FORMULARY INTERCREDITOR SUBORDINATION AGREEMENTS Materials Prepared By: R. Marshall Grodner 14 th Floor, One American Place Baton Rouge LA 70825 Telephone: (225) 383-9000 Facsimile: (225) 343-3076 E-mail: mgrodner@mcglinchey.com Web: www.mcglinchey.com
I. DEFINITIONS A. OBLIGATIONS 1. SENIOR DEBT Senior Indebtedness. The term Senior Indebtedness shall mean, collectively, all Secured Obligations, as defined under the Credit and Security Agreement, whether for principal, premium, interest (including all interest accruing after the initiation of any bankruptcy case, whether or not allowed), fees, expenses, indemnities or otherwise. Obligations shall mean all indebtedness, liabilities, and obligations (including, without limitation, principal, interest, fees and expenses) of the Loan Party to Lender whether direct, indirect, contingent, joint, several, or independent, now or hereafter existing, due or to become due to, or held or to be held by, Lender, whether created directly or acquired by assignment or otherwise, whether or not evidenced by written instrument, including, without limitation, all indebtedness, liabilities, and obligations of the Loan Party to Lender arising out of or in connection with the Loan Documents. Loan Documents shall mean any Loan Agreement executed by the Loan Party and Lender, the notes and collateral and security documents referred to therein and each other instrument, agreement and document executed and delivered by the Loan Party to Lender in connection with the Obligations and all renewals, extensions, amendments, modifications or replacements thereof. 2. SUBORDIINATED DEBT Subordinated Indebtedness. The term Subordinated Indebtedness shall mean, collectively, all indebtedness, liabilities and other obligations of Borrower to Subordinated Creditor, whether the sums represent principal, interest, dividends, costs, attorneys fees, charges, or other obligations due or not due, whether incurred directly or indirectly, whether absolute or contingent, and whether now existing or hereafter existing. Without limitation of the foregoing, the term Subordinated Indebtedness extends to and includes, particularly, the Subordinated Note. Subordinated Debt shall mean all indebtedness, liabilities, and obligations (including, without limitation, principal, interest, fees and expenses) of the Loan Party to Holder, whether direct, indirect, contingent, joint, several, or independent, now or hereafter existing, due or to become due to, or held or to be held by, the undersigned, whether created directly or acquired by assignment or otherwise, and whether or not evidenced by written instrument including, without limitation, all indebtedness, liabilities, and obligations of the Loan Party to Lender arising out of or in connection with (i) the Subordinated Notes, and (ii) the Permitted Claims. Subordinated Debt Loan Documents shall mean all loan agreements, promissory notes, security agreements, pledge agreements, mortgages, deeds of trust and each other instrument, agreement and document executed and delivered by the Loan Party to Holder in connection with
the Subordinated Debt and any renewals, extensions, amendments, modifications or replacements thereof. Subordinated Note shall mean that certain promissory note dated, 20 in the original principal amount of $ and any renewals, extensions, replacements, substitutions therefor. B. COLLATERAL 1. SHARED Collateral shall mean all assets and property, tangible, intangible, corporeal, incorporeal, real, personal, movable or immovable of the Loan Party, whether now existing or hereafter arising or created, in which a security interest or lien is now or hereafter granted to Lender to secure the Obligations, or any part thereof. 