SUBORDINATION AND INTERCREDITOR AGREEMENT
This Subordination and Intercreditor Agreement (this "Agreement") dated as
of February 28, 2005 among LAURUS MASTER FUND, LTD., a Cayman Islands
corporation ("Laurus"), ROYNAT MERCHANT CAPITAL INC., a Delaware corporation
("Roynat"), XXXXXX EQUIPMENT, INC., a Delaware corporation ("Xxxxxx Equipment"),
XXXXXX VENTURES, INC., a Delaware corporation ("Xxxxxx Ventures"), XXXXXX
EQUIPMENT 2004 INC., a corporation organized under the laws of Canada ("Xxxxxx
Canada"), PNEUTECH INC., a corporation organized under the laws of Canada
("Pneutech"), XXXXXXXX CONTROLS INC., a corporation organized under the laws of
Canada ("Xxxxxxxx"), and HYDRAMEN FLUID POWER LIMITED, a corporation organized
under the laws of Ontario ("Hydramen") (Xxxxxx Equipment, Xxxxxx Ventures,
Xxxxxx Canada, Pneutech, Xxxxxxxx and Hydramen and their respective successors
and assigns, each a "Company" and, collectively, the "Companies").
BACKGROUND
Laurus and Roynat wish to set forth their agreement as to their respective
rights and obligations with respect to the indebtedness of the Companies owing
to Laurus and Roynat and the security interests, hypothecs and liens of Laurus
and Roynat in the assets and properties of the Companies and their understanding
relative to their respective positions in such indebtedness and such assets and
properties.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Laurus, Roynat and each Company hereby agree as follows:
1. Definitions.
1.1 General Terms. For purposes of this Agreement, the following
terms shall have the following meanings:
"Affiliate" means, with respect to a Person, any other Person (i)
which directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, (ii) which owns 10%
or more of the equity interests of such Person, (iii) 10% or more of the voting
stock (or in the case of a Person that is not a corporation, 10% or more of the
equity interests of such Person) of which is owned by such Person or (iv) who is
an executive officer or director of such Person. The term "control" means (a)
the power to vote more than 50% of the securities or other equity interests of a
Person having ordinary voting power (on a fully diluted basis), or (b) the
possession, directly or indirectly, of any other power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Bankruptcy Law" shall mean the Code, or any similar federal, state,
provincial or foreign law for the relief of debtors or any arrangement,
reorganization, insolvency, moratorium, assignment for the benefit of creditors,
any other marshalling of the assets and liabilities of any Company.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which commercial banks in New York, New York are required or
permitted by law to close.
"Code" shall mean the United States Bankruptcy Code, as in effect
from time to time.
"Collateral" shall mean all of the property and interests in
property, tangible or intangible, real or personal, immovable or movable, now
owned or hereafter acquired by any Company in or upon which any Creditor at any
time has a Lien, including, without limitation, all proceeds and products of
such property and interests in property; provided, however, the Collateral shall
not include the Life Insurance Proceeds.
"Common Stock" means the common stock of Xxxxxx Equipment, par value
of $0.01 per share.
"Company" and "Companies" shall have the meanings set forth in the
introductory paragraph of this Agreement.
"Creditor Agreements" shall mean, collectively, the Laurus
Agreements and the Roynat Agreements.
"Creditors" shall mean, collectively, Laurus and Roynat.
"Distribution" shall mean any payment, whether in cash, in kind, by
offset, securities or any other property, or security for any such payment
(other than (i) securities, including Common Stock, issued by Xxxxxx Equipment
to Roynat in connection with the Roynat Warrant or (ii) other property issued by
Xxxxxx Equipment to Roynat under Section 6(a)(ii) of the Roynat Warrant as in
effect on the date hereof) for any such payment.
"Enumerated Collateral" shall mean the Collateral of Pneutech,
Xxxxxxxx and Hydramen.
"Enumerated Companies" shall mean, collectively, Pneutech, Xxxxxxxx
and Hydramen.
"Insolvency or Liquidation Proceeding" shall mean, collectively, (a)
any voluntary or involuntary case, proceeding or filing under any Bankruptcy Law
with respect to any Company, (b) any other voluntary or involuntary insolvency,
reorganization or bankruptcy case, proceeding or filing, or any receivership,
liquidation, reorganization or other similar case, proceeding or filing with
respect to any Company or with respect to any of its assets, (c) any
liquidation, dissolution or winding up of any Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, (d) any
assignment for the benefit of creditors or any other marshaling of assets and
liabilities of any Company, and (e) the cessation of the operation of a
substantial part of any Company's business.
"Laurus Agreements" shall mean, collectively, the Laurus Security
Agreement, the Laurus Guaranty and Security Agreements, the other Ancillary
Agreements (as defined in the Laurus Security Agreement) and all other
promissory notes, agreements, documents and instruments now or at any time
hereafter executed and/or delivered by any Company or any other Person to, with
or in favor of Laurus in connection therewith or related thereto, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, in each case to the extent permitted
herein.
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"Laurus Amendment" shall mean the Amendment Agreement dated as of
the date hereof among Xxxxxx Equipment, Xxxxxx Ventures and Laurus.
"Laurus Default" shall mean and include a Laurus Realization Default
and/or a Laurus Non-Realization Default.
"Laurus Default Notice" shall mean and include a Laurus Realization
Default Notice and/or a Laurus Non-Realization Default Notice.
"Laurus Guaranty and Security Agreements" shall mean, collectively,
(a) each General Security Agreement, deed of hypothecs and shares pledge
agreements made by Xxxxxx Canada, Pneutech, Xxxxxxxx and Hydramen in favor of
Laurus, (b) each Guarantee made by Xxxxxx Canada, Pneutech, Xxxxxxxx and
Hydramen in favor of Laurus and (c) each Security Agreement made by Xxxxxx
Canada, Pneutech, Xxxxxxxx and Hydramen in favor of Laurus, as each of the same
may be amended, modified and supplemented from time to time.
"Laurus Indebtedness" shall mean all monetary obligations of any
kind owed by any Company or the Companies to Laurus from time to time under or
pursuant to any of the Laurus Agreements including, without limitation, all
principal, interest accruing thereon, charges, expenses, fees and other sums
(including all interest, charges, expenses, fees and other sums accruing after
commencement of any Insolvency or Liquidation Proceeding) chargeable to any
Company or the Companies by Laurus, and reimbursement, indemnity or other
obligations due and payable to Laurus.
"Laurus Non-Realization Default" shall mean an Event of Default (or
similar term) under and as such term is defined in any Laurus Agreement, other
than a Laurus Realization Default.
"Laurus Non-Realization Default Notice" shall mean written notice
from Laurus to Xxxxxx Equipment and, to the extent applicable, any other Company
of the occurrence and continuance of a Laurus Non-Realization Default which
written notice shall describe such Laurus Non-Realization Default and declare
Xxxxxx Equipment and, to the extent applicable, such other Company in default
under any of the Laurus Agreements.
