Exhibit T3C-2
DRAFT: 1/27/04
INTERCREDITOR AND SUBORDINATION AGREEMENT
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of January ___, 2004,
between CONGRESS FINANCIAL CORPORATION (FLORIDA), as Senior Agent for itself and
the other Senior Lenders (as further defined below, "Senior Agent"), and HSBC
BANK USA, as Trustee for itself and the Noteholders (as further defined below,
"Trustee").
W I T N E S S E T H :
WHEREAS, REPTRON ELECTRONICS, INC. (as further defined below, "Borrower")
and Senior Lenders (such term and each other capitalized term used herein having
the meanings set forth in Section 1 below) have entered or are about to enter
into financing arrangements with Borrower pursuant to which Senior Lenders may
upon certain terms and conditions make loans and provide financial
accommodations to Borrower secured by substantially all of the assets of the
Borrower;
WHEREAS, Borrower and the Trustee have entered into the Indenture dated as
of the date hereof (as amended, supplemented or otherwise modified from time to
time, the "Indenture"), pursuant to which the Borrower intends to issue the
Notes which Notes will be secured by a second priority Lien on the Collateral to
secure the Noteholder Claims; and
WHEREAS, Creditors desire to enter into this Intercreditor and
Subordination Agreement to (i) confirm the relative priority of the interests of
Creditors in the assets and properties of the Grantors, and (ii) provide for the
orderly sharing among Creditors, in accordance with such priorities, of proceeds
of such assets and properties upon any foreclosure thereon or other disposition
thereof, and related matters;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and obligations herein set forth and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. (A) DEFINITIONS. As used in this Agreement, the following terms have
the meanings specified below:
"Agreement" means this Intercreditor and Subordination Agreement, as
amended, renewed, extended, supplemented or otherwise modified from time to time
in accordance with the terms hereof.
"Bank Indebtedness" means Senior Debt and any Refinancing Indebtedness (as
defined in the Indenture) with respect thereto, as amended from time to time,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Borrower whether or not a claim for post-filing interest is allowed in
such proceedings), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect thereof. It is
understood and agreed that Refinancing Indebtedness (as defined in the
Indenture) in respect of the Senior Loan
Agreement may be Incurred (as defined in the Indenture) from time to time after
termination of the Senior Loan Agreement.
"Bankruptcy Law" means Title 11 of the United States Code and any similar
Federal, state or foreign law for the relief of debtors.
"Blockage Period" shall mean any period during which the Borrower is
subject to any Insolvency or Liquidation Proceeding and also any period
commencing from the date of delivery of a Default Notice from the Senior Agent
and continuing until: (a) in the case of a Default Notice relating to a Payment
Default, the earliest of (i) the date on which the Senior Lender Claims to which
such Payment Default relates are paid and satisfied in full, (ii) the date on
which such Payment Default is cured or waived or (iii) the date on which the
Senior Agent delivers a notice that the Blockage Period is terminated; or (b) in
the case of Default Notice relating to an Other Default, 180 days after the
Default Notice or, if earlier, the earliest of (i) 180 days after the Default
Notice minus the number of days in all other Blockage Periods during the 360 day
interval preceding the Default Notice, (ii) the date on which the Senior Agent
delivers a notice that the Blockage Period is terminated or (iii) the date on
which such Other Default is cured or waived; provided however, that a default
that to the actual knowledge of the Senior Agent exists at or prior to the
commencement of a Blockage Period may not serve as the basis for the
commencement of a subsequent Blockage Period; provided, that no Blockage Period
shall be imposed under this clause (b) for a period of ninety (90) days after
the last day of any Blockage Period; and provided that if the Senior Agent
accelerates the Senior Debt and it is not paid in full, such failure of the
Borrower to pay the Senior Lender Claims in full is a Payment Default separate
and distinct from the Other Default which gave rise to the acceleration.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in the State of New York are required or authorized
by law or other governmental action to close.
"Collateral" shall mean all of the property and interests in property,
real or personal, tangible or intangible, now owned or hereafter acquired by any
Grantor in or upon which Senior Lenders at any time have (or purportedly have) a
Lien, and including, without limitation, all proceeds and products of such
property and interests in property.
"Credit Facilities" means one or more debt facilities (including the
credit facility provided under Senior Loan Agreement and the other Senior Lender
Documents) or commercial paper facilities providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
lenders or to special purpose entities formed to borrow from lenders against
such receivables) or letters of credit, or any debt securities or other form of
debt financing (including convertible or exchangeable debt instruments), in each
case, as amended, supplemented, modified, extended, renewed, restated or
refunded in whole or in part from time to time.
"Creditors" means, collectively, (a) Senior Lenders and (b) the Trustee
and the Noteholders.
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"Default Notice" means a written notice from the Senior Agent to the
Trustee stating that an Event of Default (as that term is defined in the Senior
Loan Agreement) exists and whether that default is a Payment Default or Other
Default.
"Discharge of Senior Lender Claims" means, except to the extent otherwise
provided in Section 5.6, termination of financing arrangements and commitments
under the Senior Lender Documents and the payment in full in cash of (a) the
principal of and interest and premium, if any, on all Senior Debt or other
Indebtedness outstanding under any First-Lien Credit Facilities or, with respect
to letters of credit outstanding thereunder, delivery of cash collateral or
backstop letters of credit in respect thereof in compliance with such First-Lien
Credit Facilities, as applicable, in each case after or concurrently with
termination of all commitments to extend credit thereunder and (b) any other
Senior Lender Claims that are due and payable or otherwise accrued and owing at
or prior to the time such principal and interest are paid.
"First-Lien Credit Facilities" means (a) the Credit Facilities provided
pursuant to the Senior Loan Agreement and (b) after Discharge of Senior Lender
Claims arising under the Senior Loan Agreement, any other Credit Facility, that
is secured by a Permitted Lien (as defined in the Indenture) and is designated
by the Borrower as a "First-Lien Credit Facility" for purposes of the Indenture
pursuant to Section 8.19 hereof.
"Future First-Lien Credit Facility" means any First-Lien Credit Facility
(other than the Senior Loan Agreement) that is designated by the Borrower as a
"First-Lien Credit Facility" for purposes of the Indenture after the date hereof
pursuant to Section 8.19 hereof.
"Grantors" means each of the Borrower and any other Person that has or
have executed and delivered a Noteholder Collateral Document or any Senior
Lender Document.
"Indebtedness" means and includes all Obligations that constitute
"Indebtedness" within the meaning of the Indenture or the Senior Loan Agreement.
"Indenture" has the meaning set forth in the recitals hereto.
"Insolvency or Liquidation Proceeding" means (a) any voluntary or
involuntary case or proceeding under any Bankruptcy Law with respect to any
Grantor, (b) any other voluntary or involuntary insolvency, reorganization or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding with respect to any Grantor or with respect
to any of their respective assets, (c) any liquidation, dissolution,
reorganization or winding up of any Grantor whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy or (d) any assignment for the
benefit of creditors or any other marshalling of assets and liabilities of any
Grantor.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
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"Noteholder Claims" mean all Obligations in respect of the Notes or
arising under the Noteholder Documents or any of them.