2. DIFFERENT COLLATERAL ABL and Fixed Asset Lenders Current Assets. The term CURRENT ASSETS shall mean all of the following kinds and types of tangible and intangible personal property owned by the BORROWER or in which the BORROWER has an interest, whether now owned or hereafter acquired: (i) All inventory, including, without limitation, any and all goods, merchandise or other personal property, wheresoever located and whether or not in transit, which is or may at anytime be held for sale or lease or furnished under any contracts of service or held as raw materials, work in process, or supplies or materials used or which might be used in connection with the manufacture, printing, packing, shipping, advertising, leasing or furnishing of such goods or otherwise consumed in any of the BORROWER S businesses, including, without limitation, all such property the sale or other disposition of which has given rise to accounts and which has been returned to, repossessed, or stopped in transit by the BORROWER, and the proceeds (including insurance proceeds) and products thereof, and (ii) all accounts, contract rights, instruments, documents, chattel paper, notes, notes receivable, drafts, acceptances, and choses in action arising from the sale of or providing of inventory or services by the BORROWER to customers, as well as all rights of any kind of the BORROWER to receive payment or credit from any person and the proceeds thereof. Current Asset General Intangibles. The term CURRENT ASSET GENERAL INTANGIBLES shall mean all those now existing or hereafter arising general intangibles (as that term is used in the Uniform Commercial Code) which are related to the CURRENT ASSETS and which involve the right of the BORROWER to receive from some person the payment of money for a reason unrelated to the EQUIPMENT or the EQUIPMENT GENERAL INTANGIBLES. Equipment. The term EQUIPMENT shall mean all of the following kinds and types of tangible and intangible personal property of the BORROWER, now existing or hereafter acquired: all machinery, equipment, furniture, furnishings, fixtures and motor vehicles, together with all accessions and additions to, substitutions for, and replacements thereof, including, without limitation, all supplies and parts used in the manufacturing process and not incorporated into finished goods held for resale and in repairing, refurbishing or maintaining any equipment and machinery, and the proceeds (including insurance proceeds) and products thereof.
Equipment General Intangibles. The term EQUIPMENT GENERAL INTANGIBLES shall mean all those now existing or hereafter arising general intangibles (as that term is used in the Uniform Commercial Code) which are related to the EQUIPMENT and the use or function thereof, including, without limitation, all patents, patent rights, trademarks, trade names, good will, warranties, rights of indemnification and the like. Real Estate. The term REAL ESTATE shall mean that parcel of land and the improvements thereon located in and more particularly described on Exhibit A attached hereto and made a part hereof. BANK 1 PROPERTY. The term "BANK 1 PROPERTY" shall mean the kinds and types of tangible and intangible personal and property owned by the BORROWER or in which the BORROWER has an interest more particularly described as follows, (i) All inventory, including, without limitation, any and all goods, merchandise or other personal property, wheresoever located and whether or not in transit, which is or may at anytime be held for sale or lease or furnished under any contracts of service or held as raw materials, work in process, or supplies or materials used or which might be used in connection with the manufacture, printing, packing, shipping, advertising, leasing or furnishing of such goods or otherwise consumed in any of the BORROWER'S businesses, including, without limitation, all such property the sale or other disposition of which has given rise to accounts and which has been returned to, repossessed, or stopped in transit by the BORROWER, and the proceeds (including insurance proceeds) and products thereof; (ii) all accounts, contract rights, instruments, documents, chattel paper, notes, notes receivable, drafts, acceptances, and chooses in action arising from the sale of or providing of inventory or services by the BORROWER to customers, as well as all rights of any kind of the BORROWER to receive payment or credit from any person and the proceeds thereof; (iii) all those now existing or hereafter arising general intangibles (as that term is used in the Uniform Commercial Code) which