period” has the meaning set forth in Section 6 of
this Agreement.
“Enforcement
Action” means (a) to take from or for the account of any Borrower or
any guarantor with respect to any of the Junior Obligations, by set-off or
in
any other manner other than by a voluntary payment by any such Borrower,
the
whole or any part of any moneys which may now or hereafter be owing by any
such
Borrower or guarantor with respect to any of the Junior Obligations, (b) to
xxx for payment of, or to initiate or participate with others in any suit,
action or proceeding against any Borrower or any guarantor (i) to enforce
payment of or to collect the whole or any part of the Junior Obligations,
(ii) to commence judicial enforcement of any of the rights and remedies
under the Junior Loan Documents or applicable law with respect to any of
the
Junior Obligations, (c) to accelerate any of the Junior Obligations,
(d) to notify any account debtor to make payment to Junior Creditor on any
accounts receivable owing to any Borrower on which such account debtor is
obligated, or directly collect accounts receivable or other payment rights
of
any of the Borrowers, (e) to take any action under the provisions of any
state or federal law, including, without limitation, the UCC or under any
contract or agreement, to enforce, foreclose upon, take possession of or
sell
any property or assets of any such Borrower or guarantor, including the
Collateral, or (f) to exercise any put, repurchase or similar option or to
cause
Borrowers or any guarantor to honor any redemption or mandatory prepayment
obligation under Junior Loan Documents.
“Excluded
Distributions” means any payment or distribution of assets of any Borrower
authorized by an unstayed, final, non-appealable order or decree stating
that
effect is being given to the subordination of the Junior Obligations to the
Senior Obligations, and made by a court of competent jurisdiction in a
Bankruptcy Case, or of securities which, if debt securities, are subordinated,
with respect to payments and liens, to at least the same extent as the Junior
Obligations are to (A) the Senior Obligations or (B) any securities
issued in exchange for Senior Obligations; providedthat,
(i) the final maturity of such securities shall not be any earlier than
one (1) year following the maturity date of the last to mature of the
Senior Obligations (or such securities issued in exchange for the Senior
Obligations) at the time outstanding and (ii) such securities shall contain
covenants which are no more restrictive than the covenants contained in each
of
the Senior Loan Documents.
“Final
Payment Default” means any failure of any of the Borrowers to Pay in Full
all of the Senior Obligations owing to the Senior Lenders immediately upon
the
occurrence of any acceleration of such Senior Obligations in accordance with
any
of the applicable Senior Loan Documents or immediately
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upon
the
final scheduled maturity of any of the Senior Obligations owing to the Senior
Lenders as provided for under the Senior Loan Documents, in either such case
as
such Senior Loan Documents are in effect on the date hereof or have been
modified in accordance with the terms of this Agreement.
“Financing
Agreement” has the meaning set forth in the recitals to this
Agreement.
“Junior
Obligations” means any and all presently existing or hereafter arising
indebtedness, claims, debts, liabilities, obligations (including without
limitation obligations arising from or relating to (x) the redemption or
repurchase of securities or (y) any put or call of securities), fees and
expenses of any Borrower owing to Junior Creditor, in each case arising under
the Junior Credit Agreement and any of the other Junior Loan Documents, whether
direct or indirect, whether as primary obligor, surety, or guarantor, whether
contingent or of any other nature, character, or description (including all
interest and other amounts accruing after commencement of any Bankruptcy
Case,
and any interest and other amounts that, but for the provisions of the
Bankruptcy Code, would have accrued and become due or otherwise would have
been
allowed), and any refinancings, renewals, refundings, or extensions of such
amounts.
“Junior
Credit Agreement” has the meaning set forth in the recitals to this
Agreement.
“Junior
Creditor” has the meaning set forth in the recitals to this
Agreement.
“Junior
Loan Documents” means, collectively, the Junior Credit Agreement, the Note,
and each of the Collateral Documents (as such terms are defined in the Junior
Credit Agreement) and any other document, instrument, or agreement now existing
or in the future entered into evidencing, documenting, securing, or otherwise
relating to the Junior Credit Agreement and/or the indebtedness and obligations
created thereunder, together with any amendments or restatements thereof,
to the
extent permitted hereunder, but excluding the Warrant (as such term is defined
in the Junior Credit Agreement).
“Lenders”
has the meaning set forth in the recitals to this Agreement.
“Lien”
means any lien, charge, encumbrance, mortgage or security interest of any
kind
whatsoever, whether obtained by agreement, by judgment, by operation of law,
or
otherwise.
“Non-Payment
Default” has the meaning set forth in Section 2(c)(ii) of this
Agreement below.
“Payment
Blockage Period” has the meaning set forth in Section 2(c) of this
Agreement below.
“Payment
Default” has the meaning set forth in Section 2(c)(i) of this Agreement
below.
“Payment
in Full”, “Pay in Full”, or “Paid in Full” means the final
payment in full in cash of all Senior Obligations in accordance with the
Senior
Loan Documents, and that such payment shall not be subject to defeasance,
disgorgement, repayment or return for any reason whatsoever and termination
of
all commitments to lend and/or make future advances of credit under any of
the
Senior Loan Documents.
“Permitted
Junior Interest Payments” means regularly scheduled payments of interest due
and payable in cash on a non-accelerated basis in accordance with and at
the
non-default cash rates provided for under the terms of the Junior Credit
Agreement and any of the other Junior Loan Documents as in effect on the
date
hereof.
“Permitted
Junior Principal Payments” means an amount equal to 50% of the Net Proceeds
(as defined in the Senior Loan Documents as they exist on the date hereof)
of
any issuance of Capital Securities (as defined in the Senior Loan Documents
as
they exist on the date hereof) of MTM
3
Technologies,
Inc., excluding Capital Securities issued in connection with stock splits
or
dividends payable in stock), in excess of $25,000,0000.
“Person”
means natural persons, corporations, limited liability companies, limited
partnerships, general partnerships, limited liability partnerships, joint
ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
“Required
Lenders” has the meaning ascribed to such term in the Financing
Agreement.
“Senior
Commitment Amount” means, on any date of determination, the aggregate amount
of the commitments then in effect under the Financing Agreement.
“Senior
Lenders” means, collectively, Agent and the Lenders, and “Senior
Lender” shall mean any one of them.
“Senior
Liens” has the meaning set forth in Section 3 of this Agreement
below.
“Senior
Loan Documents” means, collectively, the Financing Agreement and any other
document, instrument, or agreement now existing or executed or delivered
in the
future, evidencing, documenting, securing, or otherwise relating to the
Financing Agreement and/or the indebtedness and obligations created thereunder
and/or the Senior Liens, together with any amendments or restatements
thereof.
