EXHIBIT 10(xvi)
DEBT AND SECURITY INTEREST SUBORDINATION AGREEMENT
See attached.
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[LOGO]
DEBT AND SECURITY INTEREST SUBORDINATION AGREEMENT
This Debt and Security Interest Subordination Agreement ("AGREEMENT") is
made and entered into by and between the undersigned UNIVERSAL DISTRIBUTION LLC
(the "CREDITOR"), and RAINBO COMPANY LLC (the "DEBTOR") in favor of FIRSTAR
BANK, N.A. (the "BANK") as of the date set forth on the last page of this
Agreement.
To induce the Bank to extend credit and other financial accommodations to
Debtor now and hereafter, the Bank has required the undersigned Creditor to
irrevocably and unconditionally subordinate to the Bank all indebtedness of the
Debtor to the Creditor and the Creditor's rights in collateral, in accordance
with the terms of this Agreement.
1. DEFINITIONS. As used herein, (a) the term "SENIOR DEBT" shall include
all of the Debtor's debts and obligations to the Bank now existing or hereafter
created or incurred, and all extensions, renewals and refinancing thereof,
however arising, (including, without limitation, all interest and costs of
collection and all costs and expenses pertaining to the Collateral) regardless
of whether such debts and obligations are absolute or contingent, liquidated or
unliquidated, due or not yet due, whether acquired by assignment or otherwise,
and whether the Debtor is liable individually or jointly with others; (b) the
term "SUBORDINATED DEBT" shall include all debts and obligations of the Debtor
to the Creditor now existing or hereafter created or incurred, and all
extensions, renewals and refinancing thereof, however arising, (including,
without limitation, all interest and costs of collection, and all other charges
or expenses owed to the Creditor, however and whenever arising) regardless of
whether such debts and obligations are absolute or contingent, liquidated or
unliquidated due or not due, whether acquired by assignment or otherwise, and
whether the Debtor is liable individually or jointly with others; and (c) the
term "COLLATERAL" shall mean all real property and personal property now owned
or hereafter acquired by the Debtor which is subject to any security interest,
pledge or mortgage in favor of the Bank to secure Senior Debt.
2. SUBORDINATION BY CREDITOR. Creditor hereby unconditionally and
irrevocably subordinates to the Bank (i) payment by the Debtor of all or any
part of the Subordinated Debt to the payment of all Senior Debt; and (ii) all
security interests, liens, interests and rights (whether consensual or by
operation of law) in or against the Collateral now or hereafter securing the
Subordinated Debt. The Creditor agrees that the Bank's security interest,
lien and rights to the Collateral are superior to those of the Creditor
notwithstanding the date, manner or order of perfection of the security
interest, lien or claim of the Bank or the Creditor, the Bank's failure to
perfect its security interest, or any provisions of any other agreements
between the Creditor and the Bank regarding the Debtor or Collateral to the
contrary. Except as provided in Section 3 of this Agreement or until all
Senior Debt has been paid in full and the Bank has no further obligation to
make loans to the Debtor, the Creditor hereby agrees not to: (a) demand
payment of, xxx for, or receive all or any part of the Subordinated Debt; (b)
request, obtain or alter any subordinate security interest, lien, right or
interest in the Collateral to secure the Subordinated Debt after the date of
this Agreement; (c) amend any terms of the agreements representing the
Subordinated Debt; (d) set off any amount of the Subordinated Debt against
any obligations owed by the Creditor to the Debtor; (e) take any action
against the Collateral securing payment of the Subordinated Debt; (f) assert
against the Bank any claim pursuant to the doctrine of marshalling assets or
under the United States Bankruptcy Code with respect to any of the Collateral
or the Senior Debt; (g) receive any amounts from the Debtor respecting any
ownership of the Debtor (including, without limitation, dividends); or (h)
commence or participate in the commencement of any bankruptcy, insolvency or
reorganization proceedings against the Debtor, or vote in such proceedings
against the Debtor, or vote in such proceedings in a manner inconsistent with
the provisions hereof.
