Exhibit 10.45
LIEN SUBORDINATION AND INTER-CREDITOR AGREEMENT
THIS LIEN SUBORDINATION AND INTER-CREDITOR AGREEMENT (this
"Agreement") dated as of December 18, 2000, is between CMC Heartland Partners
("CMC Heartland") and Heartland Partners, L.P. (the "Partnership" and
collectively with CMC Heartland, the "Senior Creditor") and PG Oldco, Inc.
("PG" or "Junior Creditor"), and HEARTLAND TECHNOLOGY, Inc. ("Borrower"), with
respect to certain financing arrangements with Borrower.
BACKGROUND:
1. Pursuant to a certain Settlement Agreement and Release
dated as of December 18, 2000 (the "Settlement Agreement"), Junior Creditor
has agreed to settle certain claims against Borrower in exchange for five (5)
Promissory Notes from Borrower in the aggregate amount of $3,000,000, each
dated as of December 18, 2000, made by Borrower and payable to the order of
the Junior Creditor (collectively, the "Notes").
2. In connection with the execution and delivery of the Notes,
the Borrower has caused HTI Class B, LLC ("Grantor") to grant to Junior
Creditor, pursuant to that certain Subordinated Security Agreement dated as
of December 18, 2000 between Grantor and Junior Creditor (the "PG Security
Agreement"), a lien on and security interest in the "Collateral" (as defined
in the PG Security Agreement).
3. In order to perfect the security interest granted by
Grantor to Junior Creditor pursuant to the PG Security Agreement, Grantor,
Junior Creditor, Partnership and CMC Heartland have entered into a Control
Agreement dated as of December 18, 2000 (the "Junior Creditor Control
Agreement" and together with the Notes and the PG Security Agreement, the "PG
Loan Agreements").
4. Senior Creditor has heretofore made, and may from time to
time hereafter make, loans to Borrower and Borrower has executed and
delivered to Senior Creditor that certain Line of Credit Promissory Note
dated December 14, 2000, which loans are secured by a lien on and security
interest in the Collateral pursuant to that certain Senior Security Agreement
dated as of December 14, 2000, as heretofore or hereafter amended, between
Senior Creditor and Grantor, and all instruments, documents, and agreements
executed in connection therewith (collectively, the "Loan Agreements").
5. Junior Creditor and Senior Creditor have each filed or may
hereafter file financing statements under the Uniform Commercial Code with
respect to the Collateral.
6. Junior Creditor and Senior Creditor desire to agree to the
relative priority of their respective security interests in and liens on the
Collateral.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, it
is hereby agreed as follows:
1. DEFINITIONS
In addition to those terms defined elsewhere in this Agreement,
the following definitions shall be applicable:
1.1 Creditor shall mean either Senior Creditor or Junior
Creditor.
1.2 Creditor Claim shall mean either the Senior Creditor Claim
or the Junior Creditor Claim.
1.3 Senior Creditor Claim shall mean all "Obligations of
Borrower to Senior Creditor as set forth in the Loan Agreements, including
but not limited to, all sums loaned and advanced to or for the benefit of
Borrower at any time, any interest thereon, any future advances, any costs of
collection or enforcement, including reasonable attorneys' and paralegals'
fees and expenses and any prepayment penalties.
1.4 Junior Creditor Claim shall mean all obligations of
Borrower to PG under the PG Loan Agreements, any costs of collection or
enforcement, including but not limited to, reasonable attorneys' and
paralegals' costs and fees.
1.5 Uniform Commercial Code shall mean the Uniform Commercial
Code as in effect from time to time in the State of Delaware and any
successor statute thereto.
1.6 Enforcement shall mean demand by any Creditor for payment
or acceleration of the indebtedness of the Borrower, to repossess the
Collateral or to commence the judicial enforcement of any of the rights and
remedies under the Loan Agreements or the PG Loan Agreements, as applicable,
or applicable law with respect to the Collateral.
