Exhibit 10.48
Subordination Agreement
(All Indebtedness and Liens)
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Spectrum Organic Products, Inc. ___________ ("Borrower") is indebted to the
undersigned ("Creditor") in the principal sum of Six Hundred Nine Thousand Three
Hundred Five and No/l00_______ Dollars ($609,375.00) evidenced by
a promissory note which indebtedness is secured by a life insurance policy on
Xxxxxxx Xxxxxxxx, and Creditor is or may become financially interested in
Borrower and desires to aid Borrower in obtaining or having continued financial
accommodations, whether by way of loan, commitment to loan, discounting of
instruments, extensions of credit or the obtaining of any other financial aid
from Comerica Bank-California ("Bank").
In order to induce the Bank to extend or to continue to extend financial
accommodations to Borrower from time to time, whether by way of a loan,
commitment to loan, discounting of instruments, extension of credit or otherwise
and in consideration of any of these financial accommodations, Creditor agrees
as follows:
1. Any and all obligations and liabilities of Borrower to Creditor, including,
without limit, principal and interest payments, whether direct or indirect,
absolute or contingent, joint or several, secured or unsecured, due or to
become due, now existing or later arising and whatever the amount and
however evidenced (the "Subordinated Indebtedness"), are subordinated in
right of payment to any and all obligations and liabilities of Borrower to
the Bank, including, without limit, principal and interest payments,
whether direct or indirect, absolute or contingent, joint or several,
secured or unsecured, due or to become due, now existing or later arising
and however evidenced, together with all other sums due thereon and all
costs of collecting the same (including, without limit, reasonable
attorneys' fees) for which Borrower is liable (the "Senior Indebtedness").
2 Creditor will not ask for, demand, xxx for, take or receive (by way of
voluntary payment, acceleration, set-off or counterclaim, foreclosure or
other realization on security, dividends in bankruptcy or otherwise), or
offer to make any discharge or release of, any of the Subordinated
Indebtedness, and Creditor waives any such rights with respect to the
Subordinated Indebtedness nor shall Creditor exercise any rights of
subrogation or other similar rights with respect to the Senior
Indebtedness.
3. Creditor will not exercise any of Creditor's rights in any collateral now
or later securing the Subordinated Indebtedness. All rights of Creditor in
any collateral now or later securing the Subordinated Indebtedness are
subordinated to all rights of the Bank now or later existing in any of the
same collateral securing the Senior Indebtedness.
4. Should any payment, distribution or security or proceeds from these be
received by Creditor upon or with respect to the Subordinated Indebtedness
prior to the satisfaction in full of the Senior Indebtedness, Creditor
shall immediately deliver same to the Bank in the form received (except
for endorsement or assignment by Creditor where required by the Bank), for
application on the Senior Indebtedness (whether or not then due and in such
order of maturity as Bank elects) and, until so delivered, the same shall
be held in trust by Creditor as the property of the Bank.
5. Creditor represents and warrants that it has not made or permitted to be
made and shall not make or permit any assignment, transfer, pledge, or
disposition for collateral purposes or otherwise, of all or any part of the
Subordinated Indebtedness or any collateral or other security for the
Subordinated Indebtedness so long as this Agreement remains in effect.
Creditor shall, on the date of this Agreement or promptly upon receipt if
not yet delivered to Creditor, deliver to the Bank, endorsed if required by
the Bank, all notes and other instruments evidencing any Subordinated
Indebtedness. Creditor hereby authorized Bank to prepare and file all
Financing statements deemed necessary by the Bank to perfect the Bank's
rights and interests under this Agreement. The Bank is to have all the
rights and remedies of a secured creditor under the California Uniform
Commercial Code, as amended from time to time, with respect to such
interests. Creditor further makes, constitutes and appoints Bank its true
and lawful attorney-in-fact with full power of substitution to take any
action in furtherance of this Agreement, including, but not limited to, the
signing of financing statements, endorsing of instruments, and the
execution and delivery of all documents and agreements necessary to obtain
or accomplish any protection for or collection or disposition of any pad of
any collateral. Such appointment shall be deemed irrevocable and coupled
with an interest.
