Exhibit 10.9
SUBORDINATION AGREEMENT
This Subordination Agreement dated as of October 22, 1998 (as amended,
restated, supplemented or otherwise modified, this "Agreement") among DIMAC
Corporation, a Delaware corporation (the "Company"), and the purchasers of the
Company's securities listed on the signature pages hereto (the "Purchasers").
WHEREAS, the Company has entered into that certain Amended and Restated
Credit Agreement dated as of October 22, 1998 (as amended, restated,
supplemented or otherwise modified, the "Senior Credit Agreement") among the
Company, DIMAC Holdings Inc., as Guarantor ("DIMAC Holdings"), the lenders party
thereto (the "Lenders"), Credit Suisse First Boston, as Administrative Agent and
Arranger, Warburg Dillon Read LLC, as Syndication Agent and First Union National
Bank, as Documentation Agent, pursuant to which the Lenders have agreed to
advance certain Loans (as defined therein) to the Company;
WHEREAS, the Company has entered into that certain Indenture, dated as
of October 15, 1998 (as amended, restated, supplemented or otherwise modified,
the "DIMAC Operating Notes Indenture") among the Company, the Subsidiary
Guarantors (as defined therein) and Wilmington Trust Company, a Delaware banking
corporation, as Trustee;
WHEREAS, the Company has entered into that certain Purchase Agreement,
dated as of October 16, 1998 (the "DIMAC Operating Notes Purchase Agreement")
among (i) the Company, (ii) the Subsidiary Guarantors and (iii) Credit Suisse
First Boston Corporation, First Union Capital Markets and Warburg Dillon Read
LLC (collectively, the "DIMAC Operating Notes Purchasers"), pursuant to which
the DIMAC Operating Notes Purchasers have agreed to purchase the DIMAC Operating
Notes from the Company;
WHEREAS, the Company has entered into that certain Securities Purchase
Agreement, dated as of October 22, 1998 (as amended, restated, supplemented or
otherwise modified, the "Securities Purchase Agreement") among the Company,
DIMAC Holdings and the Purchasers;
WHEREAS, the Company and the Purchasers, wish to provide for the
benefit of the holders of Senior Indebtedness, the DIMAC Operating Noteholders
and the Lenders, that the Purchasers' rights against the Company arising out of
obligations incurred by the Company pursuant to the Securities Purchase
Agreement (such obligations, the "Subordinated Obligations") shall be
subordinated to the rights of holders of Senior Indebtedness (as defined in the
DIMAC Operating Notes Indenture) of the Company and the rights of the Lenders
and the DIMAC Operating Noteholders against the Company arising out of
obligations incurred by the Company pursuant to the Senior Credit Documents (as
defined in the DIMAC Operating Notes Indenture), the DIMAC Operating Notes
Indenture, the DIMAC Operating Notes, the DIMAC Operating Registration Rights
Agreement, the DIMAC Operating Notes Purchase Agreement and any other document
governing Senior Indebtedness of the Company (such obligations, the "Senior
Obligations"), to the extent and as provided herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:
Section 1. Definitions. The following capitalized terms shall
have the meanings set forth below in this Section 1:
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"Cash Equivalents" shall have the meaning given to such term in the
DIMAC Operating Notes Indenture.
"Company" shall have the meaning given to such term in the introductory
paragraph hereof.
"DIMAC Holdings" shall have the meaning given to such term in the
recitals hereof.
"DIMAC Operating Noteholder" shall mean any holder of DIMAC Operating
Notes.
"DIMAC Operating Notes" shall have the meaning given to such term in
the Securities Purchase Agreement.
"DIMAC Operating Notes Indenture" shall have the meaning given to such
term in the recitals hereof.
"DIMAC Operating Notes Purchase Agreement" shall have the meaning given
to such term in the recitals hereof.
"DIMAC Operating Registration Rights Agreement" shall mean the
Registration Rights Agreement dated as of October 16, 1998 among the Company,
the Subsidiary Guarantors and the DIMAC Operating Notes Purchasers.
"Lenders" shall have the meaning given to such term in the recitals
hereof.
"Loans" shall have the meaning given to such term in the Senior Credit
Agreement.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Representative" means any trustee, agent or representative (if any)
with respect to the Senior Obligations.
"Securities" shall have the meaning given to such term in the
Securities Purchase Agreement.
"Securities Purchase Agreement" shall have the meaning given to such
term in the recitals hereof.
"Securityholder" shall mean each Purchaser (so long as it holds any
Securities) and any other holder of any of the Securities.
"Senior Credit Agreement" shall have the meaning given to such term in
the recitals hereof.
"Senior Credit Documents" shall have the meaning given to such term in
the recitals hereof.
"Senior Indebtedness" shall have the meaning given to such term in the
DIMAC Operating Notes Indenture.
"Senior Obligations" shall have the meaning given to such term in the
recitals hereof.
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"Subordinated Obligations" shall have the meaning given to such term in
the recitals hereof.
"Subsidiary Guarantors" shall have the meaning given to such term in
the DIMAC Operating Notes Indenture.
Section 2. Agreement To Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that any claim that any
Securityholder may have against the Company arising out of obligations incurred
by the Company pursuant to the Securities Purchase Agreement shall be
subordinated in right of payment, to the extent and in the manner provided in
this Agreement, to the prior payment in full in cash of all Senior Obligations,
and that the subordination is for the benefit of and enforceable by the holders
of such Senior Indebtedness, the DIMAC Operating Noteholders or the Lenders, as
the case may be.
Section 3. Payment of Senior Obligations. The Company may not
make any payment of the Subordinated Obligations until such time as all Senior
Obligations are paid in full in cash.