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"Laurus Realization Default" shall mean an Event of Default (or
similar term) under and as such term is defined in any Laurus Agreement arising
from (a) the failure by any Company to make any payment, whether for principal,
interest or fees, in respect of the Laurus Indebtedness (whether at maturity or
at a date fixed for prepayment or by declaration, acceleration or otherwise)
and/or (b) the failure by Xxxxxx Equipment to deliver or cause to be delivered
Common Stock to Laurus pursuant to and in accordance with the requirements set
forth in any of the Laurus Agreements.
"Laurus Realization Default Notice" shall mean written notice from
Laurus to Xxxxxx Equipment and, to the extent applicable, any other Company of
the occurrence and continuance of a Laurus Realization Default which written
notice shall describe such Laurus Realization Default and declare Xxxxxx
Equipment and, to the extent applicable, such other Company in default under any
of the Laurus Agreements.
"Laurus Security Agreement" shall mean the Security and Purchase
Agreement dated as of November 9, 2004 among Xxxxxx Equipment, Xxxxxx Ventures
and Laurus, amended by the Laurus Amendment and as the same may be further
amended, supplemented, modified and/or restated from time to time, to the extent
permitted herein.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, hypothecs, assignment, deposit arrangement, security interest,
encumbrance (including, but not limited to, easements, rights of way and the
like), lien (statutory or other), security agreement or transfer intended as
security including, without limitation, any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease or any
financing lease having substantially the same economic effect as any of the
foregoing.
"Life Insurance Proceeds" shall mean the proceeds of any life
insurance policy on the life of Xxxxxxxx Xxxx specifically assigned to Roynat.
"Maximum Laurus Principal Amount" shall mean an amount equal to (a)
$30,800,000, plus (b) interest, fees and other costs and expenses which may
become part of or added to the principal amount of the Laurus Indebtedness,
minus (c) any amounts received by Laurus from the Companies and applied to the
outstanding principal amount of the Term Loans (as defined in the Laurus
Security Agreement), minus (d) any permanent commitment reductions in any
revolving credit facility under the Laurus Security Agreement.
"Maximum Roynat Principal Amount" shall mean an amount equal to (a)
$6,500,000, plus (b) interest, fees and other costs and expenses which may
become part of or added to the principal amount of the Roynat Indebtedness,
minus (c) any amounts received by Roynat from the Companies and applied to the
outstanding principal amount of the Roynat Indebtedness.
"Permitted Payments" shall mean payments of:
(a) interest, fees and expenses due and payable by the Companies to
Roynat pursuant to the Roynat Agreements as in effect on the date hereof
including, without limitation, any fees under the Registration Rights Agreement
dated as of the date hereof between Xxxxxx Equipment and Roynat;
(b) on or after December 30, 2005, any principal and any other
amounts which comprise all or part of the Roynat Indebtedness; and
(c) any or all of the Roynat Indebtedness provided such payment is
made or derived from the proceeds received by Xxxxxx Equipment as a result of
any public offering of Common Stock.
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"Person" shall mean an individual, a partnership, a corporation
(including a business trust), a company, a joint stock company, a trust, an
unincorporated association, a joint venture, a limited liability company, an
unlimited liability company, a limited liability partnership or other entity, or
a government or any agency, instrumentality or political subdivision thereof.
"Post-Petition Financing" shall mean all extensions of credit under
any financing extended or provided to any Company under any Bankruptcy Law.
"Roynat Agreements" shall mean, collectively, the Roynat Debenture,
the Roynat Warrant and all promissory notes, warrants, agreements, documents and
instruments now or at any time hereafter executed and/or delivered by any
Company or any other Person to, with or in favor of Roynat in connection
therewith or related thereto, as all of the foregoing now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced, in
each case to the extent permitted herein.
"Roynat Debenture" shall mean the Debenture dated as of the date
hereof by and between Roynat and Xxxxxx Equipment, as amended to the extent
permitted herein.
"Roynat Default" shall mean an "event of default" (or similar term)
under and as such term in any Roynat Agreement as in effect on the date hereof.
"Roynat Default Notice" shall mean written notice from Roynat to any
Company of the occurrence of a Roynat Default which written notice shall
describe such Roynat Default and refer to this Agreement.
"Roynat Indebtedness" shall mean all monetary obligations of any
kind owed by any Company or the Companies to Roynat from time to time under or
pursuant to any of the Roynat Agreements including, without limitation, all
principal, interest accruing thereon, charges, expenses, fees and other sums
(including all interest, charges, expenses, fees and other sums accruing after
commencement of any Insolvency or Liquidation Proceeding) chargeable to any
Company or the Companies by Roynat, and reimbursement, indemnity or other
obligations due and payable to Roynat.
"Roynat Warrant" shall mean the Stock Purchase Warrant issued on the
date hereof by Xxxxxx Equipment in favor of Roynat and any reissue or amendment
thereof to the extent permitted herein.
"Secured Lender Remedies" shall mean the taking possession of
(either directly or through an agent or mandatary), the sale, foreclosure,
realization upon, and/or a liquidation of any of the Collateral including,
without limitation, the exercise of any of the rights or remedies of a "secured
party" under Article 9 of the New York Uniform Commercial Code, or under the
Personal Property Security Act of the applicable province or territory of Canada
or the Civil Code of Quebec, such as, without limitation, the notification of
account debtors.
1.2 Certain Matters of Construction. The terms "herein", "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Except as expressly set forth
herein, all references to any instruments or agreements, including, without
limitation, references to any of the Creditor Agreements shall include any and
all modifications or amendments thereto and any and all extensions or renewals
thereof, in each case, to the extent permitted herein. All references to
security interests or mortgages shall mean and include hypothecs.
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2. Priorities.
2.1 Subordination Provisions. Notwithstanding any other provision of
the Roynat Agreements to the contrary, to the extent provided below in this
Agreement, any Distribution with respect to the Roynat Indebtedness is and shall
be expressly junior and subordinated in right of payment to all amounts due and
owing upon all the Laurus Indebtedness outstanding from time to time in the
manner and to the extent provided in this Agreement. Until the indefeasible
payment in full of the Laurus Indebtedness and the irrevocable termination of
the Laurus Agreements, no Company shall make and Roynat shall not accept or
retain any Distribution in respect of the Roynat Indebtedness except, subject to
the provisions of this Section 2, Roynat may accept and retain (a) Permitted
Payments, (b) subject to the last sentence hereof, any Distribution arising from
the exercise of Secured Lender Remedies and (c) subject to the last sentence
hereof, any proceeds of Collateral pursuant to an Insolvency or Liquidation
Proceeding. Notwithstanding anything contained herein to the contrary, to the
extent any Creditor receives any Distribution arising from such Creditor's
exercise of its Secured Lender Remedies or any proceeds of Collateral pursuant
to an Insolvency or Liquidation Proceeding, in each case, as permitted by and in
accordance with the terms and conditions of this Agreement, the application of
such Distribution to the Laurus Indebtedness or the Roynat Indebtedness, as the
case may be, shall be governed by the priorities set forth in Section 3.2
hereof.
