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EXHIBIT 10.61
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT is made and entered into as of June 30,
1997, by and between XXXXX FARGO HSBC TRADE BANK, NATIONAL ASSOCIATION ("Bank")
and XXXXXX FINANCIAL, INC. ("Factor"), with reference to the following facts:
R E C I T A L S
WHEREAS, JALATE, LTD. ("Company") and Factor have entered into that
certain Collection Date Factoring Agreement dated June 30, 1997, as amended,
supplemented and modified from time to time (the "Factoring Agreement"), and
that certain Revolving Loan Agreement dated June 30, 1997, ended, supplemented
and modified from time to time (the "Loan Agreement"), the Factoring Agreement
and the Loan Agreement being hereinafter collectively referred to as the "Factor
Financing Agreements");
WHEREAS, Company and Bank have entered into certain financing
arrangements (the "Bank Financing Arrangements");
WHEREAS, as security for the payment and performance of Company's
respective obligations and indebtedness to Bank and Factor, Company has granted
to each of Bank and Factor security interests in certain assets of Company; and
WHEREAS, Bank and Factor desire to confirm their agreement regarding
their respective security interests in certain assets of Company;
NOW, THEREFORE, in consideration of the mutual covenants set forth
below, and other valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
A G R E E M E N T
1. As used in this Agreement, the term "Xxxxxx Collateral" shall mean
all of the following property, whether now owned by Company or hereafter
acquired by or arising in favor of Company:
(a) all accounts, contract rights, documents, notes, drafts,
instruments, and other forms of obligations owed to or owned by Company or
arising or resulting from the sale of goods or the rendering of services by
Company, all general intangibles relating thereto, all proceeds thereof, all
guaranties and security therefor, and all returned, reclaimed and repossessed
goods arising therefrom and all of the rights of an unpaid seller represented
thereby or arising therefrom including, but not limited to, the rights of
stoppage in transit, replevin and reclamation, EXCLUDING, HOWEVER, from coverage
under this subsection "a" all deposit accounts, credit balances, monies and
proceeds of rights to payment due Company under the Factor Financing Agreements
which have been paid to Bank or are in the custody or possession of Bank (such
accounts, balances, monies and rights to payment which have
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been paid at Bank's direction into an account of Customer at another financial
institution are for this purpose deemed to be in the custody or possession of
Bank);
(b) all monies, securities and other property now or hereafter held
or received by, or in transit to Factor from or for Company, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all of
Company's deposits and credit balances in Factor's possession;
(c) all books, records and other property at any time evidencing or
relating to any of the foregoing property;
(d) all proceeds of any of the foregoing property including, without
limitation, the proceeds of any insurance policies covering any of the foregoing
property; and
(e) all proceeds (as that term is defined in Section 9306(1) of the
California Uniform Commercial Code) of Company's inventory to the extent such
proceeds arise from Company's sale of inventory in the ordinary course of
business or are otherwise factored by Factor ("Proceeds").
2. As used in this Agreement, the term "Bank Collateral" shall mean all
of the following property, whether now owned by Company or hereafter acquired by
or arising in favor of Company;
(a) all deposit accounts, credit balances, monies and proceeds of
rights to payment due Company under the Factor Financing Agreements which have
been paid to Bank or are in the custody or possession of Bank;
(b) all imported inventory, goods (including goods held for sale or
lease or to be furnished under a contract of service), merchandise, materials,
raw materials, work in process, finished goods, advertising, packing and
shipping materials, supplies, and all other tangible personal property relating
thereto which is held for sale, and all warehouse receipts and other documents
relating thereto, wherever located, with the exception of returned, reclaimed
and repossessed goods from a sale of inventory in the ordinary course of
business; and
(c) all personal property of Company other than the Xxxxxx
Collateral.
3. Bank hereby subordinates in favor of Factor all right, title and
interest that Bank may now have or hereafter acquire in any of the Xxxxxx
Collateral. Bank agrees that until all obligations and indebtedness now or
hereafter owing by Company to Factor are paid to Factor in full, and the Factor
Financing Agreements have been terminated, the subordination agreed to in this
paragraph shall remain effective, and Bank will not, without Factor's prior
written consent, assert or seek to enforce or apply, by legal proceedings or
otherwise, any security interest or other rights that Bank may now have or
hereafter acquire with respect to the Xxxxxx Collateral; notify any of Company's
customers of Bank's security
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interest in the Xxxxxx Collateral; attempt to collect any Proceeds or any
payments due on the Xxxxxx Collateral or in any manner interfere with Factor's
security interest in the Xxxxxx Collateral.
4. Factor hereby subordinates in favor of Bank all right, title and
interest that Factor may now have or hereafter acquire in any of the Bank
Collateral. Factor agrees that until all obligations and indebtedness now or
hereafter owing by Company to Bank are paid to Bank in full, and the Bank
Financing Arrangements have been terminated, the subordination agreed to in this
paragraph shall remain effective, and Factor will not without Bank's prior
written consent, assert or seek to enforce or apply, by legal proceedings or
otherwise, any security interest or other rights that Factor may now have or
hereafter acquire with respect to the Bank Collateral; notify any of Company's
customers of Factor's security interest in the Bank Collateral; attempt to
collect any Proceeds or any payments due on the Bank Collateral or in any manner
interfere with Bank's security interest in the Bank Collateral.
5. Bank agrees that Factor shall have no direct or indirect obligations
of any kind to Bank with respect to, and Bank waives any right it may have to
direct or affect, the manner or time in which Factor exercises or refrains from
exercising any of its rights or remedies with respect to the Xxxxxx Collateral.
