Document:

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       SUBORDINATION AGREEMENT      THIS SUBORDINATION AGREEMENT dated as of May 2, 2016 (this “Agreement”), is   entered into among (i) DLH HOLDINGS CORP. a New Jersey corporation (the “Company”), (ii)   FIFTH THIRD BANK, an Ohio banking corporation (“Senior Lender”) and (iii) WYNNEFIELD   PARTNERS SMALL CAP VALUE, LP and WYNNEFIELD PARTNERS SMALL CAP   VALUE, LP I and WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD   (collectively, the “Subordinated Lender”).   RECITALS      A. The Senior Lender and the Company have entered into a Loan Agreement of even   date herewith (as from time to time amended, modified, extended, renewed, refinanced, or restated,   the “Loan Agreement”), together with the Senior Notes, Senior Security Agreement, Senior Pledge   Agreement and the other Loan Documents (each as defined in the Loan Agreement if not otherwise   defined herein), whereby the Senior Lender has made and shall make available to the Company   certain loans and other financial accommodations therein set forth.  All of the Company’s   obligations under the Senior Loan Documents (as hereinafter defined) are secured by assignments   of and security interests in substantially all of the now or hereafter acquired assets of the Company,   all as more fully set forth in the Senior Loan Documents.   B. The Company has issued 4% Subordinated Notes dated as of May 2, 2016, and   maturing on May 2, 2021 in favor of Subordinated Lender in the aggregate principal amount of   Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000) (collectively, the   “Subordinated Note”, together with all guarantees and other documents or instruments executed   in connection therewith (as from time to time modified, extended, renewed, refinanced or restated   to the extent permitted by the terms of this Agreement, collectively the “Subordinated   Documents”)).   C. As a condition of the financing accommodations under the Loan Agreement and   the Loan Documents, the parties hereto are required to enter into this Agreement to establish the   relative rights and priorities of the Senior Lender and the Subordinated Lender under the Senior   Loan Documents and the Subordinated Documents.   D. The Subordinated Lender will benefit from the financing accommodations made by   the Senior Lender under the Loan Agreement and the Loan Documents.  The Subordinated Lender   and the Company desire to enter into this Agreement in order to induce the Senior Lender to   continue to enter into the Loan Agreement.  The Subordinated Lender acknowledges that the   Senior Lender would not enter into the Senior Loan Documents but for the execution of this   Agreement.   In consideration of the mutual agreements herein contained, the parties hereto agree as   follows:     

 

     2      1. Definitions.  Except as otherwise provided herein, all capitalized terms used in this   Agreement shall have the meanings ascribed to such terms in the Loan Agreement, provided that   the following terms shall have the meanings set forth below:    “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et.   seq.) or any replacement or supplemental federal statute dealing with the bankruptcy of debtors.   “Company” shall have the meaning set forth in the recitals hereof.   “Company Property” means all assets, property and property rights, of any kind or   nature, tangible or intangible, now or hereafter existing, in which the Company or any Obligor   owns, asserts or maintains an interest.   “Finally Paid” or “Final Payment,” when used in connection with the Senior   Indebtedness means the full and indefeasible payment in cash of all of the Senior Indebtedness and   the irrevocable termination of the Revolving Commitment of the Lender under the Senior Loan   Documents.   “Liens” means any mortgage, deed of trust, pledge, lien, security interest, charge,   set-off right or other encumbrance, whether now existing or hereafter created, acquired or arising.     “Loan Agreement” shall have the meaning set forth in the recitals hereof.   “Obligor” means any guarantor or obligor of any Senior Indebtedness.   “Proceeding” means any voluntary or involuntary proceeding commenced by or   against the Company or any Obligor under any provision of the Bankruptcy Code, or under any   other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or   informal moratoria, compositions, extensions generally with its creditors, or proceedings seeking   dissolution, receivership, reorganization, arrangement, or other similar relief.   “Senior Indebtedness” means all obligations, liabilities and indebtedness of every   nature of the Company or any Obligor from time to time owed to the Senior Lender under the   Senior Loan Documents, including the principal amount of the Senior Notes, all debts, claims and   indebtedness, accrued and unpaid interest and all premium, fees, costs and expenses, whether   primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time   hereafter owing, due or payable, whether before or after the filing of a Proceeding, including any   Bank Product Obligations at any time due and owing to Senior Lenders, together with (a) any   indebtedness which refinances such principal, interest or other obligations and any amendments,   modifications, renewals, restatements, refinancings or extensions thereof to the extent not   prohibited by the terms of this Agreement and (b) any interest accruing thereon after the   commencement of a Proceeding, without regard to whether or not such interest is allowed in any   Proceeding.  Senior Indebtedness shall be deemed to be outstanding until it is Finally Paid.   “Senior Lenders” means The PrivateBank and Trust Company, an Illinois banking   corporation, or any other Person appointed by the holders of the Senior Indebtedness as   administrative agent for purposes of the Senior Loan Documents and this Agreement, together   with the successors and assigns of all of the foregoing.     