“Senior
Obligations” means any and all presently existing or hereafter arising
indebtedness, claims, debts, liabilities, obligations, interest, fees and
expenses of each Borrower owing to any of the Senior Lenders under each of
the
Senior Loan Documents, whether direct or indirect, whether contingent or
of any
other nature, character, or description (including all interest and other
amounts accruing after commencement of any Bankruptcy Case, and all interest
and
other amounts that, but for the provisions of the Bankruptcy Code, would
have
accrued and become due or otherwise would have been allowed), and any renewals
or extensions of such amounts, and also includes the CDF Exposure,
provided, however, that the aggregate principal amount of the
indebtedness, obligations and liabilities outstanding on any date of
determination under the Senior Loan Documents, including unfunded Approvals
(as
such term is defined in the Senior Loan Documents), which shall constitute
Senior Obligations, excluding in all cases the CDF Exposure, shall not exceed
$37,000,000.
“Standstill
Termination Date” has the meaning set forth in Section 6 of this
Agreement below.
“UCC”
means the Uniform Commercial Code as the same may be amended and in effect
from
time to time in the State of Illinois.
Other
Definitional Provisions. When used in this
Agreement: (i) the words “herein,” “hereof,” and “hereunder” and
words of similar import shall refer to this Agreement as a whole and not
to any
provision of this Agreement; (ii) the words “include,” “includes,” and
“including” are not limiting; the word “or” has, except where otherwise required
by the context, the inclusive meaning represented by the phrase “and/or”;
(iii) unless otherwise specified, the words “Section,” “Schedule” and
“Exhibit” refer to Sections of, and Schedules and Exhibits to, this Agreement
unless otherwise specified; and (iv) the singular number includes the
plural, and vice versa, whenever the context so requires.
2. Junior
Obligations Subordinate to Senior Obligations.
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(a) Junior
Creditor covenants and agrees that to the extent and in the manner set forth
in
this Agreement, the payment of any or all of the Junior Obligations is hereby
expressly made subordinated and subject in right of payment to the prior
Payment
in Full of all of the Senior Obligations. No Borrower shall make any
payment, redemption or prepayment, whether of interest, principal, premium,
fees, or otherwise, of all or any part of the Junior Obligations, and Junior
Creditor shall not accept or retain any such payment or prepayment except
as and
to the extent permitted in this Section 2.
(b) Notwithstanding
anything to the contrary contained in this Agreement, but subject to the
terms
of Section 2(c) below, (i) from time to time as and when provided for
under the Junior Credit Agreement as in effect on the date hereof, Borrowers
may
make and Junior Creditor shall be entitled to receive, accept and retain
Permitted Junior Interest Payments, as provided for under and at the rates
and
in the amounts set forth in the Junior Credit Agreement as in effect on the
date
hereof, (ii) Borrowers may make and Junior Creditor shall be entitled to
receive fees payable in accordance with the terms of any waiver, forbearance
or
amendment executed in accordance with the terms of this Agreement by the
Borrowers in connection with a workout or restructuring of the credit facilities
established pursuant to the Junior Loan Documents up to 75% of the amount
of any
corresponding fees received by Senior Lender, and (iii) if (A) no Event of
Default (as defined in the Senior Loan Documents as they exist on the date
hereof) has occurred and is continuing, (B) no Change of Control (as defined
in
the Senior Loan Documents as they exist on the date hereof) has occurred,
and
(C) the issuance of Capital Securities is permitted pursuant to the terms
of the
Senior Loan Documents or is consented to in writing by the Required Lenders,
then Borrowers may make and Junior Creditor shall be entitled to receive,
accept
and retain Permitted Junior Principal Payments.
(c) Notwithstanding
anything to the contrary contained in the Junior Credit Agreement, but subject
to the terms of Section 2(d) below, no Permitted Junior Interest Payments
or Junior Principal Payments may be made by any Borrower (directly or
indirectly) or received, accepted or retained by Junior Creditor during any
time
period beginning with the occurrence of any of the events described in
clauses (c)(i) and (c)(ii) of this Section 2 and ending on the
applicable date of termination of such time period as provided for in
Section 2(d) below (any such time period, a “Payment Blockage
Period”):
(i) (A) any
Borrower shall have failed to pay when due (after giving effect to any
applicable grace periods), upon maturity, acceleration or otherwise, any
amount
or obligation which constitutes interest on, or principal of, any of the
Senior
Obligations, or any premium, costs, fees or expenses payable with respect
thereto (a “Payment Default”), which Payment Default shall not
have been (I) cured as required by the Senior Loan Documents or
(II) waived by the Required Lenders in accordance with the Financing
Agreement, and (B) Agent, on behalf of the Required Lenders, shall have
given Junior Creditor a Blockage Notice with respect to such Payment Default;
or
(ii) (A) subject
to the terms of Section 2(e), an “Event of Default” (other than a Payment
Default) under any of the Senior Loan Documents shall have occurred and be
continuing and shall not have been (I) cured as required by the Senior
Loan Documents or (II) waived by the Required Lenders in accordance with
the Financing Agreement (a “Non-Payment Default”), and
(B) Agent shall have been directed in writing by the Required Lenders and
shall have given Junior Creditor a Blockage Notice with respect to such
Non-Payment Default.
(d) Each
Payment Blockage Period shall end as follows: (x) with respect
to any Payment Blockage Period arising under Section 2(c)(i) above, upon
the (I) cure as required by the Senior Loan Documents or (II) the
waiver thereof by the Required Lenders in accordance with the Financing
Agreement, or (y) with respect to any Payment Blockage Period arising under
Section 2(c)(ii) above, upon the earlier of (1) any cure as required
by the Senior Loan Documents or waiver of the underlying
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Non-Payment
Default by the Required Lenders, as applicable or (2) the date that is one
hundred eighty (180) days after the delivery by Agent on behalf of the
Required Lenders of the Blockage Notice in respect of such Non-Payment
Default. No Payment Default or Non-Payment Default shall be deemed to
have been waived for the purposes of this Agreement unless and until the
Borrowers shall have received a written waiver from Agent in accordance with
the
Financing Agreement. Upon the expiration of any Payment Blockage
Period, the Borrowers may resume making and Junior Creditor may resume
receiving, accepting and retaining, Permitted Junior Interest Payments and
Permitted Junior Principal Payments and the Borrowers may also make and Junior
Creditor may also receive, accept and retain any payments made by Borrowers
in
respect of (i) any Permitted Junior Interest Payments that were not made
during
any Payment Blockage Period, and (ii) any Permitted Junior Principal Payments
that were not made during any Payment Blockage Period if and only if funds
from
an offering of Capital Securities that would comprise Permitted Junior Principal
Payments hereunder remain available in cash to the Borrowers (excluding,
in all
cases, use of proceeds of Senior Loans) to be paid to Junior Lender and if
such
funds are not so available, then the failure to make any such Permitted Junior
Principal Payment shall not cause “Event of Default” (as such term is defined
under the Junior Loan Documents) under the Junior Loan Documents.
