EXHIBIT 10.61
SUBORDINATION AGREEMENT
Dated February 27, 2003
OLD NATIONAL BANK, a national banking association ("Lender"), and
XXXXXXX XXXXXXX AND XXXXXXXX X. XXXXXXX (collectively, "Junior Creditor"), each
of which are creditors of SYNDICATED FOOD SERVICE INTERNATIONAL, INC.
("Company"), agree to the following:
1. Company is indebted to Junior Creditor in the principal amount
of $1,266,420.00, together with accrued interest under a Promissory Note dated
December 31, 2001 and may be indebted to Junior Creditor for other and further
loans and advances in the future (all of which are referred to as the "Junior
Indebtedness"). Nothing in this Agreement is intended to permit nor does it
permit or allow any further loans or advances by Junior Creditor to Company or
Borrower (as hereinafter defined) without the prior written consent of Lender.
In addition, nothing in this Agreement is intended to permit nor does it permit
or allow any further grant of security in favor of Junior Creditor without the
prior written consent of Lender.
2. Junior Creditor represents that the Junior Indebtedness has
not been previously assigned to or subordinated in favor of any other person or
entity, and that Company has made all interest and principal payments, except as
described in the disclosure letter dated as of the date hereof, due to date.
3. Junior Creditor is entering into this Agreement;
(a) to induce Lender to enter into (i) a Credit Agreement dated as
of even date and any other related agreements with XXXXXXX FOOD SERVICE, INC.
("BFS") and (ii) a Mortgage Loan Note as of even date with and any other related
agreements WITH SYNDICATED BLOOMINGTON I LLC ("SB") (BFS and SB collectively,
"Borrower"), which financial accommodations are or are to be unconditionally
guaranteed by Company (the credit and collateral documents evidencing Borrower's
and Company's obligations and indebtedness to Lender collectively referred to as
"Credit Agreements"); and
(b) in consideration of loans, advances, payments, extensions of
credit (including the extension or renewal, in whole or in part, of any debt),
benefits or financial accommodations previously made to Company and Borrower or
which may be made to Company and Borrower; and/or
(c) in consideration of any of Company's and Borrower's
obligations to Lender, now existing or arising in the future.
4. The Junior Indebtedness is hereby subordinated to the extent
provided in this Agreement to any present or future indebtedness, obligations or
liabilities of Borrower and Company (and, in addition, of Borrower and/or
Company as a Debtor-in-Possession under any bankruptcy act or code, state or
federal law, common law or equitable doctrine and of any trustee, receiver or
other party appointed for Company under any such laws, doctrine or proceedings)
to Lender, including interest accrued or to be accrued, absolute or contingent
obligations and obligations acquired by purchase or otherwise as well as all
reasonable collection costs and attorneys fees incurred by Lender in enforcing
its rights against Company and Borrower to the extent such indebtedness and
obligations do not, in the aggregate exceed Four Million and No/100 Dollars
($4,000,000.00) (collectively, "Obligations").
5. Except for the security interest granted by Xxxxxxx
Transportation, Inc. to Junior Creditor described in Schedule I attached hereto
and incorporated herein which Lender expressly agrees is senior to any rights
Lender may assert in and to the collateral described in Schedule I, Junior
Creditor hereby expressly and unconditionally subordinates to Lender any and all
right, title, liens, security interests and mortgages which Junior Creditor may
presently have or which it may hereafter acquire from Borrower and Company in
property of the Borrower and Company, respectively, whether now owned or
hereafter created or acquired and wherever located. Any rights or claims of
Junior Creditor to reasonable and customary compensation for services rendered
pursuant to an Employment Agreement with Borrower or the Company are not subject
to or covered by this Subordination Agreement. Junior Creditor agrees that all
liens, security interests and mortgages granted by Borrower or Company in favor
of any Junior Creditor in property of the Borrower and the Company are and shall
be junior in right of priority to and subordinate to any and all liens, security
interests and mortgages Lender, its successors or assigns have or may have in
the same property. The priorities provided for in this Agreement shall apply:
(a) without regard to the time or order of attachment, perfection,
filing or recording of the mortgages, security interests and other liens to
secure the obligations of the Borrower and the Company, or the failure to give
notice of the acquisition or expected acquisition of any such mortgage, security
interest or lien;
(b) notwithstanding anything to the contrary in the provisions of
the United States Bankruptcy Code or the Uniform Commercial Code in any relevant
state of the United States or the laws of the State of Indiana or any other
relevant state, which relate to the priority of liens, security interests or
mortgages;
(c) with respect to all obligations of the Borrower and the
Company to Junior Creditor, and of the Borrower and the Company to the Lender,
whenever made, created or acquired; and
(d) notwithstanding the lapse of perfection of Lender's liens or
security interests or Lender's failure to perfect its liens or security
interests.