 

     3      “Senior Loan Documents” means the Loan Agreement, Senior Notes, Senior   Pledge Agreement, Senior Security Agreement, the Loan Documents and all other agreements,   documents and instruments executed from time to time in connection therewith, in each case as   from time to time renewed, extended, amended, restated or modified and all agreements and   instruments evidencing full or partial refundings or refinancings of the indebtedness thereunder.   “Senior Pledge Agreement” means that certain Pledge Agreement of even date   herewith made by Company in favor of Senior Lender.    “Senior Notes” means that certain Term Note of even date herewith, executed by   the Company and made payable to the order of Senior Lender in the principal amount of   $25,000,000 and that certain Revolving Line of Credit Note of even date herewith, executed by   the Company and made payable to the order of Senior Lender in the principal amount of   $10,000,000.   “Senior Security Agreement” means that certain Pledge Agreement of even date   herewith made by Company in favor of Senior Lender.   “Subordinated Indebtedness” means all obligations, liabilities and indebtedness of   every nature of the Company or any Obligor from time to time owed to Subordinated Lender under   the Subordinated Documents, including the principal amount of the Subordinated Note, all debts,   claims and indebtedness, accrued and unpaid interest and all premium, fees, costs and expenses,   whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time   to time hereafter owing, due or payable, whether before or after the filing of a Proceeding   (including any amounts payable by the Company or any Obligor in connection with put,   redemption, repurchase or repurchase rights under any warrants or any other Capital Securities of   the Company or any Obligor held by Subordinated Lender), together with (a) any amendments,   modifications, renewals, restatements, refinancings or extensions thereof and (b) any interest   accruing thereon after the commencement of a Proceeding, without regard to whether or not such   interest is allowed in any Proceeding.    “Subordinated Lender Remedies” means any action (a) to take from or for the   account of the Company, any Obligor, any other guarantor of the Subordinated Indebtedness or   any other Person, by set-off or in any other manner, the whole or any part of any moneys which   may now or hereafter be owing by the Company (other than receipt of payments of Subordinated   Indebtedness to the extent permitted by Section 6 of this Agreement), any Obligor, any such   guarantor or any other Person with respect to the Subordinated Indebtedness, (b) to sue for payment   of, or to initiate or participate with others in any suit, action or proceeding (including any   Proceeding) against the Company, any Obligor, any such guarantor or any other Person to (i)   enforce payment of or to collect the whole or any part of the Subordinated Indebtedness or (ii)   commence judicial enforcement of any of the rights and remedies under the Subordinated   Documents or applicable law with respect to the Subordinated Indebtedness, (c) to accelerate the   Subordinated Indebtedness, (d) to exercise any put, repurchase or similar option or to cause the   Company, any Obligor, any such guarantor or any other Person to honor any redemption or   mandatory prepayment obligation under any Subordinated Document or (e) to take any action   under the provisions of any state or federal law, including the UCC, or under any contract or   agreement, to enforce, foreclose upon, take possession of or sell any Company Property or any     

 

     4      property or assets of any such guarantor or any other Person (other than to the extent receipt of   payments of Subordinated Indebtedness is permitted by Section 6 of this Agreement).   “Subordinated Lender” shall have the meaning set forth in the recitals hereof.   “Subordinated Note” shall have the meaning set forth in the recitals hereof.   “Subordinated Note Purchase Agreement” means that certain Note Purchase   Agreement, dated as of May 2, 2016, between the Subordinated Lender and the Company, pursuant   to which the Subordinated Lender purchased the Subordinated Note.    “UCC” means Article 9 of the Uniform Commercial Code, as in effect in any   relevant jurisdiction.     2. Subordination of Subordinated Indebtedness to Senior Indebtedness.  Except as set   forth in Section 6 hereof, the Company covenants and agrees, and Subordinated Lender by its   acceptance of the Subordinated Documents (whether upon original issue or upon transfer or   assignment) likewise covenants and agrees, notwithstanding anything to the contrary contained in   any of the Subordinated Documents, that the payment of any and all of the Subordinated   Indebtedness shall be subordinate and subject in right and time of payment, to the extent and in   the manner hereinafter set forth, to the Final Payment of all Senior Indebtedness. Each holder of   Senior Indebtedness, whether now outstanding or hereafter created, incurred, assumed or   guaranteed, shall be deemed to have acquired Senior Indebtedness in reliance upon the provisions   contained in this Agreement.     3. Subordination of Liens.   (a) Subordinated Lender hereby covenants and agrees that any Liens and rights   of any kind Subordinated Lender may now have and hereafter acquire (or be deemed to   now have or hereafter acquire) against the Company or any Obligor and/or any Company   Property, if any, shall be subordinate and subject to the Liens and rights against the   Company, Obligors and/or Company Property of the Senior Lender arising from or out of   the Senior Indebtedness, regardless of the order, time or manner in which any Liens attach   to or are perfected in any Company Property.   (b) If (x) the Company or any Obligor, as the case may be, desires to make any   distribution or payment or to sell any Company Property as to which the Senior Lender has   provided its written consent or which is otherwise permitted under the Senior Loan   Documents or (y) the Senior Lender releases its Lien in connection with any sale or   disposition of any Company Property, the Subordinated Lender shall be deemed to have   consented to such disposition and shall execute such releases with respect to such Company   Property to be sold as the Senior Lender requests to evidence the release of any Lien against   such property the Subordinated Lender may have or be deemed to have.  Subordinated   Lender hereby irrevocably appoints the holder of the Senior Indebtedness as the true and   lawful attorneys of the Subordinated Lender for the purpose of executing and filing any   such releases.  Subordinated Lender hereby waives any rights Subordinated Lender has or   may have in the future to object to the appointment of a receiver for all or any portion of   the equity or the assets of the Company or any Obligor or to require Senior Lender to     

