EXHIBIT 10.2
AMENDED AND RESTATED SUBORDINATION AGREEMENT
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THIS AMENDED AND RESTATED SUBORDINATION AGREEMENT (this "Agreement") is
entered into as of the 17th day of November, 2003, (i) BANK ONE, NA, successor
to Bank One, Kentucky, NA, a national banking association with an office and
place of business in Louisville, Kentucky, as agent bank on behalf of the Banks
defined herein ("the Agent Bank") (in its capacity as a Bank, "Bank One"); (ii)
GUGGENHEIM INVESTMENT MANAGEMENT, LLC a Delaware limited liability company, as
agent for the Class B Lenders ("Class B Loan Agent"); (iii) the CLASS B LENDERS
as defined herein (each a "Class B Lender" and collectively the "Class B
Lenders"); (the "Class B Lenders"); (iv) NORTH ATLANTIC TRADING COMPANY, INC., a
Delaware corporation with its principal office and place of business and
registered office in New York, New York (the "Borrower") and (v) the
SUBSIDIARIES identified on Schedule 1.2 to the Loan Agreement (each a
"Subsidiary" and collectively, the "Subsidiaries").
RECITALS
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A. The Borrower and National Tobacco Company, L.P. ("NTCLP"), North
Atlantic Operating Company ("NAOC"), National Tobacco Finance Corporation
("NTFC") (NTCLP, NAOC and NTFC, collectively, the "Existing Subsidiaries")
entered into a Loan Agreement with the Agent Bank and the Banks dated as of
December 29, 2000, as amended to the date hereof (the "Original Loan
Agreement").
B. The Borrower executed and delivered to the Agent Bank a Revolving
Credit Note in the face amount of $10,000,000.00 dated December 29, 2000 (the
"Original Revolving Credit Note").
C. The Borrower executed and delivered to the Agent Bank a Term Note
in the face amount of $25,000,000.00 dated December 29, 2000 (the "Original Term
Note").
D. The Existing Subsidiaries executed and delivered to the Agent Bank
a Guaranty Agreement dated as of December 29, 2000 (the "Original Guaranty"),
guarantying payment of the Original Revolving Credit Note and the Original Term
Note.
E. The Borrower and the Existing Subsidiaries executed and delivered
to the Agent Bank a Security Agreement dated as of December 29, 2000 (the
"Original Security Agreement"), securing payment of the Original Revolving
Credit Note and the Original Term Note.
F. The Borrower and the Existing Subsidiaries executed and delivered
to the Agent Bank a Pledge Agreement dated as of December 29, 2000 (the
"Original Pledge Agreement"), securing payment of the Original Revolving Credit
Note and the Original Term Note.
G. National Tobacco Company, L.P. ("NTCLP"), one of the Existing
Subsidiaries, executed and delivered to the Agent Bank a Mortgage and Security
Agreement, Assignment of Rents, Leases and Profits, Financing Statement and
Fixture Filing dated as of December 29, 2000 and recorded in Jefferson County,
Kentucky (the "Original Mortgage"), securing payment of the Original Revolving
Credit Note and the Original Term Note.
H. NTCLP executed and delivered to the Agent Bank an Assignment of
Security Interest in United States Trademarks (the "NTCLP Trademark
Assignment"), which was filed in the US Patent and Trademark Office ("USPTO"),
securing payment of the Original Revolving Credit Note and the Original Term
Note.
I. North Atlantic Operating Company, Inc. ("NAOC") executed and
delivered to the Agent Bank an Assignment of Security Interest in United States
Trademarks (the "NAOC Trademark Assignment"), which was filed in the USPTO,
securing payment of the Original Revolving Credit Note and the Original Term
Note.
J. The Borrower, the Existing Subsidiaries, the Agent Bank and the
Banks entered into a 2002A Amendment to Loan Documents dated December 31, 2002
(the "2002A Amendment"), amending the Original Loan Agreement and other Loan
Documents to reflect the following: (i) the Original Term Note had been fully
repaid; (ii) the amount of the Revolving Credit Facility was increased from Ten
Million ($10,000,000) to Twenty Million Dollars ($20,000,000), pursuant to an
amended revolving credit note (the "Revolving Credit Note"); and (iii) the
maturities of the Revolving Credit Facility and the Letter of Credit Subfacility
provided for in the Original Loan Agreement were extended to December 31, 2003.