2.2 Payments.
(a) From and after receipt by Roynat of a Laurus Realization Default
Notice from Laurus (which expressly states that such Default Notice is a Laurus
Realization Default Notice), no Company shall make any Distribution on the
Roynat Indebtedness and Roynat shall not be entitled to receive or retain any
such Distribution in respect of the Roynat Indebtedness until the earliest to
occur of (i) the date on which all Laurus Defaults described in such Laurus
Realization Default Notice shall have been cured or waived in writing by Laurus,
(ii) the date the Laurus Indebtedness is indefeasibly paid in full and the
Laurus Agreements are irrevocably terminated or (iii) the expiration of a period
of one-hundred and fifty (150) days commencing from and including the date of
Roynat's receipt of such Laurus Realization Default Notice from Laurus.
(b) From and after receipt by Roynat of a Laurus Non-Realization
Default Notice from Laurus (which expressly states that such Default Notice is a
Laurus Non-Realization Default Notice), no Company shall make any Distribution
on the Roynat Indebtedness and Roynat shall not be entitled to receive or retain
any such Distribution in respect of the Roynat Indebtedness until the earliest
to occur of (i) the date on which all Laurus Non-Realization Defaults described
in such Laurus Non-Realization Default Notice shall have been cured or waived in
writing by Laurus, (ii) the date the Laurus Indebtedness is indefeasibly paid in
full and the Laurus Agreements are irrevocably terminated or (iii) the
expiration of a period of sixty (60) days commencing from and including the date
of Roynat's receipt of such Laurus Non-Realization Default Notice from Laurus.
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(c) No Laurus Realization Default Notice shall be effective under
clause (a) above if Laurus previously delivered a Laurus Realization Default
Notice to Roynat. No Laurus Non-Realization Default Notice shall be effective
under clause (b) above if Laurus previously delivered a Laurus Non-Realization
Default Notice to Roynat.
(d) Any Company may make and Roynat may accept and retain any
Permitted Payments other than during any period described in Section 2.2(a)
and/or Section 2.2(b) and, after the expiration of any such period, any Company
may resume making and Roynat may accept and retain Permitted Payments including
those Permitted Payments that were due as of the commencement of such period or
became due during such period.
(e) Notwithstanding anything contained herein to the contrary, if
Xxxxxx Equipment receives any proceeds from any public offering of Common Stock,
the proceeds of such public offering shall first be applied to repay the Roynat
Indebtedness regardless of whether or not there has occurred and is continuing
any Laurus Realization Default or Laurus Non-Realization Default. For greater
certainty, it is hereby acknowledged that nothing in this Agreement shall bar or
in any way affect the ability of Roynat to receive such payments following the
consummation of any public offering by Xxxxxx Equipment.
(f) In the event that Roynat delivers to any Company a Roynat
Default Notice declaring that there exists a Roynat Default, any Distribution
received by Roynat during the ten (10) Business Days following the delivery of
such notice to Laurus shall be paid over to Laurus if Laurus delivers a Laurus
Realization Default Notice or a Laurus Non-Realization Default Notice to Roynat
during such ten (10) Business Day period.
(g) Notwithstanding anything contained herein to the contrary,
Roynat shall be permitted to receive (i) securities, including Common Stock,
issued by Xxxxxx Equipment in connection with the Roynat Warrant and/or (ii)
other property issued by Xxxxxx Equipment under Section 6(a)(ii) of the Roynat
Warrant (as in effect on the date hereof).
2.3 Knowledge; Delivery of Default Notice. Subject to compliance
with Section 2.2(f) hereof, Roynat shall not at any time be charged with
knowledge of any of the events described in Section 2.2 hereof or on such
account be prohibited from receiving or retaining any Permitted Payments, unless
and until Roynat shall have received the Laurus Default Notice. Each Laurus
Default Notice shall be deemed to be properly given by Laurus to Roynat if such
Laurus Default Notice is delivered in accordance with Section 5.6 hereof.
2.4 Payments Held in Trust. Should any Distribution or the proceeds
thereof, in respect of any Roynat Indebtedness, be collected or received by
Roynat or any Affiliate of Roynat at a time when Roynat is not permitted to
receive any such Distribution or proceeds thereof, then Roynat will forthwith
deliver, or cause to be delivered, the same to Laurus in precisely the form held
by Roynat or such Affiliate (except for any necessary endorsement) and until so
delivered, the same shall be held in trust by Roynat, or any such Affiliate, as
the property of Laurus and shall not be commingled with other property of Roynat
or any such Affiliate.
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2.5 Subrogation. After the Laurus Indebtedness has been indefeasibly
paid in full and the Laurus Agreements have been irrevocably terminated, to the
extent that Laurus has received any Distribution on Laurus Indebtedness which,
but for this Agreement, would have been applied to Roynat Indebtedness, Roynat
shall be subrogated to the then or thereafter rights of Laurus including,
without limitation, the right to receive any Distribution made on Laurus
Indebtedness until the principal of, interest on and other amounts payable under
the Roynat Indebtedness shall be indefeasibly paid in full; and, for the
purposes of such subrogation, no Distribution to Laurus to which Roynat would be
entitled except for the provisions of this Agreement shall, as between any
Company, its creditors (other than Laurus) and Roynat, be deemed to be a
Distribution by such Company to or on account of the Laurus Indebtedness, it
being understood that the provisions hereof are and are intended solely for the
purpose of defining the relative rights of Roynat on the one hand, and Laurus on
the other hand.
2.6 Scope of Subordination. The provisions of this Agreement are
solely to define the relative rights of Roynat and Laurus. Nothing in this
Agreement shall impair, as between any Company and Roynat, the unconditional and
absolute obligation of such Company to punctually pay the principal, interest
and any other amounts and obligations owing under the Roynat Agreements in
accordance with the terms thereof, subject to the rights of Laurus under this
Agreement.
3. Security and Remedies.
3.1 Acknowledgment of Lien. Each Creditor hereby agrees and
acknowledges that the other Creditor has been granted a Lien upon the
Collateral.
3.2 Priority. Notwithstanding the order or time of grant or
attachment, or the order, time or manner of perfection or rendering enforceable,
or the order or time of filing, registration, publication or recordation of any
document or instrument, or other method of perfecting or rendering enforceable a
Lien in favor of each Creditor in any Collateral and notwithstanding any
conflicting terms or conditions which may be contained in any of the Creditor
Agreements, the Liens of each Creditor shall have the following priorities:
(a) With respect to the Collateral (other than in respect of the
Enumerated Collateral), the Liens of Laurus have and shall have priority over
the Liens of Roynat upon the Collateral (other than in respect of the Enumerated
Collateral) and the Liens of Roynat are and shall be, in all respects, subject
and subordinate to the Liens of Laurus therein to the full extent of the Laurus
Indebtedness outstanding from time to time; and
(b) With respect to the Enumerated Collateral, the Liens of Laurus
and Roynat shall have the following priorities in the following order:
(i) First, the Liens of Laurus have and shall have priority
over the Liens of Roynat to the extent of an amount equal to the sum of (x)
$1,900,000, (y) any accrued and unpaid interest on the principal amount set
forth in subsection (x) immediately above and (z) all costs and expenses
incurred by Laurus in its enforcement of any Secured Lender Remedies with
respect to the Enumerated Collateral;
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(ii) Second, the Liens of Roynat have and shall have priority
over the Liens of Laurus to the full extent of the Roynat Indebtedness
outstanding from time to time; and
(iii) Third, the Liens of Laurus have and shall have priority
to the remaining amounts of the outstanding Laurus Indebtedness.