 

     5      marshal the collateral and agrees that Senior Lender may proceed against the collateral in   any order that it deems appropriate in the exercise of its absolute discretion.     4. Warranties and Representations of Company and Subordinated Lender.   (a) The Company and Subordinated Lender hereby severally represent and   warrant to the Senior Lender that Senior Lender has been furnished with a true and correct   copy of all instruments, documents, agreements and securities evidencing or pertaining to   the Subordinated Indebtedness.    (b) The Company hereby represents and warrants to the Senior Lender that this   Agreement has been duly executed and delivered by the Company and constitutes a legal,   valid and binding obligation of the Company enforceable in accordance with its terms   except to the extent that the enforceability thereof may be limited by any applicable   bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in   effect affecting generally the enforcement of creditors’ rights and remedies and general   principles of equity.   (c) Subordinated Lender represents and warrants to the Senior Lender: (i) that   this Agreement has been duly executed and delivered by Subordinated Lender and   constitutes a legal, valid and binding obligation of Subordinated Lender enforceable   against Subordinated Lender in accordance with its terms, except to the extent that the   enforceability thereof may be limited by any applicable bankruptcy, insolvency,   reorganization, moratorium or similar laws from time to time in effect affecting generally   the enforcement of creditors’ rights and remedies and general principles of equity; (ii) that   Subordinated Lender has not relied and shall not rely on any representation or information   of any nature made by or received from Senior Lender relative to the Company or any   Obligor in deciding to execute this Agreement or to permit it to continue in effect; and (iii)   that Subordinated Lender is the current holder of the Subordinated Indebtedness.   (d) Notwithstanding anything contained in this Agreement to the contrary,   Subordinated Lender hereby represents and warrants to the Senior Lender and the   Company that Subordinated Lender has no security interest in or Lien on any assets of the   Company or any Obligor or any Company Property.   5. Negative Covenants.  Until all of the Senior Indebtedness has been Finally Paid:   (A) the Subordinated Lender shall not demand, accept or acquire from the Company or any Obligor   any security interest in or Lien on any assets of the Company or any Obligor or any Company   Property, nor any collateral from the Company or any Obligor; (B) the Company shall not   discharge the Subordinated Indebtedness other than in accordance with the terms of the   Subordinated Documents and of this Agreement; (C) the Subordinated Lender shall not demand   or accept from the Company, any Obligor or other Person any consideration which would result   in a discharge of the Subordinated Indebtedness other than in accordance with the terms of the   Subordinated Documents; (D) the Subordinated Lender shall not hereafter give any subordination   in respect of the Subordinated Indebtedness; and (E) the Company shall not hereafter issue any   instrument, security or other writing evidencing any part of the Subordinated Indebtedness, and   the Subordinated Lender shall not receive any such writing, except upon the condition that such     

 

     6      security shall bear the legend referred to in Section 25 below and a true copy thereof shall be   thereupon promptly furnished to the Senior Lender.   6. Permitted Payments.   Provided that no Event of Default hereunder or under the   Loan Agreement has occurred and is continuing, or will occur with the giving of notice, the passage   of time, or both at the time a payment is scheduled to be made, interest and principal due under   the Subordinated Note may be paid prior to maturity in the event the Company engages in an   equity financing which results in the Company receiving funds in an amount sufficient to pay all   principal and outstanding interest due and owing under the Wynnefield Subordinated Note   including, but not limited to, the rights offering contemplated by the Subordinated Note Purchase   Agreement between the Subordinated Lender and the Company, or upon maturity, in each case   regardless of whether or not the Senior Indebtedness has been Finally Paid.  Notwithstanding the   forgoing, if any Event of Default or unmatured Event of Default has occurred and is continuing   under the Loan Agreement or the Loan Documents or would occur as a result of any payments or   distributions, including, without limitation, payments or distributions with respect to the   Subordinated Indebtedness, each of Company and Subordinated Lender agree that any payments   or distributions with respect to the Subordinated Indebtedness will be suspended until the Senior   Indebtedness has been Finally Paid, the Senior Lender determine in its sole discretion that such   Event of Default or unmatured Event of Default has been cured (if capable of being cured) or the   Senior Lender has otherwise provide its written consent to the making of such payment or   distribution.   7. Forbearance of Legal Remedies.   (a) Until the Senior Indebtedness is Finally Paid, the Subordinated Lender shall   not, without the prior written consent of the Senior Lender, exercise any Subordinated   Lender Remedies.    (b) Notwithstanding anything contained herein to the contrary or any rights or   remedies available to the Subordinated Lender under any of the Subordinated Documents,   applicable law or otherwise, prior to the time that the Senior Indebtedness has been Finally   Paid, any payments, distributions or other proceeds obtained by Subordinated Lender from   the exercise of any Subordinated Lender Remedies shall in any event be held in trust by it   for the benefit of the Senior Lender and promptly paid or delivered to the Senior Lender in   the form received except to the extent the same is permitted to be paid to and kept by the   Subordinated Lender in accordance with Section 6 hereof..   8. Dissolution, Liquidation, Reorganization or Bankruptcy.     (a) In the event of any Proceeding involving the Company or any Obligor:    (i) all Senior Indebtedness shall be Finally Paid before the   Subordinated Lender shall be entitled to receive any payment on account of any   Subordinated Indebtedness; and    (ii) any payment or distribution of assets of such Person of any kind or   character, whether in cash, property or securities, to which the Subordinated Lender   would be entitled except for these provisions, shall be paid by the liquidating trustee     