(e) Notwithstanding
anything to the contrary contained in Section 2(c) or 2(d) above or
elsewhere in this Agreement, the number of days in any Payment Blockage Period
invoked under Section 2(c)(ii) may not exceed one hundred eighty (180)
days in any three hundred sixty-five (365) day period. Subject
to the foregoing limitation, nothing shall prohibit Agent, on behalf of the
Required Lenders, from giving a Blockage Notice to invoke a Payment Blockage
Period under Section 2(c)(i) at any time (including prior to the expiration
of any Payment Blockage Period arising under Section 2(c)(ii)) including
without limitation as a result of any Payment Default arising from a failure
by
any of the Borrowers to make Payment in Full of all of the Senior Obligations
immediately upon the acceleration thereof by Agent on behalf of the Required
Lenders, as the result of the occurrence and continuance of any “Event of
Default” under any of the Senior Loan Documents, whether or not such Event of
Default was the subject of any prior Blockage Notice under
Section 2(c)(ii).
(f) In
the event that, notwithstanding the foregoing, any Borrower shall make any
payment on the Junior Obligations to Junior Creditor not permitted by the
terms
of this Agreement, then and in such event such payment shall be held by Junior
Creditor in trust, pursuant to an express trust for the benefit of the Senior
Lenders created hereby and separate and segregated from and not commingled
with
the other funds and assets of Junior Creditor and shall be paid over and
delivered by Junior Creditor forthwith to Agent for application against the
Senior Obligations in accordance with the terms of the Financing
Agreement. For the avoidance of doubt, nothing contained in this
Section 2 shall prevent Junior Creditor from accepting any Excluded
Distributions permitted pursuant to Section 4 below.
(g) Subject
to the terms of Section 6 below, nothing contained herein shall be deemed
to prohibit or restrict Junior Creditor from exercising its rights and remedies
against any of the Borrowers in accordance with and subject to the terms
of
Section 6, so long as any payment or distribution of cash, assets or
securities of any Borrower received by Junior Creditor pursuant to such exercise
of rights and remedies prior to the date on which all of the Senior Obligations
shall have been Paid in Full shall be held by Junior Creditor in trust pursuant
to an express trust for the benefit of the Senior Lenders created hereby
and
separate and segregated from and not commingled with the other funds and
assets
of Junior Creditor and shall be paid over and delivered by Junior Creditor
forthwith to Agent for application against the Senior Obligations in accordance
with the terms of the Financing Agreement.
3. Security
for Junior Obligations; Agreement Regarding Release of Liens on Disposition
of
Collateral. Pursuant to the Senior Loan Documents, Borrowers have
granted to Agent on behalf of the
6
Lenders
first priority Liens and security interests in all of the Collateral (such
Liens
and security interests in the Collateral are collectively referred to herein
as
the “Senior Liens”). Pursuant to the Junior Loan
Documents, Borrowers have granted to Junior Creditor second priority Liens
and
security interests in all of the Collateral to secure the Junior Obligations
pursuant to the Junior Loan Documents (such Liens in favor of Junior Creditor
collectively referred to herein as the “Junior Liens”), and
Agent, on behalf of the Lenders, and Junior Creditor, each hereby consent
to the
granting of such Liens and security interests. Junior Creditor
covenants and agrees that all of such Junior Liens shall be and are hereby
expressly made subordinate and junior in priority for all purposes and in
all
respects to the Senior Liens, regardless of the time, manner or order of
creation, attachment and/or perfection of any such Junior Liens and the Senior
Liens, regardless of any failure, whether intervening or continuing, of the
Senior Liens to be perfected Liens and regardless of anything to the contrary
contained in any of the Junior Loan Documents. In the event that
Agent releases or agrees to release any of the Senior Liens in connection
with
the sale or other disposition of any of the Collateral, or if any of the
Collateral is sold or retained pursuant to a foreclosure, secured creditor’s
sale under the UCC or similar action, Junior Creditor shall automatically
be
deemed to have consented to such sale or dispositions free and clear of any
applicable Junior Liens and to have agreed to release such applicable Junior
Lien(s), and Junior Creditor shall promptly execute and deliver to Agent
such
termination statements and releases as Agent shall reasonably request to
effect
such release of such applicable Junior Liens, provided that such release
by Junior Creditor shall not extend to, or otherwise affect any of the rights
of
Junior Creditor to, the proceeds from any such sale or other disposition
of
Collateral to the extent any proceeds exist after repaying the Senior
Obligations in full in cash. In furtherance of the foregoing, Junior
Creditor (x) hereby irrevocably authorizes Agent, its agents and attorneys
to file any and all amendments to any UCC financing statements that Junior
Creditor may file from time to time with respect to the Collateral that Agent
may reasonably determine are appropriate in connection with any such release
of
any Junior Liens provided for in the foregoing sentence and (y) hereby
irrevocably appoints Agent as the attorney-in-fact for Junior Creditor, with
full authority in the place and stead of Junior Creditor and in the name
of
Junior Creditor or otherwise, to execute and deliver any document or instrument
which Junior Creditor may be required to deliver pursuant to the foregoing
sentence. At any such foreclosure, secured creditor’s sale under the
UCC or similar action, any Senior Lender may bid at such disposition to purchase
such Collateral (including without limitation, in such Senior Lender’s
discretion, by making a “credit bid”), but such ability to bid shall not impose
any additional obligations on such Senior Lender or limit the discretion
of such
Senior Lender with respect to the disposition of the
Collateral. Nothing contained herein shall be construed in any way to
limit or impair the right of Junior Creditor to (i) bid for and purchase
Collateral for cash at any private or judicial foreclosure upon such Collateral
initiated by the Senior Lenders, or Agent on their behalf, or (ii) for the
sole purpose of protecting the Junior Creditor’s Lien upon the Collateral, join
(but not control) any foreclosure or other judicial lien enforcement proceeding
with respect to the Collateral or any Borrower initiated by the Senior Lenders,
or Agent on their behalf.
