This Subordination Agreement involves
Title: SUBORDINATION AGREEMENT
Governing Law: New York Date: 4/17/2006
SUBORDINATION AGREEMENT , dated as of March 31, 2006, by and among Lightbridge, Inc., a Delaware corporation and the successor by merger to Corsair Communications, Inc. (a “ Subordinated Lender ”; collectively, together with any other holders from time to time of the Subordinated Obligations, the “ Subordinated Lenders ”), Wireless Billing Systems, a California corporation (together with its successors and assigns, the “ Borrower ”), Primal Solutions, Inc., a Delaware corporation (“ Primal ”) and the “Investors” named in that certain Purchase Agreement by and among the Borrower and the Investors (the “ Purchase Agreement ”) (together with their respective successors and assigns, collectively, the “ Senior Lender ”).
The parties hereto hereby agree as follows:
“ Agreement ”: this Subordination Agreement, as the same may be amended, supplemented or otherwise modified from time to time.
“ Blockage Notice ”: a written notice from the Senior Lender to the Subordinated Lenders that (a) a Non-Payment Event of Default has occurred and is continuing or (b) an Event of Default would occur if a scheduled interest or principal payment were made under the Subordinated Notes in accordance with the terms thereof.
“ Blockage Period ”: any period commencing on the date a Blockage Notice is given and ending on the earlier to occur of: (a) the date when (1) the Event of Default that was the basis for such notice has been cured or waived or (2) the conditions shall have ceased to exist which would cause an Event of Default to occur if a scheduled payment were made under the Subordinated Notes in accordance with the terms thereof; and (b) 90 days after the date such Blockage Notice is given.
“ Collateral ”: the collective reference to any and all property from time to time subject to security interests to secure payment or performance of the Senior Obligations or the Subordinated Obligations.
“ Default ”: any Event of Default as defined in the Senior Note, or any event or condition that with notice of lapse of time, or otherwise results in the acceleration of, or entitles a Senior Lender to accelerate, any Senior Obligation.
“ Insolvency Event” : (a) The Borrower or Primal commencing any case, proceeding or other action (1) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (2) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or Primal making a general assignment for the benefit of its creditors; or (b) there being commenced against the Borrower or Primal any case, proceeding or other action of a nature referred to in clause (a) above which (1) results in the entry of an order for relief or any such adjudication or appointment or (2) remains undismissed, undischarged or unbonded for a period of 60 days; or (c) there being commenced against the Borrower or Primal any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (d) the Borrower or Primal taking any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (a), (b) or (c) above; or (e) the Borrower or Primal generally not paying, or being unable to pay, or admitting in writing its inability to pay, its debts as they become due.
“ Non-Payment Event of Default ”: any event (other than a Payment Event of Default) the occurrence of which entitles the Senior Lender to accelerate the maturity of any of the Senior Obligations.
“ Payment Event of Default ”: any default in the payment of the Senior Obligations (whether upon maturity, mandatory prepayment, acceleration or otherwise) beyond any applicable grace period with respect thereto.
“ Senior Loan Agreement ”: the Purchase Agreement, as the same may be amended, modified or supplemented from time to time, including, without limitation, amendments, modifications, supplements and restatements thereof giving effect to increases, renewals, extensions, refundings, deferrals, restructurings, replacements or refinancings of, or additions to, the arrangements provided in such agreement (whether provided by the original Senior Lender or a successor Senior Lender or other Lenders).
“ Senior Loans ”: the loans made by the Senior Lender to the Borrower pursuant to the Senior Loan Agreement.
“ Senior Loan Documents ”: the collective reference to the Senior Loan Agreement, the Senior Notes, the Senior Security Documents and all other documents that from time to time evidence the Senior Obligations or secure payment or performance thereof.
“ Senior Notes ”: the promissory notes of the Borrower outstanding from time to time under the Senior Loan Agreement.
“ Senior Obligations ”: the collective reference to the unpaid principal of and interest on the Senior Notes and all other obligations and liabilities of the Borrower to the Senior Lender of whatever kind or nature (including, without limitation, interest accruing at the then applicable rate provided in the Senior Notes after the maturity of the Senior Loans and interest accruing at the then applicable rate provided in the Senior Notes after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, whether or not arising under, out of, or in connection with, the Senior Loan Agreement, the Senior Notes, this Agreement, the other Senior Loan Documents or any other document made, delivered or given by Borrower, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Senior Lender that are required to be paid by the Borrower).
“ Senior Security Documents ”: the collective reference to all documents and instruments, now existing or hereafter arising, which create or purport to create a security interest in property to secure payment or performance of the Senior Obligations.
“ Subordinated Loan Documents ”: the collective reference to the Subordinated Notes, the Subordinated Security Documents and any other documents or instruments that from time to time evidence the Subordinated Obligations or secure or support payment or performance thereof.
