SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (hereafter this "Agreement") is made
as of the 27th day of December, 1996, by and among SANWA BUSINESS CREDIT
CORPORATION, a Delaware corporation, as a Senior Lender and as Agent under
the Sanwa Documents for other Senior Lenders, and DILMUN FINANCIAL SERVICES,
an unlimited Irish company, and BIB HOLDINGS (BERMUDA) LTD., a Bermuda
corporation.
RECITALS
WHEREAS, Brothers Gourmet Coffees, Inc. (the "Borrower") has
entered into a Loan and Security Agreement dated as of May 29, 1996 with
Sanwa Business Credit Corporation, as a Senior Lender and as Agent for the
Senior Lenders (the "Sanwa Loan Agreement"), pursuant to which the Senior
Lenders have committed to make loans and financial accommodations available
to the Borrower to be secured by a first lien and security interest against
the Collateral.
WHEREAS, Subordinated Creditor is the holder of (a) a senior
subordinated promissory note of even date herewith issued by the Borrower in
the principal amount of Fifteen Million Dollars ($15,000,000) (the
"Subordinated Note") pursuant to the Subordinated Note Agreement and (b) the
Warrant issued pursuant to the Subordinated Note Agreement.
WHEREAS, the Borrower has requested that the Subordinated Creditor
enter into this Agreement with Sanwa as a condition of the Borrower's
assumption of the Subordinated Debt and as a condition to the Senior Lenders
continuing to advance Sanwa Debt under the Sanwa Documents on the date hereof
or in the future.
WHEREAS, Sanwa and Subordinated Creditor have entered into this
Agreement to set forth the relative rights of payment of the indebtedness and
other liabilities and obligations of the Borrower evidenced by the Sanwa
Documents and the Subordinated Debt Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the Subordinated
Creditor, and in order to induce the Senior Lenders, at their option, now or
from time to time hereafter, to make loans or extend credit or any other
financial accommodations to or for the benefit of the Borrower or to grant
such renewals or extensions thereof as the Senior Lenders may deem advisable
and to better secure Sanwa and the other Senior Lenders in respect of the
foregoing, the Subordinated Creditor hereby agrees with Sanwa and the other
Senior Lenders as hereinafter set forth.
Section 1. CERTAIN DEFINITIONS. In addition to the terms defined
in the recitals hereto, the following terms shall have the following meanings
for purposes of this Agreement:
"Additional Subordinated Notes" shall mean the additional senior
subordinated promissory notes issued pursuant to Section 5(d)(vi) of the
Warrant in the form of Exhibit A to the Warrant.
"Bankruptcy Code" shall mean 11 U.S.C. Section 101 ET SEQ., as from
time to time hereinafter amended, and any successor thereto or replacement
therefor which may be hereinafter enacted.
"Blockage Period" shall have the meaning ascribed thereto in
subsection 2(b) hereof.
"Code" shall mean the Uniform Commercial Code as in effect from
time to time in each jurisdiction in which any of the Collateral is located.
"Collateral" shall mean all assets, property and interests in
property now owned or hereafter acquired by the Borrower or its Subsidiaries
or any guarantor thereof in or upon which a security interest, lien or
mortgage is granted to Sanwa and the other Senior Lenders by the Borrower or
its Subsidiaries under the Sanwa Documents or under any other documents,
instruments, agreements or writings executed by the Borrower or its
Subsidiaries and delivered to Sanwa including, without limitation, the
Accounts, General Intangibles, Fixtures, Inventory, Intellectual Property,
Equipment and Real Estate and all Proceeds (as defined in the Code) of all of
the foregoing.
"Collection Action" shall mean any of the following: (a) to take
from or on behalf of the Borrower or any guarantor, by set-off or in any
similar manner, the whole or any part of any monies which may now or
hereafter be owing by the Borrower or any guarantor with respect to the
Subordinated Debt, (b) to take any Enforcement Action with respect to the
Subordinated Debt, or (c) to accelerate the Subordinated Debt.
"Conversion Shares" shall have the meaning ascribed thereto in the
Warrant.
"Covenant Default" shall mean any Event of Default (other than a
Payment Default) with respect to any Sanwa Debt which is described in the
definition of "Event of Default" in the Sanwa Loan Agreement (excluding
clauses (f), (g),(h) and (j) thereof).
"Enforcement Action" shall mean any of the following: (a) to xxx
for payment of, or to initiate or participate with others in any Event of
Bankruptcy or any suit, action or proceeding
-2-
against the Borrower or any guarantor to enforce payment of or to collect the
whole or any part of the Sanwa Debt or the Subordinated Debt or to enforce
any other rights, powers, privileges or remedies under the Sanwa Documents or
the Subordinated Debt Documents or (b) to take any action under Article 9 of
the Code with respect to personal property (including any action in the
nature of a self-help remedy permitted under the Code) or under the
provisions of any state law with respect to foreclosure upon real estate to
enforce, foreclose upon, take possession of or sell any Collateral or take
any other judicial or non-judicial action with respect to the Collateral.
"Event of Bankruptcy" shall mean any Default or Event of Default
arising under clause (f), (g), (h) or (j) of the definition of "Event of
Default" in the Sanwa Loan Agreement.
"Event of Default" shall mean the existence of an Event of
Bankruptcy or a Default or Event of Default under any Sanwa Document.
"Payment Blockage Notice" shall have the meaning ascribed thereto
in subsection 2(b) hereof.
"Payment Default" shall mean a default in the payment (including,
without limitation, any mandatory prepayment) when due (whether such payment
is due at maturity, as a result of acceleration or otherwise) of all or any
portion of the Sanwa Debt.
"Person" shall mean any natural person, corporation, limited
partnership, general partnership, limited liability partnership, limited
liability company, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and a government and agency and political
subdivision thereof.
"Phantom Stock Payment" shall have the meaning ascribed thereto in
the Warrant.
"Post-Petition Interest" shall mean the aggregate amount of all
post-petition interest, fees, costs or expenses or adequate protection
payments accruing or allowed to be paid during the pendency of any Event of
Bankruptcy and any other interest, fees, costs or expenses that would have
accrued but for the commencement of such Event of Bankruptcy, to the date of
payment even if the claim for such interest, fees, costs or expenses is not
an allowed claim of the type described in Section 506(b) of the Bankruptcy
Code.