4. Payment
Over of Proceeds Upon Bankruptcy. Upon the commencement of, and
at all times during the pendency of, any Bankruptcy Case:
(a) each
of the Senior Lenders shall be entitled to receive Payment in Full before
Junior
Creditor is entitled to receive any direct or indirect payment or distribution
on account of any of the Junior Obligations, including, without limitation,
any
voluntary or mandatory prepayment under the Junior Credit Agreement, any
payment
or distribution received or obtained by Junior Creditor by means of any exercise
of any right of set-off which Junior Creditor may have against any Borrower
and
any payment or distribution which may be payable or deliverable to Junior
Creditor as the result of any subordination in favor of Junior Creditor of
any
other indebtedness, obligation or liability owing from any Borrower to any
third
party, except for any such payment or distribution which constitutes an Excluded
Distribution;
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(b) any
payment or distribution of assets of any Borrower, of any kind or character,
whether in cash, property or securities, to which Junior Creditor would be
entitled but for the provisions of this Section 4, including, without
limitation, any payment or distribution which could be received or obtained
by
Junior Creditor by means of any exercise of any right of set-off which Junior
Creditor may have against any Borrower and any payment or distribution which
would be payable or deliverable to Junior Creditor by reason of any
subordination in favor of Junior Creditor of any other indebtedness, obligation
or liability owing from any Borrower to any third party (except for any such
payment or distribution which constitutes an Excluded Distribution) shall
be
paid by the liquidating trustee or agent or other Person making such payment
or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee
or otherwise, directly to the Senior Lenders, to the extent necessary to
make
Payment in Full of all Senior Obligations, after giving effect to any concurrent
payment or distribution to the Senior Lenders, as applicable, on account
of the
Senior Obligations; and
(c) in
the event that, notwithstanding the foregoing provisions of this Section 4,
Junior Creditor shall have received any such payment or distribution, including,
without limitation, any payment or distribution received or obtained by Junior
Creditor by means of any exercise of any right of set-off which Junior Creditor
may have against any Borrower and any payment or distribution which may be
payable or deliverable to Junior Creditor as the result of any subordination
in
favor of Junior Creditor of any other indebtedness, obligation or liability
owing from any Borrower to any third party (other than a payment or distribution
which constitutes an Excluded Distribution) before all of the Senior Obligations
are Paid in Full or payment thereof is provided for, then and in such event
such
payment or distribution shall be held by Junior Creditor in trust pursuant
to an
express trust for the benefit of the Senior Lenders, created hereby and held
separate and segregated from and not commingled with the other funds and
assets
of Junior Creditor and shall be paid over or delivered by Junior Creditor
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution
of
assets of any Borrower for application to the payment of all Senior Obligations
remaining unpaid, to the extent necessary to Pay in Full such Senior
Obligations, after giving effect to any concurrent payment or distribution
to
the Senior Lenders, on account of the Senior Obligations.
5. Agent;
Insurance and Landlord Waivers.
(a) With
respect to any certificated securities as to which any Borrower has granted
to
Junior Creditor a security interest as collateral security for the Junior
Obligations (the “Pledged Stock”) (i) Agent will act as
pledgeholder for Junior Creditor until the Payment in Full of the Senior
Obligations, whereupon possession of any such Pledge Stock remaining shall,
subject to applicable law, including any court order, be promptly transferred
to
Junior Creditor, and promptly upon such transfer of possession, Junior Creditor
shall become the pledgeholder of the Pledged Stock and (ii) Agent will act
as agent for Junior Creditor, until the Payment in Full of the Senior
Obligations, to the extent Agent has a security interest in the Pledged Stock,
for purposes of (x) exercising any voting rights pertaining to the Pledged
Stock, (y) exercising any conversion, exchange, subscription or other
rights, privileges or options pertaining to the Pledged Stock and
(z) receiving dividends and other distributions with respect to the Pledged
Stock. Junior Creditor agrees that it shall not give Agent, and Agent
shall have no obligation to honor, any instructions with regard to any of
the
rights or interests described in the preceding clauses (x) through (z), so
long as the Senior Obligations shall not have been Paid in Full, and any
such
instructions shall be null and void. Agent may resign from the
performance of its functions and duties as agent hereunder at any time by
giving
reasonable prior written notice to Junior Creditor, such resignation to be
effective upon Junior Creditor’s receipt of such notice.
(b) Junior
Creditor acknowledges and agrees that: (i) Agent does not make
any representation or warranty whatsoever as to the nature, extent, description,
validity or priority of any Pledged Stock or the security interests in or
liens
upon any Pledged Stock; (ii) while any Pledged Stock is
8
held
by
Agent, and so long as Agent is acting as agent for Junior Creditor pursuant
to
subparagraph (a) above, Agent shall not have any liability to, and shall
be held
harmless by, and indemnified by, Junior Creditor, for any losses, damages,
claim, or liability of any kind to the extent arising out of the holding
of such
Pledged Stock or any actions taken by Agent, or omitted to be taken by Agent,
as
such agent, other than losses, damages, claims, or liabilities directly arising
out of Agent’s gross negligence or willful misconduct; (iii) Agent need not
act as a pledgeholder for Junior Creditor with respect to any Collateral
in
which a security interest may be perfected by means other than possession;
(iv) Junior Creditor shall immediately deliver to Agent any Pledged Stock
that is now in or in the future comes into its possession; and (v) the
priority of the security interests in and liens upon the Pledged Stock, shall
be
governed by the terms of Section 3.
(c) In
the event of the occurrence of a fire or other casualty resulting in damage
to
all or any portion of any Collateral (collectively, a
“Casualty”), or a condemnation or similar proceeding affecting
all or any part of the Collateral (a
“Condemnation”):
(i) Junior
Creditor hereby waives any right to participate or join in any adjustment,
compromise, or settlement of any claims resulting from a Casualty or
Condemnation with respect to any Collateral;
(ii) all
proceeds received or to be received on account of a Casualty or Condemnation
shall be applied against the Senior Obligations until Paid in Full;
and
(iii) Junior
Creditor agrees to execute and deliver any documents, instruments, agreements
or
further assurances required to effectuate any of the foregoing.
(d) From
and after a Standstill Termination Date (as defined in Section 6 hereof)
shall have occurred, and subject to the additional restrictions contained
in
Section 6(iii)(A) hereof and elsewhere in this Agreement, Junior Creditor
agrees that (i) it will not independently exercise any contractual rights
it may have arising under collateral access or lien waiver agreements between
Junior Creditor and any third party that leases, stores, warehouses or otherwise
maintains possession of any Borrower’s goods or books and records (collectively
“Collateral Access Rights”) and (ii) Agent shall have the
exclusive right to negotiate with and otherwise deal with all such third
parties
to the extent such negotiations and dealings relate to Collateral and the
exercise of remedies with respect thereto.