 

     7      or agent or other Person making such payment or distribution directly to the Senior   Lender, to the extent necessary to make Final Payment of all Senior Indebtedness   remaining unpaid, after giving effect to any concurrent payment or distribution or   provision therefor to the holders of such Senior Indebtedness.  Subordinated Lender   irrevocably authorizes, empowers and directs any debtor, debtor-in-possession,   receiver, trustee or agent or other Person having authority, to pay or otherwise   deliver all such payments or distributions to Senior Lender.   (b) Until the Senior Indebtedness has been Finally Paid, if a Proceeding shall   occur and be continuing, the Subordinated Lender shall file all claims they may have   against the Company or any Obligor, and shall direct the debtor in possession or trustee in   bankruptcy, as appropriate, to pay over to the Senior Lenders all amounts due to the   Subordinated Lender on account of the Subordinated Indebtedness until the Senior   Indebtedness has been Finally Paid.  If the Subordinated Lender fails to file and/or vote   such claims prior to 30 days before the expiration of time to do so, the Senior Lender may   (but shall have no obligation to) file and/or vote such claims in the Subordinated Lender’s   name on behalf of the Senior Lender.  If the Senior Lender vote any such claim in   accordance with the authority granted hereof, the Subordinated Lender shall not be entitled   to withdraw or change such vote.   (c) Subordinated Lender agrees, in connection with any such Proceeding, that   while it shall retain the right to vote and otherwise act in any such proceeding (including   the right to vote to accept or reject any plan of partial or complete liquidation,   reorganization, arrangement, composition or extension), it will not take any action or vote   in any way so as to (i) contest the validity of the Liens securing the Senior Indebtedness,   (ii) contest the enforceability of any of the Senior Loan Documents, (iii) contest the Senior   Lender’ priority position over the Subordinated Lender created by this Agreement or (iv)   take any position or action which would have directly or indirectly any of the following   effects:  (A) extension of the final maturity of and/or forgiveness, reduction or cram-down   of the Senior Indebtedness or deferral of any required payment in respect of Senior   Indebtedness, (B) opposing or objecting to initiatives or claims by the Senior Lender for   adequate protection or relief from the automatic stay, use of cash collateral or super-priority   expense of administration for failure of adequate protection, (C) challenging in any respect   treatment of the Senior Indebtedness as a first priority perfected fully secured claim, (D)   blocking current payment of any obligation in respect of Senior Indebtedness, (E) assenting   to or supporting any requested extension of the exclusivity period for the submission by   Company of any plan of reorganization or liquidation under the Bankruptcy Code unless   such extension is assented to or supported by the Senior Lender; and (F) opposing or   objecting to any sale or lease of any Company Property that has been consented to by the   holders of Senior Indebtedness.  In the event of any violation of any provisions of this   section by Subordinated Lender, the Senior Lender may in the name of the Subordinated   Lender, or in its own name thereafter amend, modify or rescind any such prior act taken or   vote issued, in violation of this Agreement.   (d) Until the Senior Indebtedness has been Finally Paid, if a Proceeding shall   occur and be continuing, the Subordinated Lender hereby (i) expressly consents to Senior   Lender’ providing post-petition financing to the Company or any Obligor or the granting     

 

     8      by the Company or any Obligor to Senior Lender of senior liens and priorities in connection   therewith and/or the use of cash collateral and (ii) agrees that adequate notice of such   financing or cash collateral usage to the Subordinated Lender shall have been provided if   the Subordinated Lender received notice in accordance with Section 16 hereof 2 Business   Days prior to the entry of any order approving such financing or cash collateral usage.   (e) If Subordinated Lender has or at any time acquires any Lien securing any   Subordinated Indebtedness, Subordinated Lender agrees not to (i) initiate any proceeding   involving the marshalling of any of Company Property (whether in a Proceeding or   otherwise) or (ii) assert any right it may have to “adequate protection” of its interest, if any,   in such security in any Proceeding and agrees that it will not seek to have the automatic   stay lifted with respect to such security, in each case without the prior written consent of   the Senior Lender.  Subordinated Lender waives any claim or defense Subordinated Lender   may now or hereafter have arising out of the election by Senior Lender in any Proceeding   instituted under Chapter 11 of the Bankruptcy Code of any use of cash collateral, any   borrowing or any grant of a security interest under Sections 363 and/or 364 of the   Bankruptcy Code by the Company or any Obligor, as debtor-in-possession.  Subordinated   Lender agrees that it will not object to or oppose a sale or other disposition of any property   securing all or any part of the Senior Indebtedness free and clear of any Liens or other   claims of Subordinated Lender under Section 363 of the Bankruptcy Code if the Senior   Lender have consented to such sale or disposition.  Subordinated Lender further agrees that   it will not seek to participate on any creditors committee in respect of the Subordinated   Indebtedness without the Senior Lender’s prior written consent.  To the extent that Senior   Lender receives payments on, or proceeds of collateral for, the Senior Indebtedness which   are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or   required to be repaid to a trustee, receiver or any other party under any bankruptcy law,   state or federal law, common law, or equitable cause, then as between Senior Lender and   Subordinated Lender hereunder, to the extent of such payment or proceeds received, the   Senior Indebtedness, or part thereof, intended to be satisfied shall be revived and continue   in full force and effect as if such payments or proceeds had not been received by Senior   Lender.   9. Obligation of Company Unconditional.  Nothing contained herein or in the Senior   Loan Documents is intended to or shall impair, as between the Company and the Subordinated   Lender only, the obligation of the Company, which is absolute and unconditional, to pay to the   Subordinated Lender the Subordinated Indebtedness as and when the same shall become due and   payable in accordance with their terms, or to affect the relative rights of the Subordinated Lender   and creditors of the Company other than the Senior Lender.   10. Subordination Rights Not Impaired by Acts or Omissions of the Company or   Holders of Senior Indebtedness.   (a) No right of any present or future holders of any Senior Indebtedness to   enforce the subordination provisions as provided herein shall at any time in any way be   prejudiced or impaired by any act or failure to act on the part of the Company; by any act   or failure to act by any such holder; by any act or failure to act by any other holder of the   Senior Indebtedness; or by any noncompliance by the Company with the terms hereof,     