Junior Creditor also agrees to execute any other documents or financing
statements reasonably required by Lender to effectuate the terms and provisions
of this Agreement.
6. Unless (a) Borrower defaults under the Credit Agreements, (b)
Company defaults in its guaranty or other obligations to Lender, or (c) unless
an event occurs which, with the passage of time or with notice, would become an
event of default under the Credit Agreements and Lender gives notice of the same
to Junior Creditor, Junior Creditor may receive payments from Company on account
of the Junior Indebtedness. However, upon receipt of such notice of
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default, Junior Creditor agrees, for a period of One Hundred Eighty (180) days
following Junior Creditor's receipt of such notice of default from Lender
("Standstill Period"), not to ask for, demand, xxx for, take or receive payment,
whether by setoff or otherwise, on account of the Junior Indebtedness or take or
receive security for any part of the Indebtedness, unless (i) prior to the
expiration of such Standstill Period all Obligations to Lender have been fully
paid to Lender; (ii) Lender provides written notice to Junior Creditor that all
events of default under the Credit Agreements have been cured; or (iii) Lender
waives its rights in writing under this Subordination Agreement. Any payments
received by Junior Creditor on account of the Junior Indebtedness after
receiving such notice from Lender will be held by Junior Creditor in trust for
Lender and will be immediately turned over to Lender to be credited against the
Obligations. Any payments received associated with the Junior Indebtedness prior
to receipt of notice of default from Lender may be retained by Junior Creditor
and applied to the Junior Indebtedness.
7. At all times Obligations are owing to Lender, Junior Creditor
agrees that it will not accept prepayments of the Junior Indebtedness or any
payments on the Junior Indebtedness other than payments in accordance with the
original terms of the Junior Indebtedness, without acceleration.
8. If Company defaults on the Junior Indebtedness, the Junior
Creditor shall give Lender written notice of the default. Junior Creditor shall
have no right to foreclose or otherwise realize on any security or collect the
Junior Indebtedness except pursuant to the terms and limitations contained in
Section 6 hereof.
9. Upon any distribution of any of Company's assets, whether by
reason of sale, reorganization, liquidation, dissolution, arrangement,
bankruptcy, receivership, assignment for the benefit of creditors, foreclosure
or otherwise, Lender shall be entitled to receive payment in full of the
Obligations prior to the payment of all or any part of the Junior Indebtedness,
except that Junior Creditor may realize upon the collateral pledged by Xxxxxxx
Transportation, Inc. to Junior Creditor which secures repayment of the Junior
Indebtedness, subject to the provisions and limitations as set forth in Section
6 hereof. To enable Lender to assert and enforce its rights under this Agreement
or upon any default under the Credit Agreements, Lender or any person Lender may
designate by written notice to Junior Creditor is appointed agent and
attorney-in-fact for Junior Creditor. This appointment is coupled with an
interest and is irrevocable so long as any Obligations remain unpaid. Lender or
any person it may designate by written notice to Junior Creditor will have full
power to act in the place of Junior Creditor, including the right to make,
present, file and vote proofs of claim(s) against Borrower and/or Company on
account of any part of the Junior Indebtedness as Lender may deem advisable and
to receive and collect any and all dividends or other payments made on the
Junior Indebtedness, and to apply such funds to the balance due on the
Obligations.
