SUBORDINATION AND INTERCREDITOR AGREEMENT
Exhibit 10.14
THIS
SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of May 7, 2007 (this
“Agreement”) is entered into among XXXXXXXXX FINANCIAL, LLC
(the “Company”), CS FINANCING CORPORATION (“Senior
Lender”) and XXXXXXXXX FINANCIAL MONTHLY INCOME FUND, LP
(“Subordinated Lender”).
RECITALS
A.
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Senior
Lender and the Company have entered into a Loan and Security Agreement
dated October 25, 2005 and amended August 22, 2006, September 21,
2006 and
May 7, 2007 (as from time to time amended, modified, extended,
renewed,
refinanced, or restated in accordance with the terms of this Agreement,
the “Senior Loan Agreement”), together with the other
Loan Documents (as defined in the Senior Loan Agreement), whereby
the
Senior Lender intends to make available to the Company certain
loans and
other financial accommodations therein set forth. All of the
Company’s obligations under the Senior Loan Documents (as hereinafter
defined) are secured by assignments of and security interests in
substantially all of the now or hereafter acquired assets of the
Company,
all as more fully set forth in the Senior Loan
Documents.
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B.
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Subordinated
Lender and the Company have entered into a Loan and Security Agreement
dated May 10, 2007 (as from time to time amended, modified, extended,
renewed, refinanced, or restated in accordance with the terms of
this
Agreement, the “Subordinated Loan Agreement”), together
with the other Loan Documents (as defined in the Subordinated Loan
Agreement), whereby the Subordinated Lender will make available
to the
Company certain loans and other financial accommodations therein
set
forth. All of the Company’s obligations under the Subordinated
Loan Documents (as hereinafter defined) are secured by assignments
of and
security interests in substantially all of the now or hereafter
acquired
assets of the Company, all as more fully set forth in the Subordinated
Loan Documents.
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C.
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The
Company is or will be from time to time indebted to the Subordinated
Lender up to the aggregate principal amount of One Hundred Million
and
00/100 Dollars ($100,000,000.00) and is or will be from time to
time
indebted to the Senior Lender up to the aggregate principal amount
of
Forty Million and 00/100 Dollars
($40,000,000.00).
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D.
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As
a condition of the financing accommodations under the Senior Loan
Documents and Subordinated Loan Documents, the parties hereto are
required
to enter into this Agreement to establish the relative rights and
priorities of the Senior Lender and the Subordinated Lender under
the
Senior Loan Documents and the Subordinated Loan
Documents.
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E.
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The
Subordinated Lender will benefit from the financing accommodations
made by
the Senior Lender under the Senior Loan Agreement and the other
Senior
Loan Documents. The Subordinated Lender and the Company desire
to enter into this Agreement in order to induce the Senior Lender
to enter
into the Senior Loan Agreement. The Subordinated Lender
acknowledges that the Senior Lender would not advance to the Company
under
the Senior Loan Documents but for the execution of this
Agreement.
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F.
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As
more fully set forth herein, the Subordinated Lender will subordinate
to
the Senior Lender, in certain circumstances enumerated herein,
20% of the
amount owed by the Company to the Senior Lender and the Subordinated
Lender and the Senior Lender will divide the remainder in a pro-rata
fashion.
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In
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
1.
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Definitions. Except
as otherwise provided herein, all capitalized terms used in this
Agreement
shall have the meanings ascribed to such terms in the Senior Loan
Agreement, provided that the following terms shall have the meanings
set
forth below:
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“Bankruptcy
Code” means Title 11 of the United States Code (11 U.S.C.
§ 101 et. seq.) or any replacement or supplemental federal statute
dealing
with the bankruptcy of debtors.
“Company
Property” means all assets, property and property rights, of any kind
or nature, tangible or intangible, now or hereafter existing, in which the
Company or any Obligor owns, asserts or maintains an interest.
“Finally
Paid” or “Final Payment,” when used in connection with
the Senior Indebtedness, means the full and indefeasible payment in cash
of all
of the Senior Indebtedness and the irrevocable termination of all commitments
of
the Senior Lender under the Senior Loan Documents, if any.
“Initial
Share” shall be 20% of the Senior Indebtedness as of the date of the
last Senior Payment Default unless there have been a continuous series of
Senior
Payment Defaults, in such case the Initial Share shall be computed as of
the
first date in the series of Senior Payment Defaults.
“Liens”
means any mortgage, deed of trust, pledge, lien, security interest, charge,
set-off right or other encumbrance, whether now existing or hereafter created,
acquired or arising.
“Obligor”
means any guarantor or obligor of any Senior Indebtedness or Subordinated
Indebtedness.
“Person”
shall have the meaning given such term in the Senior Loan
Agreement.
“Pro-Rated
Share” when used in connection with the Senior Lender “Pro-Rated Share”
shall be Senior Indebtedness divided by the sum of the Senior Indebtedness
and
Subordinated Indebtedness as of the date of the last Senior Payment
Default. When used in the context of the Subordinated Lender,
“Pro-Rated Share” shall be Subordinated Indebtedness divided by the sum of the
Subordinated Indebtedness and the Senior Indebtedness as of the date of the
last
Senior Payment Default. By way of example, if the Senior Indebtedness
is $1,000,000 and the Subordinated Indebtedness is $2,000,000, the
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Pro-Rated
Share of the Senior Lender would be 33.33% (1,000,000/3,000,000) and the
Pro-Rated Share of the Subordinated Indebtedness would be 66.67%
(2,000,000/3,000,000). For the purpose of the foregoing calculations, the
Senior
Indebtedness shall be reduced by the Initial Share actually paid to the Senior
Lender.
“Proceeding”
means any voluntary or involuntary proceeding commenced by or against the
Company or any Obligor under any provision of the Bankruptcy Code, or under
any
other bankruptcy or insolvency law, including assignments for the benefit
of
creditors, formal or informal moratoria, compositions, extensions generally
with
its creditors, or proceedings seeking dissolution, receivership, reorganization,
arrangement, or other similar relief.
“Senior
Covenant Default” means any “Event of Default” (as such term is defined
in the Senior Loan Agreement) under the Senior Loan Documents (other than
a
Senior Payment Default) which is brought to the attention of Subordinated
Lender
by written notice from Senior Lender.
“Senior
Indebtedness” means all obligations, liabilities and indebtedness of
every nature of the Company or any Obligor from time to time owed to the
Senior
Lender under the Senior Loan Documents, including the principal amount of
all
debts, claims and indebtedness, accrued and unpaid interest and all premium,
fees, costs and expenses, whether primary, secondary, direct, contingent,
fixed
or otherwise, heretofore, now and from time to time hereafter owing, due
or
payable, whether before or after the filing of a Proceeding, including any
credit enhancement obligations due and owing to the Senior Lender, together
with
(a) any indebtedness which refinances such principal, interest or other
obligations and any amendments, modifications, renewals, restatements,
refinancings or extensions thereof to the extent not prohibited by the terms
of
this Agreement and (b) any interest accruing thereon after the commencement
of a
Proceeding, without regard to whether or not such interest is allowed in
any
Proceeding. Senior Indebtedness shall be deemed to be outstanding
until it is Finally Paid.
“Senior
Loan Documents” shall have the meaning given to the term “Loan
Documents” in the Senior Loan Agreement.
