1
EXHIBIT 10.26
SUBORDINATION AGREEMENT
Agreement dated October 15, 1997 between PNC BANK, NATIONAL
ASSOCIATION as agent for Senior Lenders (as hereafter defined) and TYLER
CORPORATION ("Subordinated Lender").
BACKGROUND
As an inducement for Agent and Senior Lenders to provide a
secured credit facility in favor of INSTITUTIONAL FINANCING SERVICES, INC., a
California corporation (the "Company"), Subordinated Lender has agreed to enter
into this subordination agreement to provide for the subordination of the
"Subordinated Indebtedness" to the "Senior Indebtedness."
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
I. Definitions.
I.1. General Terms. For purposes of this
Subordination Agreement, the following terms shall have the following meanings:
"Agent" shall mean PNC Bank, National Association and
its successors and assigns.
"Agreements" shall mean, collectively, the Senior
Lending Agreements and the Purchase Agreement.
"Acquisition Guaranty" shall mean the Guaranty dated
as of the date hereof executed by I.F.S. in favor of Agent for its benefit and
for the ratable benefit of Lenders, as same may be amended from time to time.
"Company" shall mean the Company and its successors
and assigns.
"Creditors" shall mean, collectively, Agent, Senior
Lenders and Subordinated Lender and their respective successors and assigns.
"Default" shall have the meaning set forth in the
Loan Agreement.
"Distribution" shall mean any payment, whether in
cash, in kind, securities or any other property, or security for any such
Distribution.
1
2
"Documents" shall have the meaning given to the term
"Other Documents" in the Loan Agreement,
"Event" shall have the meaning set forth in Section
2.2(c) hereof.
"Holder of Subordinated Indebtedness" or
"Subordinated Lender" shall mean Tyler Corporation, and any other Person(s) at
any time or in any manner acquiring any right or interest in any of the
Subordinated Indebtedness.
"I.F.S." shall mean I.F.S. Acquisition Corp., a New
Jersey corporation.
"Loan Agreement" shall mean the Revolving Credit, Term
Loan and Security Agreement dated as of October 15, 1997 between the Company,
Agent and Senior Lenders as the same may be amended, supplemented, modified or
restated from time to time.
"Material Default" shall mean a Default under
Sections 10.4, 10.5 (solely with respect to Sections 4.6, 4.9, 4.11, 6.3 and
9.4 of the Loan Agreement), 10.6, 10.7, 10.9 and 10.15 (ii) of the Loan
Agreement.
"Merger" shall mean the merger of the Company with
and into I.F.S. with I.F.S. being the surviving corporation.
"Person" shall mean an individual, a partnership, a
corporation (including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture, a limited liability company, a
limited liability partnership or other entity, or a government or any agency,
instrumentality or political subdivision thereof.
"Purchase Agreement" shall mean that certain Stock
Purchase Agreement dated as of October 9, 1997 among the Company, Subordinated
Lender and I.F.S., together with all exhibits and schedules thereto, as same
may be amended, modified, restated or supplemented from time to time.
"Senior Indebtedness" shall mean, prior to the
Merger, all obligations of any kind owed by I.F.S. to Agent and Senior Lenders
from time to time under or pursuant to any of the Acquisition Guaranty,
including without limitation, all principal, interest (including all interest
accruing after commencement of any case, proceeding or other action relating to
the bankruptcy, insolvency or reorganization of I.F.S.) accruing thereon,
charges, expenses, fees and other sums chargeable to I.F.S. by Agent and Senior
Lenders, and reimbursement, indemnity or other obligations due and payable to
Agent and Senior Lenders and, subsequent to the Merger, Senior Indebtedness
shall mean all obligations of any kind owed by I.F.S. to Agent and Senior
Lenders from time to time under or pursuant to the Senior Lending Agreements
including, without limitation, all principal, interest (including all interest
accruing after commencement of any case, proceeding or other action relating to
the bankruptcy, insolvency or reorganization of I.F.S.) accruing thereon,
charges, expenses, fees and other sums chargeable to I.F.S. by Agent and Senior
Lenders, and reimbursement, indemnity or other obligations due and payable to
Agent and Senior
2
3
Lenders. Senior Indebtedness shall continue to Constitute Senior Indebtedness,
notwithstanding the fact that such Senior Indebtedness or any claim for such
Senior Indebtedness is subordinated, avoided or disallowed under the federal
Bankruptcy Code or other applicable law. Senior Indebtedness shall also include
any indebtedness of I.F.S. incurred in connection with a refinancing of the
Senior Indebtedness under the Senior Lending Agreements if the terms and
conditions of the agreements, documents and instruments related to such
refinancing, taken as a whole, are not materially more onerous to the Holder of
Subordinated Indebtedness than those set forth in the Senior Lending
Agreements, as in effect on the date hereof.