involve the right of the BORROWER to receive from some person the payment of money for any reason; (iv) all machinery, equipment, furniture, furnishings, fixtures and motor vehicles more particularly described in Exhibit "C", together with all accessions and additions to, substitutions for, and replacements thereof, including the proceeds (including insurance proceeds) and products thereof (the "BANK 1 CURRENT EQUIPMENT"); (v) to the extent not included as BANK 2 CURRENT EQUIPMENT (as hereinafter defined), all equipment (as that term is used in the Uniform Commercial Code) and fixtures (as that term is used in the Uniform Commercial Code), hereinafter located on and used in connection with the BANK 1 REAL PROPERTY (the "BANK 1 FUTURE EQUIPMENT", the BANK 1 CURRENT EQUIPMENT and the BANK 1 FUTURE EQUIPMENT, are hereinafter the "BANK 1 EQUIPMENT"); (vi) all those now existing or hereafter arising general intangibles (as that term is used in the Uniform Commercial Code) which are related to the BANK 1 EQUIPMENT and the use or function thereof, including, without limitation, all patents, patent rights, trademarks, trade names, good will, warranties, rights of indemnification and the like; (vii) to the extent not included above, all present and future accounts, general intangibles, inventory, equipment, documents, instruments, goods, fixtures, chattel paper (tangible and electronic), deposit accounts, investment property, letter of credit rights, commercial tort claims; (viii) the BANK 1 REAL PROPERTY; (ix) any and all proceeds of the foregoing including insurance proceeds. BANK 2 PROPERTY. The term "BANK 2 PROPERTY'' shall mean and the kinds and types of tangible and intangible personal and real property owned by BORROWER or in which
BORROWER has an interest, more particularly described as follows: (i) all machinery, equipment, furniture, fixtures and motor vehicles more particularly described on Exhibit "D", together with all accessions and additions to, substitutions for, and replacements thereof, (including insurance proceeds) and products thereof (the "BANK 2 CURRENT EQUIPMENT"); (ii) to the extent not included as BANK 1 CURRENT EQUIPMENT, all equipment (as that terms is used in the Uniform Commercial Code) and fixtures (as that term is used in the Uniform Commercial Code) hereinafter located on and used in connection with the BANK 2 REAL PROPERTY (the "BANK 2 FUTURE EQUIPMENT"; the BANK 2 CURRENT EQUIPMENT and the BANK 2 FUTURE EQUIPMENT are the BANK are hereinafter the "BANK 2 EQUIPMENT"); (iii) all those now accruing or hereinafter accruing general intangibles (as that term is used in the Uniform Commercial Code), which are related to the BANK 2 EQUIPMENT, including without limitation, all patents, patent rights, trademarks, trade names, good will, warranties, rights of indemnification and the like; (iv) the BANK 2 REAL PROPERTY and; (v) any and all proceeds of the foregoing including insurance proceeds. 3. ENFORCEMENT ACTION Enforcement Action shall mean for Holder to make demand for payment of or accelerate the maturity of the Subordinated Debt, take possession of or collect any of the collateral for the Subordinated Debt, commence the enforcement (by judicial proceedings or otherwise) of any of the rights and remedies existing or available under any of the Subordinated Debt Loan Documents, at law or in equity against any Loan Party. II. GENERAL PROVISIONS A. SUBORDINATION 1. Debt Indebtedness. Unless and until all Senior Indebtedness (as hereinafter defined) has been fully paid and satisfied in cash, or this Agreement has ceased to be effective, Subordinated Creditor shall not accept or receive, by setoff or in any other manner, from Borrower or any of its subsidiaries the whole or any part of any sums which may now or hereafter be owing to Subordinated Creditor by Borrower or any of its subsidiaries, or any of its or their predecessors, successors or assigns, including, without limitation, a receiver, trustee or debtor in possession (the term Borrower, as used hereinafter, shall include, as appropriate, all such subsidiaries and any such predecessors, successors or assigns) under or in