EXHIBIT 4(d)(14)
SUBORDINATED NOTE
$1,500,000 February 26, 1999
FOR VALUE RECEIVED, the undersigned TEXFI INDUSTRIES, INC., a Delaware
corporation ("Borrower") hereby promises to pay to the order of XXXXX ASSETS
INTERNATIONAL LIMITED (Registration No. 84998B), a Bahamian corporation
("Subordinated Lender"), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND
AND NO/100s DOLLARS (US$1,500,000.00) at the office of Subordinated Lender
notified by it to Borrower, on September 1, 1999 in lawful money of the United
States, together with interest thereon at a rate equal to the "Prime Rate" of
The Chase Manhattan Bank, announced from time to time by it in New York City as
its prime rate, from the date hereof until payment in full of the principal
amount evidenced hereby, on the average principal balance outstanding hereunder
from time to time, computed on the basis of a 360-day year for the actual number
of days outstanding.
Subordination. Borrower agrees, and by its acceptance of this Note
Subordinated Xxxxxx agrees, that the obligations of Borrower to Subordinated
Lender under this Note (the principal of, interest and premium, if any, on this
Note and all other obligations of Borrower to Subordinated Lender in connection
with the indebtedness evidenced hereby, the "Subordinated Debt") are
subordinated in right of payment, to the extent and in the manner provided
herein, to the prior payment in full in cash of all Senior Debt (as hereinafter
defined), whether outstanding on the date hereof or hereafter created, incurred,
assumed or guaranteed, whether direct or indirect, absolute or contingent,
secured or unsecured, or by operation of law or otherwise, including any and all
expenses (including reasonable attorneys' fees) incurred in connection therewith
and any interest thereon, including, without limitation, any post petition
interest accruing on such Senior Debt after Borrower becomes subject to an
insolvency proceeding (whether or not such interest is enforceable against
Borrower or recoverable against Borrower or its bankruptcy estate), and that
such subordination is for the benefit of the holders of the Senior Debt.
For purposes of this Note, "Senior Debt" means all obligations of Borrower
(i) to the Agent and the Lenders and their respective successors and assigns
under and as defined in the Loan and Security Agreement dated as of August 28,
1998 (as amended to date and as the same may be further amended, amended and
restated, supplemented, refinanced or otherwise modified, the "Loan Agreement")
and the Loan Documents (as defined in the Loan Agreement, (ii) to Back Bay
Capital Funding LLC, a Delaware limited liability company ("Back Bay") and its
successors and assigns under the Term Loan and Security Agreement dated as of
August 28, 1998 (as amended, amended and restated, supplemented, refinanced or
otherwise modified, the "Back Bay Agreement") between Borrower and Back Bay,
(iii) to BancBoston Leasing Inc., a Massachusetts
corporation ("BBL") under various equipment leases (the "BBL Leases"), and (iv)
to The CIT Group/Commercial Services, Inc., a New York corporation ("CIT/CSI")
in Borrower's capacity as an account debtor of CIT/CSI factoring customers (such
obligations of Borrower, the "CIT Ledger Debt"). Senior Debt shall also include
all indebtedness, obligations and liabilities of Borrower (i) arising in
connection with any advances made to Borrower as a debtor-in-possession, or a
trustee for Borrower under any insolvency proceeding and (ii) to repay any
amount previously paid by Borrower pursuant to the Loan Agreement which amounts
have been returned to Borrower or to a trustee pursuant to sections 547 and 548
of the Bankruptcy Code or otherwise.
Notwithstanding any term of this Note to the contrary, without the prior
written consent of the Agent and Back Bay, Borrower shall not make any payment
or repayment in respect of the Subordinated Debt nor grant to Subordinated
Lender any lien or security interest to secure such payment or repayment, nor
shall Subordinated Lender sue for, receive, accept or retain any such payment,
repayment or collateral or any guaranty of any person or entity of the
Subordinated Debt, prior to the payment in full in cash of all Senior Debt. Any
money or other property received by Subordinated Lender from or on behalf of
Borrower for application to the Subordinated Debt in violation of the preceding
sentence shall be received by Subordinated Lender for the benefit of the holders
of the Senior Debt and shall be turned over to the Agent in the form received,
together with any necessary endorsement, as promptly as practicable, for
application to the Senior Debt (in accordance with the terms of the Loan
Agreement, the Back Bay Agreement and the other agreements between the holders
of the Senior Debt). Subordinated Lender shall have no responsibility for the
manner in which the Agent disburses any money so paid to the Agent by
Subordinated Lender and shall in no event be liable to any Lender, Back Bay, BBL
or CIT/CSI for any application by the Agent of any such amount.
