Ex 99.10
SELLER SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT dated as of June 27, 1997 among Pumpkin Ltd.,
a Delaware corporation (together with its successors, the "Company"), Pumpkin
Masters Holdings, Inc. ("Holdings"), the Subordinated Obligations Holders (as
defined below), and NationsCredit Commercial Corporation, as Agent (the "Agent")
for the Lenders referred to below.
W I T N E S S E T H:
WHEREAS, the Company, Holdings, the Lenders party thereto (the
"Lenders") and the Agent are parties to the Credit Agreement (as defined below);
and
WHEREAS, in order to induce the Lenders to enter into such Credit
Agreement, the Company, Holdings and the Subordinated Obligations Holders have
agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and
not otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used herein, have the
following respective meanings:
"Credit Agreement" means the Credit Agreement dated as of June 27,
1997, among the Company, Holdings, the Lenders and the Agent, as the same may be
amended from time to time.
"Seller Obligations" means the obligations, if any, owing by the
Company or Holdings to Pumpkin, Ltd., a Colorado corporation, and Holdings
pursuant to Sections 3.2 and 3.3 of the Asset Purchase Agreement.
"Senior Commitments" means, without duplication, all commitments to
extend credit (including without limitation any commitments to issue any letters
of credit) and all instruments pursuant to
which commitments or instruments Senior Debt may be incurred (including
without limitation any letters of credit).
"Senior Debt" means all amounts payable with respect to the Credit
Agreement and the Seasonal Line of Credit (as defined in the Asset Purchase
Agreement) and any whole or partial increase, extension, renewal, refinancing or
replacement thereof or of any subsequent Senior Debt, including principal,
premium (if any), interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company or
Holdings whether or not a claim for post-filing interest is allowed or allowable
in such proceeding), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect thereof;
provided, however, that any such refinancing or replacement shall not be Senior
Debt to the extent such refinancing or replacement (i) results in an increase in
the aggregate principal amount of Debt of the Company outstanding plus all
available, but unused, Commitments under the Credit Agreement as of the date of
such proposed refinancing or replacement (plus (x) the amount of any premium
required to be paid under the terms of the instrument governing such Debt and
plus the amount of reasonable expenses incurred by the Company in connection
with such refinancing or replacement, in the aggregate not in excess of
$350,000, and (y) an aggregate principal amount not to exceed $2,000,000) or
(ii) creates Debt with a different maturity date than the final maturity of the
Senior Debt being refinanced or replaced, except with respect to Senior Debt
under the Credit Agreement, the final maturity date may be extended up to the
seventh anniversary of the Closing Date.
"Subordinated Obligations" means (a) all principal of, and interest on
the Seller Obligations (including any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company, Holdings or any of their respective
Subsidiaries or Affiliates, whether or not allowed or allowable as a claim in
any such proceeding) and any other amounts payable with respect thereto and
(b) any amendments, restatements, renewals, extensions or modifications of any
of the foregoing.
"Subordinated Obligations Holder" means any holder from time to time
of Subordinated Obligations.
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SECTION 2. Covenants of Subordinated Obligations Holders. (a) Each
Subordinated Obligations Holder acknowledges and agrees that (i) the Credit
Agreement restricts the ability of the Company, Holdings and their respective
Subsidiaries to make payments in respect of Subordinated Obligations and
(ii) should any Subordinated Obligations Holder collect or receive, directly or
indirectly, any payment of any kind or character, whether in cash or property in
respect of any Subordinated Obligations (and whether by way of payment of
principal or interest, redemption, purchase, other acquisition, dividend,
distribution, guarantee, grant of a security interest, realization of security
or the proceeds thereof, set-off, exercise of contractual or statutory rights or
otherwise), (x) at a time when such payment is prohibited by the terms of this
Agreement, (y) through exercise of remedies permitted under Section 2(c) at any
time while any Senior Debt or any Senior Commitment is outstanding (except for
payments received pursuant to the exercise of remedies permitted under clause
(iii) of Section 2(c) so long as, at the time such payment is received, no Event
of Default (as defined in the Credit Agreement as in existence of the date
hereof) or (z) in the event of any insolvency or bankruptcy proceeding or any
receivership, liquidation, reorganization or other similar proceeding in
connection therewith, relative to the Company or Holdings or to any of their
respective creditors, in their capacity as creditors of the Company or Holdings,
as the case may be, or to substantially all of its property, and in the event of
any proceedings for voluntary liquidation, dissolution or other winding up of
the Company or Holdings, whether or not involving insolvency or bankruptcy, such
Subordinated Obligations Holder will forthwith deliver the same to the Agent for
the equal and ratable benefit of the holders of Senior Debt in precisely the
form received (except for the endorsement or the assignment of or by such
Subordinated Obligations Holder where necessary) for application to payment of
all Senior Debt in full, after giving effect to any concurrent payment or
distribution to the holders of Senior Debt and, until so delivered, the same
shall be held in trust by such Subordinated Obligations Holder as the property
of the holders of Senior Debt.
