Exhibit 10-49
Subordination Agreement
(All Indebtedness and Liens)
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Spectrum Organic Products, Inc.__________("Borrower") is indebted to the
undersigned ("Creditor") in the principal sum of Two Hundred Sixty Five Thousand
and no/100 Dollars $265,000.00 evidenced by [ ] an open account [X] a promissory
note [ ]other (describe) ___________________________ which indebtedness is [X]
unsecured [ ]secured by _________________________________________ and Creditor
is or may become financially interested in Borrower and desires to aid Borrower
in obtaining or having continued financial accommodations, whether by way of
loan, commitment to loan, discounting of instruments, extensions of credit or
the obtaining of any other financial aid from Comerica Bank-California
("Bank").
In order to induce the Bank to extend or to continue to extend financial
accommodations to Borrower from time to time, whether by way of a loan,
commitment to loan, discounting of instruments, extension of credit or
xxxxxxx.xx and in consideration of any of these financial accommodations,
Creditor agrees as follows:
1. Any and all obligations and liabilities of Borrower to Creditor, including,
without limit, principal and interest payments, whether direct or indirect,
absolute or contingent, joint or several, secured or unsecured, due or to
become due, now existing or later arising and whatever the amount and
however evidenced (the "Subordinated Indebtedness"), are subordinated in
right of payment to any and all obligations and liabilities of Borrower to
the Bank, including, without limit, principal and interest payments,
whether direct or indirect, absolute or contingent, joint or several,
secured or unsecured, due or to become due, now existing or later arising
and however evidenced, together with all other sums due thereon and all
costs of collecting the same (including, without limit, reasonable attorney
fees) for which Borrower is liable (the "Senior Indebtedness").
2. Creditor will not ask for, demand, xxx for, take or receive (by way of
voluntary payment, acceleration, set-off or counterclaim, foreclosure or
other realization on security, dividends in bankruptcy or otherwise), or
offer to make any discharge or release of, any of the Subordinated
Indebtedness, and Creditor waives any such rights with respect to the
Subordinated Indebtedness nor shall Creditor exercise any rights of
subrogation or other similar rights with respect to the Senior
Indebtedness.
3. Creditor will not exercise any of Creditor's rights in any collateral now
or later securing the Subordinated Indebtedness. All rights of Creditor in
any collateral now or later securing the Subordinated Indebtedness are
subordinated to all rights of the Bank now or later existing in any of the
same collateral securing the Senior Indebtedness.
4. Creditor authorizes and empowers the Bank to demand, enforce payment by
legal proceedings, receive and give acquittances for the Subordinated
Indebtedness and to exercise all rights of Creditor in any security (other
than a deed of trust, mortgage or security interest covering real property
or a principal dwelling) now or later held for the Subordinated
Indebtedness. As collateral for the Senior Indebtedness, Creditor hereby
pledges, assigns and grants to Bank a security interest in the Subordinated
Indebtedness, any collateral or other security (other than a deed of trust,
mortgage or security interest covering real property or a principal
dwelling) for the Subordinated Indebtedness, and all claims or demands of
Creditor in connection therewith, with full right on the part of the Bank
in its own name or in the name of Creditor, to collect and enforce these
claims or demands, by suit, proof of debt in bankruptcy, or in any other
proceeding involving dissolution, insolvency, liquidation or an adjustment
of the indebtedness of Borrower. The Bank has no obligation to the Creditor
to take any steps with regard to these claims or demands, the Subordinated
Indebtedness, or any collateral or other security for the Subordinated
Indebtedness.
5. Should any payment, distribution or security or proceeds from these be
received by Creditor upon or with respect to the Subordinated Indebtedness
prior to the satisfaction in full of the Senior Indebtedness, Creditor
shall immediately deliver same to the Bank in the form received (except for
endorsement or assignment by Creditor where required by the Bank), for
application on the Senior Indebtedness (whether or not then due and in such
order of maturity as Bank elects) and, until so delivered, the same shall
be held in trust by Creditor as the property of the Bank.