“Senior
Payment Default” means any “Event of Default” (as such term is defined
in the Senior Loan Agreement) under the Senior Loan Documents resulting from
the
failure to pay, by the time required therefor, any principal, interest, fees
or
other obligations under the Senior Loan Documents including any default in
payment of any Senior Indebtedness after acceleration thereof which is brought
to the attention of Subordinated Lender by written notice from Senior
Lender.
“Sub-Account”
shall have the meaning given such term in the Subordinated Loan
Agreement.
“Subordinated
Indebtedness” means all obligations, liabilities and indebtedness of
every nature of the Company or any Obligor from time to time owed to any
Subordinated Lender under the Subordinated Loan Documents, including any
credit
enhancement
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obligations
to the Subordinated Lender, together with the principal amount of all debts,
claims and indebtedness, accrued and unpaid interest and all premium, fees,
costs and expenses, whether primary, secondary, direct, contingent, fixed
or
otherwise, heretofore, now and from time to time hereafter owing, due or
payable, whether before or after the filing of a Proceeding, together with
(a)
any amendments, modifications, renewals, restatements, refinancings or
extensions thereof and (b) any interest accruing thereon after the commencement
of a Proceeding, without regard to whether or not such interest is allowed
in
any Proceeding.
“Subordinated
Lender Remedies” means any action (a) to take from or for the account
of the Company, any Obligor, any other guarantor of the Subordinated
Indebtedness or any other Person, by set-off or in any other manner, the
whole
or any part of any moneys which may now or hereafter be owing by the Company
(other than receipt of payments of Subordinated Indebtedness to the extent
permitted by this Agreement), any Obligor, any such guarantor or any other
Person with respect to the Subordinated Indebtedness, (b) to xxx for payment
of,
or to initiate or participate with others in any suit, action or proceeding
(including any Proceeding) against the Company, any Obligor, any such guarantor
or any other Person to (i) enforce payment of or to collect the whole or
any
part of the Subordinated Indebtedness or (ii) commence judicial enforcement of
any of the rights and remedies under the Subordinated Loan Documents or
applicable law with respect to the Subordinated Indebtedness, (c) to accelerate
the Subordinated Indebtedness, (d) to exercise any put, repurchase or similar
option or to cause the Company, any Obligor, any such guarantor or any other
Person to honor any redemption or mandatory prepayment obligation under any
Subordinated Document or (e) to take any action under the provisions of any
state or federal law, including the UCC, or under any contract or agreement,
to
enforce, foreclose upon, take possession of or sell any Company Property
or any
property or assets of any such guarantor or any other Person.
“Subordinated
Loan Documents” shall have the meaning given to the term “Loan
Documents” in the Subordinated Loan Agreement.
“Subordinated
Note(s)” shall have the meaning given the term “Mezzanine Note” in the
Subordinated Loan Agreement.
“UCC”
means Article 9 of the Uniform Commercial Code, as in effect in any relevant
jurisdiction.
2.
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Subordination
of Subordinated Indebtedness to Senior Indebtedness. The
Company covenants and agrees, and the Subordinated Lender by its
acceptance of the Subordinated Loan Documents (whether upon original
issue
or upon transfer or assignment) likewise covenants and agrees,
notwithstanding anything to the contrary contained in any of the
Subordinated Loan Documents, that the payment of any and all of
the
Subordinated Indebtedness shall be, in the event of an Event of
Default,
subordinate and subject in right and time of payment, to the extent
and in
the manner hereinafter set forth, to the Initial Share of the Senior
Lender. Each holder of Senior Indebtedness, whether now
outstanding or hereafter created, incurred, assumed or guaranteed,
shall
be deemed to have acquired Senior Indebtedness in reliance upon
the
provisions contained in this
Agreement.
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3.
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Subordination
of Liens.
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3.1
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Subordinated
Lender hereby covenants and agrees that any Liens and rights of
any kind
Subordinated Lender may now have and hereafter acquire (or be deemed
to
now have or hereafter acquire) against the Company or any Obligor
and/or
any Company Property, if any, shall be subordinate, to the extent
and in
the manner hereinafter set forth, and subject to the Liens and
rights
against the Company, Obligors and/or Company Property of the Senior
Lender
arising from or out of the Senior Indebtedness, regardless of the
order,
time or manner in which any Liens attach to or are perfected in
any
Company Property.
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3.2
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If,
after an Event of Default and an acceleration of the payment of
the Senior
Indebtedness, in the exercise of its legal remedies, Senior Lender
is
causing any Company Property to be sold and is releasing its Lien
in
connection with such sale or disposition of any Company Property,
the
Subordinated Lender shall be deemed to have consented to such disposition
and shall execute such releases with respect to such Company Property
to
be sold as the Senior Lender requests to evidence the release of
any Lien
against such property that the Subordinated Lender may have or
be deemed
to have. Provided, however, that the Senior Lender agrees to
distribute the proceeds from the sale of Company Property in accordance
with Section 8 hereof. Subordinated Lender hereby irrevocably
appoints the holders of the Senior Indebtedness as the true and
lawful
attorneys of the Subordinated Lender for the purpose of executing
and
filing any such releases in such instances. Subordinated Lender
hereby waives any rights such Subordinated Lender has or may have
in the
future to object to the appointment of a receiver for all or any
portion
of the equity or the assets of the Company or any Obligor or to
require
any Senior Lender to marshal the collateral and agrees that each
Senior
Lender may proceed against the collateral in any order that it
deems
appropriate in the exercise of its absolute
discretion.
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3.3
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Subordinated
Lender hereby appoints the Senior Lender as its agent to perfect
by
possession or control the Lien in any of the Collateral: (a)
which Lien is capable of being perfected by possession or control
and (b)
that is, at any time, delivered to and in the possession, or is
under the
control, of the Senior Lender, subject always to the rights of
the Senior
Lender as prior Lien holder. The Subordinated Lender
acknowledges that Senior Lender holds such Collateral for the benefit
of
Senior Lender upon and subject to the terms contained in this
Agreement. Except for matters that are the result of the gross
negligence, bad faith or willful misconduct, the Senior Lender
shall not
be liable to Subordinated Lender, in any respect, for the manner
in which
it discharges its obligations, as a collateral agent, owed pursuant
to
this Section 3.3.
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3.4
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Upon
the date that the Senior Indebtedness is Finally Paid or otherwise
discharged and released in an express writing to such effect by
the Senior
Lender, Senior Lender shall, upon the request and at the expense
of the
Subordinated Lender: (a) deliver notice, in form and substance
reasonably satisfactory to the Subordinated Lender (or its representative)
to any Person which has agreed to comply with the instructions
of Senior
Lender, including without limitation, any depositary institution
where a
deposit account to which Senior Lender has “control” (as such term is
defined in the UCC) has been opened, that such Person no longer
is
required to comply with the Senior Lender’s instruction, (b) deliver any
physical collateral to Subordinated Lender (or their representative)
which
secures obligations owing to the Subordinated Lender and (c) execute
such
notices, instruments, termination statements, letter or other documents
to
evidence the Final Payment of the Senior
Indebtedness.
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4.
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Warranties
and Representations of Company.
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4.1
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The
Company hereby represents and warrants to the Senior Lender and
Subordinated Lender that each of them has been furnished with a
true and
correct copy of all instruments and securities evidencing or pertaining
to
the Subordinated Indebtedness and Senior
Indebtedness.
