EXHIBIT 10.2
SUBORDINATION AND INTERCREDITOR
AGREEMENT
between
SUNAMERICA LIFE INSURANCE
COMPANY
and
PRIME GROUP REALTY,
L.P.
Continental Towers
Rolling Meadows,
Illinois
May 5, 2005
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TABLE OF CONTENTS
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Page
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1.
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Defined Terms
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1
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2.
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Subordination
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1
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3.
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Payments on Junior Indebtedness
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1
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4.
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Distributions Held in Trust
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2
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5.
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Deposit Account Distributions
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2
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6.
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Payoff Obligation
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3
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7.
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Reserved
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3
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8.
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Purchase Option
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3
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9.
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Reserved
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3
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10.
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Reserved
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3
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11.
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Tenant Estoppels and SNDAs
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3
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12.
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Insurance
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3
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13.
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Reporting
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4
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14.
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Management
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4
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15.
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Reserved
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4
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16.
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Reserved.
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4
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17.
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Events of Default
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4
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18.
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Remedies
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5
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19.
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Default Interest; Administrative Costs;
Protective Advances; Collection Costs
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6
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20.
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Performance by Prime; Waiver of
Subrogation
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7
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21.
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Standstill
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7
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22.
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Enforcement Interference by Prime
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7
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23.
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Consent by Prime
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8
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24.
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Waivers
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8
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25.
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Priority of Payments, Distributions
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9
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26.
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Additional Covenants of Prime
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10
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27.
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Representations of Prime
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11
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28.
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Senior Lender Representations
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12
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29.
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Nature of Relationship
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13
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30.
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Governing Law
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13
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TABLE OF CONTENTS
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(continued)
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Page
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31.
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Notice
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13
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32.
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Waiver
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14
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33.
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Binding Agreement
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14
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34.
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Construction
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15
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35.
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Severability
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15
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36.
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Counterparts
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15
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37.
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No Other Agreements
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15
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38.
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Time of the Essence
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15
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39.
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Rule of Construction
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16
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40.
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Saturday, Sunday or Legal Holiday
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16
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41.
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Amendments
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16
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42.
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No Third Party Beneficiaries; No
Relationship
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16
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43.
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Exhibits
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16
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44.
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Jury Waiver Venue
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16
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45.
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Assignment
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17
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46.
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Attorneys’ Fees
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17
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47.
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Prime Exculpation
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17
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48.
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Senior Lender Exculpation
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17
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Schedules and Exhibits
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SCHEDULE 1
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DEFINED TERMS
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EXHIBIT A
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JUNIOR LOAN DOCUMENTS
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EXHIBIT B
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SENIOR LOAN DOCUMENTS
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EXHIBIT C
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LEGAL DESCRIPTION
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SUBORDINATION AND INTERCREDITOR
AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR
AGREEMENT is made as of May 5, 2005 among SUNAMERICA LIFE INSURANCE
COMPANY, an Arizona corporation, (“ Senior Lender
”), and PRIME GROUP REALTY, L.P., a Delaware limited
partnership (“ Prime ”).
RECITALS:
Prime is the holder of the Junior
Loan Documents which evidence the Junior Loan which encumber the
Property. Simultaneously with the execution and delivery hereof,
Senior Lender has made the Senior Loan to Borrower which Senior
Loan is evidenced and secured by the Senior Loan Documents which
encumber the Property. This Agreement is entered into to evidence
the subordination of the Junior Loan and the Junior Loan Documents
to the Senior Loan and the Senior Loan Documents, to set forth the
relative rights of the holders thereof and to evidence additional
agreements between the holders.
Therefore, the parties agree as
follows:
In addition to the terms defined
elsewhere in this Agreement and the Exhibits hereto, certain terms
shall have the meanings ascribed to such terms in Schedule 1
attached hereto. Any terms not defined herein shall have the
meaning given to such term in the Senior Loan Documents.
2.1 Prime
hereby subordinates and does hereby declare to be subordinate the
Junior Loan Documents, the Junior Loan, the Junior Indebtedness and
the lien thereof to the Senior Loan Documents, the Senior Loan, the
Senior Loan Indebtedness and the lien thereof. The security
interests of Prime in the Collateral are hereby made subject and
subordinate in all respects to the security interests of Senior
Lender in the Collateral. Prime agrees that, as of the date hereof,
it does not have nor will it assert any lien or security interest
in or against the Deposit Account or the partnership interests in
Beneficial Interest Holder.