These subordination provisions are intended solely to define the relative
rights of the holders of the Senior Debt and Subordinated Lender and are not
intended to and shall not be construed to impair the obligation of Borrower to
repay the principal amount of this Note and to pay interest on such principal
balance in accordance with the terms hereof, provided that Subordinated Lender
will not demand payment of, accelerate the maturity of or commence or join in
(except with the Agent or Back Bay) any action or proceeding against Borrower or
any property of Borrower to recover all or any part of the Subordinated Debt
unless either (i) the Agent and the Lenders or Back Bay, respectively, have
accelerated the maturity of Borrower's obligations under the Loan Agreement or
the Back Bay Agreement or (ii) the Agent and the Lenders or Back Bay,
respectively, have demanded payment of such obligations after such obligations
remained unpaid after maturity or (iii) judicial proceedings against Borrower
have been initiated by the Agent or Back Bay.
Subordinated Xxxxxx agrees that the Agent may (but shall not be obligated
to), if Subordinated Lender has not done so within 10 business days prior to the
applicable bar date, file proofs of claim or debt and vote the claims of
Subordinated Lender in any bankruptcy, liquidation, dissolution or other similar
proceeding involving an adjustment
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of the indebtedness of Borrower or application of any assets of Borrower to
payment in liquidation thereof, or otherwise. Subordinated Lender shall not take
any action or vote in any way so as to contest (i) the validity or the
enforceability of the Loan Agreement, the Loan Documents (as defined in the Loan
Agreement), the Back Bay Agreement or the Loan Documents (as defined in the Back
Bay Agreement) or the liens and security interests to the extent granted to the
holders of the Senior Debt with respect to the Senior Debt, (ii) the rights and
duties of the holders of the Senior Debt established in the Loan Agreement, the
Back Bay Agreement or any security documents with respect to such liens and
security interests, or (iii) the validity or enforceability of any agreement or
instrument to the extent evidencing or relating to the Senior Debt. Subordinated
Lender further agrees that it (a) will not assign or transfer or subordinate all
or any part of the Subordinated Debt held by it or any claim which it may have
against Borrower in respect of the Subordinated Debt, (b) will direct Borrower
or any trustee or receiver for borrower or any other person or entity that
offers any payment to Subordinated Lender in respect of the Subordinated Debt,
to make such payment directly to the Agent for application to the Senior Debt as
provided above, (c) will not borrow money from or otherwise incur any obligation
to Borrower, (d) unless and until the Senior Debt is paid in full in cash, will
not exercise or seek to exercise any rights of subrogation Subordinated Lender
may acquire in respect of the Senior Debt.
Subordinated Lender agrees that the Agent and the Lenders and Back Bay,
respectively, may at any time and from time to time, either prior to or after
any default by Borrower with respect to any indebtedness and without affecting
the rights hereunder of the holders of Senior Debt, (a) advance additional
credit to Borrower and make other accommodations to or for the account of
Borrower even if the Senior Debt is increased, (b) amend, respectively, the Loan
Agreement or any Loan Document as defined therein or the Back Bay Agreement or
any Loan Document as defined therein and by written agreement or otherwise,
extend, renew or change, modify, compromise, release, refuse to extend, renew or
modify the Senior Debt held by them, respectively, (c) fail to exercise any
right of set off, (d) sell, assign, surrender, release, realize upon or apply,
or omit to do any of the foregoing, the Senior Debt or any collateral for the
Senior Debt and (e) without limiting the generality of the foregoing, deal with
Borrower as they see fit, including, without being limited to, taking or
omitting to take any action the taking or omission of which could otherwise
constitute a discharge of any obligor on the Senior Debt or impair the position
of the Subordinated Lender.