3. CREDITOR'S RIGHT TO PAYMENT; PERMITTED LIENS. Notwithstanding the
provisions of section 2 of this Agreement and so long as the Debtor is not in
default under any instrument or agreement evidencing the Senior Debt or the
Bank's interest in Collateral, the Creditor may receive, and the Debtor may
pay (if blank, no payments are permitted): ACCRUED INTEREST PER TERMS OF
NOTE, AS LONG AS DEBTOR IS NOT IN DEFAULT OF FIRSTAR OBLIGATIONS (but the
Creditor shall not receive any balloon payments and/or prepayments, nor any
payments as a result of any acceleration, demand or subsequent change in the
terms of the agreements representing the Subordinated Debt). If the Creditor
is in the employment of the Debtor, the Creditor may receive the Creditor's
salary, (but the Creditor shall not receive, nor shall the Debtor pay, any
bonuses, dividends or other remuneration to the Creditor except upon the
written consent of the Bank). So long as any part of the Senior Debt shall
remain outstanding, the Creditor shall not hold any security interest in,
pledge of or mortgage upon any of the Debtor's real or personal property, now
owned or hereafter acquired, except a lien subordinate to the Bank on the
following (if blank, no liens are permitted): none.
4. REPRESENTATIONS AND WARRANTIES. The Debtor and the Creditor
represent and warrant that (a) the total present indebtedness of the Debtor
to the Creditor is as set forth on the signature page of this Agreement; (b)
no part of the Subordinated Debt is evidenced by any instrument, security or
other writing which has not previously been or is not concurrently being
deposited with the Bank if requested; (c) the Creditor is the lawful owner of
the Subordinated Debt and (d) no part thereof has been assigned to, or
subordinated or subjected to any other security interest in favor of, anyone
other than the Bank. Until all Senior Debt has been paid in full, the Debtor
will not issue any instrument, security or other writing evidencing any part
of the Subordinated Debt except with the prior written approval of the Bank
or at the request of and in the manner requested by the Bank; and the
Creditor shall not assign or subordinate any part of the Subordinated Debt
except to or in favor of the Bank.
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5. MODIFICATION OF SENIOR DEBT. The Bank may, at any time and in its
sole discretion, renew, modify, waive or extend the time or manner of payment
of any part of the Senior Debt, substitute, release or permit alterations to
the Collateral securing same; proceed against any or all of the Collateral in
whatever order the Bank shall determine; modify, supplement or waive the
provisions of the loan documents in any manner, and apply payments and/or
proceeds from Collateral in any order; in each case without notice to or the
consent of the Creditor, and without impairing or affecting any of the Bank's
rights under this Agreement or the Creditor's obligations to the Bank
hereunder.
6. NOTIFICATION OF SUBORDINATION. The Creditor will place the
following legend upon any notes or other instruments evidencing Subordinated
Debt:
"The indebtedness evidenced by this instrument and the rights of the
holder hereof are subordinated to the rights of FIRSTAR BANK, N.A.
under the terms of a Debt and Security Interest Subordination
Agreement dated SEPTEMBER 26, 2000."
7. NO WARRANTY; CREDITOR'S INDEPENDENT INVESTIGATION. The Creditor
acknowledges that the Creditor has and will continue to independently review
the Debtor's financial condition, creditworthiness and business operations.
The Creditor acknowledges that the Bank has made NO PROMISE, REPRESENTATION
OR WARRANTY (EXPRESS OR IMPLIED) as to any matter regarding the Debtor and/or
the Collateral. The Creditor represents that the Creditor has and will
continue to independently ascertain the reliability of any information obtained
from the Bank, and expressly waives any and all claims against the Bank
regarding any of the foregoing.
8. DEFAULT. If any representation or warranty in this Agreement or in
any instrument evidencing Senior Debt shall prove untrue or misleading in any
material respect (as determined by the Bank in the exercise of its judgment)
as of the time when given or in the event of a breach by the Debtor or the
Creditor in the performance of any of the terms of this Agreement or upon the
occurrence of an event of default under any instrument or agreement
evidencing Senior Debt, the Bank may, at its option, declare all Senior Debt
to be forthwith due and payable, without presentment, demand, protest, or
notice of any kind. At any time the Creditor fails to comply with any
provision applicable to the Creditor, the Bank may demand specific
performance of this Agreement, whether or not the Debtor has complied with
this Agreement, or exercise any other remedy available at law or equity. If
any payment on account of, or any collateral for, any part of the
Subordinated Debt is received by the Creditor other than as permitted by this
Agreement, then such payment or collateral shall be delivered forthwith to
the Bank for application to the Senior Debt in the form received, except for
the addition of any endorsement or assignment necessary to effect transfer of
all rights therein to the Bank. The Bank is irrevocably authorized to
supply any required endorsement or assignment which may have been omitted.
