Document:

Exhibit 10.4

Exhibit 10.4

GENERAL SECURITY AGREEMENT

 

This GENERAL SECURITY AGREEMENT is made this 19th day of March 2009, between HUDSON TECHNOLOGIES COMPANY ("Debtor"), a corporation organized and existing pursuant to the laws of the State of Tennessee having an address at PO Box 1541, One Blue Hill Plaza, Pearl River, New York 10965 and RICHARD PARRILLO ("Lender"), whose address is 163 Hooton Road, Mount Laurel, NJ  08054

1.DEFINITIONS.  All words and terms used in this Agreement shall have the meanings as set forth herein and where not otherwise defined herein shall be deemed to have the meanings as accorded to them in the Uniform Commercial Code as in effect from time to time ("UCC"). As used herein, the following terms shall have the following meanings (terms defined in the singular to have the same meaning when used in the plural and vice versa):
1.1 "Agreement" shall mean this General Security Agreement.

1.2 "Collateral" shall have the meaning given to such term in Section 2.1 hereof.  

1.3"Equipment" shall mean all machinery, equipment, office machinery, furniture, fixtures, conveyors, tools, materials storage and handling equipment, molds, dies, stamps and other equipment of every kind and nature and wherever situated now or hereafter owned by Debtor or in which Debtor may have any interest (to the extent of such interest), together with all additions and accessions thereto, all replacements and all accessories and parts therefor, all manuals, blueprints, know-how, warranties and records in connection therewith, all rights against suppliers, warrantors, manufacturers, sellers or others in connection therewith, and together with all substitutes for any of the foregoing.

1.4"Inventory" shall have the meaning given to such term in the UCC.

1.5"Note" shall mean the 10% Secured Promissory Note dated the date hereof between the Debtor and Lender, as the same may be modified, amended, restated or replaced from time to time.

1.6"Loan Documents" shall mean the Note, together with this Agreement and any and all other documents, instruments or agreements executed in connection therewith as the same may be modified, amended, restated or replaced from time to time.

1.7"Person" shall mean an individual, partnership, limited liability company, limited liability partnership, corporation, joint venture, joint stock company, land trust, business trust or unincorporated organization, or a government agency or political subdivision thereof.

1.8"Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

2.SECURITY INTEREST.
2.1Security Interest.  To secure the prompt payment and performance of all of the obligations to Lender under the Note, Debtor hereby grants to Lender a lien and security interest in all of Debtor's right, title and interest in all Properties and rights in Properties, whether now owned or existing or hereafter created, acquired or arising and wheresoever located including, without limitation, the following (collectively, "Collateral"), which lien shall be expressly subject and subordinate to: i) the first priority lien and security interest held by Keltic Financial Partners, LP, a Delaware limited partnership ("Keltic"), and Bridge Healthcare Finance, LLC, pursuant to certain Amended and Restated Loan Agreement, dated as of June 26, 2007, as amended (the "Loan Agreement"); (ii) certain mortgages and mortgage notes in favor of Busey Bank secured by real property owned by Debtor in Champaign, Illinois (the "Mortgages"); (iii) security interests held as the date hereof by certain purchase money lenders; and (iv) any future security interest obtained by purchase money lenders or other lenders with respect to assets of the Company (except to the extent that the agreements governing any future security interests expressly provide that such interests shall rank pari passu with, or junior to, the security interest of the Lender):  

(a)All Equipment;

(b)All Inventory;

(c)All monies or other Property of any kind, now or at any time or times hereafter, in the possession or under the control of Lender or any affiliate of Lender or any representative, agent or correspondent of Lender;
2.2Perfection.  Debtor will execute and deliver to Lender such security agreements, assignments (including, without limitation, assignments of specific Receivables, Inventory and General Intangibles), and other papers as Lender may at any time or from time to time reasonably request that are required to perfect or protect the security interest granted hereby.  Debtor will perform any and all steps that Lender may request to perfect Lender's security interest in Inventory, including, but without limitation, executing and filing financing or continuation statements in form and substance satisfactory to Lender and maintaining stock records.  Debtor hereby appoints Lender as its attorney in fact to execute and deliver notices of lien, financing statements, assignments, and any other documents, notices, and agreements necessary for the perfection of Lender's security interests in the Collateral.  Debtor agrees to pay the costs of the continuation of Lender's security interests and releases or assignments of Lender's interests.

3.EVENTS OF DEFAULT.  Any of the following events or occurrences shall constitute an "Event of Default" under this Agreement:
(a)the occurrence of any Event of Default under the Note, the of the Loan Agreement; or

(b)the failure of Debtor to perform or comply with any provision of this Agreement and the continuance of such failure beyond any applicable grace and/or notice period.

 4.RIGHTS OF LENDER.
4.1General Rights.  The rights of Lender shall at all times be those of a secured party under the UCC.  