"Senior Lenders" shall mean each of the financial
institutions that are now or hereafter become parties to the Loan Agreement and
their successors and assigns.
"Senior Lending Agreements" shall mean, collectively,
the Loan Agreement, the Note and the other Documents between the Company prior
to the Merger and I.F.S. (as successor in interest to the Company) upon the
Merger becoming effective, Agent and/or Senior Lenders each as from time to
time in effect.
"Subordinated Indebtedness" shall mean all principal,
interest and other amounts payable or chargeable in connection with the Section
2.2(a)(iii) of the Purchase Agreement.
I.2. Other Terms. Capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan Agreement.
I.3. Certain Matters of Construction. The terms
"herein, "hereof" and "hereunder" and other words of similar import refer to
this Subordination 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. All references to any instruments or agreements, including,
without limitation, references to any of the Senior Lending Agreements or
Purchase Agreement shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
2. Covenants. I.F.S. and each Holder of Subordinated
Indebtedness hereby covenant that until the Senior Indebtedness shall have been
paid in full and satisfied in cash and the Loan Agreement shall have been
irrevocably terminated, all in accordance with the terms of the Loan Agreement,
each will comply with such of the following provisions as are applicable to it:
2.1. Transfers. Each Holder of Subordinated
Indebtedness covenants that any transferee from it of any Subordinated
Indebtedness shall, prior to acquiring such interest, execute and deliver a
counterpart of this Subordination Agreement to each other party hereto.
2.2. Subordination Provisions. To induce Agent and
Senior Lenders to enter into the Loan Agreement and to make loans and advances
thereunder, notwithstanding any other provision of the Subordinated
Indebtedness to the contrary, any Distribution with respect to the Subordinated
Indebtedness is and shall be expressly junior and subordinated in light of
payment
3
4
to all amounts due and owing upon all Senior Indebtedness outstanding from time
to time. Specifically, but not by way of limitation:
(a) Payments. I.F.S. shall make no Distribution on the
Subordinated Indebtedness until such time as the Senior Indebtedness shall have
been paid in full in cash and the Loan Agreement shall have been irrevocably
terminated; provided, however, so long as no Material Default or Event of
Default shall have occurred under the Senior Lending Agreements or would occur
after giving effect to such payment, I.F.S. may pay and the holders of the
Subordinated Indebtedness may receive payment of the outstanding Subordinated
Indebtedness if the Company has achieved EBITDA of at least $5,017,000 and
revenues of at least $20,813,000 for the period commencing on October 1, 1997
and ending December 31, 1997 ("Initial Period"), which determination shall be
made by Agent based upon a special purpose audit prepared for the Initial
Period by independent certified accountants retained by the Company. In the
event that the foregoing test is not met for the Initial Period, then so long
as no Material Default or Event of Default shall have occurred under the Senior
Lending Agreements or would occur after giving effect to such payment, I.F.S.
may pay and the Holders of Subordinated Indebtedness may receive payment of (1)
$500,000 of the Subordinated Indebtedness if the Company has achieved EBITDA of
at least $4,738,000 and revenues of at least $19,657,000 for the Initial
Period, which determination shall be made by Agent based upon the a special
purpose audit prepared for the Initial Period by independent certified
accountants retained by the Company and (2) the outstanding balance of the
Subordinated Indebtedness if the Company has achieved EBITDA of at least
$5,334,000 and revenues of at least $29,513,000 for the six month period ending
on March 31, 1998, which determination shall be made by Agent based upon a
special purpose audit prepared for the six month period ending on March 31,
1998 by independent certified accountants retained by the Company.