1.7 Enforcement Notice shall mean a written notice delivered,
at a time when an Event of Default under the Loan Agreements or the PG Loan
Agreements, as applicable, has occurred and is continuing, by any Creditor to
the other Creditor announcing that it intends to commence Enforcement,
specifying the relevant Event of Default, stating the current balance of its
Creditor Claim and requesting the current balance of the other Creditor Claim.
1.8 Event of Default shall mean any event of default under any
of the Loan Agreements or PG Loan Agreements.
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2. INTERCREDITOR AGREEMENT
2.1 Lien Priorities. Notwithstanding the date, manner or order
of perfection of the security interests and liens granted Junior Creditor or
Senior Creditor, or the acquisition of purchase money or other security
interests, or the time of giving or failure to give notice of the acquisition
or expected acquisition of purchase money or other security interests, and
notwithstanding any provisions of the Uniform Commercial Code, or any
applicable law or decision or the PG Loan Agreements or the Loan Agreements,
whether either Junior Creditor or Senior Creditor holds possession of all or
any part of the Collateral, the following, as between Junior Creditor and
Senior Creditor, shall be the relative priority of the security interests and
liens of Junior Creditor and Senior Creditor in the Collateral:
(1) Senior Creditor shall have a first and prior security
interest in the Collateral and proceeds of any of the
foregoing, including insurance proceeds relating thereto,
up to the "Senior Debt Priority Amount" (as defined
below). Senior Creditor shall have a second and
subordinate security interest in the Collateral and
proceeds of any of the foregoing, including insurance
proceeds relating thereto, for all amounts in excess of the
Senior Debt Priority Amount; and
(2) Junior Creditor shall have a second and subordinate
security interest in the Collateral and proceeds of any of
the foregoing, including insurance proceeds relating
thereto, up to the Senior Debt Priority Amount. Junior
Creditor shall have a first and prior security interest in
the Collateral and proceeds of any of the foregoing,
including insurance proceeds relating thereto, for all
amounts in excess of the Senior Debt Priority Amount;
The "Senior Debt Priority Amount" shall be a dollar amount equal to the
amount of the Senior Debt (as defined in the PG Security Agreement)
outstanding on the date hereof, which the parties agree is equal to
$4,318,978.52, together with such additional debt as is incurred by Borrower
in compliance with the Collateral Value Ratio (as defined in the PG Security
Agreement). The subordinations and priorities specified in this Agreement are
expressly conditioned upon the nonavoidability and perfection of the security
interest to which another security interest is subordinated and, if the
security interest to which another security interest is subordinated is not
perfected or is avoidable, for any reason, then the subordinations and
relative priority agreements provided for in this Agreement shall not be
effective as to the particular collateral which is the subject of the
unperfected or avoidable security interest.
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2.2 Distribution of Proceeds of Collateral. At any time, all
proceeds of Collateral shall be distributed in accordance with the following
procedure:
(1) Proceeds of the Collateral shall first be applied to the
Senior Creditor Claim up to the Senior Debt Priority Amount
or up to the payment in full of the Senior Creditor Claim,
whichever is lower. Proceeds of the Collateral shall be
next applied to the payment in full of the Junior Creditor
Claim. After payment in full of the Junior Creditor Claim,
any remaining proceeds shall be applied to the payment in
full of any remaining Senior Creditor Claim.
(2) After the Senior Creditor Claim and the Junior Creditor
Claim have been paid or satisfied in full, the balance of
proceeds of Collateral, if any, shall be paid to Grantor or
as otherwise required by applicable law.
2.3 Enforcement Actions. Each Creditor agrees not to commence
Enforcement until an Enforcement Notice has been given to each other
Creditor. The parties hereto further agree that any Event of Default under
any of the Loan Agreements or the PG Loan Agreements shall constitute an
Event of Default under all of the foregoing and shall give to each Creditor
the same rights and remedies subject to all applicable cure periods and the
priorities set forth herein. Subject to the foregoing, Senior Creditor and
the Junior Creditor agree that after the giving of an Enforcement Notice:
(1) Any Creditor may, at its option, take any action to
accelerate payment of its Creditor Claim and to foreclose
or realize upon or enforce any of its rights with respect
to the Collateral, subject to the priorities set forth
herein.
