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SUBORDINATION AND INTERCREDITOR AGREEMENT
Subordination and Intercreditor Agreement entered into as of October
23, 1999 by and among PEOPLE'S BANK ("New Lender"), JUNE H. GENEEN, PHIL E.
GILBERT, JR., THOMAS W. KEESEE and the UNITED STATES TRUST COMPANY OF NEW YORK,
as Co-Executors of the Estate of Harold S. Geneen, Late of New York, New York
(collectively, the "Estate") and GUNTHER INTERNATIONAL, LTD. ("Gunther").
WHEREAS, pursuant to a certain Commercial Revolving Loan Agreement
dated the date hereof between Gunther and the New Lender (the "Revolving Loan
Agreement"), the New Lender has or may make loans to Gunther from time to time
in the aggregate principal amount of up to Five Hundred Thousand Dollars
($500,000) at any one time outstanding, which loans are evidenced by the
Revolving Loan Agreement and a certain $500,000 Promissory Note (Revolving
Credit Facility) dated the date hereof made by Gunther to the order of the New
Lender (the "Revolving Note"); and
WHEREAS, payment and performance of Gunther's obligations under the
Revolving Loan Agreement and the Revolving Note are secured by a valid security
interest in, and lien on, all of Gunther's tangible and intangible personal
property, whether now owned or hereafter acquired, and all products and proceeds
thereof (collectively, the "Collateral"), all as more fully set forth in a
certain Security Agreement dated the date hereof between Gunther and the New
Lender (the "Security Agreement"); and
WHEREAS, pursuant to a certain Commercial Loan Agreement dated the date
hereof between Gunther and the New Lender (the "Commercial Loan Agreement"), the
New Lender may make loans to Gunther from time to time in the aggregate
principal amount of up to Two Hundred Thousand Dollars ($200,000) at any one
time outstanding; and
WHEREAS, payment and performance of Gunther's obligations under the
Commercial Loan Agreement are to be secured by a valid pledge and security
interest in cash deposits (the "Cash Deposits") to be delivered to the New
Lender pursuant to a certain Pledge Agreement dated the date hereof between
Gunther and the New Lender (the "Pledge Agreement"); and
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WHEREAS, Gunther is indebted to the Estate under a certain
$1,701,168.75 Promissory Note dated October 2, 1998 made by Gunther to the order
of the Estate (the "Estate Note"); and
WHEREAS, payment and performance of Gunther's obligations to the Estate
under the Estate Note are secured by a valid security interest in, and lien on,
all of the Collateral granted to the Estate by Gunther pursuant to a certain
Security Agreement dated October 2, 1998 (the" Estate Security Agreement"); and
WHEREAS, the Collateral, including the Cash Deposits, is also
encumbered by a valid security interest and lien granted by Gunther to Gunther
Partners, LLC ("GP") pursuant to a certain Loan and Security Agreement dated
October 2, 1998 between Gunther and GP as amended by that certain Amendment to
Loan and Security Agreement and Term Note dated as of September 15, 1999 between
Gunther and GP; and
WHEREAS, the Collateral, including the Cash Deposits, is also
encumbered by a valid security interest and lien granted by Gunther to
Connecticut Innovations, Inc. ("CII") pursuant to an Amendment and Restatement
of Development Agreement dated as of December 31, 1995 between Gunther and CII;
and
WHEREAS, pursuant to a certain Subordination and Intercreditor
Agreement dated the date hereof between GP (the "GP Subordination"), the New
Lender and Gunther, GP has agreed to subordinate its lien and security interest
in the Cash Deposits and all of the other Collateral constituting Accounts, as
defined in the GP Subordination, to the lien and security interest therein held
by the New Lender; and
WHEREAS, pursuant to a certain Subordination and Intercreditor
Agreement dated the date hereof between CII, the New Lender and Gunther, CII has
agreed to subordinate its lien and security interest in the Cash Deposits and
all of the other Collateral (other than Collateral constituting patents and
trademarks) to the lien and security interest held by the New Lender in the Cash
Deposits and the other Collateral (other than Collateral constituting patents
and trademarks); and
WHEREAS, the New Lender has conditioned its extension of credit to
Gunther under the Revolving Loan Agreement, the Revolving Note and the
Commercial Loan Agreement upon the Estate's subordinating its lien in the