Following the occurrence of a Material Default or an Event of
Default under the Senior Lending Agreements, (i) I.F.S. shall make no
Distribution on the Subordinated Indebtedness and (ii) upon and after receipt
by the Holders of Subordinated Indebtedness of written notice of such Material
Default or Event of Default from Agent (such notice, the "Default Notice") no
such Holder of Subordinated Indebtedness shall be entitled to receive or
retain any such Distribution in respect of the Subordinated Indebtedness,
provided, further, that notwithstanding the foregoing restriction, I.F.S. may
pay and the Holders of Subordinated Indebtedness shall be entitled to receive
and retain a Distribution on account of the Subordinated Indebtedness which
shall have become due and payable (on a non-accelerated basis) on the earliest
to occur of (x) the date on which all such Material Defaults and/or Events of
Default specified in the Default Notice shall have been cured or waived or (y)
payment in full in cash of all Senior Indebtedness and the irrevocable
termination of the Loan Agreement.
(b) Limitation on Acceleration. During any period described
in Section 2.2(a) hereof in which a Distribution is not permitted to be made on
Subordinated Indebtedness, no Holder of Subordinated Indebtedness shall be
entitled to accelerate the maturity of the Subordinated Indebtedness, exercise
any remedies or commence any other action or proceeding to recover any amounts
due or to become due with respect to Subordinated Indebtedness, provided,
however, the foregoing limitation on acceleration or exercise of any remedies
shall not be applicable following (x) the occurrence of an Event (as to which
Section 2.2(c) shall apply), (y)
4
5
following the maturity Or acceleration of all Senior Indebtedness, or (z) one
hundred-eighty (180) days from the delivery of the Default Notice.
(c) Prior Payment of Senior Indebtedness in
Bankruptcy, etc. In the event of any insolvency or bankruptcy proceedings
relative to I.F.S. or its property, or any receivership, liquidation,
reorganization or other similar proceedings in connection therewith, or, in the
event of any proceedings for voluntary liquidation, dissolution or other
winding up of I.F.S. or distribution or marshalling of its assets or any
composition with creditors of I.F.S., whether or not involving insolvency or
bankruptcy, or if I.F.S. shall cease its operations, call a meeting of its
creditors or no longer do business as a going concern (each individually or
collectively, an "Event") then all Senior Indebtedness shall be paid in full
and satisfied in cash and the Loan Agreement irrevocably terminated before any
Distribution shall be made on account of any Subordinated Indebtedness. Any
such Distribution which would, but for the provisions hereof, be payable or
deliverable in respect of the Subordinated Indebtedness, shall be paid or
delivered directly to Agent or its representatives, in the proportions in which
they hold the same, until amounts owing upon Senior Indebtedness shall have
been paid in full in cash and the Loan Agreement irrevocably terminated.
(d) Acceleration. In the event of any Senior
Indebtedness becoming due and payable, whether by acceleration, maturity or
otherwise, no Distribution shall thereafter be made on account of the
Subordinated Indebtedness until all Senior Indebtedness shall be paid in full
in cash and the Loan Agreement be irrevocably terminated.
(e) Power of Attorney. To enable Agent to assert
and enforce its rights hereunder in any proceeding referred to in Section
2.2(c) or upon the happening of any Event, the Agent or any person whom it may
designate is hereby irrevocably appointed attorney in fact for the Subordinated
Lender with full power to act in the place and stead of the Subordinated Lender
including the right to make, present, file and vote such proofs of claim
against I.F.S. on account of all or any part of the Subordinated Indebtedness as
Agent may deem advisable and to receive and collect any and all dividends or
other payments made thereon and to apply the same on account of the Senior
Indebtedness, provided, however, that such power of attorney shall terminate
when the limitations on acceleration are no longer applicable. The Subordinated
Lender will execute and deliver to Agent such instruments as may be required by
Agent to enforce any and all Subordinated Indebtedness, to effectuate the
aforesaid power of attorney and to effect collection of any and all dividends
or other payments which may be made at any time on account thereof, and the
Subordinated Lender hereby irrevocably appoints Agent as the lawful attorney
and agent of the Subordinated Lender to execute financing statements on behalf
of the Subordinated Lender and hereby further authorizes Agent to file such
financing statements in any appropriate public office.