Subordinated Lender hereby waives any and all demands, presentments or
notices (other than notices specifically provided for in this Subordinated Note)
to which it might otherwise be entitled (including, without limitation, any and
all notice of the creation or accrual of any Senior Debt; of any extension,
modification, or renewal of any of said Senior Debt; and of reliance of the
holders of the Senior Debt on this Subordinated Note).
If Subordinated Lender in violation of any provision contained in this
Subordinated Note shall assert or bring any action, suit or proceeding against
Borrower, Borrower may interpose as a defense or dilatory plea the making of
this Subordinated Note, and each holder of the Senior Debt is hereby irrevocably
authorized to intervene
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and to interpose such defense or plea in its name or in Borrower's name. If
Subordinated Lender shall attempt to enforce, collect or realize upon any
Subordinated Debt, or any collateral, security or guarantees (if any) securing
the Subordinated Debt, in violation of the provisions of this Subordinated Note,
Borrower may, by virtue of this Subordinated Note, restrain any such
enforcement, collection or realization, or upon failure to do so, any holder of
the Senior Debt may restrain any such enforcement, collection or realization,
either in its own name or in the name of Borrower.
The Subordinated Xxxxxx acknowledges and agrees that none of the
Forbearance Agreement dated as of February 25, 1999 among Borrower, BankBoston,
N.A. and The CIT Group/Commercial Services, Inc. (the "Lenders"), BankBoston,
N.A. (the "Agent"), BBL and Back Bay (the "Forbearance Agreement"), the
forbearance by the Agent and the Lenders, BBL and Back Bay thereunder, the
Lenders' continued Revolving Credit Loans (as defined in the Loan Agreement) to
Borrower in accordance with the terms of the Loan Agreement and the Forbearance
Agreement or the Agent's or the Lenders' or BBL's or Back Bay's discussions or
negotiations with Borrower or any Affiliate (as defined in the Loan Agreement)
of Borrower are intended to be, nor are they nor shall they be deemed to be, a
waiver or forbearance of any of the rights, powers or remedies of The CIT
Group/Commercial Services, Inc. with respect to the ledger debt of Borrower
(which is indebtedness for goods and services purchased by Borrower from any
party whose accounts receivable are factored or financed by The CIT
Group/Commercial Services, Inc.). This Note shall be governed by and construed
in accordance with the laws of the State of Georgia (without reference to
principles of conflicts of laws). Borrower and by its acceptance hereof,
Subordinated Lender hereby agree that the federal court of the Northern District
of Georgia or shall have nonexclusive jurisdiction to hear and determine any
claims or disputes between Borrower and Subordinated Lender pertaining directly
or indirectly to this Agreement or to any matter arising herefrom. Borrower and
by its acceptance hereof Subordinated Lender expressly submits and consents in
advance to such jurisdiction in any action or proceeding commenced in such
courts. The nonexclusive choice of forum set forth herein shall not be deemed
to preclude the enforcement of any judgment obtained in such forum or the taking
of any action under this agreement to enforce same in any appropriate
jurisdiction.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be executed and
delivered by its officers thereunto duly authorized, as of the date first above
written.
TEXFI INDUSTRIES, INC.
By /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
EVP & CFO
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ACCEPTANCE
By its acceptance of this Note, Subordinated Xxxxxx agrees to perform all
obligations hereunder of Subordinated Xxxxxx and confirms for the benefit of the
holders of the Senior Debt that (a) Borrower has delivered this Note in exchange
for the loan by Subordinated Lender to Borrower of US$1.5 million, in cash, (b)
the making of such loan and acceptance of this Note by Subordinated Lender have
been duly authorized, (c) Subordinated Xxxxxx's obligations hereunder constitute
the legal, valid and binding obligations of Subordinated Lender enforceable
against Subordinated Lender in accordance with the terms of this Note and (d) no
action or inaction by Borrower, including any misrepresentation made by Borrower
to Subordinated Lender, will impair or otherwise affect the subordination
provisions hereof.
IN WITNESS WHEREOF, Subordinated Xxxxxx has caused this Note to be accepted
by its authorized officer as of the date first above written.
For and on behalf of
XXXXX ASSETS INTERNATIONAL LIMITED
By Premier Management Limited
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Director
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