10. While this Agreement remains in effect, Junior Creditor will
not, without Lender's prior written consent, (a) assign or subordinate in favor
of any other person or entity, any part of the Junior Indebtedness or any right,
claim or interest in the Junior Indebtedness, or (b) commence or join with any
other creditor in commencing any bankruptcy, reorganization or insolvency
proceeding against Company in violation of the restrictions contained in Section
6 hereof.
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11. Lender may at any time, in its sole discretion, renew or
extend the time of payment of any part of the Obligations, waive or release any
collateral that may be held as security, and enter into any agreements with
Borrower and Company which Lender may deem desirable, without notice to or
further assent from Junior Creditor and without in any way affecting Lender's
rights under this Agreement, except that Junior Creditor shall be entitled to
receive written notice of any default that Lender has declared against Borrower.
12. Junior Creditor will type, write or otherwise conspicuously
imprint on each note, document or other instrument evidencing or related to the
Junior Indebtedness the following legend:
RIGHTS OF THE HOLDER UNDER THIS NOTE ARE SUBJECT AND
SUBORDINATE TO THE PRIOR PAYMENT OF THE OBLIGATIONS OF THE
MAKER TO OLD NATIONAL BANK PURSUANT TO THE TERMS OF A
SUBORDINATION AGREEMENT AS OF FEBRUARY 27,2003.
13. This Agreement shall remain in effect and shall be a
continuing subordination until all the Obligations (as defined and limited by
the definition of Obligations contained herein) to Lender from Borrower and
Company are paid in full.
14. Junior Creditor agrees that if at any time Borrower's or
Company's payment or payments to Lender or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, rescinded
and/or required to be repaid by Lender to a trustee, receiver or any other party
under any bankruptcy act or code, state or federal law, common law or equitable
doctrine, then to the extent of any sum not finally retained by Lender, the
Junior Creditor's obligations to Lender shall be reinstated and this Agreement
shall remain in full force and effect (or be reinstated) until full and final
payment shall have been made to Lender. If any action or proceeding seeking such
repayment is pending or, in Lender's judgment, threatened, this Agreement shall
remain in full force and effect notwithstanding that Borrower and Company may
not then be obligated to Lender. Junior Creditor agrees to hold in trust for
Lender and promptly remit to Lender any payments received by Junior Creditor
after such invalidated, rescinded or returned payments, above-described, were
originally made.
15. Junior Creditor, on its own behalf and on behalf of its
successors and permitted assigns, hereby expressly waives all rights, if any, to
require a marshalling of assets by Lender or to require that Lender first resort
to some or any portion of any collateral securing Borrower's and Company's
obligations to Lender before foreclosing upon, selling or otherwise realizing on
any other portion thereof.
16. This Agreement shall inure to the benefit of Lender, its
parent, subsidiary or affiliated corporation(s), and any of Lender's successors
and assigns, and shall be binding on Junior Creditor, and Junior Creditor's
heirs, executors, administrators, personal representatives, successors and
assigns.
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17. In the event that there is an express conflict between the
terms and provisions of the Credit Agreements and of this Agreement, the terms
and conditions of this Agreement shall govern and control. In the event that
there is an express conflict between the terms and provisions of the agreements
between Junior Creditor and Company relating to the Junior Indebtedness and of
this Agreement, the terms and conditions of this Agreement shall govern and
control.
18. All notices, demands, or requests, and responses thereto,
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been properly given or served and shall be effective
upon being deposited in the United States Mail, postpaid and registered or
certified with return receipt requested; provided, however, the time period in
which a response to any notice, demand, or request must be given shall commence
on the date of the receipt of the return receipt of the notice, demand, or
request by the addressee thereof. Rejection or other refusal to accept or
inability to deliver because of changed address of which no notice has been
given shall constitute receipt of the notice, demand, or request sent. Any such
notice shall be addressed as set forth next to the party's signature below or
at such address in the United States as a party may by notice in writing
designate for notice.
