INTERCREDITOR AGREEMENT among NEW WORLD BRANDS, INC. P & S SPIRIT, LLC, and TELES AG Informationstechnologien Dated February 15, 2008
Exhibit 10.2
____________________________________________________________________
among
NEW WORLD
BRANDS, INC.
P & S
SPIRIT, LLC, and
TELES AG
Informationstechnologien
________________________________
Dated
February 15, 2008
________________________________
____________________________________________________________________
TABLE OF
CONTENTS
ARTICLE I
DEFINITIONS....................................................................................................................................................................................................................................2
1.1 Defined
Terms................................................................................................................................................................................................................................2
ARTICLE
II INTERCREDITOR
PROVISIONS...................................................................................................................................................................................................7
2.1 Standstill ........................................................................................................................................................................................................................................
7
2.2 Prohibition on Contesting
Liens..................................................................................................................................................................................................8
2.3 Amendments to Loan
Documents...............................................................................................................................................................................................8
2.4 Certain General Intercreditor
Matters..........................................................................................................................................................................................8
2.5 Prohibition on Certain
Advances.................................................................................................................................................................................................9
2.6 Certain
Notices................................................................................................................................................................................................................................9
ARTICLE
III INSOLVENCY OR
LIQUIDATION..............................................................................................................................................................................................11
ARTICLE
IV RIGHTS AND REMEDIES OF SECURED
CREDITORS...........................................................................................................................................................11
4.1 General Relation to Security
Documents...................................................................................................................................................................................11
4.2 Power of
Attorney.........................................................................................................................................................................................................................11
4.3 Certain Rights After Event of
Default........................................................................................................................................................................................11
4.4 Right to Initiate Judicial
Proceedings.........................................................................................................................................................................................12
4.5 Right to Appoint a
Receiver........................................................................................................................................................................................................12
4.6 Remedies Not Exclusive,
etc........................................................................................................................................................................................................12
4.7 Certain
Waivers.............................................................................................................................................................................................................................13
4.8 No New
Liens.................................................................................................................................................................................................................................14
4.9 Fees, Taxes,
etc..............................................................................................................................................................................................................................14
4.10 Maintenance of Liens and Further
Assurances.......................................................................................................................................................................14
ARTICLE
V
DISTRIBUTIONS............................................................................................................................................................................................................................15
5.1 Lockbox
Account..........................................................................................................................................................................................................................15
5.2 Deposits..........................................................................................................................................................................................................................................15
5.3 Distributions Before an Event of
Default...................................................................................................................................................................................15
5.4 Directive After an Event of
Default............................................................................................................................................................................................15
5.5 Distributions After an Event of
Default.....................................................................................................................................................................................15
5.6 Calculations....................................................................................................................................................................................................................................16
5.7 Application of
Monies..................................................................................................................................................................................................................16
5.8 Collateral
Agency..........................................................................................................................................................................................................................17
5.9 No
Warranties................................................................................................................................................................................................................................17
ARTICLE
VI
[RESERVED]....................................................................................................................................................................................................................................18
ARTICLE
VII
MISCELLANEOUS.......................................................................................................................................................................................................................18
7.1 Amendments, Supplements and
Waivers..................................................................................................................................................................................18
7.2 Notices.............................................................................................................................................................................................................................................18
7.3 No Implied Waiver; Cumulative
Remedies.................................................................................................................................................................................18
7.4 Severability......................................................................................................................................................................................................................................19
7.5 Prior
Understandings.....................................................................................................................................................................................................................19
7.6 No
Partnership................................................................................................................................................................................................................................19
7.7 Survival............................................................................................................................................................................................................................................19
7.8 Counterparts...................................................................................................................................................................................................................................19
7.9 Termination of
Liens......................................................................................................................................................................................................................19
7.10 Independent Credit
Investigation..............................................................................................................................................................................................
20
7.11 Successors and
Assigns..............................................................................................................................................................................................................20
7.12 Governing
Law...............................................................................................................................................................................................................................20
7.13 Waiver of Right to Trial by
Jury..................................................................................................................................................................................................21
THIS INTERCREDITOR AGREEMENT, dated
February 15, 2008, and entered into by and among TELES AG
Informationstechnologien, having an address at Xxxxx-Xxxxxx-Xxxxx 0,
00000 Xxxxxx, Xxxxxxx (herein, “Teles”), P&S SPIRIT, LLC, a Nevada
limited liability company having its principal office at 0000 Xxxxxxxxxx Xxxxx
Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 (herein “P&S”),
and NEW WORLD BRANDS,
INC., a Delaware
corporation having its principal place of business at 000 Xxxx Xxxxx Xxxxxx,
Xxxxxx, XX 00000 (“NWB”
or “Borrower”).
BACKGROUND
A. P&S
and NWB entered into that certain Credit Line and Security Agreement dated May
30, 2007 (as amended, restated, modified, extended, renewed, replaced,
supplemented, restructured and/or refinanced from time to time, the “Credit
Agreement”), providing for the making of revolving credit loans (“Revolving
Credit Loans”) to NWB, not to exceed at any time the principal amount of
One Million Fifty Thousand Dollars ($1,050,000.00), as contemplated
therein.
X. XXXXX and
NWB have entered into that certain Term Loan and Security Agreement, dated as of
the date hereof (as amended, restated, modified, extended, renewed, replaced,
supplemented, restructured and/or refinanced from time to time, the “Teles
Agreement”), pursuant to which Teles may extend term loan advances on a
non-revolving basis to NWB in an aggregate principal amount not to exceed One
Million Dollars ($1,000,000.00) which loan advances will convert to a single
term loan (said advances and the term loan together referred to herein as the
“Term
Loan”). Teles and NWB have also entered into a revolving
Inventory Credit Line in the initial amount of Two Hundred Thousand Dollars
($200,000.00), subject to increase to an amount not to exceed Five Hundred
Thousand Dollars ($500,000.00) under certain circumstances, established under
the Share Sale and Purchase Agreement by and between Teles and NWB (the “Inventory
Credit Line”). Credit purchases from Teles under the Inventory
Credit Line are secured by the Teles Inventory, as hereinafter
defined.
C. It is a
condition precedent to the Teles Agreement that each party hereto shall have
executed and delivered this Agreement.
D. NWB will
obtain benefits from the Revolving Credit Loans, the Teles Loan and the
Inventory Line and, accordingly, NWB desires to join into this Agreement to
satisfy the condition precedent described in the preceding
paragraph.