connection with the Subordinated Indebtedness (as hereinafter defined), except as set forth in Section 2 below. Subordination. To the extent and in the manner hereinafter set forth, Holder hereby subordinates, in right of payment and claim, all Subordinated Debt to the Obligations: 2. Lien Liens and Security Interests. Subordinated Creditor acknowledges that pursuant to the terms of the Credit and Security Agreement, Borrower is prohibited from granting any rights, liens or security interests in any assets of Borrower to secure payment of any Subordinated Indebtedness unless Lender consents in writing thereto, which consent Lender has granted, as an
accommodation to Borrower, in specific regard to the Subordinated Indebtedness, but subject to the terms, conditions and limitations set forth herein. Accordingly, Subordinated Creditor further acknowledges and agrees that any rights, security interests or liens of Subordinated Creditor in any assets or property of Borrower (herein called Subordinate Liens ) shall in each case be expressly subject, subordinate and inferior to the rights, liens and security interests held by Senior Lender with respect to the Senior Indebtedness in any and all assets and properties of Borrower, whether now existing or hereafter granted or arising (herein called Senior Liens ), notwithstanding the date, time, manner or order of the creation, attachment or perfection of such Senior Liens, or any term of the Subordinated Note or any provision of the federal Bankruptcy Code or the applicable Uniform Commercial Code or any other law, or any other matter whatsoever. Collateral. The security interest and other Liens (as defined in the Loan Agreement) in favor of Lender in and to the Collateral given to secure the Obligations shall have priority over any security interest or other Lien therein given or arising to secure the Subordinated Debt. Any security interest or other Lien of Holder in any assets or properties of the Loan Party shall be, and at all times remain, subject, inferior and subordinate to any security interest or other Lien of Lender therein given or arising to secure the Obligations. The priorities of the security interests established, altered, or specified hereinabove shall be applicable, irrespective of the time or order of attachment, recording or perfection thereof, the method of perfection, or the time or order of filing of financing statements or taking of possession. Holder agrees not to contest the validity, perfection, priority or enforceability of any Lien or security interest granted to Lender. The BANK 1 TERM LOAN and the BANK 2 TERM LOAN are each secured by (a) a security interest in the EQUIPMENT, the EQUIPMENT GENERAL INTANGIBLES, the CURRENT ASSETS and the CURRENT ASSET GENERAL INTANGIBLES, and (b) a mortgage lien in the REAL ESTATE. BANK 1 and BANK 2, as holders of the BANK 1 TERM LOAN and BANK 2 TERM LOAN, respectively, agree that [the priorities of the security interests and mortgage liens which secure their respective term loans and their rights in and to the collateral which secures them at all times shall be equal and that each shall share and be equal in priority and rights with the other. Any deposits of the BORROWER which are offset by BANK 2 for application to the BANK 2 TERM LOAN shall be shared equally with BANK 1, and vice versa.] [BANK 1 shall have a first priority security interest in the CURRENT ASSETS AND THE CURRENT ASSET GENERAL INTANGIBLES, and BANK 2 hereby subordinates its security interest is such collateral to BANK 1. BANK 2 shall have a first priorty security interest in the EQUIPMENT, THE EQUIPMENT GENERAL INTANGIBLES, and the REAL ESTATE, and BANK 1 hereby subordintes its security interest and mortgage lien on such assets to BANK 2.] The BANK 1 LOAN is secured by a security interest and mortgage in the BANK 1 PROPERTY. The BANK 2 TERM LOAN is secured by a security interest mortgage on the BANK 2 PROPERTY. To the extent BANK 1 has an interest in the BANK 2 PROPERTY, BANK 1 hereby subordinates such interest to BANK 2. To the extent BANK 2 has an interest in the BANK 1 PROPERTY, BANK 2 hereby subordinates such interest to BANK 1.