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4.2
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The
Company hereby represents and warrants to the Senior Lender that
this
Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms except to the extent that
the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time
in effect affecting generally the enforcement of creditors’ rights and
remedies and general principles of
equity.
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4.3
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Subordinated
Lender represents and warrants to the Senior Lender: (i) that this
Agreement has been duly executed and delivered by such Subordinated
Lender
and constitutes a legal, valid and binding obligation of such Subordinated
Lender enforceable against such Subordinated Lender in accordance
with its
terms, except to the extent that the enforceability thereof may
be limited
by any applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws from time to time in effect affecting generally the
enforcement of creditors’ rights and remedies and general principles of
equity; and (ii) that such Subordinated Lender has not relied and
shall
not rely on any representation or information of any nature made
by or
received from the Senior Lender relative to the Company or any
Obligor in
deciding to execute this Agreement or to permit it to continue
in
effect.
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4.4
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Senior
Lender represents and warrants to the Subordinated Lender: (i)
that this
Agreement has been duly executed and delivered by Senior Lender
and
constitutes a legal, valid and binding obligation of the Senior
Lender
enforceable against such Senior Lender in accordance with its terms,
except to the extent that the enforceability thereof may be limited
by any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar
laws from time to time in effect affecting generally the enforcement
of
creditors’ rights and remedies and general principles of equity; (ii) that
the Senior Lender has not relied and shall not rely on any representation
or information of any nature made by or received from any Subordinated
Lender relative to the Company or any Obligor in deciding to execute
this
Agreement or to permit it to continue in effect; and (iii) that
the Senior
Lender is the current holder of the Senior
Indebtedness.
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4.5
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Company
represents and warrants that to the best of its knowledge it has
delivered
true, correct and complete copies of all the documents executed
as of the
date hereof which have been executed by the Company and others
which
evidence, secure or otherwise relate to its Subordinated
Indebtedness.
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5.
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Negative
Covenants. Until all of the Senior Indebtedness has been
Finally Paid: (A) except as provided herein, the Subordinated Lender
shall
not demand, accept or acquire from the Company or any Obligor any
security
interest in or Lien on any assets of the Company or any Obligor
or any
Company Property, nor any collateral from the Company or any Obligor
which
is superior to the Lien in favor of Senior Lender (except for a
Credit
Enhancement as such term is defined in the Subordinated Loan Documents
that does not exceed 5% of the Subordinated Indebtedness); (B)
the Company
shall not discharge the Subordinated Indebtedness other than in
accordance
with the terms of the Subordinated Loan Documents; (C) the Subordinated
Lender shall not demand or accept from the Company, any Obligor
or other
Person any consideration which would result in a discharge of the
Subordinated Indebtedness other than in accordance with the terms
of the
Subordinated Loan Documents; (D) the Subordinated Lender shall
not
hereafter give any subordination in respect of the Subordinated
Indebtedness; and (E) the Company shall not hereafter issue any
instrument, security or other writing evidencing any part of the
Subordinated Indebtedness, and the Subordinated Lender shall not
receive
any such writing, except upon the condition that such security
shall bear
the legend referred to in Section 25 below and a true copy thereof
shall be thereupon promptly furnished to the Senior
Lender.
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6.
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Permitted
Payments.
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6.1
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Notwithstanding
the terms of the Subordinated Loan Documents, the Company hereby
agrees
that it shall not make (and will not permit any other Obligor to
make),
and each Subordinated Lender hereby agrees that it will not accept,
any
payment or distribution with respect to the Subordinated Indebtedness
including any payment or distribution received through the exercise
of any
right of setoff, counterclaim or crossclaim, until the Senior Indebtedness
is Finally Paid; provided that the Company may pay to the
Subordinated Lender and the Subordinated Lender may
accept:
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(a)
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at
any time prior to written notice of an Event of Default by the
Senior
Lender to the Subordinated Lender, any and all Subordinated Indebtedness
whether such payment is made in the ordinary course, through a
Sub-Account, at maturity or a
pre-payment.
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(b)
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at
any time subsequent to an Event of Default, payments made pursuant
to
Section 8(a)(iii) or 6.1(b) hereof.
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The
interest rate provided for with respect to the Subordinated Indebtedness
may
provide for a default interest rate of four percent (4%) per annum above
the
above stated rates, which stated rates may not be increased more than one
percent (1%) per annum without the prior written consent of the Senior
Lender. The charging of default interest and any increased interest
rate permitted hereby shall not increase the cash payments permitted to be
made
to the Subordinated Lender pursuant to this Section 6.1 such additional interest
shall accrue and compound quarterly or monthly as
applicable. Notwithstanding the foregoing:
(i)
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If
a Senior Payment Default has occurred, no payment or distribution
shall be
made by the Company (or any other Obligor) or accepted by any Subordinated
Lender on the Subordinated Indebtedness until the earlier to occur
of (x)
twenty percent (20%) of the Senior Payment Defaults have been cured
or
waived or (y) the Senior Lender shall have received its Initial
Share.
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(ii)
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If
a Senior Covenant Default shall have occurred, no payment or distribution
on the Subordinated Indebtedness shall be made by the Company (or
any
other Obligor) or accepted by any Subordinated Lender on the Subordinated
Indebtedness for a period (a “Blockage Period”) of time commencing upon
delivery by the Senior Lender to the Company and Subordinated Lender
of
written notice stating that a Senior Covenant Default exists or
would be
created by the making of such payment (the “Blockage Notice”) and
continuing until the earlier to occur of (A) 30 days from the date
of
delivery of the Blockage Notice, or (B) the date on which all Senior
Covenant Defaults have been cured or waived. There shall be no
more than five (5) Blockage Periods during the term of Senior
Indebtedness.
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(iii)
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Upon
the cure or waiver of any Senior Payment Default or the expiration
of any
Blockage Period, the Company may make, and the Subordinated Lender
may
receive, prospective payments of the Subordinated Indebtedness
(on a
non-accelerated basis) to the extent, if any, such payment would
be
permitted under this Section 6. All accrued amounts not paid
during any Blockage Period shall accrue and compound by adding
the same to
principal.
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(iv)
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Nothing
contained herein shall prohibit the Subordinated Lender from receiving,
or
drawing on, its Credit Enhancement.
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6.2
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No
Senior Payment Default or Senior Covenant Default shall be deemed
to have
been waived for purposes of this Section 6.2 unless and until the
Company shall have received a written waiver from the Senior
Lender.
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6.3
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If
Subordinated Lender receives payment pursuant to Section 6,
such payment shall be deemed to constitute a representation by
Company
that no Event of Default exists and that such payment is otherwise
permitted by such Section 6.
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6.4
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Notwithstanding
any other provision of this Agreement, the Senior Loan Documents
or the
Subordinated Loan Documents to the contrary, the aggregate number
of
Blockage Period days shall not exceed 60 days in any 365-day
period.
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6.5
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No
Senior Covenant Default existing on the date any Blockage Notice
is given
shall, unless the same shall have ceased to exist for a period
of at least
thirty (30) consecutive days, be used as a basis for any subsequent
Blockage Notice; provided that successive Senior Covenant Defaults
resulting from the failure to comply with a particular covenant
for
separate measurement periods shall constitute separate Senior Covenant
Defaults not subject to the foregoing
limitation.