K. The Borrower, the Existing Subsidiaries, the Agent Bank and the
Banks entered into a 2003A Amendment to Loan Documents dated July 31, 2003 (the
"2003A Amendment"), amending the Original Loan Agreement and other Loan
Documents to reflect the extension of the Class B Term Loans in the aggregate
principal amount of Nineteen Million Dollars ($19,000,000), to provide the
Borrower with moneys that can be used to secure a bond to be posted in an appeal
of the judgment (the "Judgment") entered against the Borrower and the Existing
Subsidiaries in the amount of $18,600,000 in the case of Republic Tobacco, L.P.
v. North Atlantic Trading Company, Inc., North Atlantic Operating Company, Inc.
and National Tobacco Company L.P. (Case No. 98 C 4011) pending in the United
States District Court for the Northern District of Illinois Eastern Division
(the "Litigation"). The existing Class B Term Loans in the aggregate principal
amount of Nineteen Million Dollars ($19,000,000) have been extended to the
Borrower on a subordinated basis, pursuant to the Subordination Agreement dated
July 31, 2003 among the Borrower, the Existing Subsidiaries, the Agent Bank, the
Class B Loan Agent and the Class B Lenders (the "Original Subordination
Agreement") and other conditions set forth in the 2003A Amendment.
L. The Borrower and the Existing Subsidiaries have requested that one
or more Class B Term Lenders increase the Class B Term Loans by Twenty Three
Million Dollars ($23,000,000), which would bring the total amount of Class B
Term Loans to Forty Two Millions Dollars ($42,000,000), to provide the Borrower
with moneys to be used for (i) the acquisition of Xxxxxx, Inc., a Tennessee
corporation ("Xxxxxx"), RBJ Sales, Inc. a Tennessee corporation ("RBJ") and Xxxx
Xxxxxx & Sons, Inc. ("Xxxxxx & Sons") (Xxxxxx, RBJ and Xxxxxx & Sons,
collectively, the "Xxxxxx Entities") and for general corporate purposes. One or
more Class B Lenders are willing to extend such Class B Term Loans to the
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Borrower. The Agent Bank, the existing Banks, the Class B Loan Agent and the
existing Class B Lenders are willing to allow the Borrower to obtain such
increased Class B Term Loans on the condition that the repayment of all Class B
Term Loans be subordinated to the repayment of the Revolving Credit Facility
pursuant to a Subordination Agreement and on other conditions set forth herein.
The Agent Bank and the existing Banks are agreeable to such changes, upon the
terms and conditions set forth herein. The parties are entering into a 2003B
Amendment to Loan Documents dated November 17, 2003, to effect these and other
changes (the "2003B Amendment"). The Original Loan Agreement as amended by the
2002A Amendment, the 2003A Amendment and the 2003B Amendment is referred to
herein as the "Loan Agreement". The (i) Loan Agreement, (ii) Revolving Credit
Note, (iii) Original Guaranty as amended by the by the 2002A Amendment, the
2003A Amendment and the 2003B Amendment, (iv) Original Security Agreement as
amended by the 2002A Amendment, the 2003A Amendment and the 2003B Amendment, (v)
Original Mortgage as amended by the by the 2002A Amendment, the 2003A Amendment
and the 2003B Amendment, (vi) NTCLP Trademark Assignment as amended by the 2002A
Amendment, the 2003A Amendment and the 2003B Amendment, (vii) NAOC Trademark
Assignment as amended by the 2002A Amendment, the 2003A Amendment and the 2003B
Amendment and (viii) Class B Term Notes evidencing the Class B Term Loans, are
collectively referred to herein as the "Loan Documents" and the Loan Documents
to which the Class B Lenders are parties are collectively referred to herein as
the "Class B Loan Documents".
L. The Agent Bank, the existing Banks, the Class B Loan Agent and the
Class B Lenders hereby desire to set forth the respective rights and obligations
each has as against the other with respect to the Borrower and the Subsidiaries.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS.
(a) Incorporation of Definitions from the Loan Agreement. Capitalized
terms not otherwise defined in this Agreement that are defined in the Loan
Agreement are used herein with the meanings ascribed to such terms therein.
