EXHIBIT 10.9
[Execution]
AFFILIATE SUBORDINATION AGREEMENT
THIS AFFILIATE SUBORDINATION AGREEMENT (this "Agreement") dated June 29,
2005 is by and among WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, in its capacity as agent (in such capacity, "Agent" as hereinafter
further defined) pursuant to the Loan Agreement (as hereinafter defined) acting
for and on behalf of the Lenders (as hereinafter defined), HF RESOURCES, INC., a
Delaware corporation ("Resources"), and HF ENTERPRISES, INC., a Delaware
corporation ("Enterprises" and together with Resources, collectively, "Junior
Creditors" and each a "Junior Creditor" as hereinafter further defined).
W I T N E S S E T H:
WHEREAS, Junior Creditors have made and provided, and may from time to
time hereafter make and provide, loans or other financial accommodations to
Xxxxxxx Fabrics, Inc., a Delaware corporation ("Xxxxxxx"), and HF Merchandising,
Inc., a Delaware corporation ("Merchandising" and together with Xxxxxxx,
collectively, "Debtors" and each a "Debtor" as hereinafter further defined),
which loans or other financial accommodations are and shall be unsecured; and
WHEREAS, Senior Creditors (as hereinafter defined) have entered or are
about to enter into financing arrangements with Debtors, the other Borrowers (as
hereinafter defined) and Guarantors (as hereinafter defined), pursuant to which
Senior Creditors may, upon certain terms and conditions, make loans and provide
other financial accommodations to Borrowers secured by certain assets and
properties of Borrowers and Guarantors; and
WHEREAS, in order to induce Senior Creditors to enter into and/or continue
the financing arrangements with Borrowers, Junior Creditors have agreed to the
subordination in right of payment of the existing and future obligations of
Debtors to Junior Creditors to the payment of the existing and future
obligations of Debtors to Senior Creditors and related matters as set forth
below;
NOW THEREFORE, in consideration of the mutual benefits accruing to
Creditors hereunder and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. DEFINITIONS
As used above and in this Agreement, the following terms shall have the
meanings ascribed to them below:
1.1 "Agent" shall mean Wachovia Bank, National Association, a national
banking association, in its capacity as agent on behalf of Lenders pursuant to
the Loan Agreement, and its successors and assigns, and any successor or
replacement agent for and on behalf of Lenders under the Loan Agreement.
1.2 "Agreements" shall mean, collectively, the Senior Creditor Agreements
and the Junior Creditor Agreements.
1.3 "Bankruptcy Code" shall mean the United States Bankruptcy Code, being
Title 11 of the United States Code as enacted in 1978, as the same has
heretofore been or may hereafter be amended, recodified, modified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.4 "Borrowers" shall mean, collectively, the following, together with
their respective successors and assigns, including, without limitation, a
receiver, trustee or debtor-in-possession on behalf of such person or on behalf
of any such successor or assign: (a) Xxxxxxx Fabrics, Inc, a Delaware
corporation, (b) HF Merchandising, Inc., a Delaware corporation, (c) Xxxxxxx
Fabrics of MI, Inc., a Delaware corporation, (d) xxxxxxxxxxxxxx.xxx, Inc., a
Delaware corporation, and (e) Xxxxxxx Fabrics, LLC, a Delaware limited liability
company; each sometimes referred to herein individually as a "Borrower".
1.5 "Creditors" shall mean, collectively, Senior Creditors and Junior
Creditors and their respective successors and assigns; each sometimes referred
to herein individually as a "Creditor".
1.6 "Debtors" shall mean collectively, the following, together with their
respective successors and assigns, including, without limitation, a receiver,
trustee or debtor-in-possession on behalf of such person or on behalf of any
such successor or assign: (a) Xxxxxxx Fabrics, Inc, a Delaware corporation, and
(b) HF Merchandising, Inc., a Delaware corporation; each sometimes referred to
herein individually as a "Debtor".
1.7 "Guarantors" shall mean, collectively, the following, together with
their respective successors and assigns, including, without limitation, a
receiver, trustee or debtor-in-possession on behalf of such person or on behalf
of any such successor or assign: (a) HF Resources, Inc., a Delaware corporation,
(b) HF Enterprises, Inc., a Delaware corporation, and (c) any other Person that
at any time after the date hereof becomes party to a guarantee in favor of Agent
or any Lender or otherwise liable on or with respect to the Obligations or who
is the owner of any property which is security for the Senior Debt (other than a
Borrower); each sometimes referred to herein individually as a "Guarantor".