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6.6
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The
failure of the Company to make any payment with respect to the
Subordinated Indebtedness by reason of the operation of this Section
6 shall not be construed as preventing the occurrence of a default
under the Subordinated Loan
Documents.
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6.7
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The
Company shall not be prohibited from making, and the Subordinated
Lender
shall not be prohibited from receiving, any payments in respect
of the
Subordinated Indebtedness in kind, by adding such payment to principal
provided that no interest accruing on any such payments in kind
added to principal may be paid in cash prior to the Payment in
Full of all
Senior Indebtedness.
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6.8
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The
provisions of this Section 6 shall not be applicable to the extent
that the provisions of Section 8 are
applicable.
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7.
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Forbearance
of Legal Remedies.
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7.1
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Until
the Senior Indebtedness is Finally Paid, the Subordinated Lender
shall
not, without the prior written consent of the Senior Lender, exercise
any
Subordinated Lender Remedies, until the earliest to occur of the
following:
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(a)
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acceleration
of the Senior Indebtedness;
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(b)
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the
passage of 120 days from the delivery to the Senior Lender of written
notice from the Subordinated Lender that a default under the Subordinated
Loan Documents has occurred and such default shall not have been
cured or
waived within such period; and
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(c)
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the
commencement or initiation of any Proceeding by a Person other
than a
Subordinated Lender or any Person on behalf of a Subordinated
Lender
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provided
that in no event shall any Subordinated Lender exercise any Subordinated
Lender
Remedies upon the expiration of the period set forth above
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any
earlier than 5 Business Days after acknowledged receipt of written notice
by the
Subordinated Lender to the Senior Lender of their intention to take any such
Subordinated Lender Remedies, which 5 Business Day period may be within the
120-day period set forth above.
7.2
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Notwithstanding
anything contained herein to the contrary, if following the acceleration
of the Senior Indebtedness by the Senior Lender such acceleration
is
rescinded (whether or not any existing Senior Payment Default or
Senior
Covenant Default has been cured or waived), then all Subordinated
Lender
Remedies taken by the Subordinated Lender shall likewise be
rescinded.
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7.3
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Notwithstanding
anything contained herein to the contrary or any rights or remedies
available to the Subordinated Lender under any of the Subordinated
Loan
Documents, applicable law or otherwise, prior to the time that
the Senior
Lender has received its Initial Share, any payments, distributions
or
other proceeds obtained by any Subordinated Lender from the exercise
of
any Subordinated Lender Remedies shall in any event be held in
trust by it
for the benefit of the Senior Lender and promptly paid or delivered
to the
Senior Lender for the benefit of the Senior Lender in the form
received.
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8.
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Dissolution,
Liquidation, Reorganization or
Bankruptcy.
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(a)
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In
the event of any Proceeding involving the Company or any
Obligor:
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(i)
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the
Senior Lender shall receive its Initial Share before the Subordinated
Lender shall be entitled to receive any cash payment on account
of any
Subordinated Indebtedness, provided, however, that the Subordinated
Lender
may receive “payment in kind” of the Subordinated Indebtedness by adding
accrued interest to the principal of the Subordinated Notes or
Subordinated Lender may receive payment by acceptance of a note
or notes
or other instruments evidencing a part or all of the Subordinated
Indebtedness; and
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(ii)
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any
payment or distribution of assets of such Person of any kind or
character,
whether in cash, property or securities, to which the Subordinated
Lender
would be entitled except for these provisions, shall be paid by
the
liquidating trustee or agent or other Person making such payment
or
distribution directly to the Senior Lender, to the extent necessary
to
make for the Senior Lender to receive its Initial Share, after
giving
effect to any concurrent payment or distribution or provision therefor
to
the holders of such Senior Indebtedness. Subordinated Lender
irrevocably authorizes, empowers and directs any debtor,
debtor-in-possession, receiver, trustee or agent or other Person
having
authority, to pay or otherwise deliver all such payments or distributions
to Senior Lender, provided, however, that the Subordinated Lender
may
receive “payment in kind” of the Subordinated Indebtedness by adding
accrued interest to the principal of the Subordinated Notes or
Subordinated Lender may receive payment by acceptance of a note
or notes
or other instruments evidencing a part or all of the Subordinated
Indebtedness.
|
10
(iii)
|
after
the Senior Lender receives its Initial Share, any payment or distribution
of Company assets shall be distributed to Senior Lender and Subordinated
Lender by multiplying their Pro-Rated Share by the value of the
distribution.
|
(b)
|
Until
the Senior Indebtedness has received its Initial Share, if a Proceeding
shall occur and be continuing, the Subordinated Lender shall file
all
claims they may have against the Company or any Obligor, and shall
direct
the debtor in possession or trustee in bankruptcy, as appropriate,
to pay
over to the Senior Lender all amounts due to the Subordinated Lender
on
account of the Subordinated Indebtedness until the Senior Indebtedness
has
received its Initial Share. If the Subordinated Lender fails to
file and/or vote such claims prior to 30 days before the expiration
of
time to do so, the Senior Lender may (but shall have no obligation
to)
file and/or vote such claims in the Subordinated Lender’s name on behalf
of the Senior Lender. If the Senior Lender votes any such claim
in accordance with the authority granted hereof, the Subordinated
Lender
shall not be entitled to withdraw or change such
vote.
|
(c)
|
Subordinated
Lender agrees, in connection with any such Proceeding, that while
it shall
retain the right to vote and otherwise act in any such proceeding
(including the right to vote to accept or reject any plan of partial
or
complete liquidation, reorganization, arrangement, composition
or
extension), it will not take any action or vote in any way so as
to (i)
contest the validity of the Liens securing the Senior Indebtedness,
(ii)
contest the enforceability of any of the Senior Loan Documents,
(iii)
contest the Senior Lender’s priority position over the Subordinated Lender
created by this Agreement or (iv) take any position or action which
would
have directly or indirectly any of the following effects: (A)
extension of the final maturity of and/or forgiveness, reduction
or
cram-down of the Senior Indebtedness or deferral of any required
payment
in respect of Senior Indebtedness, (B) opposing or objecting to
initiatives or claims by the Senior Lender for adequate protection
or
relief from the automatic stay, use of cash collateral or super-priority
expense of administration for failure of adequate protection, (C)
challenging in any respect treatment of the Senior Indebtedness
as a first
priority perfected fully secured claim, (D) blocking current payment
of
any obligation in respect of Senior Indebtedness, (E) assenting
to or
supporting any requested extension of the exclusivity period for
the
submission by Company of any plan of reorganization or liquidation
under
the Bankruptcy Code unless such extension is assented to or supported
by
the Senior Lender; and (F) opposing or objecting to any sale or
lease of
any Company Property that has been consented to by the holders
of Senior
Indebtedness. In the event of any violation of any provisions
of this section by Subordinated Lender, the Senior Lender may in
the name
of the Subordinated Lender, or in their own name thereafter amend,
modify
or rescind any such prior act taken or vote issued, in violation
of this
Agreement.
|
11
(d)
|
Senior
Lender agrees, in connection with any such Proceeding, that while
it shall
retain the right to vote and otherwise act in any such proceeding
(including the right to vote to accept or reject any plan of partial
or
complete liquidation, reorganization, arrangement, composition
or
extension), it will not take any action or vote in any way so as
to (i)
contest the validity of the Liens securing the Subordinated Indebtedness,
(ii) contest the enforceability of any of the Subordinated Loan
Documents,
but may, in all instances, assert the superiority of Senior Lender’s Liens
and right to be indefeasibly paid the Senior Indebtedness in cash
prior to
the Subordinated Lender being paid the Subordinated Indebtedness
in cash,
all in accordance with this
Agreement.
