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EXHIBIT 4.7
SUBORDINATION AGREEMENT
WHEREAS, AIR-CURE TECHNOLOGIES, INC. (together with its successors and
assigns, the "Company") may from time to time become indebted to the various
financial institutions (together with their respective successors and assigns,
collectively the "Senior Lenders" and each individually a "Senior Lender")
from time to time party to an Amended and Restated Credit Agreement dated as of
November 18, 1996 (as amended, restated or otherwise modified from time to
time, together with any replacement therefor or refinancing thereof, the
"Senior Credit Agreement") among the Company, the Senior Lenders, Bank of
America National Trust and Savings Association, as agent for the Senior Lenders
(in such capacity, together with any successor thereto in such capacity, the
"Agent"), and The First National Bank of Boston, as co-agent for the Senior
Lenders (in such capacity, the "Co-Agent");
WHEREAS, concurrently with the execution of this Agreement, the Company
will enter into a Subordinated Note and Warrant Purchase Agreement (as amended
or otherwise modified from time to time, the "Subordinated Note Agreement")
with International Mezzanine Capital, B.V. ("IMC") and First Commerce
Corporation ("FCC") (together with their respective successors and assigns,
collectively the "Noteholders");
NOW, THEREFORE, to induce the Senior Lenders, from time to time, to make
loans and to issue letters of credit (including, without limitation, renewals
or extensions of any loans or letters of credit heretofore or hereafter made)
to the Company under or in connection with the Senior Credit Agreement, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Noteholders agree as follows:
1. Unless otherwise defined herein, terms used herein have the
meanings assigned to such terms in Schedule A attached hereto. All obligations
of the Company and the Guarantors, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due (including, without limitation, any and all interest
accruing on any of the Liabilities after the commencement of any Proceedings
(as defined in Section 2(i) hereof), notwithstanding any provision or rule of
law which might restrict the right of any Person, as against the Company, any
Guarantor or anyone else, to collect such interest) are hereinafter called
"Liabilities." All Liabilities to the Agent, the Co-Agent, any Senior Lender
or any Affiliate of any Senior Lender which is a party to a Swap Contract with
the Company (collectively, the "Senior Creditors") arising under (i) the Senior
Credit Agreement, (ii) any Swap Contract or (iii) the Guaranty executed in
favor of the Senior Creditors are herein called "Senior Liabilities"; and all
Liabilities to the Noteholders arising under (i) the Subordinated Note
Agreement, (ii) the
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Subordinated Notes or (iii) the Guaranty executed in favor of the Noteholders
are herein called "Junior Liabilities". For the purposes of this Agreement,
Senior Liabilities shall include all obligations of the Company under the
Senior Credit Agreement or any Swap Contract between the Company and any Senior
Creditor and all Liabilities of any Guarantor under the Guaranty executed in
favor of the Senior Creditors, notwithstanding any right or power of the
Company, any Guarantor or anyone else to assert any claim or defense as to the
invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the agreements and obligations of the
Noteholders hereunder.
2. Anything in this Agreement to the contrary notwithstanding, the
Junior Liabilities shall be subordinate and junior to the extent set forth in
subparagraphs (i) through (vii), inclusive, below, to all Senior Liabilities.
(i) Except as hereinafter in this Agreement expressly
otherwise provided or as the Agent with the consent of the Required
Lenders may hereafter otherwise expressly consent in writing, the
payment of all Junior Liabilities shall be postponed and subordinated to
the payment in full in cash of all Senior Liabilities, and no payment or
other distribution whatsoever in respect of any Junior Liabilities shall
be made, nor (except as contemplated by Section 1F of the Warrants)
shall any property or assets of the Company or any Guarantor be applied
to the purchase or other acquisition or retirement of any Junior
Liabilities; provided that, subject to the provisions of subparagraphs
(ii) through (vii) below, there are excepted from the terms of the
foregoing provisions of this Section 2(i): (a) payments of interest
under the Subordinated Note Agreement to the Noteholders by the Company
or any Guarantor, (b) payments of any of the costs and expenses referred
to in Section 12B(i)(i) of the Subordinated Note Agreement and (c)
payments of any of the charges, fees and expenses referred to in Section
12B(i)(ii) of the Subordinated Note Agreement (collectively, the
"Permitted Payments").
