EXHIBIT 10.60
INTERCREDITOR AND SUBORDINATION AGREEMENT
This INTERCREDITOR AND SUBORDINATION AGREEMENT is entered into as of
April 9, 1999, between FOOTHILL CAPITAL CORPORATION, a California corporation
("Senior Creditor") and IRONWOOD TELECOM LLC, a Colorado limited liability
company ("Subordinated Creditor") in light of the following:
R E C I T A L S
A. Senior Creditor and INCOMNET COMMUNICATIONS CORPORATION, a
Delaware corporation ("Debtor") have entered into that certain Loan and Security
Agreement, dated as of April 9, 1999 (the "Senior Creditor Loan Agreement"),
pursuant to which Senior Creditor has agreed to extend certain financial
accommodations to Debtor.
B. As security for the prompt payment and performance of the Senior
Creditor Indebtedness (as hereinafter defined), Debtor and Parent have granted
Senior Creditor a security interest in all of the Collateral (as hereinafter
defined).
C. Subordinated Creditor, Incomnet, Inc., a California corporation
("Parent") and Debtor have entered into that certain Loan and Security
Agreement, dated as of December 15, 1998 (the "Subordinated Creditor Loan
Agreement") pursuant to which Subordinated Creditor presently holds the Notes,
as such term is defined in the Subordinated Creditor Loan Agreement.
D. As security for the prompt payment and performance of the
Subordinated Creditor Indebtedness (as hereinafter defined) Debtor and Parent
have granted Subordinated Creditor a security interest in the Collateral.
E. Senior Creditor and Subordinated Creditor wish to agree as to
their respective liens upon and security interests in the assets of Debtor, and
as to certain other rights, priorities, and interests as between Senior Creditor
and Subordinated Creditor.
A G R E E M E N T
In consideration of the foregoing, the mutual covenants contained
herein, and for other good and valuable consideration, the receipt of which
Senior Creditor and Subordinated Creditor hereby acknowledge, Senior Creditor
and Subordinated Creditor hereby agree as follows:
1. DEFINITIONS. The following terms, as used in this Agreement,
shall have the following meanings:
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"ACCOUNTS", "CHATTEL PAPER", "DOCUMENTS", "EQUIPMENT",
"FIXTURES", "GENERAL INTANGIBLES", "INSTRUMENTS", "INVENTORY", and "INVESTMENT
PROPERTY" shall have the meanings assigned to them under the UCC.
"AGREEMENT" means this Intercreditor and Subordination Agreement
together with any and all amendments, extensions, modifications, riders,
addenda, exhibits, and schedules hereto.
"BANKRUPTCY CASE" means any proceeding commenced by or against
Debtor, under any provision of the Bankruptcy Code or under any other federal or
state bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
its creditors, or proceedings seeking reorganization, arrangement, or other
similar relief, and all converted or succeeding cases in respect thereof.
"BANKRUPTCY CODE" means the United States Bankruptcy Code (11
U.S.C. Section 101, ET SEQ.), as amended, and any successor statute.
"COLLATERAL" means all of Debtor's presently existing and
hereafter acquired personal property, including, without limitation, Accounts,
Chattel Paper, deposit accounts, Documents, Equipment, Fixtures, General
Intangibles, Instruments, Inventory, and Investment Property; all of Debtor's
and all proceeds and insurance proceeds of the foregoing, all of Debtor's books
and records relating thereto and all of the outstanding shares of Debtor's
capital stock, excluding, however, any or all stock or other ownership interest
held by Debtor or Parent in Rapid Cast, Inc.
"SECURED CREDITOR REMEDIES" means any action by a Secured
Creditor in furtherance of the sale, foreclosure, realization upon, or the
repossession or liquidation of any of the Collateral, including without
limitation, (i) the exercise of any remedies or rights of a "Secured Creditor"
under Division 9 of the UCC, such as, without limitation, the notification of
account debtors; (ii) the exercise of any remedies available to a judgment
creditor; or (iii) any other remedy available in respect of the Collateral
available to such Secured Creditor under any Secured Creditors' Agreement to
which it is a party.
