EXHIBIT 10.2
SUBORDINATION
AGREEMENT
This Subordination Agreement is made
as of June 10, 2009 by and between OMEGA FLEX, INC., a Pennsylvania
corporation (the “Subordinated Lender”) and BANK OF
AMERICA, N.A., as Agent (the “Agent”), pursuant to the
terms of a certain Amended and Restated Credit Agreement dated as
of October 19, 2007, as amended by a First Amendment to Amended and
Restated Credit Agreement dated as of November 30, 2007, as further
amended by a Second Amendment to Amended and Restated Credit
Agreement dated as of the date hereof (as same may be further
amended from time to time, the “Credit Agreement”) with
Mestek, Inc., a Pennsylvania corporation (the
“Borrower”) and certain Lenders named therein from time
to time (the “Lenders”).
WHEREAS, the Lenders and the Agent
have entered into the Credit Agreement with the Borrower and have
made certain credit facilities and other financial accommodations
available to the Borrower, all as more fully described in the
Credit Agreement. All Obligations as defined in and arising
pursuant to the Credit Agreement are hereinafter collectively
referred to as the “Senior Debt”; and
WHEREAS, the Borrower has issued to
the Subordinated Lender a promissory note dated as of the date
hereof, in the aggregate principal sum of Three Million Two Hundred
Forty-Nine Thousand Six Hundred Fifteen and 00/100 ($3,249,615.00)
(the “Subordinated Note” and, together with any other
obligations of the Borrower to the Subordinated Lender, are
hereinafter collectively referred to as the “Subordinated
Debt”);
WHEREAS, the Agent and the
Subordinated Lender are parties to that certain Subordination
Agreement dated as of October 19, 2007 (the “Original
Subordination Agreement”) by and between Omega Flex, Inc. and
Bank of America, N.A., as agent related to certain amounts
previously loaned by the Subordinated Lender to the Borrower;
and
WHEREAS, the Lenders and Agent
require that the Subordinated Lender enter into this Subordination
Agreement as a condition precedent to Lenders continuing to make
the credit facilities and other financial accommodations available
to the Borrower pursuant to the Credit Agreement;
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties act and agree as
follows:
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1.
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The Subordinated Lender agrees that
the payment of principal, interest and all other charges with
respect to the Subordinated Debt is hereby expressly subordinated,
in the manner set forth in this Subordination Agreement, in right
of payment to the prior
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payment of the Senior Debt pursuant
to the terms of the Credit Agreement. As used herein, “Senior
Debt” means the principal, interest, fees, reimbursement
obligations and any other Obligations by the Borrower to the Agent
(interest and fees being calculated as provided for in the
instruments giving rise to same and without regard to whether or
not same are allowed in any bankruptcy or reorganization
proceedings) under the Credit Agreement and any Note (each as
defined in the Credit Agreement).
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2.
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The Borrower shall be permitted to
repay regularly scheduled payments of interest due on the
Subordinated Debt pursuant to the terms of the Subordinated Note
provided that, at the time of any such repayment, no Default or
Event of Default, each as defined under the Credit Agreement,
exists and is continuing, and provided that, after giving effect to
any such payment, there will not have occurred any event or
circumstance which constitutes, or which, with notice or lapse of
time, or both, would constitute such a Default or an Event of
Default under the Credit Agreement. If the Subordinated Lender
receives any payment of interest as to which Subordinated Lender
shall not be entitled under this Section 2, Subordinated Lender
will hold any such payment in trust for the benefit of the Agent,
and upon demand will forthwith remit same to the Agent.
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3.
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Except as provided in the last
sentence of this Paragraph 3, the Borrower shall not make any
payment of principal under the Subordinated Note to the
Subordinated Lender without prior written notice to and the prior
written consent of the Agent. If the Subordinated Lender receives
any payment of principal or interest as to which the Subordinated
Lender shall not be entitled under this Section 3, the Subordinated
Lender will hold any such payment in trust for the benefit of the
Agent, and upon demand will forthwith remit the same to the Agent.
Any assignment of the Subordinated Note or Subordinated Debt shall
be considered and deemed to constitute a repayment of such
Subordinated Note or Subordinated Debt, as the case may be.
Notwithstanding anything to the contrary contained in this
Subordination Agreement, if on the Maturity Date, as defined in the
Subordinated Note, no Default or an Event of Default under the
Credit Agreement exists and is continuing, and provided that after
giving effect to any such payment there will not have occurred any
event or circumstance which constitutes or which, with notice or
lapse of time would constitute a Default or Event of Default under
the Credit Agreement, then, the Borrower shall be permitted to pay,
and the Subordinated Lender shall be permitted to receive, with
notice to the Agent and the prior written consent of the Lenders,
all amounts due and owing under the Subordinated Note, including
without limitation the principal amount due thereunder.
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4.
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In the event of an acceleration
of
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