"Sanwa" shall mean and include Sanwa Business Credit Corporation as
a Senior Lender and as Agent under the Sanwa Documents for the Senior Lenders
and its successors and assigns.
-3-
"Sanwa Debt" shall mean all indebtedness, obligations and
liabilities of the Borrower to Sanwa and the other Senior Lenders of any kind
and every kind and nature now existing or hereafter arising, whether
contingent or otherwise direct or indirect, matured or unmatured including,
without limitation, all principal, fees, costs, expenses, indemnities,
premium, if any, interest (including, without limitation, Post-Petition
Interest) and advancements arising under, or incurred in connection with, or
created under, the Sanwa Loan Agreement, whether such indebtedness,
obligations or liabilities arise or accrue before or after the commencement
of any Event of Bankruptcy; PROVIDED that, notwithstanding anything set forth
therein to the contrary, unless otherwise consented to in writing by the
Subordinated Creditor the aggregate principal amount of Sanwa Debt to which
the Subordinated Debt shall be subordinated pursuant to this Agreement shall
not exceed in the aggregate $28,000,000 at any one time outstanding of which
not more than $10,000,000 shall be term debt.
"Sanwa Documents" shall mean and include the Sanwa Loan Agreement
and the other Financing Agreements, and all other agreements, documents and
instruments now or hereafter evidencing or securing Sanwa Debt, and any
credit agreement, financing agreement or other agreement, promissory note,
guaranty, instrument or document of any Person evidencing any replacement,
substitution, conversion, refunding or refinancing thereof, as the same may
be amended, modified, restated, renewed, extended or otherwise supplemented
from time to time hereafter.
"Senior Lenders" shall mean Sanwa Business Credit Corporation, in
its individual capacity as a Lender (as defined in the Sanwa Loan Agreement)
under the Sanwa Loan Agreement and any other Person hereafter becoming a
party to the Sanwa Loan Agreement as a Lender and any other Person hereafter
holding any part of the Sanwa Debt under any Sanwa Document.
"Significant Subordinated Debt Default" shall mean the occurrence
of (a) a matured Event of Default (as defined in the Subordinated Note
Agreement) under Section 7.1(i), 7.1(j) or 7.1(k) of the Subordinated Note
Agreement, or (b) a default in the payment when due under the Subordinated
Note Agreement of Subordinated Debt in excess of $100,000 or (c) a default in
the payment when due under the Subordinated Note Agreement of fees and other
charges incurred by the Borrower pursuant to the Subordinated Debt Documents
in connection with the closing of the Subordinated Debt transaction on
December 27, 1996.
"Significant Subordinated Debt Default Notice" shall have the
meaning ascribed thereto in Section 5(d) hereof.
"Subordinated Creditor" shall mean and include, collectively,
Dilmun Financial Services and BIB Holdings (Bermuda) Ltd., their respective
successors and assigns and any other Person
-4-
hereafter holding any part of the Subordinated Debt under any Subordinated
Debt Documents.
"Subordinated Debt" shall mean all indebtedness, obligations, and
liabilities of the Borrower to the Subordinated Creditor of any kind and
every kind and nature now existing or hereafter arising, whether contingent
or otherwise direct or indirect, matured or unmatured including, without
limitation, all principal, fees, costs, expenses, premium, if any, interest
(including, without limitation, Post-Petition Interest) and advancements
arising under, or incurred in connection with, or created under, the
Subordinated Note and the Additional Subordinated Notes, and all liabilities
and obligations under the Warrant including, without limitation, the Phantom
Stock Payment, whether such indebtedness, obligations or liabilities arise or
accrue before or after the commencement of any Event of Bankruptcy.
"Subordinated Debt Documents" shall mean and include the
Subordinated Note, the Warrant, the Subordinated Note Agreement, the
Additional Subordinated Notes and all other agreements, documents,
instruments and guaranties now or hereafter evidencing or securing the
Subordinated Debt, and any credit agreement, financing agreement or other
agreement, promissory note, guaranty, instrument or document of any Person
evidencing any replacement, substitution, conversion, refunding or
refinancing thereof, as the same may be amended, modified, restated, renewed,
extended or otherwise supplemented from time to time hereafter in accordance
with the terms hereof.
"Subordinated Note Agreement" shall mean that certain Senior
Subordinated Note Agreement, dated December 27, 1996, by and between the
Borrower and Dilmun Financial Services.
"Warrant" shall mean that certain Warrant for the Purchase of
Shares of Common Stock, dated December 27, 1996, issued by the Borrower in
favor of BIB Holdings (Bermuda) Ltd.
"Warrant Shares" shall have the meaning ascribed thereto in the
Warrant.
Section 1.2 OTHER DEFINED TERMS. Unless otherwise defined
herein, all defined terms herein shall have the respective meanings ascribed
thereto in the Sanwa Loan Agreement.
Section 2. SUBORDINATION.
a. The Subordinated Creditor agrees that the Subordinated Debt
shall be subject to the provisions of this Agreement, and the Subordinated
Creditor, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions. The Subordinated Creditor
further agrees that, notwithstanding any language to the contrary contained
in any Subordinated Debt Document, the Subordinated Debt shall be
-5-
and is subordinated and subject in right of payment to the prior payment in
full in cash (or in another manner agreed to in writing by the Senior Lenders
in their sole discretion) of all Sanwa Debt when and as due (whether by
acceleration or otherwise); PROVIDED that payments on the Subordinated Debt
may be made from time to time in accordance with the terms of the
Subordinated Debt Documents as provided in Section 3 hereof. Notwithstanding
the foregoing, the consent of the Senior Lenders shall not be required for
the issuance by the Borrower of the Warrant Shares or Conversion Shares or
Additional Subordinated Notes in accordance with the terms of the
Subordinated Debt Documents.