3.3 No Alteration of Priority. The Lien priorities provided in
Section 3.2 hereof shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing of any
Laurus Indebtedness or Roynat Indebtedness, nor by any action or inaction which
either Creditor may take or fail to take in respect of the Collateral.
3.4 Perfection.
(a) Each Creditor shall be solely responsible for perfecting and
rendering enforceable and maintaining the perfection and enforceability of its
Lien in and to each item constituting the Collateral in which such Creditor has
been granted a Lien. The foregoing provisions of this Agreement are intended
solely to govern the respective Lien priorities as between the Creditors and
shall not impose on Laurus or Roynat any obligations in respect of the
disposition of proceeds of foreclosure or enforcement of security on any
Collateral which would conflict with prior perfected and enforceable claims
therein in favor of any other Person. Each Creditor agrees that it will not
contest the validity, perfection, priority or enforceability of the Liens of the
other Creditor in the Collateral.
(b) Each Creditor hereby appoints the other Creditor as such
Creditor's bailee, agent and mandatary for the purpose of perfecting and
rendering enforceable its respective Liens solely in and on any of the
Collateral in the possession or "control" (as such term is defined in the
Uniform Commercial Code as in effect in each applicable jurisdiction) of such
other Creditor; provided, however, that, a Creditor in the possession or having
control of any Collateral shall not have any duty or liability to protect or
preserve any rights pertaining to any of such Collateral and, except for gross
negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction, the non-possessing or
non-controlling Creditor hereby waives and releases the Creditor in possession
or control from all claims and liabilities arising pursuant to such possessing
Creditor's role as bailee, agent and mandatary with respect to the Collateral,
so long as such possessing or controlling Creditor shall use the same degree of
care with respect thereto as such possessing or controlling Creditor uses for
similar property pledged to such possessing or controlling Creditor as
collateral for indebtedness of others to such possessing or controlling
Creditor. After the respective indebtedness owing to any Creditor has been
indefeasibly paid in full, and so long as any indebtedness remains owing to the
other Creditor, such Creditor shall deliver the remainder of the Collateral, if
any, in its possession to such other Creditor, and, if permitted under the
applicable agreements, transfer control of the remainder of the Collateral, if
any, under its control to such other Creditor, except in each case as may
otherwise be required by applicable law or court order. It is understood and
agreed that this paragraph is intended solely to assure continuous perfection
and enforceability of the Liens granted under the Laurus Agreements and the
Roynat Agreements, as applicable, and nothing in this paragraph shall be deemed
or construed as altering the priorities or obligations set forth elsewhere in
this Agreement.
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3.5 Acceleration and Remedies. Until the Laurus Indebtedness has
been indefeasibly paid in full and the Laurus Agreements have been irrevocably
terminated, Roynat shall not (i) accelerate the maturity of the Roynat
Indebtedness, (ii) exercise any remedies including, without limitation, any
Secured Lender Remedies, (iii) commence any action or proceeding to recover any
amounts due or to become due with respect to the Roynat Indebtedness, or (iv)
join in, solicit any other Person to join in, or act to cause the commencement
of, any Insolvency or Liquidation Proceeding, except as follows:
(a) Subject to Sections 3.6, 3.7 and 4 hereof and notwithstanding
Section 3.5(b) below, following the commencement of an Insolvency or Liquidation
Proceeding by a Person other than Roynat, Roynat may (i) accelerate the maturity
of the Roynat Indebtedness, (ii) commence any action or proceeding to recover
any amounts due or to become due with respect to the Roynat Indebtedness so long
as such action or proceeding does not involve the enforcement of Secured Lender
Remedies against any Collateral and/or (iii) join in or solicit any other Person
to join in, any Insolvency or Liquidation Proceeding;
(b) Subject to Sections 3.2(b), 3.5(c), 3.6, 3.7 and 4 hereof,
Roynat may (i) accelerate the maturity of the Roynat Indebtedness, (ii) exercise
Secured Lender Remedies against the Enumerated Collateral, (iii) commence any
action or proceeding to recover any amounts due or to become due with respect to
the Roynat Indebtedness so long as such action or proceeding does not involve
the enforcement of Secured Lender Remedies against any Collateral not consisting
of Enumerated Collateral and/or (iv) join in, solicit any other Person to join
in, or act to cause the commencement of, any Insolvency or Liquidation
Proceeding by a Person other than Roynat so long as, in each case, a Roynat
Default has occurred and is continuing and a period of one-hundred and fifty
(150) days has elapsed since the date Laurus has received the Roynat Default
Notice from Roynat with respect to such Roynat Default; and
(c) Subject to Sections 3.2, 3.6 and 4 hereof, on any date following
February 9, 2008, so long as a Roynat Default has occurred and is continuing and
Laurus has received a Roynat Default Notice from Roynat with respect to such
Roynat Default, Roynat may exercise any rights that it has in respect of the
Collateral including, without limitation, the right to exercise Secured Lender
Remedies in respect of any of the Collateral.
3.6 Secured Lender Remedies. Notwithstanding any provisions herein
to the contrary that otherwise permit Roynat to exercise any Secured Lender
Remedies, including, without limitation, Sections 3.5(b) and 3.5(c) hereof, in
no event shall Roynat exercise or continue to exercise any Secured Lender
Remedies at any time with respect to the Collateral (including, without
limitation, following the expiration of the period described in Section 3.5(c))
if Laurus is diligently pursuing its Secured Lender Remedies against, or is
diligently attempting to vacate any stay of enforcement of its Liens on, any
portion of the Collateral (including, without limitation, the commencement or
continuation of any Secured Lender Remedies).
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3.7 Payments Held in Trust. In the event, at any time, Roynat shall
receive any Distribution representing proceeds of any Collateral, other than
Enumerated Collateral, before the Laurus Indebtedness shall have been
indefeasibly paid in full and the Laurus Agreements shall have been irrevocably
terminated, such sums shall be held in trust by Roynat for the benefit and on
account of Laurus and such amounts shall be paid to Laurus for application to
the then unpaid Laurus Indebtedness under the Laurus Agreements. In the event,
at any time, Laurus or Roynat shall receive any Distribution representing
proceeds of any Enumerated Collateral, such amount shall be held in trust by
Laurus or Roynat, as the case may be, and distributed in accordance with the
provisions of Section 3.2(b) hereof, to Laurus or Roynat, as the case may be.