1.8 "Insolvency Proceeding" shall mean, as to any Person, any of the
following: (a) any case or proceeding with respect to such Person under the
Bankruptcy Code or any other Federal or State bankruptcy, insolvency,
reorganization or other law affecting creditors' rights generally or any other
or similar proceedings seeking any stay, reorganization, arrangement,
composition or readjustment of the obligations and indebtedness of such Person
or (b) any proceeding seeking the appointment of any trustee, receiver,
liquidator, custodian or other insolvency official with similar powers with
respect to such Person or any or all of its assets or properties or (c) any
proceedings for liquidation, dissolution or other winding up of the business of
such Person or (d) any assignment for the benefit of creditors or any marshaling
of assets of such Person.
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1.9 "Junior Creditors" shall mean, collectively, HF Resources, Inc., a
Delaware corporation, and HF Enterprises, Inc., a Delaware corporation, together
with their respective successors and assigns; each sometimes referred to herein
individually as a "Junior Creditor".
1.10 "Junior Creditor Agreements" shall mean, collectively, the Junior
Loan Agreement, the Junior Promissory Notes and all agreements, documents and
instruments at any time executed and/or delivered by any Debtor or any other
person to, with or in favor of any Junior Creditor in connection therewith or
related thereto, as all of the foregoing now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced (including
amendments to increase the principal amount of Junior Debt evidenced thereby).
1.11 "Junior Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by Debtors to Junior
Creditors, including principal, interest, charges, fees, premiums, indemnities
and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under or evidenced by the Junior
Creditor Agreements or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of the
Junior Creditor Agreements or after the commencement of any case with respect to
any Debtor under the Bankruptcy Code or any similar statute or any other
Insolvency Proceeding (and including, without limitation, any principal,
interest, fees, costs, expenses and other amounts, whether or not such amounts
are allowable in whole or in part, in any such case or similar proceeding),
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or unsecured, and
whether arising directly or howsoever acquired by Junior Creditors.
1.12 "Junior Loan Agreement" shall mean the Loan Agreement, dated December
22, 1997, between Xxxxxxx and Resources, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced
(including amendments to increase the principal amount of Junior Debt evidenced
thereby).
1.13 "Junior Promissory Notes" shall mean, collectively, each of the
following (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, including amendments to
increase the principal amount of Junior Debt evidenced thereby): (a) the Note,
dated February 2, 1998, by Merchandising in favor of Resources and (b) the
Revolving Credit Note, dated December 22, 1997, by Xxxxxxx in favor of
Resources.
1.14 "Lenders" shall mean Wachovia Bank, National Association, a national
banking association, in its individual capacity and not as agent, and any other
financial institution which is from time to time a party to the Loan Agreement
or any of the other Senior Creditor Agreements as a lender, and their respective
successors and assigns (and including any other lender or group of lenders that
at any time refinances, replaces or succeeds to all or any portion of the Senior
Debt or is otherwise party to the Senior Creditor Agreements); each sometimes
referred to herein individually as a "Lender".
1.15 "Payment in Full" or "payment in full" shall mean, as to any Senior
Debt, the final payment and satisfaction in full in immediately available funds
of all of such Senior Debt and the
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termination of the commitments of Senior Creditors (but not including for this
purpose the refinancing or replacement of Senior Creditors). If after receipt of
any payment of, or proceeds of collateral applied to the payment of, any Senior
Debt, any Senior Creditor is required to surrender or return such payment or
proceeds to any person for any reason, then the Senior Debt intended to be
satisfied by such payment or proceeds shall be reinstated and continue as if
such payment or proceeds had not been received by such holder. The term "paid in
full" as used herein shall have the same meaning as the term "payment in full".
1.16 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability company, limited liability partnership, business trust,
unincorporated association, joint stock company, trust, joint venture, or other
entity or any government or any agency or instrumentality or political
subdivision thereof.
1.17 "Senior Creditors" shall mean collectively, Agent and Lenders; each
sometimes referred to herein individually as a "Senior Creditor".