6. Acceleration
Rights; Remedies. Notwithstanding anything to the contrary
contained in the Junior Loan Documents, Agent (on behalf of the Lenders)
and
Junior Creditor hereby agree as among themselves that, regardless of the
occurrence of any “Event of Default” as provided for under the Junior Loan
Documents or any other event or circumstance, Junior Creditor shall not
accelerate any part of the Junior Obligations, exercise any of its rights
with
respect to the Junior Obligations or the Collateral whether arising under
or
pursuant to the Junior Loan Documents or otherwise arising at law or in equity,
or otherwise take any Enforcement Action, except that upon the earliest of
any
of the following dates (the earliest of such dates, the “Standstill
Termination Date”), Junior Creditor may, subject to the provisions of
Section 2(g) above, accelerate the payment of all Junior Obligations,
exercise its rights and remedies against any Borrower and the Collateral,
and
otherwise take such Enforcement Actions as it may deem appropriate:
(i) 10
days following the date on which Agent, on behalf of the Required Lenders,
shall
accelerate the Senior Obligations,
(ii) the
date on which a Bankruptcy Case may be commenced by or against any Borrower,
or
9
(iii) the
date that is (x) in the case of an acceleration of the payment of the
Junior Obligations, one hundred twenty (120) days, and (y) in the case
of the exercise of rights and remedies against any Borrower or the Collateral
and the exercise of Enforcement Actions, other than an acceleration of the
payment of the Junior Obligations, one hundred eighty (180) days, in each
case after any date on which Junior Creditor shall give a written notice
to
Agent stating that an “Event of Default” under (and as such term is defined
under the Junior Loan Documents as in effect on the date of this Agreement)
has
occurred and is continuing and as a consequence thereof, Junior Creditor
intends
to accelerate the payment of the Junior Obligations, or otherwise exercise
its
rights and remedies with respect to the Borrowers, the Collateral, or take
any
other Enforcement Action, as the case may be, providedthat,
notwithstanding anything to the contrary contained in the foregoing or in
the
Junior Loan Documents:
(A) if
on the date on which a Standstill Termination Date shall occur, or on any
date
thereafter, Agent, on behalf of the Lenders, shall have initiated an Enforcement
Action with respect to the Collateral (it being understood that solely for
purposes of this clause, the definition of Enforcement Action shall be deemed
to
apply to Agent, on behalf of the Lenders, with respect to the Senior Obligations
and the Senior Loan Documents), the Junior Creditor shall immediately cease
any
Enforcement Action it shall have taken with respect to the Collateral, and
the
exercise of any Collateral Access Rights it shall have taken, and shall at
all
times thereafter refrain from continuing any such Enforcement Action and
the
exercise of any such Collateral Access Rights, for so long as Agent is
continuing to exercise any Enforcement Action with respect to the Collateral,
provided, however, that for the sole purpose of protecting the
Junior Creditor’s Lien upon the Collateral, the Junior Creditor may join (but
not control) any foreclosure or other judicial lien enforcement proceeding
with
respect to the Collateral initiated by the Senior Lenders, or Agent on their
behalf;
(B) the
failure of any Borrower to make any payments otherwise due and payable under
the
Junior Loan Documents because of any Payment Blockage Period invoked under
Section 2(c)(ii) (any such Payment Blockage Period, a “Covenant
Violation Blockage Period”) shall not constitute or be deemed to be a
default or “Event of Default” under any of the Junior Loan Documents as in
effect on the date hereof unless and except the Borrowers shall fail for
any reason (including without limitation the existence of a Payment Blockage
Period under Section 2(c)(i) as the result of any Final Payment Default) to
make payment of all such payments otherwise due and payable under the Junior
Loan Documents which are Junior Permitted Interest Payments or, if permitted
by
Section 2(b) hereof, which are Junior Permitted Principal Payments, within
ten (10) days of the termination of any such Covenant Violation Blockage
Period, and
(C) if
Junior Creditor has been prevented from declaring any “Event of Default” as such
term is defined under any of the Junior Loan Documents as in effect on the
date
hereof due to the provisions of clause (B) above and the applicable
Covenant Violation Blockage Period shall then end (whether by expiration
or
earlier termination thereof in accordance with this Agreement), then Junior
Creditor shall be free to declare any “Event of Default” as such term is defined
under the Junior Loan Documents as in effect on the date
hereof for any reason, including the failure of Borrowers to make payments
to
Junior Creditor during such applicable Covenant Violation Blockage Period
if
such failure is not cured by Borrowers within the 10 day grace period
provided for in clause (B), and in such case, the Standstill Termination
Date with respect to such “Event of Default” as such term is defined under the
Junior Loan Documents as in effect on the date hereof shall be deemed to
occur
on the later of (x) the date that is one hundred eighty (180) days
after such applicable Covenant Violation Blockage Period originally began
or
(y) the date on which the 10 day grace period for Borrowers to cure
all payment defaults expires.
10
(iv) Nothing
contained in the foregoing shall be deemed to prohibit or limit the occurrence
of a default or “Event of Default” as such term is defined under any of the
Junior Loan Documents as in effect on the date hereof by reason of the failure
of the Borrowers to make payments otherwise due and payable under the Junior
Loan Documents because of any Payment Blockage Period invoked under
Section 2(c)(i) as the result of a Final Payment Default or by reason of an
“Event of Default” as such term is defined under the Junior Loan Documents as in
effect on the date hereof arising for any other reason than solely because
of
the imposition of a Covenant Violation Blockage Period (e.g., an independent
violation of any negative covenant or financial covenant contained in the
Junior
Loan Documents). For the avoidance of doubt, if Junior Creditor shall
elect to give a notice to Agent under clause (iii) above because of the
occurrence of any such default or “Event of Default” as such term is defined
under any of the Junior Loan Documents as in effect on the date hereof described
in this paragraph, the Standstill Termination Date with respect to such default
or “Event of Default” shall occur on the date that is 180 days after the
date the notice of such default or “Event of Default” is given (or any earlier
acceleration of the Senior Debt or earlier commencement of a Bankruptcy Case),
regardless of whether any Payment Blockage Period that may be in effect may
extend beyond such Standstill Termination Date.
(v) Regardless
of whether Junior Creditor intends to exercise its rights and remedies with
respect to the Borrowers, the Collateral or otherwise take any Enforcement
Actions in each case because an “Event of Default” (as such term is defined
under the Junior Loan Documents) has occurred and is continuing, Junior Creditor
shall endeavor to give prompt written notice of any such Event of Default
to
Agent.
7. Rights
of Junior Creditor. Subject to the provisions of Section 6,
nothing contained in this Agreement is intended to or shall (i) impair, as
among any Borrower, its creditors (other than the Senior Lenders) and Junior
Creditor, the obligation of any Borrower, which is absolute and unconditional,
to pay to Junior Creditor the principal of, and premium and interest on,
and any
other amount payable by any Borrower with respect to, the Junior Obligations
or
any of the other Junior Loan Documents as and when the same shall become
due and
payable in accordance with its terms; or (ii) affect the rights of Junior
Creditor to accelerate the maturity of the Junior Obligations and exercise
all
other remedies otherwise permitted under the Junior Loan Documents and by
applicable law, subject to the rights of the Senior Lenders (x) during the
pendency of a Bankruptcy Case, to receive, pursuant to and in accordance
with
Section 4, cash, property and securities otherwise payable or deliverable
to Junior Creditor, (y) to prevent any payment prohibited by Section 2
or (z) pursuant to the terms of Section 6, to enforce the restrictions
on the ability of Junior Creditor to take certain actions against any Borrower
and/or the Collateral.