(f) Knowledge; Delivery of Default Notice. No
holder of any Subordinated Indebtedness shall at any time be charged with
knowledge of any of the events described in Section 2.2 (a) hereof or on such
account be prohibited from receiving or retaining any payment of monies or from
taking any action regarding acceleration or the exercise of remedies, unless
and until such holder shall have received the Default Notice; provided,
however, any "default" or "event of default" under the Purchase Agreement shall
automatically constitute an Event of Default under the Senior Lending
Agreements so that payments received by any Holder of Subordinated Indebtedness
following any such occurrence shall not be retained irrespective of the
5
6
lack of receipt by such holder of a Default Notice, unless, (i) the Event of
Default is waived by such Holder of Subordinated Indebtedness, (ii) a copy of
such waiver is given in writing by such Holder of Subordinated Indebtedness to
Agent and (iii) no Default Notice is thereafter forthcoming from Agent within
five (5) Business Days following the giving of notice of the aforesaid waiver,
in which event any Holder of Subordinated Indebtedness may retain all payments
previously or thereafter received, subject to the provisions of Section 2.2
(a).
Each Default Notice shall be deemed to be properly
given by Agent or other holder of Senior Indebtedness to the Holders of
Subordinated Indebtedness if such Default Notice is delivered in accordance
with Section 3.7 hereof; provided, however, that each and every additional or
subsequent Holder of Subordinated Indebtedness shall be entitled to deliver
written notice to Agent of its name and address and of its status as such a
Holder of Subordinated Indebtedness, and upon delivery of such notice said
holder shall also be entitled to receive Default Notices and to have the
benefit of the provisions of this paragraph.
(g) Payments Held in Trust. Should any
Distribution or the proceeds thereof, in respect of the Subordinated
Indebtedness, be collected or received by the Subordinated Lender or any
Affiliate (as such term is defined in Rule 405 of Regulation C adopted by the
Securities and Exchange Commission pursuant to the Securities Act of 1933) of
the Subordinated Lender at a time when the Subordinated Lender is not permitted
to receive any such Distribution or proceeds thereof including if same is
collected or received when there is or would be after giving effect to such
payment a Material Default or an Event of Default under the Loan Agreement,
then the Subordinated Lender will forthwith deliver, or cause to be delivered,
the same to Agent in precisely the form held by the Subordinated Lender (except
for any necessary endorsement) and until so delivered, the same shall be held
in trust by the Subordinated Lender, or any such Affiliate, as the property of
the Agent on behalf of Senior Lenders and shall not be commingled with other
property of the Subordinating Lender or any such Affiliate.
(h) Subrogation. Subject to the prior payment in
full in cash of the Senior Indebtedness and the irrevocable termination of the
Loan Agreement, to the extent that Agent or any Senior Lender has received any
Distribution on the Senior Indebtedness which, but for this Subordination
Agreement, would have been applied to the Subordinated Indebtedness, the
Subordinated Lender shall be subrogated to the then or thereafter rights of
Agent and Senior Lenders including, without limitation, the right to receive
any Distribution made on the Senior Indebtedness until the principal of,
interest on and other charges due under the Subordinated Indebtedness shall be
paid in full; and, for the purposes of such subrogation, no Distribution to the
Agent or any Senior Lender to which the Subordinated Lender would be entitled
except for the provisions of this Subordination Agreement shall, as between
I.F.S., its creditors (other than Agent and Senior Lenders) and the
Subordinated Lender, be deemed to be a Distribution by I.F.S. to or on account
of Senior Indebtedness, it being understood that the provisions hereof are and
are intended solely for the purpose of defining the relative rights of the
Subordinated Lender on the one hand, and the Agent and Senior Lenders on the
other hand.