b. The Borrower will not, directly or indirectly, make or agree
to make, and the Subordinated Creditor will not ask for, demand, xxx for,
take, receive, accept or retain (subject to the applicable provisions of the
Bankruptcy Code), directly or indirectly, any payment or distribution (in
cash, property or securities, by set-off or otherwise) of or on account of
any Subordinated Debt or take any Collection Action, if, at the time of such
action, payment or distribution or immediately after giving effect thereto:
i. (x) a Payment Default shall have occurred and such Payment
Default shall not have been cured or waived or (y) judicial proceedings
shall be pending in respect of such Payment Default; or
ii. all of the following shall have occurred:
(1) the Subordinated Creditor shall have received written notice
(a "Payment Blockage Notice") from Sanwa of the occurrence of a
Covenant Default (which Payment Blockage Notice shall describe the
nature of such Covenant Default and shall specify that such notice is
a Payment Blockage Notice pursuant to this Agreement);
(2) such Covenant Default shall not have been cured or waived;
and
(3) less than one hundred eighty (180) days shall have elapsed
after the date of the receipt of the Payment Blockage Notice (the
period during which the restrictions imposed by this subsection
2(b)(ii) are in effect is hereinafter referred to as a "Blockage
Period");
PROVIDED, that (i) at least thirty (30) days must elapse between the
termination of one Blockage Period and the commencement of a
subsequent Blockage Period and the aggregate duration of all Blockage
Periods shall not exceed one hundred eighty (180) days during any
period of three hundred sixty (360) consecutive days, and (ii) no
Covenant Default which exists on the date of the commencement of a
Blockage Period and which was known to
-6-
Sanwa on such date may be made the basis of the commencement of a
subsequent Blockage Period; and PROVIDED FURTHER that successive
breaches of financial or other non-payment covenants by the
Borrower shall be deemed to be separate Covenant Defaults.
The foregoing restrictions in this subsection 2(b) shall cease to
apply and, unless otherwise prohibited under Section 2, 5 or 6 hereof, the
Borrower shall be permitted to resume payments with respect to the Subordinated
Debt (including, without limitation, all payments which shall not have been made
on account of the provisions contained in this subsection 2(b)):
(x) in the case of a Payment Default, upon the earlier to occur
of (1) a cure or waiver of such Payment Default or the dismissal of
any such judicial proceeding by the Senior Lenders or (2) payment in
full in cash (or in another manner agreed to in writing by the Senior
Lenders in their sole discretion) of all Sanwa Debt; or
(y) in the case of a Covenant Default, upon the earlier to occur
of (1) the cure or waiver thereof or (2) the expiration of the
Blockage Period or the earlier termination of such Blockage Period by
the Senior Lenders.
If any such Covenant Default shall have been cured or waived, Sanwa
shall so notify the Subordinated Creditor in writing of such occurrence;
PROVIDED that failure of Sanwa to give such notice shall not in any way
affect the terms of this Agreement or render Sanwa or any other Senior Lender
liable to the Subordinated Creditor in any respect or relieve the
Subordinated Creditor of its obligations and agreements set forth in this
Agreement.
c. Notwithstanding any language in Section 2.2(b) to the
contrary, following an acceleration of the maturity of any of the Sanwa Debt
(whether as a result of a Payment Default, a Covenant Default, an Event of
Bankruptcy or otherwise) and as long as such acceleration shall continue
unrescinded, the Sanwa Debt shall first be paid in full in cash (or in
another manner agreed to in writing by the Senior Lenders in their sole
discretion) before any payment is made on account of or applied on the
Subordinated Debt.
d. Each payment of the Subordinated Debt by the Borrower shall be
deemed to constitute a representation of the Borrower to Sanwa and the other
Senior Lenders and the Subordinated Creditor that such payment is permitted
to be paid by the Borrower under this Agreement. Notwithstanding anything to
the contrary set forth herein, the Subordinated Creditor shall be entitled to
retain (subject to the applicable provisions of the Bankruptcy Code) any such
payment unless the Subordinated Creditor received a notice of a Payment
Default or a Payment Blockage Notice from Sanwa
-7-
hereunder, in which case the Subordinated Creditor shall hold and deliver to
Sanwa such payment or an amount of immediately available funds equal to the
amount thereof in accordance with the terms of Section 7 hereof within ten
(10) days of receipt of such notice. Any notice given under this subsection
2(d) arising from a Covenant Default shall constitute a Payment Blockage
Notice for purposes of this Section 2, commencing on such date of payment of
the Subordinated Debt, and the duration of any resulting Blockage Period
shall be governed in all respects by the terms of subsection 2(b) hereof.
e. This Agreement shall apply with respect to all of the Sanwa
Debt, regardless of how or in what manner the Sanwa Debt is incurred, or
whether the Sanwa Debt has already been incurred or may be incurred in the
future by future advances or other financial accommodations made or extended
by the Senior Lenders as of the date hereof or hereafter or by Persons that
become holders of Sanwa Debt after the date hereof, or whether such future
advances or other financial accommodations are made at the discretion of the
Senior Lenders or such other Person under the Sanwa Documents or pursuant to
commitments thereunder.
f. The Subordinated Creditor acknowledges and agrees that the
subordination provisions herein contained are, and are intended to be, an
inducement and a consideration to the Senior Lenders, whether the Sanwa Debt
was created or acquired before or after the issuance of the Subordinated
Debt, to continue to hold or to acquire and continue to hold such Sanwa Debt
and the Senior Lenders shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold such Sanwa Debt.
If the Subordinated Creditor shall attempt to take any action in violation
of this Agreement, Sanwa and the other Senior Lenders may interpose as a
defense or plea the making of this Agreement and Sanwa and the other Senior
Lenders may intervene and interpose such defense in their name, and may by
virtue of this Agreement restrain the violation thereof.
Section 3. PERMITTED PAYMENTS. Subject to the terms of Sections
2, 5, and 6 hereof and subsection 8.20 of the Sanwa Loan Agreement, the
Borrower may pay to the Subordinated Creditor and the Subordinated Creditor
may receive, accept and retain (subject to the applicable provisions of the
Bankruptcy Code) from the Borrower payments made by the Borrower on the
Subordinated Debt in accordance with the terms of the Subordinated Debt
Documents; PROVIDED that no Default or Event of Default would result after
giving effect to any such payment. The Borrower will not, directly or
indirectly, make or agree to make, and the Subordinated Creditor will not ask
for, demand, take, receive, accept or retain (subject to the applicable
provisions of the Bankruptcy Code), directly or indirectly, any prepayment of
the Subordinated Debt except as permitted by the terms of this Agreement and
the Sanwa Loan Agreement as in effect on the date hereof without the prior
written consent of the Senior Lenders.