(2) Each Creditor agrees to execute and deliver to the
foreclosing Creditor, promptly upon the foreclosing
Creditor's request, appropriate UCC termination statements
or partial releases, with respect to any of the Collateral
being sold or otherwise disposed of in connection with the
liquidation of Borrower's or Grantor's assets upon or after
the declaration of a default or an Event of Default by the
foreclosing Creditor pursuant to the Loan Agreements or the
PG Loan Agreements, as applicable. The proceeds of any
Collateral so sold or disposed of shall be applied, after
the deduction of any and all costs relating to such sale or
disposition (including reasonable attorneys' fees,
advertising costs and auctioneer's fees) as set forth in
Section 2.1. Notwithstanding the foregoing, each Creditor
agrees that in the event it takes any action to accelerate
payment of its respective Creditor Claim and to foreclose
or realize upon or enforce any of its rights with respect
to the Collateral it shall cooperate with each other
Creditor in such undertaking and shall take all such
actions as are reasonable necessary to ensure that all of
the Creditor Claims are paid in full to the maximum extent
possible.
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2.4 Additional Credit Extensions. Subject to (i) any
restrictions on Borrower contained in the Loan Agreements, (ii) maintenance
by Borrower and Grantor of the Collateral Value Ratio, and (iii) the
provisions of Section 2.1 hereto, the Senior Creditor shall have the right,
without the consent of the Junior Creditor, to extend credit to Borrower in
excess of the maximum amounts set forth in the Loan Agreements or under any
other agreements with Borrower, secured by the Collateral and otherwise
having the same priorities as herein contained. The Junior Creditor shall
not have the right to extend additional credit to Borrower. Notwithstanding
the foregoing, if any such advance(s) are secured by collateral other than
the Collateral described hereunder, the Senior Creditor shall have no
obligation to marshal the assets of Borrower or Grantor in which it has a
lien or security interest before enforcing its rights in the Collateral
hereunder, and the Junior Creditor shall have no rights hereunder to share or
participate in any proceeds of such other collateral.
2.5 Accountings. Senior Creditor and Junior Creditor agree to
render accounts to the other upon request, giving effect to the application
of proceeds of Collateral as hereinbefore provided.
2.6 Notices of Defaults. Senior Creditor and Junior Creditor
agree to use their best efforts to give to the other copies of any notice of
the occurrence or existence of an Event of Default sent to Borrower or
Grantor simultaneously with the sending of such notice to Borrower or
Grantor, but the failure to do so shall not affect the validity of such
notice or create a cause of action against the party failing to give such
notice or create any claim or right on behalf of any third party absent
actual prejudice to the party not receiving the notice. The sending of such
notice shall not give the recipient the obligation to cure such Event of
Default.
2.7 Action Upon Repayment of Senior Creditor or Junior
Creditor. If either (i) the Senior Creditor Claim is paid in full and the
Loan Agreements are terminated or (ii) the Junior Creditor Claim is paid in
full and the PG Loan Agreements are terminated, then the lender whose claim
is thus fully paid shall release its lien on the Collateral.
2.8 UCC Notices. In the event that Senior Creditor or Junior
Creditor shall be required by the Uniform Commercial Code or any other
applicable law to give notice to the other of intended disposition of
Collateral, such notice shall be given in accordance with paragraph 3.1
hereof and ten (10) business days' notice shall be deemed to be commercially
reasonable.
2.9 Acknowledgment Regarding Pari Passu Debt. Notwithstanding
anything herein to the contrary, the parties hereby acknowledge and agree
that the Junior Creditor's security interest in the Collateral shall be
senior to any Pari Passu Debt (as defined in the PG Security Agreement) that
is not incurred by Borrower in compliance with the Collateral Value Ratio.