|
(e)
|
Until
the Senior Indebtedness has been Finally Paid, if a Proceeding
shall occur
and be continuing, the Subordinated Lender hereby (i) expressly
consents
to any Senior Lender’s providing post-petition financing to the Company or
any Obligor or the granting by the Company or any Obligor to any
Senior
Lender of senior liens and priorities in connection therewith and/or
the
use of cash collateral and (ii) agrees that adequate notice of
such
financing or cash collateral usage to the Subordinated Lender shall
have
been provided if the Subordinated Lender received notice in accordance
with Section 16 hereof 2 Business Days prior to the entry of any
order
approving such financing or cash collateral
usage.
|
(f)
|
If
Subordinated Lender has or at any time acquires any Lien securing
any
Subordinated Indebtedness, until Senior Lender receives its Initial
Share,
Subordinated Lender agrees not to (i) initiate any proceeding involving
the marshalling of any of Company Property (whether in a Proceeding
or
otherwise) or (ii) assert any right it may have to “adequate protection”
of its interest, if any, in such security in any Proceeding and
agrees
that it will not seek to have the automatic stay lifted with respect
to
such security, in each case without the prior written consent of
the
Senior Lender. Until Senior Lender receives its Initial Share,
Subordinated Lender waives any claim or defense such Subordinated
Lender
may now or hereafter have arising out of the election by any Senior
Lender
in any Proceeding instituted under Chapter 11 of the Bankruptcy
Code of
any use of cash collateral, any borrowing or any grant of a security
interest under Sections 363 and/or 364 of the Bankruptcy Code by
the
Company or any Obligor, as debtor-in-possession. Until Senior
Lender receives its Initial Share, Subordinated Lender agrees that
it will
not object to or oppose a sale or other disposition of any property
securing all or any part of the Senior Indebtedness free and clear
of any
Liens or other claims of such Subordinated Lender under Section
363 of the
Bankruptcy Code if the Senior Lender has consented to such sale
or
disposition. Until Senior Lender receives its Initial Share,
Subordinated Lender further agrees that it will not seek to participate
on
any creditors committee in respect of the Subordinated Indebtedness
without the Senior Lender’s prior written consent. To the
extent that any Senior Lender receives payments on, or proceeds
of
collateral for, the Senior Indebtedness which are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or
required to be repaid to a trustee, receiver or any other party
under any
bankruptcy law, state or federal law, common law, or equitable
cause, then
as between Senior Lender and Subordinated Lender hereunder, to
the extent
of such payment or proceeds received, the Senior Indebtedness,
or part
thereof, intended to be satisfied shall be revived and continue
in full
force and effect as if such payments or proceeds had not been received
by
such Senior Lender.
|
12
9.
|
Obligation
of Company Unconditional. Nothing contained herein or in
the Senior Loan Documents is intended to or shall impair, as between
the
Company and the Subordinated Lenders only, the obligation of the
Company,
which is absolute and unconditional, to pay to the Subordinated
Lender the
Subordinated Indebtedness as and when the same shall become due
and
payable in accordance with their terms, or to affect the relative
rights
of the Subordinated Lender and creditors of the Company other than
the
Senior Lender.
|
10.
|
Subordination
Rights Not Impaired by Acts or Omissions of the Company or Holders
of
Senior Indebtedness.
|
10.1
|
No
right of any present or future holders of any Senior Indebtedness
to
enforce the subordination provisions as provided herein shall at
any time
in any way be prejudiced or impaired by any act or failure to act
on the
part of the Company; by any act or failure to act by any such holder;
by
any act or failure to act by any other holder of the Senior Indebtedness;
or by any noncompliance by the Company with the terms hereof, regardless
of any knowledge thereof which any such holder may have or be otherwise
charged with. The Subordinated Lender shall not be released,
nor shall the Subordinated Lender’s obligation hereunder be in anyway
diminished, by any of the following: (i) the exercise or the failure
to
exercise by any Senior Lender of any rights or remedies conferred
on it or
them under the Senior Loan Documents hereunder or existing at law
or
otherwise, or against any Company Property; (ii) the commencement
of an
action at law or the recovery of a judgment at law against the
Company or
any Obligor for the performance of the Senior Indebtedness and
the
enforcement thereof through levy or execution or otherwise; (iii)
the
taking or institution or any other action or proceeding against
the
Company or any Obligor; (iv) any delay in taking, pursuing, or
exercising
any of the foregoing actions, rights, powers, or remedies (even
though
requested by Subordinated Lender) by any Senior Lender or anyone
acting
for any Senior Lender; (v) any lack of validity or enforceability
of any
Senior Loan Document; (vi) the release or non-perfection of any
collateral
securing the Senior Indebtedness; or (vii) any other circumstance
which
might otherwise constitute a defense available to, or a discharge
of, the
Company or any Obligor in respect of the Senior Indebtedness or
Subordinated Lender in respect of this
Agreement.
|
13
10.2
|
Without
limiting the generality of the foregoing, and anything else contained
herein to the contrary notwithstanding but subject to Section 14
hereof, any Senior Lender, from time to time, without prior notice
to or
the consent of the Subordinated Lender, may take all or any of
the
following actions without in any manner affecting or impairing
the
obligation or liability of the Subordinated Lender hereunder, so
long as
the Senior Indebtedness is not increased above the amount permitted
in
Section 14.2 or increase the interest rate by more than two percent
(2%)
per annum: (i) obtain a Lien in any property to secure any of the
Senior
Indebtedness; (ii) obtain the primary and secondary liability of
any party
or parties with respect to any of the Senior Indebtedness; (iii)
renew,
reaffirm, or release any liability of any nature of any Person,
including
any Obligor, with respect to the Senior Indebtedness; (iv) enforce,
and
apply any Company Property and direct the order or manner of sale
thereof
as such Senior Lender may in its discretion determine; (vi) enforce
its
rights hereunder, whether or not such Senior Lender shall proceed
against
any other Person; (vii) exercise its rights to consent to any action
or
non-action of the Company or any Obligor which may violate the
covenants
and agreements contained in the Senior Loan Documents, with or
without
consideration, on such terms and conditions as may be acceptable
to it; or
(viii) exercise any of its rights conferred by the Senior Loan
Documents
or by law.
|
11.
|
Waivers. The
Company and Subordinated Lender each hereby waive, to the fullest
extent
permitted by law, any defense based on the adequacy of a remedy
at law
which might be asserted as a bar to the remedy of specific performance
of
this Agreement in any action brought therefor by the Senior Lender.