B. COPIES OF LOAN DOCUMENTS Copies of Loan Documents. The parties agree to provide each other with copies of the fully executed loan documents which evidence or embody their respective loans and any future amendments thereto. The provisions of this Agreement are intended by the parties hereto to control any conflicting provisions, including, without limitation, any covenants prohibiting further borrowing or encumbrances of collateral, which are contained in any loan documents by or on behalf of the BORROWER with either of the parties hereto. Each of the parties hereto consents to the making of the various loans described herein and to the granting by the BORROWER to the other party hereto of the security interests and mortgage liens which are the subject of this Agreement. C. MODIFICATION OF LOAN DOCUMENTS Modifications of Indebtedness. a. Senior Indebtedness. Subordinated Creditor acknowledges and agrees that Senior Lender shall have the right, without giving notice to or obtaining the consent of Subordinated Creditor, to amend, supplement or modify the Senior Indebtedness, in accordance with the terms of the Credit and Security Agreement, including, without limitation, any extensions of time of payments (even if such shortening causes any Senior Indebtedness to be due on demand or otherwise), any revision of any amortization schedule with respect thereto, and any increase in the amount of the Senior Indebtedness; and the obligations of Subordinated Creditor hereunder shall not be affected by any of the foregoing amendments, supplements or modifications. b. Subordinated Indebtedness. Subordinated Creditor understands and agrees that no Subordinated Indebtedness may be created hereafter except as may be permitted under this Agreement and the Credit and Security Agreement; and no document, instrument or agreement evidencing all or any part of any Subordinated Indebtedness created on or prior to the date hereof, including, particularly, the Subordinated Note, may be modified or amended without Senior Lender s prior written consent. So long as any Obligations remain unpaid, Holder will not (i) establish a sinking fund for the payment or prepayment of or otherwise arrange for the defeasance of any Subordinated Debt; (ii) amend, modify or alter in any way the terms of the Subordinated Debt or any document, agreement, instrument or certificate relating thereto in a manner to shorten the maturity thereof or to cause any installment thereof to be due on an earlier date or to change the amount of any installment payment thereof or to increase the interest rate thereon or to otherwise materially and adversely affect Lender, or (iii) exercise any remedies with respect to any of the Subordinated Debt or any collateral at any time securing payment or performance thereof, except as permitted in Paragraph 2 hereof. Holder agrees that it will not challenge, object to or in any respect inhibit or otherwise interfere with Lender s enforcement of any of its rights or remedies in respect of the Obligations or this Subordination Agreement. D. TIMING OF PERFECTION OR NON-PERFECTION
The parties agree that their respective rights and priorities set forth herein shall exist and be enforceable independent of the time or order of attachment or perfection of the respective security interests or mortgage liens, or the time or order of filing of financing statements or recording of mortgages. Each party, nevertheless, agrees to make such filings and recordings in the public records to evidence the subordinations and priorities made herein as the other party may reasonably request. Rights are Independent of Time of Attachment or Perfection. The parties agree that their respective rights and priorities set forth herein shall exist and be enforceable independent of the time or order of attachment or perfection of the respective security interests or mortgage liens, or the time or order of filing of financing statements or recording of mortgages. Each party, nevertheless, agrees to make such filings and recordings in the public records to evidence the subordinations and priorities made herein as the other party may reasonably request. Agreement not Conditioned Upon Validity and Perfection. The priority specified in this Agreement is not conditioned upon the nonavoidability and perfection of the security interests and mortgage liens to which it applies. If a security interest or mortgage lien is not perfected or is avoidable for any reason, then the priority arrangements provided for in this Agreement shall be nevertheless be effective as to the particular collateral which is the subject of the unperfected or avoidable security interest or mortgage lien. E. NOTICES OF DEFAULT BANK 1 agrees to provide BANK 2 with notice in the event BANK 1 declares the BORROWER in default with respect to the BANK 1 TERM LOAN. BANK 2 agrees to provide BANK 1 with notice in the event that BANK 2 declares the BORROWER in default with respect to the BANK 2 TERM LOAN. Although the parties have agreed to provide notices of default, the failure of a party to provide the notices of default described herein shall not negate or in any way adversely affect or impair the validity of the declaration of default declared by the party declaring the BORROWER in default. F. PRIORITY ON DISBURSMENTS