(b) Additional Defined Terms. As used in this Agreement, the
following terms have the meanings set forth below:
"OBLIGATIONS" means the Revolving Credit Loans, all Letters of Credit
issued under the Letter of Credit Subfacility all interest accruing thereon
(including any interest accruing thereon after maturity or after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower or the Subsidiaries,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) and all fees, costs and expenses (whether internal or external)
and other amounts payable in respect thereof by the Borrower or the Subsidiaries
under the Loan Documents, any obligations, contingent or otherwise, now existing
or after arising, to Bank One, Bank One Corporation or any of their affiliates,
under any interest or currency swap, future, option or other interest rate
protection or similar agreement, or arising out of overdrafts on deposit or
other accounts or electronic fund transfers, and any amendments, extensions,
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renewals or increases and all reasonable costs and expenses of Bank One incurred
in the documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including reasonable
attorneys' fees and expenses; provided that (i) the Obligations shall not
include principal amounts of indebtedness exceeding Twenty Million Dollars
($20,000,000) in the aggregate or (ii) interest on indebtedness accruing at a
rate in excess of the rates provided for in the Loan Agreement.
"CLASS B LOAN AGENT" means the Person serving as Class B Loan Agent
from time to time under the Loan Agreement.
"COLLATERAL" means any collateral now or in the future securing the
Obligations, including but not limited to claims against any guarantors of the
Obligations and any collateral securing such guarantees. The Collateral includes
all personal property of the Borrower and the Subsidiaries, real property owned
by NTCLP and trademarks of NTCLP and NAOC.
'JUNIOR TRIGGER EVENT" means (i) the failure of the Borrower or any
Subsidiary to make any payment in respect of the Subordinated Debt when due (for
so long as such default remains uncured) or (ii) the occurrence and continuance
of any other event of default under Class B Loan Documents in respect of the
Subordinated Debt (for so long as such event of default remains uncured)
pursuant to which the maturity of the Class B Loans has been accelerated in
accordance with the applicable provisions of the Loan Agreement.
'SENIOR TRIGGER EVENT" means (i) the failure of the Borrower or any
Subsidiary to pay any of the Obligations when due (for so long as such default
remains uncured) (ii) the occurrence of an Event of Default under the Loan
Documents arising from a violation of Section 8.6 of the Loan Agreement and the
sending of notice of such default to Borrower, with a copy to the Class B Loan
Agent, or (iii) the occurrence and continuance of any other event of default
under the Loan Documents in respect of the Obligations (for so long as such
event of default remains uncured) pursuant to which the maturity of the
Revolving Credit Loans has been accelerated in accordance with the applicable
provisions of the Loan Agreement.
"SUBORDINATED DEBT" means the Class B Term Loans, all interest
accruing thereon and all fees, costs, expenses and other amounts payable in
respect thereof by the Borrower or the Subsidiaries under the Loan Documents and
any amendments, extensions, renewals or increases.
2. SUBORDINATION.
(a) Subject to Section 3 hereof, the Class B Lenders hereby
irrevocably subordinate and postpone the payment and the time of payment of all
the Subordinated Debt and all claims and demands arising therefrom to the
Obligations and direct that the Obligations be paid in full before the
Subordinated Debt.
(b) Class B Lenders shall: (i) make notations on the books of the
Class B Lenders beside all accounts or on such other statements evidencing or
recording any Subordinated Debt to the effect that such Subordinated Debt is
subject to the provisions of this Agreement, (ii) furnish Bank One, upon Bank
One's request from time to time, a statement of the account between such Class B
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Lenders and the Borrower representing the Subordinated Debt and copies of each
of the Class B Loan Documents, and (iii) give Bank One, upon its request, full
and free access to the Class B Lenders' books pertaining only to such accounts
with the right to make copies thereof. Each and every Class B Loan Document
shall bear a legend as set forth in paragraph 13(c) hereof.
3. PAYMENTS TO CLASS B LENDERS. Notwithstanding any other provision
of this Agreement and/or any other Loan Document, the Borrower shall be entitled
to pay and the Class B Lenders shall be entitled to receive, so long as no
Senior Trigger Event has occurred and is continuing, only scheduled payments of
interest (at the current rate set forth in the Class B Loan Documents) under the
Subordinated Debt and fees, costs, expenses and other amounts payable in respect
of the Subordinated Debt under the Class B Loan Documents, but only when due.
Until the Obligations have been repaid in full and the Revolving Loan
Commitments have been terminated, no payments of principal on the Subordinated
Debt shall be permitted or made without Bank One's prior written consent. After
the occurrence of a Senior Trigger Event, the Borrower shall not make, and the
Class B Loan Agent shall not receive, any direct or indirect payments of
principal, interest, fees or expenses under the Subordinated Debt for so long as
such Senior Trigger Event remains in effect.