4.2Rights on Default.  

Upon the occurrence of any Default or an Event of Default, and after giving effect to any applicable grace period, in addition to and without limiting any rights Lender may have under any agreement, document or instrument evidencing or representing any obligation of Debtor to Lender or executed in connection with any such obligation, Lender is hereby authorized to declare any or all of the Obligations to be immediately due and payable, and the rights and remedies of Lender with respect to the Collateral shall be as set forth herein, in the UCC and as otherwise available under applicable law.
4.3Expense of Collection and Sale.   Debtor agrees to pay all costs and expenses incurred by Lender in connection with the negotiation and preparation of this Agreement or any other document, or any other Loan Documents executed in connection herewith, in determining Lender's rights under, and in enforcing and determining its rights under and enforcing the security interests created by this Agreement, including, without limitation, costs and expenses relating to taking, holding, insuring, preparing for sale, appraising, selling or otherwise realizing on the Collateral, and reasonable attorneys' fees and expenses in connection with any of the foregoing.  All such reasonable costs and expenses shall be payable on demand, and shall bear interest at the highest rate charged on any Obligation, payable on demand, from the date of Lender's payment of such costs and expenses until payment in full is made by Debtor, at the highest rate of interest permitted by law.

4.4Compliance with Other Laws.  Lender may comply with any applicable law requirements in connection with a disposition of the Collateral, and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

4.5Warranties.  Lender may sell the Collateral without giving any warranties.  Lender may specifically disclaim any warranties of title or the like.  This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. 

5.GENERAL PROVISIONS.
5.1Waivers.  Debtor expressly waives notice of nonpayment, demand, presentment, protest or notice of protest in relation to the Loan Documents or the Collateral.  No delay or omission of Lender in exercising or enforcing any of its rights, powers, privileges, options or remedies under this Agreement shall constitute a waiver thereof, and no waiver by Lender of any default by Debtor shall operate as a waiver of any other default.

5.2Remedies Not Exclusive.  All rights and remedies of Lender under this Agreement shall be cumulative and not alternative or exclusive, irrespective of any other collateral guaranty, right or remedy and may be exercised by Lender at such time or times and in such order as Lender, in its sole discretion, may determine, and are for the sole benefit of Lender.  The exercise or failure to exercise such rights and remedies shall not result in liability to Debtor or others except in the event of willful misconduct or bad faith by Lender, and in no event shall Lender be liable for more than it actually receives as a result of the exercise or failure to exercise such rights and remedies.

5.3Successors and Assigns.   This Agreement is entered into for the benefit of the parties hereto and their successors and assigns.  It shall be binding upon and shall inure to the benefit of such parties, their successors and assigns. Lender shall have the right, without the necessity of any further consent or authorization by the Debtor, to sell, assign, securitize or grant participation in all, or a portion of, Lender's interest in the Collateral, to other financial institutions of the Lender's choice and on such terms as are acceptable to Lender in its sole discretion. 

5.4Notices.  Wherever this Agreement provides for notice to any party (except as expressly provided to the contrary), it shall be given by messenger, facsimile, certified U.S. mail with return receipt requested, or nationally recognized overnight courier with receipt requested, effective when received by the party to whom addressed, and shall be addressed as follows, or to such other address as the party affected may hereafter designate:

	
If to Lender
	
163 Hooton Road,

	 	
Mount Laurel, NJ  08054

	
If to Debtor:
	
Hudson Technologies Company

	 	
Attn:  Stephen P. Mandracchia, Esq.

	 	
275 North Middletown Road

	 	
Pearl River, New York 10965

	 	
Tel:  (845) 735-6000

	 	
Fax: (845) 512-6070

 
5.5Strict Performance. The failure, at any time or times hereafter, to require strict performance by the Debtor of any provision of this Agreement shall not waive, affect or diminish any right of Lender thereafter to demand strict compliance and performance therewith.  Any suspension or waiver by Lender of any Default or Event of Default by the Debtor under this Agreement or any other Loan Document shall not suspend, waive or affect any other Default or Event of Default by the Debtor under this Agreement or any other Loan Document, whether the same is prior or subsequent thereto and whether of the same or a different type. 

5.6Construction of Agreement.  The parties hereto agree that the terms and language of this Agreement were the result of negotiations between the parties, and, as a result, there shall be no prescription that any ambiguities in this Agreement shall be resolved against either party.  Any controversy over the construction of this Agreement shall be decided mutually without regard to events of authorship or negotiation.

5.7WAIVER OF RIGHT TO JURY TRIAL.  

(a)Debtor and Lender recognize that in matters related to this Agreement, and as it may be subsequently modified and/or amended, any such party may be entitled to a trial in which matters of fact are determined by a jury (as opposed to a trial in which such matters are determined by a federal or state judge).  By execution of this Agreement, Debtor and Lender will give up their respective right to a trial by jury. Debtor and Lender each hereby expressly acknowledged that this waiver is entered into to avoid delays, minimize trial expenses, and streamline the legal proceedings in order to accomplish a quick resolution of claims arising under or in connection with this Agreement.