3.8 Management of Collateral. Laurus shall have the exclusive right
to manage, perform and enforce the terms of the Laurus Agreements with respect
to the Collateral and to exercise and enforce all privileges and rights
thereunder according to its discretion and the exercise of its business
judgment, including, without limitation, the exclusive right to enforce or
settle insurance claims, take or retake control or possession of the Collateral
and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate
the Collateral, provided, in all cases, that Laurus is acting in a commercially
reasonable manner. In connection therewith, Roynat waives any and all rights to
affect the method or challenge the appropriateness of any action by Laurus.
Notwithstanding anything contained in this Section 3.8 to the contrary, to the
extent Roynat is permitted to exercise Secured Lender Remedies with respect to
any Collateral under this Agreement, Roynat may manage, perform and enforce the
terms of the Roynat Agreements with respect to such Collateral and exercise and
enforce all privileges and rights thereunder according to its discretion and the
exercise of its business judgment, provided, in all cases, that Roynat is acting
in a commercially reasonable manner. In connection therewith, Laurus waives any
and all rights to affect the method or challenge the appropriateness of any
action by Roynat.
3.9 Sale of Collateral. Subject to Sections 3.5(b) and (c) hereof,
Laurus shall have the sole right to restrict or permit, or approve or
disapprove, the sale, transfer or other disposition of Collateral, provided
Laurus exercises any such right in a commercially reasonable manner. Roynat
shall, immediately, upon the request of Laurus, release, discharge or otherwise
terminate its Liens upon the Collateral, provided that, and, as applicable, to
the same extent that, (a) Laurus releases its Lien in such Collateral, (b) such
Collateral is sold or otherwise disposed of either by Laurus, its agents or
mandatary, or any Company with the prior written consent of Laurus and/or (c) in
the event any such sale or disposition is to a Person who is an Affiliate of
Laurus, such sale or disposition is made upon terms Laurus could obtain in a
comparable arms-length transaction. Roynat shall immediately deliver such
release documents to Laurus as Laurus may require in connection therewith in
form and substance reasonably satisfactory to Roynat. Notwithstanding anything
contained in this Section 3.9 to the contrary and subject to Sections 3.5, 3.6
and 3.7 hereof, to the extent Roynat is permitted to exercise Secured Lender
Remedies with respect to any Collateral under this Agreement, Roynat may permit
or approve the sale, transfer or other disposition of such Collateral, provided
Roynat exercises any such right in a commercially reasonable manner. In
connection therewith, Laurus shall, immediately, upon the request of Roynat,
release, discharge or otherwise terminate its Liens upon such Collateral,
provided that, and, as applicable, to the same extent that, (a) Roynat releases
its Lien in such Collateral, (b) such Collateral is sold or otherwise disposed
of either by Roynat, its agents or mandatary, or any Company with the prior
written consent of Roynat and/or (c) in the event any such sale or disposition
is to a Person who is an Affiliate of Roynat, such sale or disposition is made
upon terms Roynat could obtain in a comparable arms-length transaction. Laurus
shall immediately deliver such release documents to Roynat as Roynat may require
in connection therewith in form and substance reasonably satisfactory to Laurus.
11
3.10 Insurance Proceeds. Proceeds of the Collateral include
insurance proceeds, and therefore, notwithstanding the terms set forth in the
Laurus Agreements or the Roynat Agreements, the priorities set forth in Section
3.2 govern the ultimate disposition of casualty insurance proceeds. Laurus, as
the holder of a senior security interest on the Collateral, shall have the sole
and exclusive right to adjust settlement of insurance claims in the event of any
covered loss, theft or destruction of the Collateral. All proceeds of such
insurance shall inure to Laurus, to the extent of Laurus' claim, and Roynat
shall cooperate (if necessary) in a reasonable manner in effecting the payment
of insurance proceeds to Laurus. In the event Laurus, in its sole discretion or
pursuant to an agreement with any Company, permits such Company to utilize the
proceeds of insurance to replace Collateral, the prior written consent of Laurus
thereto shall be deemed to include the consent of Roynat.
3.11 Section 9-611 Notice and Waiver of Marshaling. Each Creditor
acknowledges that this Agreement shall constitute notice of their respective
interests in the Collateral as provided by Section 9-611 of the New York Uniform
Commercial Code or any similar applicable provision of the Personal Property
Security Act of a Canadian province or territory or the Civil Code of Quebec and
each hereby waives any right to compel any marshaling of any of the Collateral.
3.12 Defense to Enforcement. If Roynat, in contravention of the
terms of this Agreement, shall commence, prosecute or participate in any suit,
action or proceeding against any Company, then Laurus may intervene and
interpose such defense or pleas in its name. If Roynat, in contravention of the
terms of this Agreement, shall attempt to collect any of the Roynat Indebtedness
or enforce any of its right under the Roynat Agreements, then Laurus may, by
virtue of this Agreement, restrain the enforcement thereof. If Roynat, in
contravention of the terms of this Agreement, obtains any cash or other assets
of any Company as a result of any administrative, legal or equitable actions or
otherwise, Roynat agrees, subject to the terms of Section 3.2(b), forthwith to
pay, deliver and assign to Laurus, with appropriate endorsements, any such cash
or other assets for application to the Laurus Indebtedness. If Laurus, in
contravention of the terms of Section 3.2(b), obtains any cash or other assets
of any Company as a result of any administrative, legal or equitable actions or
otherwise, Laurus agrees, subject to the terms of Section 3.2(b), forthwith to
pay, deliver and assign to Roynat, with appropriate endorsements, any such cash
or other assets for application to the Roynat Indebtedness
3.13 Life Insurance Proceeds. Laurus hereby acknowledges that it
does not have a Lien in the Life Insurance Proceeds and any distribution of Life
Insurance Proceeds to Roynat does not constitute a Distribution as defined
herein and, until such time as the Roynat Indebtedness is indefeasibly paid in
full, Laurus hereby disclaims any Lien it may have in the Life Insurance
Proceeds.
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4. Insolvency and Liquidation Proceedings.
4.1 Continuing Agreement. This Agreement shall continue in full
force and effect after the commencement of any Insolvency or Liquidation
Proceeding by or against any Company and all converted or succeeding cases or
proceedings in respect thereof. All references herein to any Company shall be
deemed to apply to such Company as debtor-in-possession and to a trustee or
similar official for such Company.