 

     9      regardless of any knowledge thereof which any such holder may have or be otherwise   charged with.  The Subordinated Lender shall not be released, nor shall the Subordinated   Lender’s obligation hereunder be in anyway diminished, by any of the following: (i) the   exercise or the failure to exercise by Senior Lender of any rights or remedies conferred on   it or them under the Senior Loan Documents hereunder or existing at law or otherwise, or   against any Company Property; (ii) the commencement of an action at law or the recovery   of a judgment at law against the Company or any Obligor for the performance of the Senior   Indebtedness and the enforcement thereof through levy or execution or otherwise; (iii) the   taking or institution or any other action or proceeding against the Company or any Obligor;   (iv) any delay in taking, pursuing, or exercising any of the foregoing actions, rights,   powers, or remedies (even though requested by Subordinated Lender) by Senior Lender or   anyone acting for Senior Lender; (v) any lack of validity or enforceability of any Senior   Loan Document; (vi) the release or non-perfection of any collateral securing the Senior   Indebtedness; or (vii) any other circumstance which might otherwise constitute a defense   available to, or a discharge of, the Company or any Obligor in respect of the Senior   Indebtedness or Subordinated Lender in respect of this Agreement.   (b) Without limiting the generality of the foregoing, and anything else   contained herein to the contrary notwithstanding, Senior Lender, from time to time, without   prior notice to or the consent of the Subordinated Lender, may take all or any of the   following actions without in any manner affecting or impairing the obligation or liability   of the Subordinated Lender hereunder: (i) obtain a Lien in any property to secure any of   the Senior Indebtedness; (ii) obtain the primary and secondary liability of any party or   parties with respect to any of the Senior Indebtedness; (iii) renew, extend, or otherwise   change the time for payment of the Senior Indebtedness or any installment thereof for any   period, or change the interest rates and fees with respect to the Senior Indebtedness; (iv)   renew, reaffirm, extend, release or otherwise change any liability of any nature of any   Person, including any Obligor, with respect to the Senior Indebtedness; (v) exchange,   enforce, waive, release, and apply any Company Property and direct the order or manner   of sale thereof as Senior Lender may in its discretion determine; (vi) enforce its rights   hereunder, whether or not Senior Lender shall proceed against any other Person; (vii)   exercise its rights to consent to any action or non-action of the Company or any Obligor   which may violate the covenants and agreements contained in the Senior Loan Documents,   with or without consideration, on such terms and conditions as may be acceptable to it; or   (viii) exercise any of its rights conferred by the Senior Loan Documents or by law.   11. Waivers.  The Company and Subordinated Lender each hereby waive, to the fullest   extent permitted by law, any defense based on the adequacy of a remedy at law which might be   asserted as a bar to the remedy of specific performance of this Agreement in any action brought   therefor by the Senior Lender. To the fullest extent permitted by law and except as to any notices   specified in this Agreement, notices regarding the intended sale or disposition of any portion of   the collateral held by the Senior Lender, or any notice which may not be waived in accordance   with the UCC, the Company and Subordinated Lender each hereby further waive: presentment,   demand, protest, notice of protest, notice of default or dishonor, notice of payment or nonpayment   and any and all other notices and demands of any kind in connection with all negotiable   instruments evidencing all or any portion of the Senior Indebtedness or the Subordinated   Indebtedness to which the Company or the Subordinated Lender may be a party; prior notice of     

 