"Noteholder Collateral Documents" means the Noteholder Security Agreement
and any other document or instrument pursuant to which a Lien is granted by any
Grantor to secure any Noteholder Claims or under which rights or remedies with
respect to any such Lien are governed.
"Noteholder Documents" means (a) the Indenture, the Notes, the Noteholder
Collateral Documents and any document or instrument evidencing or governing any
Other Second-Lien Obligations (as defined in the Indenture) and (b) any other
related document or instrument executed and delivered pursuant to any Noteholder
Document described in clause (a) above evidencing or governing any Obligations
thereunder.
"Noteholder Security Agreement" means the Security Agreement, dated as of
the date hereof, among the Borrower, the other Grantors and the Trustee.
"Noteholders" mean the Persons holding Noteholder Claims, including the
Trustee.
"Notes" means (a) the Senior Secured Notes due 2009 issued under the
Indenture by the Borrower, and (b) any additional notes issued under the
Indenture by the Borrower, to the extent permitted by the Indenture and the
Senior Loan Agreement.
"Obligations" means any and all obligations with respect to the payment of
(a) any principal of or interest (including interest accruing on or after the
commencement of any Insolvency or Liquidation Proceeding, whether or not a claim
for post-filing interest is allowed in such proceeding) or premium on any
Indebtedness, including any reimbursement obligation in respect of any letter of
credit, (b) any fees, indemnification obligations, expense reimbursement
obligations or other liabilities payable under the documentation governing any
Indebtedness, or (c) any obligation to post cash collateral in respect of
letters of credit and any other obligations.
"Other Default" means any Event of Default (as defined in the Senior Loan
Agreement as in effect on the date hereof) other than a Payment Default.
"Payment Default" means any event of the type described in Section
10.1(a)(i) of the Senior Loan Agreement as in effect on the date hereof.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, entity or other party,
including any government and any political subdivision, agency or
instrumentality thereof.
"Pledged Collateral" means any Collateral in the possession of the Senior
Agent (or its agents or bailees), to the extent that possession thereof is
necessary to perfect a Lien thereon under the Uniform Commercial Code.
"Recovery" has the meaning set forth in Section 6.5 hereof.
"Required Lenders" means, with respect to any amendment or modification of
the Senior Loan Agreement, or any termination or waiver of any provision of the
Senior Loan Agreement,
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or any consent or departure by the Borrower or any other Grantor therefrom,
those Senior Lenders the approval of which is required to approve such amendment
or modification, termination or waiver or consent or departure.
"Senior Agent" means Congress Financial Corporation (Florida) in its
capacity as agent under the Senior Loan Agreement and the other Senior Lender
Documents (and also includes its successors hereunder as collateral agent for
the Senior Lenders (or if there is more than one agent, a majority of them)
under the Senior Lender Documents exercising substantially the same rights and
powers, or if there is no acting Senior Agent under the Senior Loan Agreement,
the Required Lenders.
"Senior Debt" shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description owing by any Grantor to
Senior Agent or Senior Lenders, including principal, interest, charges, fees,
premiums, indemnities and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, in each case arising under any of the
Senior Lender Documents, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of the Senior
Loan Agreement or after the commencement of any Insolvency or Liquidation
Proceeding (and including, without limitation, any principal, interest, fees,
costs, expenses and other amounts, which would accrue and become due but for the
commencement of such case or proceeding, whether or not such amounts are allowed
or allowable in whole or in part in any such case or proceeding), whether direct
or indirect, absolute or contingent, joint or several, due or not due, primary
or secondary, liquidated or unliquidated, or secured or unsecured.
Notwithstanding anything to the contrary contained in this Agreement, amounts
constituting principal shall qualify as Senior Debt only to the extent that such
principal amounts (a) with respect to Senior Debt and all other Indebtedness
outstanding under one or more of the Senior Lender Documents (which for the
purposes hereof is an "asset based transaction" (as defined below)) do not in
the exceed Sixty Million Dollars ($60,000,000) at any time outstanding; and (b)
with respect to any Future First-Lien Credit Facilities, (i) in the case of
Indebtedness obtained from any one or more lenders in an "asset based
transaction," do not in the exceed Sixty Million Dollars ($60,000,000) at any
time outstanding, and (ii) in the case of Indebtedness obtained from any one or
more lenders in a non-"asset based transaction", do not in the exceed Thirty
Million Dollars ($30,000,000) at any time outstanding (for the purpose of this
sentence, the term "asset based transaction" means any Credit Facility pursuant
to which loans, advances or financial accommodations are provided to Borrower on
the basis of, among other provisions, a borrowing base percentage or borrowing
base formula not to exceed 100% of the value of accounts receivable, inventory,
real estate, cash equivalents and/or equipment).
"Senior Lender Claims" means (a) all Senior Debt and all other
Indebtedness outstanding under one or more of the Senior Lender Documents; and
(b) other Bank Indebtedness, including any Future First-Lien Credit Facilities,
the Indebtedness under each of which (i) constitutes Permitted Debt (as defined
in the Indenture) or is otherwise permitted by the Indenture, (ii) is designated
by the Borrower as "Loan Agreement Obligations" for purposes of the Indenture
pursuant to Section 8.19 hereof and (iii) is secured by a Permitted Lien (as
defined in the Indenture) described in clause (a) of the definition thereof, and
(b) all other Obligations (not constituting Indebtedness) of the Borrower or any
Grantor under the Senior Lender Documents or any such other Future First-Lien
Credit Facility. To the extent any payment with respect to
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the Senior Lender Claims (whether by or on behalf of any Grantor, as proceeds of
security, enforcement of any right of set-off or otherwise) is declared to be
fraudulent or preferential in any respect, set aside or required to be paid to a
debtor in possession, trustee, receiver or similar Person, then the obligation
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred.
"Senior Lender Documents" means the Senior Loan Agreement, any other
agreement at any time executed and/or delivered by any Grantor to or in favor of
Senior Agent for the benefit of Senior Lenders granting a Lien upon any
Collateral of such Grantor to Senior Agent for the benefit of Senior Lenders and
all agreements, guaranties, documents and instruments at any time executed
and/or delivered by any Grantor or any other Person to, with or in favor of
Senior Agent or Senior Lenders in connection therewith or related thereto, as
all of the foregoing now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated, refinanced, replaced or restructured
(in whole or in part and including any agreements with, to or in favor of any
other lender or group of lenders that at any time refinances, replaces or
succeeds to all or any portion of the Senior Lender Claims).
"Senior Loan Agreement" means the Senior Loan Agreement; provided that if
at any time a Discharge of Senior Lender Claims occurs with respect to the
Senior Loan Agreement (without giving effect to Section 5.6), then, to the
extent provided in Section 5.6, the term "Senior Loan Agreement" means the
Future First-Lien Credit Facility designated by the Borrower as the "Senior Loan
Agreement" in accordance with such Section.