2.2 This
Agreement shall be deemed to be a Subordination Agreement under
Section 510 of the United States Bankruptcy Code.
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3.
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Payments on Junior Indebtedness
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Notwithstanding any provision
contained herein to the contrary, as long as no Cash Management
Period (as defined in the Senior Loan Agreement) has occurred and
is continuing, Prime shall have the right to receive payments due
under the Junior Loan Documents to the extent, but only to the
extent, cash is available for such payments after the payment of
all monthly payment amounts set forth in the Senior Loan Documents
(the “ Permitted Payments ”). Prime agrees that
it will not accept or demand any payments, in cash or other
property (by acceleration, set-off or otherwise) with respect to
the Prime Indebtedness other than the
Permitted Payments. If a Senior
Event of Default occurs and is continuing, Prime shall not be
entitled and shall not accept any payment or prepayments (whether
by acceleration, set-off or otherwise) on the Junior Indebtedness,
such payments to be held in trust and distributed, if received, in
accordance with Section 4.
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4.
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Distributions Held in Trust
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If Prime shall receive any payment
or distribution from or for the account of Borrower or any cash or
other proceeds of the Collateral other than a Permitted Payment
(including, without limitation, (i) any distribution arising
directly or indirectly from any lien of the Senior Lender being
avoided, declared to be fraudulent, or otherwise set aside under
the provisions of any law governing fraudulent conveyances or
transfers, and (ii) any distribution arising directly or
indirectly by reason of or in connection with an Insolvency
Proceeding), in excess of a Permitted Payment (calculated as if
such Insolvency Proceeding had not occurred or if any such lien had
not been avoided, declared to be fraudulent, or otherwise set aside
under the provisions of any law governing fraudulent conveyances or
transfers), Prime shall hold the same in trust, as trustee, for the
benefit of Senior Lender and shall promptly deliver the same to the
Clearing Account or as otherwise directed by Senior Lender, for the
benefit of Senior Lender in precisely the form received (except for
the endorsement or assignment thereof by Prime without recourse or
warranty). In the event Prime fails to make any such endorsement or
assignment, Senior Lender, or any of its officers or employees, is
hereby irrevocably authorized as Prime’s attorney in fact, to
make the same.
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5.
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Cash Collateral Account Distributions
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5.1
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Distributions Prior to Senior Event of
Default .
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(a) Prior
to the occurrence of a Senior Event of Default, all Funds shall be
distributed as provided in the Loan Agreement and the Clearing
Account Agreement.
(b) Prime
shall cause to be deposited in the Clearing Account all Funds which
are received by Prime or any of its Affiliates within one Business
Day of its receipt thereof. So long as an Affiliate of Prime is the
Manager, Prime will not permit any withdrawal by Manager from the
Clearing Account or the Borrower’s Operating Account (as
defined in the Clearing Account Agreement) except as permitted by
the Management Agreement.
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5.2
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Distribution Following an Event of Default
Hereunder .
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(a) Following
an Event of Default hereunder, and so long as no Senior Event of
Default has occurred, all Funds theretofore deposited, and as and
when deposited thereafter, into the Clearing Account may be
directed by Lender to be swept by the Clearing Bank into the Cash
Collateral Subaccount and the same shall constitute a Cash
Management Period under the Loan Agreement; and such Funds in the
Cash Collateral Subaccount shall be applied in accordance with and
in the order of priority set forth in the Deposit Account Agreement
and the Loan Agreement.
(b) Following
a Senior Event of Default, all Funds theretofore deposited and as
and when deposited thereafter in the Cash Collateral Subaccount or
otherwise collected by
Senior Lender, shall be applied to
amounts outstanding under the Senior Loan Documents in any order
and in any manner as Senior Lender shall elect in Senior
Lender’s sole discretion without the need to seek the
appointment of a receiver and without adversely affecting the
rights of Lender to foreclose the Lien of the Mortgage or exercise
of its other rights under the Loan Documents.