Priority on Distribution. Notwithstanding anything herein to the contrary, in the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of Mortgagor to the or creditors of Mortgagor or readjustment of any of the Obligations and indebtedness of Mortgagor, whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceedings involving the readjustment of all or any of the Obligations, or the application of the assets of Mortgagor to the payment or liquidation thereof, or the dissolution or other winding up of Mortgagor s business, or upon the sale of all or substantially all of Mortgagor s assets or as the result of any Enforcement Action or in the event of any Enforcement Action, then, any payment or distribution of any kind or character, either in cash, securities or other property, shall be distributed as follows: a. First, to Bank 1 up to the lesser of (i) the outstanding Bank 1 Obligations, or (ii) the Maximum Amount;
b. Next, to Bank 2 up to the outstanding Bank 2 Obligations (contingent or otherwise); c. Next, to Bank 1 to the extent any Bank 1 Obligations remain outstanding; d. Next, to the other creditors of Mortgagor (if any); e. Last, to the Mortgagor. G. BLOCKING NOTICE Permitted Payments. a. Notwithstanding any other terms of this Agreement to the contrary, so long as no bankruptcy, assignment for the benefit of creditors or similar proceedings are pending by or against Borrower, Borrower may pay and Subordinated Creditor may receive regularly scheduled payments of accrued interest on (but, unless the Senior Indebtedness first has been paid in full or the Senior Lender otherwise has consented in writing thereto, no payments of principal of) the Subordinated Debt Documents, at an interest rate not greater than, and at the time(s) not earlier than, the interest rate on and time(s) for payment thereof set forth in the Subordinated Debt Documents as in effect on the date of this Agreement so long as, and, provided, however, that, at or prior to the time that any such payment becomes due and payable, Subordinated Creditor has not received written notice from Senior Lender (herein, a Standstill Notice ), that an Event of Default or Default (as those terms are defined in the Credit and Security Agreement) has occurred and is continuing or would be caused by, or result from, such payment being made (including, for this purpose, any Event of Default resulting from a breach of any financial covenant which would have occurred if, on a pro forma basis, such payment had been made during the most current fiscal period of Borrower for which financial statements then have been made available to Senior Lender which are applicable to the determination of Borrower s compliance with such financial covenants in the Credit and Security Agreement). If Subordinated Creditor has received any such Standstill Notice, then, unless and until the earlier of (i) the date as of which Senior Lender has revoked such Standstill Notice by written notice to Subordinated Creditor (a Revocation Notice ), or (ii) if, but only if, such Standstill Notice concerned a non-monetary Event of Default or Default, a period of 180 days has elapsed since receipt by Subordinated Creditor of such Standstill Notice (provided no intervening and overriding Standstill Notice then has been received), Borrower shall not pay, and Subordinated Creditor shall not receive, any of the payments described in and otherwise permitted by the preceding paragraph, provided that, after receiving a Revocation Notice or, subject to the aforesaid limitations thereon, the passage of 180 days, Borrower may pay, and Subordinated Creditor may receive, any of such interest payments at the interest rate permitted hereunder (as described above) to the extent then accrued and unpaid, and to the further extent that the catchup payment itself would not contravene any of the foregoing conditions. H. STANDSTILL NOTICE If an event of default has occurred under the Subordinated Debt, subject to the limitations set forth herein, the undersigned may commence an Enforcement Action at any time after one
hundred eighty (180) days (the Standstill Period ) after Lender has received written notice (a Standstill Notice ) from the Holder of such default which default was not cured or waived prior to the Holder s taking the actions described herein. In the event the Loan Party is the subject of a bankruptcy proceeding or any other proceeding that limits Lender s ability to exercise its remedies, the running of the Standstill Period shall be tolled until the lifting of the automatic stay or the removal of any other limitation on Lender s ability to exercise its remedies in order to permit the Lender to foreclose its liens, provided further that when such automatic stay is lifted or such other limitation is removed, Holder shall not take any action described herein until a new Standstill Period, beginning with the lifting of such automatic stay or the removal of such limitation, has expired. If Lender receives a Standstill Notice and the default described therein is cured or waived before the expiration of such Standstill Period, and before Holder may take any Enforcement Action, Lender must receive another Standstill Notice and a new Standstill Period (subject to tolling and other provisions of this section) must have