"Senior Lenders" mean the Persons holding Senior Lender Claims, including
the Senior Agent.
"Subsidiary" means any "Subsidiary" of the Borrower, as defined in the
Indenture or the Senior Loan Agreement.
"Trustee" means HSBC Bank USA, in its capacity as trustee under the
Indenture and collateral agent under the Noteholder Collateral Documents, and
also includes its successors hereunder as collateral agent for the Noteholders
under the Noteholder Collateral Documents.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as
from time to time in effect in the State of New York.
(c) Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified, (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Sections shall be construed to
refer to Sections of
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this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 2. LIEN PRIORITIES; SUBORDINATION OF DEBT
2.1 Subordination. Notwithstanding the date, manner or order of grant,
attachment or perfection of any Liens granted to the Trustee or the Noteholders
on the Collateral or of any Liens granted to the Senior Agent or the Senior
Lenders on the Collateral and notwithstanding any provision of the UCC, or any
applicable law or the Noteholder Documents or the Senior Lender Documents or any
other circumstance whatsoever, the Trustee, on behalf of itself and the
Noteholders, hereby agrees that: (a) any Lien on the Collateral securing any
Senior Lender Claims now or hereafter held by or on behalf of the Senior Agent
or any Senior Lenders or any agent or trustee therefor shall be senior in all
respects and prior to any Lien on the Collateral securing any of the Noteholder
Claims; and (b) any Lien on the Collateral now or hereafter held by or on behalf
of the Trustee or any Noteholders or any agent or trustee therefor regardless of
how acquired, whether by grant, statute, operation of law, subrogation or
otherwise, shall be junior and subordinate in all respects to all Liens on the
Collateral securing any Senior Lender Claims. All Liens on the Collateral
securing any Senior Lender Claims shall be and remain senior in all respects and
prior to all Liens on the Collateral securing any Noteholder Claims for all
purposes, whether or not such Liens securing any Senior Lender Claims are
subordinated to any Lien securing any other obligation of the Borrower, any
other Grantor or any other Person. >>
2.2 No New Liens. So long as the Discharge of Senior Lender Claims has not
occurred, (a) the parties hereto agree that, after the date hereof, if the
Trustee shall hold any Lien on any assets of the Borrower or any other Grantor
securing any Noteholder Claims that are not also subject to the Lien of the
Senior Agent or Senior Lenders under the Senior Lender Documents, the Trustee,
upon written demand by the Senior Agent or the Borrower, will assign it to the
Senior Agent as security for the Senior Lender Claims and, upon such assignment
taking effect, the Borrower agrees that it shall take, and shall cause each
other Grantor, as the case may be, to take, at the Borrower's sole cost and
expense, such actions as shall be necessary and proper to grant to the Trustee a
security interest in the assets of the Borrower or such Grantor, as the case may
be, as to which such security interest was assigned to the Senior Agent as
aforesaid, such security interest to be as security for all Obligations owed to
the Trustee and the Noteholders and to be subject to the terms and conditions of
this Agreement, and (b) the Borrower agrees that it will not, and will not
permit any Subsidiary to, grant or permit to exist any Lien on any assets of the
Borrower or any of its Subsidiaries to secure any Noteholder Claim unless a
perfected prior Lien on the same assets has been granted to Senior Lenders to
secure the Senior Lender Claims.
2.3 No Contest of Liens. Each Creditor agrees that it will not contest the
validity, perfection, priority or enforceability of the Liens upon the
Collateral of the Senior Lenders or the Trustee, as the case may be, or any
rights of the Senior Lenders or the Trustee with respect to the Collateral, or
the respective priorities assigned to the Noteholder Claims and the Senior Debt
herein, or the validity or reasonableness of any act or omission by the Senior
Lenders in respect of the Collateral, including, without limitation, the timing,
method, or manner of selling or otherwise disposing of or realizing upon any of
the Collateral, the terms (including the price and
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percentage of consideration received in cash) of any such sale or other
disposition or realization, or any failure to sell, dispose of or realize upon
any of the Collateral.
2.4 Subordination. Except as specifically set forth in Section 2.5 below,
each of the Trustee and the Noteholders hereby subordinates its right to payment
and satisfaction of the Noteholder Claims and the payment thereof, directly or
indirectly, by any means whatsoever, is deferred, to the indefeasible payment
and satisfaction in full of all Senior Debt. Notwithstanding the foregoing,
nothing in this Agreement is intended to, or should be construed to, impair the
Lien of the Trustee provided in the penultimate paragraph of Section 7.07 of the
Indenture (as in effect on the date hereof) or subordinate amounts payable to
the Trustee under Section 7.07 of the Indenture (as in effect on the date
hereof) as an unsecured creditor in an Insolvency or Liquidation Proceeding. The
Trustee's Lien shall not attach to the Collateral.
2.5 Permitted Payments. Senior Lenders hereby agree that, notwithstanding
anything to the contrary contained in Section 2.4, except during a Blockage
Period, the Borrower may make and the Trustee or the Noteholders may receive and
retain from the Borrower regularly scheduled payments of interest, on an
unaccelerated basis, in respect of the Noteholder Claims in accordance with the
terms of the Noteholder Documents as in effect on the date hereof (but not any
prepayments, non-mandatory payments or any payments pursuant to acceleration or
claims of breach or to acquire any Noteholder Claims, or otherwise).
2.6 Payments Received by Junior Creditor. Except for payments received by
Junior Creditor as provided in Section 2.5 above, should any payment or
distribution or security or instrument or proceeds thereof be received by the
Trustee or the Noteholders in respect of the Noteholder Claims, Trustee or the
Noteholders shall receive and hold the same in trust, as trustee, for the
benefit of the Senior Lenders, segregated from other funds and property of the
Trustee or the Noteholders and shall forthwith deliver the same to the Senior
Lenders (together with any endorsement or assignment of the Trustee or the
Noteholders where necessary), for application to any of the Senior Debt. In the
event of the failure of the Trustee and the Noteholders to make any such
endorsement or assignment to the Senior Lenders, the Senior Lenders, or any of
their officers or employees, are hereby irrevocably authorized on behalf of the
Trustee and the Noteholders to make the same.