6. This Agreement constitutes a continuing agreement of subordination, even
though at times Borrower is not indebted to the Bank. The Bank may
continue, in reliance on this Agreement, without notice to Creditor, to
lend monies, extend credit, modify, renew or make other financial
accommodations, to or for the account of Borrower until the fifth (5th) day
("effective date") following written acknowledgment by an officer of the
Bank that the Bank received written notice of revocation of this Agreement
from Creditor. Any such notice of revocation shall not be effective as to
any Senior Indebtedness existing at the effective date of revocation or any
Senior Indebtedness created after that pursuant to any commitment or
agreement of the Bank or pursuant to any Borrower loan (whether advances or
readvances by the Bank after the effective date of revocation are optional
or obligatory) existing at the effective date of revocation or any
modifications or renewals of any Senior Indebtedness, whether in whole or
in part. Possession by the Bank of any note or other evidence of
indebtedness made, endorsed or guaranteed by Borrower shall be conclusive
evidence (but not the only means of establishing) that Borrower is indebted
to the Bank.
7. Creditor hereby releases Bank, any person or entity that has obtained any
interest from Bank in this Agreement and the Senior Indebtedness, and each
of Bank's and any such person or entity's officers, directors and employees
from any known or unknown claims which Creditor now has against Bank or any
such person or entity of any nature, including any claims that Creditor,
its successors, counsel, and advisors may in the future discover they would
have now had if they had known facts not now known to them, whether founded
in contract, in tort or pursuant to any other theory of liability,
including but not limited to any claims arising out of or related to this
Agreement, the Senior Indebtedness or arising out of any modification or
termination of the Senior Indebtedness or any refusal by the Bank to extend
additional credit to Borrower relating to the revocation of this Agreement.
Creditor waives the provisions of California Civil Code section 1542, which
states:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor.
Creditor hereby further covenants and agrees that the provisions, waivers
and releases set forth in this section are binding upon Creditor and
Creditor's trustees, agents, beneficiaries, assigns and successors in
interest. The provisions, waivers and releases of this section shall inure
to the benefit of Bank and its agents, employees, officers, directors,
assigns and successors in interest Creditor warrants and represents that
Creditor is the sole and lawful owner of all right, title and interest in
and to all of the claims released hereby and Creditor has not heretofore
voluntarily, by operation of law or otherwise, assigned or transferred or
purported to assign or transfer to any person any such claim or any portion
thereof. Creditor shall indemnify and hold harmless Bank from and against
any claim, demand, damage, debt, liability (including payment of attorneys'
fees and costs actually incurred whether or not litigation is commenced)
based on or arising out of any assignment or transfer. The provisions of
this section shall survive (i) payment in full of the obligations owing
from Borrower to Bank under the Senior indebtedness, (ii) full performance
of all the terms of this Agreement, (iii) Banks actions to exercise any
remedy available under this Agreement, the Senior Indebtedness or
otherwise, and/or (iv) the payment in full of the obligations of Borrower
to Creditor under the Subordinated Indebtedness.
8. If. at any time or times Bank pays or incurs legal fees and costs or any
other claims, damages, costs or expenses in connection with any litigation,
contest, dispute, suit, proceeding or action instituted by Creditor or
subsequently joined by Creditor in any way relating to this Agreement or
any of the subject matter hereof, then Creditor shall reimburse Bank for
all such legal expenses (including all reasonable attorneys' fees) together
with all other claims, damages, costs and expenses of Bank. which
reimbursements shall be payable to Bank by Creditor without demand after
notice, and Creditor shall promptly pay all such amounts payable to Bank
under this section.
9. Creditor delivers this Agreement based solely on Creditor's independent
investigation of (or decision not to investigate) the financial condition
of Borrower and is not relying on any information furnished by the Bank.
Creditor assumes full responsibility for obtaining any further information
concerning the Borrowers financial condition, the status of the Senior
Indebtedness or any other matter which Creditor may deem necessary or
appropriate now or later, Creditor waives any duty on the part of the Bank,
and agrees that Creditor is not relying upon nor expecting the Bank to
disclose to Creditor any fact now or later known by the Bank, whether
relating to the operations or condition of Borrower, the existence,
liabilities or financial condition of any guarantor of the Senior
Indebtedness, the occurrence of any default with respect to the Senior
Indebtedness, or otherwise, notwithstanding any effect such fact may have
upon Creditors risk or Creditor's rights against Borrower. Creditor
knowingly accepts the full range of risk encompassed in this Agreement,
which risk includes, without limit, the possibility that Borrower may incur
Senior Indebtedness to the Bank after the financial condition of Borrower,
or its ability to pay Borrower's debts as they mature, has deteriorated.