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5.3
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Senior Lender Notices .
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In the event of a Default by the
Borrower under any of the Senior Loan Documents, the Senior Lender
will provide to the Junior Lender a copy of any related notice of
default delivered to Borrower, in the manner provided for herein.
In the event of a default by Borrower under any of the Junior Loan
Documents, the Junior Lender will provide to the Senior Lender a
copy of any related notice of default delivered to Borrower, in the
manner provided for herein.
On the later of (a) the Maturity
Date of the Loan and (b) January 5, 2013 (“ Final Payoff
Date ”) or such earlier date as provided in this
Agreement, Prime will pay off the Senior Indebtedness by paying to
Senior Lender by Wire Transfer an amount equal to the Payoff Amount
(without Prepayment Premium), upon receipt of which Senior Lender
will perform the Release Actions.
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7.
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Reserved .
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8.
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Purchase Option .
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Prime shall have the option to
purchase the Senior Loan at any time upon thirty (30) days prior
written notice to Senior Lender and payment to Senior Lender by
Wire Transfer of the Payoff Amount plus any applicable Prepayment
Premium. Upon receipt of such payment, Senior Lender shall perform
the Transfer Actions.
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9.
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Reserved .
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10.
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Reserved .
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11.
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Tenant Estoppels and SNDAs
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To the extent that Tenant Estoppels
and SNDAs from Tenants occupying 100% of the total rentable space
in the Property have not been delivered to Senior Lender on the
date hereof, Prime will diligently pursue the missing Tenant
Estoppels and SNDAs and report on the progress thereof as requested
by Senior Lender.
Throughout the Term, so long as
Prime or an Affiliate of Prime is the Manager, Prime will cause
Manager to maintain policies of All Risk Replacement Cost Insurance
and Agreed Amount Endorsement, flood insurance (if the Property is
in an area which is considered a flood risk area by the U.S.
Department of Housing and Urban Development), rent insurance in
amounts and in form which comply with the terms of the Senior Loan
Documents, or as Senior
Lender may reasonably require from
time to time pursuant to the terms of the Loan Documents, a copy of
which Prime acknowledges it has received and approved.
So long as the Manager is an
Affiliate of Prime, Prime will cause the Manager to furnish Senior
Lender the financial reports required by the Senior Loan Agreement,
a copy of which Prime acknowledges it has received and
approved.
The Property will be managed at all
times by a property manager approved by Senior Lender in its
reasonable discretion pursuant to a management agreement approved
by Senior Lender. Senior Lender approves Prime Group Management,
L.L.C. as the initial Manager under the Management Agreement
previously submitted to and approved by Senior Lender (the “
Management Agreement ”), subject to the right of
Lender to terminate the Management Agreement as provided in the
Senior Loan Documents. A change in the Manager or the Management
Agreement without the consent of Senior Lender shall be an Event of
Default hereunder and under the Senior Loan Documents. Any
transaction which results in Manager no longer being an Affiliate
of Prime shall constitute a change in the Manager.
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15.
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Reserved .
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16.
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Reserved .
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17.
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Events of Default .
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Each of the following shall
constitute an Event of Default under this Intercreditor
Agreement:
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(a)
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The occurrence of any Senior Event of Default,
provided:
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(i) in
the case of a Senior Event of Default which arises from a Senior
Default in the making of any payment or deposit required under the
Senior Loan Documents, such Senior Default has continued unremedied
for five (5) days following Prime’s receipt of written notice
of such Senior Default (whether or not notice or the elapsing of
any grace period is required under the Senior Loan Documents prior
to such Senior Default becoming a Senior Event of Default);
or
(ii) in
the case of a Senior Event of Default which arises from a Senior
Default other than failure to make any payment or deposit required
under the Senior Loan Documents, such Senior Default has continued
unremedied for thirty (30) days following Prime’s receipt of
written notice of such Senior Default (whether or not notice or the
elapsing of a longer or shorter grace period is required under the
Senior Loan Documents) unless (A) such default is reasonably
susceptible of cure but such cure cannot be accomplished within
such thirty (30) period using reasonable commercial efforts and (B)
within such thirty (30) day period and (1) Prime undertakes in a
written notice (the “ Cure Notice ”) to cure the
default within a reasonable period of time by taking such action as
is described therein, (2) Prime posts such security as is
reasonably
required by Senior Lender to assure
that such default will be cured within such period of time, (3)
Prime continuously and diligently pursues such cure in compliance
with the Cure Notice and such other reasonable requirements
reasonably requested by Senior Lender, (4) the value of the
Property or Senior Lender’s interest therein is not
jeopardized during the cure period and (5) Prime pays any
reasonable costs (including reasonable attorneys’ fees)
incurred by Senior Lender in preparing and sending notices of the
default, evaluating the default and the proposed cure and
monitoring the cure.