"SECURED CREDITOR" means any of Senior Creditor or Subordinated
Creditor, or any successor or assignee of any of them, in its capacity as a
secured creditor under the Senior Creditor Agreements or the Subordinated
Creditor Agreements, respectively.
"SECURED CREDITORS' AGREEMENTS" means, collectively, the Senior
Creditor Agreements and the Subordinated Creditor Agreements.
"SECURED CREDITORS' INDEBTEDNESS" means, collectively, the Senior
Creditor Indebtedness and the Subordinated Creditor Indebtedness.
"SENIOR CREDITOR AGREEMENTS" means, collectively, the Senior
Creditor Loan Agreement, any Loan Documents referred to therein, and any other
document,
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instrument, or agreement entered into by or in favor of Senior Creditor and
Debtor in connection with the Senior Creditor Indebtedness and the
Collateral, together with any amendments, replacements, substitutions, or
restatements thereof.
"SENIOR CREDITOR INDEBTEDNESS" means any and all presently
existing or hereafter arising indebtedness, claims, debts, liabilities, and
obligations of Debtor owing to Senior Creditor, whether direct or indirect,
contingent or of any other nature, character, or description (including all
interest accruing after commencement of any case, proceeding, or other action
relating to the bankruptcy, insolvency, or reorganization of Debtor and all
amounts and interest that, but for the provisions of the Bankruptcy Code, would
have accrued and become due).
"SENIOR CREDITOR PRIORITY AMOUNT" means $15,000,000 plus
(i) accrued and unpaid interest on the Senior Creditor Indebtedness, (ii) fees
payable to Senior Creditor pursuant to SECTION 2.11 of the Senior Creditor Loan
Agreement and (iii) Foothill Expenses as defined in the Senior Creditor Loan
Agreement.
"SUBORDINATED CREDITOR AGREEMENTS" means, collectively, the
Subordinated Creditor Loan Agreement, and any other document, instrument, or
agreement now existing or in the future entered into by or in favor of
Subordinated Creditor and Debtor in connection with the Subordinated Creditor
Indebtedness or the Collateral, together with any amendments, replacements,
substitutions, or restatements thereof.
"SUBORDINATED CREDITOR INDEBTEDNESS" means any and all presently
existing or hereafter arising indebtedness (including the indebtedness evidenced
by the Amended and Restated Notes and the Term Note, as such terms are defined
in the Subordinated Creditor Loan Agreement), claims, debts, liabilities, and
obligations of Debtor owing to Subordinated Creditor, whether direct or
indirect, whether contingent or of any other nature, character, or description
(including all interest accruing after commencement of any case, proceeding, or
other action relating to the bankruptcy, insolvency, or reorganization of Debtor
to the extent such interest is an allowable claim in any such proceeding).
"UCC" means the Uniform Commercial Code as adopted in the State
of California, or in such other jurisdiction as governs the perfection of the
liens and security interests in the Collateral for the purposes of the
provisions hereof relating to such perfection or effect of perfection.