6. Creditor represents and warrants that it has not made or permitted to be
made and shall not make or permit any assignment, transfer, pledge, or
disposition for collateral purposes or otherwise, of all or any part of the
Subordinated Indebtedness or any collateral or other security for the
Subordinated Indebtedness so long as this Agreement remains in effect.
Creditor shall, on the date of this Agreement or promptly upon receipt it
not yet delivered to Creditor, deliver to the Bank, endorsed if required by
the Bank, all notes and other instruments evidencing any Subordinated
Indebtedness. Creditor agrees to execute all financing statements deemed
necessary by the Bank to perfect the Bank's rights and interests under this
Agreement, The Bank is to have all the rights and remedies of a secured
creditor under the California______ Uniform Commercial Code,
as, amended from time to time, with respect to such interests, Creditor
further makes, constitutes and appoints Bank its true and lawful
attorney-in-fact with full power of substitution to take any action in
furtherance of this Agreement, including, but not limited to, the signing
of financing statements, endorsing of instruments, and the execution and
delivery .of all documents and agreements necessary to obtain or accomplish
any protection for or collection or disposition of any part of any
collateral. Such appointment shall be deemed irrevocable and coupled with
an interest.
7. This Agreement constitutes a continuing agreement of subordination, even
though at times Borrower is not indebted to the Bank, The Bank may
continue, in reliance on this Agreement, without notice to Creditor, to
lend monies, extend credit, modify, renew or make other financial
accommodations, to or for the account of Borrower until the fifth (5th) day
("effective date") following written acknowledgment by an officer of the
Bank that the Bank received written notice of revocation of this Agreement
from Creditor. Any such notice of revocation shall not be effective as to
any Senior Indebtedness existing at the effective date of revocation or any
Senior Indebtedness created after that pursuant to any commitment or
agreement of the Bank or pursuant to any Borrower loan (whether advances or
readvances by the Bank after the effective date of revocation are optional
or obligatory) existing at the effective date of revocation or any
modifications or renewals of any Senior Indebtedness, whether in whole or
in part. Possession by the Bank of any note or other evidence of
indebtedness made, endorsed or guaranteed by Borrower shall be conclusive
evidence (but not the only means of establishing) that Borrower is indebted
to the Bank.
8. Creditor shall indemnify the Bank against all claims, damages, costs, and
expenses, including, without limit, reasonable attorneys' fees, incurred by
the Bank in connection with any suit, claim or action against the Bank
arising out of any modification or termination of a Borrower loan or any
refusal by the Bank to extend additional credit relating to the revocation
Of this Agreement.
9. Creditor delivers this Agreement based solely on Creditors independent
investigation of (or decision not to investigate) the financial condition
of Borrower and is not relying on any information furnished by the Bank.
Creditor assumes full responsibility for obtaining any further information
concerning the Borrower's financial condition, the status of the Senior
Indebtedness or any other matter which Creditor may deem necessary or
appropriate now or later. Creditor waives any duty on the part of the Bank,
and agrees that Creditor is not relying upon nor expecting the Bank to
disclose to Creditor any fact now or later known by the Bank, whether
relating to the operations or condition of Borrower, the existence,
liabilities or financial condition of any guarantor of the Senior
Indebtedness, the occurrence of any default with respect to the Senior
Indebtedness, or otherwise, notwithstanding any effect such fact may have
upon Creditor's risk or Creditor's rights against Borrower. Creditor
knowingly accepts the full range of risk encompassed in this Agreement,
which risk includes, without limit, the possibility that Borrower may incur
Senior Indebtedness to the Bank after the financial condition of Borrower,
or its ability to pay Borrower's debts as they mature, has deteriorated.
Creditor acknowledges and agrees that the Banks rights under this Agreement
are not conditioned upon pursuit by the Bank of any remedy the Bank may
have against Borrower or any other person or any other security. The
absence of Borrower's signature at the end of this Agreement shall in no
way impair or affect the validity of this Agreement.