(b) The
occurrence of an Event of Default under and as defined in any of
the Prime Documents.
(c) The
failure of Prime to pay or make any payment, deposit, Default
Charge, Administrative Cost or Protective Advance due under this
Agreement or any other Prime Document within five (5) days
following Senior Lender’s written request to Prime for the
payment thereof.
(d) The
failure of Prime to pay off the Senior Indebtedness on the Final
Payoff Date.
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(e)
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Any action by Prime in violation of Section 21
or 22 hereof.
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(f) The
failure of Prime to perform any other obligation under this
Agreement or any of the other Prime Documents and such failure
continues for thirty (30) days following receipt by Prime of
written notice thereof.
(g) The
untruth in any material respect of any warranty or representation
made by Prime in any of the Prime Documents.
(h) (i)
The filing by or against any of either Fee Holder, Beneficial
Interest Holder, General Partner, or Prime of a petition under the
United States Bankruptcy Code, which in the case of an involuntary
petition is not dismissed within ninety (90) days; (ii) an
assignment by any party for the benefit of creditors; or (iii) the
appointment of a trustee, receiver or liquidator for any such
party.
(i) A
Prohibited Transfer under the Senior Loan Agreement or the transfer
of Prime’s interest as holder of the Junior Loan
Documents.
(j) Any
modification of the Junior Loan Documents without the prior written
consent of Senior Lender, which consent shall not be unreasonably
withheld.
(k) The
occurrence of a Management Event of Default as defined in the
Management Agreement at any time when any Affiliate of Prime is the
Manager.
Upon the occurrence of an Event of
Default under this Intercreditor Agreement, Senior Lender may
exercise some or all of the following rights and remedies in any
order and in any combination it may choose:
(a) Exercise
any right or remedy available under this Agreement or any of the
Prime Documents.
(b) Take
any action permitted under Section 5.2(a) above or, if a Senior
Event of Default has occurred, under Section 5.2(b)
above.
(c) Designate
a new Manager, replace the Manager and/or modify or replace the
Management Agreement.
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19.
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Default Interest; Administrative Costs;
Protective Advances; Collection Costs .
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(a) All
payments or deposits due under this Agreement or any of the other
Prime Documents shall bear interest at the Default Rate from the
date due until paid (“ Default Interest ”). In
addition, if any payment due to Senior Lender under this Agreement
or any of the other Prime Documents is not paid within five (5)
days following the due date thereof, Senior Lender may impose, with
or without notice to Prime, a late payment fee (each, a “
Late Charge ”) equal to four percent (4%) of the
amount due to cover Senior Lender’s administrative
expenses.
(b) Prime
will reimburse Senior Lender within five (5) days after demand for
all reasonable expenses, including fees of attorneys, architects,
engineers and other consultants, incurred in connection with any
consent or approval sought by Prime, any Fee Holder or Beneficial
Interest Holder pursuant to or in connection with this Agreement,
the other Prime Documents, the Senior Loan Documents or the
Property (collectively “ Administrative Costs
”). Senior Lender may require payment of Administrative Costs
as a condition precedent to giving any such consent or approval
sought by Prime.