SECTION 3. ENFORCEMENT
3.1 Exercise of Remedies.
(a) So long as the Discharge of Senior Lender Claims has not occurred,
whether or not any Insolvency or Liquidation Proceeding has been commenced by or
against the Borrower or any other Grantor, (i) the Trustee and the Noteholders
will not exercise or seek to exercise any rights or remedies (including set-off)
with respect to any Collateral, institute any action or proceeding with respect
to such rights or remedies (including any action of foreclosure), contest,
protest or object to any foreclosure proceeding or action brought by the Senior
Agent or any Senior Lender, the exercise of any right under any lockbox
agreement, landlord waiver or bailee's letter or similar agreement or
arrangement to which the Trustee or any Noteholder is a party, or any other
exercise by any such party, of any rights and remedies relating to the
Collateral under the Senior Lender Documents or otherwise, or object to the
forbearance by the Senior Lenders from bringing or pursuing any foreclosure
proceeding or action or any other
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exercise of any rights or remedies relating to the Collateral and (ii) the
Senior Agent and the Senior Lenders shall have the exclusive right to enforce
rights, exercise remedies (including set-off) and make determinations regarding
the release, disposition, or restrictions with respect to the Collateral, or
forbear from taking any such action in the sole discretion of Senior Agent and
the Senior Lenders, without any consultation with or the consent of the Trustee
or any Noteholder; provided, that (A) in any Insolvency or Liquidation
Proceeding commenced by or against the Borrower or any Grantor, the Trustee may
file a claim or statement of interest with respect to the Noteholder Claims, and
(B) the Trustee may take any action (not adverse to the prior Liens on the
Collateral securing the Senior Lender Claims, or the rights of the Senior Agent
or the Senior Lenders to exercise remedies in respect thereof) in order to
preserve or protect its Lien on the Collateral. Neither the Trustee nor any
Noteholder shall commence any Insolvency or Liquidation Proceeding against
Borrower or any Grantor under any Bankruptcy Laws. In exercising rights and
remedies with respect to the Collateral, the Senior Agent and the Senior Lenders
may enforce the provisions of the Senior Lender Documents and exercise remedies
thereunder, or forbear from taking any such action in the sole discretion of
Senior Agent and the Senior Lenders, all in such order and in such manner as
they may determine in the exercise of their sole discretion. Such exercise and
enforcement shall include the rights of an agent appointed by them to sell or
otherwise dispose of Collateral upon foreclosure, to incur expenses in
connection with such sale or disposition, and to exercise all the rights and
remedies of a secured lender under the Uniform Commercial Code of any applicable
jurisdiction and of a secured creditor under Bankruptcy Laws of any applicable
jurisdiction.
(b) The Trustee, on behalf of itself and the Noteholders, agrees that it
will not take or receive any Collateral or any proceeds of Collateral in
connection with the exercise of any right or remedy (including set-off) with
respect to any Collateral, unless and until the Discharge of Senior Lender
Claims has occurred. Without limiting the generality of the foregoing, unless
and until the Discharge of Senior Lender Claims has occurred, except as
expressly provided in the proviso in clause (ii) of Section 3.1(a) above, the
sole right of the Trustee and the Noteholders with respect to the Collateral is
to hold a Lien on the Collateral pursuant to the Noteholder Documents for the
period and to the extent granted therein and to receive a share of the proceeds
thereof, if any, after the Discharge of the Senior Lender Claims has occurred.
(c) Subject to the proviso in clause (ii) of Section 3.1(a) above, (i) the
Trustee, for itself or on behalf of the Noteholders, agrees that the Trustee and
the Noteholders will not take any action that would hinder any exercise of
remedies undertaken by the Senior Agent or Senior Lenders under the Senior Loan
Documents, including any sale, lease, exchange, transfer or other disposition of
the Collateral, whether by foreclosure or otherwise, and (ii) the Trustee, for
itself and on behalf of the Noteholders, hereby waives any and all rights it or
the Noteholders may have as a junior lien creditor or otherwise to object to the
manner in which the Senior Agent or the Senior Lenders seek to enforce or
collect the Senior Lender Claims or the Liens granted in any of the Senior
Lender Collateral, or forbear from taking any such action in the sole discretion
of Senior Agent and the Senior Lenders, regardless of whether any action or
failure to act by or on behalf of the Senior Agent or Senior Lenders is adverse
to the interest of the Noteholders.
(d) The Trustee hereby acknowledges and agrees that no covenant, agreement
or restriction contained in any Noteholder Document shall be deemed to restrict
in any way the Credit Facilities provided pursuant to the Senior Loan Agreement
or any rights and remedies of
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the Senior Agent or the Senior Lenders with respect to the Collateral as set
forth in this Agreement and the Senior Lender Documents.
3.2 Cooperation. Subject to the proviso in clause (ii) of Section 3.1(a)
above, the Trustee, on behalf of itself and the Noteholders, agrees that, unless
and until the Discharge of Senior Lender Claims has occurred, it will not
commence, or join with any Person (other than the Senior Lenders and the Senior
Agent upon the request thereof) in commencing, any enforcement, collection,
execution, levy or foreclosure action or proceeding with respect to any Lien
held by it under any of the Noteholder Documents or otherwise.
SECTION 4. PAYMENTS
4.1 Application of Proceeds. As long as the Discharge of Senior Lender
Claims has not occurred, the Collateral or proceeds thereof received in
connection with the sale or other disposition of, or collection on, such
Collateral upon the exercise of remedies, shall be applied by the Senior Agent
to the Senior Lender Claims in such order as specified in the relevant Senior
Lender Documents until the Discharge of Senior Lender Claims has occurred. Upon
the Discharge of the Senior Lender Claims, the Senior Agent shall deliver to the
Trustee any proceeds of Collateral held by it in the same form as received, with
any necessary endorsements or as a court of competent jurisdiction may otherwise
direct to be applied by the Trustee to the Noteholder Claims in such order as
specified in the relevant Noteholder Documents.
4.2 Payments Over. Any Collateral or proceeds thereof received by the
Trustee or any Noteholder in connection with the exercise of any right or remedy
(including set-off) relating to the Collateral in contravention of this
Agreement shall be segregated and held in trust and forthwith paid over to the
Senior Agent for the benefit of the Senior Lenders in the same form as received,
with any necessary endorsements or as a court of competent jurisdiction may
otherwise direct. The Senior Agent is hereby authorized to make any such
endorsements as agent for the Trustee or any such Noteholder. This authorization
is coupled with an interest and is irrevocable.
SECTION 5. OTHER AGREEMENTS
5.1 Releases.
(a) If in connection with:
(i) the exercise of the Senior Agent's remedies in respect of the
Collateral provided for in Section 3.1, including any sale, lease, exchange,
transfer or other disposition of any such Collateral;
(ii) any sale, lease, exchange, transfer or other disposition of any
Collateral permitted under the terms of the Senior Loan Agreement (whether or
not an event of default thereunder, and as defined therein, has occurred and is
continuing) [and permitted or not prohibited under Section 4.06 of the Indenture
(Asset Sales)]; or
(iii) any agreement between Senior Agent and Borrower or any other
Grantor to release the Senior Agent's Lien on any portion of the Collateral or
to release any Grantor from its obligations under its guaranty of the Senior
Lender Claims, provided that after giving effect to
10
the release, Obligations secured by the first priority Liens on the remaining
Collateral remain outstanding;
the Senior Agent, for itself or on behalf of any of the Senior Lenders, releases
any of its Liens on any part of the Collateral (or any Grantor from its
obligations under its guaranty of the Senior Lender Claims), the Liens, if any,
of the Trustee, for itself or for the benefit of the Noteholders, on such
Collateral (and the obligations of such Grantor under its guaranty of the
Noteholder Claims) shall be automatically, unconditionally and simultaneously
released and the Trustee, for itself or on behalf of any such Noteholder,
promptly shall execute and deliver to the Senior Agent or such Grantor such
termination statements, releases and other documents as the Senior Agent or such
Grantor may request to effectively confirm such release.