4.2 Payments in Bankruptcy. In the event, at any time following the
commencement of any Insolvency or Liquidation Proceeding, Roynat shall receive
any proceeds of any Collateral, other than Enumerated Collateral, before the
Laurus Indebtedness shall have been indefeasibly paid in full and the Laurus
Agreements shall have been irrevocably terminated, such sums shall be held in
trust by Roynat for the benefit and on account of Laurus and such amounts shall
be paid to Laurus for application to the then unpaid Laurus Indebtedness under
the Laurus Agreements. In the event, at any time, Laurus or Roynat shall receive
any proceeds of any Enumerated Collateral, such amount shall be held in trust by
Laurus or Roynat, as the case may be, and distributed in accordance with the
provisions of Section 3.2(b) hereof, to Laurus or Roynat, as the case may be.
4.3 Insolvency and Liquidation Issues.
(a) In the event an Insolvency or Liquidation Proceeding shall be
commenced by or against any Enumerated Company and neither Xxxxxx Equipment,
Xxxxxx Ventures or Xxxxxx Canada is joined, at any time, as a debtor or a
co-debtor in such proceeding, Laurus hereby agrees that, with respect to such
proceeding, Laurus shall not, until the payment in full of the Roynat
Indebtedness and the irrevocable termination of the Roynat Agreements:
(i) seek any relief from, or modification of, the automatic
stay as provided in ss.362 of the Code or any similar provision of any other
applicable Bankruptcy Law or seek or accept any form of adequate protection
under either or both of ss.362 and ss.363 of the Code, except (i) replacement
Liens and super-priority administrative expense claims for diminution of value
(the "Priority Claims"), (A) which Liens at all times shall also secure the
Roynat Indebtedness and (B) which Liens and Priority Claims shall be subject to
the priority set forth in Section 3.2 hereof, and (ii) the accrual (but not the
current payment) of interest and out-of-pocket expenses, including fees and
disbursements of counsel and other professional advisors, incurred by Laurus
(which Laurus agrees will constitute adequate protection of their claims and
interests);
(ii) oppose or object to any adequate protection sought by or
granted to Roynat with respect to the Enumerated Collateral of any Enumerated
Company in such proceeding;
(iii) oppose or object to the use of any Enumerated Collateral
of any Enumerated Company in such proceeding constituting cash collateral by
such Enumerated Company, unless Roynat shall have opposed or objected to such
use of such cash collateral;
(iv) oppose or object to any Post-Petition Financing by Roynat
or any group of lenders including Roynat with respect to any Enumerated Company
in such proceeding or any order approving same on an interim or final basis,
unless (A) Roynat shall have opposed or objected to such Post-Petition
Financing, (B) such Post-Petition Financing affects the priorities set forth in
Section 3.2 hereof or (C) the rights of any parties in connection with such
Post-Petition Financing result in a Lien in any Collateral of Xxxxxx Equipment,
Xxxxxx Ventures and/or Xxxxxx Canada;
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(v) object to (A) the amount of the Roynat Indebtedness
allowed or permitted to be asserted in such proceeding under any Bankruptcy Law
so long as the principal amount of the Roynat Indebtedness does not exceed the
Maximum Roynat Principal Amount or (B) the extent to which the Roynat
Indebtedness is deemed secured claims in such proceeding, including under
ss.506(a) of the Code or any similar provision of any other applicable
Bankruptcy Law;
(vi) oppose or object to any protection provided to Roynat in
such proceeding, including any form of adequate protection under ss.362 or
ss.363 of the Code or any similar provision of any other applicable Bankruptcy
Law and the payment of amounts equal to interest and expenses allowed under
ss.506(b) and (c) of the Code or any similar provision of any other applicable
Bankruptcy Law to Roynat; or
(vii) vote in favor of a chapter 11 plan of reorganization in
such proceeding under the Code or similar plan or reorganization or arrangement
under any other applicable Insolvency or Liquidation Proceeding or Bankruptcy
Law which fails to provide for the repayment in full of the Roynat Indebtedness,
unless Roynat is voting in favor of such plan.
Nothing contained in this Section 4.3(a) shall prohibit or in any
way limit Roynat from, with respect to the Enumerated Collateral of any
Enumerated Company in such proceeding, objecting in such proceeding to any
action taken by Laurus, including the seeking by Laurus of adequate protection
with respect to the Enumerated Collateral of any Enumerated Company in such
proceeding or the asserting by Laurus of any of its rights and remedies under
the Laurus Agreements (or otherwise) with respect to the Enumerated Collateral
of any Enumerated Company in such proceeding in contravention of this Agreement.
(b) In the event an Insolvency or Liquidation Proceeding shall be
commenced by or against any one or more Companies other than an Insolvency or
Liquidation Proceeding described in Section 4.3(a) above, Roynat hereby agrees
that, with respect to such proceeding, Roynat shall not, until the payment in
full of the Laurus Indebtedness and the irrevocable termination of the Laurus
Agreements:
(i) seek any relief from, or modification of, the automatic
stay as provided in ss.362 of the Code or any similar provision of any other
applicable Bankruptcy Law or seek or accept any form of adequate protection
under either or both of ss.362 and ss.363 of the Code, except (i) replacement
Liens and super-priority administrative expense claims for diminution of value
(the "Priority Claims"), (A) which Liens at all times shall also secure the
Laurus Indebtedness (except to the extent such Liens relate to the Life
Insurance Proceeds) and (B) which Liens and Priority Claims shall be subject to
the priority set forth in Section 3.2 hereof, and (ii) the accrual (but not the
current payment) of interest and out-of-pocket expenses, including fees and
disbursements of counsel and other professional advisors, incurred by Roynat
(which Roynat agrees will constitute adequate protection of their claims and
interests);
14
(ii) oppose or object to any adequate protection sought by or
granted to Laurus with respect to the Collateral of any Company in such
proceeding;
(iii) oppose or object to the use of any Collateral of any
Company in such proceeding constituting cash collateral by such Company, unless
Laurus shall have opposed or objected to such use of such cash collateral;
(iv) oppose or object to any Post-Petition Financing by Laurus
or any group of lenders including Laurus with respect to any Company in such
proceeding or any order approving same on an interim or final basis, unless (i)
Laurus shall have opposed or objected to such Post-Petition Financing, (ii) such
Post-Petition Financing affects the priorities set forth in Section 3.2 hereof
or (iii) the rights of any parties in connection with such Post-Petition
Financing result in a Lien in any Life Insurance Proceeds;
(v) object to (i) the amount of the Laurus Indebtedness
allowed or permitted to be asserted in such proceeding under any Bankruptcy Law
so long as the principal amount of the Laurus Indebtedness does not exceed the
Maximum Laurus Principal Amount or (ii) the extent to which the Laurus
Indebtedness is deemed secured claims in such proceeding, including under
ss.506(a) of the Code or any similar provision of any other applicable
Bankruptcy Law;
(vi) oppose or object to any protection provided to Laurus in
such proceeding, including any form of adequate protection under ss.362 or
ss.363 of the Code or any similar provision of any other applicable Bankruptcy
Law and the payment of amounts equal to interest and expenses allowed under
ss.506(b) and (c) of the Code or any similar provision of any other applicable
Bankruptcy Law to Laurus; or
(vii) vote in favor of a chapter 11 plan of reorganization in
such proceeding under the Code or similar plan or reorganization or arrangement
under any other applicable Insolvency or Liquidation Proceeding or Bankruptcy
Law which fails to provide for the repayment in full of the Laurus Indebtedness,
unless Laurus is voting in favor of such plan.