To the
fullest extent permitted by law and except as to any notices specified
in
this Agreement, notices regarding the intended sale or disposition
of any
portion of the collateral held by the Senior Lender, or any notice
which
may not be waived in accordance with the UCC, the Company and each
Subordinated Lender each hereby further waive: presentment, demand,
protest, notice of protest, notice of default or dishonor, notice
of
payment or nonpayment and any and all other notices and demands
of any
kind in connection with all negotiable instruments evidencing all
or any
portion of the Senior Indebtedness or the Subordinated Indebtedness
to
which the Company or the Subordinated Lender may be a party; prior
notice
of and consent to any loans made, extensions granted or other action
taken
in reliance thereon; and all other demands and notices of every
kind in
connection with this Agreement, the Senior Indebtedness or the
Subordinated Indebtedness.
|
12.
|
No
Estoppel. Neither the failure nor any delay on the part of
any Senior Lender to exercise any right, remedy, power or privilege
hereunder shall operate as a waiver thereof or give rise to an
estoppel,
nor be construed as an agreement to modify the terms of this Agreement,
nor shall any single or partial exercise of any right, remedy,
power or
privilege with respect to any occurrence be construed as a waiver
of such
right, remedy, power or privilege with respect to any other occurrence.
No
waiver by a party hereunder shall be effective unless it is in
writing and
signed by the party making such waiver, and then only to the extent
specifically stated in such
writing.
|
14
13.
|
Incorrect
Payments; Specific Performance. If the Company or any
Obligor shall make or the Subordinated Lender shall collect any
payment on
account of the principal of, premium or interest on or any other
amounts
due under the Subordinated Indebtedness in contravention of this
Agreement, such payments shall be held in trust by the Subordinated
Lenders and not commingled with any assets of any Subordinated
Lender and
shall be paid over and delivered to the Senior Lender, for the
benefit of
the Senior Lender, promptly upon receipt thereof. At any time
any Subordinated Lender fails to comply with any provision of this
Agreement, the Senior Lender may demand specific performance of
this
Agreement, whether or not the Company has complied with this Agreement,
and may exercise any other remedy available at law or
equity.
|
14.
|
Amendment
of the Subordinated Loan Documents and Senior Loan
Documents.
|
14.1
|
Subordinated
Lender agrees that it will not, without the prior written consent
of the
Senior Lender, agree to any amendment, modification or supplement
to the
Subordinated Loan Documents the effect of which is to (i) increase
the
maximum principal amount of the Subordinated Indebtedness (except
as may
be due to the payment in kind of any obligations under the Subordinated
Loan Documents) or increase the rate of interest (other than in
connection
with the imposition of default interest of four percent (4%) per
annum and
other than increasing the stated interest rate up to one percent
(1%) per
annum from the currently stated rate), increase the portion of
the
interest required to be paid in cash, or increase fees required
to be paid
with respect to the Subordinated Indebtedness, (ii) accelerate
the dates
upon which payments of principal or interest on the Subordinated
Indebtedness are due, (iii) change or add any event of default
or any
covenant with respect to the Subordinated Indebtedness, if the
resulting
event of default or covenant would be more restrictive to the Company
or
any Obligor, (iv) change any redemption or prepayment provisions
of the
Subordinated Indebtedness, (v) alter the subordination provisions
with
respect to the Subordinated Indebtedness, including subordinating
the
Subordinated Indebtedness to any other indebtedness, (vi) take
any Liens
in any assets of the Company or any Obligor which are superior
to the Liens granted to the Senior Lenders or (vii) change or amend
any
other term of the Subordinated Loan Documents if such change or
amendment
would result in a Senior Payment Default or Senior Covenant Default,
increase the obligations of the Company or any Obligor or confer
additional material rights on any Subordinated Lender or any other
holder
of the Subordinated Indebtedness in a manner adverse to the Company,
any
Obligor or the Senior Lender.
|
14.2
|
The
Senior Indebtedness may at any time be amended, modified, restated,
refinanced or waived without limitation without notice to, or the
consent
of, the Subordinated Lender; provided that the Senior Lender shall
not, without the prior written consent of holders of a majority
of the
outstanding Subordinated Indebtedness, agree to any amendment,
modification or supplement to the Senior Loan Documents the effect
of
which is to (i) increase the principal amount of the Senior Indebtedness
in excess of the amount of $40,000,000, less mandatory, voluntary
and
scheduled principal payments received by Senior Lender other than
in
connection with financing provided pursuant to a Proceeding; (ii)
shorten
the maturity date of the Senior Indebtedness to less than 59 months
(other
than in connection with exercise of remedies), (iii) delay the
schedule of
payments or delay or waive any mandatory prepayment in respect
of the
Senior Indebtedness (other than in connection with an exercise
of
remedies); or (iv) increase the interest rate margins by more than
100
basis points (other than in connection with the imposition of default
interest).
|
15
15.
|
Inconsistent
or Conflicting Provisions; Construction. If a provision of
the Senior Loan Documents or the Subordinated Loan Documents is
inconsistent or conflicts with the provisions of this Agreement,
the
provisions of this Agreement shall govern and prevail. The term
“including” is not limiting and means “including without
limitation.” In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including;” the words “to” and “until” each mean “to but excluding,” and
the word “through” means “to and
including.”
|
16.
|
Notices. Any
notice, consent or other communication provided for in this Agreement
shall be in writing and shall be delivered personally (effective
upon
delivery), via facsimile (effective upon confirmation of transmission),
via overnight courier (effective the next Business Day after dispatch
if
instructed to deliver on next business day) or via U.S. Mail (effective
3
days after mailing, postage prepaid, first class) to each party
at its
address(es) and/or facsimile number(s), or to such other address
as either
party shall specify to the other in writing from time to
time. The Subordinated Lender shall provide the Senior Lender
with written notice promptly upon the occurrence of an event of
default
under the Subordinated Loan Documents. The parties hereto agree
that, notwithstanding Section 20(b) hereof, any notice to a
Subordinated Lender shall be deemed to constitute notice to all
affiliated
Subordinated Lenders, if any.
|
17.
|
Entire
Agreement. This Agreement constitutes and expresses the
entire understanding between the parties hereto with respect to
the
subject matter hereof, and supersedes all prior and contemporaneous
agreements and understandings, inducements or conditions, whether
express
or implied, oral or written. Neither this Agreement nor any
portion or provision hereof may be changed, waived or amended orally
or in
any manner other than by an agreement in writing signed by the
Senior
Lender and the Subordinated Lender; provided that any such change,
waiver or amendment shall be binding upon the Company by their
written
consent thereto. This Agreement shall constitute a Loan
Document and the recitals hereto shall constitute part of this
Agreement.
|
18.
|
Additional
Documentation. The Company and the Subordinated Lender
shall execute and deliver to the Senior Lender such further instruments
and shall take such further action as the Senior Lender may at
any time or
times reasonably request in order to carry out the provisions and
intent
of this Agreement.
|
16
19.
|
Expenses. The
Company agrees to pay the Senior Lender on demand all expenses
of every
kind, including reasonable attorney fees, that the Senior Lender
incurs in
enforcing any of their rights against the Company and/or the Subordinated
Lender under this Agreement.
|
20.
|
Successors
and Assigns.
|
20.1
|
This
Agreement shall inure to the benefit of Senior Lender, Subordinated
Lender, and their respective successors and assigns, and shall
be binding
upon the Company and its successors and assigns, and each Senior
Lender,
each Subordinated Lender and their respective transferees, successors
and
assigns, including any subsequent holders of the Subordinated
Notes. Any Senior Lender, without prior notice or consent of
any kind, may sell, assign or transfer any Senior Indebtedness,
and in
such event each and every immediate and successive assignee or
transferee
thereof may be given the right by such Person to enforce this Agreement
in
full against the Company and the Subordinated Lender, by suit or
otherwise, for its own benefit.