(ii) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company, and in the
event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings (each such event, a "Proceeding"), then all
Senior Liabilities shall first be paid in full in cash before any
payment is made by the Company in respect of the Junior Liabilities.
(iii) In any Proceeding of the Company or any Guarantor, any
payment or distribution of any kind or character, whether in cash,
property, stock or obligations, which may be payable or deliverable in
respect of the Junior Liabilities shall be paid or delivered directly to
the Agent for application in payment of the Senior Liabilities in
accordance with the priorities then existing among the Senior Creditors,
unless and until all Senior Liabilities shall have been paid in full in
cash; provided, however, that no such delivery shall be made to Senior
Creditors of stock or obligations which are issued pursuant to
reorganization
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proceedings if such stock or obligations are subordinate and junior
(whether by law or agreement) at least to the extent provided in this
Section 2 to the payment of all Senior Liabilities then outstanding and
to the payment of any stock or obligations which are issued in exchange
or substitution for any Senior Liabilities then outstanding.
(iv) Upon the acceleration of the maturity of any Senior
Liabilities, no payment of the Junior Liabilities shall be made, unless
the percentage of Senior Creditors specified in the instrument creating
or evidencing such Senior Liabilities rescind or annul such acceleration
in writing or such Senior Liabilities shall have been paid in full in
cash.
(v) During the continuance of any Event of Default under and
as defined in the Senior Credit Agreement (any such event being referred
to herein as a "Senior Default"), if notice of such default has been
given to the Company and to the Noteholders' Representative by the Agent
and such notice shall specify that it constitutes a "blockage notice"
pursuant to this Section 2(v), then no Permitted Payments shall be made
during the period of 180 days from the date of such blockage notice
(subject to the number of such days being reduced pursuant to Section
2(vi)(y)), unless such Senior Default shall have been cured or waived in
writing or ceases to exist and any acceleration of Senior Liabilities as
to which such Senior Default relates shall have been rescinded or
annulled in writing or the Senior Liabilities to which such Senior
Default relates shall have been paid in full in cash (the "Blockage
Period").
(vi) Notwithstanding the foregoing, (x) Permitted Payments
shall not be blocked pursuant to Section 2(v) more than twice in any
period of twelve consecutive months as long as any of the Junior
Liabilities remain outstanding, (y) Permitted Payments shall not be
blocked pursuant to Section 2(v) for more than an aggregate 180 days
during any such period of twelve consecutive months as long as any of
the Junior Liabilities remain outstanding, and (z) the Senior Creditors
shall not be entitled to give notice pursuant to Section 2(v) more than
once with respect to any Senior Default which was specified in such a
blockage notice and which has continued without interruption since the
date such notice was given, nor shall the Senior Creditors be entitled
to give a separate blockage notice with respect to any Senior Default
not so specified which (to the knowledge of the Senior Creditors) was
existing on the date the blockage notice shall have been given pursuant
to Section 2(v) and which has continued without interruption from the
date such notice was given.
(vii) Subject to the automatic acceleration provisions of the
Bankruptcy Code, so long as any Senior Liabilities remain outstanding,
no Noteholder may
(x) declare or join in the declaration of any Junior
Liabilities to be due and payable or otherwise accelerate the
maturity of any principal of the Junior Liabilities, accrued
interest thereon or other amounts due in respect thereof, or
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(y) commence or join in the commencement of any
bankruptcy or insolvency proceeding against the Company or any
subsidiary thereof, or
(z) commence any litigation against the Company or any
Guarantor to collect any Junior Liabilities,
prior to the earlier of (A) the tenth day after the date on which any holder of
the Junior Liabilities shall have given written notice to the Agent of its
intention to take such action or (B) the acceleration of any of the Senior
Liabilities; provided, however, that no Noteholder shall take any action
described in clause (x), (y) or (z) above during a Blockage Period (unless any
of the Senior Liabilities shall have been accelerated during such Blockage
Period).