E. In order
to induce the Secured Creditors to consent to the incurring of the various
Secured Obligations and to induce the Secured Creditors to extend credit and
other financial accommodations and lend monies to or for the benefit of NWB, the
Secured Creditors have agreed to the provisions set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and
obligations herein set forth and for other good and valuable consideration, the
sufficiency and
1
receipt
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Defined
Terms.
(a) Unless
otherwise defined herein, all capitalized terms used herein and defined in the
UCC shall be used herein as therein defined. Reference to singular
terms shall include the plural and vice versa. The following
capitalized terms used herein shall have the definitions specified
below:
“Agreement”
means this Intercreditor Agreement, as amended, renewed, extended, supplemented
or otherwise modified from time to time in accordance with the terms
hereof.
“Bankruptcy
Code” means Title 11 of the United States Code entitled “Bankruptcy,” as
now and hereafter in effect, or any successor statute.
“Bankruptcy
Law” means the Bankruptcy Code and any similar federal, state or foreign
law for the relief of debtors.
“Business
Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in Baltimore, Maryland or New York, New York are authorized or
required by law to close.
“Cash
Equivalents” means any of the following types of investments, to the
extent owned by NWB or any of its subsidiaries free and clear of all Liens
(other than Liens created under any Security Document):
(i) readily
marketable obligations issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof having
maturities of not more than one year from the date of acquisition thereof; provided that the
full faith and credit of the United States of America is pledged in support
thereof;
(ii) readily
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof having maturities of not more than one year from the
date of acquisition thereof; provided that at the
time of acquisition such obligations have the highest rating obtainable from
Standard & Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies,
Inc., and any successor thereto (“S&P”)
or Xxxxx’x Investors Services, Inc. and any successor thereto (“Xxxxx’x”);
(iii) time
deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that (i) is organized under the laws of the United States of
America, any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States of America, any state
2
thereof
or the District of Columbia, and is a member of the Federal Reserve System, (ii)
issues (or the parent of which issues) commercial paper rated as described in
clause (c) of this definition and (iii) has combined capital and surplus of
at least $250,000,000, in each case with maturities of not more than one year
from the date of acquisition thereof; and
(iv) commercial
paper issued by any Person organized under the laws of any state of the United
States of America and rated at least “Prime-1” (or the then equivalent
grade) by Xxxxx’x or at least “A-1” (or the then equivalent grade) by
S&P, in each case with maturities of not more than one year from the date of
acquisition thereof.
“Collateral”
means all of the assets and property of NWB, whether real, personal or mixed,
described as Collateral in the Credit Agreement. Notwithstanding the
foregoing, the Teles Inventory shall not be considered Collateral for purposes
of this Agreement and Teles shall not be accountable to P&S in connection
with the Teles Inventory.
“Collateral
Account” has the meaning provided in Section 5.1 of this
Agreement.
“Credit
Agreement” has the meaning set forth in the background above
hereto.
“Discharge” means, with respect to
any Secured Obligations, (a) payment in full in cash of the principal of and
interest (including interest accruing on or after the commencement of any
Insolvency or Liquidation Proceeding, whether or not such interest would be
allowed in such Insolvency or Liquidation Proceeding), and premium, if any, on
all Indebtedness outstanding under the P&S Documents or the Teles Documents,
(b) payment in full of all other such Secured Obligations that are due and
payable or otherwise accrued and owing at or prior to the time such principal
and interest are paid, and (c) termination of any other commitments under the
P&S Documents or the Teles Documents relating to such Secured
Obligations.
“Equity
Interests” of any Person means any and all capital stock, limited or
general partnership interests, limited liability company membership interests,
beneficial interests in a trust, shares, interests, rights to purchase or
acquire, warrants, options, participations, certificates of indebtedness, or
other equivalents of or interest in (however designated) equity of such
Person.
“Equity
Sale” means any sale, transfer or other disposition of any capital stock
or other Equity Interests in NWB by any of its stockholders (but shall not
include the issuance by NWB of its own Equity).
“Indebtedness”
of any Person means, without duplication, (i) all Obligations and other
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller’s
assignees, (iii) the amount under all letters of credit issued for the account
of such Person and, without duplication, all drafts drawn thereunder, (iv) all
Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such Indebtedness has been assumed; such
amount, for purposes of this clause (iv) being limited to
the value of such property, (v) all capitalized lease obligations of such
Person, (vi) all obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted, i.e., take-or-pay and
similar
3
obligations,
(vii) all contingent obligations of such Person, and (viii) all synthetic lease
obligations.
“Insolvency
or Liquidation Proceeding” means (a) any voluntary or involuntary case or
proceeding under the Bankruptcy Code with respect to NWB, (b) any other
voluntary or involuntary insolvency, reorganization or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding with respect to NWB or with respect to a material portion of
its assets, (c) any liquidation, dissolution, reorganization or winding up of
NWB whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (d) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of NWB.
“Law”
means any law (including common law), constitution, statute, treaty, convention,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
governmental or regulatory authority.
“Lien”
means any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any financing or similar statement or
notice filed under the UCC or any similar recording or notice statute, and any
lease having substantially the same effect as the foregoing).
“Loan
Documents” means the P&S Documents and the Teles
Documents.
“Lockbox
Account” means a
lockbox or blocked account arrangement among P&S as collateral agent, NWB
and a Blocked Account Bank (as defined in Section 5.8) under
one or more Control Agreements (as defined in Section
5.8).
“Obligations”
means any and all obligations (including guaranty obligations) with respect to
the payment and performance of (a) any principal of or interest, or premium on
any Indebtedness, including any reimbursement obligation in respect of any
letter of credit, or any other liability, including interest that accrues after
the commencement of any Insolvency or Liquidation Proceeding of NWB at the rate
provided for in the respective documentation, whether or not a claim
for post-petition interest is allowed in any such Insolvency or Liquidation
Proceeding, (b) any fees, indemnification obligations, expense reimbursement
obligations or other liabilities payable under the documentation governing any
indebtedness (including, without limitation, the retaking, holding, selling or
otherwise disposing of or realizing on the Collateral), (c) any obligation to
post cash collateral in respect of letters of credit or any other obligations,
and (d) all performance obligations under the documentation governing any
Indebtedness.