Nothing contained in this Section 4.3(b) shall prohibit or in any
way limit Laurus from, with respect to the Collateral of any Company in such
proceeding, objecting in such proceeding to any action taken by Roynat,
including the seeking by Roynat of adequate protection with respect to the
Collateral of any Company in such proceeding or the asserting by Roynat of any
of its rights and remedies under the Roynat Agreements (or otherwise) with
respect to the Collateral of any Company in such proceeding in contravention of
this Agreement.
4.4 Proofs of Claim; Claims; Voting; Other Matters and Power of
Attorney. At any meeting of creditors or in the event of any Insolvency or
Liquidation Proceeding involving any Company or any Collateral, Roynat shall,
subject to the limitations set forth in this Agreement, retain the right to
vote, file a proof of claim and otherwise act with respect to Roynat
Indebtedness (including, without limitation, the right to vote to accept or
reject any plan of partial or complete liquidation, reorganization, arrangement,
composition or extension). In the event Roynat fails to execute, verify, deliver
and/or file any proofs of claim in respect of any Roynat Indebtedness in
connection with any such Insolvency or Liquidation Proceeding prior to the date
that is ten (10) days before the expiration of the time fixed by statute, court
rule or court order, as applicable, to file any such proof, Roynat hereby
irrevocably authorizes, empowers and appoints Laurus its agent and
attorney-in-fact to execute, verify, deliver and file such proofs of claim in
any such Insolvency or Liquidation Proceeding; provided, that Laurus shall have
no obligation to exercise any such authority with respect to Roynat's claim. To
enable Laurus to assert and enforce its rights hereunder in any Insolvency or
Liquidation Proceeding, Laurus or any Person whom Laurus may designate is hereby
irrevocably appointed attorney in fact for Roynat for the purposes provided for
in this Section 4.4. Roynat will execute and deliver to Laurus such instruments
as may be reasonably required by Laurus to effectuate the aforesaid power of
attorney.
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5. Miscellaneous.
5.1 Transfers. Roynat agrees that any transferee from it of any of
the Roynat Indebtedness shall, prior to acquiring such interest, execute and
deliver a counterpart of this Agreement to Laurus. Laurus agrees that any
transferee from it of any of the Laurus Indebtedness shall, prior to acquiring
such interest, execute and deliver a counterpart of this Agreement to Roynat.
5.2 Survival of Rights. The right of any Creditor to enforce the
provisions of this Agreement shall not be prejudiced or impaired by any act or
omitted act of any Company or the other Creditor, including forbearance, waiver,
consent, compromise, amendment, extension, renewal, or taking or release or
discharge of security in respect of any of such Creditor's indebtedness or
noncompliance by any Company with such provisions, regardless of the actual or
imputed knowledge of the other Creditor.
5.3 Amendments to Roynat Agreements. Nothing contained in this
Agreement, or in any other agreement or instrument binding upon any of the
parties hereto, shall in any manner limit or restrict the ability of Roynat from
increasing or changing the terms of the Roynat Agreements, or to otherwise
waive, amend or modify the terms and conditions of the Roynat Agreements, in
such manner as Roynat and Companies shall mutually determine. Laurus hereby
consents to any and all such waivers, amendments, modifications and compromises,
and any other renewals, extensions, indulgences, releases or discharges of
Collateral or other accommodations granted by Roynat to Companies from time to
time, and agrees that none of such actions shall in any manner affect or impair
the subordination established by this Agreement in respect of the Laurus
Indebtedness. Notwithstanding the foregoing, neither Roynat nor any Company
shall enter into any amendment to or modification of any Roynat Agreement,
without the prior written consent of Laurus, the effect of which would (a)
increase the aggregate principal amount of the Roynat Indebtedness to an amount
greater than the Maximum Roynat Principal Amount, (b) increase the amount of any
cash installment of principal due under the Roynat Agreements, (c) shorten the
amortization of any payment of principal or interest due under the Roynat
Agreements, (d) increase the applicable interest rate with respect to the Roynat
Indebtedness over the interest rates currently set forth in the Roynat
Agreements, except in connection with the imposition of the default rate of
interest set forth in the Roynat Agreements on the date hereof; (e) increase the
dollar amounts of any fees required to be paid by any Company to Roynat from the
amounts set forth in the Roynat Agreements on the date hereof, (f) add
additional financial covenants or events of defaults to any Roynat Agreement or
make the terms of any existing financial covenant or event of default materially
more restrictive to any Company as set forth in the Roynat Agreements on the
date hereof and/or (g) add restrictions on the ability of any Company to make
payments to Laurus under the Laurus Agreements.
16
5.4 Amendments to Laurus Agreements. Nothing contained in this
Agreement, or in any other agreement or instrument binding upon any of the
parties hereto, shall in any manner limit or restrict the ability of Laurus from
increasing or changing the terms of the Laurus Agreements, or to otherwise
waive, amend or modify the terms and conditions of the Laurus Agreements, in
such manner as Laurus and Companies shall mutually determine. Roynat hereby
consents to any and all such waivers, amendments, modifications and compromises,
and any other renewals, extensions, indulgences, releases or discharges of
Collateral or other accommodations granted by Laurus to Companies from time to
time, and agrees that none of such actions shall in any manner affect or impair
the subordination established by this Agreement in respect of the Roynat
Indebtedness. Notwithstanding the foregoing, neither Laurus nor any Company
shall enter into any amendment to or modification of any Laurus Agreement,
without the prior written consent of Roynat, the effect of which would (a)
increase the aggregate principal amount of the Laurus Indebtedness to an amount
greater than the Maximum Laurus Principal Amount, (b) increase the amount of any
cash installment of principal due under the Laurus Agreements, (c) shorten the
amortization of any payment of principal or interest due under the Laurus
Agreements unless a Laurus Default has occurred and is continuing, (d) increase
the applicable interest rate with respect to the Laurus Indebtedness over the
interest rates currently set forth in the Laurus Agreements, except in
connection with the imposition of the default rate of interest set forth in the
Laurus Agreements on the date hereof, (e) increase the dollar amounts of any
fees required to be paid by any Company to Laurus from the amounts set forth in
the Laurus Agreements on the date hereof, (f) add additional events of defaults
to any Laurus Agreement or make the terms of any existing Laurus Default
materially more restrictive to any Company as set forth in the Laurus Agreements
on the date hereof and/or (g) add restrictions on the ability of any Company to
make Permitted Payments in addition to those restrictions set forth herein and
in the Laurus Agreements on the date hereof. For the avoidance of any doubt,
Laurus and any Company may enter into any amendment to or modification of any
Laurus Agreement, without the consent of Roynat, the effect of which would
decrease the Fixed Conversion Price (as defined in the Laurus Security
Agreement) set forth in any Laurus Agreement.