8. Subrogation
to Rights of Senior Lenders. Subject to, and solely effective
following, the Payment in Full of all Senior Obligations, Junior Creditor
shall
be subrogated to the rights of the Senior Lenders to receive payments and
distributions of cash, property and securities applicable to the Senior
Obligations to the extent of the payments or distributions made to any Senior
Lender, or otherwise applied to payment of, the Senior Obligations pursuant
to
the provisions of this Section 8, until the principal of and the interest
on the Junior Obligations shall be paid in full in cash. For purposes
of such subrogation, no payments or distributions on account of or with respect
to the Senior Obligations to the Senior Lenders of any cash, property or
securities to which Junior Creditor would be entitled except for the provisions
of this Agreement, and no payments over pursuant to the provisions of this
Agreement to any of the Senior Lenders by Junior Creditor shall, as among
any
Borrower, its creditors (other than the Senior Lenders) and Junior Creditor,
be
deemed to be a payment or distribution by any Borrower to or on account of
the
Senior Obligations.
11
9. Claim
Submission; Agreement Not to Contest Senior Obligations or Senior
Liens. Junior Creditor irrevocably authorizes and empowers each
Agent (x) to demand, xxx for, collect, receive and acknowledge receipt of
all payments and distributions in respect of the Junior Obligations, to the
extent such payments and distributions are required to be paid or delivered
to
any such Senior Lender as provided in this Agreement, and (y) to file and
prove all claims therefor and file and prove claims in respect of the Junior
Obligations in connection with any Bankruptcy Case if and to the extent that
Junior Creditor has not filed appropriate proofs of claim with respect to
the
Junior Obligations within fourteen (14) days of any bar date applicable to
any part of the Junior Obligations, in either such case in the name of Junior
Creditor or otherwise and as Agent determines to be necessary or appropriate
for
the enforcement of the provisions contained in this Agreement. Junior
Creditor agrees to execute and to deliver to Agent all such further instruments
confirming the authorization hereinabove set forth, and all such powers of
attorney, proxies, proofs of claim, assignments of claim and other instruments,
and to take all such other actions, as may reasonably be requested Agent
in
order to enable Agent to enforce all claims upon or in respect of payments
and
distributions made on account of the Junior Obligations. Junior
Creditor further agrees that, notwithstanding anything to the contrary contained
in this Agreement, Junior Creditor shall not under any circumstances
(i) initiate or prosecute any claim, action or other proceeding challenging
the enforceability of the Senior Obligations, any of the Senior Loan Documents
or any of the Senior Liens, (ii) seek to subordinate the Senior Obligations
to any other indebtedness of any Borrower or to subordinated the Senior Liens
to
any other Liens on any of the Collateral, (iii) request judicial relief
that would hinder, delay, limit or prohibit the exercise or enforcement of
any
right or remedy otherwise available to the Senior Lenders in respect of the
Senior Obligations or available to any of the Senior Lenders in respect of
any
of the Senior Liens and/or under any of the Senior Loan Documents, or
(iv) with respect to any Bankruptcy Case, object to any agreement by any
Senior Lender to (x) permit the use by any Borrower of cash collateral for
the ordinary course working capital needs of such Borrower or (y) provide
post-petition financing to any Borrower (whether or not any portion of such
post-petition financing shall be used by any Senior Lender to pay off any
of the
pre-petition Senior Obligations). Agent, on behalf of the Lenders,
acknowledges that the Junior Creditor may seek, support, accept or retain
adequate protection of its Junior Liens, and Agent, on behalf of the Lenders,
shall not object to or contest any request by the Junior Creditor for such
adequate protection, or support any other person that objects to or contests
any
such request, provided that if Junior Creditor is granted such adequate
protection in the form of periodic payments, such payments shall be subject
to
the turnover requirements set forth in Section 4 hereof.
10. Modification
of Documents; Additional Covenants.
(a) Junior
Creditor agrees that, except as expressly provided otherwise in this
Section 10(a), the Senior Lenders shall have absolute power and discretion,
without notice to Junior Creditor, to deal in any manner with the Senior
Obligations and the Collateral, including, without limitation, the power
and
discretion to do any of the following: (i) any demand for
payment of any Senior Obligations may be rescinded in whole or in part, and
any
Senior Obligations may be continued, and the Senior Obligations or the liability
of any Borrower upon or for any part thereof, or any Collateral or guaranty
therefor, or right of offset with respect thereto, may, from time to time,
in
whole or in part, be renewed, extended, modified, accelerated, compromised,
waived, surrendered, or released; (ii) the Senior Loan Documents may be
amended, modified, supplemented, restated, renewed, refunded, extended or
terminated, in whole or in part, and/or the Senior Obligations may be increased
(subject to the amount specified in the definition of Senior Obligations)
or
extended, as the Senior Lenders may deem advisable from time to time; and
(iii) any Collateral may be sold, exchanged, waived, surrendered, or
released, in any order determined by Agent. Junior Creditor will
remain bound under this Agreement, and the subordination provisions provided
for
herein shall not be impaired, abridged, released, or otherwise affected
notwithstanding any such renewal, extension, modification, acceleration,
compromise, amendment, supplement, restatement, termination, sale, exchange,
waiver, surrender, or release. The
12
Senior
Obligations shall conclusively be deemed to have been created, contracted,
or
incurred in reliance upon this Agreement, and all dealings between Senior
Lenders on the one hand, and the Borrowers, on the other hand, shall be deemed
to have been consummated in reliance upon this Agreement.
(b) Unless
the Senior Obligations shall have been Paid in Full, Junior Creditor will
not,
without the prior written consent of the Required Lenders (which consent
shall
not be unreasonably withheld or delayed):
(i) sell,
assign, pledge, encumber or otherwise dispose of any of the Junior Obligations
unless such purchaser, assignee, pledgee, transferee or other beneficiary
agrees
in writing to be bound by the terms of this Agreement;
providedthat, notwithstanding any breach of this provision, this
Agreement shall bind any such transferee; or
(ii) commence
or join with any creditor other than Senior Lender in commencing any Bankruptcy
Case.