(i) Scope of Subordination. The provisions of
this Subordination Agreement are solely to define the relative rights of any
Holder of Subordinated Indebtedness, Agent and Senior Lenders. Nothing in this
Subordination Agreement shall impair, as between I.F.S. and the Subordinated
Lender the unconditional and absolute obligation of I.F.S. to punctually pay
6
7
the principal, interest and any other amounts and obligations owing under the
Purchase Agreement in accordance with the terms thereof, subject to the rights
of Agent and Senior Lenders under this Subordination Agreement.
3. Miscellaneous.
3.1. Additional Agreements. In the event that the
Senior Indebtedness is refinanced in full, Subordinated Lender agrees at the
request of such refinancing party to enter into a subordination agreement on
terms substantially similar to this Subordination Agreement.
3.2. Survival of Rights. The right of Agent to enforce
the provisions of this Subordination Agreement shall not be prejudiced or
impaired by any act or omitted act of I.F.S., Agent or any Senior Lender
including forbearance, waiver, consent, compromise, amendment, extension,
renewal, or taking or release of security in respect of any Senior Indebtedness
or noncompliance by I.F.S. with such provisions, regardless of the actual or
imputed knowledge of Agent or such Senior Lender.
3.3. Receipt of Agreements. Agent hereby acknowledges
receipt of a correct and complete copy of the Purchase Agreement as in effect
on the date hereof. The Subordinated Lender, solely for the purposes of this
Subordination Agreement, hereby acknowledges receipt of a correct and complete
copy of each of the Senior Lending Agreements as in effect on the date hereof.
3.4. No Amendment of Purchase Agreement. So long as the
Loan Agreement remains in effect, neither I.F.S. nor any Holder of Subordinated
Indebtedness shall enter into any amendment to or modification of any Purchase
Agreement which relates to or affects the principal amount, interest rate,
payment terms, or any other material covenant or agreement of I.F. S.
thereunder or in respect thereof, without the prior written consent of Agent.
3.5. Amendments to Senior Lending Agreements. Nothing
contained in this Subordination 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 Agent and Senior Lenders from increasing or changing
the terms of the loans under the Senior Lending Agreements, or to otherwise
waive, amend or modify the terms and conditions of the Senior Lending
Agreements, in such manner as Agent, Senior Lenders and the Company (prior to
the Merger being effective) or I.F.S. (upon the Merger becoming effective)
shall mutually determine. Each Holder of Subordinated Indebtedness hereby
consents to any and all such waivers, amendments, modifications and
compromises, and any other renewals, extensions, indulgences, releases of
collateral or other accommodations granted by Agent and/or Senior Lenders to
the Company (prior to the Merger being effective) or I.F.S. (upon the Merger
becoming effective) from time to time, and agrees that none of such actions
shall in any manner affect or impair the subordination established by this
Subordination Agreement in respect of the Subordinated Indebtedness.
3.6, Notice of Default and Certain Events. Agent and the
Holders of Subordinated Indebtedness shall undertake in good faith to notify
the other of the occurrence of any of the following as applicable:
7
8
(i) the obtaining Of actual knowledge of the
occurrence of any default or breach under the Purchase Agreement;
(ii) the acceleration of any Senior Indebtedness
by Senior Lenders or of any Subordinated Indebtedness by any Holder of
Subordinated Indebtedness;
(iii) the granting by Senior Lenders of any waiver
of any Event of Default under the Loan Agreement or the granting by any Holder
of Subordinated Indebtedness of any waiver of any "default" or "event of
default" under the Purchase Agreement; or
(iv) The payment in full by (whether as a result
of refinancing or otherwise) of all Senior Indebtedness.
The failure of any party to give such notice shall not affect
the subordination of the Subordinated Indebtedness as provided in this
Subordination Agreement.
3.7. Notices. Any notice or other communication required
or permitted pursuant to this Subordination 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 telephone communication, confirming receipt and subsequently
confirmed by registered, certified or overnight mail to the address set forth
below, in each case addressed to each party at its address set forth below or
at such other address as has been furnished in writing by a party to the other
by like notice:
If to Agent: PNC BANK, NATIONAL ASSOCIATION
2 PNC Plaza
620 Liberty Avenue
Pittsburgh, Pennsylvania 15265
Attention: Wallace G. Clements
Telephone., (412) 768-4376
Facsimile: (412) 762-4069
with copies to: Hahn & Hessen LLP
350 Fifth Avenue
New York, NY 10118-0075
Attention: Steven J. Seif, Esq.
