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EXHIBIT 10.11
SUBORDINATION AGREEMENT
BORROWER: U.S. OnLine Communications, Inc.
CREDITOR: ________________________________
DATE: ________________________________
This Subordination Agreement is entered into between Silicon Valley Bank
("Silicon") and the creditor named above (the "Creditor").
1. Subordination. To induce Silicon to extend credit to the
above-named borrower (the "Borrower") at any time, in such manner, upon such
terms and for such amounts as may be mutually agreeable to Silicon and the
Borrower (but without obligation on Silicon's part to do so), the Creditor
hereby agrees to subordinate and does hereby subordinate payment by the Borrower
of any and all indebtedness of the Borrower, now or hereafter incurred, created
or evidenced, to the Creditor, however such indebtedness may be hereafter
extended, renewed or evidenced (together with all collateral, security and
guarantees, if any, for the payment of any such indebtedness) (collectively, the
"Junior Debt"), to the payment in full in cash to Silicon of any and all present
and future indebtedness, liabilities, guarantees and the other obligations, of
every kind and description, of the Borrower to Silicon (collectively, the
"Senior Debt"). The Creditor agrees not to ask for, demand, xxx for, take or
receive any payments with respect to all or any part of the Junior Debt or any
security therefor, whether from the Borrower or any other source, unless and
until all of the Senior Debt has been paid and performed in full; PROVIDED,
HOWEVER, THAT THE BORROWER MAY PAY, AND THE CREDITOR MAY RECEIVE, AMOUNTS DUE
FROM TIME TO TIME AS PRINCIPAL AND INTEREST PAYMENTS ON THE JUNIOR DEBT AS LONG
AS (i) THERE IS NO PENDING "EVENT OF DEFAULT" AT THE TIME (AS SUCH TERM IS
DEFINED IN THE LOAN AND SECURITY AGREEMENT BETWEEN BORROWER AND SILICON), AND
(ii) SUCH PAYMENTS WOULD NOT CAUSE AN EVENT OF DEFAULT.
The word "indebtedness" is used herein in its most comprehensive sense
and includes without limitation any and all present and future loans, advances,
credit, debts, obligations, liabilities, representations, warranties, and
guarantees, of any kind and nature, absolute or contingent, liquidated or
unliquidated, and individual or joint. The Creditor represents and warrants to
Silicon that the Borrower is now indebted to the Creditor in the amounts, and
only the amounts, as described on the attached Exhibit A, pursuant to the notes
and/or documents described on the attached Exhibit A. The Creditor also
represents and warrants that the Junior Debt is unsecured. Upon request, the
Creditor shall render accountings to Silicon stating the balance due on the
Junior Debt, including accrued interest.
Any payment made by Borrower and/or received by the Creditor in
violation of any provision of this Agreement shall be segregated from all other
funds, and shall be held in trust by the Creditor for Silicon and shall be
promptly delivered, in kind, to Silicon for application in reduction of the
Senior Debt.
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2. Distribution of Assets or Liquidation Proceeds. The Creditor
further agrees that upon any distribution of money or assets, or readjustment of
the indebtedness of the Borrower whether by reason of foreclosure, liquidation,
composition, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding involving the Junior Debt, or the
application of the assets of the Borrower to the payment or liquidation thereof,
Silicon shall be entitled to receive payment in full in cash of all of the
Senior Debt prior to the payment of all or any part of the Junior Debt. In order
to enable Silicon to enforce its rights hereunder in any such action or
proceeding, Silicon is hereby irrevocably authorized and empowered in its
discretion (but without any obligation on Silicon's part) to receive and collect
any and all dividends or other payments or disbursements made thereon in
whatever form the same may be paid or issued and to apply same on account of the
Senior Debt. The Creditor further agrees to execute and deliver to Silicon such
assignments or other instruments as may be required by Silicon in order to
enable Silicon to enforce any and all such claims and to collect any and all
dividends or other payments or disbursements which may be made at any time on
account of all and any of the Junior Debt.
3. Transfer of Subordinated Debt. The Creditor shall not sell,
pledge, assign or otherwise transfer, at any time while this Agreement remains
in effect, any rights, claim or interest of any kind in or to any of the Junior
Debt, either principal or interest, without first notifying Silicon and making
such transfer expressly subject to this Subordination Agreement in form and
substance satisfactory to Silicon. The Creditor represents and warrants to
Silicon that the Creditor has not sold, pledged, assigned or other wise
transferred any of the Junior Debt, or any interest therein or collateral or
security therefor to any other person. The Creditor shall concurrently endorse
all notes and other written evidence of the Junior Debt with a statement that
they are subordinated to the Senior Debt pursuant to the terms of this
Agreement, in such form as Silicon shall require, and the Creditor shall exhibit
the originals of such notes and other written evidence of the Junior Debt to
Silicon so that Silicon can confirm that such endorsement has been made (but no
failure to do any of the foregoing shall affect the subordination of the Junior
Debt provided for herein, which shall be fully effective upon execution of this
Agreement).