(b) The Trustee, for itself and on behalf of the Noteholders, hereby
irrevocably constitutes and appoints the Senior Agent and any officer or agent
of the Senior Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Trustee or such holder or in the Senior Agent's own name, from time
to time in the Senior Agent's discretion, for the purpose of carrying out the
terms of this Section 5.1, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Section 5.1, including any termination
statements, endorsements or other instruments of transfer or release.
5.2 Insurance. Unless and until the Discharge of Senior Lender Claims has
occurred, the Senior Agent and the Senior Lenders shall have the sole and
exclusive right, subject to the rights of the Grantors under the Senior Lender
Documents, to adjust settlement for any insurance policy covering the Collateral
in the event of any loss thereunder and to approve any award granted in any
condemnation or similar proceeding affecting the Collateral. Unless and until
the Discharge of Senior Lender Claims has occurred, all proceeds of any such
policy and any such award if in respect to the Collateral shall be paid to the
Senior Agent for the benefit of the Senior Lenders to the extent required under
the Senior Lender Documents and thereafter to the Trustee for the benefit of the
Noteholders to the extent required under the applicable Noteholder Documents and
then to the owner of the subject property or as a court of competent
jurisdiction may otherwise direct. If the Trustee or any Noteholder shall, at
any time, receive any proceeds of any such insurance policy or any such award in
contravention of this Agreement, it shall pay such proceeds over to the Senior
Agent in accordance with the terms of Section 4.2.
5.3 Amendments to Noteholder Collateral Documents.
(a) Without the prior written consent of the Senior Agent and the Required
Lenders, no Noteholder Collateral Document may be amended, supplemented or
otherwise modified or entered into to the extent such amendment, supplement or
modification, or the terms of any new Noteholder Collateral Document, would be
prohibited by or inconsistent with any of the terms of the Senior Lender
Documents. The Indenture, the Notes and the Noteholder Security Agreement shall
include the following language (or language to similar effect approved by the
Senior Agent):
"Notwithstanding anything herein to the contrary, the lien and
security interest granted to the Trustee pursuant to this Agreement
and the exercise of any right or remedy by the Trustee hereunder
11
are subject to the provisions of the Intercreditor and Subordination
Agreement, dated as of ____________, 2004 (as amended, supplemented
or otherwise modified from time to time, the "Intercreditor and
Subordination Agreement"), among Reptron Electronics, Inc., Congress
Financial Corporation (Florida), as agent, and HSBC Bank USA , as
Trustee. In the event of any conflict between the terms of the
Intercreditor and Subordination Agreement and this Agreement, the
terms of the Intercreditor and Subordination Agreement shall
govern."
In addition, the Borrower agrees that each Noteholder Mortgage covering any
Collateral shall contain such other language as the Senior Agent may reasonably
request in writing to reflect the subordination of such Noteholder Mortgage to
the Senior Collateral Document covering such Collateral.
5.4 Rights As Unsecured Creditors. Subject to the terms of this Agreement,
the Trustee and the Noteholders may each exercise rights and remedies as an
unsecured creditor against the Borrower or any Subsidiary that has guaranteed
the Noteholder Claims in accordance with the terms of the Noteholder Documents
and applicable law. Nothing in this Agreement shall prohibit the receipt by the
Trustee or any Noteholders of the required payments of interest to the extent
permitted hereunder so long as such receipt is not the direct or indirect result
of the exercise by the Trustee or any Noteholder of rights or remedies as a
secured creditor or enforcement in contravention of this Agreement of any Lien
held by any of them. In the event the Trustee or any Noteholder becomes a
judgment lien creditor in respect of Collateral as a result of its enforcement
of its rights as an unsecured creditor, such judgment lien shall be subordinated
to the Liens securing Senior Lender Claims on the same basis as the other Liens
securing the Noteholder Claims are so subordinated to such Senior Lender Claims
under this Agreement. Nothing in this Agreement impairs or otherwise adversely
affects any rights or remedies the Senior Agent or the Senior Lenders may have
with respect to the Collateral.
5.5 Bailee for Perfection
(a) Senior Agent agrees to hold the Pledged Collateral that is part of the
Collateral in its possession or control (or in the possession or control of its
agents or bailees) as bailee for the Trustee and any assignee solely for the
purpose of perfecting the security interest granted in such Pledged Collateral
pursuant to the Noteholder Pledge Agreement, subject to the terms and conditions
of this Section 5.5.
(b) Until the Discharge of Senior Lender Claims has occurred, the Senior
Agent shall be entitled to deal with the Pledged Collateral in accordance with
the terms of the Senior Lender Documents. The rights of the Trustee shall at all
times be subject to the terms of this Agreement and to the Senior Agent's rights
under the Senior Lender Documents.
(c) The Senior Agent shall have no obligation whatsoever to the Trustee or
any Noteholder to assure that the Pledged Collateral is genuine or owned by any
of the Grantors or to preserve rights or benefits of any Person except as
expressly set forth in this Section 5.5. The duties or responsibilities of the
Senior Agent under this Section 5.5 shall be limited solely to
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holding the Pledged Collateral as bailee for the Trustee for purposes of
perfecting the Lien held by the Trustee.
(d) The Senior Agent shall not have by reason of the Noteholder Collateral
Documents or this Agreement or any other document a fiduciary relationship in
respect of the Trustee or any Noteholder. The Trustee shall not have by reason
of the Senior Lender Documents or this Agreement or any other document a
fiduciary relationship in respect of the Senior Agent or the Senior Lenders.
(e) Upon the Discharge of Senior Lender Claims, the Senior Agent shall
deliver to the Trustee the remaining Pledged Collateral (if any), together with
any necessary endorsements (or otherwise allow the Trustee to obtain control of
such Pledged Collateral) or as a court of competent jurisdiction may otherwise
direct.
5.6 When Discharge of Senior Lender Claims Deemed to Not Have Occurred. If
at any time after the Discharge of Senior Lender Claims has occurred the
Borrower designates any Future First-Lien Credit Facility to be the "Senior Loan
Agreement" pursuant to Section 8.19 hereof, then such Discharge of Senior Lender
Claims shall automatically be deemed not to have occurred for all purposes of
this Agreement (other than with respect to any actions taken prior to the date
of such designation as a result of the occurrence of such first Discharge of
Senior Lender Claims), and such Future First-Lien Credit Facility shall
automatically be treated as the Senior Loan Agreement for all purposes of this
Agreement, including for purposes of the Lien priorities and rights in respect
of Collateral set forth herein. Upon receipt of written notice of such
designation (including the identity of the new Senior Agent), the Trustee shall,
at the written direction of the Borrower, promptly (i) enter into such documents
and agreements (including amendments or supplements to this Agreement) as the
Borrower or such new Senior Agent shall reasonably request in order to provide
to the new Senior Agent the rights of the Senior Agent contemplated hereby and
(ii) deliver to the Senior Agent the Pledged Collateral together with any
necessary endorsements (or otherwise allow such Senior Agent to obtain control
of such Pledged Collateral).