(b)WAIVER OF JURY TRIAL.  TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, DEBTOR AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT DEBTOR OR LENDER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION, DIRECTLY OR INDIRECTLY, AT ANY TIME ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR ANY TRANSACTION CONTEMPLATED THEREBY OR HEREBY, BEFORE OR AFTER MATURITY.

(c)CERTIFICATIONS.  DEBTOR HEREBY CERTIFIES THAT NEITHER ANY REPRESENTATIVE NOR AGENT OF LENDER NOR LENDER'S COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.  DEBTOR ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION HEREIN.

5.8Entire Agreement; Amendments; Lender's Consent.  This Agreement represents the entire agreement between the parties.  No amendment or waiver of any provision of this Agreement or of the Note, nor consent to any departure by Debtor therefrom, shall in any event be effective unless the same shall be in a writing signed by the Lender.  

5.9Execution in Counterparts.   This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.

5.10Severability of Provisions.  Any provision of this Agreement or any of the other Loan Documents that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or the other Loan Documents or affecting the validity or enforceability of such provision in any other jurisdiction.

5.11Table of Contents; Headings.  The table of contents and headings preceding the text of this Agreement are inserted solely for convenience of reference and shall not constitute a part of this Agreement or affect its meaning, construction or effect.

5.12Exhibits and Schedules.  All of the Exhibits and Schedules to this Agreement are hereby incorporated by reference herein and made a part hereof.

5.13Governing Law; Consent To Jurisdiction.  

(a)THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY LENDER AND ACCEPTED BY DEBTOR IN THE STATE OF NEW YORK, AND THE PROCEEDS OF OBLIGATIONS DELIVERED PURSUANT THERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREIN, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.  TO THE FULLEST EXTENT PERMITTED BY LAW, LENDER AND DEBTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE OBLIGATIONS, AND THIS AGREEMENT AND THE OBLIGATIONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b)ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR DEBTOR, ANY GUARANTOR OR OTHER PARTY TO THIS TRANSACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN THE SOLE OPTION OF LENDER IN ANY FEDERAL OR STATE COURT LOCATED IN ROCKLAND COUNTY, NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND LENDER AND DEBTOR WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND LENDER AND DEBTOR HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized on the day and year first above written.

	 	
/s/ Richard Parrillo

	 	
Richard Parrillo

	
HUDSON TECHNOLOGIES COMPANY

	 	 
	
By:
	
/s/ Kevin J. Zugibe

	 	
Kevin J. Zugibe

	 	
Chief Executive OfficerExhibit 10.5

Exhibit 10.5

SUBORDINATION AND INTERCREDITOR AGREEMENT

This Subordination and Intercreditor Agreement (the "Agreement") is made this 26th day of March, 2009, between RICHARD PARRILLO (the "Subordinated Lender"), a New York resident, and KELTIC FINANCIAL PARTNERS, LP, a Delaware limited partnership ("Keltic"), and BRIDGE HEALTHCARE FINANCE, LLC, a Delaware limited liability company ("Bridge", and together with Keltic, individually and collectively, "Senior Lender").

WITNESSETH

WHEREAS, Hudson Technologies Company, a Tennessee corporation ("Borrower"), has executed and delivered to Senior Lender one or more revolving notes and/or term notes (the "Senior Notes") evidencing all of Borrower's obligations, liabilities and indebtedness to Senior Lender, as set forth in an Amended and Restated Loan Agreement dated June 26, 2007 among Borrower and Senior Lender (as amended, modified or supplemented from time to time, the "Loan Agreement"), and as secured by a General Security Agreement made by Borrower in favor of Senior Lender (the "Security Agreement") (the Loan Agreement, the Security Agreement and the Senior Notes together with the other documents, instruments and agreements executed in connection therewith, as they may from time to time be modified, amended, restated or replaced are hereinafter collectively referred to as, the "Senior Loan Documents"), pursuant to which Senior Lender has agreed to make certain loans and advances to Borrower (collectively, the "Loans"), upon and subject to the terms of the Senior Loan Documents, which Loans will directly benefit Subordinated Lender.  Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Senior Loan Documents.

WHEREAS, all of the indebtedness, liabilities and obligations of Borrower to Senior Lender, whether now existing or hereafter arising, including, without limitation, the Loans and all other present and future Obligations of Borrower to Senior Lender are hereinafter collectively called the "Senior Debt."

WHEREAS, the payment and performance of the Senior Debt is secured by a security interest in, among other things, all of the present and future goods, equipment, inventory, investment property, instruments, chattel paper, documents, letter-of-credit rights, accounts, deposit accounts, commercial tort claims and general intangibles of Borrower, wherever located, and the products and proceeds thereof (collectively, the "Collateral").