Until so delivered, any such payment or collateral shall be held in trust for
the Bank and shall not be commingled with other funds or property of the
Creditor.
9. EXPENSES. The Debtor and the Creditor agree to pay the Bank on
demand, all expenses of every kind, including fees for the Bank's inside
counsel and outside counsel, which the Bank may incur in enforcing or
protecting any of its rights under this Agreement.
10. ENTIRE AGREEMENT; WAIVER; SUCCESSORS AND ASSIGNS. This Agreement
contains the entire agreement of the Creditor with the Bank regarding
subordination. Any failure by the Bank to exercise any right hereunder shall
not be construed as a waiver of the right to exercise the same, and such
rights shall be cumulative and not exclusive. Knowledge by the Bank of any
breach or other nonobservance by the Debtor or the Creditor of the terms of
this Agreement will not constitute a waiver thereof or of any obligations to
be performed by the Debtor or the Creditor hereunder. This Agreement will be
binding upon the Debtor, the Creditor and the Bank, and their respective
successors and assigns.
11. APPLICABLE LAW AND JURISDICTION; INTERPRETATION AND MODIFICATION.
This Agreement will be governed by and interpreted in accordance with the
laws of the State of Iowa. Invalidity of any provision of this Agreement will
not affect the validity of any other provision. The provisions will not be
altered, amended or waived without the express written consent of the Bank.
THE DEBTOR AND THE CREDITOR HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF
THE BANK'S BRANCH WHERE THE LOAN WAS ORIGINATED, AND WAIVE ANY OBJECTION
BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES
OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE COLLATERAL OR ANY TRANSACTIONS
ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE
FOREGOING. Nothing herein shall affect the Bank's rights to serve process in
any manner permitted by law, or limit the Bank's right to bring proceedings
against the Debtor or the Creditor in the competent courts of any other
jurisdiction or jurisdictions. This Agreement and any amendments hereto
(regardless of when executed) will be deemed effective and accepted only at
the Bank's offices, and only upon the Bank's receipt of the executed
originals thereof.
12. WAIVER OF JURY TRIAL. THE BANK, DEBTOR AND CREDITOR HEREBY JOINTLY
AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE OBLIGATIONS HEREUNDER OR ANY
TRANSACTION ARISING THEREFROM OR CONNECTED HERETO. THE BANK, DEBTOR AND
CREDITOR EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY GIVEN.
13. ATTACHMENTS. All documents attached hereto, including any
appendices, schedules, riders, and exhibits to this Agreement, are hereby
expressly incorporated by reference.
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Dated as of SEPTEMBER 26, 2000
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UNIVERSAL DISTRIBUTION LLC
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Creditor Name (Organization)
Debtor owes
$ a Nebraska Corporation
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By /s/ Xxxxxx X. Xxxxxx
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Name and Title Xxxxxx X. Xxxxxx, President
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By
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Name and Title
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Debtor owes
$ SEAL
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(Individual Creditor)
N/A
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Creditor Name
SEAL
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(Individual Creditor)
N/A
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Creditor Name
NOTE: FOREGOING SIGNATURE MUST BE NOTARIZED
STATE OF Iowa )
) ss.
COUNTY OF Kossuth )
This instrument was acknowledged before me on 9/26/00 , by Xxxxxx X. Xxxxxx
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(Date) (Name(s) of Person(s))
, as President
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(Type of authority, if any, e.g.,
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officer, trustee; if an individual, state "an individual")
of UNIVERSAL DISTRIBUTION LLC
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(Name of entity on whose behalf the document was executed;
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use N/A if individual)
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(Notarial Seal) Printed Name: Xxxxxxx X. Xxxxxx
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APPLIED FOR Notary Public, State of: IOWA
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My commission expires:
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THE UNDERSIGNED DEBTOR HEREBY APPROVES AND AGREES TO BE BOUND BY THE TERMS OF
THIS AGREEMENT.
(Individual Debtor) RAINBO COMPANY LLC
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Debtor Name (Organization)
(SEAL) a NEBRASKA limited liability company
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Debtor Name N/A By /s/ Xxxxxx X. Xxxxxx, Pres. of MGR.
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Name and Title
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(SEAL) BY
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Debtor Name N/A Name and Title
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