10. The Bank, in its sole discretion, without notice to Creditor, may release,
exchange, enforce and otherwise deal with any security now or later held by
the Bank for payment of the Senior Indebtedness or release any party now or
later liable for payment of the Senior Indebtedness without affecting in
any manner the Bank's rights under this Agreement. Creditor acknowledges
and agrees that the Bank has no obligation to acquire or perfect any lien
on or security interest in any asset(s), whether realty or personalty, to
secure payment of the Senior Indebtedness, and Creditor is not relying upon
assets in which the Bank has or may have a lien or security interest for
payment of the Senior Indebtedness.
11. Notwithstanding any prior revocation, termination, surrender, or discharge
of this Agreement in whole or in part, the effectiveness of this Agreement
shall automatically continue or be reinstated in the event that any
payment received or credit given by the Bank in respect of the Senior
Indebtedness is returned, disgorged, or rescinded, under any applicable
state or federal law, including, without limitation, laws pertaining to
bankruptcy or insolvency, in which case this Agreement, shall be
enforceable against the Creditor as if the returned, disgorged, or
rescinded payment or credit had not been received or given by the Bank, and
whether or not the Bank relied upon this payment or credit or changed its
position as a consequence of it. In the event of continuation or
reinstatement of this Agreement, the Creditor agrees upon demand by the
Bank to execute and deliver to the Bank those documents which the Bank
determines are appropriate to further evidence (in the public records or
otherwise) this continuation or reinstatement, although the failure of the
Creditor to do so shall not affect in any way the reinstatement or
continuation.
12. Creditor waives any right to require the Bank to: (a) proceed against any
person or property; (b) give notice of the terms, time and place of any
public or private sale of personal property security held from Borrower or
any other person, or otherwise comply with the provisions of Section 9-504
of the California or other applicable Uniform Commercial Code; or (c)
pursue any other remedy in the Banks power. Creditor waives notice of
acceptance of this Agreement and presentment demand, protest, notice of
protest, dishonor, notice of dishonor, notice of default, notice of intent
to accelerate or demand payment of any Senior Indebtedness, any and all
other notices to which the undersigned might otherwise be entitled, and
diligence in collecting any Senior Indebtedness, and agrees that the Bank
may, once or any number of times, modify the terms of any Senior
Indebtedness, compromise, extend, increase, accelerate, renew or forbear to
enforce payment of any or all Senior Indebtedness, or permit the Borrower
to incur additional Senior Indebtedness, all without notice to Creditor and
without affecting in any manner the unconditional obligations of Creditor
under this Agreement.
13. Creditor acknowledges that the Bank has the right to sell, assign,
transfer, negotiate or grant participations or any interest in, any or all
of the Senior Indebtedness and any related obligations including without
limit this Agreement. In connection with the above, but without limiting
its ability to make other disclosures to the full extent allowable, the
Bank may disclose all documents and information which the Bank now or later
has or acquires relating to Creditor and this Agreement, however obtained.
Creditor further agrees that the Bank may disclose such documents and
information to the Borrower. Creditor further agrees that the Bank may
provide information relating to this Agreement or relating to the Creditor
to the Bank's parent, affiliates. subsidiaries and service providers.
14. No waiver or modification of any of its rights under this Agreement shall
be effective unless the waiver or modification shall be in writing and
signed by an authorized officer on behalf of the Bank. Each waiver or
modification shall be a waiver or modification only with respect to the
specific matter to which the waiver or modification relates and shall in no
way impair the rights of the Bank or the obligations of Creditor to the
Bank in any other respect.
15. This Agreement shall bind and be for the benefit of Creditor and the Bank
and their respective successors and assigns, and shall be construed
according to the laws of the State of California without regard to conflict
of laws principles. If this Agreement is executed by two or more persons,
it shall bind each of them individually as well as jointly.
16. The term "Borrower", as used in this Agreement, includes any person,
corporation, partnership or other entity which succeeds to the interests or
business of Borrower named above, and the terms "Senior Indebtedness" and
"Subordinated Indebtedness" include indebtedness of any successor Borrower
to the Bank and Creditor.
17. Creditor agrees to reimburse the Bank upon demand for any and all costs and
expense, (including, without limit, court costs, legal fees, and
reasonable attorney fees whether inside or outside counsel is used, whether
or not suit is instituted and, if instituted, whether at the trial or
appellate level, in a bankruptcy, probate or administrative proceeding. or
otherwise) incurred in enforcing any of the duties and obligations of
Creditor under this Agreement.