-8-
Section 4. SUBORDINATED DEBT OWED TO THE SUBORDINATED CREDITOR.
The Subordinated Creditor represents and warrants to Sanwa and the other
Senior Lenders that, as of the date hereof (i) the only outstanding
Subordinated Debt is that incurred under the Subordinated Note, (ii) the
aggregate outstanding Subordinated Debt is $15,000,000, plus fees and other
charges incurred by the Borrower pursuant to the Subordinated Debt Documents
in connection with the closing of the Subordinated Debt transaction, (iii) it
holds no Lien in or upon any property of the Borrower or any of its
Subsidiaries to secure payment of the Subordinated Debt, (iv) no other Person
owns any interest in the Subordinated Debt (whether as joint holder,
participant or otherwise) and (v) to the best of the Subordinated Creditor's
knowledge, no default or event of default or other breach exists under the
Subordinated Debt Documents.
The Subordinated Creditor may not negotiate, sell, assign, transfer
or otherwise dispose of (collectively a "transfer") all or any portion of the
Subordinated Debt or any interest therein unless (a) the Subordinated
Creditor shall have given Sanwa at least ten (10) days' prior written notice
of such proposed transfer and (b) the transferee shall have unconditionally
agreed in writing, in each instance, in advance of or contemporaneously with
such transfer and in form and substance satisfactory to Sanwa to be bound by
the terms of this Agreement.
Section 5. STAND-STILL PROVISIONS. Subject to the terms of
SECTIONS 2 and 6 hereof and subsection 8.20 of the Sanwa Loan Agreement,
upon the occurrence and during the continuance of a default with respect to
the Subordinated Debt (other than by reason of a Payment Default or a
Blockage Period) the Subordinated Creditor may ask or make demand for payment
of any payment of any Subordinated Debt then due in accordance with the terms
of the Subordinated Debt Documents, but shall not take any other action to
enforce payment of such amount or take any other Collection Action with
respect to the Subordinated Debt or the Borrower or any guarantor until the
earliest to occur of:
(a) payment in full in cash (or in another manner agreed to in
writing by the Senior Lenders in their sole discretion) of all Sanwa Debt;
(b) the acceleration of all Sanwa Debt;
(c) an Event of Bankruptcy; or
(d) with respect to a Significant Subordinated Debt Default only,
one hundred eighty (180) days shall have elapsed from the date on which the
Subordinated Creditor shall have given notice (a "Significant Subordinated
Debt Default Notice") to the Borrower and Sanwa of the occurrence of any
Significant Subordinated Debt Default which Significant Subordinated Debt
Default Notice shall describe the nature of such Significant Subordinated
Debt Default
-9-
and shall specify that such notice is a Significant Subordinated Debt Default
Notice pursuant to this Agreement;
PROVIDED that any payments or proceeds of such exercise of any Collection Action
received by the Subordinated Creditor shall be subject to the terms of Sections
2 and 6 hereof and shall be paid over to Sanwa in accordance with Section 7
hereof.
Notwithstanding anything contained herein to the contrary, if (i)
following the acceleration of the Sanwa Debt as described in clause (b)
above, such acceleration is rescinded by the Senior Lenders, whether or not
any existing Event of Default shall have been waived or cured, and the
Borrower is restored to the STATUS QUO ANTE existing prior to such
acceleration, and (ii) the Subordinated Creditor has taken any Collection
Actions, then all such Collection Actions shall likewise be rescinded or
terminated. Upon the occurrence of any such rescission, the terms of this
Agreement shall continue to control any subsequent Collection Actions by the
Subordinated Creditor. In taking any Collection Action, the Subordinated
Creditor shall not take any action which is intended to hinder or delay any
Enforcement Action taken by the Senior Lenders or which is inconsistent with
the provisions of this Agreement.
As between the Subordinated Creditor and the Borrower, the
existence of any payment bar or standstill restriction hereunder shall not
constitute a waiver of the Subordinated Creditor's rights to receive payments
of the Subordinated Debt when due or prevent or suspend the occurrence of an
"Event of Default" under the Subordinated Debt Documents.
Section 6. INSOLVENCY PROCEEDINGS. Upon the occurrence of an
Event of Bankruptcy:
a. This Agreement shall be applicable both before and after the
commencement, whether voluntary or involuntary, of any Event of Bankruptcy,
and all references herein to the Borrower shall be deemed to apply to the
Borrower as debtor and/or debtor in possession and to any trustee in
bankruptcy for the estate of the Borrower. Each of the parties hereto
acknowledges and agrees that this Agreement shall be enforceable under
Section 510(a) of the Bankruptcy Code. Without limiting the generality of the
foregoing, this Agreement, the priorities set forth herein and the rights and
obligations of the parties hereto with regard to Collateral shall be
applicable to all post-petition Liens on Collateral (whether such Liens are
additional or replacement Liens)granted pursuant to any bankruptcy court
order, stipulation or agreement to the same extent as if granted under the
Sanwa Documents.