3. The Noteholders shall not at any time be charged with knowledge
of the existence of any facts which would prohibit the making of any payment to
or for the account of the Noteholders, unless and until the Noteholders'
Representative shall have received written notice thereof from the Company or
the Agent; and, prior to the receipt of any such written notice, the
Noteholders shall be entitled to assume conclusively that no such facts exist.
4. Each Noteholder shall be entitled to rely on the delivery to it
of a written notice by a Person representing itself to be a Senior Creditor to
establish the facts set forth therein and that such notice has been given by a
Senior Creditor. If any Noteholder shall determine in good faith that further
evidence is required with respect to the right of any Person as a Senior
Creditor to participate in any payment or distribution pursuant thereto, such
Noteholder may request such Person to furnish evidence as to the amount of
Senior Liabilities held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person hereunder, and if such evidence is not
furnished, such Noteholder may defer any payment to such Person pending
judicial determination as to the right of such Person to receive payment.
5. Each and every Noteholder undertakes and agrees for the benefit
of each Senior Creditor to execute, verify, deliver and file a proof of claim
which the Agent may at any time reasonably require, as requested in writing, in
order to prove and realize upon any rights or claims pertaining to the Junior
Liabilities and to effectuate the full benefit of the subordination contained
herein; and upon failure of any Noteholder so to do, the Agent shall be deemed
to be irrevocably appointed the agent and attorney-in-fact of such Noteholder
to execute, verify, deliver and file any such proof of claim.
6. Upon any distribution of assets of the Company or any Guarantor
pursuant to a Proceeding, the Noteholders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the liquidating trustee or agent or
other Person making any distribution to the Noteholders, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
Senior Creditors and other Liabilities of
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the Company or any Guarantor, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto
and hereto.
7. In the event that any payment or distribution of assets shall be
received by any Noteholder on account of the Junior Liabilities in violation of
the provisions of this Agreement, such payment or distribution shall be
promptly paid over and delivered to the Agent in the form received (except for
any necessary endorsements) for application to the payment of Senior
Liabilities, until the Senior Liabilities shall have been paid in full in cash.
Until so delivered, any such payment or distribution shall be held by the
recipient in trust for the Senior Creditors.
8. The provisions of this Agreement are for the purpose of defining
the relative rights of the Senior Creditors on the one hand, and the
Noteholders on the other hand, against the Company and the Guarantors and their
property, and nothing herein shall impair, as between the Company and the
Guarantors and the Noteholders, the obligation of the Company and the
Guarantors, which is unconditional and absolute, to pay to the Noteholders the
Junior Liabilities in accordance with the terms and the provisions thereof,
subject to the rights, if any, under this Agreement of Senior Creditors to
receive cash, property, stock or obligations otherwise payable or deliverable
by the Company and the Guarantors to the Noteholders.
9. Upon payment in full in cash of all Senior Liabilities, the
Noteholders shall be subrogated to the rights of the Senior Creditors to
receive payments or distributions of assets of the Company and the Guarantors
made on Senior Liabilities until the Junior Liabilities shall be paid in full,
and, for the purposes of such subrogation, no payments or distributions (direct
or indirect) to the Senior Creditors of any cash, property, stock or
obligations to which the Noteholders would be entitled except for the
provisions of Section 2 shall, as between the Company and the Guarantors, their
creditors (other than the Senior Creditors) and the Noteholders, be deemed to
be a payment by the Company or any Guarantor to or on account of Senior
Liabilities.
10. Any notices hereunder shall be in writing (including facsimile
transmission) and shall be sent (i) in the case of notices to the Agent, to:
Bank of America National Trust and Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Agency Management Services
Facsimile No.: 000-000-0000
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with copies to:
Bank of America Illinois
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx/Service Industries
Facsimile No.: 000-000-0000
and
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile No.: 000-000-0000
(ii) in the case of notices to the Noteholders' Representative,
to:
International Mezzanine Capital, B.V.
Xxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attention: Sjaak Xxxxxxxx
with copies to:
Mezzanine Management Limited
Manfield House
000-000 Xxxxxx
Xxxxxx XX0X XXX
XXXXXX XXXXXXX
Attention: Xxxxx Xxxxxx
and
First Commerce Capital, Inc.
000 Xx. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
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and
Xxxxx & Xxxxx, L.L.P.