2. SUBORDINATION OF SUBORDINATED CREDITOR INDEBTEDNESS.
(a) Except as otherwise provided in this Agreement, only
regularly scheduled payments of interest and the payment of principal at
maturity shall be made with respect to the Subordinated Creditor Indebtedness
while the Senior Creditor Indebtedness remains outstanding. No payment on
account of the Subordinated Creditor Indebtedness shall be made by or on behalf
of Debtor with respect to regularly scheduled payments of interest or the
payment of principal on Subordinated Creditor Indebtedness, if at the time of
such payment or immediately after giving effect thereto there shall have
occurred and be continuing an Event
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of Default (as described in the Senior Creditor Loan Agreement) unless such
Event of Default is due to a default under the Subordinated Creditor
Agreements and the Subordinated Creditor has agreed to waive or forbear from
acting on such default. Except as set forth in SECTION 2(b), so long as
Subordinated Creditor is prohibited from receiving payments of principal
under this SECTION 2(a), Subordinated Creditor, or any party on behalf of
Subordinated Creditor, may not do any of the following: (i) accelerate any
part of the Subordinated Creditor Indebtedness; (ii) commence, prosecute, or
participate in any administrative, legal, or equitable action to enforce its
Subordinated Creditor Indebtedness; or (iii) join in any Bankruptcy Case
against Debtor by filing of an involuntary petition; PROVIDED, HOWEVER, that
Subordinated Creditor may take such actions if there is an uncured monetary
default of the Subordinated Creditor Indebtedness: (A) at any time 30 days
after it has delivered to Senior Creditor a Subordinated Debt Default Notice
(as defined below), if and only if, Senior Creditor has not delivered a
Blockage Notice (as defined below) or (B) at any time after the expiration of
any Blockage Period (as defined below) or at any time prior to the expiration
of any Blockage Period, subject to the limitations of SECTIONS 2(b) or 9
hereof, if any Bankruptcy Case is commenced against the Debtor or its assets
(except by Subordinated Creditor) so long as such proceeding is not dismissed
or settled. Notwithstanding anything to the contrary contained in this
Agreement, Subordinated Creditor shall not take any action with respect to
the Collateral upon expiration of any Blockage Period so long as Senior
Creditor has commenced action to collect or enforce the Collateral and is
continuing such action in a diligent manner.
(b) (i) Subordinated Creditor hereby agrees to provide to
Senior Creditor written notice (a "Subordinated Debt Default Notice"), with a
copy to Debtor, of any event of default of Debtor under the Subordinated
Creditor Indebtedness pursuant to which Subordinated Creditor desires to
institute either legal proceedings against Debtor to collect the Subordinated
Creditor Indebtedness or to foreclose on any assets of the Debtor securing such
Subordinated Creditor Indebtedness. Such notice shall set forth a description
of the default and the Subordinated Creditor's desired actions.
(ii) At any time during the continuation of any default
under the Subordinated Creditor Agreements or at any time within 30 days after
receipt of a Subordinated Debt Default Notice, Senior Creditor may deliver
written notice thereof to Subordinated Creditor in the manner set forth herein
(each a "Blockage Notice"), specifying the default or defaults upon which such
Blockage Notice is based including Senior Creditor's receipt of a Subordinated
Debt Default Notice. A Blockage Period (a "Blockage Period") shall be in effect
for the purposes of this Agreement from the date of delivery or deemed delivery
of any Blockage Notice to the earlier of (i) 180 days after a Blockage Notice
shall have been given to the Subordinated Creditor or (ii) through the date on
which all defaults are cured or waived in writing or the benefits of such
Blockage Period are waived in writing by Senior Creditor.
(iii) During any Blockage Period or such shorter period if
all of the Senior Creditor Indebtedness shall have been paid in full, in cash,
Debtor shall not make, and Subordinated Creditor shall not receive, accept, or
retain, and agrees not to take, sue for, or demand from Debtor payment of all or
any of the Subordinated Creditor
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Indebtedness or otherwise accelerate the principal amount due and payable
thereunder or commence, or join with any creditor other than the Senior
Creditor Lender, in commencing, an involuntary Bankruptcy Case.
Notwithstanding the foregoing, (i) not more than one Blockage Notice shall be
given with respect to the Senior Creditor Indebtedness within a period of 360
consecutive days, and (ii) no default which existed or was continuing on the
date of any Blockage Notice shall be made the basis for the giving of a
subsequent Blockage Notice.