1.18 "Senior Creditor Agreements" shall mean, collectively, the Loan and
Security Agreement, dated of even date herewith, among Senior Creditors,
Borrowers and Guarantors, and all agreements, documents and instruments at any
time executed and/or delivered by any Borrower or Guarantor or any other person
to, with or in favor of any Senior Creditor in connection therewith or related
thereto, as all of the foregoing now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated, refinanced, replaced or
restructured (in whole or in part and including any agreements with, to or in
favor of any other lender or group of lenders that at any time refinances,
replaces or succeeds to all or any portion of the Senior Debt).
1.19 "Senior Debt" shall mean all obligations, liabilities and
indebtedness of every kind, nature and description owing by Debtors to Senior
Creditors and/or their respective participants, including principal, interest,
charges, fees, premiums, indemnities and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether arising under the
Senior Creditor Agreements or otherwise, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal term
of the Senior Creditor Agreements or after the commencement of any case with
respect to any Debtor under the Bankruptcy Code or any similar statute or any
other Insolvency Proceeding (and including, without limitation, any principal,
interest, fees, costs, expenses and other amounts, whether or not such amounts
are allowable either in whole or in part, in any such case or similar
proceeding), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and whether arising directly or howsoever acquired by
Senior Creditors.
1.20 All terms used herein which are defined in the Uniform Commercial
Code as in effect in the State of New York, unless otherwise defined herein
shall have the meanings set forth therein. All references to any term in the
plural shall include the singular and all references to any term in the singular
shall include the plural.
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2. SUBORDINATION OF JUNIOR DEBT
2.1 Subordination. Except as specifically set forth in Section 2.2 below,
each Junior Creditor hereby subordinates its right to payment and satisfaction
of the Junior Debt and the payment thereof, directly or indirectly, by any means
whatsoever, is deferred, to the indefeasible payment and satisfaction in full of
all Senior Debt. As collateral security for the prompt performance, observance
and payment in full of the Senior Debt, each Junior Creditor hereby assigns and
transfers to Agent all of such Junior Creditor's right, title and interest in
and to, and grants to Agent a security interest in, the Junior Debt.
2.2 Permitted Payments. Agent hereby agrees that, notwithstanding anything
to the contrary contained in Section 2.1, Debtors may make and Junior Creditors
may receive regularly scheduled quarterly payments of interest in respect of the
Junior Debt in accordance with the terms of the Junior Creditor Agreements so
long as Junior Creditors immediately apply all of the proceeds of such interest
payments to make a loan in cash to either or both of Debtors.
2.3 Distributions.
(a) In the event of any distribution, division, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of any Debtor or the proceeds thereof to the
creditors of any Debtor or readjustment of the obligations and indebtedness of
any Debtor, in any Insolvency Proceeding, or upon the sale of all or
substantially all of any Debtor's assets, then, and in any such event, (i)
Senior Creditors shall first receive indefeasible payment in full in cash of all
of the Senior Debt prior to the payment of all or any part of the Junior Debt,
and (ii) Senior Creditors shall be entitled to receive any payment or
distribution of any kind or character, whether in cash, securities or other
property, which may be payable or deliverable in respect of any or all of the
Junior Debt.
(b) Junior Creditors hereby authorize and empower Agent in any
Insolvency Proceeding to file a proof of claim on behalf of Junior Creditors
with respect to the Junior Debt (i) if any Junior Creditor fails to file such
proof of claim prior to thirty (30) days before the expiration of the time
period during which such claims must be submitted, or (ii) if Agent, in good
faith, determines that any statements or assertions in a proof of claim filed by
any Junior Creditor are not consistent with the terms and conditions hereof;
provided, that, any failure of Agent to file such proof of claim shall not be
deemed to be a waiver by Agent of any of the rights and benefits granted herein
by such Junior Creditor. Each Junior Creditor shall provide Agent with a copy of
any proof of claim filed by such Junior Creditor in any Insolvency Proceeding.