b. Sanwa and the other Senior Lenders shall be entitled to
receive indefeasible payment in full in cash (or in another manner agreed to
in writing by the Senior Lenders in their sole discretion) of all Sanwa Debt
before any payment or distribution,
-10-
whether in cash, property or securities, is made on account of or applied to
the Subordinated Debt;
c. The Subordinated Debt shall forthwith become due and payable,
and any payment or distribution of assets of the Borrower of any kind or
character that occurs after an Event of Bankruptcy, whether in cash, property
or securities, to which the Subordinated Creditor would be entitled except
for the provisions of this Agreement (including any payment that may be
payable by reason of any other indebtedness of the Borrower being
subordinated to payment of any of the Subordinated Debt), shall be paid or
delivered by any debtor, debtor in possession, receiver, liquidator,
custodian, conservator, trustee or other Person making such payment or
distribution, directly to Sanwa for application to the payment of the Sanwa
Debt remaining unpaid, to the extent necessary to indefeasibly pay in full in
cash (or in another manner agreed to in writing by the Senior Lenders in
their sole discretion) of all Sanwa Debt after giving effect to any
concurrent payment or distribution to Sanwa and the other Senior Lenders. To
facilitate the foregoing, at the request of Sanwa, the Subordinated Creditor
shall authorize, empower and direct any such debtor, debtor in possession,
receiver, liquidator, custodian, conservator, trustee or other Person having
authority in the premises to effect all such payments and deliveries. The
Subordinated Creditor also irrevocably authorizes and empowers the Senior
Lenders to demand, xxx for, collect and receive every such payment or
distribution described herein, such Person to make all such payments and
distributions directly to the Senior Lenders;
d. The Subordinated Creditor hereby irrevocably authorizes and
empowers the Senior Lenders, if the Subordinated Creditor fails to file a
claim or proof of claim in any case or proceeding related to an Event of
Bankruptcy at least forty-five (45) calendar days prior to the date
established by rule of law or order of court for such filing, to file and
prove such claims on behalf of the Subordinated Creditor;
e. The Subordinated Creditor shall execute and deliver to the
Senior Lenders all such further instruments and other documentation
confirming the above authorization, and all such powers of attorney, proofs
of claim and assignment of claims, and shall take all such other action, as
may be reasonably requested by the Senior Lenders to enforce such claims and
carry out the purposes of this SECTION 6;
f. In the event Sanwa or any other Senior Lender is required in
any case or proceeding related to an Event of Bankruptcy or otherwise to turn
over or otherwise return to the Borrower, the estate of the Borrower or any
guarantor, any third party or any trustee, receiver or other representative
of the Borrower or any guarantor any payment or other amount received with
respect to the Sanwa Debt (a "Recovery"), the obligations of the Subordinated
Creditor under this Agreement shall continue to be
-11-
effective, or be reinstated, as the case may be, and the Sanwa Debt shall be
reinstated to the extent of such Recovery and Sanwa and the other Senior
Lenders shall be entitled to receive payment in full in cash (or in another
manner agreed to in writing by the Senior Lenders in their sole discretion)
of all such amounts, all as though such payment had not been made;
g. The Subordinated Creditor shall not contest (or support any
other Person contesting) (i) any request by the Senior Lenders for adequate
protection in any case or proceeding related to an Event of Bankruptcy or
(ii) any objection by the Senior Lenders to any motion, relief, action or
proceeding in any such case or proceeding based on the Senior Lenders
claiming a lack of adequate protection; and
h. Although, subject to paragraph (c) above, the Subordinated
Creditor has retained its rights to vote its claims and otherwise act on its
own behalf in any case or proceeding related to an Event of Bankruptcy, the
Subordinated Creditor agrees that it will not (i) directly or indirectly,
amend the Subordinated Documents or take any other action with respect to the
Subordinated Documents or vote in any way in connection with an Event of
Bankruptcy that would be in violation of, or inconsistent with, or result in
a breach of, this Agreement or so as to challenge or contest in a case or
proceeding related to an Event of Bankruptcy or otherwise (x) the validity,
perfection, priority or enforceability of the Sanwa Debt or the liens,
security interests, mortgages and guaranties granted to secure payment of any
of the Sanwa Debt, (y) the rights of Sanwa and the other Senior Lenders set
forth in any Sanwa Document with respect to such liens, security interests,
mortgages or guaranties or (z) the validity or enforceability of any term,
condition or provision of this Agreement, (ii) induce any other Person to
take any such action or (iii) cooperate with any Person in taking any such
action. Nothing herein shall be construed to prohibit the Senior Lenders
from seeking, in any case or proceeding related to an Event of Bankruptcy, a
determination of the value of its secured claims, including, without
limitation, a determination under 11 U.S.C. Section 506(a) and Bankruptcy
Rule 3012.
Nothing contained herein shall prohibit or in any way limit Sanwa
or any other Senior Lender from objecting in any such case or proceeding
related to an Event of Bankruptcy or otherwise to any action taken by the
Subordinated Creditor.
Upon any payment or distribution of assets of the Borrower referred
to in this Section 6, the Subordinated Creditor shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
any case or proceeding related to an Event of Bankruptcy is pending, and upon
a certificate of the debtor, debtor in possession, receiver, liquidator,
custodian, conservator, trustee or other Person making any payment or
distribution to such holders for the purpose of
-12-
ascertaining the Persons entitled to participate therein, the then
outstanding principal amount of the Sanwa Debt and any and all amounts
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this SECTION 6.
Section 7. PAYMENTS OR DISTRIBUTIONS RECEIVED BY THE SUBORDINATED
CREDITOR. Except as to payments or distributions which the Subordinated
Creditor is permitted to receive, accept and retain (subject to the
applicable provisions of the Bankruptcy Code) pursuant to this Agreement,
should any payment or distribution of any kind or character be paid to or
received by, whether in cash, property or securities, upon or with respect to
the Subordinated Debt prior to the payment in full in cash (or in another
manner agreed to in writing by the Senior Lenders in their sole discretion)
of all Sanwa Debt, the Subordinated Creditor shall receive and hold the same
in trust, as trustee, for the benefit of Sanwa and the other Senior Lenders
and shall forthwith deliver the same to Sanwa in precisely the same form
received (except for the endorsement or assignment of the Subordinated
Creditor where necessary) for application to the Sanwa Debt and until so
delivered, the same shall not be commingled with any assets of the
Subordinated Creditor and shall be held in trust by the Subordinated Creditor
as the property of Sanwa and the other Senior Lenders.
Section 8. LIENS. The Subordinated Creditor represents that it
holds no guaranty of the Subordinated Debt or lien, security interest or
mortgage in or upon any assets of the Borrower or any of its Subsidiaries to
secure payment of the Subordinated Debt. After the date hereof, the
Subordinated Creditor agrees not to accept any guaranty of the Subordinated
Debt or any lien, security interest or mortgage in or upon the assets of the
Borrower or any Subsidiary of the Borrower to secure the Subordinated Debt.