(c) Senior Creditor shall have the right to provide Subordinated
Creditor with a written notice (a "Senior Debt Default Notice") of any event of
default of Debtor under the Senior Creditor Indebtedness which notice shall
serve as a Blockage Notice. Such notice shall specify the default or defaults
upon which the Blockage Notice is based. Upon Subordinated Creditor's receipt
of the Blockage Notice, a Blockage Period shall be in effect as described in
SECTION 2(b).
(d) Upon (i) any maturity (whether by acceleration or otherwise)
of the principal amount due on the Subordinated Creditor Indebtedness, or
(ii) any payment or distribution of assets of Debtor, of any kind or character,
whether in cash, property, or securities, following commencement of a Bankruptcy
Case, then all amounts due or to become due upon all Senior Creditor
Indebtedness shall first be paid in full in cash, before any payment is made by
Debtor on account of the Subordinated Creditor Indebtedness; and following
commencement of a Bankruptcy Case, any payment or distribution of assets of
Debtor of any kind or character, whether in cash, property or securities, to
which the Subordinated Creditor would be entitled, except for the provisions
hereof, shall be paid by Debtor or any other person making such payment or
distribution, or by the Subordinated Creditor if received by it, directly to the
Senior Creditor to the extent necessary to pay all Senior Creditor Indebtedness
in full, in cash, before any payment or distribution is made to the Subordinated
Creditor. In any Bankruptcy Case, Subordinated Creditor may file proof of claim
which indicates Subordinated Creditor's interest in Debtor's assets.
(e) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of a Debtor, whether in cash, property or
securities, prohibited by the foregoing, shall be received by Subordinated
Creditor in respect of Subordinated Creditor Indebtedness before all Senior
Creditor Indebtedness is paid in full in cash, such payment or distribution
shall be held in trust for the benefit of the Senior Creditor and shall be paid
over to or delivered to the Senior Creditor until all such Senior Creditor
Indebtedness shall have been paid in full, in cash.
3. PERMITTED LIENS AND RELATIVE PRIORITIES. As between the Secured
Creditors, notwithstanding: (a) the terms (including the description of
collateral), dating, execution, or delivery of any document, instrument, or
agreement; the time, order, occurrence, method, or manner of granting, or
perfection of any security interest or lien; the time of filing or recording of
any financing statements, assignments, deeds of trust, mortgages, or any other
documents, instruments, or agreements under the UCC or any other applicable law;
(b) the existence of (or the order in which any Secured Creditor becomes a party
to or a beneficiary of) any collateral agency arrangement with any party other
than a Secured
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Creditor, or the appointment of such other party as a collateral
agent to perfect the Secured Creditors' liens and security interests, in all or
in any part of the Collateral; (c) the existence of any control agreement in
favor of any Secured Creditor; or (d) any provision of the UCC or any other
applicable law to the contrary, the Secured Creditors agree that, as to the
Collateral of Debtor:
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(i) Senior Creditor shall have a first priority security
interest in and lien thereon to secure the Senior Creditor Indebtedness up to
the Senior Priority Amount; and
(ii) Subordinated Creditor shall have a junior and subordinate
security interest in and lien thereon to secure the Subordinated Creditor
Indebtedness.
For purposes of the foregoing allocation of priorities, any claim
or a right to a set-off shall be treated in all respects as a security interest
and no claimed right of set-off shall be asserted to defeat or diminish the
rights or priorities provided for herein.