4. SECURITY. The Borrower and the Subsidiaries have granted to the
Agent Bank, on behalf of the Banks and the Class B Lenders, a security interest
in all of the Collateral. The Class B Lenders acknowledge that Bank One has a
first priority lien on all of the Collateral and the right to be paid in full
all of the Obligations from the sale of the Collateral before the Class B
Lenders are entitled to receive the first $1.00 from the sale of such
Collateral. The Class B Lenders further acknowledge that their rights with
respect to the Collateral are subordinate and junior to the rights of Bank One.
Except as set forth in this Section 4, Borrower shall not grant and the Class B
Lenders shall not take any lien on or security interest in any of the Borrower's
property, now owned or hereafter acquired or created, without the prior written
consent of Bank One.
5. STANDBY LIMITATION. Notwithstanding any breach or default by the
Borrower under the Class B Loan Documents, the Class B Lenders shall not at any
time or in any manner: foreclose upon, take possession of, or attempt to realize
on any Collateral, or proceed in any way to enforce any claims they have or may
have against the Borrower under the Subordinated Debt or otherwise unless and
until the Obligations have been fully and indefeasibly paid and satisfied in
full; provided that (i) the Class B Lenders may enforce their claims in respect
of any payment permitted under Section 3 so long as no Senior Trigger Event has
occurred and is continuing and (ii) if (x) a Senior Trigger Event has occurred
or (y) a Junior Trigger Event has occurred and the Class B Lenders give notice
thereof to Bank One, unless the Agent Bank commences an action against the
Borrower and/or its Subsidiaries to enforce its claims under the Loan Documents
within nine (9) months thereafter and continues to prosecute such action with
reasonable diligence, the Class B Lenders may proceed to enforce their claims
against the Borrower and the Subsidiaries, subject to all of the provisions of
this Agreement, including but not limited to, Section 7 hereof. The Agent Bank
shall promptly give the Class B Loan Agent a copy of any notice of any Default
or Event of Default occurring under the Loan Documents which the Agent Bank
actually gives to the Borrower.
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6. BANKRUPTCY/PROBATE OF BORROWER. In the event a petition or action
for relief shall be filed by or against the Borrower under any federal
bankruptcy statute in effect from time to time, or under any other law relating
to bankruptcy, insolvency, reorganization, receivership, general assignment for
the benefit of Class B Lenders, moratorium, Class B Lenders composition,
arrangement or other relief for debtors, Bank One's claim (secured or unsecured)
against the assets or estate of the Borrower for repayment of the Obligations
shall be indefeasibly paid in full before any payment is made to the Class B
Lenders on the Subordinated Debt, whether such payment is in cash, securities or
any other form of property or rights. Bank One may, in its reasonable
discretion, following not less than 10 Business Days prior written notice to the
Class B Loan Agent of its intention with respect thereto, file a proof of claim
for or collect the Class B Lenders' claims first for the benefit of Bank One to
the extent of the unpaid Obligations and then for the benefit of (but without
creating any duty or liability to the Class B Lenders other than to remit to the
Class B Lenders distributions, if any, actually received in such proceedings
after the Obligations have been paid and satisfied in full) the Class B Lenders
directly from the receiver, trustee, custodian, liquidator or representative of
the Borrower's estate in such proceeding. The Borrower and the Class B Lenders
shall furnish all assignments, powers or other documents requested by Bank One
to facilitate such direct collection by Bank One.
7. RECEIPT OF PAYMENTS BY CLASS B LENDERS. Should the Class B Lenders
directly or indirectly receive any payment or distribution not permitted by the
provisions of this Agreement or any Collateral or proceeds thereof, prior to the
full and indefeasible payment and satisfaction of the Obligations and the
termination of the Revolving Credit Facility, the Class B Lenders will deliver
the same to Bank One in the form received (except for the endorsement or
assignment of the Class B Lenders where necessary), for application to the
Obligations (i) so long as no Event of Default under the Loan Documents is then
in existence, in such order and manner as the Borrower may elect, and (ii) if an
Event of Default under the Loan Documents is then in existence, in such order
and manner as Bank One may elect. Until so delivered, the Class B Lenders shall
hold the same, in trust, for Bank One as property of Bank One, and shall not
commingle such property of Bank One with any other property held by the Class B
Lenders. In the event any Class B Lender fails to make any such endorsement or
assignment, Bank One, or any of its officers or employees on behalf of Bank One,
is hereby irrevocably authorized in its own name or in the name of such Class B
Lender to make such endorsement or assignment and is hereby irrevocably
appointed as such Class B Lender's attorney-in-fact for those purposes.