expired. III. MISCELLANEOUS PROVISION A. DOUBLE DIVIDEND/ASSIGNMENT OF PROCEEDS Payments Received by Subordinated Creditor. Except as otherwise expressly provided in Section 2 above, as long as this Agreement remains in effect, if any payment, distribution or any collateral proceeds thereof is received by Subordinated Creditor from Borrower with respect to the Subordinated Indebtedness prior to the earlier of full payment and satisfaction of all the Senior Indebtedness or termination of this Agreement, Subordinated Creditor shall receive and hold the same in trust as trustee for the benefit of Senior Lender and shall forthwith deliver such assets to Senior Lender in precisely the form received (except for the endorsement or assignment by Subordinated Creditor where necessary), for application on any of the Senior Indebtedness, due or not due. In the event of the failure of Subordinated Creditor to make any such endorsement or assignment to Senior Lender, Senior Lender and any of its officers or agents are hereby irrevocably authorized to make such endorsement or assignment. Priority on Distribution. Notwithstanding anything herein to the contrary, in the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of the Loan Party to the creditors of the Loan Party or readjustment of the obligations and indebtedness of the Loan Party, whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceedings involving the readjustment of all or any of the Subordinated Debt, or the application of the assets of the Loan Party to the payment or liquidation thereof, or the dissolution or other winding up of the Loan Party s business, or upon the sale of all or substantially all of the Loan Party s assets, then, and in any such event, Lender shall be entitled to receive payment in full of any and all of the Obligations then owing prior to the payment of all or any part of the Subordinated Debt, and any payment or distribution of any kind or character, either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any or all of the Subordinated Debt shall be paid or delivered directly to Lender for
application on any of the Obligations, due or not due, until such Obligations shall have first been fully paid and satisfied. Payments Received by Holder. Should any payment or distribution be received by Holder upon or with respect to the Subordinated Debt in violation of or contrary to the terms of the Agreement, Holder shall receive and hold the same in trust, as trustee, for the benefit of Lender and shall forthwith deliver the same to Lender in precisely the form received (except for endorsement or assignment by Holder where necessary), for application on any of the Obligations, due or not due, and, until so delivered, the same shall be held in trust by Holder as the property of Lender. In the event of the failure of Holder to make any such endorsement or assignment to Lender, Lender or any of its officers or employees, is hereby irrevocably authorized to make same as attorney-in-fact for Holder. B. POWER OF ATTORNEY Claims in Bankruptcy. In the event of any bankruptcy, assignment for the benefit of creditors or similar proceedings by or against Borrower, Subordinated Creditor hereby designates and appoints Senior Creditor as its attorney-in-fact, in the place and stead of Subordinated Creditor, to file any and all claims which Subordinated Creditor may have against Borrower in accordance with the terms of this Agreement, and to direct the debtor in possession or trustee in bankruptcy, as appropriate, to pay over to Senior Lender all amounts due to Subordinated Creditor on account of the Subordinated Indebtedness for distribution to the Subordinated Creditor after allowed distribution to the Senior Creditor. C. LEGEND Instrument Legend. The Subordinated Notes will be inscribed with a legend conspicuously indicating that payment thereof is subordinated to the claims of Lender pursuant to the terms of this Agreement. Any other instrument, agreement or other document evidencing any of the Subordinated Debt, or any portion thereof, shall state that it is subject to this Subordination Agreement. D. TERMINATION Term. This Agreement shall constitute a continuing agreement of subordination, and Lender may continue, without notice to Holder (except as provided in Section 12), to lend monies, extend credit and make other accommodations pursuant to the Loan Documents to or for the benefit of any Loan Party on the faith hereof and to which the Subordinate Debt shall be subordinate, and this Agreement shall be irrevocable by Holder until all Obligations shall have been paid and fully satisfied, and all financing arrangements between Lender and the Loan Party have been terminated. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by Lender upon the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as though such payment had not been made.
Term of Agreement. This Agreement shall continue in full force and effect and shall be irrevocable by either party hereto until the earlier to occur of the following: (a) The parties mutually agree in writing to terminate this Agreement; or (b) All of the obligations owed by the BORROWER to either of the parties hereto are fully paid and satisfied and the respective security interests and mortgage liens have been terminated and released of record.