Telephone: (212) 736-1010
Facsimile: (212) 594-7167
If to Subordinated
Lender: TYLER CORPORATION
520 Post Oak Boulevard, Suite 850
Houston, Texas 77027
Attention: Bruce W. Wilkinson
Telephone: (713) 629-9584
Facsimile: (713) 629-9936
8
9
with copies to: Lidell, Sapp, Zivley, Hill & La Boon
600 Travis
3400 Texas Commerce Tower
Houston, Texas 77002-3004
Attention: David Taylor, Esq.
Telephone: (713) 226-1200
Facsimile: (713) 223-3717
If to the Company: INSTITUTIONAL FINANCING SERVICES,
INC.
5100 Park Road
Benicia, California 94510
Attention: James Cascino, President
Telephone: (707) 747-2124
Facsimile: (707) 747-4188
with copies to: CRUMMY, DEL DEO, DOLAN,
GRIFFINGER & VECCHIONE
One Riverfront Plaza
Newark, New Jersey 07102-5497
Attention: Frank E. Lawatsch, Esq.
Telephone. (201) 596-4500
Facsimile: (201) 639-6249
3.8. Books and Records. The Subordinated Lender
shall (a) make notations on the books of the Subordinated Lender beside all
accounts or on other statements evidencing or recording any Subordinated
Indebtedness to the effect that such Subordinated Indebtedness is subject to
the provisions of this Subordination Agreement, (b) furnish Agent, upon request
from time to time, a statement of the account between the Subordinated Lender
and I.F.S. and (c) give Agent, upon its request, full and free access to the
Subordinated Lender's books pertaining only to such accounts with the right to
make copies thereof
3.9. Binding Effect; Other. This Subordination
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, shall be irrevocable and shall remain in
full force and effect until the Senior Indebtedness shall have been satisfied
or paid in full in cash and the Loan Agreement 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 I.F.S. (both before and after giving effect to the Merger) with
regard to the Senior Indebtedness is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of I.F.S. (both before and after giving effect to the Merger),
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee, custodian, or similar officer, for I.F.S. (both
before and after giving effect to the Merger) or any substantial part of its
property, or otherwise, all as though such payments had not been made. No
action which any Agent or any Senior Lender or I.F. S. may take or refrain from
taking with
9
10
respect to the Senior Indebtedness, including any amendments thereto, shall
affect the provisions of this Subordination Agreement or the obligations of any
Subordinated Lender hereunder. 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 Subordination Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
The headings in this Subordination Agreement are for convenience of reference
only, and shall not alter or otherwise affect the meaning hereof.
4. Representations and Warranties.
(a) Subordinated Lender represents and warrants
to Agent and Senior Lenders that Subordinated Lender is the holder of the
Subordinated Indebtedness. Subordinated Lender agrees that it shall not assign
or transfer any of the Subordinated Indebtedness without (i) prior notice being
given to Agent and (ii) such assignment or transfer being made expressly
subject to the terms of this Subordination Agreement, Subordinated Lender
further warrants to Agent and Senior Lenders that it has full right, power and
authority to enter into this Subordination Agreement and, to the extent
Subordinated Lender is an agent or trustee for other parties, that this
Subordination Agreement shall fully bind all such other parties.
(b) Agent represents and warrants to Subordinated
Lender that Senior Lenders are the holders of the Senior Indebtedness. Agent
agrees that neither Agent nor any Senior Lender shall assign or transfer any of
the Senior Indebtedness or without (i) prior notice being given to Subordinated
Lender and (ii) such assignment or transfer being made expressly subject to the
terms and provisions of this Subordination Agreement. Agent further warrants to
Subordinated Lender that it has full right, power and authority to enter into
this Subordination Agreement and, to the extent Agent is an agent or trustee
for other parties, that this Subordination Agreement shall fully bind all such
other parties.