18. Creditor waives any defense against the enforceability of this Agreement
based upon or arising by reason of the application by Borrower of the
proceeds of any Indebtedness for purposes other than the purposes
represented by Borrower to the Bank or intended or understood by the Bank
or Creditor. Creditor waives all rights to require the Bank to xxxxxxxx the
Collateral or any other property the Bank may at any time have as security
for the Indebtedness and waives all right to require the Bank to first
proceed against any guarantor or other person before proceeding against the
Collateral.
19. The relative priorities of the Bank and Creditor in the Collateral as set
forth in this Agreement control irrespective of the time, method or order
of attachment or perfection of the liens and security interests acquired by
the parties in the Collateral and irrespective of the priorities as would
otherwise be determined by reference to the Uniform Commercial Code or
other applicable laws. Creditor shall not contest the validity, priority or
perfection of the Bank's security interest in the Collateral (regardless of
whether the Bank's security interest in the Collateral is valid or
perfected). The priorities of any liens or security interests of the
parties in any property of the Borrower other than the Collateral are not
affected by this Agreement and shall be determined by reference to
applicable law, The Bank's rights under this Agreement arc in addition to,
and not in substitution of its rights under any other subordination
agreement with Creditor.
20. Special Provisions: [None if left blank.]
Anything contained in this Agreement to the contrary notwithstanding, so
long as Bank has received all payments required under the Senior
Indebtedness and so long as no event of default has occurred or is
continuing thereunder, then Borrower may pay to Creditor, and Creditor may
accept and retain from Borrower, as and when each becomes due and payable,
regularly scheduled payments of principal and interest on the Subordinated
Indebtedness according to and in the respective amounts set forth in any
documents, instruments or agreements entered into evidencing the
Subordinated Indebtedness, provided, that such payments to Creditor shall
not cause or result in any default or violation by Borrower of any
affirmative or negative covenant, term, condition, or other provision of
the Senior Indebtedness. In no event, however, shall Creditor at any time
accept or retain any such payment more than 30 days prior to the due date
therefor, nor otherwise accept or retain any payment on or against the
Subordinated Indebtedness except as expressly provided in the documents,
instruments or agreements entered into evidencing the Subordinated
Indebtedness.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT.
IN WITNESS WHEREOF, Creditor has caused this Agreement to be executed as
of June 12, 2003.
/s/ Xxxxxx Xxxxx
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(CREDITOR) CREDITOR'S ADDRESS
By: /s/ Xxxxxx Xxxxx 0000 Xxxxxxxx Xxxxx
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SIGNATURE OF Xxxxxx Xxxxx STREET ADDRESS
ITS: Xxxxxxxxxx, Xxxxxxxxxx 00000
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TITLE (if applicable) CITY STATE ZIP
By:
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SIGNATURE OF
ITS:
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TITLE (if applicable)
BORROWER'S ACKNOWLEDGEMENT
Spectrum Organic Products, Inc. ______("Borrower"), accepts notice of
subordination created by this Agreement and agrees that it will take no action
inconsistent with this Agreement and that, except with the prior written
approval of Bank, no payment or distribution shall be made by Borrower on or
with respect to the Subordinated Indebtedness, so long as this Agreement remains
in effect. Borrower agrees that the Bank may, at its option, without notice and
without limiting Banks other rights, upon any breach by Creditor of, or
purported termination by the Creditor of, this Agreement, declare all Senior
Indebtedness to be immediately due and payable and/or terminate any commitments
of Bank to Borrower.
Spectrum Organic Products, Inc.
By: /s/ Xxxxxx X. Xxxxxx Its: CFO
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By: /s/ Its:
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By: /s/ Its:
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By: /s/ Its:
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BORROWER'S ADDRESS
0000 Xxx Xxxxxxx Xxxxxxx Xxxxxxxx XX XXX 00000
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STREET ADDRESS CITY STATE COUNTRY ZIP CODE
DATED: June 12, 2003
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