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3. MISCELLANEOUS
3.1 Notices. All notices hereunder shall be effective upon
receipt, and shall be in writing and sent by either certified mail, return
receipt requested, telecopy, or overnight delivery, to the addresses as
follows:
If to the Senior Creditor:
CMC Heartland Partners
Heartland Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
If to the Junior Creditor:
PG Oldco, Inc.
▇/▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
P.O. Box 2028
Bloomfield Hills, M1 48303-2028
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
or to such other address or person as any of the parties hereto may designate
in writing to the other parties.
3.2 Contesting Liens or Security Interests. Neither of the
Creditors shall contest the validity, perfection, priority or enforceability
of any lien or security interest granted to the other in the Collateral and
each of the Creditors agrees to cooperate in the defense of any action
contesting the validity, perfection, priority or enforceability of such liens
or security interest.
3.3 No Additional Rights for Borrower Hereunder. If either
Creditor enforces its rights or remedies in violation of the terms of this
Agreement, Borrower agrees that it shall not use such violation as a defense
to the enforcement by either Creditor under the PG Loan Agreements or the
Loan Agreements, as the case may be, nor assert such violation as a
counterclaim or basis for set-off or recoupment against either Creditor.
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3.4 Independent Credit Investigations. Neither of the
Creditors, nor any of their respective directors, officers, agents or
employees, shall be responsible to the other or to any other person, firm or
corporation, for Borrower's solvency, financial condition or ability to repay
the Senior Creditor Claim or the Junior Creditor Claim, or for statements of
Borrower, oral or written, or for the validity, sufficiency or enforceability
of the Senior Creditor Claim or the Junior Creditor Claim, the PG Loan
Agreements, the Loan Agreements, or any liens or security interests granted
by Borrower to Junior Creditor or Senior Creditor in connection therewith.
Each of Junior Creditor and Senior Creditor has entered into its respective
financing agreements with Borrower based upon its own independent
investigation, and makes no warranty or representation to the other lender
nor does it rely upon any representation of the other lender with respect to
matters identified or referred to in this paragraph.
3.5 Amendments to Financing Arrangements or to this Agreement.
Senior Creditor and Junior Creditor shall use their best efforts to notify
the other of any amendment or modification in the Loan Agreements or the PG
Loan Agreements, but the failure to do so shall not create a cause of action
against the party failing to give such notice or create any claim or right on
behalf of any third party. Senior Creditor and Junior Creditor shall, upon
request of the other, provide copies of all such modifications or amendments
and copies of all other documentation relevant to the Collateral hereunder.
All modifications or amendments of this Agreement must be in writing and duly
executed by an authorized officer of each to be binding and enforceable.
3.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of
each of the parties hereto, but does not otherwise create, and shall not be
construed as creating, any rights enforceable by any person not a party to
this Agreement.
3.7 Choice of Law. This Agreement shall be governed as to
validity, interpretations, enforcement and effect by the laws of the State of
Delaware.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
CMC HEARTLAND PARTNERS
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
HEARTLAND PARTNERS, L.P.
By Its General Partner
HTI Interests, LLC
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
PG OLDCO, INC.
By s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its President
HEARTLAND TECHNOLOGY, INC.
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
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ACKNOWLEDGMENT AND AGREEMENT
The undersigned acknowledges and agrees to the foregoing terms
and provisions. By executing this Agreement, the undersigned agrees to be
bound by the provisions hereof as they relate to the relative rights of
Junior Creditor and Senior Creditor as between such Creditors. The
undersigned further agrees that the terms of this Agreement shall not give
the undersigned any substantive rights vis-a-vis either Junior Creditor or
Senior Creditor. Notwithstanding anything to the contrary, in the event of
any inconsistency between this Agreement and either or both of the Loan
Agreements and/or the PG Loan Agreements, the terms of this Agreement shall
control.
HTI CLASS B, LLC
By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its President & CEO
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