SECTION 6. INSOLVENCY OR LIQUIDATION PROCEEDINGS
6.1 Financing Issues. If the Borrower or any other Grantor shall be
subject to any Insolvency or Liquidation Proceeding and the Senior Agent shall
desire to permit the use of cash collateral or to permit the Borrower or any
other Grantor to obtain financing under Section 363 or Section 364 of Title 11
of the United States Code or any similar Bankruptcy Law ("DIP Financing"), then
the Trustee, on behalf of itself and the Noteholders, agrees that it will raise
no objection to such use of cash collateral or DIP Financing and will not
request adequate protection or any other relief in connection therewith (except
to the extent permitted by Section 6.3) and, to the extent the Liens securing
the Senior Lender Claims are subordinated or pari passu with such DIP Financing,
will subordinate its Liens in the Collateral to such DIP Financing (and all
Obligations relating thereto) on the same basis as the other Liens securing the
Noteholder Claims are so subordinated to Senior Lender Claims under this
Agreement.
6.2 Relief from the Automatic Stay. Until the Discharge of Senior Lender
Claims has occurred, the Trustee, on behalf of itself and the Noteholders,
agrees that none of them shall seek relief from the automatic stay or any other
stay in any Insolvency or Liquidation Proceeding in
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respect of the Collateral, without the prior written consent of the Senior Agent
and the Required Lenders.
6.3 Adequate Protection. The Trustee, on behalf of itself and the
Noteholders, agrees that none of them shall contest (or support any other Person
contesting) (a) any request by the Senior Agent or the Senior Lenders for
adequate protection or (b) any objection by the Senior Agent or the Senior
Lenders to any motion, relief, action or proceeding based on the Senior Agent or
the Senior Lenders claiming a lack of adequate protection. Notwithstanding the
foregoing contained in this Section 6.3, in any Insolvency or Liquidation
Proceeding, (i) if the Senior Lenders (or any subset thereof) are granted
adequate protection in the form of additional collateral in connection with any
DIP Financing or use of cash collateral under Section 363 or Section 364 of
Title 11 of the United States Code or any similar Bankruptcy Law, then the
Trustee, on behalf of itself or any of the Noteholders, may seek or request
adequate protection in the form of a replacement Lien on such additional
collateral, which Lien is subordinated to the Liens securing the Senior Lender
Claims and such DIP Financing (and all Obligations relating thereto) on the same
basis as the other Liens securing the Noteholder Claims are so subordinated to
the Senior Lender Claims under this Agreement, and (ii) in the event the
Trustee, on behalf of itself and the Noteholders, seeks or requests adequate
protection and such adequate protection is granted in the form of additional
collateral, then the Trustee, on behalf of itself or any of the Noteholders,
agrees that the Senior Agent shall also be granted a senior Lien on such
additional collateral as security for the Senior Lender Claims and any such DIP
Financing and that any Lien on such additional collateral securing the
Noteholder Claims shall be subordinated to the Liens on such collateral securing
the Senior Lender Claims and any such DIP Financing (and all Obligations
relating thereto) and any other Liens granted to the Senior Lenders as adequate
protection on the same basis as the other Liens securing the Noteholder Claims
are so subordinated to such Senior Lender Claims under this Agreement.
6.4 No Waiver. Nothing contained herein shall prohibit or in any way limit
the Senior Agent or any Senior Lender from objecting in any Insolvency or
Liquidation Proceeding or otherwise to any action taken by the Trustee or any of
the Noteholders, including the seeking by the Trustee or any Noteholder of
adequate protection or the asserting by the Trustee or any Noteholder of any of
its rights and remedies under the Noteholder Documents or otherwise.
6.5 Preference Issues. If any Senior Lender is required in any Insolvency
or Liquidation Proceeding or otherwise to turn over or otherwise pay to the
estate of the Borrower or any other Grantor any amount (a "Recovery"), then the
Senior Lender Claims shall be reinstated to the extent of such Recovery and the
Senior Lenders shall be entitled to a Discharge of Senior Lender Claims with
respect to all such recovered amounts. If this Agreement shall have been
terminated prior to such Recovery, this Agreement shall be reinstated in full
force and effect, and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the parties hereto from
such date of reinstatement.
SECTION 7. RELIANCE; WAIVERS; ETC.
7.1 Reliance. The consent by the Senior Lenders to the execution and
delivery of the Noteholder Documents and the grant to the Trustee on behalf of
the Noteholders of a Lien on the Collateral and all loans and other extensions
of credit made or deemed made on and after the date hereof by the Senior Lenders
to the Borrower or any Grantor shall be deemed to have been
14
given and made in reliance upon this Agreement. The Trustee, on behalf of itself
and the Noteholders, acknowledges that it and the Noteholders have,
independently and without reliance on the Senior Agent or any Senior Lender, and
based on documents and information deemed by them appropriate, made their own
credit analysis and decision to enter into the Indenture, this Agreement and the
transactions contemplated hereby and thereby and they will continue to make
their own credit decision in taking or not taking any action under the Indenture
or this Agreement.
7.2 No Warranties or Liability. The Trustee, on behalf of itself and
Noteholders, acknowledges and agrees that each of the Senior Agent and the
Senior Lenders have made no express or implied representation or warranty,
including with respect to the execution, validity, legality, completeness,
collectibility or enforceability of any of the Senior Lender Documents, the
ownership of any Collateral or the perfection or priority of any Liens thereon.
The Senior Lenders will be entitled to manage and supervise their respective
loans and extensions of credit under the Senior Lender Documents in accordance
with law and as they may otherwise, in their sole discretion, deem appropriate,
and the Senior Lenders may manage their loans and extensions of credit without
regard to any rights or interests that the Trustee or any of the Noteholders
have in the Collateral or otherwise, except as otherwise provided in this
Agreement. Neither the Senior Agent nor any Senior Lender shall have any duty to
the Trustee or any of the Noteholders to act or refrain from acting in a manner
which allows, or results in, the occurrence or continuance of an event of
default or default under any agreements with the Borrower or any Subsidiary
thereof (including the Noteholder Documents), regardless of any knowledge
thereof which they may have or be charged with.