Creditor acknowledges and agrees that the Bank's rights under this
Agreement are not conditioned upon pursuit by the Bank of any remedy the
Bank may have against Borrower or any other person or any other security.
The absence of Borrower's signature at the end of this Agreement shall in
no way impair or affect the validity of this Agreement.
10. The Bank, in its sole discretion, without notice to Creditor, may release,
exchange, enforce and otherwise deal with any security now or later held by
the Bank for payment of the Senior Indebtedness or release any party now or
later liable for payment of the Senior Indebtedness without affecting in
any manner the Bank's rights under this Agreement. Creditor acknowledges
and agrees that the Bank has no obligation to acquire or perfect any lien
on or security interest in any asset(s), whether realty or personalty. to
secure payment of the Senior Indebtedness, and Creditor is not relying upon
assets in which the Bank has or may have a lien or security interest for
payment of the Senior Indebtedness.
11 Notwithstanding any prior revocation, termination, surrender, or discharge
of this Agreement in whole or in part, the effectiveness of this Agreement
shall automatically continue or be reinstated in the event that any payment
received or credit given by the Bank in respect of the Senior Indebtedness
is returned, disgorged. or rescinded under any applicable state or federal
law, including, without limitation, laws pertaining to bankruptcy or
insolvency, in which case this Agreement, shall be enforceable against the
Creditor as if the returned, disgorged, or rescinded payment or credit had
not been received or given by the Bank, and whether or not the Bank relied
upon this payment or credit or changed its position as a consequence of it.
In the event of continuation or reinstatement of this Agreement, the
Creditor agrees upon demand by the Bank to execute and deliver to the Bank
those documents which the Bank determines are appropriate to further
evidence (in the public records or otherwise) this continuation or
reinstatement, although the failure of the Creditor to do so shall not
affect in any way the reinstatement or continuation.
12. Creditor waives any right to require the Bank to: (a) proceed against any
person or property; (b) give notice of the terms, time and place of any
public or private sale of personal property security held from Borrower or
any other person, or otherwise comply with the provisions of Section 9-504
of the California or other applicable Uniform Commercial Code; or (c)
pursue any other remedy in the Bank's power. Creditor waives notice of
acceptance of this Agreement and presentment, demand. protest, notice of
protest, dishonor, notice of dishonor, notice of default, notice of intent
to accelerate or demand payment of any Senior Indebtedness, any and all
other notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Senior Indebtedness, and agrees that the Bank
may, once or any number of times, modify the terms of any Senior
Indebtedness, compromise. extend, increase, accelerate, renew or forbear to
enforce payment of any or all Senior Indebtedness, or permit the Borrower
to incur additional Senior Indebtedness, all without notice to Creditor and
without affecting in any manner the unconditional obligations of Creditor
under this Agreement
13. Creditor acknowledges that the Bank has the right to sell, assign,
transfer, negotiate or grant participations or any interest in, any or all
of the Senior Indebtedness and any related obligations, including without
limit this Agreement. In connection with the above, but without limiting
its ability to make other disclosures to the full extent allowable, the
Bank may disclose all documents and information which the Bank now or later
has or acquires relating to Creditor and this Agreement, however obtained.
Creditor further agrees that the Bank may disclose such documents and
information to the Borrower. Creditor further agrees that the Bank may
provide information relating to this Agreement or relating to the Creditor
to the Bank's parent, affiliates, subsidiaries and service providers.
14. No waiver or modification of any of its rights under this Agreement shall
be effective unless the waiver or modification shall be in writing and
signed by an authorized officer on behalf of the Bank. Each waiver or
modification shall be a waiver or modification only with respect to the
specific matter to which the waiver or modification relates and shall in no
way impair the rights of the Bank or the obligations of Creditor to the
Bank in any other respect.
15. This Agreement shall bind and be for the benefit of Creditor and the Bank
and their respective successors and assigns, and shall be construed
according to the laws of the State of California without regard to conflict
of laws principles. If this Agreement is executed by two or more persons.
it shall bind each of them individually as well as jointly.