WHEREAS, Subordinated Lender is or may be the holder of certain indebtedness and liabilities owing from Borrower to Subordinated Lender from time to time or may have made a loan or loans to Borrower, including under that certain Note Purchase Agreement dated on or about the date hereof between Borrower and Subordinated Lender (the "Subordinated Note Purchase Agreement") and that certain promissory note dated on or about the date hereof  given by Borrower to Subordinated Lender in the principal amount of $1,000,000 (the "Subordinated Note").  The Subordinated Note Purchase Agreement, the Subordinated Note and the Subordinated Security Agreement referenced below, together with all other documents, agreements, instruments and/or certificates relating thereto, are hereinafter collectively referred to as the "Subordinated Debt Documents."

WHEREAS, all indebtedness, liabilities and obligations of Borrower to Subordinated Lender, whether now existing or hereafter arising, including, without limitation, all indebtedness, liabilities and obligations under the Subordinated Debt Documents, together with all interest and other monies due or to become due thereunder, and any fees, costs and expenses in connection therewith, are hereinafter referred to as the "Subordinated Debt."  

WHEREAS, the payment and performance of the Subordinated Debt is secured by a security interest in certain assets of the Borrower, some or all of which constitute the Collateral, pursuant to a General Security Agreement given by Borrower in favor of Subordinated Lender (as amended, the "Subordinated Security Agreement").

WHEREAS, it is a condition precedent to the obligation of Senior Lender to continue to make the Loans provided for in the Senior Loan Documents that Subordinated Lender and Borrower execute and deliver this Agreement to and with Senior Lender.

NOW, THEREFORE, in order to induce Senior Lender to make the Loans provided for in the Senior Loan Documents and in consideration therefor, and in consideration of the mutual covenants set forth herein, the parties hereto hereby agree as follows:
1.CONSENT.  Subordinated Lender hereby consents to and approves of the execution, delivery and performance by Borrower of the Senior Loan Documents and the consummation of the transactions contemplated thereby, notwithstanding anything to the contrary contained in any of the agreements, instruments and documents executed in connection with the Subordinated Debt.

2.SUBORDINATION.
2.1Subordination of Payment.  Except as set forth in Section 2.2 below, the payment of any and all of the principal amount of, interest on and any fees, costs and expenses on the Subordinated Debt is hereby expressly subordinated and made junior to the payment of the principal amount, all interest, all liquidated damages, fees, costs, expenses and any other amounts due on the Senior Debt.

2.2Payments.  Anything in any other agreement, instrument or document executed and delivered in connection with the Subordinated Debt to the contrary notwithstanding, Borrower shall not make, and Subordinated Lender shall not receive, accept or retain, any direct or indirect payment, or prepayment on account, or any reduction (whether by way of loan, set-off or otherwise) in respect of the principal of, premium on, or interest on the Subordinated Debt until the Termination Date (as defined in Section 6.11); provided, however, that so long as (a) on the date such proposed payment is to be made (a) no Default or Event of Default has occurred and is continuing, or shall occur as a result of such payment, and (b) on the date such proposed payment is to be made and after giving effect to such proposed payment, Borrower shall have availability of not less than $500,000 under the Revolving Loan (calculated on average for the thirty (30) days prior to the date of such proposed payment, with  expenses, liabilities and trade payables being paid in the ordinary course of business), Borrower may make, and Subordinated Lender may accept, (i) monthly payments of interest on the Subordinated Debt (with interest not to exceed ten percent (10%) per annum), without acceleration, and (ii) payment of principal on the Subordinated Debt on September 30, 2009. 

2.3Subordination of Lien.  Notwithstanding the date, manner or order of creation, attachment or perfection of those security interests and liens in favor of Subordinated Lender now or hereafter existing in the Collateral, and notwithstanding any provisions of the Uniform Commercial Code or other applicable law or of any agreement(s) granting such security interests or liens to Subordinated Lender and Senior Lender, the security interests and liens held by Subordinated Lender in the Collateral shall be, in all respects, subject to and subordinate to the security interests and liens of Senior Lender in the Collateral to the full extent of the Senior Debt secured thereby.  Subordinated Lender will indicate in any financing statement filed (whether before or after the date hereof) in connection herewith that its security interests and liens in the Collateral are subordinated to the security interests and liens of Senior Lender in the Collateral.    