8. BANK ONE'S RIGHTS.
a) The Class B Lenders hereby consent that at any time and from time
to time, without further consent of or notice to the Class B Lenders and without
in any manner affecting, impairing, lessening or releasing any of the provisions
of this Agreement, Bank One may, in its sole discretion: (i) renew, compromise,
extend, expand, postpone, waive, accelerate, terminate, change the payment terms
of, or otherwise modify the Obligations (subject to the proviso in the
definition of Obligations) or amend, renew, replace or terminate the Loan
Documents (other than the Class B Loan Documents) or any and all other
agreements now or hereafter related to the Obligations; (ii) extend credit to
the Borrower in whatever amount on a secured or unsecured basis or take other
support for the Obligations and exchange, enforce, waive, sell, transfer,
collect, adjust or release any such security or other support or any part
thereof; (iii) so long as no Event of Default under the Loan Documents is then
in existence, apply any and all payments or proceeds of such security or other
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support and in any order or manner as Borrower, in its discretion, may determine
and if an Event of Default under the Loan Documents is then in existence, apply
any and all payments or proceeds of such security or other support and in any
order or manner as Bank One, in its discretion, may determine; and (iv) release
or substitute any party liable on the Obligations, any guarantor of the
Obligations, or any other party providing support for the Obligations.
b) This Agreement will not be affected, impaired or released by any
delay or failure of Bank One to exercise any of its rights and remedies against
the Borrower or any guarantor or under any of the Obligations or against any
Collateral, by any failure of Bank One to take steps to perfect or maintain its
lien on, or to preserve any rights to, any Collateral by any irregularity,
unenforceability or invalidity of any of the Obligations or any part thereof or
any security or guarantee therefor, or by any other event or circumstance which
otherwise might constitute a defense available to, or a discharge of, the
Borrower or a subordinated creditor. The Class B Lenders hereby waive demand,
presentment for performance, protest, notice of dishonor and of protest with
respect to the Subordinated Debt and the Collateral, notice of acceptance of
this Agreement, notice of the making of any of the Obligations and notice of
default under any of the Obligations.
c) Nothing in this Agreement will obligate Bank One to grant credit
to, or continue financing arrangements with, the Borrower.
9. CONTINUING AGREEMENT. This is a continuing agreement and will
remain in full force and effect until all of the Obligations and all of the
Class B Lenders obligations and undertakings to Bank One hereunder have been
fully performed and indefeasibly satisfied and until all the Loan Documents
(other than the Class B Loan Documents) have been terminated. This Agreement
will continue to be effective or will be automatically reinstated, as the case
may be, if at any time payment of all or any part of the Obligations is
rescinded or must otherwise be returned by Bank One upon insolvency, bankruptcy,
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.
10. NO CHALLENGE TO LIENS. The Class B Lenders agree that they will
not make any assertion, claim or argument in any action, suit or proceeding of
any nature whatsoever in any way challenging the priority, validity or
effectiveness of the liens and security interests granted to Bank One.
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11. DISPOSITION OR RELEASE OF COLLATERAL.
a) If at any time or from time to time (i) the Collateral, or any
portion thereof, is proposed in any manner to be sold or otherwise transferred,
(ii) the Borrower is not in default under the Loan Agreement but the consent of
the Agent Bank is required for such sale to occur under the Loan Agreement or an
Event of Default has occurred under the Loan Agreement and the Agent Bank
proposes to sell collateral, or any portion thereof, as a secured creditor under
Article 9 of the Uniform Commercial Code; and (iii) the Agent Bank shall have
given the Class B Loan Agent and the Borrower not less than 10 Business Days
prior notice of the sale or transfer, the Class B Lenders shall be deemed to
have consented to such disposition if Bank One, in its sole discretion and for
any reason, consents to such disposition, and in any event the Class B Lenders
shall not be entitled to receive any proceeds (cash or non-cash) of such
disposition unless and until the Obligations have been indefeasibly paid in
full.
b) If at any time or from time to time (i) the liens of the Banks
(including the Class B Lenders) on the Collateral or any portion thereof are
proposed to be released, (ii) and the consent of the Agent Bank is required for
release to occur; and (iii) the Agent Bank shall have given the Class B Loan
Agent and the Borrower not less than 10 Business Days prior notice of the
proposed release of lien, the Class B Lenders shall be deemed to have consented
to such release if the Agent Bank, in its sole discretion and for any reason,
consents to such release; provided that the Agent Bank's consent to such release
does not constitute gross negligence in the exercise of its duties as Agent
Bank.