(b) Unless and until all Senior Debt shall have been paid in full and
all Senior Commitments shall have terminated or been canceled, neither the
Company, Holdings nor any of their respective Subsidiaries or Affiliates shall
make, and no Subordinated Obligations
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Holder shall demand, accept or receive, or shall attempt to collect or
commence any legal proceedings to collect, any direct or indirect payment (in
cash or property or by setoff, exercise of contractual or statutory rights or
otherwise) of or on account of any amount payable on or with respect to any
Subordinated Obligations (including any payment in respect of redemption or
purchase or other acquisition), except (i) the Company may make regularly
scheduled payments of Additional Payments (as defined in the Asset Purchase
Agreement) on the Seller Obligations so long as, immediately before and after
giving effect to any such payment, no Event of Default (as defined in the
Credit Agreement) has occurred and is continuing, (ii) the Company may make a
payment of the aggregate outstanding principal amount of the Seller
Obligations on June 27, 2002, so long as, immediately before and after giving
effect to such payment, no Event of Default (as defined in the Credit
Agreement) has occurred and is continuing, (iii) Holdings may make payments
pursuant to 3.3.4(iii) of the Asset Purchase Agreement, so long as,
immediately before and after giving effect to such payment, no Event of
Default (as defined in the Credit Agreement) has occurred and is continuing,
(iv) Holdings may make payments pursuant to the second proviso to Section
3.2.2 of the Asset Purchase Agreement, so long as, immediately before and
after giving effect to such payment, no Event of Default (as defined in the
Credit Agreement) has occurred and is continuing and (v) as expressly
permitted under Section 2(c).
(c) Unless and until all Senior Debt shall have been paid in full and
all Senior Commitments shall have terminated or been canceled, no Subordinated
Obligations Holder will commence or maintain any action, suit or any other legal
or equitable proceeding against the Company, Holdings or any of their respective
Subsidiaries or Affiliates, or join with any creditor in any such proceeding;
provided that nothing in this Section 2(c) will preclude any Subordinated
Obligations Holder (i) from commencing at any time any action, suit or any other
legal or equitable proceeding to enforce any remedies to which such Subordinated
Obligations Holder is entitled under the instrument governing the Subordinated
Obligations held by such Subordinated Obligations Holder if at such time the
holders of Senior Debt have commenced an action, suit or proceeding to enforce
substantially similar remedies or (ii) from joining with any creditor in any
such proceeding, under any insolvency, bankruptcy,
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receivership, liquidation, reorganization or other similar proceeding if the
holders of Senior Debt have joined in any such proceeding or (iii) from
commencing at any time any action, suit or other proceeding to enforce any
payment of Additional Payments if such payment is permitted under clause (i)
of Section 2(b).
(d) Each Subordinated Obligations Holder hereby waives any and all
notice in respect of the Credit Agreement and agrees and consents that without
notice to or assent by such Subordinated Obligations Holder:
(i) the obligations and liabilities of the Company, Holdings or
any other party or parties to the Credit Agreement (or any promissory
note, security document or guaranty evidencing or securing the same)
may, from time to time, in whole or in part, be renewed, extended,
modified, amended, restated, accelerated, compromised, supplemented,
terminated, sold, exchanged, waived or released;
(ii) the Agent and the Lenders may exchange, release or surrender any
collateral to the Company or any other Person, waive, release or
subordinate any security interest, obtain a guaranty of any Person or a
security interest in or mortgage or other encumbrance on any additional
property as collateral for any obligations of the Company or Holdings in
its sole discretion may elect;
(iii) the Agent and the Lenders may apply payments by the Company or
Holdings or any other Person to such portion of the Secured Obligations (as
defined in the Security Agreements) as they in their sole discretion may
elect;
(iv) any Lender may provide additional financing or otherwise extend
credit to the Company or Holdings;
(v) the Agent and the Lenders may exercise or refrain from
exercising any right, remedy or power granted by or in connection with
the Credit Agreement, any other Financing Documents or any other
agreements relating thereto; and
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(vi) any Lender or the Agent may surrender or release, from time
to time, in whole or in part, any balance or balances of funds with
the Agent or any Lender at any time standing to the credit of the
Company or Holdings;
all as the Agent or the Lenders may deem advisable and all without impairing,
abridging, diminishing, releasing or affecting the obligations of the Company,
Holdings and the Subordinated Obligations Holders hereunder.