“ Subordinated Loans ”: the loans made by the Subordinated Lenders pursuant to the Subordinated Notes.
“ Subordinated Notes ”: the Borrower’s 2006 Amended and Restated Secured Promissory Note, dated March 31, 2006, in the original principal amount of $982,243.40.
“ Subordinated Obligations ”: the collective reference to the unpaid principal and interest on the Subordinated Notes and all other obligations and liabilities of the Borrower to the Subordinated Lenders (including, without limitation, interest accruing at the then applicable rate provided in the Subordinated Notes after the maturity of the Subordinated Loans and interest accruing at the then applicable rate provided in the Subordinated Notes after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Subordinated Notes, this Agreement, or any other Subordinated Loan Document, in each case whether or not on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Subordinated Lenders that are required to be paid by the Borrower).
“ Subordinated Security Documents ”: the collective reference to (a) the documents listed on Schedule 1 , as the same may be amended, modified or otherwise supplemented from time to time with the prior written consent of the Senior Lender and (b) any other documents executed by the Borrower with the prior written consent of the Senior Lender that from time to time secure payment or performance of the Subordinated Obligations.
(1) all Senior Obligations shall be paid in full before any payment or distribution of whatever kind or nature is made with respect to the Subordinated Obligations; and
(2) any payment or distribution of assets of the Borrower, whether in cash, property or securities, to which any Subordinated Lender would be entitled except for the provisions hereof, shall be paid or delivered by the Borrower, or any receiver, trustee in bankruptcy, liquidating trustee, disbursing agent or other Person making such payment or distribution, directly to the Senior Lender, to the extent necessary to pay in full all Senior Obligations, before any payment or distribution of any kind or nature shall be made to any Subordinated Lender.
(1) each Subordinated Lender irrevocably authorizes and empowers the Senior Lender (A) to demand, sue for, collect and receive every payment or distribution on account of the Subordinated Obligations payable or deliverable in connection with such event or proceeding and give acquittance therefor, and (B) to file claims and proofs of claim in any statutory or non-statutory proceeding and take such other actions, in its own name as Senior Lender, or in the name of the Subordinated Lenders or otherwise, as the Senior Lender may deem necessary or advisable for the enforcement of the provisions of this Agreement; provided , however , that the foregoing authorization and empowerment imposes no obligation on the Senior Lender to take any such action;
(2) each Subordinated Lender shall take such commercially reasonable action, duly and promptly, as the Senior Lender may request from time to time (A) to collect the Subordinated Obligations for the account of the Senior Lender and (B) to file appropriate proofs of claim in respect of the Subordinated Obligations; and
(3) each Subordinated Lender shall execute and deliver such powers of attorney, assignments or proofs of claim or other instruments as the Senior Lender may request to enable the Senior Lender to enforce any and all claims in respect of the Subordinated Obligations and to collect and receive any and all payments and distributions which may be payable or deliverable at any time upon or in respect of the Subordinated Obligations.
(1) the time, order or method of attachment or perfection of the security interests created by any Senior Security Document or any Subordinated Security Document;
(2) the time or order of filing or recording of financing statements or other documents filed or recorded to perfect security interests in any Collateral;
(3) anything contained in any filing or agreement to which the Senior Lender or any Subordinated Lender now or hereafter may be a party; and
(4) the rules for determining perfection or priority under the Uniform Commercial Code or any other law governing the relative priorities of secured creditors,
any security interest in any Collateral pursuant to any Senior Security Document has and shall have priority, to the extent of any unpaid Senior Obligations, over any security interest in such Collateral pursuant to any Subordinated Security Document.
(1) no Subordinated Lender will (A) exercise or seek to exercise any rights or exercise any remedies with respect to any Collateral or (B) institute any action or proceeding with respect to such rights or remedies, including without limitation, any action of foreclosure or (C) contest, protest or object to any foreclosure proceeding, postpetition financing, use of cash collateral or action brought by the Senior Lender or any other exercise by the Senior Lender of any rights and remedies under any Senior Loan Documents; and
(2) the Senior Lender shall have the exclusive right to enforce rights and exercise remedies with respect to the Collateral and Senior Lender shall not be required to marshal any Collateral.
(1) First , to the payment in full of all costs and expenses (including, without limitation, attorneys’ fees and disbursements) paid or incurred by the Senior Lender in connection with the such realization on the Collateral or the protection of their rights and interests therein;
(2) Second , to the payment in full of all Senior Obligations in such order as the Senior Lender may elect in its sole discretion;
(3) Third , to the payment in full of all Subordinated Obligations then due and which are secured by such Collateral, which shall be paid to the Subordinated Lenders; and
(4) Fourth , to pay to the Borrower, or its representative or as a court of competent jurisdiction may direct, any surplus then remaining.