     10      and consent to any loans made, extensions granted or other action taken in reliance thereon; and   all other demands and notices of every kind in connection with this Agreement, the Senior   Indebtedness or the Subordinated Indebtedness.  Subordinated Lender consents to any release,   renewal, extension, compromise or postponement of the time of payment of the Senior   Indebtedness, to any substitution, exchange or release of collateral therefor, and to the addition or   release of any Person primarily or secondarily liable thereon.   12. No Estoppel.  Neither the failure nor any delay on the part of Senior Lender to   exercise any right, remedy, power or privilege hereunder shall operate as a waiver thereof or give   rise to an estoppel, nor be construed as an agreement to modify the terms of this Agreement, nor   shall any single or partial exercise of any right, remedy, power or privilege with respect to any   occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any   other occurrence. No waiver by a party hereunder shall be effective unless it is in writing and   signed by the party making such waiver, and then only to the extent specifically stated in such   writing.   13. Incorrect Payments; Specific Performance.  If the Company or any Obligor shall   make or the Subordinated Lender shall collect any payment on account of the principal of,   premium or interest on or any other amounts due under the Subordinated Indebtedness in   contravention of this Agreement, such payments shall be held in trust by the Subordinated Lender   and not commingled with any assets of Subordinated Lender and shall be paid over and delivered   to the Senior Lender, promptly upon receipt thereof.  At any time Subordinated Lender fails to   comply with any provision of this Agreement, the Senior Lender may demand specific   performance of this Agreement, whether or not the Company has complied with this Agreement,   and may exercise any other remedy available at law or equity.   14. Amendment of the Subordinated Documents and Senior Loan Documents.    Subordinated Lender agrees that it will not, without the prior written consent of the Senior Lender,   agree to any amendment, modification or supplement to the Subordinated Documents.  The Senior   Indebtedness may at any time be amended, modified, restated, refinanced or waived without   limitation without notice to, or the consent of, the Subordinated Lender.   15. Inconsistent or Conflicting Provisions; Construction.  If a provision of the Senior   Loan Documents or the Subordinated Documents is inconsistent or conflicts with the provisions   of this Agreement, the provisions of this Agreement shall govern and prevail.  The term   "including" is not limiting and means "including without limitation."  In the computation of periods   of time from a specified date to a later specified date, the word "from" means "from and including";   the words "to" and "until" each mean "to but excluding", and the word "through" means "to and   including."   16. Notices.  Any notice, consent or other communication provided for in this   Agreement shall be in writing and shall be delivered personally (effective upon delivery), via   facsimile (effective upon confirmation of transmission), via overnight courier (effective the next   Business Day after dispatch if instructed to deliver on next business day) or via U.S. Mail (effective   3 days after mailing, postage prepaid, first class) to each party at its address(es) and/or facsimile   number(s) set forth on Annex I hereto, or to such other address as either party shall specify to the   other in writing from time to time.  The Subordinated Lender shall provide the Senior Lender with     

 

     11      written notice promptly upon the occurrence of an event of default under the Subordinated   Documents.  The parties hereto agree that, notwithstanding Section 20(b) hereof, any notice to a   Subordinated Lender shall be deemed to constitute notice to all affiliated Subordinated Lender.   17. Entire Agreement.  This Agreement constitutes and expresses the entire   understanding between the parties hereto with respect to the subject matter hereof, and supersedes   all prior and contemporaneous agreements and understandings, inducements or conditions,   whether express or implied, oral or written.  Neither this Agreement nor any portion or provision   hereof may be changed, waived or amended orally or in any manner other than by an agreement   in writing signed by the Senior Lender and the Subordinated Lender; provided that any such   change, waiver or amendment shall be binding upon the Company by their written consent thereto.    This Agreement shall constitute a Loan Document and the recitals hereto shall constitute part of   this Agreement.   18. Additional Documentation.  The Company and the Subordinated Lender shall   execute and deliver to the Senior Lender such further instruments and shall take such further action   as the Senior Lender may at any time or times reasonably request in order to carry out the   provisions and intent of this Agreement.   19. Expenses.  The Company agrees to pay the Senior Lender on demand all expenses   of every kind, including Attorney Costs, that the Senior Lender incur in enforcing any of its rights   against the Company and/or the Subordinated Lender under this Agreement.   20. Successors and Assigns.   (a) This Agreement shall inure to the benefit of Senior Lender, Subordinated   Lender, and their respective heirs, administrators, executors, successors and assigns, and   shall be binding upon the Company and its successors and assigns, and Senior Lender,   Subordinated Lender and their respective heirs, administrators, executors, transferees,   successors and assigns, including any subsequent holders of the Subordinated Note.  Senior   Lender, without prior notice or consent of any kind, may sell, assign or transfer any Senior   Indebtedness, and in such event each and every immediate and successive assignee or   transferee thereof may be given the right by such Person to enforce this Agreement in full   against the Company and the Subordinated Lender, by suit or otherwise, for its own benefit.   (b) No Subordinated Lender shall sell, assign, pledge, dispose of or otherwise   transfer all or any portion of the Subordinated Indebtedness or any Subordinated Document   without the prior written consent of the Senior Lender.   (c) Notwithstanding the failure of any transferee to execute or deliver an   agreement substantially identical to this Agreement, the subordination effected hereby   shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion   of the Subordinated Indebtedness, and the terms of this Agreement shall be binding upon   the successors and assigns of Subordinated Indebtedness, as provided in this Section.   (d) Subordinated Lender hereby agrees that any party that refinances the Senior   Indebtedness of the Senior Lender may rely on and enforce this Agreement as if it were   Senior Lender.  Subordinated Lender further hereby agrees that it will, at the request of     

 