(c) Junior Creditors hereby irrevocably grant Agent authority and
power in any Insolvency Proceeding, unless and until this Agreement is
terminated in accordance with its terms: (i) to accept and receive any payment
or distribution which may be payable or deliverable at any time upon or in
respect of the Junior Debt; and (ii) to take such other action as may be
necessary or advisable to effectuate the foregoing. Junior Creditors shall
provide to Agent all information and documents necessary to present claims or
seek enforcement as described in the immediately preceding sentence. To the
extent necessary for Agent to realize the benefits of the subordination of the
Junior Debt provided for herein (including the right to receive any payment
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and distributions which might otherwise be payable or deliverable in respect of
the Junior in any Insolvency Proceeding or otherwise), each Junior Creditor
shall execute and deliver to Agent such instruments or documents (together with
such assignments or endorsements as Agent shall deem necessary), as may be
requested by Agent.
(d) Each Junior Creditor hereby agrees that, while it shall retain
the right to vote its claims and, except as otherwise provided in this
Agreement, otherwise act in any Insolvency Proceeding relative to any Debtor
(including, without limitation, the right to vote to accept or reject any plan
of partial or complete liquidation, reorganization, arrangement, composition, or
extension), such Junior Creditor shall not: (i) take any action or vote in any
way so as to directly or indirectly challenge or contest (A) the validity or the
enforceability of any of the Senior Creditor Agreements or the liens and
security interests granted to Agent with respect to the Senior Debt, (B) the
rights and duties of Senior Creditors established in the Senior Creditor
Agreements, or (C) the validity or enforceability of this Agreement; (ii) seek,
or acquiesce in any request, to dismiss any Insolvency Proceeding or to convert
an Insolvency Proceeding under Chapter 11 of the Bankruptcy Code to a case under
Chapter 7 of the Bankruptcy Code; (iii) seek, or acquiesce in any request for,
the appointment of a trustee or examiner with expanded powers for any Debtor;
(iv) propose, vote in favor of or otherwise approve a plan of reorganization,
arrangement or liquidation, or file any motion or pleading in support of any
plan of reorganization, arrangement or liquidation, unless it provides that for
the Payment in Full of the Senior Debt or unless Senior Creditors have approved
of the treatment of their claims with respect to the Senior Debt under such
plan; (v) object to the treatment under a plan of reorganization or arrangement
of the claims with respect to the Senior Debt; (vi) seek relief from the
automatic stay of Section 362 of the Bankruptcy Code or any other stay in any
Insolvency Proceeding in respect of any portion of the Collateral; or (vii)
directly or indirectly oppose any relief requested or supported by Senior
Creditors, including any sale or other disposition of property free and clear of
the liens and security interests of Junior Creditors under Section 363(f) of the
Bankruptcy Code or any other similar provision of applicable law.
(e) Senior Creditors shall not in any event be liable for: (i) any
failure to prove the Junior Debt; (ii) any failure to exercise any rights with
respect thereto; (iii) any failure to collect any sums payable thereon; or (iv)
any impairment or nonpayment of the Junior Debt that results, directly or
indirectly, from the exercise by Senior Creditors of any of their rights or
remedies under this Agreement, the Senior Creditor Agreements or under
applicable law.
2.4 Payments Received by Junior Creditors. Except for payments received
and applied by Junior Creditors as provided in Section 2.2 above, should any
payment or distribution or security or instrument or proceeds thereof be
received by any Junior Creditor in respect of the Junior Debt, such Junior
Creditor shall receive and hold the same in trust, as trustee, for the benefit
of Senior Creditors, segregated from other funds and property of such Junior
Creditor and shall forthwith deliver the same to Agent (together with any
endorsement or assignment of such Junior Creditor where necessary), for
application to any of the Senior Debt. In the event of the failure of such
Junior Creditor to make any such endorsement or assignment to Agent, Agent, or
any of its officers or employees, are hereby irrevocably authorized on behalf of
such Junior Creditor to make the same.