Bank hereby specifically waives and renounces any rights which Bank may have,
whether at law or in equity, to require Factor to marshal the Xxxxxx Collateral,
or any portion thereof, for all or any part of any indebtedness of Company to
Bank or to require Factor to proceed against or exhaust the Xxxxxx Collateral.
In this regard, Bank expressly waives its rights, if any, under the provisions
of California Civil Code Section 3433 or under any other similar provisions of
the laws of any other jurisdiction deemed applicable to this Agreement, and
agrees that Bank shall not derive any benefit therefrom. Until all obligations
and indebtedness now or hereafter owing by Company to Factor are paid to Factor
in full and the Factor Financing Agreements have been terminated, Bank agrees
that Factor may at any time, without Bank's consent and without notice to Bank,
settle, release (by operation of law or otherwise), compromise, collect, sell,
surrender, liquidate or otherwise deal with the Xxxxxx Collateral in any manner.
6. Factor agrees that Bank shall have no direct or indirect obligations
of any kind to Factor with respect to, and Factor waives any right it may have
to direct or affect, the manner or time in which Bank exercises or refrains from
exercising any of its rights or remedies with respect to the Bank Collateral.
Factor hereby specifically waives and renounces any rights which Factor may
have, whether at law or in equity, to require Bank to marshal the Bank
Collateral, or any portion thereof, for all or any part of any indebtedness of
Company to Factor or to require Bank to proceed against or exhaust the Bank
Collateral. In this regard, Factor expressly waives its rights, if any, under
the provisions of California Civil Code Section 3433 or under any other similar
provisions of the laws of any other jurisdiction deemed applicable to this
Agreement, and agrees that Factor shall not derive any benefit therefrom. Until
all obligations and indebtedness now or hereafter owing by Company to Bank are
paid to Bank in full and the Bank Financing Arrangements have been terminated,
Factor agrees that Bank may at any time, without Factor's consent and without
notice to Factor, settle, release (by operation of law or otherwise),
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compromise, collect, sell, surrender, liquidate or otherwise deal with the Bank
Collateral in any manner.
7. Bank represents and warrants to Factor that Bank has not assigned
its security interest or any other interest that Bank has in the Xxxxxx
Collateral. Any assignment of any such interest entered into after the date of
this Agreement shall be made expressly subject to the terms of this Agreement,
and Bank shall deliver to Factor written notice of such an assignment at least
fifteen (15) days prior to any such assignment; provided, however, that Bank
shall have no liability to Factor for negligently or inadvertently failing to
furnish any such notice.
8. Factor represents and warrants to Bank that Factor has not assigned
any security interest or any other interest that Factor has in the Bank
Collateral. Any assignment of any such interest entered into after the date of
this Agreement shall be made expressly subject to the terms of this Agreement,
and Factor shall deliver to Bank written notice of such an assignment at least
fifteen (15) days prior to any such assignment; provided, however, that Factor
shall have no liability to Bank for negligently or inadvertently failing to
furnish any such notice.
9. Bank and Factor will, upon request of the other party, execute and
deliver such further documents, including UCC financing statements, as are
reasonably necessary to evidence the subordination contained in this Agreement.
10. The subordination and relative priorities of Bank and Factor set
forth in this Agreement shall apply regardless of the time, order or manner of
attachment, filing or perfection of their respective security interests.
However, such subordination and relative priorities are expressly conditioned
upon the non-avoidability of any security interest to which another interest is
subordinated, and if any such security interest is avoidable for any reason,
then the subordination granted in this Agreement with respect to the subject
collateral shall not be effective.
11. This Agreement shall be binding upon, and inure to the benefit of,
the respective successors and assigns of Bank and Factor, but no other parties,
including Company, shall be able to assert or be entitled to assert any of the
benefits herein contained.
12. This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
13. This Agreement may not be modified, amended or terminated without
the written consent of Bank and Factor. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT, THIS AGREEMENT, AND ALL RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER, SHALL AUTOMATICALLY TERMINATE UPON FINAL TERMINATION OF THE FACTOR
FINANCING AGREEMENTS AND PAYMENT IN FULL OF ALL INDEBTEDNESS THEREUNDER,
PROVIDED, HOWEVER, THAT THE AGREEMENT SHALL CONTINUE TO GOVERN THE RIGHTS AND
OBLIGATIONS OF THE PARTIES WITH RESPECT TO
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INDEBTEDNESS ARISING FROM ANY DISGORGED PAYMENT. AS USED IN THIS SECTION 13, THE
TERM "DISGORGED PAYMENT" REFERS TO ANY PAYMENT OR PORTION THEREOF MADE OR
CREDITED ON ACCOUNT OF INDEBTEDNESS OWING FROM COMPANY WHICH FACTOR DISGORGES
FOR ANY REASON UNDER COMPULSION OF BANKRUPTCY OR OTHER APPLICABLE LAW (AS A
PREFERENCE OR OTHERWISE) FOLLOWING FINAL TERMINATION OF THE FACTOR FINANCING
AGREEMENTS AND PAYMENT IN FULL OF ALL INDEBTEDNESS THEREUNDER.
14. This Agreement may be executed in counterparts which, when read
together, shall constitute a single document.
IN WITNESS WHEREOF, this Intercreditor Agreement has been executed on
behalf of Bank and Factor by their respective duly authorized officers as of the
day and year first above written.
XXXXXX FINANCIAL, INC. XXXXX FARGO HSBC TRADE BANK, N.A.
By:_______________________________ By:________________________________
Title:____________________________ Title:_____________________________
The undersigned hereby consents to the foregoing agreement.
JALATE, LTD.
By:_______________________________
Title:____________________________
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