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx, Jr.
(iii) in the case of notices to the Company, to:
Air-Cure Technologies, Inc.
0000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx XxXxxx; or
(iv) in the case of any of the foregoing, to such other address
as such Person shall have specified to (x) in the case of the Agent, the
Company and the Noteholders' Representative, (y) in the case of the
Noteholders' Representative, the Agent and the Company and (z) in the
case of the Company, the Agent and the Noteholders' Representative.
Notices shall be deemed to have been received (a) if sent by messenger
or courier, when received at the address specified above, (b) if sent by
facsimile, when transmission has been confirmed and (c) if sent by
registered or certified mail, on the fifth Business Day after being
sent.
11. The Noteholders hereby waive: (a) notice of acceptance of this
Agreement by the Agent or any Senior Creditor; (b) notice of the existence or
creation or non-payment of all or any of the Senior Liabilities; and (c) all
diligence in collection or protection of or realization upon the Senior
Liabilities or any security therefor.
12. This Agreement shall in all respects be a continuing agreement
and shall remain in full force and effect (notwithstanding, without limitation,
the dissolution, death or incompetency of any Noteholder or that at any time or
from time to time all Senior Liabilities may have been paid in full), subject
to discontinuance only upon receipt by the Agent of written notice from the
Noteholders, or any Person duly authorized and acting on behalf of the
Noteholders, of the discontinuance thereof; provided that no such notice of
discontinuance shall affect or impair any of the agreements and obligations of
the Noteholders hereunder with respect to any and all Senior Liabilities
existing prior to the time of receipt of such notice by the Agent, any and all
Senior Liabilities created or acquired thereafter pursuant to any previous
commitment made by any Senior Creditor under or in connection with the Senior
Credit Agreement or in connection with any Swap Contract with the Company, any
and all extensions or renewals of any of the foregoing, any and all interest
accruing on any of the foregoing, and any and all expenses paid or incurred by
the Agent or any other Senior Creditor in endeavoring to collect or realize
upon any of the foregoing or any security therefor; and all of the agreements
and obligations of the Noteholders under this Agreement
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shall, notwithstanding any such notice of discontinuance, remain fully in
effect until all such Senior Liabilities (including any extensions or renewals
of any thereof and all such interest and expenses) shall have been finally paid
in full in cash.
13. The Agent or any other Senior Creditor may, from time to time,
whether before or after any discontinuance of this Agreement, at its sole
discretion and without notice to the Noteholder, take any or all of the
following actions: (a) retain or obtain a security interest in any property to
secure any of the Senior Liabilities, (b) retain or obtain the primary or
secondary obligation of any other obligor or obligors with respect to any of
the Senior Liabilities, (c) extend or renew for one or more periods (whether or
not longer than the original period), alter or exchange any of the Senior
Liabilities, or release or compromise any obligation of any nature of any
obligor with respect to any of the Senior Liabilities, and (d) release its
security interest in, or surrender, release, or permit any substitution or
exchange for, all or any part of any property securing any of the Senior
Liabilities, or extend or renew for one or more periods (whether or not longer
than the original period), or release, compromise, alter, or exchange any
obligations of any nature of any obligor with respect to any such property.
14. Each Senior Creditor may, from time to time, whether before or
after any discontinuance of this Agreement, without notice to any Noteholder,
assign or transfer any or all of the Senior Liabilities or any interest
therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Senior Liabilities shall be and remain
Senior Liabilities for the purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Senior Liabilities or of any
interest therein shall, to the extent of the interest of such assignee or
transferee in the Senior Liabilities, be entitled to the benefits of this
Agreement to the same extent as if such assignee or transferee were the
transferring Senior Creditor.
15. No Senior Creditor shall be prejudiced in its rights under this
Agreement by any act or failure to act of the Company, any Guarantor or any
Noteholder, or any noncompliance of the Company, any Guarantor or any
Noteholder with any agreement or obligation, regardless of any knowledge
thereof which such Senior Creditor or any other Senior Creditor may have or
with which such Senior Creditor or any other Senior Creditor may be charged;
and no action of the Agent or any other Senior Creditor permitted hereunder
shall in any way affect or impair the rights of the Agent or any other Senior
Creditor and the obligations of any Noteholder under this Agreement.