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2.5 Instrument Legend and Notation. Any instrument at any time evidencing
the Junior Debt, or any portion thereof, shall be permanently marked on its face
with a legend conspicuously indicating that payment thereof is subordinate in
right of payment to the Senior Debt and subject to the terms and conditions of
this Agreement, and (a) after being so marked certified copies thereof shall be
delivered to Agent and (b) the original of any such instrument shall be
immediately delivered to Agent upon Agent's request, at any time on or after the
occurrence of an event of default under the Senior Creditor Agreements. In the
event any legend or endorsement is omitted, Agent, or any of its officers or
employees, are hereby irrevocably authorized on behalf of Junior Creditors to
make the same. No specific legend, further assignment or endorsement or delivery
of notes, guarantees or instruments shall be necessary to subject any Junior
Debt to the subordination thereof contained in this Agreement.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES
3.1 Additional Covenants. Junior Creditors and Debtors agree in favor of
Senior Creditors that:
(a) except as specifically set forth in Section 2.2 above, Debtors
shall not, directly or indirectly, make and Junior Creditors shall not, directly
or indirectly, accept or receive any payment of principal or interest or any
prepayment or non-mandatory payment or any payment pursuant to acceleration or
claims of breach or any payment to acquire Junior Debt or otherwise in respect
of any Junior Debt;
(b) notwithstanding any rights or remedies available to them under
the Junior Creditor Agreements, applicable law or otherwise, Junior Creditors
shall not, directly or indirectly, (i) seek to collect from any Debtor any of
the Junior Debt or exercise any of its rights or remedies upon a default or
event of default by any Debtor under the Junior Creditor Agreements or otherwise
or (ii) commence any Insolvency Proceeding against any Debtor or its properties
or (iii) take any other action against any Debtor or its properties;
(c) Debtors shall not grant to Junior Creditors and Junior Creditors
shall not acquire any security interest, lien, claim or encumbrance on any
assets or properties of Debtors or any guarantees for any of the Junior Debt;
(d) Junior Creditors and Debtors shall not amend, modify, alter or
change in any material respect the terms of any arrangements related to the
Junior Debt, except that Junior Creditors and Debtors may amend the Junior
Creditor Agreements to increase the principal amount of Junior Debt evidenced
thereby;
(e) Junior Creditors shall not sell, assign, pledge, encumber or
otherwise dispose of any of the Junior Debt and guarantees, if any, or
subordinate any of the Junior Debt to any indebtedness of Debtors other than the
Senior Debt;
(f) Junior Creditors and Debtors shall, at any time or times upon
the request of Agent, promptly furnish to Agent a true, correct and complete
statement of the outstanding Junior Debt; and
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(g) Junior Creditors and Debtors shall execute and deliver to Agent
such additional agreements, documents and instruments and take such further
actions as may be necessary or desirable in the opinion of Agent to effectuate
the provisions and purposes of this Agreement.
3.2 Additional Representations and Warranties. Junior Creditors and
Debtors represent and warrant to Senior Creditors that:
(a) Junior Creditors have no security interests, liens, claims or
encumbrances on any assets and properties of Debtors and the Junior Debt is
unsecured;
(b) as of the date hereof, no default or event of default, or event
which with notice or passage of time or both would constitute an event of
default exists or has occurred under the Junior Creditor Agreements;
(c) Junior Creditors are the exclusive legal and beneficial owners
of all of the Junior Debt;
(d) none of the Junior Debt is subject to any lien, security
interest, financing statements, subordination, assignment or other claim, except
in favor of Senior Creditors; and
(e) this Agreement constitutes the legal, valid and binding
obligations of each Junior Creditor, enforceable in accordance with its terms.
3.3 Waivers. Notice of acceptance hereof, the making of loans, advances
and extensions of credit or other financial accommodations to, and the incurring
of any expenses by or in respect of, Debtors by Senior Creditors, and
presentment, demand, protest, notice of protest, notice of nonpayment or default
and all other notices to which Junior Creditors and Debtors are or may be
entitled are hereby waived (except as expressly provided for herein or as to
Debtors, in the Senior Creditor Agreements). Junior Creditors also waive notice
of, and hereby consents to, (a) any amendment, modification, supplement,
renewal, restatement or extensions of time of payment of or increase or decrease
in the amount of any of the Senior Debt or to the Senior Creditor Agreements or
any collateral at any time granted to or held by Agent, (b) the taking,
exchange, surrender and releasing of collateral at any time granted to or held
by any Senior Creditor or guarantees now or at any time held by or available to
any Senior Creditor for the Senior Debt or any other person at any time liable
for or in respect of the Senior Debt, (c) the exercise of, or refraining from
the exercise of any rights against any Debtor or any other Borrower or Guarantor
or any collateral at any time granted to or held by any Senior Creditor, (d) the
settlement, compromise or release of, or the waiver of any default with respect
to, any of the Senior Debt, and/or (e) Senior Creditors' election, in any
proceeding instituted under the Bankruptcy Code of the application of Section
1111(b)(2) of the Bankruptcy Code. Any of the foregoing shall not, in any
manner, affect the terms hereof or impair the obligations of Junior Creditors
hereunder. All of the Senior Debt shall be deemed to have been made or incurred
in reliance upon this Agreement.