Collateral, including but
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not limited to the Cash Deposits, to the lien therein of the New Lender; and
WHEREAS, it is in the best interests of the Estate if the New Lender
provide financing to Gunther pursuant to the Revolving Loan Agreement, the
Revolving Note and the Commercial Loan Agreement; and
NOW THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. The Estate hereby subordinates its security interest and lien in the
Collateral, including the Cash Deposits, to the security interest and lien of
the New Lender therein. Notwithstanding the date, time, manner or order of
attachment or perfection of the security interest and liens of the Estate or the
New Lender in any of the Collateral, including the Cash Deposits, and
notwithstanding any provisions of the Uniform Commercial Code, any applicable
law, any decision of any court or tribunal of competent jurisdiction or whether
the Estate or the New Lender holds possession of all or any part of the
Collateral, including the Cash Deposits, the lien and security interest of the
New Lender in and to the Collateral, including the Cash Deposits, and all
proceeds thereof shall be prior in right to the lien and security interest of
the Estate in and to the Collateral, including the Cash Deposits.
2. After the occurrence of a default in Gunther's obligations to the
New Lender or the Estate which continues beyond any applicable grace period, (i)
the proceeds from the disposition, sale or liquidation of the Collateral, other
than the Cash Deposits, shall be applied, regardless of when the indebtedness of
Gunther to the New Lender or the Estate may be due, first to pay the debts,
obligations and liabilities of Gunther to the New Lender under the Revolving
Loan Agreement and the Revolving Note (including accrued interest, expenses and
other costs) and then, to pay all other creditors of Gunther in accordance with
their rights and (ii) the Cash Deposits shall be applied, regardless of when the
indebtedness of Gunther to the New Lender or the Estate may be due, first to pay
the debts, obligations and liabilities of Gunther to the New Lender under the
Commercial Loan Agreement (including accrued interest, expenses and other costs)
and then to pay all other creditors of Gunther in accordance with their rights.
At all times, the New Lender may exercise all of its rights and remedies under
the Revolving Loan Agreement, the Revolving Note and the Commercial
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Loan Agreement and, without limiting the foregoing, may take all actions that it
deems desirable to collect the debts, obligations and liabilities of Gunther to
the New Lender under the Revolving Loan Agreement, the Revolving Note and/or
Commercial Loan Agreement (collectively, the "New Lender Indebtedness"), as the
case may be, including without limitation, the repossession, foreclosing,
selling, releasing or disposing of any Collateral and the commencement of, or
joining with other creditors in the commencement of, bankruptcy or insolvency
actions against Gunther.
3. The Estate agrees to execute any assignment, UCC-1 financing
statement, UCC-3 subordination agreement, or any other instrument or document
requested by the New Lender and to take such further action as the New Lender
may at any time, and from time to time, reasonably request in order to
effectuate this Agreement.
4. The Estate has, to the extent deemed necessary by the Estate,
reviewed the existing agreements among the New Lender and Gunther and has had
its counsel fully explain to it such agreements and this Agreement, and
understands that there is no commitment or obligation on the New Lender's part
to make any loans or advances or to extend credit to Gunther except as may be
contained in current and presently effective written agreements between the New
Lender and Gunther; provided, however, that the Estate further understands that
such agreements may be modified, altered or amended, without notice to or
consent of the Estate.
5. The New Lender may at any time, in its discretion, renew or extend
the time of payment of all or any of the New Lender Indebtedness or waive or
release any collateral which may be held therefor, and the New Lender may enter
into such agreements with Gunther as the New Lender may deem desirable without
notice to or further assent from the Estate and without in any way affecting the
New Lender's rights hereunder.