4. NO ALTERATION OF PRIORITY AND PERFECTION. The lien and security
interest priorities provided in SECTION 3 shall not be altered or otherwise
affected by any amendment, modification, supplement, extension, renewal,
restatement, or refinancing of any of the Secured Creditor Indebtedness, nor by
any action or inaction which either Secured Creditor may take or fail to take in
respect of the Collateral, or otherwise. Each Secured Creditor consents to
Debtor's granting to each other Secured Creditor the liens and security
interests reflected in SECTION 3. Subordinated Creditor shall be solely
responsible for perfecting and maintaining the perfection of its lien or
security interest in any of the Collateral. Subordinated Creditor agrees that it
will not directly or indirectly take any action to contest or challenge the
validity, legality, perfection, priority (up to the Senior Priority Amount),
avoidability, or enforceability of the liens or security interests of Senior
Creditor upon the Collateral or seek to have the same avoided, disallowed, set
aside, or otherwise invalidated in any judicial proceeding or otherwise. In the
event that Subordinated Creditor (either individually or together with others)
breaches or causes to be breached the terms of the preceding sentence, resulting
(directly or indirectly) in the avoidance or imperfection of Senior Creditor's
lien or security interest in some or all of the Collateral, then the priority of
the lien or security interest of Subordinated Creditor in any such affected
Collateral shall continue to be governed by the terms of SECTION 3 irrespective
of the avoidance or imperfection of Senior Creditor's lien or security interest.
Notwithstanding anything to the contrary contained in this Agreement, Senior
Creditor hereby consents to the conversion, in whole or in part, of Subordinated
Creditor Indebtedness into shares of Parent's preferred stock.
5. MANAGEMENT OF COLLATERAL. Notwithstanding anything to the
contrary contained in any of the Senior Creditor Agreements or the Subordinated
Creditor Agreements:
(a) Until the Senior Creditor Indebtedness (up to the Senior
Priority Amount) has been fully paid in cash, and all obligations of Senior
Creditor to extend credit under the Senior Creditor Agreements have been
terminated: (i) Senior Creditor shall have the exclusive right to manage the
Collateral, including the exclusive right to perform and enforce the terms of
the Senior Creditor Agreements with respect to the Collateral and to exercise
and enforce all privileges and rights thereunder according to Senior Creditor's
discretion, but in a commercially reasonable manner in compliance with the UCC,
including, without limitation, the exclusive right to enforce or settle
insurance claims with respect to the Collateral, take or retake control or
possession of the Collateral and to hold, prepare for sale, sell, lease, or
liquidate the Collateral; (ii) neither Subordinated Creditor nor any party
acting on their behalf, shall exercise any Secured Party Remedies with respect
to the Collateral; and (iii) any and all proceeds of the Collateral (other than
regularly scheduled payments made on the Subordinated
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Creditor Indebtedness) which shall come into the possession, control, or
custody of Subordinated Creditor will be deemed to have been received for the
account of Senior Creditor and shall be immediately paid over to Senior
Creditor. In connection with the provisions of CLAUSE 5(a)(i) ABOVE,
Subordinated Creditor waives any and all rights to affect the method or
challenge the appropriateness of any action by Senior Creditor with respect
to the Collateral, and waives any claims or defenses it may have against
Senior Creditor, including any such claims or defenses based on any actions
or omissions of any such person, in connection with the perfection,
maintenance, enforcement, foreclosure, sale, liquidation, or release of any
lien or security interest therein by Senior Creditor, or any modification or
waiver of any Senior Creditor Agreements, except as provided or limited under
this Agreement.
(b) The rights and priorities set forth in this Agreement shall
remain binding irrespective of the terms of any plan of reorganization in a
Bankruptcy Case or other provisions of the Bankruptcy Code or any similar
federal or state statute.
6. SALE OF COLLATERAL. Until the Senior Creditor Indebtedness (up
to the Senior Priority Amount and in accordance with SECTION 2(b)) has been
fully paid in cash and all obligations of Senior Creditor to extend credit under
the Senior Creditor Agreements have been terminated: (i) only Senior Creditor
shall have the right to restrict or permit, or approve or disapprove, the sale
of the Collateral; and (ii) Subordinated Creditor will, immediately upon the
request of Senior Creditor, release or otherwise terminate its liens and
security interests upon the Collateral, to the extent such Collateral is sold by
Debtor with the consent of Senior Creditor in accordance with the Senior
Creditor Agreements, and Subordinated Creditor will promptly deliver (at
Debtor's expense) such release documents as Senior Creditor or Debtor may
reasonably require in connection therewith.