(e) Each Subordinated Obligations Holder agrees that it will not
contest the validity, perfection, priority or enforceability of any lien or
security interest granted to secure any Senior Debt or of any guaranty securing
Senior Debt.
SECTION 3. Dissolution, Liquidation or Reorganization of the Company.
(a) In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Company, to Holdings or to any of their
respective creditors, in their capacity as creditors of the Company or Holdings,
or to substantially all of its property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Company, whether
or not involving insolvency or bankruptcy, then:
(i) the holders of the Senior Debt shall first be entitled to receive
payment in full in cash of the principal thereof, premium, if any, interest and
all other amounts payable thereon (accruing before and after the commencement of
the proceedings) before any Subordinated Obligations Holder is entitled to
receive any payment on account or in respect of Subordinated Obligations; and
(ii) any payment or distribution of assets of the Company or Holdings
of any kind or character, whether in cash, property or securities to which any
Subordinated Obligations Holder would be entitled, but for the provisions of
this Section 3, shall be paid or distributed by the liquidating trustee or agent
or other Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or agent,
directly to the Agent and any other representative on behalf of
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the holders of Senior Debt to the extent necessary to make payment in full of
all amounts of Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of the Senior Debt.
(b) The Subordinated Obligations Holders shall not be subrogated to
the rights of the holders of the Senior Debt to receive payments or
distributions of assets of the Company or Holdings until all Senior Debt shall
have been paid in full and all Senior Commitments shall have terminated or been
canceled; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which any Subordinated Obligations Holder would be entitled except
for these provisions shall, as between the Company or Holdings, as the case may
be, its creditors other than the holders of the Senior Debt, and such
Subordinated Obligations Holder, be deemed to be a payment by the Company or
Holdings, as the case may be, to or on account of the Senior Debt. The
provisions of Sections 2 and 3 of this Agreement are and are intended solely for
the purpose of defining the relative rights of holders of Subordinated
Obligations, on the one hand, and the holders of the Senior Debt, on the other
hand.
(c) Upon payment in full of all Senior Debt and the termination or
cancellation of all Senior Commitments, the Subordinated Obligations Holders
shall be subrogated (equally and ratably with the holders of all subordinated
indebtedness of the Company and Holdings, which, by its terms, is not superior
in right of payment to the Subordinated Obligations, and ranks on a parity with
the Subordinated Obligations) to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of the Company
or Holdings applicable to the Senior Debt until all amounts owing on the
Subordinated Obligations shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Subordinated
Obligations of cash, property, securities or other assets by virtue of the
subrogation herein provided which otherwise would have been made to the holders
of the Senior Debt shall, as between the Company or Holdings, as the case may
be, its creditors other than the holders of Senior Debt and the holders of the
Subordinated Obligations, be deemed to be a payment to or on account of the
Subordinated Obligations. The Subordinated Obligations Holders agree that, in
the event that all or any part of any
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payment made on account of the Senior Debt is recovered from the holders of
Senior Debt as a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law, any payment or distribution received
by the Subordinated Obligations Holders on account of the Subordinated
Obligations at any time after the date of the payment so recovered, whether
pursuant to the right of subrogation provided for in this Section 3(c) or
otherwise, shall be deemed to have been received by such holders of
Subordinated Obligations in trust as the property of the holders of the
Senior Debt and such holders shall forthwith deliver the same to the Agent
for the equal and ratable benefit of the holders of the Senior Debt for
application to payment of all Senior Debt in full.