(c) Prime
shall appear in and defend any action or proceeding purporting to
affect the Senior Loan Documents, Property, or the Security or the
rights or powers of the Senior Lender. Prime shall pay all
reasonable costs and expenses, including without limitation cost of
evidence of title and reasonable attorneys’ fees, in any such
action or proceeding in which Senior Lender may appear. If Prime
fails to perform any of the material covenants or agreements
contained in this Agreement, or if any action or proceeding is
commenced which may have a materially adverse effect on the Senior
Loan Documents, Property or the Security or any part thereof,
including, but not limited to, eminent domain, code enforcement, or
proceedings of any nature whatsoever under any federal or state
law, whether now existing or hereafter enacted or amended, relating
to bankruptcy, insolvency, arrangement, reorganization or other
form of debtor relief, or to a decedent, then Senior Lender may,
but without obligation to do so and without notice to or demand
upon Prime and without releasing Prime from any obligation
hereunder, make such appearances, disburse such sums and take such
action as Senior Lender deems necessary or appropriate to protect
Senior Lender’s interests, including, but not limited to,
disbursement of reasonable attorneys’ fees, entry upon the
Property to make repairs or take other action to protect the
Property or other Security, payment of Necessary Capital Expenses,
and payment, purchase, contest or compromise of any mechanics lien
and any other encumbrance, charge or lien which other encumbrance
in the judgment of Senior Lender appears to be prior or equal in
priority to the lien of the Loan Documents. Prime further agrees to
pay or reimburse Senior Lender for the payment of all reasonable
expenses of Senior Lender (including without limitation attorneys
fees and expenses) incident to the actions of Senior Lender
pursuant to this Section 19(c). Any amounts disbursed by Senior
Lender pursuant to this Section 19(c) or
otherwise reimbursable by Prime
(“ Protective Advances ”) shall be payable by
Prime within ten (10) days after demand. Nothing contained in this
Section shall be construed to require Senior Lender to incur any
expense, make any appearance, or take any other action.
(d) Prime
will pay within ten (10) days after demand the reasonable costs,
including fees of attorneys and other consultants, incurred by
Senior Lender in preparation for the exercise of and in exercising
any of its remedies under or in respect of this Agreement, the
Senior Loan Documents or the Property arising by reason of the
occurrence of any default or Event of Default under this Agreement,
any of the other Prime Documents or the Senior Loan Documents
(collectively, “ Collection Costs ”).
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20.
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Performance by Prime; Waiver of
Subrogation .
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Senior Lender shall accept
performance by Prime of any of the obligations of Borrower under
the Senior Loan Documents, including any cure effected during any
cure period provided for therein or herein. Notwithstanding any
such performance by Prime of any obligations of Borrower, Prime
hereby absolutely and irrevocably waives, to the fullest extent
permitted by applicable law, any rights it may have, by contract,
at law or in equity, to be subrogated to Senior Lender’s
rights against Borrower under the Senior Loan Documents or to
Senior Lender’s security interests in any of the Collateral
until three hundred sixty-six (366) days following the satisfaction
in full of the Senior Indebtedness or the date on which Prime
purchases the Senior Indebtedness pursuant to Section 8. Provided
Senior Lender has complied with the terms of this Agreement, Prime
shall not contest any foreclosure of Senior Lender’s security
interests against the Collateral. Notwithstanding any provision of
this Agreement, Prime agrees and acknowledges that it is not, in
its capacity as holder of the Junior Loan Documents and creditor of
Borrower, a third party beneficiary of any obligations of Senior
Lender under the Senior Loan Documents.
Prime shall not under any
circumstance take any action to foreclose or otherwise enforce any
of the security interests or rights under the Junior Loan Documents
by reason of a default thereunder unless and until the Senior
Indebtedness is paid in full, Prime acknowledging that it is fully
able to protect its rights under the Junior Loan Documents by
exercising its right to pay off the Senior Indebtedness (including
Prepayment Premium). Without limitation of the foregoing, until the
Senior Indebtedness is paid in full, (i) Prime will take no action
which would or may have the effect of terminating any lease of the
Property by reason of such lease being subordinate to the Junior
Loan Documents or otherwise, (ii) Prime will not seek the
appointment of a receiver, trustee or conservator of the Property
or of any entity comprising the Borrower in any proceeding or
otherwise and (iii) Prime will not exercise any assignment of rents
or take action under any guaranty given under the Junior Loan
Documents against the Limited Partners in the Beneficial Interest
Holder without Senior Lender’s prior written consent thereto
contained in the Junior Loan Documents.
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22.