7. SECTION 9504 NOTICE AND WAIVER OF MARSHALING. Each Secured
Creditor hereby acknowledges that this Agreement shall constitute notice of the
other Secured Creditor's respective interests in the Collateral as provided by
Section 9504 of the UCC and each of the Secured Creditors waives any right to
compel the other Secured Creditor to marshal any of the Collateral or to seek
payment from any particular assets of Debtor or from any third party.
8. INSURANCE. In the event of the occurrence of a fire or other
casualty resulting in damage to all or any portion of any Collateral
(collectively, a "Casualty"):
(a) Subordinated Creditor hereby waives any right to participate
or join in any adjustment, compromise, or settlement of any claims resulting
from a Casualty with respect to any Collateral;
(b) all proceeds received or to be received on account of a
Casualty shall be applied in the manner or manners provided for in the Senior
Creditor Agreements; and
(c) Subordinated Creditor agrees to execute and deliver any
documents, instruments, agreements or further assurances reasonably required to
effectuate any of the foregoing.
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9. BANKRUPTCY ISSUES.
(a) Except as provided in this SECTION 9, this Agreement
shall continue in full force and effect after the commencement of a
Bankruptcy Case (all references herein to Debtor being deemed to apply to
Debtor as debtor-in-possession and to a trustee for Debtor's estate in a
Bankruptcy Case), and shall apply with full force and effect with respect to
all Collateral acquired by Debtor, and to all Secured Creditors' Indebtedness
incurred by Debtor, subsequent to such commencement.
(b) If Debtor shall become subject to a Bankruptcy Case, and
if Senior Creditor shall desire to permit the use of cash collateral or to
provide post-petition financing to Debtor, Subordinated Creditor agrees as
follows: (i) adequate notice to Subordinated Creditor shall be deemed to have
been provided for such use of cash collateral or post-petition financing if
the such parties receive notice thereof at least three business days prior to
the earlier of (y) any hearing on a request to approve such use of cash
collateral or post-petition financing or (z) the date of entry of an order
approving the same; and (ii) no objection will be raised by Subordinated
Creditor to any such use of cash collateral or such post-petition financing
by Senior Creditor on the grounds of a failure to provide adequate protection
for the Subordinated Creditor's junior liens and security interests in the
Collateral, provided that the Subordinated Creditor is granted the same
rights, benefits, and protections as Senior Creditor, including the same
liens and security interests on the post-petition Collateral, that may be
granted to or for the benefit of Senior Creditor, junior only to the liens or
security interests of Senior Creditor therein. No objection will be raised
by Subordinated Creditor to Senior Creditor's motion for relief from the
automatic stay in any proceeding under the Bankruptcy Code to foreclosure on
and sell the Collateral.
10. NOTICE OF DEFAULT AND CERTAIN EVENTS. Subordinated Creditor
shall promptly notify Senior Creditor in writing of the occurrence of any of the
following as applicable:
(a) any default or event of default under the Subordinated
Creditor Agreements; or
(b) the demand for payment of, acceleration of or termination of
any of the Subordinated Creditor Indebtedness.
11. ADDITIONAL DOCUMENTS. The Secured Creditors agree to execute and
deliver, upon the request of any other Secured Party, such documents and
instruments (appropriate for filing, if requested) as may be necessary or
appropriate to fully implement or to fully evidence the understandings and
agreements contained in this Agreement. Without limiting the foregoing, in the
event that all or part of any of the Senior Creditor Indebtedness is hereafter
refinanced, Subordinated Creditor agrees to enter into one or more new
agreements with the refinancing lender or lenders on terms identical to those of
this Agreement.
12. REPRESENTATIONS AND WARRANTIES. Subordinated Creditor represents
and warrants to Senior Creditor that Subordinated Creditor is the holder of the
liens and security
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interests which secure or will secure the Subordinated Creditor Indebtedness.