12. ORDER OF PROCEEDINGS. Nothing in this Agreement is intended to
compel Bank One or the Class B Lenders at any time to declare the Borrower in
default or compel Bank One to proceed against or refrain from proceeding against
any Collateral in any order or manner. All rights and remedies of Bank One with
respect to the Collateral, the Borrower, and any other obligors concerning the
Obligations are cumulative and not alternative.
13. ASSIGNMENT OF OBLIGATIONS OR SUBORDINATED DEBT.
a) The provisions hereof shall inure to the benefit of any assignee
to which any of the Obligations are assigned.
b) Each Class B Lender agrees that as a prior condition of any
assignment of any of its interests in the Subordinated Debt, such Class B Lender
shall require the assignee to acknowledge this Agreement and agree, in writing,
to be bound by the terms and conditions hereof.
(c) Each and every Class B Loan Document shall bear the following
legend, or a similar legend acceptable to Bank One, in boldface type:
THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT
IN FAVOR OF BANK ONE, NA. NOTWITHSTANDING ANY CONTRARY STATEMENT
CONTAINED IN THE WITHIN INSTRUMENT, NO PAYMENT ON ACCOUNT OF ANY
OBLIGATION ARISING FROM OR IN CONNECTION WITH THE WITHIN INSTRUMENT OR
ANY RELATED AGREEMENT (WHETHER OF PRINCIPAL, INTEREST OR OTHERWISE)
SHALL BE MADE, PAID, RECEIVED OR ACCEPTED EXCEPT IN ACCORDANCE WITH
THE TERMS OF SAID SUBORDINATION AGREEMENT.
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14. SUBROGATION. Subject to the prior payment in full of all of the
Obligations, and to the extent that Bank One has received payment from the Class
B Lenders with respect to obligations of the Borrower under Section 7 of this
Agreement, or has received distributions otherwise payable to the Class B
Lenders pursuant to Section 6 of this Agreement, the Class B Lenders shall be
subrogated to the rights of Bank One (or its successors or assigns) to receive
payments or distributions of assets of the Borrower or its Subsidiaries made in
respect of the Obligations until the Subordinated Debt has been paid in full;
and, for the purposes of such subrogation, no payments or distributions to
holders of the Obligations of any cash, property or securities to which the
Class B Lenders would be entitled in respect of the Subordinated Debt except for
the provisions of this Agreement and no payment by the Class B Lenders over to
the holders of the Obligations pursuant to this Agreement shall, as between the
Borrower and its Subsidiaries, their respective creditors other than the holders
of the Obligations and the Class B Lenders, be deemed to be a payment by the
Borrower or its Subsidiaries to or on account of the Obligations, it being
understood that the provisions of this Agreement are and are intended solely for
the purposes of defining the relative rights of the holders of the Obligations,
on the one hand, and the Class B Lenders, on the other hand. Without limiting
any other restrictions in this Agreement on enforcement of rights of Class B
Lenders, until the full and indefeasible payment of the Obligations, the rights
of the Class B Lenders and the Class B Loan Agent to enforce any rights of
subrogation shall be Subordinated Debt and shall be subject to Section 2 and 3
through 27 of this Agreement.
15. FINANCING OF FIDUCIARY. In the event of a bankruptcy,
reorganization, other insolvency or court proceeding commences in respect of the
Borrower, Bank One shall have the option (in its sole and absolute discretion)
to continue to provide financing (on terms acceptable to Bank One) of the
trustee, other fiduciary, or of the Borrower as a debtor-in-possession, if Bank
One deems such financing to be in its best interests, and such financing shall
be deemed to be part of the Obligation for the purposes hereof, subject to the
proviso in the definition of Obligations limiting the amount thereof. The
subordination and lien priority provisions of this Agreement shall continue to
apply to all advances made during the pendency of such court proceedings thus
constituting part of the Obligations, so that Bank One shall have a prior lien
on all Collateral, created before or during such court proceeding, to secure all
such Obligations, whether created before or during such court proceeding.