2.4Default/Remedies.  In the event of (a) any insolvency, bankruptcy, receivership, custodianship, liquidation, reorganization, readjustment of debt, arrangement, composition, assignment for the benefit of creditors, or other similar proceeding relative to Borrower or its creditors, as such, or its property, or (b) any proceeding of Borrower for voluntary liquidation, dissolution, winding down or bankruptcy proceedings (collectively, an "Insolvency Event"), then and in any such event:
(i)All of the Senior Debt shall first be paid in full before any payment or distribution of any character, whether in cash, securities, obligations or other property, shall be made in respect of the Subordinated Debt;

(ii)Any payment or distribution of any character, which would otherwise (but for the terms hereof) be payable or deliverable in respect of the Subordinated Debt (including any payment or distribution of any other indebtedness of Borrower being subordinated to the Subordinated Debt), shall be paid or delivered directly to Senior Lender, or its representative, until the Termination Date, and Subordinated Lender irrevocably authorizes, empowers and directs all receivers, custodians, trustees, liquidators, conservators and others having authority in the property and premises of Subordinated Lender to effect all such payments and deliveries; and

(iii)Notwithstanding any statute, including, without limitation, the United States Bankruptcy Code (the "Bankruptcy Code"), any rule of law or bankruptcy procedures to the contrary, the right of Senior Lender hereunder to have all of the Senior Debt paid and satisfied in full prior to the payment of any of the Subordinated Debt shall include, without limitation, the right of Senior Lender to be paid in full all interest accruing on the Senior Debt due to it after the filing of any petition by or against Borrower in connection with any bankruptcy or similar proceeding or any other proceeding referred to in this paragraph, hereof, prior to the payment of any amounts in respect to the Subordinated Debt, including, without limitation, any interest due to Subordinated Lender accruing after such date.

2.5Turnover to Senior Lender; Senior Lender's Rights.
(a)Subordinated Lender will, upon the written request of Senior Lender, prove, enforce and endeavor to obtain payment of the aggregate outstanding amount of all unpaid Subordinated Debt payments due and payable, or thereafter becoming due and payable from Borrower to Subordinated Lender, and will turn over to Senior Lender in precisely the form received, any payment of any kind or character on account of the Subordinated Debt for application to the payment of any indebtedness, liabilities or obligations of Borrower to Senior Lender then existing.  In the event that Subordinated Lender shall fail to take any such action requested by Senior Lender, Senior Lender may, as attorney-in-fact for Subordinated Lender, take such action on behalf of Subordinated Lender but for the use and benefit of Senior Lender.  Subordinated Lender hereby authorizes and empowers (without imposing any obligation on) Senior Lender, under the circumstances referred to in this Paragraph 2.5(a) to demand, sue for, collect and receive every such payment and distribution and give acquittance therefor, and to file claims and to take such other proceedings in Senior Lender's own name or in the name of Subordinated Lender or otherwise, and to vote, give consent and take any other steps with regard thereto, all as Senior Lender may deem necessary or advisable for the enforcement of this Agreement, including without limitation, the right of Senior Lender in its own name or in the name of Subordinated Lender, to vote the full amount of the Subordinated Debt in its sole discretion in connection with any resolution, arrangement, plan of reorganization, compromise, settlement or extension, and to take all such other action (including, without limitation, the right to participate in any composition of creditors and the right to vote the Subordinated Debt at creditors' meetings for the election of trustees, acceptance of plans and otherwise), as Senior Lender may deem necessary or advisable for the enforcement of this Agreement; and

(b)Subordinated Lender or any other holder of the Subordinated Debt shall execute and deliver to Senior Lender or its representative all such further instruments confirming the authorization referred to in the Paragraph 2.5(a), and any powers of attorney specifically confirming the rights of Senior Lender arising hereunder, and all such proofs of claim, assignments of claim and other instruments and shall take all such other actions as may be requested by Senior Lender or its representative in order to enable Senior Lender or its representative to enforce any and all claims upon or in respect of such Subordinated Debt and to collect and give any and all payments of distributions which may be payable or deliverable at any time upon or with respect to the Subordinated Debt.

(c)Notwithstanding anything contained in this Paragraph 2.5 to the contrary, the respective rights and obligations of the parties hereto under this Paragraph 2.5 shall be applicable only at such time as Senior Lender has accelerated the Senior Debt. 

2.6Payments in Trust.  If, notwithstanding the provisions of this Agreement, any payment or distribution of any character (whether in cash, securities, or other property) or any security shall be received by Subordinated Lender in contravention of the terms of this Agreement, such payment, distribution or security shall be held in trust for the benefit of, and shall be paid over or delivered and transferred to Senior Lender, or its representative, for application to the payment of all Senior Debt remaining unpaid, until the Termination Date.

2.7Transfer/Assignment of Senior Debt.  This Agreement, without further reference, shall pass to and may be relied on and enforced by any transferee or subsequent holder of any Senior Debt.  In the event of any sale, assignment, disposition or other transfer of the Subordinated Debt, Subordinated Lender shall cause the transferee thereof to execute and deliver to Senior Lender an agreement (substantially identical with this Agreement or otherwise in form and substance satisfactory to Senior Lender) providing for the continued subordination of the Subordinated Debt to the Senior Debt as provided herein and for the continued effectiveness of all of the rights of Senior Lender arising under this Agreement.