5.5 Notice of Default and Certain Events. Each Creditor shall notify
the other of the occurrence of any of the following as applicable:
(a) the occurrence of any Laurus Default or any Roynat Default;
(b) the acceleration of any Laurus Indebtedness or any Roynat
Indebtedness;
(c) the granting by Laurus of any waiver of any Laurus Default under
the Laurus Agreements or the granting by Roynat of any waiver of any Roynat
Default under the Roynat Agreements;
17
(d) the payment in full by Companies (whether as a result of
refinancing or otherwise) of all Laurus Indebtedness or all Roynat Indebtedness;
and
(e) the irrevocable termination of the Laurus Agreements or the
Roynat Agreements.
The failure of any party to give such notice shall not affect the
subordination terms or the relative Lien priorities set forth in this Agreement
nor shall the failure to deliver such notice give Laurus or Roynat, as the case
may be, any cause of action or right to damages or other remedy against one
another.
5.6 Notices. Any notice or other communication required or permitted
pursuant to this Agreement shall be deemed given (a) when personally delivered
to any officer of the party to whom it is addressed, (b) on the earlier of
actual receipt thereof or three (3) days following posting thereof by certified
or registered mail, postage prepaid, or (c) upon actual receipt thereof when
sent by a recognized overnight delivery service, or (d) upon actual receipt
thereof when sent by telecopier to the number set forth below with electronic
confirmation of receipt, in each case addressed to each party at its address or
telecopier number set forth below or at such other address or telecopier number
as has been furnished in writing by a party to the other by like notice:
If to Laurus: Laurus Master Fund, Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Loeb & Loeb, LLP
000 Xxxx Xxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Roynat: Roynat Merchant Capital Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Roynat Merchant Capital Inc.
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to any Company: Xxxxxx Equipment, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and: Xxxxxx Equipment 2004 Inc.
00 Xxxxxxx Xxxx
Xxxxxxxxxxx, XX X0X 0X0 Xxxxxx
Attention: Xxxxxxxx X. Xxxx
Facsimile: (000) 000-0000
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5.7 Binding Effect; Other. This Agreement shall be a continuing
agreement, shall be binding upon and shall inure to the benefit of the parties
hereto from time to time and their respective successors and assigns. This
Agreement may not be assigned by Laurus except to an assignee of the Laurus
Indebtedness. This Agreement may not be assigned by Roynat except to an assignee
of the Roynat Indebtedness. This Agreement shall be irrevocable and remain in
full force and effect until the Laurus Indebtedness shall have been indefeasibly
paid in full and the Laurus Agreements shall have been irrevocably terminated,
but shall continue to be effective, or be reinstated, as the case may be, if at
any time payment, or any part thereof, of any amount paid by or on behalf of any
Company with regard to the Laurus Indebtedness is rescinded or must otherwise be
restored or returned upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of any Company, or upon or as a result of the appointment of a
receiver, interim receiver, monitor, intervenor or conservator of, or trustee,
custodian, or similar officer, for any Company or any substantial part of its
property, or otherwise, all as though such payments had not been made. Any
waiver or amendment hereunder must be evidenced by a signed writing of the party
to be bound thereby, and shall only be effective in the specific instance. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. The headings in this Agreement are for convenience of
reference only, and shall not alter or otherwise affect the meaning hereof.
6. Representations and Warranties.
6.1 Roynat represents and warrants to Laurus that Roynat is the
holder of Roynat Indebtedness and Liens which secure or will secure Roynat
Indebtedness. Roynat agrees that it shall not assign or transfer any of Roynat
Indebtedness without (i) prior notice being given to Laurus and (ii) such
assignment or transfer being made expressly subject to the terms of this
Agreement. Roynat further warrants to Laurus that it has full right, power and
authority to enter into this Agreement.
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6.2 Laurus represents and warrants to Roynat that Laurus is the
holder of the Laurus Indebtedness and Liens which secure or will secure the
Laurus Indebtedness. Laurus agrees that it shall not assign or transfer any of
the Laurus Indebtedness or Liens without (i) prior notice being given to Roynat
and (ii) such assignment or transfer being made expressly subject to the terms
and provisions of this Agreement. Laurus further represents and warrants to
Roynat that it has full right, power and authority to enter into this Agreement.
6.3 The representations and warranties contained in this Section 6
shall survive execution and delivery of this Agreement.
7. Proceedings. ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST LAURUS,
ROYNAT OR ANY COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, UNITED
STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH PARTY
HERETO ACCEPTS FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HERETO
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED
HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF AND SHALL NOT ASSERT ANY DEFENSE
BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.
8. Waiver of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY CREDITOR OR ANY COMPANY OR ANY
OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR
AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF
THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
9. Companies' Acknowledgement. Each Company agrees that (a) nothing
contained in this Agreement shall be deemed to amend, modify, supercede or
otherwise alter the terms of the respective agreements between such Company and
each Creditor and (b) this Agreement is solely for the benefit of the Creditors
and shall not give such Company, its successors or assigns or any other Person
any rights vis-a-vis any Creditor.
20
10. Counterparts; Facsimile. This Agreement may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
11. Language. The parties hereto hereby acknowledge that they have
required that this Agreement be prepared in English. Les parties reconnaissent
avoir exige que la presente convention et tous les documents connexes soient
rediges en anglais
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES TO FOLLOW]
21
IN WITNESS WHEREOF, the undersigned have entered into this
Subordination and Intercreditor Agreement as of this 28 day of February, 2005.
LAURUS MASTER FUND, LTD.
By:/s/ XXXXX GRIN
-----------------
Name: Xxxxx Grin
Title: Fund Manager
ROYNAT MERCHANT CAPITAL INC.
By:/s/ XXXXX XXXXXX
-------------------
Name: Xxxxx Xxxxxx
Title: President
XXXXXX EQUIPMENT, INC.
By:/s/ XXXXXXXX X. XXXX
-----------------------
Name: Xxxxxxxx X. Xxxx
Title: President
XXXXXX VENTURES, INC.
By:/s/ XXXXXXXX X. XXXX
-----------------------
Name: Xxxxxxxx X. Xxxx
Title: President
XXXXXX EQUIPMENT 2004 INC.
By: /s/ XXXXXXXX X. XXXX
-----------------------
Name: Xxxxxxxx X. Xxxx
Title: President
[ADDITIONAL SIGNATURE PAGE TO FOLLOW]
22
PNEUTECH INC.
By: /s/ XXXXXXXX X. XXXX
----------------------
Name: Xxxxxxxx X. Xxxx
Title: President
XXXXXXXX CONTROLS INC.
By: /s/ XXXXXXXX X. XXXX
----------------------
Name: Xxxxxxxx X. Xxxx
Title: President
HYDRAMEN FLUID POWER LIMITED
By: /s/ XXXXXXXX X. XXXX
----------------------
Name: Xxxxxxxx X. Xxxx
Title: President
23