19. Except where the context otherwise requires, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter.
20. This Agreement constitutes the entire understanding of Junior
Creditor and Lender regarding the subject matter provided for in this Agreement.
This Agreement may only be modified, amended or supplemented by a writing signed
by both Junior Creditor and Lender.
21. This Agreement shall be governed by and construed according to
the internal laws of the State of Indiana.
[REMAINDER OF THIS PAGE INTENTIONALLY BLANK - SIGNATURE PAGES FOLLOW]
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SIGNATURE OF JUNIOR CREDITOR
/s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxxx X. Xxxxxxx
Address: 0000 Xxxxxx Xxx
Xxxxxxxxxxx, Xxxxxxx 00000
STATE OF INDIANA )
) SS:
COUNTY OF Monroe )
Before me the undersigned, a Notary Public in and for Monroe
County, State of Indiana, personally appeared Xxxxxxx X. Xxxxxxx and Xxxxxxxx X.
Xxxxxxx and acknowledged the execution of the foregoing Subordination Agreement
this 26th day of February, 2003.
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Notary Public
Xxxxxx X. Xxxxxxx
----------------------------------
Printed
My Commission Expires:
3-13-07
My County of Residence:
Monroe
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SIGNATURE OF LENDER
OLD NATIONAL BANK
By: /s/ Xxxxxx X. XxxXxxXxxxx
---------------------------------------------
Xxxxxx X. XxxXxxXxxxx, Vice President
Address: 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
STATE OF INDIANA )
)SS:
COUNTY OF XXXXXX )
Before me the undersigned, a Notary Public in and for Xxxxxxxx
County, State of Indiana, personally appeared Xxxxxx X. XxxXxxXxxxx, the Vice
President of Old National Bank, a national banking association and acknowledged
the execution of the foregoing Subordination Agreement on behalf of such entity
this 27th day of February, 2003.
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Notary Public
____________________________________
Printed
My Commission Expires:
______________________
XXXXXXX X. XXXXX, NOTARY PUBLIC
My County of Residence: [SEAL] My Commission Expires: August 25, 2006
Residing in Xxxxxxxx County
______________________
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ACKNOWLEDGMENT BY COMPANY
The terms and provisions of the foregoing Subordination Agreement
between XXXXXXX X. XXXXXXX AND XXXXXXXX X. XXXXXXX, as Junior Creditor, and OLD
NATIONAL BANK, as Lender, are hereby acknowledged and approved on behalf of the
Company as of the 27th day of February, 2003.
SYNDICATED FOOD SERVICE
INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------------------------
Xxxxxx X. Xxxxx, Xx., Chief Executive Officer
STATE OF INDIANA )
) SS:
COUNTY OF XXXXXX )
Before me the undersigned, a Notary Public in and for Xxxxxxxx
County, State of Indiana, personally appeared Xxxxxx X. Xxxxx, Xx., the Chief
Executive Officer of Syndicated Food Service International, Inc., a Florida
corporation, and acknowledged the execution of the foregoing Subordination
Agreement this 27th day of February, 2003.
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Notary Public
____________________________________
Printed
My Commission Expires:
_______________________
XXXXXXX X. XXXXX, Notary Public
My County of Residence: [SEAL] My Commission Expires: August 28, 2008
Residing in Xxxxxxxx County
______________________
This Instrument Prepared By: Xxxxxxx X. Xxxxx, Attorney-At-Law
Xxxxx XxXxxxx LLP
0000 Xxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
(000) 000-0000
Schedule I: Description of Collateral Securing Junior Indebtedness
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SCHEDULE I TO SUBORDINATION AGREEMENT
DESCRIPTION OF COLLATERAL SECURING JUNIOR INDEBTEDNESS
TRANSPORTATION FLEET
NUMBER
------ GROSS ORIG.