3.CONTINUED EFFECTIVENESS OF THIS AGREEMENT.  The terms of this Agreement, the subordination effected hereby, and the rights of Senior Lender and the obligations of Subordinated Lender arising hereunder, shall not be affected, modified or impaired in any manner or to any extent by:
(a)any amendment, modification or termination of or supplement to the Senior Loan Documents or any other agreement, instrument or document executed or delivered pursuant thereto;

(b)the validity or enforceability of any such documents;

(c)the release, sale, exchange or surrender, in whole or in part, of any collateral security, now or hereafter existing, for any of the Senior Debt or any other indebtedness, liability or obligation of Borrower to Senior Lender, now existing or hereafter arising;

(d)any exercise or failure to exercise any right, power or remedy under or in respect of the Senior Debt or any of such instruments and documents referred to in clause (a) above or arising at law; or

(e)any waiver, consent, release, indulgence, extension, renewal, modifications, delay or other action, inaction or omission in respect of the Senior Debt or any of the agreements instruments or documents executed and delivered in respect of any collateral security for the Senior Debt or any other indebtedness, liability or obligation of Borrower to Senior Lender, now existing or hereafter arising, all whether or not Subordinated Lender shall have had notice or knowledge of any of the foregoing and whether or not it shall have consented thereto.

4.RESTRICTIONS; RIGHTS AND REMEDIES; WAIVER OF CLAIMS.  
4.1Restrictions.  Prior to the Termination Date and notwithstanding anything contained in any Subordinated Debt Documents to the contrary, Subordinated Lender shall not, without the prior written consent of Senior Lender, do any of the following:
(a)amend, modify or supplement or agree to any amendment, modification or supplement of, or to, the Subordinated Debt or any of the Subordinated Debt Documents in any manner;

(b)accelerate the maturity of all or any portion of the Subordinated Debt, or take any action towards collection of all or any portion of the Subordinated Debt or enforcement of any rights, powers or remedies under the Subordinated Debt Documents against any of the property, real or personal, of Borrower, or any interest therein or under other agreements entered into pursuant thereto or against any of the property, real or personal, of Borrower or any interest therein upon the occurrence of any event of default under the Subordinated Debt or as defined in the Subordinated Debt Documents or any event, which with the passage of time, or giving of notice, or both would constitute such a default (including, without limitation, the occurrence of an Event of Default under any of the Senior Loan Documents); 

(c)contest, protest or object to any foreclosure proceeding, post petition financing, use of cash collateral or action brought by Senior Lender or any other exercise by Senior Lender of any rights or remedies under the Senior Loan Documents or applicable law; or

(d)obtain any additional security interest in or liens upon any of Borrower's existing or hereafter acquired real or personal property including, without limitation, the Collateral without Senior Lender's prior written consent.  In the event that Subordinated Lender shall, despite the provisions of this paragraph, obtain any such additional security interest or lien, then without any further action any such security interest or lien shall be deemed assigned to Senior Lender as collateral security for the Senior Debt and the termination of the Commitment as provided in the Senior Loan Documents.

4.2Senior Lender's Rights and Remedies.  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.  In exercising rights and remedies with respect to the Collateral, Senior Lender may enforce the provisions of the Senior Loan Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its sole business judgment. Such exercise and enforcement shall include, without limitation, the rights to sell or otherwise dispose of Collateral, to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the Uniform Commercial Code of any applicable jurisdiction. 

4.3Right to Release.  Senior Lender's rights with respect to the Collateral include the right to release any or all of the Collateral from the security interest and lien of any Senior Loan Documents or Subordinated Debt Documents in connection with the sale of such Collateral, notwithstanding that the net proceeds of any such sale may not be used to permanently prepay any Senior Debt or Subordinated Debt.  If Senior Lender shall determine, in connection with any sale of Collateral, that the release of such security interest and lien of any Subordinated Debt Document on such Collateral in connection with such sale is necessary or advisable, Subordinated Lenders shall execute such release documents and instruments and shall take such further actions as Senior Lender shall request. Subordinated Lender hereby irrevocably constitutes and appoints Senior Lender and any officer of Senior Lender, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Subordinated Lender and in the name of Subordinated Lender or in Senior Lender's own name, from time to time in Senior Lender's discretion, for the purpose of carrying out the terms of this paragraph, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this paragraph, including, without limitation, any financing statements, endorsements, assignments or other instruments of transfer or release.

4.4Waiver of Claims.  To the maximum extent permitted by law, Subordinated Lender waives any claim it might have against Senior Lender with respect to, or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or oversight whatsoever on the part of Senior Lender, or its directors, officers, employees or agents with respect to any exercise of rights or remedies under the Senior Loan Documents or any transaction relating to the Collateral.  Neither Senior Lender, nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Borrower or Subordinated Lender or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.