“P&S
Documents” means the Credit Agreement and each of the other agreements,
documents and instruments providing for or evidencing any other P&S
Obligation, as each may be amended, modified, restated, supplemented, replaced
and/or refinanced from time to time (including, without limitation, the Loan
Documents as defined in the Credit Agreement); provided, however, that P&S
Documents shall not include the Guaranty or the Stock Pledge Agreement, as these
terms are defined in the Credit Agreement.
4
“P&S
Obligations” means all Obligations outstanding under the Credit Agreement
and the other P&S Documents, and shall in any event include: (a)
all interest accrued or accruing (or which would, absent commencement of an
Insolvency or Liquidation Proceeding (and the effect of provisions such as
Section 502(b)(2) of the Bankruptcy Code), accrue) after commencement of an
Insolvency or Liquidation Proceeding in accordance with the rate specified in
the relevant P&S Document, whether or not the claim for such interest is
allowed as a claim in such Insolvency or Liquidation Proceeding, (b) any and all
fees and expenses (including attorneys’ and/or financial consultants’ fees and
expenses) incurred by P&S after the commencement of an Insolvency or
Liquidation Proceeding, whether or not the claim for fees and expenses is
allowed under Section 506(b) of the Bankruptcy Code or any other provision of
the Bankruptcy Code or Bankruptcy Law as a claim in such Insolvency or
Liquidation Proceeding and (c) all obligations and liabilities of NWB under each
P&S Document to which it is a party which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due.
“Permitted
Liens” means Liens on the Collateral not prohibited under the terms of
any Loan Document.
“Person”
means any individual, partnership, joint venture, firm, corporation, limited
liability company, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality
thereof.
“Pro Rata
Basis” means, in relation to any amount, with respect to any Secured
Creditor sharing in such amount, a share of such amount determined by
multiplying such amount by a fraction, the numerator of which shall be the
aggregate unpaid principal amount of Secured Obligations owing to such Secured
Creditor at the time outstanding, and the denominator of which shall be the
aggregate unpaid principal amount of all such Secured Obligations owing to all
Secured Creditors.
“Receivable
Rights” means, as to NWB, all rights to the payment of a monetary
obligation, whether or not earned by performance, and whether evidenced by an
Account, Chattel Paper, Instrument, General Intangible, or otherwise, together
with all other portions of the Collateral which, in the reasonable determination
of P&S, are related to the collection and performance of such rights to
payment. Receivable Rights shall also include a portion of the
proceeds of any Equity Sale and of any Recovery Event.
“Recovery
Event” means the receipt by or for the account of NWB of any insurance or
condemnation proceeds (other than proceeds from business interruption insurance)
payable (i) by reason of theft, physical destruction or damage or any other
similar event with respect to any properties or assets of NWB, (ii) by reason of
any condemnation, taking, seizing or similar event with respect to any
properties or assets of NWB, or (iii) under any policy of
insurance.
“Refinance”
means, in respect of any indebtedness, to refinance, extend, renew, defease,
amend, modify, supplement, restructure, replace, refund or repay, or to issue
other indebtedness, in exchange or replacement for, such
indebtedness. “Refinanced”
and “Refinancing” shall have correlative
meanings.
5
“Secured
Creditors” means P&S and Teles.
“Secured
Obligations” means all P&S Obligations and Teles
Obligations.
“Setoff
Amount” means any funds of NWB which are offset or retained by a Secured
Creditor against the Obligations, including by way of setoff or
recoupment.
“Teles
Documents” means the Teles Agreement, and each of the other agreements,
documents and instruments providing for or evidencing the Term Loan, as the same
may be amended, modified or otherwise supplemented from time to time in
accordance with the terms hereof, thereof and the Teles Agreement.
“Teles
Inventory” means, only during the time that Obligations are
owed to Teles under the Inventory Credit Line, inventory of Teles product
purchased by NWB pursuant to the Inventory Credit Line; provided, however, that
in no event shall Teles Inventory include cash or non-cash proceeds of such
inventory, including, without limitation, Accounts, Chattel Paper or Instruments
(other than Account, Chattel Paper or Instruments received as proceeds and as
described in the last sentence of Section 2.4(c) of
this Agreement).
“Teles
Obligations” means all Obligations outstanding under the Teles Agreement,
but shall not include Obligations incurred under the Inventory Credit Line, and
shall in any event include: (a) all interest accrued or accruing (or
which would, absent commencement of an Insolvency or Liquidation Proceeding (and
the effect of provisions such as Section 502(b)(2) of the Bankruptcy Code),
accrue) after commencement of an Insolvency or Liquidation Proceeding in
accordance with the rate specified in the relevant Teles Document whether or not
the claim for such interest is allowed as a claim in such Insolvency or
Liquidation Proceeding; (b) any and all fees and expenses (including attorneys’
and/or financial consultants’ fees and expenses) incurred by Teles after the
commencement of an Insolvency or Liquidation Proceeding, whether or not the
claim for fees and expenses is allowed under Section 506(b) of the Bankruptcy
Code or any other provision of the Bankruptcy Code or Bankruptcy Law as a claim
in such Insolvency or Liquidation Proceeding; and (c) all obligations and
liabilities NWB under each Teles Document to which it is a party which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due.
“UCC”
means the Uniform Commercial Code in effect on the date hereof and as amended
from time to time, as enacted in the State of Delaware or in any state or states
which, pursuant to the Uniform Commercial Code as enacted in the State of
Delaware, has jurisdiction with respect to all, or any portion of, the
Collateral or this Agreement, from time to time. It is the intent of
the parties that the definitions set forth above should be construed in their
broadest sense so that Collateral will be construed in its broadest
sense. Accordingly if there are, from time to time, changes to
defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.
(b) Terms
Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.
6
The words
“include”,
“includes” and
“including”
shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be
construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise (i) any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified, (ii) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to
Exhibits or Sections shall be construed to refer to Exhibits or Sections of this
Agreement, (v) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, (vi) terms defined in the UCC but not otherwise
defined herein shall have the same meanings herein as are assigned thereto in
the UCC, (vii) reference to any law means such law as amended, modified,
codified, replaced or re-enacted, in whole or in part, including rules,
regulations, enforcement procedures and any interpretations promulgated
thereunder and (viii) underscored references to Sections or clauses shall refer
to those portions of this Agreement, and any underscored references to a clause
shall, unless otherwise identified, refer to the appropriate clause within the
same Section in which such reference occurs.