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Enforcement Interference by Prime
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(a) Until
at least three hundred sixty-six (366) days following the
satisfaction in full of the Senior Indebtedness or the date on
which Prime purchases the Senior Indebtedness
pursuant to Section 8, Prime hereby
covenants and agrees that it will not acquiesce, petition or
otherwise invoke or cause any other Person to invoke the process of
the United States of America, any state or other political
subdivision thereof or any other jurisdiction, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government for the
purpose of commencing or sustaining any Insolvency Proceeding
against any entity comprising the Borrower. Prime hereby
irrevocably appoints Senior Lender as Prime’s agent and
attorney-in-fact to vote the full amount of the Junior Indebtedness
and to file any claims as the holder thereof in any Insolvency
Proceeding. The Junior Loan Documents are hereby pledged to Senior
Lender as security for Prime’s obligations under this
Agreement and the other Prime Documents. Accordingly, such
irrevocable appointment of Senior Lender as agent and
attorney-in-fact is a power coupled with an interest. In so voting,
Senior Lender shall be entitled to vote in its own self-interest
without regard to the interest of Prime. Without limitation of the
foregoing, Prime shall not in any Insolvency Proceeding propose,
join in, or vote in favor of, any plan of reorganization (or any
provision in any such plan) that would impair (within the meaning
of 11 U.S.C. § 1124) any claim of Senior Lender under the
Senior Loan Documents or any security or collateral for the Senior
Loan, including without limitation any plan (or any provision in
any such plan) that would (i) extend the term of the Senior Loan,
(ii) cause any reduction in the debt service or the amount of the
debt owed by Borrower to Senior Lender under the Senior Loan
Documents or any of them, or (iii) amend or modify in any way the
agreements between Prime and Senior Lender as set forth in this
Agreement and the other Prime Documents.
(b) Prime
shall not institute any judicial or administrative proceeding
against Senior Lender with the intent of interfering with or
delaying the exercise by Senior Lender of its rights and remedies
in respect of the Collateral or any part thereof or under the
Senior Loan Documents or this Agreement or the other Prime
Documents. Without limiting the generality of the foregoing, in the
event of an Insolvency Proceeding under the United States
Bankruptcy Code, Prime agrees that it will not object to or oppose
any efforts by Senior Lender to obtain relief from the automatic
stay under Section 362 of the United States Bankruptcy Code or to
seek to cause such entity’s bankruptcy estate to abandon the
Property (or any portion thereof). Prime agrees that if Prime or
any of its Affiliates purchases any claims of other creditors of
Borrower in any Insolvency Proceeding, such claims and all security
therefor will, for all purposes, be subject to the terms of this
Agreement as if such claims were included in the Junior Loan and as
if such security were included in the Junior Loan
Documents.
Prime hereby consents and agrees
that, subject to the provisions of this Agreement and the other
Prime Documents, any lawful action taken by or on behalf of Senior
Lender in the exercise of Senior Lender’s rights and/or
remedies under the Senior Loan Documents (including, without
limitation, any foreclosure or acquisition of title to the Property
or any part thereof by deed in lieu of foreclosure or otherwise)
are hereby deemed to be consented to and approved by Junior Lenders
in all respects.
Prime hereby waives and agrees not
to assert or take advantage of, to the fullest extent permitted by
law:
(a) Any
right to require Senior Lender to proceed against Borrower or any
other Person or to proceed against or exhaust any of the Collateral
held by it at any time, or to proceed with any other remedy in
Senior Lender’s power before exercising any other right, or
remedy under the Senior Loan Documents;
(b) Until
the Senior Indebtedness has been paid in full, any defense that may
arise by reason of the incapacity, lack of authority, death or
disability of, or revocation hereof by any Person or the failure of
Senior Lender to file prior to any disallowance date or to enforce
a claim against the estate (either in administration, bankruptcy or
any other proceedings), of any Person;
(c) Until
the Senior Indebtedness has been paid in full, demand, protest and
notice of any kind, except for any notice expressly required under
the Prime Documents or the Senior Loan Documents, including without
limiting the generality of the foregoing, notice of the evidence,
creation or incurring of any new indebtedness or obligation or of
any action or non-action on the part of Borrower or Senior Lender
in connection with any obligation or evidence of indebtedness held
by Senior Lender as collateral or in connection with any
indebtedness evidenced by the Senior Loan Documents;
(d) Any
and all right to have the Property and estates comprising the
Property or any other Collateral marshaled upon any foreclosure of
the security interests of Senior Lender and Prime further agrees
that any court having jurisdiction to foreclose such security
interests may order the Collateral sold as an entirety or in any
parcels or combinations thereof elected by Senior
Lender.