Section 4. When Distribution Must Be Paid Over. If a distribution is
made to Securityholders that because of this Agreement should not have been made
to them, the Securityholders who receive the distribution shall hold it in trust
for holders of Senior Indebtedness of the Company, the DIMAC Operating
Noteholders or the Lenders, as the case may be, and pay it over to them as their
interests may appear.
Section 5. Subrogation. After all Senior Obligations of the Company are
paid in full in cash and until the Securities are paid in full, with respect to
payments required to be made by the Company of any Subordinated Obligations,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness of the Company, the DIMAC Operating Noteholders and the Lenders to
receive distributions applicable to the Senior Obligations. A distribution made
under this Agreement to holders of such Senior Indebtedness of the Company,
DIMAC Operating Noteholders or the Lenders which otherwise would have been made
to Securityholders is not, as between the Company and Securityholders, a payment
by the Company on the Senior Obligations.
Section 6. Relative Rights. This Agreement defines the relative rights
of Securityholders and the holders of Senior Indebtedness of the Company, DIMAC
Operating Noteholders and the Lenders. Nothing in this Agreement shall impair,
as between the Company and Securityholders, the obligation of the Company, which
is absolute and unconditional, to perform any of the Subordinated Obligations.
Section 7. Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness of the Company, any DIMAC Operating Noteholder
or any Lender to enforce the subordination of the Subordinated Obligations shall
be impaired by any act or failure to act by the Company or by its failure to
comply with this Agreement.
Section 8. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, DIMAC Operating Noteholders or Lenders, as the case may be, the
distribution may be made and the notice given to their Representatives (if any).
Section 9. Reliance by Holders of Senior Indebtedness, DIMAC Operating
Noteholders and the Lenders on Subordination Provisions. Each Securityholder by
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a
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consideration to each holder of any Senior Indebtedness of the Company, each
DIMAC Operating Noteholder and each Lender, whether the Senior Obligation was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness or DIMAC
Operating Note, and such holder of such Senior Indebtedness of the Company,
DIMAC Operating Noteholder or Lender, as the case may be, shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness or DIMAC
Operating Note, as the case may be.
Section 10. Payment in Full. For all purposes hereof, the Senior
Obligations shall not be deemed paid in full until all obligations in respect
thereof shall have been fully satisfied in cash denominated in U.S.
dollars.
Section 11. Prohibition of Certain Actions. Until all Senior
Obligations are paid in full in cash, no holder of Subordinated Obligations may
commence, or join with any other person in commencing, any assignment for the
benefit of creditors or any proceeding against the Company, its successors or
assigns or any other person with respect to the Subordinated Obligations under
any bankruptcy, reorganization, readjustment of debt, dissolution, receivership,
liquidation or insolvency law or statute now or hereafter in effect in any
jurisdiction (provided that each holder of Subordinated Obligations shall be
entitled to file a proof of claim in respect of the Subordinated Obligations in
any such proceeding so long as such proof of claim shall state that the
Subordinated Obligations are subordinated to the extent and in the manner set
forth in this Agreement).
Section 12. Amendments. No change may be made to this Agreement that
would adversely affect the rights under this Agreement of any holder of Senior
Indebtedness, the DIMAC Operating Noteholders or the Lenders unless such persons
consent to such change.
Section 13. Headings. Section headings are used herein for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of or be taken into in consideration in interpreting,
this Agreement.
Section 14. Waivers; Amendments. Neither this Agreement nor any
terms hereof may be amended, changed or waived unless such amendment, change or
waiver is in writing signed by each of the parties hereto.
Section 15. Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties.
Section 16. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement constitutes
the entire contract among the parties relating to the subject matter hereof and
supersedes any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile shall be as effective as delivery
of a manually executed counterpart of this Agreement.
Section 17. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining
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provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 18. Notices. All notices and communications to be given under
this Agreement shall be given or made in writing to the intended recipient at
the address specified below or, as to any party, at such other address as shall
be designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier, personally delivered or, in the case
of a mailed notice, upon receipt, in each case, given or addressed as provided
in this Section 18:
To the Company: DIMAC Corporation
0000 Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx X-000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telecopier No: (000) 000-0000
With a copy to: White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Telecopier No: (000) 000-0000
To the Purchasers: TCW/Crescent Mezzanine, L.L.C.
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx-Xxxx Xxxxxx
Telecopier No: (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Telecopier No: (000) 000-0000
Section 19. Governing Law; Submission to Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW EXCEPT
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal with the intent that this be a sealed instrument, as of the
day and year first above written.
DIMAC CORPORATION, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
-------------------------
Title: Chief Executive Officer
------------------------
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TCW/CRESCENT MEZZANINE PARTNERS, L.P.
TCW/CRESCENT MEZZANINE TRUST
TCW/CRESCENT MEZZANINE INVESTMENT
PARTNERS, L.P.
By: TCW/CRESCENT MEZZANINE L.L.C.
its general partner or managing owner
By: /s/ Xxxx-Xxxx Xxxxxx
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
-------------------------------
Title: Managing Director
------------------------------
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------
Title: Managing Director
------------------------------
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TCW LEVERAGED INCOME TRUST, L.P.
By: TCW ADVISORS (BERMUDA), LIMITED,
as General Partner
By: /s/ Xxxx-Xxxx Xxxxxx
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
-------------------------------
Title: Managing Director
------------------------------
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------
Title: Managing Director
------------------------------
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TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW INVESTMENT MANAGEMENT
COMPANY, its investment advisor
By: /s/ Xxxx-Xxxx Xxxxxx
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
-------------------------------
Title: Managing Director
------------------------------
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------
Title: Managing Director
------------------------------
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