3.4 Subrogation; Marshalling. Junior Creditors shall not be subrogated to,
or be entitled to any assignment of any Senior Debt or Junior Debt or of any
collateral for or guarantees or evidence of any thereof. Junior Creditors hereby
waive any and all rights to have any collateral
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or any part thereof granted to or held by Agent marshaled upon any foreclosure
or other disposition of such collateral by Agent or any Debtor with the consent
of Agent.
3.5 No Offset. In the event any Junior Creditor at any time incurs any
obligation to pay money to any Debtor, such Junior Creditor hereby irrevocably
agrees that it shall pay such obligation in cash or cash equivalents in
accordance with the terms of the contract governing such obligation and shall
not deduct from or setoff against any amounts owed by such Junior Creditor to
such Debtor in connection with any such transaction any amounts such Junior
Creditor claims are due to it with respect to the Junior Debt.
4. MISCELLANEOUS
4.1 Amendments. Any waiver, permit, consent or approval by either Creditor
of or under any provision, condition or covenant to this Agreement must be in
writing and shall be effective only to the extent it is set forth in writing and
as to the specific facts or circumstances covered thereby. Any amendment of this
Agreement must be in writing and signed by each of the parties to be bound
thereby.
4.2 Successors and Assigns.
(a) This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of each
of Creditors and its respective successors, participants and assigns.
(b) Senior Creditors reserve the right to grant participations in,
or otherwise sell, assign, transfer or negotiate all or any part of, or any
interest in, the Senior Debt and the collateral securing same; provided, that,
Junior Creditors shall not be obligated to give any notices to or otherwise in
any manner deal directly with any participant in the Senior Debt and no
participant shall be entitled to any rights or benefits under this Agreement
except through Senior Creditors. In connection with any participation or other
transfer or assignment, any Senior Creditor (i) may disclose to such assignee,
participant or other transferee or assignee all documents and information which
such Senior Creditor now or hereafter may have relating to the Senior Debt or
any collateral and (ii) shall disclose to such participant or other transferee
or assignee the existence and terms and conditions of this Agreement.
(c) In connection with any assignment or transfer of any or all of
the Senior Debt, or any or all rights of Senior Creditors in the property of any
Debtor (other than pursuant to a participation), Junior Creditors agree to
execute and deliver an agreement containing terms substantially identical to
those contained herein in favor of any such assignee or transferee and, in
addition, will execute and deliver an agreement containing terms substantially
identical to those contained herein in favor of any third person who succeeds to
or replaces any or all of such Senior Creditor's financing of such Debtor,
whether such successor financing or replacement occurs by transfer, assignment,
"takeout" or any other means.
4.3 Insolvency. This Agreement shall be applicable both before and after
the filing of any petition by or against any Debtor under the Bankruptcy Code
and all converted or succeeding cases in respect thereof, and all references
herein to any Debtor shall be deemed to apply to a trustee for such Debtor and
Debtor as debtor-in-possession. The relative rights of
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Senior Creditors and Junior Creditors to repayment of the Senior Debt and the
Junior Debt, respectively, and in or to any distributions from or in respect of
any Debtor or any proceeds of any Debtor's property and assets, shall continue
after the filing thereof on the same basis as prior to the date of the petition,
subject to any court order approving the financing of, or use of cash collateral
by, any Debtor as debtor-in-possession.
4.4 Bankruptcy Financing. If any Debtor shall become subject to a
proceeding under the Bankruptcy Code and if Senior Creditors desire to permit
the use of cash collateral or to provide financing to any Debtor under either
Section 363 or Section 364 of the Bankruptcy Code, Junior Creditors agree as
follows: (a) adequate notice to Junior Creditors shall have been provided for
such financing or use of cash collateral if Junior Creditors receive notice two
(2) business days prior to the entry of the order approving such financing or
use of cash collateral and (b) no objection will be raised by Junior Creditors
to any such use of cash collateral or financing. For purposes of this Section,
notice of a proposed financing or use of cash collateral shall be deemed given
when given in the manner prescribed by Section 4.5 hereof to Junior Creditors.