5.PROVISIONS APPLICABLE AFTER BANKRUPTCY.  The provisions of this Agreement shall continue in full force and effect notwithstanding the occurrence of any Insolvency Event.  To the extent that Subordinated Lender has or acquires any rights under Section 362, 363 or 364 of the Bankruptcy Code with respect to the Collateral, Subordinated Lender hereby agrees not to assert such rights without the prior written consent of Senior Lender; provided that, if requested by Senior Lender, Subordinated Lender shall seek to exercise such rights in the manner requested by Senior Lender, including the rights in payments in respect of such rights. Subordinated Lender (both in its capacity as Subordinated Lender and in its capacity as a party which may be obligated to Borrower or any of Borrower's affiliates with respect to contracts which are part of Senior Lender's Collateral) agrees not to initiate or prosecute or encourage any other Person to initiate or prosecute any claim, action, objection or other proceeding (i) challenging the enforceability of Senior Lender's claim (ii) challenging the enforceability of any liens or security interests in assets securing the Senior Debt, (iii) asserting any claims which Borrower may hold with respect to Senior Lender, or (iv) objecting to any sale or other disposition of Borrower's assets consented to by Senior Lender in any bankruptcy or other proceeding or any borrowing or grant of any lien by Borrower consented to by Senior Lender in any such proceeding.   

6.GENERAL PROVISIONS.
6.1Successors and Assigns.  This Agreement is entered into for the benefit of the parties hereto and their successors and permitted assigns.  It shall be binding upon and shall inure to the benefit of the parties, their successors and assigns.  Senior Lender shall have the right, without the necessity of any further consent or authorization by Subordinated Lender, to sell, assign, securitize or grant participation in all, or a portion of, Senior Lender's interest in the Senior Loan Documents, to other financial institutions of Senior Lender's choice and on such terms as are acceptable to Senior Lender in its sole discretion.

6.2Subrogation.  No payment or distribution to Senior Lender pursuant to the provisions of this Agreement shall entitle Subordinated Lender to exercise any rights of subrogation in respect thereof prior to the Termination Date.  After the Termination Date, and provided that no payments are voidable, Subordinated Lender shall be subrogated to the rights of Senior Lender to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to Subordinated Lender have been applied to the payment of Senior Debt.  A distribution made under this Agreement to Senior Lender, which otherwise would have been made to Subordinated Lender, is not, as between Subordinated Lender and Borrower, a payment by Borrower on the Subordinated Debt.

6.3Reinstatement.  The obligations of Subordinated Lender under this Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time any payment in respect of any Senior Debt is rescinded or must otherwise be restored or returned by Senior Lender by reason of any bankruptcy, reorganization, arrangement, composition or similar proceeding or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any substantial part of Borrower's property, or otherwise, all as though such payment had not been made.

6.4Notice.  Wherever this Agreement provides for notice to any party (except as expressly provided to the contrary), it shall be given by messenger, facsimile, certified U.S. mail with return receipt requested, or nationally recognized overnight courier with receipt requested, effective when received or receipt rejected by the party to whom addressed, and shall be addressed as follows, or to such other address as the party affected may hereafter designate:

	
If to Senior Lender:
	
Keltic Financial Partners, LP

	 	
580 White Plains Road, Suite 610

	 	
Tarrytown, New York 10591

	 	
Attn: John P. Reilly, President and CEO

	 	
Fax:  (914) 921-1154

	
With a copy to:
	
Stradley Ronon Stevens & Young, LLP

	 	
Woodland Falls Corporate Park

	 	
200 Lake Drive East, Suite 100

	 	
Cherry Hill, New Jersey  08002

	 	
Attn:  Michael P. Bonner, Esquire

	 	
Fax:  (856) 321-2415

	
If to Subordinated
	 
	
Creditor:
	
Richard Parrillo

	 	
163 Hooton Road,

	 	
Mount Laurel, NJ  08054

	 	
Fax:

 
6.5Conflicts of Terms.  In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant of the Subordinated Debt, or any document executed in connection therewith or the indebtedness evidenced thereby, the provisions of this Agreement shall control and govern.

6.6Further Assurances. Subordinated Lender and Borrower, at their own expense and at any time from time to time, upon the written request of Senior Lender will promptly and duly execute and deliver such further instruments and documents and take such further actions as Senior Lender reasonably may request for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted.

6.7Expenses.  Borrower will pay or reimburse Senior Lender, upon demand, for all its costs and expenses in connection with the enforcement or preservation of any rights under this Agreement, including, without limitation, fees and disbursements of counsel to Senior Lender.  Borrower will pay, indemnify, and hold Senior Lender harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions (whether sounding in contract, tort or on any other ground), judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of, or in any other way arising out of or relating to this Agreement or any action taken or omitted to be taken by any Senior Lender with respect to any of the foregoing.