4. Silicon's Rights. This is a continuing agreement of subordination
and Silicon may continue, without notice to the Creditor, to extend credit or
other accommodation or benefit and loan monies to or for the account of the
Borrower in reliance hereon. Silicon may at any time, in its discretion, renew
or extend the time of payment of all or any Senior Debt, modify the Senior Debt
and any terms or provisions thereof or of any agreement relating thereto, waive
or release any collateral which may be held therefor at any time, and make and
enter into any such agreement or agreements as Silicon may deem proper or
desirable relating to the Senior Debt, without notice to or further consent from
the Creditor and without any manner impairing or affecting this Agreement or any
of Silicon's rights hereunder. The Creditor waives notice of acceptance hereof,
notice of the creation of any Senior Debt, the giving or extension of any credit
by Silicon to the Borrower, or the taking, waiving or releasing of any security
therefor, or the making of any modifications, and the Creditor waives
presentment, demand, protest, notice of protest, notice of default, and all
other notices to which the Creditor might otherwise be entitled.
5. Mutual Waiver of Jury Trial. SILICON AND THE CREDITOR EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
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ARISING OUT OF, OR IN ANY WAY RELATING TO: (a) THIS AGREEMENT; OR (b) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE CREDITOR; OR
(c) ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR THE CREDITOR OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH SILICON OR THE CREDITOR; IN EACH OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
6. Specific Performance. Silicon is hereby authorized to demand
specific performance of the provisions set forth in this agreement, and Creditor
hereby irrevocably waives any defense based on the adequate remedy at law which
might be asserted as a bar to such remedy of specific performance.
7. Continuing Effect. The provisions of this agreement shall
continue in effect and be reinstated if at any time payment or performance of
the Senior Debt is, pursuant to applicable law, rescinded or reduced in amount,
or must otherwise be restored or returned, whether as a preference, fraudulent
conveyance or otherwise, all as if such payment or performance had not been
made.
8. Governing Law; Jurisdiction; Venue. This agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and
Creditor shall be governed by, and construed in accordance with, the laws of the
State of Washington. Creditor (i) agrees that all actions and proceedings
relating directly or indirectly hereto shall at Silicon's option, be litigated
in courts located within Washington, and that the exclusive venue therefor shall
be, at Silicon's option, King County, Washington; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights the Creditor may have to object to
the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
9. General. This agreement sets forth in full all of the
representations and agreements of the parties with respect to the subject matter
hereof and supersedes all prior discussions, representations, agreements and
understandings between the parties. This Agreement may not be modified or
amended, nor may any rights hereunder be waived, except in a writing signed by
the parties hereto. In the event of any litigation between the parties based
upon, arising out of, or in any way relating to this Agreement, the prevailing
party shall be entitled to recover all of his costs and expenses (including
without limitation attorneys' fees at trial, and on appeal or review) from the
non-prevailing party. The parties agree to cooperate fully with each other and
take all further actions and execute all further documents from time to time as
may be reasonably necessary to carry out the purposes of this Agreement.
CREDITOR:
_________________________________________
SILICON:
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SILICON VALLEY BANK
By
Title
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BORROWER'S AGREEMENT
The undersigned Borrower hereby acknowledges receipt of a copy of the
foregoing Subordination Agreement and agrees not to pay any Junior Debt, except
as provided therein. If Borrower breaches this Agreement or any of the
provisions of the foregoing Subordination Agreement, Borrower agrees that, in
addition to all other rights and remedies Silicon has, all of the Senior Debt
shall, at Silicon's option and without notice or demand, become immediately due
and payable, unless Silicon expressly agrees in writing to waive such breach. No
waiver by Silicon of any breach shall be effective unless in writing signed by
one of Silicon's authorized officers, and no such waiver shall be deemed to
extend to or waive any other or subsequent breach. Borrower further agrees that
any default or event of default by Borrower on the Junior Debt, or under any
present or future instrument or agreement between Borrower and the Creditor, or
any breach of the foregoing Subordination Agreement by Borrower or the Creditor
shall constitute a default and event of default under all present and future
instruments and agreements between Borrower and Silicon. Borrower further agrees
that, at any time and from time to time, the foregoing Subordination Agreement
may be altered, modified or amended by Silicon and the Creditor without notice
to Borrower and without further consent by Borrower.
BORROWER:
U.S. ONLINE COMMUNICATIONS, INC.
By:
Title: ______________________________
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