4.5 Notices. All notices, requests and demands to or upon the respective
parties hereto shall be in writing and shall be deemed to have been duly given
or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if mailed by certified mail, return receipt requested, five (5)
days after mailing. All notices, requests and demands are to be given or made to
the respective parties at their addresses set forth below (or to such other
addresses as either party may designate by notice in accordance with the
provisions of this Section:
To Agent: Wachovia Bank, National Association, as Agent
Heritage Square II
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Portfolio Manager -- Xxxxxxx Fabrics, Inc.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
To any Junior Creditor: HF Resources, Inc.
HF Enterprises, Inc.
Xxx Xxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Either Creditor may change the address(es) to which all notices, requests and
other communications are to be sent by giving written notice of such address
change to the other Creditor in conformity with this Section 4.5, but such
change shall not be effective until notice of such change has been received by
the other Creditor.
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4.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original with the same force and effect
as if the signatures thereto and hereto were upon the same instrument. Delivery
of an executed counterpart of this Agreement or by telefacsimile or other
electronic method of transmission shall have the same force and effect as the
delivery of an original executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of this Agreement.
4.7 Governing Law. The validity, construction and effect of this Agreement
shall be governed by the internal laws of the State of New York but excluding
any principles of conflicts of law or other rule of law that would result in the
application of the law of any jurisdiction other than the laws of the State of
New York.
4.8 Consent to Jurisdiction; Waiver of Jury Trial. Each of the parties
hereto hereby irrevocably consents to the non-exclusive jurisdiction of the
Supreme Court of the State of New York in New York County, New York and the
United States District Court for the Southern District of New York and waives
trial by jury in any action or proceeding with respect to this Agreement.
4.9 Complete Agreement. This written Agreement is intended by the parties
as a final expression of their agreement and is intended as a complete statement
of the terms and conditions of their agreement.
4.10 No Third Parties Benefitted. Except as expressly provided in Section
4.2, this Agreement is solely for the benefit of the Creditors and their
respective successors, participants and assigns, and no other person shall have
any right, benefit, priority or interest under, or because of the existence of,
this Agreement.
4.11 Disclosures, Non-Reliance. Each Creditor has the means to, and shall
in the future remain, fully informed as to the financial condition and other
affairs of Debtors and no Creditor shall have any obligation or duty to disclose
any such information to any other Creditor. Except as expressly set forth in
this Agreement, the parties hereto have not otherwise made to each other nor do
they hereby make to each other any warranties, express or implied, nor do they
assume any liability to each other with respect to: (a) the enforceability,
validity, value or collectability of any of the Junior Debt or the Senior Debt
or any collateral or guarantee which may have been granted to any of them in
connection therewith, (b) any Debtor's title to or right to any of its assets
and properties or (c) any other matter except as expressly set forth in this
Agreement.
4.12 Term. This Agreement is a continuing agreement and shall remain in
full force and effect until the Payment in Full of the Senior Debt.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent
By: _____________________________
Title: ________________________
HF RESOURCES, INC.
By: _____________________________
Title: ________________________
HF ENTERPRISES, INC.
By: _____________________________
Title: ________________________
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The undersigned hereby acknowledges and agrees to the foregoing terms and
provisions. By its signature below, the undersigned agrees that it will,
together with its successors and assigns, be bound by the provisions hereof.
The undersigned acknowledges and agrees that: (i) although it may sign
this Agreement, it is not a party hereto and does not and will not receive any
right, benefit, priority or interest under or because of the existence of the
foregoing Affiliate Subordination Agreement, (ii) in the event of a breach by
either of the undersigned or any Junior Creditor of any of the terms and
provisions contained in the foregoing Affiliate Subordination Agreement, such a
breach shall constitute an "Event of Default" as defined in and under the Senior
Creditor Agreements and (iii) it will execute and deliver such additional
documents and take such additional action as may be necessary or desirable in
the opinion of any Creditor to effectuate the provisions and purposes of the
foregoing Affiliate Subordination Agreement.
XXXXXXX FABRICS, INC.
By: ___________________________
Title: __________________________
HF MERCHANDISING, INC.
By: ___________________________
Title: __________________________