6.8Legend.  Subordinated Lender and Borrower will cause any promissory note evidencing the Subordinated Debt to bear upon its face a legend referring to this Agreement and indicating that such promissory note is subordinated as provided herein.

6.9Entire Agreement; Amendments.  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof.  This Agreement may not be amended or modified orally but may be amended or modified only in writing, signed by all parties hereto.  No amendment or waiver of provision of this Agreement shall in any event be effective unless it is in writing, making specific reference to this Agreement and signed by the party against whom such waiver is sought to be enforced.

6.10No Third-Party Beneficiaries.  Notwithstanding anything contained herein to the contrary, no provision of this Agreement is intended to benefit any party other than the signatories hereto, nor shall any such provision be enforceable by any other party.

6.11Termination.  This Agreement shall terminate upon the indefeasible payment in full of the Senior Debt and termination of the Senior Loan Documents (such date being referred to as the "Termination Date").

6.12Subordinated Lender.  Each reference to "Subordinated Lender" shall be deemed to mean each Subordinated Lender, individually and collectively, as the context requires.

6.13Counterparts; Facsimile.  This Agreement may be executed in any number of counterparts (each of which may be transmitted via facsimile or pdf), each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

7.GOVERNING LAW; CONSENT TO JURISDICTION.

(A)This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York; provided, however, that if any of the Collateral shall be located in any jurisdiction other than New York, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of Senior Lender's lien upon such Collateral and the enforcement of Senior Lender's other remedies in respect of such Collateral to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of New York.

(B)AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF SUBORDINATED LENDER OR SENIOR LENDER, SUBORDINATED LENDER HEREBY CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT LOCATED IN ANY COUNTY IN NEW YORK STATE, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN SUBORDINATED LENDER AND SENIOR LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED, HOWEVER, SENIOR LENDER MAY, AT ITS OPTION, COMMENCE ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION TO OBTAIN POSSESSION OF OR FORECLOSE UPON ANY COLLATERAL, TO OBTAIN EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER OBTAINED BY SENIOR LENDER AGAINST SUBORDINATED LENDER OR WITH RESPECT TO ANY COLLATERAL, TO ENFORCE ANY OTHER RIGHT OR REMEDY UNDER THIS AGREEMENT OR TO OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY SENIOR LENDER.  SUBORDINATED LENDER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND SUBORDINATED LENDER HEREBY WAIVES ANY OBJECTION WHICH SUBORDINATED LENDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  SUBORDINATED LENDER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS CONSENT TO JURISDICTION PROVISION WITH ITS LEGAL COUNSEL, AND HAS MADE THIS WAIVER KNOWINGLY AND VOLUNTARILY.

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day and year first above written.

	 	
/s/ Richard Parrillo

	 	
Richard Parrillo

	
KELTIC FINANCIAL PARTNERS, LP

	
By:
	
KELTIC FINANCIAL SERVICES LLC,

	 	
its general partner

	
By:
	
/s/ John P. Reilly

	
Name:
	
John P. Reilly

	
Title:
	
President and CEO

	
BRIDGE HEALTHCARE FINANCE, LLC

	 	 
	
By:
	
/s/ Kim Gordan

	
Name:
	
Kim Gordon

	
Title:
	
Executive Vice President and Chief Credit Officer

BORROWER AGREEMENT

The undersigned, the Borrower mentioned in the foregoing Subordination and Intercreditor Agreement, hereby acknowledges receipt of a copy thereof, acknowledges that the Subordinated Debt mentioned therein is payable as stated therein.  Borrower shall make no payment of principal of or interest on the Subordinated Debt, other than as expressly permitted under Section 2.2 of the Subordination and Intercreditor Agreement.

Dated as of March 26, 2009

	
HUDSON TECHNOLOGIES COMPANY

	 	 
	
By:
	
/s/ Brian F. Coleman

	
Name:
	
Brian F. Coleman

	
Title:
	
President and Chief Operating Officer

 

 

AGREEMENT AND CONSENT OF GUARANTORS

Each of the undersigned guarantors, intending to be legally bound, does hereby (a) consent to the execution, delivery and performance of the within and foregoing Subordination and Intercreditor Agreement and the granting of subordinated liens by Borrower as referenced thereunder, and (b) confirm and reaffirm, without setoff, counterclaim, deduction or other claim of avoidance of any nature, the continuing effect of such guarantor's guaranty of the Obligations after giving effect to the foregoing Agreement.

HUDSON TECHNOLOGIES, INC.

 

By:/s/ Brian F. Coleman    

Name:Brian F. Coleman

Title:President 

 

HUDSON HOLDINGS, INC.

 

By:/s/ Brian F. Coleman

Name:Brian F. Coleman

Title:President 

Dated: March 26, 2009

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