7.3 No Waiver of Lien Priorities.
(a) No right of the Senior Lenders, the Senior Agent or any of them to
enforce any provision of this Agreement or any Senior Lender Document shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Borrower or any other Grantor or by any act or failure to act by
any Senior Lender or the Senior Agent, or by any noncompliance by any Person
with the terms, provisions and covenants of this Agreement, any of the Senior
Lender Documents or any of the Noteholder Documents, regardless of any knowledge
thereof which the Senior Agent or the Senior Lenders, or any of them, may have
or be otherwise charged with;
(b) Without in any way limiting the generality of the foregoing paragraph
(but subject to the rights of the Borrower and the other Grantors under the
Senior Lender Documents), the Senior Lenders, the Senior Agent and any of them,
may, at any time and from time to time, without the consent of, or notice to,
the Trustee or any Noteholder, without incurring any liabilities to the Trustee
or any Noteholder and without impairing or releasing the Lien priorities and
other benefits provided in this Agreement (even if any right of subrogation or
other right or remedy of the Trustee or any Noteholder is affected, impaired or
extinguished thereby) do any one or more of the following:
(i) change the manner, place or terms of payment or change or extend
the time of payment of, or amend, renew, exchange, increase or alter, the terms
of any of the Senior Lender Claims or any Lien on any Senior Lender Collateral
or guaranty thereof or any liability of the Borrower or any other Grantor, or
any liability incurred directly or indirectly in respect
15
thereof (including any increase in or extension of the Senior Lender Claims,
without any restriction as to the amount, tenor or terms of any such increase or
extension) or otherwise amend, renew, exchange, extend, modify or supplement in
any manner any Liens held by the Senior Agent or any of the Senior Lenders, the
Senior Lender Claims or any of the Senior Lender Documents;
(ii) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any part of the Senior Lender
Collateral or any liability of the Borrower or any other Grantor to the Senior
Lenders or the Senior Agent, or any liability incurred directly or indirectly in
respect thereof;
(iii) settle or compromise any Senior Lender Claim or any other
liability of the Borrower or any other Grantor or any security therefor or any
liability incurred directly or indirectly in respect thereof and apply any sums
by whomsoever paid and however realized to any liability (including the Senior
Lender Claims) in any manner or order; and
(iv) exercise or delay in or refrain from exercising any right or
remedy against the Borrower or any security or any other Grantor or any other
Person, elect any remedy and otherwise deal freely with the Borrower, any other
Grantor or any Collateral and any security and any guarantor or any liability of
the Borrower or any other Grantor to the Senior Lenders or any liability
incurred directly or indirectly in respect thereof;
(c) The Trustee, on behalf of itself and the Noteholders, also agrees that
the Senior Lenders and the Senior Agent shall have no liability to the Trustee
or any Noteholder, and the Trustee, on behalf of itself and the Noteholders,
hereby waives any claim against any Senior Lender or the Senior Agent, arising
out of any and all actions which the Senior Lenders or the Senior Agent may take
or permit or omit to take with respect to: (i) the Senior Lender Documents, (ii)
the collection of the Senior Lender Claims or (iii) the foreclosure upon, or
sale, liquidation or other disposition of, any Collateral. The Trustee, on
behalf of itself and the Noteholders, agrees that the Senior Lenders and the
Senior Agent have no duty to them in respect of the maintenance or preservation
of the Collateral, the Senior Lender Claims or otherwise; and
(d) The Trustee, on behalf of itself and the Noteholders, agrees not to
assert and hereby waives, to the fullest extent permitted by law, any right to
demand, request, plead or otherwise assert or otherwise claim the benefit of,
any marshalling, appraisal, valuation or other similar right that may otherwise
be available under applicable law or any other similar rights a junior secured
creditor may have under applicable law.
7.4 Obligations Unconditional. All rights, interests, agreements and
obligations of the Senior Agent and the Senior Lenders and the Trustee and the
Noteholders, respectively, hereunder shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of any Senior Lender Documents
or any Noteholder Documents;
(b) any change in the time, manner or place of payment of, or in any other
terms of, all or any of the Senior Lender Claims or Noteholder Claims, or any
amendment or waiver or
16
other modification, including any increase in the amount thereof, whether by
course of conduct or otherwise, of the terms of the Senior Loan Agreement or any
other Senior Lender Document or of the terms of the Indenture or any other
Noteholder Document;
(c) any exchange of any security interest in any Collateral or any other
collateral, or any amendment, waiver or other modification, whether in writing
or by course of conduct or otherwise, of all or any of the Senior Lender Claims
or Noteholder Claims or any guarantee thereof;
(d) the commencement of any Insolvency or Liquidation Proceeding in
respect of the Borrower or any other Grantor; or
(e) any other circumstances which otherwise might constitute a defense
available to, or a discharge of, the Borrower or any other Grantor in respect of
the Senior Lender Claims, or of the Trustee or any Noteholder in respect of this
Agreement.
SECTION 8. MISCELLANEOUS
8.1 Conflicts. In the event of any conflict between the provisions of this
Agreement and the provisions of the Senior Lender Documents or the Noteholder
Documents, the provisions of this Agreement shall govern.
8.2 Continuing Nature of this Agreement; Severability. This Agreement
shall continue to be effective until the Discharge of Senior Lender Claims shall
have occurred. This is a continuing agreement of lien subordination and the
Senior Lenders may continue, at any time and without notice to the Trustee or
any Noteholder, to extend credit and other financial accommodations and lend
monies to or for the benefit of the Borrower or any Grantor constituting Senior
Lender Claims on reliance hereof. The Trustee, on behalf of itself and the
Noteholders, hereby waives any right it may have under applicable law to revoke
this Agreement or any of the provisions of this Agreement. The terms of this
Agreement shall survive, and shall continue in full force and effect, in any
Insolvency or Liquidation Proceeding. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.3 Amendments; Waivers. No amendment, modification or waiver of any of
the provisions of this Agreement by the Trustee or the Senior Agent shall be
deemed to be made unless the same shall be in writing signed on behalf of the
party making the same or its authorized agent and each waiver, if any, shall be
a waiver only with respect to the specific instance involved and shall in no way
impair the rights of the parties making such waiver or the obligations of the
other parties to such party in any other respect or at any other time. The
Borrower and other Grantors shall not have any right to consent to or approve
any amendment, modification or waiver of any provision of this Agreement except
to the extent their rights are directly affected.
8.4 Information Concerning Financial Condition of the Borrower and the
Subsidiaries. The Senior Agent and the Senior Lenders, on the one hand, and the
Trustee and the Noteholders, on the other hand, shall each be responsible for
keeping themselves informed of (a)
17
the financial condition of the Borrower and the Subsidiaries and all endorsers
and/or guarantors of the Noteholder Claims or the Senior Lender Claims and (b)
all other circumstances bearing upon the risk of nonpayment of the Noteholder
Claims or the Senior Lender Claims. Neither the Senior Agent and the Senior
Lenders, on the one hand, nor the Trustee or any Noteholder, on the other hand,
shall have any duty to advise the other of information known to it or them
regarding such condition or any such circumstances or otherwise. In the event
the Senior Agent or any of the Senior Lenders, on the one hand, or the Trustee
or any Noteholder, on the other hand, in its or their sole discretion,
undertakes at any time or from time to time to provide any such information to
the other, it or they shall be under no obligation (i) to make, and such
undertaking party shall not make, any express or implied representation or
warranty, including with respect to the accuracy, completeness, truthfulness or
validity of any such information so provided, (ii) to provide any additional
information or to provide any such information on any subsequent occasion, (iii)
to undertake any investigation or (iv) to disclose any information which,
pursuant to accepted or reasonable commercial finance practices, such party
wishes to maintain confidential or is otherwise required to maintain
confidential.