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25.
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Priority of Payments, Distributions
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(a) In
the event of any Insolvency Proceeding, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy,
or any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of Borrower, the Senior
Indebtedness (which term as used throughout this Agreement shall
include, without any limitation, any Interest accruing after the
occurrence of a Senior Event of Default whether or not such
Interest is allowed as a claim in any Insolvency Proceeding) due or
to become due shall first be paid in cash in full before any
payment on account of principal, interest or otherwise is made upon
the Junior Indebtedness, and in any such proceeding, any payment or
distribution of any kind or character which may be payable or
deliverable with respect to the Junior Indebtedness shall be paid
or delivered directly to Senior Lender for application in payment
of the Senior Indebtedness, unless and until the Senior
Indebtedness shall have been paid and satisfied in full in cash.
Further, Prime specifically agrees as follows:
(b) In
the event that, notwithstanding the foregoing, upon any proceeding
or event described above, any payment or distribution of assets of
any entity comprising the Borrower, of any kind or character,
whether in cash or property, shall be received by Prime before the
Senior Indebtedness is paid in full in cash, such payment or
distribution shall be held in trust for the benefit of Senior
Lender and, unless prohibited by law or court order, shall be
immediately paid over to Senior Lender for application to the
payment of the Senior Indebtedness remaining unpaid until the
Senior Indebtedness shall have been paid in full in cash, after
giving effect to any concurrent payment or distribution with
respect to the Senior
Indebtedness. The provisions of this
Agreement shall apply among Senior Lender and Prime, regardless of
whether any of the security interests of any party hereto are held
to be invalid or the priority thereof changed.
(c) Prime
shall not take or support any action to contest (i) the validity of
any liens or security interests granted to Senior Lender under the
Senior Loan Documents or with respect to the Collateral, (ii) the
relative rights of Senior Lender and Prime with respect to such
liens and security interests or (iii) the enforceability of this
Agreement or any of the Senior Loan Documents.
(d) The
subordination provisions contained herein shall continue to be
effective or be reinstated, as the case may be, until such time as
the Senior Indebtedness shall be paid in full in cash; provided
that if at any time any payment of any of the Senior Indebtedness
is rescinded or must otherwise be returned by Senior Lender upon
the insolvency, bankruptcy or reorganization of an entity
comprising the Borrower or otherwise, the provisions of this
Agreement shall again be operative until the Senior Indebtedness
shall again be paid in full in cash, all as though such payment had
not been made.
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26.
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Additional Covenants of Prime
.
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Prime covenants and agrees for the
benefit of Senior Lender or any subsequent holder of the Senior
Loan Documents, regardless of the provisions of the Junior Loan
Documents, as follows:
(a) Without
limiting the generality of any other provisions of this Agreement,
except as provided in this Section 26, Senior Lender may at any
time and from time to time without the consent of, or notice to
Prime, and without incurring responsibility to Prime, upon or
without any terms or conditions and in whole or in part:
(1) with
the written consent of Prime, change the manner or place and/or
change or extend the time of payment or performance of, renew or
alter, any portion of the Senior Indebtedness or any other
obligations of any Person evidenced or secured by the Senior Loan
Documents;
(2) sell,
exchange, release, surrender, realize upon or otherwise deal with
in any manner and in any order any Collateral
(3) exercise
or refrain from exercising any rights against Borrower or others or
otherwise act or refrain from acting;
(4) settle
or compromise any portion of the Senior Indebtedness or any other
obligations of any Person evidenced or secured by the Senior Loan
Documents, any security therefor or any liability incurred directly
or indirectly in respect thereto;
(5) apply
any sums by whomsoever paid or howsoever realized to any liability
or liabilities of Borrower to Senior Lender regardless of what
liability or liabilities of Borrower remain unpaid or unperformed;
and/or