ARTICLE
II
INTERCREDITOR
PROVISIONS
2.1 Standstill. P&S
and Teles hereby agree as between themselves as follows (it being acknowledged
and agreed by NWB that the provisions of this Section 2.1 are
solely for the benefit of P&S and Teles; may be amended by agreement of
P&S and Teles without need of consent of any other party; and shall not
benefit or create any rights in favor of any of NWB):
(a) Upon the
occurrence of any event of default under any of the P&S Documents (other
than as set forth in (c) below), P&S shall not exercise any remedy that it
may have under the P&S Documents to declare all or any portion of the
P&S Obligations to be due and payable prior to their respective due dates
and shall not commence the exercise of any other rights or remedies unless at
least forty-five (45) days have elapsed following written notice of such event
of default having been given by P&S to Teles, unless Teles otherwise
consents. This provision shall not apply if Teles shall have, for any
reason (whether or not in breach of its agreement set forth in paragraph (b) of
this Section
2.1) declared all or any portion of the Teles Obligations to be due and
payable prior to their respective due dates, or if such obligations have been
automatically accelerated pursuant to Art. VII 1.2 of the Teles
Agreement.
(b) Upon the
occurrence of any event of default under any of the Teles Documents (other than
as set forth in (c) below), Teles shall not exercise any remedy that it may have
under the Teles Documents to declare all or any portion of the Teles Obligations
to be due and payable prior to their respective due dates and shall not commence
the exercise of any other rights or remedies unless at least forty-five (45)
days have elapsed following written notice of such event of default having been
given by Teles to P&S, unless P&S otherwise consents. This
provision shall not apply if P&S shall have, for any reason (whether or not
in breach of its agreement set forth in paragraph (a) of this Section 2.1) declared
all or any portion
7
of the
P&S Obligations to be due and payable prior to their respective due dates,
or if such obligations have been automatically accelerated pursuant to Section
11.1 of the Credit Agreement.
(c) Subject
to the provisions of Article III hereof, so long as the Discharge of all Secured
Obligations has not occurred, whether or not any Insolvency or Liquidation
Proceeding has been commenced by or against NWB, as between Teles and P&S,
P&S acting as collateral agent for the Secured Creditors under Section 5.8 of this
Agreement shall have the exclusive right to enforce rights, exercise remedies
and make determinations regarding collections and enforcement with respect to
the Collateral consisting of Receivable Rights, and the proceeds thereof.
Nothing contained in this Section 2.1(c) shall
constitute a limitation on the provisions of Section 5.5 of this
Agreement, or on the rights of Teles under Section 2.1(b) of
this Agreement to require P&S, as collateral agent, to collect or otherwise
exercise the rights and remedies as the Secured Creditors against the Receivable
Rights.
2.2 Prohibition on Contesting
Liens.
(a) Each
Secured Creditor agrees that it shall not (and hereby waives any right to)
contest or support any other Person in contesting, in any proceeding (including
any Insolvency or Liquidation Proceeding), (i) the validity or enforceability of
any Loan Document or any Obligation thereunder, (ii) the validity, perfection,
priority or enforceability of the Liens, mortgages, assignments and security
interests granted pursuant to the Loan Documents or (iii) the relative rights
and duties of the holders of the Secured Obligations granted and/or established
in this Agreement or any other Loan Document with respect to such Liens,
mortgages, assignments, and security interests.
(b) Each
Secured Creditor agrees that it shall not seek to avoid, have declared
fraudulent or have set aside any Secured Obligation. In the event
that any Secured Obligation is invalidated, avoided, declared fraudulent or set
aside, the Secured Creditors agree that such Secured Obligations shall
nevertheless be considered outstanding for all purposes of this
Agreement.
2.3 Amendments to Loan
Documents. The provisions of this Agreement shall remain in
full force and effect in accordance with its terms regardless of any amendment,
modification or supplement to any Loan Document. Without limitation
of the foregoing, this Agreement shall apply in accordance with its terms
notwithstanding any increase, decrease, addition or change in the amount,
nature, type or purpose of any Secured Obligations or any execution or delivery
of any Loan Document from time to time; provided that the principal amount of
(a) the P&S Obligations outstanding under the Credit Agreement and the
P&S Documents shall not exceed $1,050,000.00, in the aggregate principal
amount outstanding at any time and (b) the Teles Obligations outstanding under
the Teles Agreement and the Teles Documents shall not exceed $1,000,000.00, in
the aggregate principal amount outstanding at any time.
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2.4 Certain General
Intercreditor Matters.
(a) The
provisions of Article
V hereof apply solely to priorities of distributions resulting from
realization under or with respect to (i) the Collateral, (ii) Setoff Amounts and
(iii) Recovery Events, and not to the priorities of the
Obligations. Nothing contained in this Agreement or in any Loan
Document is intended to effect a subordination of any Obligation to any other
Obligation.
(b) The
Secured Creditors hereby agree that, upon any realization under or with respect
to (i) the Collateral, (ii) Setoff Amounts and (iii) Recovery Events (including
but not limited to realization under or with respect to any of the Collateral or
any collection or application of funds, by setoff or otherwise, on account of
any Obligations owed under any direct or indirect guaranty which is a Loan
Document), the Secured Creditors shall share in the proceeds of such realization
in the manner provided in Section 5.5, and if
either Secured Creditor shall realize any funds on the Loan Documents otherwise
than pursuant to this Agreement, such Secured Creditor shall remit the same to
P&S, which shall apply the same as provided herein. Until such
time as such Secured Creditor shall have complied with the provisions of the
immediately preceding sentence, such Secured Creditor shall be deemed to hold
such funds and the proceeds thereof in trust for the other Secured
Creditor.
(c) This
Agreement applies to realization under or with respect to (i) the Collateral,
(ii) Setoff Amounts and (iii) Recovery Events. Nothing in
this Agreement or in any Loan Document, express or implied, shall be construed
to require any Secured Creditor to share with any other Secured Creditor any
collections received on account of Secured Obligations other than on account of
(i) the Collateral, (ii) Setoff Amounts and (iii) Recovery
Events. Without limiting the generality of the foregoing, Teles shall
not be required to share with P&S the proceeds of liquidation or disposition
of Teles Inventory, in the exercise of Teles’ rights and remedies under the UCC
and other applicable law.