16. INVESTIGATION OF PARTIES. The Class B Lenders have entered into
the Class B Loan Documents with the Borrower and its Subsidiaries, and Bank One
has entered into the Loan Documents with the Borrower and its Subsidiaries and
the Class B Lenders and Bank One have entered into this Agreement each upon its
own independent investigation, and each makes no warranty or representation as
to each other with respect to the financial condition of the Borrower and its
Subsidiaries, or its ability to repay its loans to the Class B Lenders or Bank
One in the future. Nothing in this Agreement shall be deemed to constitute this
Agreement as a security or create a joint venture or partnership between the
Class B Lenders and Bank One for any purpose.
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17. IMPROPER ACTION BY CLASS B LENDERS. If the Class B Lenders,
the Borrower or both, contrary to this Agreement, make, attempt to or threaten
to allow the Class B Lenders to exercise their remedies against the Borrower
under the Class B Loan Documents in a manner not permitted under this Agreement,
to or make any payment or take any other action contrary to this Agreement, Bank
One may restrain or enjoin the Class B Lenders and the Borrower from so doing,
it being expressly understood and agreed by the Class B Lenders and the Borrower
that: (i) Bank One's damages from their actions may at that time be difficult to
ascertain and may be irreparable, and (ii) the Class B Lenders and the Borrower
waive any defense or claim that Bank One or the Borrower cannot demonstrate
damages or can be made whole by the awarding of damages.
18. NOTICES. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder must be in writing and
will be effective upon receipt. Such notices and other communications may be
hand-delivered, sent by facsimile transmission with confirmation of delivery
with a copy sent by first-class mail, or sent by nationally recognized overnight
courier service, to a party's address set forth below or to such other address
as any party may give to the other in writing for such purpose:
To Bank One: Bank One, NA
000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Facsimile No.: Fax: (000) 000-0000
To the Class B Lenders: Upper Columbia Capital Company, LLC
c/o Guggenheim Investment Management, LLC
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Leveraged Credit
Facsimile No.: (000) 000-0000
To the Borrower
And the Subsidiaries: North Atlantic Trading Company, Inc.
000 Xxxx Xxxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
19. PRESERVATION OF RIGHTS. No delay or omission on Bank One's part
to exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will Bank One's
action or inaction impair any such right or power. Bank One's rights and
remedies hereunder are cumulative and not exclusive of any other rights or
remedies that Bank One may have under other agreements, at law or in equity.
Nothing in this Agreement is intended to modify, alter, reduce or impair any
rights which Bank One or the Class B Lenders may have against the Borrower or
each other under the Loan Documents or under any other agreement between them,
or between either of them and the Borrower.
10
20. ILLEGALITY. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. CHANGES IN WRITING. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower or the
Class B Lenders therefrom, will be effective against Bank One unless made in a
writing and signed by Bank One, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given
(except that no amendment, modification or waiver of any obligation or right of
the Borrower hereunder or under the Loan Agreement shall be made without the
written consent of the Borrower. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower or Bank
One therefrom, will be effective against the Class B Lenders unless made in a
writing and signed by a majority of the Class B Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
22. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
23. COUNTERPARTS. This Agreement may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart.
Any party so executing this Agreement by facsimile transmission shall promptly
deliver a manually executed counterpart, provided that any failure to do so
shall not affect the validity of the counterpart executed by facsimile
transmission.
24. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the Borrower, the Class B Lenders and Bank One and their
respective heirs, executors, administrators, successors and assigns; provided,
however, that (a) the Borrower may not assign this Agreement in whole or in part
without the prior written consent of Bank One and a majority of the Class B
Lenders, (b) the Class B Lenders may not assign this Agreement except in
connection with an assignment of Subordinated Debt permitted hereunder and Bank
One may not assign this Agreement except in connection with an assignment of the
Obligations in whole or in part No claims or rights are intended to be created
hereunder for the benefit of the Borrower or any alleged third party beneficiary
hereof.