6. The Estate shall pay to the New Lender on demand, all expenses of
every kind, including reasonable attorneys' fees that the New Lender may incur
in enforcing any of its rights under this Agreement.
7. This Agreement is effective notwithstanding any defect in the
validity or enforceability of any instrument or document evidencing the New
Lender Indebtedness.
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8. This Agreement shall be governed by and construed under the laws of
the State of Connecticut.
9. The provisions of this Agreement are independent of and severable
from each other. If any provision hereof shall for any reason be held invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of any other provision hereof, and this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
10. Neither the failure nor any delay on the part of the New 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 the New Lender hereunder shall be effective
unless it is in writing and signed by the New Lender, and then only to the
extent specifically stated in such writing.
11. In order to induce the New Lender to provide financing to Gunther
pursuant to the Revolving Loan Agreement, the Revolving Note and the Commercial
Loan Agreement, Gunther hereby acknowledges this Agreement and agrees to be
bound by all the terms, provisions and conditions hereof.
12. This Agreement shall be binding upon the Estate and their
respective heirs, executors, administrators, successors, and assigns, and all of
the New Lender's rights hereunder shall inure to the benefit of the New Lender
and its successors and assigns.
13. All notices or other communications pursuant to this Agreement
shall be in writing and shall be deemed given when received at the addresses
provided below:
If to the Estate, to:
Co-Executors of the Estate of Harold S. Geneen
c/o United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Steven M. Kirkpatrick
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If to the New Lender, to:
People's Bank
4 Broadway
Norwich, Connecticut 06360
Attention: Arthur C. Barton
If to Gunther, to:
Gunther International, Ltd.
One Winnenden Road
Norwich, Connecticut 06360
Attention: President
Each party shall have the right to change its address by sending a
written notice thereof to the other parties by registered or certified mail
addressed as provided herein.
14. The Estate, the New Lender and Gunther hereby agree that any state
court or local court of the State of Connecticut and the United States District
Court for the District of Connecticut shall have exclusive jurisdiction to hear
and determine any claims or disputes between the Estate, the New Lender and
Gunther pertaining directly or indirectly to this Agreement, or to any matter
arising herefrom. The Estate, the New Lender and Gunther expressly submit and
consent in advance to such jurisdiction in any action or proceeding commenced in
such courts, hereby waiving personal service of the summons and complaint, or
other process or papers issued therein, and agreeing that service of such
summons and complaint, or other process or papers may be made by registered or
certified mail addressed to the Estate, the New Lender and Gunther, as the case
may be, at the address of the New Lender, the Estate or Gunther, as the case may
be, set forth above. The exclusive choice of forum set forth in this paragraph
shall not be deemed to preclude the enforcement of any judgment obtained in such
forum, in any appropriate jurisdiction.
15. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
16. Telefacsimile transmissions of any executed original document
and/or retransmission of any executed telefacsimile transmission shall be deemed
to be the same as the delivery of an executed original. At the request of any
party hereto, the other
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parties shall confirm telefacsimile transmissions by executing duplicate
original documents and delivering the same to the requesting party or parties.
[Rest of This Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year first above written.
Signed, Sealed and Delivered
in the Presence of: PEOPLE'S BANK
/s/ Karl-Erik Sternlof By: /s/ Arthur C. Barton
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Name: Name:Arthur C. Barton
Title: Vice President
/s/ Frank J. Saccomandi, III
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Name:
THE ESTATE OF
HAROLD S. GENEEN
By: /s/ June H. Geneen
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Name: June H. Geneen,
Its Co-Executor
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Name:
/s/ Todd Skobinsky By: /s/ Phil E. Gilbert, Jr.