(d) If any
payment or distribution or security of any character (whether in cash,
securities, or other property) shall be received by either Secured Creditor out
of or in connection with the Collateral in contravention of the terms of this
Agreement or otherwise before all of the Secured Obligations shall have been
paid in full (unless otherwise approved by the other Secured Creditor) such
payment, distribution or security shall not be commingled with any property or
assets of such Secured Creditor, shall be held in trust or as custodian, and
shall promptly be paid over or delivered and transferred to NWB, subject to the
provisions of Article V of this Agreement.
2.5 Prohibition on Certain
Advances. Notwithstanding any provision in the Credit
Agreement to the contrary, no Revolving Credit Advance may be applied by NWB,
directly or indirectly, to the payment of any principal of or interest accruing
on the Term Loan.
2.6 Certain
Notices. Each Secured Creditor agrees to use its best efforts
to give to the other Secured Creditor (a) copies of any notice of the occurrence
or existence of any event of default (as defined in the Teles Documents and the
P&S Documents, respectively) sent to NWB, simultaneously with the sending of
such notice to NWB, (b) notice of the occurrence of existence of an event of
default of which such Secured Creditor has knowledge, promptly after obtaining
knowledge thereof, (c) notice of the refusal of such Secured Creditor to make
any loan to NWB pursuant to the Teles Documents or the P& S Documents, as
applicable, promptly after
9
such
refusal, and (d) notice of any enforcement action of such Secured Creditor
pursuant to Article IV hereof, prior to commencing such action, but the failure
to give any of the foregoing notices shall not affect the validity of such
notice of an event of default given to NWB or create a cause of action against
or cause a forfeiture of any rights of the party failing to give such notice or
create any claim or right on behalf of any third party.
ARTICLE
III
INSOLVENCY OR
LIQUIDATION
3.1 In the
event of any Insolvency or Liquidation Proceeding, whether or not pursuant to
bankruptcy law, dissolution, liquidation or any other marshalling of the assets
or liabilities of NWB, each of the Secured Creditors shall be entitled to (a)
file its own secured claim in respect of the Secured Obligations owed to it (a
“Claim”),
(b) move for and retain for its own account adequate protection for its Claim in
the form of replacement liens, adequate protection liens, cash payments, or
other forms of adequate protection fashioned by the court, (c) make any motion,
objection or opposition that the holder of an unsecured claim would have
standing to make (other than a motion, objection or opposition that calls into
question or otherwise directly or indirectly attacks the validity, priority,
perfection, attachment, or enforceability of any lien or security interest under
any of the Loan Documents or which otherwise secures the Secured Obligations or
any adequate protection in the form of replacement liens, adequate protection
liens, cash payments, or other forms of adequate protection fashioned by the
court with respect to the Secured Obligations), and retain (subject to the
turnover provisions of this Agreement) any cash, debt securities or equity
securities distributed to such Secured Creditor on account of its Claim in any
such proceeding, or (d) assert such defenses and counterclaims, and otherwise
protect its rights, in its discretion except as expressly prohibited by this
Agreement. Notwithstanding the foregoing, no Secured Creditor will at any time
take any action that calls into question or otherwise directly or indirectly
attacks the validity, priority, perfection, attachment, or enforceability of any
lien or security interest under any of the Loan Documents.
3.2 Neither
Secured Creditor (for purposes of this Section, the “Financing Secured
Creditor”) may propose, offer or support any debtor-in-possession financing
under Bankruptcy Code Section 364 or use of cash collateral under Bankruptcy
Code Section 363 without the prior consent of the other Secured Creditor (for
purposes of this paragraph, the “Non-Financing Secured Creditor”), provided that
no consent of the Non-Financing Secured Creditor shall be required if such
proposed debtor-in-possession financing under Bankruptcy Code Section 364 or use
of cash collateral under Bankruptcy Code Section 363 provides for the following
terms and conditions: (i) the debtor-in-possession agrees not to challenge the
enforceability, attachment or perfection of the liens of the Non-Financing
Secured Creditor under the P&S Documents or the Teles Documents, as
applicable; (ii) the liens securing such debtor-in-possession financing are
junior in priority to the liens of the P&S Documents or the Teles Documents,
as applicable; (iii) the Non-Financing Secured Creditor is awarded cash adequate
protection in an amount equal to interest; and (iv) the Non-Financing Secured
Creditor is granted adequate protection liens and replacement liens on
all
10
unencumbered
pre-petition property of NWB and post-petition property of NWB (excluding
therefrom claims of the estate under Chapter 5 of the Bankruptcy
Code).
3.3 This
Agreement shall be applicable both before and after the commencement of any
Insolvency or Liquidation Proceeding by or against NWB and all converted or
succeeding cases in respect thereof, and all references herein to NWB shall be
deemed to apply to the trustee for NWB and/or to NWB as a
debtor-in-possession.
ARTICLE
IV
RIGHTS AND REMEDIES OF
SECURED CREDITORS
4.1 General Relation to Security
Documents. This Agreement is intended to be supplemental to,
and not in limitation of, the Loan Documents, and the rights and remedies of the
Secured Creditors contained herein and therein are intended to be
cumulative. However, in the event of actual and irreconcilable
conflict between the provisions hereof and the provisions of the Loan Documents,
the provisions of this Agreement shall be controlling.
4.2 Power of
Attorney. NWB hereby irrevocably constitutes and appoints each
Secured Creditor and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of NWB or the name of such attorney-in-fact, from time to
time in such Secured Creditor’s discretion, for the purpose of signing documents
and taking other action as such Secured Creditor may reasonably deem necessary
or appropriate to perfect and protect the Liens of such Secured Creditor in the
Collateral or otherwise to accomplish the purposes hereof. This power
of attorney is a power coupled with an interest, shall be irrevocable and shall
not be subject to the limitations of Section 4.3
hereof. Without limiting the generality of the foregoing, so long as
such Secured Creditor shall be entitled under this Agreement or any Loan
Document to make collections in respect of the Collateral, such Secured Creditor
shall have the right and power to receive, endorse and collect all checks made
payable to the order of NWB representing any dividend, payment or other
distribution in respect of the Collateral and to give full discharge for the
same.