16. No delay on the part of the Agent or any other Senior Creditor in
the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by the Agent or any other Senior Creditor of any
right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy; nor shall any modification or waiver of
any of the provisions of this Agreement be binding upon the Agent or any other
Senior Creditor except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent, with the consent of the Required Lenders.
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17. This Agreement shall be binding upon the Noteholders and upon the
heirs, legal representatives, successors and assigns of the Noteholders; and
all references herein to the Company and each Guarantor shall be deemed to
include any successor or successors, whether immediate or remote, to such
corporation.
18. This Agreement shall be construed in accordance with and governed
by the laws of the State of Illinois. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
19. The Noteholders agree to promptly execute and deliver to the
Company and the Agent a release of the obligations under the Guaranty of any
Guarantor, which Guarantor is sold pursuant to and in compliance with paragraph
6B of the Subordinated Note Agreement or pursuant to any foreclosure proceeding
by the Agent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement is dated effective this ____ day of
November, 1996.
INTERNATIONAL MEZZANINE CAPITAL, B.V.
By:
---------------------------------
Title:
------------------------------
FIRST COMMERCE CORPORATION
By:
---------------------------------
Title:
------------------------------
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ACKNOWLEDGMENT
The Company and each Guarantor hereby acknowledges receipt of a copy of
the foregoing Subordination Agreement, waives notice of acceptance thereof by
the Agent or any other Senior Creditor, and agrees to be bound by the terms and
provisions thereof, to make no payments or distributions contrary to the terms
and provisions thereof, and to do every other act and thing necessary or
appropriate to carry out such terms and provisions. In the event of any
violation of any of the terms and provisions of the foregoing Subordination
Agreement, then, at the election of the Required Lenders, any and all
obligations of the Company under or in connection with the Senior Credit
Agreement shall forthwith become due and payable and any and all agreements of
the Senior Creditors to make loans, advances, or other financial accommodations
to the Company under or in connection with the Senior Credit Agreement shall
forthwith terminate, notwithstanding any provisions thereof to the contrary.
Dated: November 18, 1996
AIR-CURE TECHNOLOGIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXXXX, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AIR-CURE DYNAMICS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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ALLIED INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMEREX INDUSTRIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
VIC ENVIRONMENTAL SYSTEMS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
INTEREL ENVIRONMENTAL
TECHNOLOGIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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SCHEDULE A
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities or membership
interests, by contract, or otherwise.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, et. seq.).
"Guarantor" shall mean (i) as of November 18, 1996, Xxxxxxxx,
Inc., Air-Cure Dynamics, Inc., Allied Industries, Inc., Amerex Industries,
Inc., VIC Environmental Systems, Inc., and Interel Environmental Technologies,
Inc. and (ii) thereafter, each Person listed in clause (i) and each other
Person which executes or delivers a counterpart of the Guaranty.
"Guaranty" shall mean a guaranty in the form delivered to the
Senior Creditors and the Noteholders on November 18, 1996, as amended or
otherwise modified from time to time.
"Noteholders' Representative" means International Mezzanine
Capital, B.V. or any person or entity designated as the successor Noteholders'
Representative by the existing Noteholders' Representative in a written notice
received by the Agent (which notice (i) shall specify the name, address and
facsimile number of such successor Noteholders' Representative and (ii) may be
conclusively relied upon by the Agent until the Agent receives a new notice
changing any information therein).
"Person" shall have the meaning set forth in the Senior Credit
Agreement as of the date hereof.
"Required Lenders" shall have the meaning set forth in the Senior
Credit Agreement as of the date hereof.
"Senior Note" shall mean any "Note", as such term is defined in
the Senior Credit Agreement as of the date hereof.
"Subordinated Notes" shall mean the Notes issued by the Company
and purchased by the Noteholders pursuant to the Subordinated Note Agreement.
"Swap Contract" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, interest rate option, rate cap, collar or floor agreement, or other
similar agreement (including any option to enter into any of the foregoing)
entered into by the Borrower for the purpose of protecting the Borrower against
fluctuations in interest rates on the Senior Liabilities.
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