8.5 Subrogation. The Trustee, on behalf of itself and the Noteholders,
hereby waives any rights of subrogation it may acquire as a result of any
payment hereunder until the Discharge of Senior Lender Claims has occurred.
8.6 Application of Payments. All payments received by the Senior Lenders
may be applied, reversed and reapplied, in whole or in part, to such part of the
Senior Lender Claims as the Senior Lenders, in their sole discretion, deem
appropriate. The Trustee, on behalf of itself and the Noteholders, assents to
any extension or postponement of the time of payment of the Senior Lender Claims
or any part thereof and to any other indulgence with respect thereto, to any
substitution, exchange or release of any security which may at any time secure
any part of the Senior Lender Claims and to the addition or release of any other
Person primarily or secondarily liable therefor.
8.7 Consent to Jurisdiction; Waivers. The parties hereto consent to the
jurisdiction of any state or federal court located in New York, New York, and
consent that all service of process may be made by registered mail directed to
such party as provided in Section 8.8 below for such party. Service so made
shall be deemed to be completed three days after the same shall be posted as
aforesaid. The parties hereto waive any objection to any action instituted
hereunder based on forum non conveniens, and any objection to the venue of any
action instituted hereunder. Each of the parties hereto waives any right it may
have to trial by jury in respect of any litigation based on, or arising out of,
under or in connection with this Agreement or any other Loan Document, or any
course of conduct, course of dealing, verbal or written statement or action of
any party hereto.
8.8 Notices. All notices to the Noteholders and the Senior Lenders
permitted or required under this Agreement may be sent to the Trustee and the
Senior Agent, respectively. Unless otherwise specifically provided herein, all
notices, requests and demands to or upon the respective parties hereto shall be
in writing and shall be deemed duly given, made or received: if delivered in
person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if by
nationally recognized overnight courier service with instructions to deliver the
next business day, one (1) business day after sending; and if mailed by
certified mail, return receipt requested, five (5) days after mailing.
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For the purposes hereof, the addresses of the parties hereto shall be as set
forth below each party's name on the signature pages hereto, or, as to each
party, at such other address as may be designated by such party in a written
notice to all of the other parties.
8.9 Further Assurances. The Trustee, on behalf of itself and the
Noteholders, agrees that each of them shall take such further action and shall
execute and deliver to the Senior Agent and the Senior Lenders such additional
documents and instruments (in recordable form, if requested) as the Senior Agent
or the Senior Lenders may reasonably request to effectuate the terms of and the
lien priorities contemplated by this Agreement.
8.10 Governing Law. This Agreement has been delivered and accepted at and
shall be deemed to have been made at New York, New York and shall be
interpreted, and the rights and liabilities of the parties bound hereby
determined, in accordance with the laws of the State of New York.
8.11 Binding on Successors and Assigns. This Agreement shall be binding
upon the Senior Agent, the Senior Lenders, the Trustee, the Noteholders, the
Borrower and their respective permitted successors and assigns.
8.12 Specific Performance. The Senior Agent may demand specific
performance of this Agreement. The Trustee, on behalf of itself and the
Noteholders, hereby irrevocably waives any defense based on the adequacy of a
remedy at law and any other defense which might be asserted to bar the remedy of
specific performance in any action which may be brought by the Senior Agent.
8.13 Section Titles; Time Periods. The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.
8.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall together
constitute one and the same document.
8.15 Authorization. By its signature, each Person executing this Agreement
on behalf of a party hereto represents and warrants to the other parties hereto
that it is duly authorized to execute this Agreement.
8.16 No Third Party Beneficiaries. This Agreement and the rights and
benefits hereof shall inure to the benefit of each of the parties hereto and
their respective successors and assigns and shall inure to the benefit of each
of the holders of Senior Lender Claims and Noteholder Claims. No other Person
shall have or be entitled to assert rights or benefits hereunder.
8.17 Effectiveness. This Agreement shall become effective when executed
and delivered by the parties hereto. This Agreement shall be effective both
before and after the commencement of any Insolvency or Liquidation Proceeding.
All references to the Borrower or any other Grantor shall include the Borrower
or any other Grantor as debtor and debtor-in-possession and any receiver or
trustee for the Borrower or any other Grantor (as the case may be) in any
Insolvency or Liquidation Proceeding.
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8.18 Senior Agent and Trustee. It is understood and agreed that (a)
Congress Financial Corporation (Florida) is entering into this Agreement in its
capacity as agent and the provisions of the Senior Loan Agreement applicable to
Congress Financial Corporation (Florida) as agent thereunder shall also apply to
Congress Financial Corporation (Florida) as agent hereunder, and (b) HSBC Bank
USA is entering in this Agreement in its capacity as Trustee and the provisions
of Article 7 of the Indenture applicable to the Trustee thereunder shall also
apply to the Trustee hereunder.
8.19 Designations. For purposes of the provisions hereof and the Indenture
requiring the Borrower to designate Indebtedness for the purposes of the term
"First-Lien Credit Facilities" or any other designations for any other purposes
hereunder or under the Indenture, any such designation shall be sufficient if
the relevant designation is set forth in writing, signed on behalf of the
Borrower by an officer thereof and delivered to the Trustee and the Senior
Agent. For all purposes hereof and the Indenture, the Borrower hereby designates
the Credit Facilities provided pursuant to the Senior Loan Agreement as a
First-Lien Credit Facility.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
Senior Agent:
CONGRESS FINANCIAL CORPORATION (FLORIDA),
as agent,
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Trustee:
HSBC BANK USA, as Trustee,
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Issuer Services
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
20
The undersigned hereby acknowledges and agrees to the foregoing terms and
provisions. By its signature below, the undersigned agrees that it will,
together with its successors and assigns, be bound by the provisions hereof.
The undersigned agrees that Senior Agent or any Senior Lender holding
Collateral does so as bailee (under the UCC) for the other Creditors and is
hereby authorized to and may turn over to Senior Agent upon request therefor any
such Collateral.
The undersigned acknowledges and agrees that: (i) although it may sign
this Intercreditor and Subordination Agreement it is not a party hereto and does
not and will not receive any right, benefit, priority or interest under or
because of the existence of the foregoing Intercreditor and Subordination
Agreement and (ii) it will execute and deliver such additional documents and
take such additional action as may be necessary or desirable in the opinion of
any Lender to effectuate the provisions and purposes of the foregoing
Intercreditor and Subordination Agreement.
REPTRON ELECTRONICS, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