4.3 Certain Rights After Event
of Default. NWB hereby irrevocably constitutes and appoints
each Secured Creditor and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of NWB or otherwise, from time to time in such Secured
Creditor’s discretion, so long as any event of default under any Loan Document
has occurred and is continuing, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to carry out the terms of this Agreement or any Loan Document and to
accomplish the purposes hereof and thereof and, without limiting the generality
of the foregoing, NWB hereby gives such Secured Creditor the power and right on
behalf of NWB, without notice to or further assent by NWB, to do the
following:
(a) to ask
for, demand, xxx for, collect, receive and give acquittance for any and all
moneys due or to become due upon, or in connection with, the
Collateral;
11
(b) to
receive, take, endorse, assign and deliver any and all checks, notes, drafts,
acceptances, documents and other negotiable and nonnegotiable instruments taken
or received by the Secured Creditor as, or in connection with, the
Collateral;
(c) to
commence, prosecute, defend, settle, compromise or adjust any claim, suit,
action or proceeding with respect to, or in connection with, the
Collateral;
(d) to sell,
transfer, assign or otherwise deal in or with the Collateral or any part thereof
as fully and effectively as if such Secured Creditor were the absolute owner
thereof; and
(e) to do, at
its option and at the expense and for the account of such Credit Party, at any
time or from time to time, all acts and things which such Secured Creditor deems
necessary to protect or preserve the Collateral and to realize upon the
Collateral.
4.4 Right to Initiate Judicial
Proceedings. Each Secured Creditor (a) shall have the
right and power to institute and maintain such suits and proceedings as it may
deem appropriate to protect and enforce the rights vested in it by this
Agreement and each Loan Document and (b) may either after entry, or without
entry, proceed by suit or suits at law or in equity to enforce such rights and
to foreclose upon the Collateral and to sell all or, from time to time, any of
the Collateral under the judgment or decree of a court of competent
jurisdiction. This Section 4.4 shall not
be construed to limit any right or remedy otherwise available to such Secured
Creditor under this Agreement, any Loan Document or otherwise by Law to act
without judicial proceedings.
4.5 Right to Appoint a
Receiver. Upon the filing of a xxxx in equity or other
commencement of judicial proceedings or other applicable action set forth in any
Loan Document to enforce the rights of a Secured Creditor under this Agreement
or any Loan Document, said Secured Creditor shall, to the extent permitted by
Law and except to the extent (if any) expressly forbidden by a Loan Document,
without notice to NWB, without regard to the solvency or insolvency at the time
of NWB or any other Person then liable for the payment of any of the Secured
Obligations, without regard to the then value of the Collateral, and without
requiring any bond from any complainant in such proceedings, be entitled as a
matter of right to the appointment of a receiver or receivers of the Collateral,
or any part thereof, and of the rents, issues, tolls, profits, royalties,
revenues and other income thereof, pending such proceedings, with such powers as
the court making such appointment or as the applicable Loan Document, as the
case may be, shall confer, and to the entry of an order directing that the
rents, issues, tolls, profits, royalties, revenues and other income of the
property constituting the whole or any part of the Collateral be segregated,
sequestered and impounded for the benefit the Secured Creditors, to be
distributed to the Secured Creditors as set forth in Section 5.5 of this
Agreement, and NWB irrevocably consents to the appointment of such receiver or
receivers and to the entry of such order.
4.6 Remedies Not Exclusive,
etc. No remedy conferred upon or reserved to any Secured
Creditor herein or in any Loan Document is intended to be exclusive of any other
remedy or remedies, but every such remedy shall be cumulative and shall be in
addition to every
12
other
remedy conferred herein or in any Loan Document or now or hereafter existing at
law or in equity or otherwise.
(a) No delay
or omission by a Secured Creditor to exercise any right, remedy or power
hereunder or under any Loan Document shall impair any such right, remedy or
power or shall be construed to be a waiver thereof, and every right, power and
remedy given by this Agreement or any Loan Document to a Secured Creditor may be
exercised from time to time and as often as may be deemed expedient by the
Secured Creditor.
(b) If a
Secured Creditor shall have proceeded to enforce any right, remedy or power
under this Agreement or any Loan Document and the proceeding for the enforcement
thereof shall have been discontinued or abandoned for any reason or shall have
been determined adversely to the Secured Creditor, then NWB and the Secured
Creditors shall, subject to any determination in such proceeding, severally and
respectively be restored to their former positions and rights hereunder or
thereunder in all respects and, subject to any determination in such proceeding,
thereafter all rights, remedies and powers of the Secured Creditor and every
other Person shall continue as though no such proceeding had been
taken.
(c) All
rights of action and of asserting claims upon or under this Agreement and the
Loan Documents may be enforced by the Secured Creditors without the
possession of any original or executed instrument evidencing or governing any
Secured Obligation and without the production thereof at any trial or other
proceeding relative to such claims.
4.7 Certain Waivers.
(a) To the
extent it may lawfully do so, NWB agrees that it will not at any time in any
manner whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension, moratorium, turnover or redemption Law, or any Law
permitting it to direct the order in which the Collateral shall be sold, now or
at any time hereafter in force, which may delay, prevent or otherwise affect the
performance or enforcement of this Agreement or any Loan Document, hereby waives
all benefit or advantage of all such Laws, and covenants that it will not
hinder, delay or impede under color of any such Law the execution of any power
granted to the Secured Creditors in this Agreement or any Loan Document but will
suffer and permit the execution of every such power as though no such Law were
in force.
(b) To the
extent it may lawfully do so, NWB, on behalf of itself and all who may claim
through or under it, including without limitation any and all subsequent
creditors, vendees, assignees and lienors, waives and releases all rights to
demand or to have any marshalling of the Collateral upon any sale, whether made
under any power of sale granted herein or in any Loan Document or pursuant to
judicial proceedings or upon any foreclosure or any enforcement of this
Agreement or any Loan Document, and consents and agrees that all the Collateral
may at any such sale be offered and sold as an entirety. To the
fullest extent permitted by Law, NWB hereby waives any and all rights it may at
any time have to require any Secured Creditor to exercise its rights and
remedies under this Agreement, any Loan
13
Document,
any other agreement or instrument, at Law or in equity, as between different
Persons or against any single Person in any particular order, method or
manner.
(c) NWB
hereby waives, to the extent permitted by applicable Law, presentment, demand,
protest and any notice of any kind (except notices expressly required hereunder
or under any Loan Document) in connection with this Agreement, the Loan
Documents and any action taken by a Secured Creditor with respect to the
Collateral.