Subordinated Creditor agrees that it shall not assign or transfer any of
such liens and security interests without (i) prior notice being given to
Senior Creditor and (ii) such assignment or transfer being made expressly
subject to the terms of this Agreement. Subordinated Creditor further
warrants to Senior Creditor that it has full right, power, and authority to
enter into this Agreement and, to the extent Subordinated Creditor is an
agent or trustee for other parties, that this Agreement shall fully bind all
such other parties.
13. MODIFICATION OF SENIOR CREDITOR INDEBTEDNESS. Subordinated
Creditor agrees that Senior Creditor shall have absolute power and discretion,
without notice to Subordinated Creditor, to deal in any manner with the Senior
Creditor Indebtedness, including, but not by way of limitation, the power and
discretion to do any of the following: (a) any demand for payment of any Senior
Creditor Indebtedness may be rescinded in whole or in part, and any Senior
Creditor Indebtedness may be continued, and the Senior Creditor Indebtedness or
the liability of the Debtor upon or for any part thereof, or any Collateral or
guaranty therefor, or right of offset with respect thereto, may, from time to
time, in whole or in part, be modified, accelerated, compromised, waived,
surrendered, or released; and (b) the Senior Creditor Agreements may be amended,
modified, supplemented, or terminated, in whole or in part, as Senior Creditor
may deem advisable from time to time, and, in compliance with the UCC, any
Collateral may be sold, and any Collateral may be exchanged, waived,
surrendered, or released. Subordinated Creditor will remain bound under this
Agreement, and the subordination provided for herein shall not be impaired,
abridged, released, or otherwise affected notwithstanding any such modification,
acceleration, compromise, amendment, supplement, termination, sale, exchange,
waiver, surrender, or release. The Senior Creditor Indebtedness shall
conclusively be deemed to have been created, contracted, or incurred in reliance
upon this Agreement, and all dealings between Senior Creditor and Debtor shall
be deemed to have been consummated in reliance upon this Agreement.
14. SUBORDINATED CREDITOR'S WAIVERS. Subordinated Creditor:
(a) waives any and all notice of or proof of reliance by Senior Creditor upon
this Agreement; and (b) agrees not to assert against Senior Creditor, any rights
as a guarantor or surety, and nothing in this Agreement shall constitute
Subordinated Creditor a guarantor or surety.
15. 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, shall be
irrevocable, and shall remain in full force and effect until the Senior Creditor
Indebtedness shall have been paid in full in cash, and the obligation of Senior
Creditor to extend credit under the Senior Creditor Agreements shall have been
irrevocably terminated, but shall continue to be effective, or be reinstated, as
the case may be, if any payment, or any part thereof, of any amount paid by or
on behalf of Debtor with regard to any Senior Creditor Indebtedness is rescinded
or must otherwise be restored or returned as a result of a Bankruptcy Case, or
otherwise, all as though such payments had not been made. Any waiver or
amendment hereunder must be evidenced by a signed writing of a 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
California. The
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parties agree that actions may be tried and litigated in the state and
federal courts located in the County of Los Angeles, in the State of
California. The headings in this Agreement are for convenience of reference
only, and shall not alter or otherwise affect the meaning hereof.
16. PARTIES INTENDED TO BE BENEFITTED. All of the understandings,
covenants, and agreements contained herein are solely for the benefit of Senior
Creditor and Subordinated Creditor, and there are no other parties, including
Debtor or any of the creditors, successors, or assigns of Debtor, which are
intended to be benefitted, in any way, by this Agreement.
17. NO LIMITATION INTENDED. Nothing contained in this Agreement is
intended to or shall affect or limit, in any way, the rights that the Secured
Creditors have with respect to any third parties. The Secured Creditors hereby
specifically reserve all of their respective rights against Debtor and all other
third parties.