(c) Agent,
on behalf of the Senior Lenders, agrees that, except as expressly provided
otherwise in this Section 10(c) and subject to the provisions of
Section 6, Junior Creditor shall have absolute power and discretion,
without notice to the Senior Lenders, to deal in any manner with the Junior
Obligations, including, without limitation, the power and discretion to do
any
of the following:
(i) any
demand for payment of any Junior Obligations may be rescinded in whole or
in
part, and any Junior Obligations may be continued, and the Junior Obligations
or
the liability of any Borrower upon or for any part thereof, or any guaranty
therefor, or right of offset with respect thereto, may, from time to time,
in
whole or in part, be renewed, extended, modified, accelerated, compromised,
waived, surrendered or released; and
(ii) the
Junior Loan Documents may be amended, modified, supplemented, restated, renewed,
refunded, extended or terminated, in whole or in part, and/or the Junior
Obligations may be extended, as Junior Creditor may deem advisable from time
to
time. Notwithstanding anything to the contrary set forth in the
foregoing, Junior Creditor shall not (x) increase the interest rates
applicable with respect to the Junior Obligations and/or any applicable part(s)
thereof (including any default interest rate that may be applicable from
time to
time) under the Junior Loan Documents as in effect on the date hereof,
(y) shorten the final maturity of any of the Junior Obligations as set
forth in the Junior Loan Documents as in effect on the date hereof, amend
the
Junior Loan Documents to require any payments to be made on any part of the
Junior Obligations prior to the final maturity thereof or (z) add any
financial covenants or events of default to the Junior Loan Documents, or
make
more restrictive any financial covenants or events of default that are set
forth
in the Junior Loan Documents on the date hereof. In addition, and
without limiting the generality of the foregoing, in the event that the Senior
Lenders relax or eliminate any financial covenant contained in the Financing
Agreement for which there is an analogous financial covenant in the Junior
Loan
Documents, or the Senior Lenders amend or modify any defined term used in
connection therewith, or consent to the Borrowers’ non-compliance, or waive the
Borrowers’ compliance, with the terms thereof, Junior Creditor agrees to
proportionately relax or eliminate such financial covenant, amend or modify
such
defined term, and consent to such non-compliance or waive such compliance,
in
each case on the same terms as those agreed to by the Senior Lenders, promptly
following the effectiveness of any such change in the Senior Loan
Documents.
11. Junior
Creditor’s Waivers. Junior Creditor (a) waives any and all
notice of the creation, modification, renewal, extension, or accrual of any
of
the Senior Obligations and notice of or proof of reliance by the Senior Lenders
upon this Agreement; (b) agrees not to assert against any Senior Lender any
rights which a guarantor or surety could exercise as a defense to any
obligations under an agreement of guaranty or suretyship, but nothing in
this
Agreement shall constitute Junior Creditor as a guarantor or
13
surety;
and (c) agrees that prior to the time all of the Senior Obligations are
Paid in Full, it shall not assert any right of subrogation, contribution,
reimbursement, or indemnity which it may have against any Borrower arising
directly or indirectly out of this Agreement.
12. Binding
Effect; Choice of Law; Other Provisions. This Agreement shall be
a continuing agreement, shall be binding upon and shall inure to the benefit
of
the parties hereto from time to time, and their respective successors and
assigns, shall be irrevocable, and shall remain in full force and effect
until
the Senior Obligations shall have been Paid in Full, and the Senior Loan
Documents shall have been irrevocably terminated, but shall continue to be
effective, or be reinstated, as the case may be, if any payment, or any part
thereof, of any amount paid by or on behalf of any Borrower with regard to
any
Senior Obligations is rescinded or must otherwise be restored or returned
upon
or as a result of any Bankruptcy Case, or for any other reason, all as though
such payments had not been made. Any waiver or amendment hereunder
must be evidenced by a signed writing of the party to be bound thereby, and
shall only be effective in the specific instance. This Agreement
shall be governed by and construed in accordance with the laws of the State
of
Illinois, without regard to its otherwise applicable principles of conflicts
of
laws. The parties agree that any actions arising out of or in
connection with this Agreement shall be tried and litigated in the state
and
federal courts located in the County of Xxxx, in the State of
Illinois. The headings in this Agreement are for convenience of
reference only, and shall not alter or otherwise affect the meaning
hereof.
13. Parties
Intended to be Benefited. All of the understandings, covenants,
and agreements contained herein are solely for the benefit of Agent and Junior
Creditor, their respective successors and assigns, and the present and future
holders of the Senior Obligations and the Junior Obligations respectively,
and
there are no other parties, including any Borrower or any of their successors
or
assigns, which are intended to be benefited, in any way, by this
Agreement.
14. No
Limitation Intended. Nothing contained in this Agreement is
intended to or shall affect or limit, in any way, the rights that the Senior
Lenders and Junior Creditor have with respect to any third
parties. Agent, on behalf of the Lenders, and Junior Creditor hereby
specifically reserve all of their respective rights against each Borrower
and
all other third parties.
15. Notice. Whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration, or other communication shall or may be given to or served upon
any
of the parties hereto, or whenever any of the parties desires to give or
serve
upon the other communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration, or other communication shall
be
in writing and shall be delivered either in person or by registered, or
certified United States mail, postage prepaid, by facsimile, or by recognized
overnight courier service, addressed as follows:
| If to Agent, at: |
GE
Commercial Distribution Finance Corporation
Xx.
Xxxxxxxx Xxxx, Documentation Manager
0000
Xxxxxxxxxx Xxxx
Xxxxx
000
Xxxxxxx,
XX 00000
FAX
# (000) 000-0000
|
|
|
with
a copy to
|
||
|
GE
Commercial Distribution Finance Corporation
0000
Xxxxxxxx Xxxx.
Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx
X. Xxxxxx, Operations Counsel
FAX
# (000) 000-0000
|
14
|
If
to Junior Creditor, at:
|
COLUMBIA
PARTNERS, L.L.C. INVESTMENT MANAGEMENT
0000
Xxxxxxxxxxxx Xxxxxx, XX
Xxxxx
0000
Xxxxxxxxxx,
XX 00000
Attn: Xxxxx
Xxxxx
Fax: (000)
000-0000
|
|
|
with
a copy to:
|
COOLEY
GODWARD LLP
0000
00xx Xxxxxx, XX 0xx Xxxxx
Xxxxxxxxxx,
XX 00000
Attn: Xxxxx
X. Xxxxx, Esq.
Fax: (000)
000-0000
|
|
| If to any Borrower: |
000
Xxxxx Xxxxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Attn:
Chief Financial Officer
Fax
No.: (000) 000-0000
|
|
|
with
a copy to:
|
XXXXXX
XXXX & PRIEST, LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
E. Xxx Xxxx, Esq.
Fax
No. (000) 000-0000
|
or at such other address as may be substituted by notice given as herein provided. Giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given when received.
16. Severability. Whenever
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 applicable 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.
17. Complete
Agreement. This Agreement constitutes the complete agreement and
understanding of the Senior Lenders and Junior Creditor with respect to the
subject matter contained herein, and supersedes all prior or contemporaneous
oral and written negotiations, agreements and understandings, express or
implied, with respect to the subject matter contained herein.
18. No
Joint Venture. Agent, on behalf of the Lenders, and Junior
Creditor each acknowledges and confirms that this Agreement shall not create
a
joint venture, agency or fiduciary relationship.
15
19. Public
Filings. Junior Creditor agrees to release and terminate of
record each and every public filing against the Borrowers, including, all
UCC
filings, intellectual property filings, mortgages and other security filings,
provided, however, Junior Creditor may refile or rerecord, as the case may
be,
all such filings and recordations immediately after Agent has made such filings
and recordations. Junior Creditor covenants and agrees that (i) at no
time shall any Junior Creditor filings or recordations cover or relate to
assets
of the Borrower that are not also covered in any corresponding Agent filing
or
recordations, and (ii) at no time shall any Junior Creditor filing or
recordation be of record prior to any similar filing or recordation of the
Agent.