4.8 No New
Liens. So long as the Discharge of any Secured Obligations has
not occurred, the parties hereto agree NWB shall not grant or permit any
additional Liens, or take any action to perfect any additional Liens, on any
asset or property to secure any Secured Obligation unless it has also granted a
Lien on such asset or property to secure all Secured Obligations equally and
ratably in accordance with this Agreement, provided, however, that the foregoing
shall not apply to Teles Inventory as collateral security for the Inventory
Credit Line. To the extent that the foregoing provisions are not
complied with for any reason, without limiting any other rights and remedies
available to the other Secured Creditors, the Secured Creditor benefiting from
such new Lien agrees that any amounts received by or distributed to any of them
pursuant to or as a result of Liens granted in contravention of this Section 4.8 shall be
subject to Sections
5.4 and 5.5.
4.9 Fees, Taxes,
etc. NWB agrees to pay any and all stamp, document, transfer,
filing, recording, registration, excise or sales fees and taxes and all similar
impositions and any and all reasonable Lien searches now or hereafter payable or
determined in good faith by the Secured Creditors to be payable in connection
with this Agreement, the Loan Documents, or any other documents, instruments or
transactions pursuant to or in connection herewith or therewith and agrees to
hold each Secured Creditor harmless from and against any and all present or
future claims or liabilities with respect to, or resulting from any delay in
paying or omission to pay, any such fees, taxes or impositions. Such
agreement extends, without limitation, to any and all taxes or other state
documentary stamp or intangible tax with respect to the filing or recording of
any financing statements or mortgages in connection herewith or in connection
with any Loan Document, regardless of whom such taxes are levied or assessed
against. The obligations of NWB under this Section 4.9 shall
survive the termination of the other provisions of this Agreement and the
termination of any Loan Document.
4.10 Maintenance of Liens and
Further Assurances. At any time and from time to time, upon
the request of a Secured Creditor, and at the expense of NWB, NWB will promptly
execute and deliver any and all such further instruments and documents and take
such further actions as are necessary or reasonably requested to
establish, confirm, maintain and continue and to perfect, or to protect the
perfection of, the Liens created and intended to be created hereunder and under
the Loan Documents, and all assignments made or intended to be made pursuant
thereto, or to obtain the full benefits of this Agreement and the Loan Documents
and of the rights and powers herein and therein granted, including, without
limitation, the execution and delivery of any further deeds, conveyances,
mortgages, assignments, security agreements, pledges and further assurances and
the filing of any financing or continuation statements. NWB also
hereby authorizes each Secured Creditor to file financing statements and
continuation statements at any time with respect to any Collateral.
14
ARTICLE
V
DISTRIBUTIONS
5.1 Lockbox
Account. P&S may, pursuant to Section 2.5(B) of the Credit
Agreement, and shall, at the request of Teles pursuant to Section 2.4(b) of the
Teles Agreement, establish a Lockbox Account. In the event that
P&S establishes a Lockbox Account, then P&S shall establish one or more
deposit accounts, titled in its own name, along with such other sub-accounts as
it deems appropriate from time to time (collectively, the “Collateral
Account”). P&S shall maintain the Collateral Account as
agent hereunder, and the assets therein shall be segregated and not commingled
with other assets of P&S. Subject to the terms of this Agreement,
P&S shall have the exclusive dominion and control over the Collateral
Account and all monies in the Collateral Account shall constitute Collateral
hereunder. All right, title and interest in and to (i) the Collateral
Account, (ii) funds on deposit therein from time to time, (iii) all proceeds of
the conversion thereof into cash, instruments, securities or other property, and
(iv) all other proceeds thereof (collectively, the “Cash
Collateral”) shall vest in P&S, for the benefit of the Secured
Creditors. NWB hereby grants, conveys, assigns, pledges and transfers to
P&S, and grants to and creates in favor of P&S, as agent for the Secured
Creditors, a continuing Lien in, the Cash Collateral. NWB hereby
represents, warrants, covenants and agrees that such Lien shall at all times be
valid, perfected and of first priority, subject to no other Lien whatever other
than Permitted Liens, and NWB shall take or cause to be taken such actions and
shall execute and deliver such instruments and documents as may be necessary,
appropriate, or in the reasonable judgment of P&S desirable to perfect or
protect the Lien and security interest intended to be created
hereby. P&S shall not create or suffer to exist any Lien on any
amounts or investment held in the Collateral Account other than the Lien in
favor of P&S granted under this Section
5.1.
5.2 Deposits. NWB
and Teles each agree to deposit in the Lockbox Account, or with P&S, for
deposit in the Collateral Account, all funds required to be so deposited under
this Agreement or under any Loan Document including, without limitation,
Receivable Rights. No other funds shall be deposited in the
Collateral Account or commingled with funds in the Collateral
Account.
5.3 Distributions Before an
Event of Default. The applicable control agreement for the Lockbox
Account shall provide that until such time as the depository bank has received a
written directive from P&S, as collateral agent, the depository bank shall
distribute or deposit to the credit of NWB all funds or proceeds of
items received in the Lockbox Account.
5.4 Directive After an Event of
Default. NWB hereby agrees that upon the occurrence of an
event of default (as defined in either the Credit Agreement or the Teles
Agreement), P&S, as collateral agent hereunder, shall have the exclusive
power and right to issue written instructions to the depository institution
(which instructions may not be countermanded by NWB) directing that all funds
and the proceeds of items received and to be received in the Lockbox Account be
transferred to the Collateral Account.
5.5 Distributions After an Event of
Default. All
payments received by either Secured Creditor as a result of the exercise of any
of the enforcement rights set forth in Article
15
IV of
this Agreement, all monies held by P&S in the Collateral Account, and all
other proceeds of Collateral shall, to the extent available for distribution, be
distributed as follows:
|
First: to
each Secured Creditor in the amount of any unpaid costs, expenses and fees
(including attorneys’ fees) owing to such Secured Creditor as a Secured
Obligation (in the case of P&S, including reimbursement of all costs,
expenses and fees (including attorneys’ fees) incurred in respect of its
services as described in this Article
V);
|
Second: to each
Secured Creditor, on a Pro Rata Basis, until all Secured
Obligations are paid in full,
in each
case to be applied, first, to outstanding amounts
other than those attributable to principal owing to each Secured Creditor
receiving such payment, and second, to amounts
attributable to principal; and
Finally: if
all Secured Obligations shall have been paid in full in cash and all commitments
to extend credit under the P&S Documents shall have been terminated
irrevocably, any surplus then remaining shall be paid to NWB or its successors
or assigns or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
5.6 Calculations.
(a) In making
the determinations and allocations required by Section 5.5 hereof, the
Secured Creditors may rely upon written information supplied by each Secured
Creditor as to the amounts owing to such Secured Creditor that are described in
item “Second” above (which the Secured Creditors agree (or shall agree) to
provide upon request).