16. The term "Borrower", as used in this Agreement, includes any person,
corporation. partnership or other entity which succeeds to the interests or
business of Borrower named above, and the terms "Senior Indebtedness" and
"Subordinated Indebtedness" include indebtedness of any successor Borrower
to the Bank and Creditor,
17. Creditor agrees to reimburse the Bank upon demand for any and all costs and
expenses (including, without limit, court costs, legal fees, and reasonable
attorneys' fees whether inside or outside counsel is used, whether or not
suit is instituted and, if instituted, whether at the trial or appellate
level, in a bankruptcy. probate or administrative proceeding, or otherwise)
incurred in enforcing any of the duties and obligations of Creditor under
this Agreement.
18. Creditor waives any defense against the enforceability of this Agreement
based upon or arising by reason of the application by Borrower of the
proceeds of any Indebtedness for purposes other than he purposes
represented by Borrower to the Bank or intended or understood by the Bank
or Creditor. Creditor waives all rights to require the Bank to xxxxxxxx the
Collateral or any other property the Bank may at any time have as security
for the Indebtedness and waives all right to require the Bank to first
proceed against any guarantor or other person before proceeding against the
Collateral.
19. The relative priorities of the Bank and Creditor in the Collateral as set
forth in this Agreement control irrespective of the time, method or order
of attachment or perfection of the liens and security interests acquired by
the parties in the Collateral and irrespective of the priorities as would
otherwise be determined by reference to the Uniform Commercial Code or
other applicable laws. Creditor shall not contest the validity, priority or
perfection of the Bank's security interest in the Collateral (regardless of
whether the Bank's security interest in the Collateral is valid or
perfected). The priorities of any liens or security interests of the
parties in any property of the Borrower other than the Collateral are not
affected by this Agreement and shall be determined by reference to
applicable law. The Bank's rights under this Agreement are in addition to,
and not in substitution of, its rights under any other subordination
agreement with Creditor.
20. Special Provisions: (None if left blank.)
Anything contained in this Agreement to the contrary notwithstanding, so long as
Bank has received all payments required under the Senior Indebtedness and so
long as no event of default has occurred or is continuing thereunder, then
Borrower may pay to Creditor, and Creditor may accept and retain from Borrower,
as and when each becomes due and payable, regularly scheduled payments of
principal and interest on the Subordinated Indebtedness according to and in the
respective amounts set forth in any documents, instruments or agreements entered
into evidencing the Subordinated Indebtedness, provided, that such payments to
Creditor shall not cause or result in any default or violation by Borrower of
any affirmative or negative covenant, term, condition, or other provision of the
Senior Indebtedness. In no event, however, shall Creditor at any time accept or
retain any such payment more than 30 days prior to the due date therefor, nor
otherwise accept or retain any payments on or against the Subordinated
Indebtedness except as expressly provided in the documents, instruments or
agreements entered into evidencing the Subordinated Indebtedness.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT.
IN WITNESS WHEREOF, Creditor has caused this Agreement to be executed as of June
12, 2003.
Xxxxxx Bainbridqe Xxxxxxxx Trust CREDITOR'S ADDRESS
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(CREDITOR)
By: Xxxxxx Xxxxxxxxxx Xxxxxxxx 0000 Xxxxxxxx Xxxx
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Signature of STREET ADDRESS
Its: Trustee Xxxxx Xxxx XX 00000
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TITLE (if applicable) CITY STATE ZIP
By: /s/ Xxxxxx Xxxxxxxxxx Xxxxxxxx
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Signature of
Its:
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TITLE (if applicable)
BORROWER'S ACKNOWLEDGEMENT
Spectrum Organic Products, Inc. ______("Borrower"), accepts notice of
subordination created by this Agreement and agrees that it will take no action
inconsistent with this Agreement and that, except with the prior written
approval of Bank, no payment or distribution shall be made by Borrower on or
with respect to the Subordinated Indebtedness, so long as this Agreement remains
in effect. Borrower agrees that the Bank may, at its option, without notice and
without limiting Banks other rights, upon any breach by Creditor of, or
purported termination by the Creditor of, this Agreement, declare all Senior
Indebtedness to be immediately due and payable and/or terminate any commitments
of Bank to Borrower.
Spectrum Organic Products, Inc.
By: /s/ Xxxxxx X. Xxxxxx Its: CFO
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By: /s/ Its:
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By: /s/ Its:
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By: /s/ Its:
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BORROWER'S ADDRESS
0000 Xxx Xxxxxxx Xxxxxxx Xxxxxxxx XX XXX 00000
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STREET ADDRESS CITY STATE COUNTRY ZIP CODE
DATED: June 12, 2003
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