     12      Senior Lender, enter into an agreement, in the form of this Agreement, mutatis mutandis,   to subordinate the Subordinated Indebtedness, to the same extent as provided herein, to the   party refinancing all or a portion of such Senior Indebtedness; provided that the failure of   the Subordinated Lender to execute such an agreement shall not affect such party’s right   to rely on and enforce the terms of this Agreement.   21. Covenant Not to Challenge.  This Agreement has been negotiated by the parties   with the expectation and in reliance upon the assumption that the instruments and documents   evidencing the Senior Indebtedness are valid and enforceable.  In determining whether to enter   into this Agreement, the Subordinated Lender has assumed such validity and enforceability, and   have agreed to the provisions contained herein, without relying upon any reservation of a right to   challenge or call into question such validity or enforceability.  As between Senior Lender and   Subordinated Lender, Subordinated Lender hereby covenants and agrees, to the fullest extent   permitted by law, that it shall not initiate in any proceeding a challenge to the validity or   enforceability of the documents and instruments evidencing the Senior Indebtedness or the   validity, perfection or priority of any Lien of the Senior Lender securing the Senior Indebtedness,   nor shall the Subordinated Lender instigate other parties to raise any such challenges, nor shall the   Subordinated Lender participate in or otherwise assert any such challenges which are raised by   other parties.   22. Subrogation. Subject to the Final Payment of all Senior Indebtedness and the   provisions of Section 24 hereof, the Subordinated Lender shall be subrogated to the rights of the   Senior Lender to receive payments and distributions of cash, property and securities applicable to   the Senior Indebtedness to the extent that distributions otherwise payable to the Subordinated   Lender has been applied to the Senior Indebtedness, until all amounts payable under the   Subordinated Indebtedness shall have been paid in full except with respect to rights that are   otherwise permitted to be paid to the Subordinated Lender pursuant to Section 6 hereof.  For   purposes of such subrogation, no payments or distributions to the Senior Lender of any cash,   property or securities to which the Subordinated Lender would be entitled except for the provisions   of this Agreement, and no payment pursuant to the provisions of this Agreement to the Senior   Lender by the Subordinated Lender shall, as among the Company and its creditors other than the   Senior Lender, be deemed to be a payment or distribution by the Company to or on account of the   Senior Indebtedness.  If the Company fails to make any payment on account of the Subordinated   Indebtedness by reason of any provision contained herein, such failure shall, notwithstanding such   provision contained herein, constitute a default with respect to the Subordinated Indebtedness if   and to the extent such failure would otherwise constitute such a default in accordance with the   terms of the Subordinated Indebtedness.   23. Termination of Agreement.  This Agreement shall continue and shall be irrevocable   until the date all of the Senior Indebtedness has been Finally Paid or otherwise discharged and   released in an express writing to such effect by the Senior Lender.     24. Reinstatement.  The obligations of the Subordinated Lender under the 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 Indebtedness 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     

 

     13      or similar officer for, the Company, any Obligor or any substantial part of its property, or   otherwise, all as though such payment had not been made.   25. Legends.  Until the termination of this Agreement, Subordinated Lender will cause   to be clearly, conspicuously and prominently inserted on the face of the Subordinated Note and   any other Subordinated Document, as well as any renewals or replacements thereof, the following   legend:   “THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS   EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO   THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION   AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF   May 2, 2016, BY AND AMONG WYNNEFIELD PARTNERS SMALL CAP   VALUE, LP, WYNNEFIELD PARTNERS SMALL CAP VALUE, LP I and   WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD  (“THE   “SUBORDINATED LENDER”), DLH HOLDINGS CORP (THE   “COMPANY”), AND FIFTH THIRD BANK (“SENIOR LENDER”)   RELATING TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY   THE COMPANY PURSUANT TO THAT CERTAIN LOAN AGREEMENT   DATED AS OF May 2, 2016, AS AMENDED FROM TIME TO TIME, AND   THE LOAN DOCUMENTS (AS DEFINED IN THE LOAN AGREEMENT) AS   SUCH LOAN AGREEMENT AND LOAN DOCUMENTS MAY BE   AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED   FROM TIME TO TIME AND TO INDEBTEDNESS REFINANCING THE   INDEBTEDNESS THEREUNDER AS CONTEMPLATED BY THE   SUBORDINATION AGREEMENT; AND THE HOLDER OF THIS   INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES   TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION   AGREEMENT.”       The Company’s books shall be marked to evidence the subordination of all of the   Subordinated Indebtedness to the holders of Senior Indebtedness, in accordance with the terms of   this Agreement.  Senior Lender is authorized to examine such books from time to time in   accordance with the terms of the Loan Agreement and to make any notations required by this   Agreement.      26. Governing Law.  THIS AGREEMENT SHALL BE A CONTRACT MADE   UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS   APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN   SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.  THE   COMPANY AND THE SUBORDINATED LENDER HEREBY AGREES THAT ALL   ACTIONS OR PROCEEDINGS INITIATED BY THE COMPANY OR THE SUBORDINATED   LENDER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT   SHALL BE LITIGATED IN A FULTON COUNTY, GEORGIA COURT OR THE UNITED   STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA OR, IF   SENIOR LENDER INITIATE SUCH ACTION, IN ADDITION TO THE FOREGOING   COURTS, ANY COURT IN WHICH SENIOR LENDER SHALL INITIATE SUCH ACTION,     

 