|
20.2
|
So
long as the Subordinated Note includes the legends required pursuant
to
Section 25 of this Agreement and the Note Purchase Agreement refers
to
this Agreement, any Subordinated Lender, without prior notice or
consent
of any kind, may sell, assign or transfer any
Subordinated Indebtedness, and in such event each and every
immediate and successive assignee or transferee thereof shall have
the
right to enforce this Agreement in full against the Company and
the Senior
Lender, by suit or otherwise, for its own benefit. The
subordination effected hereby shall survive any sale, assignment,
pledge,
disposition or other transfer of all or any portion of the Subordinated
Indebtedness, and the terms of this Agreement shall be binding
upon the
successors and assigns of each Subordinated Indebtedness, as provided
in
this Section 20.
|
20.3
|
Each
Subordinated Lender hereby agrees that any party that refinances
the
Senior Indebtedness of the Senior Lender may rely on and enforce
this
Agreement as if it were such Senior
Lender.
|
21.
|
Covenant
Not to Challenge. This Agreement has been negotiated by the
parties with the expectation and in reliance upon the assumption
that the
instruments and documents evidencing the Senior Indebtedness are
valid and
enforceable. In determining whether to enter into this
Agreement, the Subordinated Lender has assumed such validity and
enforceability, and have agreed to the provisions contained herein,
without relying upon any reservation of a right to challenge or
call into
question such validity or enforceability. As between any Senior
Lender and Subordinated Lender, Subordinated Lender hereby covenants
and
agrees, to the fullest extent permitted by law, that it shall not
initiate
in any proceeding a challenge to the validity or enforceability
of the
documents and instruments evidencing the Senior Indebtedness or
the
validity, perfection or priority of any Lien of the Senior Lender
securing
the Senior Indebtedness, nor shall the Subordinated Lender instigate
other
parties to raise any such challenges, nor shall the Subordinated
Lender
participate in or otherwise assert any such challenges which are
raised by
other parties.
|
17
22.
|
Subrogation.
Subject to the Final Payment of all Senior Indebtedness and the
provisions
of Section 24 hereof, the Subordinated Lender shall be subrogated
to the rights of the Senior Lender to receive payments and distributions
of cash, property and securities applicable to the Senior Indebtedness
to
the extent that distributions otherwise payable to the Subordinated
Lender
has been applied to the Senior Indebtedness, until all amounts
payable
under the Subordinated Indebtedness shall have been paid in
full. For purposes of such subrogation, no payments or
distributions to the Senior Lender of any cash, property or securities
to
which the Subordinated Lender would be entitled except for the
provisions
of this Agreement, and no payment pursuant to the provisions of
this
Agreement to the Senior Lender by the Subordinated Lender shall,
as among
the Company and its creditors other than the Senior Lender, be
deemed to
be a payment or distribution by the Company to or on account of
the Senior
Indebtedness. If the Company fails to make any payment on
account of the Subordinated Indebtedness by reason of any provision
contained herein, such failure shall, notwithstanding such provision
contained herein, constitute a default with respect to the Subordinated
Indebtedness if and to the extent such failure would otherwise
constitute
such a default in accordance with the terms of the Subordinated
Indebtedness.
|
23.
|
Termination
of Agreement. This Agreement shall continue and shall be
irrevocable until the date all of the Senior Indebtedness has been
Finally
Paid or otherwise discharged and released in an express writing
to such
effect by the Senior Lender.
|
24.
|
Reinstatement. The
obligations of the Subordinated Lender under the Agreement shall
continue
to be effective, or be reinstated, as the case may be, if at any
time any
payment in respect of any Senior Indebtedness is rescinded or must
otherwise be restored or returned by any Senior Lender by reason
of any
bankruptcy, reorganization, arrangement, composition or similar
proceeding
or as a result of the appointment of a receiver, intervenor or
conservator
of, or trustee or similar officer for, the Company, any Obligor
or any
substantial part of its property, or otherwise, all as though such
payment
had not been made.
|
25.
|
Legends. Until
the termination of this Agreement, Subordinated Lender will cause
to be
clearly, conspicuously and prominently inserted on the face of
each note
taken by Subordinated Lender and any other Subordinated Loan Documents,
as
well as any renewals or replacements thereof, the following
legend:
|
“THIS
INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED
AS OF ____________, 2007, AMONG XXXXXXXXX FINANCIAL MONTHLY INCOME FUND,
LP (THE
“SUBORDINATED LENDER”) AND CS FINANCING CORPORATION (TOGETHER WITH ITS
SUCCESSORS AND ASSIGNS, THE “SENIOR LENDER”), RELATING TO THE
INDEBTEDNESS (INCLUDING INTEREST) OWED BY XXXXXXXXX FINANCIAL, LLC (THE
“COMPANY”) PURSUANT TO THAT LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER 2,
2005 AMONG THE COMPANY, THE SENIOR LENDER AS SUCH LOAN AND SECURITY AGREEMENT
MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME
AND TO INDEBTEDNESS REFINANCING THE INDEBTEDNESS THEREUNDER AS CONTEMPLATED
BY
THE SUBORDINATION AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS
ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.”
18
The
Subordinated Lender’s books shall be marked to evidence the subordination of all
of the Subordinated Indebtedness to the holders of Senior Indebtedness, in
accordance with the terms of this Agreement. Senior Lender is
authorized to examine such books from time to time in accordance with the
terms
of this Agreement.
26.
|
Governing
Law. THIS AGREEMENT SHALL BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH
STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. THE
COMPANY AND THE SUBORDINATED LENDER HEREBY AGREES THAT ALL ACTIONS
OR
PROCEEDINGS INITIATED BY THE COMPANY OR THE SUBORDINATED LENDER
AND
ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT SHALL BE LITIGATED
IN
A HENNEPIN COUNTY, MINNESOTA COURT.
|
27.
|
Jury
Trial. THE SENIOR LENDER, THE SUBORDINATED LENDER AND THE
COMPANY WAIVE TRIAL BY JURY IN ANY DISPUTE ARISING FROM, UNDER
OR IN
CONNECTION WITH THIS AGREEMENT.
|
28.
|
Severability. The
provisions of this Agreement are independent of and separable from
each
other. If any provision hereof shall for any reason be held
invalid or unenforceable, it is the intent of the parties that
such
invalidity or unenforceability shall not affect the validity or
enforceability of any other provision hereof, and that this Agreement
shall be construed as if such invalid or unenforceable provision
had never
been contained herein.
|
29.
|
Counterparts. This
Agreement may be executed in any number of separate counterparts,
all of
which, when taken together, shall constitute one and the same instrument,
notwithstanding the fact that all parties did not sign the same
counterpart. Receipt of an executed signature page to this
Agreement by facsimile or other electronic transmission shall constitute
effective delivery thereof.
|
30.
|
Sections. The
section headings used in this Agreement are for convenience only
and shall
not affect the interpretation of any of the provisions
hereof.
|
31.
|
Defines
Rights of Creditors. The provisions of this Agreement are
solely for the purpose of defining the relative rights of the Senior
Lender and the Subordinated Lender and shall not be deemed to create
any
rights or priorities in favor of any other Person, including the
Company.
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19
32.
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Option
to Purchase First Lien Debt.