(d) Each Subordinated Obligations Holder agrees that, if an order for
relief under the Bankruptcy Code is entered for or against the Company or
Holdings, it will not oppose any motion of the Company or Holdings for an order
under the Bankruptcy Code authorizing the Company or Holdings, as the case may
be: (i) to obtain new credit from and incur additional indebtedness to the
holders of Senior Debt (which indebtedness, inclusive of all interest and other
charges which may accrue in respect thereof, is sometimes hereinafter referred
to as the "Post-Petition Indebtedness") with such indebtedness to have priority
over any or all administrative expenses of the kind specified in Section 503(b)
or 507(b) of the Bankruptcy Code in accordance with Section 364(c)(1) of the
Bankruptcy Code; (ii) to secure repayment of the Post-Petition Indebtedness by
granting the holders of Senior Debt liens on and security interests in the
assets of the Company or Holdings that are created or acquired after the
commencement of any such case under the Bankruptcy Code, which shall be senior
and prior to any and all other liens, security interests and other claims (the
"Post-Petition Collateral"), and (iii) to secure repayment of amounts then owing
to the holders of Senior Debt under the Credit Agreement or the other Financing
Documents by granting to the holders of Senior Debt a security interest in the
Post-Petition Collateral. In the event that the holders of Senior Debt commence
an adversary proceeding for relief from the automatic stay under Section 362 of
the Bankruptcy Code, each Subordinated Obligations Holder agrees that it will
not oppose such proceeding.
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SECTION 4. Representations and Warranties. Each Subordinated
Obligations Holder represents and warrants that:
(a) The execution, delivery and performance by him of this Agreement
require no action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of any agreement, judgment,
injunction, order, decree or other instrument binding upon him.
(b) This Agreement constitutes a valid and binding agreement of such
Subordinated Obligations Holder.
SECTION 5. Other Agreements. (a) Each Subordinated Obligations Holder
acknowledges and agrees that the Credit Agreement restricts the Company,
Holdings and any of their respective Subsidiaries from agreeing to any amendment
or waiver of any of the terms and conditions of the Operative Documents unless
it obtains the prior written consent of the Required Lenders.
(b) Each Subordinated Obligations Holder acknowledges and agrees that
the holders of Senior Debt have relied upon and will continue to rely upon the
covenants of the Company, Holdings and the Subordinated Obligations Holders
contained herein in entering into the Credit Agreement and in extending credit
to the Company and Holdings pursuant thereto.
SECTION 6. Binding Effect; Restrictions on Transfer. The covenants
of the Subordinated Obligations Holders contained herein shall be binding upon
any Subordinated Obligations Holder and upon their respective heirs, legal
representatives, successors and assigns. Each Subordinated Obligations Holder
agrees that it will not assign, pledge or otherwise transfer, for security
purposes or otherwise, any interest in the Subordinated Obligations held by him;
provided that the Seller may distribute the Seller Obligations held by the
Seller to its shareholders in connection with a liquidation of the assets of the
Seller so long as, prior to the consummation of such distribution, such
shareholders agree to be bound by the terms of this Agreement.
SECTION 7. No Partnership. Nothing contained in this Agreement, and
no action taken by the
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holders of Senior Debt (or any of them) pursuant hereto, is intended to
constitute or shall be deemed to constitute the holders of Senior Debt a
partnership, association, joint venture or other entity.
SECTION 8. Notices. Unless otherwise specified herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including telex, facsimile copy or similar writing) and shall be given to such
party at its address or facsimile number set forth on the signature pages hereof
or such other address or telex or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto.
SECTION 9. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed by the Company, Holdings and each Subordinated Obligations Holder
whose rights or duties are affected thereby and each holder of Senior Debt whose
rights or duties are affected thereby.
SECTION 10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK
FOR PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT THAT MAY BE BROUGHT OR INSTITUTED AGAINST IT.
Section 11. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, and all of which taken
together shall constitute a single agreement, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be duly executed as of the date hereof by their respective officers
thereunto duly authorized.
NATIONSCREDIT COMMERCIAL
CORPORATION, as Agent
By: /s/ Xxxxxx X. Alt _________
---------------------------------
Title: Authorized Signatory
Address: Xxx Xxxxxxxxxx
Xxxxx
X.X. Xxx 000000
Xxxxxxxx, XX
00000-0000
Telecopy: 000-000-0000
PUMPKIN LTD.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Title: Vice President
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Telecopy: 203-625-0423
PUMPKIN LTD.
a Colorado corporation
By: /s/ Xxx Xxxxxxx
------------------------------
Title: President
Address:
Telecopy:
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PUMPKIN MASTERS HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Title: Vice President
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Telecopy: 000-000-0000
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