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Name: Phil E. Gilbert, Jr.,
Its Co-Executor
/s/ Valerie W. Hunt
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Name:
/s/ Clay R. Serenbetz By: /s/ Thomas W. Keesee
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Name: Thomas W. Keesee,
Its Co-Executor
/s/ Robert Bove
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Name:
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By: UNITED STATES TRUST
COMPANY OF NEW YORK,
Its Co-Executor
/s/ Robert Bove By: /s/ Steven Scott Kirkpatrick
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Name: Name:
Title: Vice President
/s/ Todd Skobinsky
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Name:
GUNTHER INTERNATIONAL, LTD.
/s/ Frank J. Saccomandi, III By: /s/ Michael M. Vehlies
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Name: Name:
Title: Chief Financial
Officer
/s/ Karl-Erik Sternlof
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Name:
STATE OF CONNECTICUT )
) ss. Norwich November 8, 1999
COUNTY OF New London )
Personally appeared Arthur C. Barton, signer and sealer of the
foregoing instrument personally known to me (or satisfactorily proven) who
acknowledged that he is the Vice President of PEOPLE'S BANK, is duly authorized
to execute said instrument and further acknowledged the same to be his free act
and deed as such Officer of PEOPLE'S BANK, and the free act and deed of said
bank, before me, the undersigned officer.
/s/ Karl-Erik Sternlof
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Name:
Commissioner of the Superior Court
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STATE OF Massachusetts )
) ss:
COUNTY OF Norfolk )
On this 30th day of October, 1999, before me, the undersigned officer,
personally appeared JUNE H. GENEEN, personally known to me (or satisfactorily
proven) who acknowledged herself to be the person whose name subscribed to the
within instrument and acknowledged that she executed the same for the purposes
therein contained.
In witness whereof I hereunto set my hand.
/s/ Andrew Murphy
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Name:
Notary Public
My Commission Expires Sept. 7, 2001
STATE OF NEW YORK )
) ss:
COUNTY OF New York )
On this __ day of October, 1999, before me, the undersigned officer,
personally appeared PHIL E. GILBERT, JR., personally known to me (or
satisfactorily proven) who acknowledged himself to be the person whose name
subscribed to the within instrument and acknowledged that he executed the same
for the purposes therein contained.
In witness whereof I hereunto set my hand.
/s/ Valerie W. Hunt
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Name:
Notary Public
My Commission Expires 2/5/2000
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STATE OF NEW YORK )
) ss:
COUNTY OF Westchester )
On this 23rd day of October, 1999, before me, the undersigned officer,
personally appeared THOMAS W. KEESEE, personally known to me (or satisfactorily
proven) who acknowledged himself to be the person whose name subscribed to the
within instrument and acknowledged that he executed the same for the purposes
therein contained.
In witness whereof I hereunto set my hand.
/s/ Clay R. Serenbetz
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Name:
Notary Public
My Commission Expires 11/13/99
STATE OF NEW YORK )
) ss:
COUNTY OF New York )
On this 28th day of October, 1999, before me, the undersigned officer,
personally appeared Steven Scott Kirkpatrick, Vice President of UNITED STATES
TRUST COMPANY OF NEW YORK, personally known to me (or satisfactorily proven) who
acknowledged himself to be the person whose name subscribed to the within
instrument and acknowledged that he executed the same for the purposes therein
contained.
In witness whereof I hereunto set my hand.
/s/ Clay R. Serenbetz
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Name:
Notary Public
My Commission Expires 11/13/99
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STATE OF CONNECTICUT )
) ss. Norwich November 8, 1999
COUNTY OF New London )
Personally appeared Michael Vehlies, signer and sealer of the foregoing
instrument personally known to me (or satisfactorily proven) who acknowledged
that he as Chief Financial Officer of GUNTHER INTERNATIONAL, LTD., is duly
authorized to execute said instrument and further acknowledged the same to be
his free act and deed as such Officer of GUNTHER INTERNATIONAL, LTD., and the
free act and deed of said corporation, before me, the undersigned officer.
/s/ Frank J. Saccomandi, III
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Name:
Commissioner of the Superior Court
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