18. NOTICE. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration, or other communication shall or may be
given to or served upon any of the parties hereto, or whenever any of the
parties desires to give or serve upon the other communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing and shall be delivered
either in person, with receipt acknowledged, or by regular, registered, or
certified United States mail, postage prepaid, or by telefacsimile, addressed as
follows:
(a) If to Senior Creditor, at:
Foothill Capital Corporation
11111 Santa Monica Blvd., Suite 1500
Los Angeles, CA 90025-3333
Attn: Business Finance Division Manager
Fax: (310) 478-9788
with a copy to:
Buchalter, Nemer, Fields & Younger
601 S. Figueroa Street, Suite 2400
Los Angeles, CA 90017-5704
Attn: Robert C. Colton, Esq.
Fax: (213) 896-0400
(b) If to Subordinated Creditor, at:
Ironwood Telecom LLC
555 Zang Street, Suite 300
Lakewood, Colorado 80228
Attn: Robert A. Klein, Esq.
Fax: (303) 985-5875
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with a copy to:
Howrey & Simon
1299 Pennsylvania Avenue N.W.
Washington, D.C. 20004-2402
Attn: Rod Nydam, Esq.
Fax: (202) 383-6610
or at such other address as may be substituted by notice given as herein
provided. Giving of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, or actually received via telefacsimile transmission,
or three days after the same shall have been deposited in the United States
mail.
19. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
20. COMPLETE AGREEMENT. This Agreement constitutes the complete
agreement and understanding of each of the Secured Creditors and supersedes all
prior or contemporaneous oral and written negotiations, agreements and
understandings, express or implied, with respect to the subject matter hereof.
21. SUCCESSORS AND ASSIGNS. Subordinated Creditor agrees to enter
into an agreement substantially in the form of this Agreement, with any senior,
secured lender that refinances or replaces the Senior Creditor Indebtedness.
This Agreement shall be binding upon, and inure to the benefit of, the
successors and assigns of Senior Creditor and Subordinated Creditor.
22. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, "including" is not limiting,
and "or" has the inclusive meaning represented by the phrase "and/or." The
words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Article, section, subsection, exhibit, and schedule
references are to this Agreement unless otherwise specified.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by Senior Creditor and Subordinated Creditor in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same Agreement.
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24. WAIVER OF JURY TRIAL. SENIOR CREDITOR AND SUBORDINATED CREDITOR
HEREBY EXPRESSLY WAIVE 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 SENIOR
CREDITOR AND SUBORDINATED CREDITOR WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT 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. SENIOR CREDITOR AND SUBORDINATED CREDITOR HEREBY AGREE AND CONSENT
THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL 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 THE CONSENT TO THE
WAIVER OF RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first herein above set forth.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ Rhonda Foreman
----------------------------------
Title: Vice President
------------------------------
IRONWOOD TELECOM LLC,
a Colorado limited liability company
By /s/ Donald V. Berlanti
----------------------------------
Title: Member
-------------------------------
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ACKNOWLEDGMENT
The undersigned, INCOMNET COMMUNICATIONS CORPORATION and INCOMNET,
INC., a California corporation, hereby acknowledge receipt of a copy of the
foregoing Intercreditor and Subordination Agreement and consent thereto, and
agree to recognize all rights granted thereby to the parties thereto, and will
not do any act or perform any obligation which is not in accordance with the
agreements set forth in such Intercreditor and Subordination Agreement. The
undersigned further acknowledge that they are not intended beneficiaries under
the Intercreditor and Subordination Agreement.
Dated as of April 9, 1999.
INCOMNET COMMUNICATIONS CORPORATION, a
Delaware corporation
By /s/ Denis Richard
----------------------------------
Name: Denis Richard
Title: President
INCOMNET, INC.,
a California corporation
By /s/ Denis Richard
----------------------------------
Name: Denis Richard
Title: President
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