     14      TO THE EXTENT SUCH COURT HAS JURISDICTION. THE COMPANY AND THE   SUBORDINATED LENDER EACH HEREBY EXPRESSLY SUBMIT AND CONSENT IN   ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED   BY SENIOR LENDERS AND HEREBY WAIVE ANY CLAIM THAT SUCH COURTS ARE   AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED UPON LACK OF   VENUE.  THE EXCLUSIVE CHOICE OF FORUM AS SET FORTH IN THIS SECTION   SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY SENIOR LENDER,   OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING, BY SENIOR   LENDER, OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE   JURISDICTION, AND THE COMPANY AND THE SUBORDINATED LENDER EACH   HEREBY WAIVE THE RIGHT TO COLLATERALLY ATTACK SUCH JUDGMENT OR   ACTION.     27. Jury Trial.  THE SENIOR LENDER, THE SUBORDINATED LENDER AND   THE COMPANY WAIVE TRIAL BY JURY IN ANY DISPUTE ARISING FROM, UNDER OR   IN CONNECTION WITH THIS AGREEMENT.     28. Severability.  The provisions of this Agreement are independent of and separable   from each other.  If any provision hereof shall for any reason be held invalid or unenforceable, it   is the intent of the parties that such invalidity or unenforceability shall not affect the validity or   enforceability of any other provision hereof, and that this Agreement shall be construed as if such   invalid or unenforceable provision had never been contained herein.   29. Counterparts.  This Agreement may be executed in any number of separate   counterparts, all of which, when taken together, shall constitute one and the same instrument,   notwithstanding the fact that all parties did not sign the same counterpart.  Receipt of an executed   signature page to this Agreement by facsimile or other electronic transmission shall constitute   effective delivery thereof.   30. Sections.  The section headings used in this Agreement are for convenience only   and shall not affect the interpretation of any of the provisions hereof.   31. Defines Rights of Creditors.  The provisions of this Agreement are solely for the   purpose of defining the relative rights of the Senior Lender and the Subordinated Lender and shall   not be deemed to create any rights or priorities in favor of any other Person, including the   Company.      [SIGNATURE PAGE FOLLOWS]     

 

{N0109917  }    6576187    The parties hereto have executed this Subordination Agreement as of the date first above   written.   COMPANY: DLH HOLDINGS CORP a New Jersey corporation          By:  _/s/ Kathryn M. JohnBull_____________   Name: Kathryn JohnBull     Title: Chief Financial Officer      SENIOR LENDER: FIFTH THIRD BANK, an Ohio banking corporation         By:  __/s/ Anne Cross_______________________    Title: Vice President             SUBORDINATED LENDER: WYNNEFIELD PARTNERS SMALL CAP VALUE,   LP      By: __/s/ Nelson Obus__________________________   Name: Nelson Obus   Title:  Managing Member, General Partner      WYNNEFIELD PARTNERS SMALL CAP VALUE,   LP I      By: __/s/ Nelson Obus__________________________   Name: Nelson Obus   Title:  Managing Member, General Partner      WYNNEFIELD SMALL CAP OFFSHORE FUND,   LTD      By: __/s/ Nelson Obus__________________________   Name: Nelson Obus   Title:  President                              

 

{N0109917  }              

 

{N0109917  }        ANNEX I   NOTICE ADDRESSES   COMPANY:            SENIOR LENDER:            SUBORDINATED LENDER:                 

 

{N0109917  }        EXHIBIT A      SUBORDINATED NOTE      See attached.AMENDMENT TO "APPENDIX A" OF THE

ASTEC INDUSTRIES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

THIS AMENDMENT to "Appendix A" of the Astec Industries, Inc. Supplemental Executive Retirement Plan, as amended and restated as of January 1, 2008 (the "Plan"), is adopted by Astec Industries, Inc. (the "Company"), effective as of April 28, 2016.

WHEREAS, Article 2 of the Plan permits the Board of Directors of the Company (the "Board") to designate participants in the Plan from time to time, whose names and effective dates of participation shall be set forth on Exhibit A to the Plan;

NOW, THEREFORE, the Company hereby amends "Appendix A" of the Plan in the form attached hereto, to update the same for changes in Plan participation approved by the Board, by action taken on April 28, 2016.

Except as amended herein, the Plan shall continue in full force and effect.

ASTEC INDUSTRIES, INC.

Date: April 28, 2016             By /s/ Stephen C. Anderson 

                    Name Stephen C. Anderson

Title Corporate Secretary

 

"APPENDIX A"

Each Participant's Date of Participation

 

	
Name of Participant

	 	
Effective Dates of Participation

	
W. Norman Smith

	 	
January 1, 1995

	
Richard Patek

	 	
January 1, 1995

	
Jeff Elliott

	 	
January 1, 2002

	
Tim Gonigam

		
August 1, 2000

	
Richard Dorris

	 	
January 3, 2005

	
Ben Brock

	 	
January 1, 2007

	
Michael A. Bremmer

	 	
January 1, 2007

	
Stephen C. Anderson

	 	
January 1, 2003

	
Lawrence R. Cumming

	 	
January 1, 2008

	
Neil Peterson

	 	
January 1, 2008

	
David C. Silvious

	 	
July 1, 2005

	
Joe Cline

	 	
February 1, 2008

	
Chris Colwell

	 	
May 31, 2011

	
Robin Leffew

	 	
August 1, 2011

	
D. Aaron Harmon

	 	
November 1, 2011

	
Matthew B. Haven

	 	
January 1, 2013

	
Jeff May

	 	
October 1, 2013

	
Malcolm Swanson

	 	
January 1, 2014

	
Tom Wilkey

	 	
January 1, 2014

	
Jeff Schwarz

	 	
July 1, 2014

	
Steven L. Claude

	 	
August 24, 2015

	
John Irvine

	 	
April 28, 2016

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