Section 9. SUBROGATION. After all of the Sanwa Debt has been paid
in full in cash (or in another manner agreed to in writing by the Senior
Lenders in their sole discretion) and until the Subordinated Debt has been
paid in full, the Subordinated Creditor shall be subrogated to the rights of
Sanwa and the other Senior Lenders with respect to the Collateral and to
receive, accept and retain (subject to the applicable provisions of the
Bankruptcy Code) payments or distributions with respect to the Sanwa Debt, to
the extent that distributions otherwise payable to the Subordinated Creditor
have been applied to the payment of the Sanwa Debt in accordance with the
provisions of this Agreement. As among the Borrower, its creditors other
than the Senior Lenders and the Subordinated Creditor, any payment or
distribution applied to the payment of the Sanwa Debt in accordance with the
provisions of this Agreement which otherwise would have been made to the
Subordinated Creditor shall not be deemed a payment by the Borrower on the
Sanwa Debt. The provisions of this Agreement are and are intended solely for
the purpose of defining the relative rights of Sanwa, the other Senior
Lenders and the Subordinated Creditor.
-13-
Nothing contained in this Agreement is intended to or shall alter or impair
the obligations of the Borrower, which are absolute and unconditional, to pay
to the Subordinated Creditor the Subordinated Debt as and when the same shall
become due and payable in accordance with its terms.
Section 10. TERM. This Agreement shall constitute a continuing
agreement between Sanwa, the other Senior Lenders and the Subordinated
Creditor, and the successors and assigns of each of them, regardless of
whether such successors and assigns are signatories hereto, and the Senior
Lenders or their respective successors and assigns may continue, without
notice to the Subordinated Creditor or to the successors and assigns thereof,
to lend monies, extend credit and make other accommodations to or for the
account of the Borrower in reliance upon the provisions of this Agreement.
This Agreement shall be irrevocable by the Subordinated Creditor until all of
the Sanwa Debt shall have been paid in full in cash (or in another manner
agreed to in writing by the Senior Lenders in their sole discretion) and all
commitments under the Sanwa Documents have expired or been terminated in
writing, or the Subordinated Debt shall have been paid in full in cash.
Section 11. WAIVERS OF THE SUBORDINATED CREDITOR. All of the
Sanwa Debt shall be deemed to have been made or incurred in reliance upon
this Agreement, and the Subordinated Creditor expressly waives notice of the
creation, renewal, extension, increase, release, accrual or other incurrence
of Sanwa Debt from time to time under the Sanwa Documents or the exchange,
sale or surrender of any Collateral as the Senior Lenders may deem advisable
or of the reliance of Sanwa and the other Senior Lenders on these provisions
and all other notices not specifically required pursuant to the terms of this
Agreement or by law. The Subordinated Creditor agrees that (a) the
provisions of this Agreement shall be specifically enforceable against it by
Sanwa and the other Senior Lenders and irrevocably waives any defense based
upon the adequacy of a remedy at law which might be asserted as a bar to such
remedy of specific performance, and (b) without notice to or further assent
by it, the Sanwa Debt may from time to time, in whole or in part, be renewed,
extended, increased or released by the Senior Lenders, as the Senior Lenders
may deem advisable, that any Collateral for the Sanwa Debt may from time to
time, in whole or in part, be exchanged, sold, or surrendered by the Senior
Lenders, as the Senior Lenders may deem advisable, and that the Senior
Lenders may take any other action it may deem necessary or appropriate in
connection with the Sanwa Debt, all without in any manner or to any extent
impairing or affecting the obligations of the Borrower or the Subordinated
Creditor. The Subordinated Creditor agrees that Sanwa has not made any
warranties or representations with respect to the due execution, legality,
validity, completeness or enforceability of any Sanwa Documents or the
collectibility of the Sanwa Debt, or the perfection of liens, security
interests or mortgages in the Collateral, and that Sanwa and the other Senior
Lenders shall be entitled to manage and
-14-
supervise the Sanwa Debt owed to them in accordance with applicable law and
its usual practices, modified from time to time as Sanwa and the other Senior
Lenders may deem appropriate under the circumstances.
Section 12. AGREEMENT UNAFFECTED BY CERTAIN EVENTS. The rights
under this Agreement of Sanwa and the other Senior Lenders as against the
Subordinated Creditor shall remain in full force and effect without regard
to, and shall not be impaired or affected by: (a) any act or failure to act
on the part of the Borrower; (b) the validity or enforceability of any Lien
on any of the Collateral or of any of the Sanwa Documents or the Subordinated
Debt Documents; (c) any extension or indulgence in respect of any payment or
prepayment of the Sanwa Debt or any part thereof or in respect of any other
amount payable to Sanwa or the other Senior Lenders; (d) any amendment,
modification or waiver of, or addition or supplement to, or deletion of, or
compromise, release, consent, termination or other action in respect of, any
of the terms of any of the Sanwa Documents, the Subordinated Debt Documents
or any other agreement which may be made relating to the Sanwa Debt or the
Subordinated Debt; PROVIDED that the Senior Lenders hereby agree that the
Sanwa Documents shall not be amended to expressly prohibit the payment of the
Subordinated Debt without regard to the terms of the Subordination Agreement;
(e) any exercise or non-exercise by the Senior Lenders of any right, power,
privilege or remedy under or in respect of any portion of the Sanwa Debt or
this Agreement, or any waiver of any such right, power, privilege or remedy
or any default in respect of such Sanwa Debt or this Agreement, or any
receipt by Sanwa or the other Senior Lenders of any security, or any failure
by Sanwa or the other Senior Lenders to perfect a Lien on, or any release by
such holder of, any Collateral for the payment of the Sanwa Debt; (f) any
merger or consolidation of the Borrower into or with any of its Subsidiaries
or any such Subsidiary with any other Subsidiary of the Borrower or of the
Borrower or any of its Subsidiaries into or with any other Person, or any
sale, lease, exchange, transfer or other disposition of any or all of the
assets or property of the Borrower or any of its Subsidiaries to any other
Person; (g) any impairment, modification, change, exchange, release or
subordination of or limitation on, any liability of, or stay of actions or
other Lien enforcement proceedings against, any of the Borrower, its property
or its estate in bankruptcy resulting from any Event of Bankruptcy; (h) any
other circumstances which might otherwise constitute a defense available to,
or a discharge of, the Borrower or a subordinated creditor; or (i) the
absence of any notice to, or knowledge by, the Subordinated Creditor of the
existence or occurrence of any of the matters or events set forth in the
foregoing clauses (a) through (h).