25. INTERPRETATION. In this Agreement, unless the parties otherwise
agree in writing, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; the word "or" shall be
deemed to include "and/or", the words "including", "includes" and "include"
shall be deemed to be followed by the words "without limitation"; references to
articles, sections (or subdivisions of sections) or exhibits are to those of
this Agreement unless otherwise indicated; and references to agreements and
other contractual instruments shall be deemed to include all subsequent
amendments and other modifications to such instruments, but only to the extent
such amendments and other modifications are not prohibited by the terms of this
Agreement. Section headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose. If this Agreement is executed by more than one party as Borrower, the
obligations of such persons or entities hereunder will be joint and several.
11
26. GOVERNING LAW AND JURISDICTION. This Agreement has been delivered
to and accepted by Bank One and will be deemed to be made in the State where
Bank One's office indicated above is located. THIS AGREEMENT WILL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. Each of the Borrower and the Class B
Lenders hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court in the County of New York, New York; provided that nothing
contained in this Agreement will prevent Bank One from bringing any action,
enforcing any award or judgment or exercising any rights against the Borrower or
the Class B Lenders individually, against any security or against any property
of the Borrower within any other county, state or other foreign or domestic
jurisdiction. The parties hereto agree that the venue provided above is the most
convenient forum for each of the parties. Each of the Borrower and the Class B
Lenders waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.
27. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE SUBSIDIARIES THE
CLASS B LENDERS AND BANK ONE IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO
THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER, THE
SUBSIDIARIES, THE CLASS B LENDERS AND BANK ONE ACKNOWLEDGE THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.
28. NO THIRD PARTY BENEFICIARY RIGHTS. Neither the Borrower nor any
of its Subsidiaries is an intended third party beneficiary of this Agreement;
and none of them shall have any rights under and/or in respect of this
Agreement.
29. AMENDMENT AND RESTATEMENT OF ORIGINAL SUBORDINATION AGREEMENT.
This Agreement is executed and delivered in amendment, restatement and
replacement of, but not in novation of, the Original Subordination Agreement.
All of the Class B Term Lenders agree that any reference in the Class B Term
Notes dated July 31, 2003 to either the "Subordination Agreement dated as of
July 31, 2003" or the "Subordination Agreement" shall be deemed to be a
reference to this Agreement.
12
WITNESS the due execution hereof as a document under seal, as of the date
first written above.
BANK ONE, NA, as Agent Bank
("the Agent Bank")
/s/ Xxxxxx Xxxxxxx
----------------------------------------------
By: Xxxxxx Xxxxxxx, Senior Vice President
BANK ONE, NA
as a Bank (a "Bank")
/s/ Xxxxxx Xxxxxxx
----------------------------------------------
By: Xxxxxx Xxxxxxx, Senior Vice President
13
GUGGENHEIM INVESTMENT MANAGEMENT, LLC,
as Class B Loan Agent (the "Class B Loan
Agent")
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx, Managing Director
UPPER COLUMBIA CAPITAL COMPANY, LLC, as a
Class B Lender (a "Class B Lender")
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx, Manager
1888 FUND, LTD., as a Class B Lender
(a "Class B Lender")
By: Guggenheim Investment Management, LLC,
as Collateral Manager
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx, Managing Director
MAGMA CDO, LTD., as a Class B Lender
(a "Class B Lender")
By: Guggenheim Investment Management, LLC,
as Advisor
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx, Managing Director
14
XXXXXXX CDO L.P., as a Class B Lender
(a "Class B Lender")
By: Guggenheim Investment Management, LLC, as
Advisor
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------
Xxxx X. Xxxxxx, Managing Director
STELLAR FUNDING, LTD., as a Class B Loan Lender
(a "Class B Lender")
By: Guggenheim Investment
Management, LLC, as Manager
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------
Xxxx X. Xxxxxx, Managing Director
15
NORTH ATLANTIC TRADING COMPANY, INC., as the
Borrower
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxx, President and Chief
Financial Officer
NATIONAL TOBACCO COMPANY, L.P., as a
Subsidiary
By NATIONAL TOBACCO FINANCE CORPORATION
as its general partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer
NORTH ATLANTIC OPERATING COMPANY, INC. as a
Subsidiary
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer
NATIONAL TOBACCO FINANCE CORPORATION as a
Subsidiary
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer
16
XXXXXX, INC. as a Subsidiary
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer
RBJ SALES, INC. as a Subsidiary
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer
XXXX XXXXXX & SONS, INC. as a Subsidiary
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Xxxxx X. Xxxxxxx, Executive Vice President
and Chief Financial Officer
17