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32.1
|
Upon
the delivery by the Senior Lender to Company of written notice
in
accordance with this Section 32.1 (a “Trigger
Notice”) of the intent of the Senior Lender to accelerate any
Senior Indebtedness or commence any foreclosure or other action
to sell or
otherwise realize upon the Collateral (including, without limitation,
by
set-off or otherwise), Company or Subordinated Lender shall have
an
option, exercised by delivery of written notice by Company to the
Senior
Lender (a “Purchase Notice”) given by a same-day
facsimile or personal delivery, to purchase all (but not less than
all) of
the Senior Indebtedness (at the “Purchase Price” referred to in Section
32.4 below) from the Senior Lender. The Purchase Notice
shall specify which of Company and/or Subordinated Lender (the
“Purchasing Subordinated Lender”) will purchase the
Senior Indebtedness. The Purchase Notice shall be
irrevocable. If Company does not deliver such Purchase Notice
within thirty (30) Business Days of the delivery of the Trigger
Notice,
the purchase right of Company and the other Subordinated Lender
hereunder
with respect to such Trigger Notice shall expire and be of no force
and
effect.
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32.2
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The
Senior Lender shall deliver to Company the Trigger Notice referred
to in
Section 32.1 above (a) in the absence of an Exigent Circumstance
(defined below), not less than ten (10) Business Days prior to
the
earliest of taking of any action to accelerate any Senior Indebtedness
or
to commence any foreclosure or other action to sell or otherwise
realize
upon the Collateral, or (b) if Exigent Circumstances exist, as
soon as
practicable and in any event not more than five (5) Business Days
after
the taking of such action. Company may send to the Senior
Lender the Purchase Notice referred to in Section 32.1 above within
ten (10) Business Days of receipt of such Trigger Notice, in which
event,
the Senior Lender shall not accelerate the Senior Indebtedness
or commence
any foreclosure or other action to sell or otherwise realize upon
such
Collateral (including, without limitation, by set-off or otherwise),
as
the case may be; provided that the purchase and sale with respect
to the Senior Indebtedness provided for in this Section 32 shall
have closed within five (5) Business Days after receipt by the
Senior
Lender of the Purchase Notice and the Senior Lender shall have
received
payment in full of the Purchase Price for the Senior Indebtedness
as
provided for herein within such five (5) Business Day
period. As used herein, “Exigent Circumstance”
shall mean (i) a Proceeding by or against any Company or any Obligor,
(ii)
an exercise by another lender of enforcement rights or remedies
with
respect to particular Collateral, or (iii) an event or circumstance
that
materially and imminently threatens the ability of the Senior Lender
to
realize upon all or a material part of the Collateral, such as,
without
limitation, fraudulent removal or concealment thereof, destruction
(other
than to the extent covered by insurance) or material waste
thereof.
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20
32.3
|
On
the date specified by Company in the Purchase Notice (which shall
not be
more than five (5) Business Days after the receipt by the Senior
Lender of
the Purchase Notice), the Senior Lender shall sell to Company and
the
Subordinated Lender, without recourse or warranty (except as specified
in
Section 32.5) of any kind, and Company and the Subordinated Lender
shall purchase from the Senior Lender all (but not less than all)
of the
Senior Indebtedness. From and after such sale and purchase of
the Senior Indebtedness, subject to the provisions of Section 32.4
hereof, Company and the Subordinated Lender shall be parties to
the Senior
Loan Agreement and the other Senior Loan Documents, and shall have
the
rights and remedies and obligations and responsibilities of the
Senior
Lender thereunder, and the Senior Lender shall have assigned their
rights
and remedies and shall have been released from their obligations
and
responsibilities under the Senior Loan Agreement and the other
Senior Loan
Documents and shall cease to be parties thereto. The Senior Lender
and the
Subordinated Lender will execute an assignment and acceptance agreement,
substantially in the form attached as Exhibit A to the Senior Loan
Agreement as in effect on the date hereof (with such changes as
are
required to assign the entire Senior Indebtedness (as opposed to
a
percentage share thereof), to assign the agency to Company, to
waive any
processing fee, or to otherwise reflect the terms of this Section
32), to evidence the purchase and sale of the Senior
Indebtedness.
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32.4
|
Upon
the date of such purchase and sale, the Purchasing Subordinated
Lender
shall (a) pay to the Senior Lender as the purchase price therefor
(the
“Purchase Price”) the full amount of all the Senior
Indebtedness then outstanding and unpaid, (b) without duplication,
agree
to reimburse the Senior Lender for any loss, cost, damage or expense
(including reasonable attorneys’ fees and legal expenses) in connection
with any commissions, fees, costs or expenses related to any payments
provisionally credited to the Senior Indebtedness, and/or as to
which the
Senior Lender has not yet received final payment and, without duplication,
agree to reimburse, within five (5) Business Days of written demand
by the
Senior Lender therefor, the Senior Lender in respect of indemnification
obligations of the Obligors under the Senior Loan Documents as
to matters
or circumstances identified by the Senior Lender prior to such
sale which
would reasonably be expected to result in any loss, cost, damage
or
expense (including reasonable attorneys' fees and legal expenses)
to
Senior Lender. Such purchase price and cash collateral shall be
remitted by wire transfer of immediately available federal funds
to such
bank account of the Senior Lender as the Senior Lender may designate
in
writing to the Company for such purpose. Interest shall be
calculated to but excluding the Business Day on which such purchase
and
sale shall occur if the amounts so paid by the Purchasing Subordinated
Lender to the bank account designated by the Senior Lender are
received in
such bank account prior to 2:00 p.m., CST time and interest shall
be
calculated to and including such Business Day if the amounts so
paid by
the Purchasing Subordinated Lenders to the bank account designated
by the
Senior Lender are received in such bank account later than 2:00
p.m., CST
time.
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21
32.5
|
Such
purchase shall be expressly made without representation or warranty
of any
kind by any of the Senior Lender as to the Senior Indebtedness
or
otherwise and without recourse to any of the Senior Lender, except
that
each of the Senior Lender shall severally represent and warrant:
(i) the
amount of the Senior Indebtedness being purchased from such Senior
Lender;
(ii) that such Senior Lender owns such Senior Indebtedness free
and clear
of any Liens or encumbrances; and (iii) such Senior Lender has
the right
to assign such Senior Indebtedness and the assignment is duly
authorized.
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121149814v2
843548
22
The
parties hereto have executed this Agreement as of the date first above
written.
CS
FINANCING CORPORATION
By:
/s/ Xxxxxxx X.
Xxxxxxx
Name:
Xxxxxxx X.
Xxxxxxx
Title:
CEO
|
|
XXXXXXXXX
FINANCIAL MONTHLY INCOME FUND, LP
By:
/s/ Xxxxxxx Xxxxx
Xxxxxxx
Name:
Xxxxxxx Xxxxx
Xxxxxxx
Title:
President of
XX
|
|
XXXXXXXXX
FINANCIAL, LLC
By:
/s/ Xxxxxxx Xxxxx
Xxxxxxx
Name:
Xxxxxxx Xxxxx
Xxxxxxx
Title:
President
|
|
XXXXXXXXX
FINANCIAL NOTE HOLDINGS, LLC
By:
/s/ Xxxxxxx Xxxxx
Xxxxxxx
Name:
Xxxxxxx Xxxxx
Xxxxxxx
Title:
President
|
|
121149814v2
843548
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