Section 13. AMENDMENTS TO SUBORDINATED DEBT DOCUMENTS. Prior to the
payment in full in cash (or in another manner agreed to in writing by the Senior
Lenders in their sole discretion) of all Sanwa Debt in accordance with the terms
thereof and hereof and notwithstanding anything contained in the Subordinated
Debt
-15-
Documents to the contrary, without the prior written consent of the Senior
Lenders (which consent shall not be unreasonably withheld), the Subordinated
Creditor shall not agree to any amendment, modification, restatement or other
supplement to any of the Subordinated Debt Documents.
Section 14. NOTICE FROM OTHER PARTIES. a. Each of Sanwa and the
Subordinated Creditor agrees to give to each other party hereto copies of any
written notices of default, termination, demand for payment, acceleration,
Enforcement Action and any other material written notice of a like nature
including, without limitation, any such notice which may be given under or
pursuant to the terms of any of the applicable Sanwa Documents or the
Subordinated Debt Documents, which such party may give hereafter to the
Borrower or any guarantor, in each case concurrently with, or as soon as
practicable after, the giving of such notice to the Borrower or any
guarantor; PROVIDED that failure of any party to give a copy of any such
notice as provided herein shall not in any way affect the validity or
effectiveness of the notice or render the party liable to any other party in
any respect or relieve any such party of its obligations and agreements
contained herein.
b. The Subordinated Creditor shall not at any time be charged with
knowledge of the existence of any facts which would prohibit the making of
any payment to it, unless and until the Subordinated Creditor shall have
received a notice of a Payment Default or a Payment Blockage Notice from
Sanwa hereunder. Prior to the receipt of any such notice, the Subordinated
Creditor shall be entitled to assume conclusively that no such facts exist,
without, however, limiting any right of Sanwa and the other Senior Lenders
under the terms of this Agreement to recover from the Subordinated Creditor
any payment made in contravention of this Agreement.
c. The Subordinated Creditor shall be entitled to rely on the
delivery to it of a notice by a Person representing itself to be the
representative of Sanwa to establish that such notice has been given by
Sanwa. In the event that the Subordinated Creditor determines in good faith
that further evidence is required with respect to the right of any such
Person to participate in any payment or distribution pursuant to this
Agreement, the Subordinated Creditor may request evidence to the reasonable
satisfaction of the Subordinated Creditor as to any fact pertinent to the
rights of the Subordinated Creditor under this Agreement, and if such
evidence is not furnished, then the Subordinated Creditor may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
Section 15. NOTICES. Any notice, demand or other communication
required or permitted under the terms of this Agreement shall be in writing and
shall be made by overnight courier service, telecopier, telegram, telex or
certified or
-16-
registered mail, return receipt requested, and shall be deemed to be received
by the addressee one (1) Business Day after sending, if sent by courier,
telecopier, telegram or telex, and three (3) Business Days after mailing, if
sent by certified or registered mail. Notices shall be addressed as provided
below:
If to the Subordinated Creditor:
Dilmun Financial Services
Harbormaster Place 4
International Financial Services Centre
Dublin, Ireland
Attention: Xxxx Xxxxx
Phone: 000-000-000-00000
Telecopy: 011-353-167-00181
With a copy to:
Bahrain International Bank E.C.
Bahrain Commercial Xxxxxxx
00xx Xxxxx, X.X. Xxx 0000
Xxxxxx, Xxxxxxx
Attention: Xxxxxx Xx Xxxxx
Phone: 000-000-000-000
Telecopy: 011-973-535-141
and
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Phone: (000) 000-0000
Telecopy: (000) 000-0000
If to Sanwa or any other Senior Lender:
SANWA BUSINESS CREDIT CORPORATION
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Phone: (000) 000-0000
Telecopy No.: (000) 000-0000
or at such other address as any party may designate by notice to the other
parties in accordance with the provisions hereof.
Section 16. INSTRUMENT LEGEND. The Subordinated Creditor Note, and
any renewals or replacements thereof, and all promissory notes or other
securities for which it is exchanged or into which it is converted will, on the
date hereof or prior to the issuance thereof, be inscribed with a legend
conspicuously stating that payment thereof is subordinate and junior in right of
payment
-17-
to the Sanwa Debt pursuant to the terms of this Agreement. The Subordinated
Creditor shall deliver to Sanwa a photocopy of the original Subordinated Note
marked with such legend.
Section 17. EXERCISE OF RIGHTS; CUMULATIVE REMEDIES. No failure by
the Senior Lenders to exercise, and no delay by the Senior Lenders in exercising
from time to time, any right, power, privilege or remedy under the Sanwa Debt or
the Sanwa Documents or any right, power, privilege or remedy under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power, privilege or remedy under this Agreement preclude
any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. The rights, powers, privileges and remedies provided in
this Agreement and in any agreement relating to any of the Sanwa Debt, the Sanwa
Documents and all other agreements, instruments and documents referred to in any
of the foregoing are cumulative and shall not be exclusive of any rights,
powers, privileges or remedies provided by law.
Section 18. GOVERNING LAW. This Agreement shall be governed by, and
the rights and liabilities of the parties hereto construed, in accordance with
the internal laws and decisions of the State of Illinois without regard to
choice of law or conflicts of law principles.
Section 19. PARTIES. This Agreement shall be binding upon, and inure
to the benefit of, Sanwa, the other Senior Lenders and the Subordinated Creditor
and their respective successors, transferees and assigns; PROVIDED that any
assignment, sale, disposition or other transfer by the Subordinated Creditor of
any of the Subordinated Debt or the Subordinated Debt Documents shall be made in
accordance with the terms of SECTION 4 hereof. Notwithstanding the failure to
execute any such agreement, the agreements effected hereby shall survive any
such assignment, sale, disposition or other transfer, and the terms of this
Agreement shall be binding upon the successors and assigns of the Subordinated
Creditor. In addition, any successor or assignee of Sanwa or any other Senior
Lender shall be entitled to rely upon and be the third party beneficiary of the
agreements provided for herein and shall be entitled to enforce the terms and
provisions hereof as if initially a party hereto. The term "Borrower" as used
herein shall also refer to the successors and assigns of the Borrower,
including, without limitation, a receiver, trustee, custodian or debtor in
possession. This Agreement is solely for the purpose of defining the rights and
priorities of the parties hereto, and their respective successors and assigns,
and no other Person (including, without limitation, the Borrower) shall have any
right, benefit, priority or interest under, or because of the existence of, this
Agreement or shall be a direct or indirect beneficiary of or have any direct or
indirect cause of action or claim in connection with this Agreement, nor shall
this Agreement affect the obligations of the Borrower to Sanwa or the other
Senior
-18-
Lenders or to the Subordinated Creditor, which obligations shall remain
absolute and unconditional in all circumstances.