5. Proceedings. ANY JUDICIAL PROCEEDING BROUGHT BY OR
AGAINST ANY SUBORDINATED LENDER WITH RESPECT TO THIS OR ANY RELATED AGREEMENT
MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN STATE OF NEW YORK,
UNITED STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS SUBORDINATION
AGREEMENT EACH SUBORDINATED LENDER, AGENT AND I.F.S. ACCEPT FOR THEMSELVES AND
IN CONNECTION WITH THEIR PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE
BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
SUBORDINATION AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE AGENT TO BRING
PROCEEDINGS AGAINST THE SUBORDINATED LENDER IN ANY COURTS OF ANY OTHER
JURISDICTION ANY JUDICIAL PROCEEDING BY ANY SUBORDINATED LENDER AGAINST AGENT
OR ANY SENIOR LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN
ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS SUBORDINATION
AGREEMENT OR ANY RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN A COURT LOCATED
IN THE CITY OF NEW YORK, STATE OF NEW YORK; PROVIDED THAT NOTWITHSTANDING THE
FOREGOING, IF IN ANY JUDICIAL PROCEEDING BY
10
11
OR AGAINST ANY SUBORDINATED LENDER THAT IS BROUGHT IN ANY OTHER COURT SUCH
COURT DETERMINES THAT AGENT OR ANY SENIOR LENDER IS AN INDISPENSABLE PARTY,
SUCH SUBORDINATED LENDER SHALL BE TO ENTITLED TO JOIN OR INCLUDE AGENT OR SUCH
LENDER IN SUCH PROCEEDINGS IN SUCH OTHER COURT. EACH SUBORDINATED LENDER WAIVES
ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED
UPON FORUM NON CONVENIENS.
6. Waiver Of Jury Trial. EACH CREDITOR HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS SUBORDINATION 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 OF THEM WITH RESPECT TO THIS SUBORDINATION AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENTS OR AGREEMENT EXECUTED OR DELIVER, 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 CREDITOR HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRAIL WITHOUT JURY, AND
THAT EITHER 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.
IN WITNESS WHEREOF, the undersigned have entered into this
Subordination Agreement this 15th day of October, 1997.
PNC BANK, NATIONAL ASSOCIATION
as Agent
By: /s/ CRAIG STILLWAGON
-----------------------------------------
Craig Stillwagon, Vice President
TYLER CORPORATION,
as Subordinated Lender
BY: /s/ BRUCE WILKINSON
-----------------------------------------
Name: Bruce Wilkinson
---------------------------------------
Title: Authorized Signature
--------------------------------------
11
12
ACKNOWLEDGEMENT
The undersigned hereby acknowledges and agrees to the
foregoing Subordination Agreement. The undersigned agrees to be bound by the
terms and provisions thereof as they relate to the relative rights of the
Creditors with respect to each other. However, nothing therein shall be deemed
to amend, modify, supersede or otherwise alter the terms of the respective
agreements between the undersigned and each Creditor. The undersigned further
agrees that the Subordination Agreement is solely for the benefit of the
Creditors and shall not give the undersigned, its successors and assigns, or
any other person, any rights vis-a-vis any Creditor.
I.F.S. ACQUISITION CORP.
By: /s/ WILLIAM WALSH
--------------------------------
Name: William Walsh
Title: Chairman of the Board
12
13
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of October, 1997, before me personally came
Craig Stillwagon to me known, who, being by me duly sworn did depose
and say that he is a Vice/President of PNC BANK, NATIONAL ASSOCIATION,
the bank described in and which executed the above instrument; and
that he was authorized to sign his name thereto.
------------------------------------
Notary Public
STATE OF TEXAS )
) ss.:
COUNTY OF HARRIS )
On the ___ day of October, 1997, before me personally came
Bruce W. Wilkinson to me known, who, being duly sworn did depose and
say that he is the Authorized Signatory of TYLER CORPORATION, the
corporation described in and which executed the above instrument; and
that he signed his name * hereto by order or the board of directors of
said corporation.
/s/ DEJUANA A. BIVINS
------------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of October, 1997, before me personally came
William Walsh to me known, who being by me duly sworn did depose and
say that he is the Chairman of the Board of I.F.S. ACQUISITION CORP.,
the corporation described in and which executed the above instrument;
and that he signed his name thereto by order of the board of directors
of said corporation.
------------------------------------
Notary Public
13