NEW OLD VIN # MAKE YEAR MILES WEIGHT COST COMMENTS
--- --- ----- ---- ---- ----- ------ ---- --------
TRACTORS
----------
109 72 0XXXXXXX0XX000000 International 2000 123152 80,000
113 74 0XXXXXXX0XX000000 International 1999 184927 55,000
115 75 0XXXXXXX0XX000000 International 1999 241985 55,000
117 0XXXXXXX0XX000000 International 1999 52094 55,000
105 0XXXXXXX0XX000000 International 1996 509361 55,000
111 0XXXXXXX0XX000000 International 1996 340509 55,000
101 0XXXXXXXXXX000000 International 1994 387925 55,000
119 85 0XXX0X0X0XX000000 International 1991 679181 55,000
STRAIGHT TRUCKS
---------------
NUMBER
------ GROSS ORIG.
NEW OLD VIN # MAKE YEAR MILES WEIGHT COST COMMENTS
--- --- ----- ---- ---- ----- ------ ---- --------
96 0XXXXXXXXXX000000 International 1996 273872 30,000
76 0XXXXXXX0XX000000 International 1995 398713 30,000
89 0XXXXXXX0XX000000 International 1994 598475 30,000
91 0XXXXXXXXXX000000 International 1994 241088 30,000
94 0XXXXXXX0XX000000 International 1994 416561 30,000
93 106 0XX0XXXXX0X000000 freightliner 1994 283662 30,000
95 102 0XXXXXXX0XX000000 International 1990 487699 30,000
78 0XXXXXXX0XX000000 International 1989 433369 30,000
87 1FDPK74ROKVA37281 Ford 1989 425332 30,000
47 1HTLCCFPOKH605377 International 1989 339168 30,000
86 0XXXXXXX0XX000000 International 1988 544638 30,000
77 0XXXXXXX0XX000000 International 1988 541477 30,000
NUMBER
------ GROSS ORIG.
NEW OLD VIN # MAKE YEAR MILES WEIGHT COST COMMENTS
--- --- ----- ---- ---- ----- ------ ---- --------
SMALL VANS
----------
12 XXXX0X0X0X0000000 Isuzu 1998 26509 16,000
15 1GDGG31W6W10024039 GMC 1998 66550 16,000
16 107 JALC4B1KOV7009274 Isuzu 1997 75791 16,000
17 108 XXXX0X0X0X0000000 Isuzu 1997 69334 16,000
18 92 0XXXX00X0XXX00000 Ford 1992 156575 N/A
TRANSPORTATION FLEET
NUMBER
------ GROSS ORIG.
NEW OLD VIN # MAKE YEAR MILES WEIGHT COST COMMENTS
--- --- ----- ---- ---- ----- ------ ---- --------
TRAILERS
----------
700 901 0XXXX0000XX000000 Great Dane 2000 39,000
702 00XXX0000XX000000 Utility 1988 55,000
704 0XXXX0000XX000000 Utility 1988 55,000
706 703 0XXXX0000XX000000 Utility 1988 55,000
708 109 0XXXX0000XX000000 Great Dane 1988 65,000
710 103 0X0XX0000X0000000 Hercules 1996 40,000
712 104 0X0XX0000X0000000 Hercules 1996 40,000
714 112 0X0XX0000X0000000 Hercules 1999 40,000
716 701 0X0XX000XX0000000 Hercules 1998 40,000
AUTOMOBILES
DESCRIPTION
----------- GROSS ORIG.
DRIVER COLOR VIN # MAKE/MODEL YEAR MILES WEIGHT COST COMMENTS
------ ----- ----- ---------- ---- ----- ------ ---- --------
KW WHT 1GNOM192XNB183116 Xxxxx Xxx 00
XX XXX 0XXXX0000XX000000 Ford Escort XL 95
PB WHT 0XXXX00X0XXX00000 Ford Van 97
DS WHT 0XXXX000XXX000000 Xxxxx Xxx 00
XXX XXX 0XXXX00X0XXX00000 Xxxx AeroStar XLT 97
CB RED 1GCC519XOT8174895 Chevy S10 Truck 96