Section 20. SECTION TITLES. The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the Agreement between the parties hereto.
Section 21. COUNTERPARTS. This Agreement may be executed by the
parties hereto in any number of separate counterparts (or telecopied
counterparts with original execution copy to follow) and by the different
parties on separate counterparts, all of which counterparts taken together shall
constitute one and the same instrument.
Section 22. WAIVERS; AMENDMENTS. No waiver shall be deemed to be
made by Sanwa or the other Senior Lenders of any of its rights hereunder unless
the same shall be in writing signed on behalf of Sanwa and each waiver, if any,
shall be a waiver only with respect to the specific instance involved and shall
in no way impair the rights of Sanwa or the other Senior Lenders in any other
respect at any other time. Unless otherwise expressly provided for herein, no
provision of this Agreement may be amended, modified or supplemented without the
express prior written consent thereto of Sanwa and the Subordinated Creditor.
Section 23. ENTIRE AGREEMENT. This Agreement contains all of the
terms and conditions agreed upon by the parties relating to its subject matter
and supersedes any and all prior and contemporaneous agreements, negotiations,
correspondence, understandings and communications of the parties, whether oral
or written, respecting that subject matter.
Section 24. SUBMISSION TO JURISDICTION; MUTUAL WAIVER OF JURY AND
BOND. EACH OF SANWA, THE OTHER SENIOR LENDERS AND THE SUBORDINATED CREDITOR
HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS, AND IRREVOCABLY AGREES
THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN
SUCH COURTS, AND EACH OF SANWA, THE OTHER SENIOR LENDERS AND THE SUBORDINATED
CREDITOR WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM
NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS
SET FORTH IN SECTION 15 HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME
SHALL HAVE BEEN POSTED TO THE SUBORDINATED CREDITOR'S ADDRESS BY THE
SUBORDINATED CREDITOR'S AGENT AS SET FORTH BELOW. SANWA, THE OTHER SENIOR
LENDERS AND THE SUBORDINATED
-19-
CREDITOR ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY
EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO
THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
SANWA OR THE OTHER SENIOR LENDERS. NOTHING CONTAINED IN THIS SECTION 24
SHALL AFFECT THE RIGHT OF SANWA TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF SANWA OR THE OTHER SENIOR LENDERS TO
BRING ANY ACTION OR PROCEEDING OR TAKE OTHER LEGAL ACTION IN THE COURTS OF
ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO ENFORCE ITS LIEN AND
SECURITY INTERESTS AGAINST COLLATERAL LOCATED IN SUCH JURISDICTION. THE
SUBORDINATED CREDITOR WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
Section 25. INVALIDITY OR CONFLICT. As between Sanwa and the other
Senior Lenders, on the one hand, and the Subordinated Creditor, on the other
hand, in the event of any conflict between any term, covenant or condition of
this Agreement and any term, covenant or condition of the Subordinated Debt
Documents, the provisions of this Agreement shall govern and be controlling.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The parties hereto shall endeavor in good faith
negotiations to replace any such invalid or unenforceable provision with a valid
provision, the economic effect of which comes as close as possible to that of
the invalid or unenforceable provision.
Section 26. MARSHALING. So long as this Agreement shall be in
effect, the Subordinated Creditor to the fullest extent permitted by applicable
law, waives, with respect to the Collateral, any requirement regarding, and
agrees not to demand, request, plead or otherwise claim the benefit of, any
marshaling by Sanwa or the other Senior Lenders that may otherwise be available
under applicable law.
Section 27. ADDITIONAL PROVISIONS
(a) Sanwa and the Subordinated Creditor each undertake to perform
only such obligations on its part as are specifically set forth in this
Agreement, and no implied covenants or obligations with respect to any party
shall be read into this Agreement against the other party. Except to the extent
specifically provided for by Section 7 hereof, neither party hereto
-20-
shall be deemed to owe any fiduciary duty to the other party by virtue of the
provisions of this Agreement.
(b) The Borrower acknowledges that the Subordinated Debt shall not be
subordinated (i) to claims of any trade creditors of the Borrower or (ii) in
right of payment to the prior payment of any existing or future unsecured
indebtedness of the Borrower, but rather shall rank equally with all existing
and future unsecured indebtedness of the Borrower, (except as otherwise may be
required by bankruptcy or other laws affecting the rights of creditors
generally).
-21-
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
SANWA BUSINESS CREDIT CORPORATION, as
a Senior Lender and as agent for the
other Senior Lenders
By:
------------------------------
Name:
-------------------------
Title:
------------------------
DILMUN FINANCIAL SERVICES
By:
------------------------------
Name:
-------------------------
Title:
------------------------
BIB HOLDINGS (BERMUDA) LTD.
By:
------------------------------
Name:
-------------------------
Title:
------------------------
-22-
ACKNOWLEDGMENT AND AGREEMENT OF THE BORROWER
The undersigned, Brothers Gourmet Coffees, Inc., the Borrower named in
the foregoing Agreement, does hereby accept, and acknowledge receipt of a copy
of, the foregoing Agreement, and agrees that (a) it will not pay any of the
Subordinated Debt except as the foregoing Agreement permits, and (b) it will be
bound by all provisions of the foregoing Agreement. In the event of a breach by
the Borrower of any of the provisions of the Agreement, all of the Sanwa Debt
shall, without presentment, demand, protest or notice of any kind become
immediately due and payable unless the Senior Lenders shall otherwise elect in
writing.
All capitalized terms used in this Acknowledgement and Agreement without
definition shall have the same meanings as set forth in the foregoing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Acknowledgement
and Agreement to be duly executed as of the day and year first above written.
BROTHERS GOURMET COFFEES, INC.
By:
------------------------------
Name:
------------------------
Title:
------------------------