20. Refinancing. Each
Junior Creditor hereby agrees that any party that refinances the Senior
Obligations of any Senior Lender shall execute an agreement to be bound by
and
subject to this Agreement and may rely on and enforce this Agreement as if
it
were such Senior Lender. Upon such refinancing, the Agent shall no
longer be a party hereto or bound hereby. Each Junior Creditor
further hereby agrees that it will, at the request of such Senior Lender,
enter
into an agreement, in the form of this Agreement, mutatis mutandis, to
subordinate the Junior Obligations, to the same extent as provided herein,
to
the party refinancing all or a portion of such Senior Obligations; provided
that
the failure of the Junior Creditor to execute such an agreement shall not
affect
such party’s right to rely on and enforce the terms of this
Agreement.
21. Star
Program. Any repayment of advances by Borrower to CDF under the
Star Program, or any amounts received by CDF in connection with any collateral
therefor and/or proceeds thereof, will be applied by CDF to repay such advances,
and all such advances and collateral therefor are entitled to all the benefits
of this Agreement as being a part of the Senior Obligations.
22. Counterparts. This
Agreement may be executed in any number of counterparts (which may include
facsimile signatures), and by the parties each in separate counterparts,
each of
which shall be an original, but all of which shall together constitute one
and
the same Agreement.
23. Waiver
of Jury Trial. AGENT, FOR ITSELF AND THE OTHER LENDERS, HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR
(B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
EITHER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED BY ANY OF THEM IN CONNECTION HEREWITH, OR
THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING
OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. AGENT, FOR ITSELF AND THE OTHER LENDERS, HEREBY AGREES AND
CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY
COURT TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
TO
THE WAIVER OF RIGHT TO TRIAL BY JURY.
24. Specific
Performance. Each of the parties agrees and acknowledges that in
the event of any breach of this Agreement, the non-breaching party would
be
irrevocably harmed and would not be made whole by monetary
damages. It is accordingly agreed that the parties hereto shall and
do hereby waive the defense in any action for specific performance that a
remedy
at law would be adequate and that the parties hereto, in addition to any
other
remedy to which they may be entitled at law or in equity, shall be entitled
to
compel specific performance of this Agreement in any action instituted in
the
state and federal courts located in the County of Xxxx, in the State of
Illinois, or, in the event such courts shall not
16
have
jurisdiction of such action, in any court of the United States or any state
thereof having subject matter jurisdiction of such actions.
25. Legend;
Further Assurances.
(a) Junior
Creditor and each Borrower will cause the Note, the
Warrant (as such terms are defined in the Junior Loan
Documents), and each instrument hereafter guaranteeing any Junior Obligations
to
be indorsed with substantially the following legend:
“THIS
INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT DATED AS
OF
AUGUST _, 2007, AS THE SAME MAY BE AMENDED, MODIFIED, SUPPLEMENTED OR RESTATED
FROM TIME TO TIME, IN FAVOR OF GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION,
AS AGENT FOR CERTAIN LENDERS, WHICH AGREEMENT IS INCORPORATED HEREIN BY
REFERENCE. NOTWITHSTANDING ANY STATEMENT TO THE CONTRARY CONTAINED IN
THIS INSTRUMENT, NO PAYMENT OR PREPAYMENT OF ANY NATURE ON ACCOUNT OF THE
OBLIGATIONS HEREUNDER, WHETHER OF PRINCIPAL, INTEREST OR PREMIUM, SHALL BE
MADE,
PAID, RECEIVED OR ACCEPTED, AND NO REMEDIES SHALL BE PURSUED, EXCEPT IN
ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT.”
(b) Each
Borrower will (i) xxxx its books or accounts or take such other action as
shall be effective to give reasonable notice of the effect of this Agreement
and
(ii) in the case of any Junior Obligations which are not evidenced by any
instrument, upon any Agent’s request, cause such Junior Obligations
to be evidenced by an appropriate instrument or instruments indorsed with
the
above legend. Each of Junior Creditor and each Borrower will, at its
expense and at any time and from time to time, promptly execute and deliver
all
further instruments and other documents, and take all further action, that
may
be necessary or, in the reasonable opinion of Agent , desirable, or that
Agent
may reasonably request, in order to protect any right or interest granted
or
purported to be granted hereby or to enable Agent to exercise and enforce
its
rights and remedies hereunder.
[REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK]
17
IN
WITNESS WHEREOF, the parties hereto have caused this Subordination Agreement
to
be duly executed as of the date first herein above set forth.
|
GE
COMMERCIAL DISTRIBUTION FINANCE CORPORATION,
as Administrative Agent for the Lenders
|
||
| By: | /s/ | |
| Name: | ||
| Title: | ||
|
COLUMBIA
PARTNERS, L.L.C.INVESTMENT
MANAGEMENT
as
Junior Creditor
|
||
| By: | /s/ | |
| Name: | ||
| Title: | ||
|
NATIONAL
ELECTRIC BENEFIT FUND
as
Junior Creditor
|
||
| By: | /s/ | |
| Name: | ||
| Title: | ||
Signature
Page to Subordination Agreement
BORROWERS’
ACKNOWLEDGMENT
Each
Borrower hereby consents to the foregoing Subordination Agreement (and the
terms
thereof) and agrees to abide thereby and to keep, observe and perform the
several matters and things therein intended to be kept, observed and performed
by each, and specifically agrees not to make any payments contrary to the
terms
of said Agreement. A breach of any of the terms and conditions of
this consent shall constitute an “Event of Default” under the Financing
Agreement. Each Borrower agrees that unless the Senior Lenders shall
have given their prior written consent thereto, such Borrower shall not consent
or agree to any modification, amendment or waiver of the undertaking of Junior
Creditor set forth in the last sentence of Section 10.20 of the Junior Credit
Agreement, as in effect on the date hereof.
|
|
||
| By: | /s/ | |
| Name: | X.X. Xxxxxxxx, III | |
| Title: | Senior Vice President and Chief Financial Officer | |
|
MTM
TECHNOLOGIES (US), INC.
|
||
| By: | /s/ | |
| Name: | X.X. Xxxxxxxx, III | |
| Title: | Senior Vice President and Chief Financial Officer | |
|
MTM
TECHNOLOGIES, INC (MASSACHUSETTS), LLC
|
||
| By: | /s/ | |
| Name: | X.X. Xxxxxxxx, III | |
| Title: | Senior Vice President and Chief Financial Officer | |
|
INFO
SYSTEMS, INC.
|
||
| By: | /s/ | |
| Name: | X.X. Xxxxxxxx, III | |
| Title: | Senior Vice President and Chief Financial Officer | |
Signature
Page Acknowledgment to Subordination Agreement