(b) Each
Secured Creditor agrees that (i) to the extent any payment of any Secured
Obligation made to it hereunder is in excess of the amount due to be paid to it
hereunder, it shall pay to the other Secured Creditor such amounts so that,
after giving effect to such payments, the amounts received by the Secured
Creditors are equal to the amounts to be paid to them hereunder, and (ii) in the
event that any payment of any Secured Obligation made to either Secured Creditor
is subsequently invalidated, declared fraudulent or preferential, set aside or
required to be paid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then the
other Secured Creditor shall pay to such Secured Creditor such amounts so that,
after giving effect to the payments hereunder by all such Secured Creditors, the
amounts received by all Secured Creditors are not in excess of the amounts to be
paid to them hereunder as though any payment so invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid had not been
made.
5.7 Application of Monies. The
distribution provisions of Section 5.5 are for
the sole purpose of determining the relative amounts of proceeds and other
payments to be distributed to the Secured Creditors and not for the purpose of
creating an agreement among the parties as to the manner in which any proceeds
or other payments distributed among them are actually to be applied to pay the
Secured Obligations. Each Secured Creditor shall be free, each in its
own discretion, to apply any of the proceeds or other payments disbursed to it
hereunder to
16
the
Secured Obligations held by each in such order as it may determine (subject only
to the applicable provisions of the Credit Agreement or the Teles Agreement, as
the case may be). NWB, by its consent hereto, agrees that in the
event any payment is made with respect to any Secured Obligations, as between
NWB and each Secured Creditor the Secured Obligations discharged by such payment
shall be the amount or amounts of the Secured Obligations to which such Secured
Creditor applies the portion of such payment distributed to it under Section 5.5 hereof as
provided in the preceding sentence. Notwithstanding the foregoing,
for all purposes of this Agreement the Secured Obligations shall be deemed paid
to the same extent that proceeds and other payments are distributed with respect
to it pursuant to Section 5.5,
notwithstanding the actual application thereof.
5.8 Collateral Agency.
Teles hereby appoints P&S as its collateral agent for the sole purpose of
(i) the creation and perfection of a security interest in the Lockbox Account
and the Collateral Account now or hereafter created, as security for the Secured
Obligations; (ii) delivery to the bank (the “Blocked
Account Bank”) at which the Collateral Account is maintained of
instructions directing disposition of the funds in the Collateral Account, in
accordance with the terms of the applicable control agreement with the Blocked
Account Bank (the “Control
Agreement”); (iii) holding for the benefit of the Secured
Creditors any proceeds of Receivable Rights in such Collateral Accounts
including, without limitation, the Cash Collateral; and (iv) exercising rights
and remedies with respect to the Receiveable Rights and proceeds thereof
including, without limitation, the Cash Collateral, in such Collateral Account
or otherwise, and for all other purposes reasonably related to the matters
described in clauses (i) through (iv) hereof, subject to the terms of this
Article V. P&S hereby accepts such appointment and agrees to act
as collateral agent on behalf of the Secured Creditors for the purposes
hereinabove described. Teles and NWB agree that P&S shall have no obligation
to honor, any instructions with regard to the Collateral Account or Control
Agreement, including without limitation any instruction to direct the Blocked
Account Bank to transfer any funds in the applicable Collateral Account, so long
as the P&S Obligations shall not have been paid in full, and any such
instructions shall be null and void. P&S may resign
from the performance of its functions and duties as agent hereunder at any time
by giving reasonable prior written notice to Teles, such resignation to be
effective upon the appointment of a successor by P&S or Teles.
5.9 No
Warranties. Teles acknowledges and agrees that: (i)
P&S does not make any representation or warranty whatsoever as to
the nature, extent, description, validity or priority of any security interests
in or liens upon the Lockbox Account or any Collateral Account; (ii) so long as
P&S is acting as agent for Teles pursuant to Section 5.8 hereof,
P&S shall not have any liability to, and shall be held harmless by, Teles,
for any losses, damages, claim, or liability of any kind to the extent arising
out of the agency thereby created or any actions taken by P&S, or omitted to
be taken by P&S, as such agent, other than losses, damages, claims, or
liabilities arising out of gross negligence or willful misconduct; (iii) P&S
shall not act as agent for Teles with respect to any Collateral in which a
security interest may be perfected by means other than control or possession;
(iv) Teles shall immediately deliver to P&S any Receivable Rights that now
or in the future comes into its possession; and (v) the priority of the security
interests in and liens upon the Lockbox Account and the Collateral Accounts, and
the application of proceeds of the Collateral Account shall be governed by the
terms of this Article V.
17
ARTICLE
VI
[RESERVED]
ARTICLE
VII
MISCELLANEOUS
7.1 Amendments, Supplements and
Waivers. With the prior written consent of both P&S and
Teles, or as otherwise expressly permitted under the Loan Documents, NWB may
from time to time enter into amendments, modifications or supplements to this
Agreement or any Loan Document for the purpose of amending, adding to, or
waiving any provisions of, this Agreement or any Loan Document, releasing any
Collateral (except for disposition of Inventory in the ordinary course of its
business), releasing or limiting the obligations of NWB under any Loan Document,
or changing in any manner the rights of either Secured Creditor or NWB hereunder
or thereunder. Any such amendment, modification or supplement made in
accordance with this Section 7.1 shall be
binding upon NWB and each Secured Creditor and their respective successors and
assigns. No amendment, modification or supplement relating hereto or
to any Loan Document shall be effective unless in writing manually signed by or
on behalf of the party to be charged therewith.
7.2 Notices. Except
to the extent otherwise expressly permitted hereunder or thereunder, all
notices, requests, demands, directions and other communications (collectively
“notices”) given or made under this Agreement or any Loan Document shall be
given in writing (including telexed and facsimile communications) and shall be
sent by first-class mail, nationally-recognized overnight courier, telex or
facsimile transmission (with confirmation in writing mailed first-class or sent
by such an overnight courier) or by personal delivery. All notices
shall be sent to the applicable party at the address stated on the signature
pages hereof or in accordance with the last unrevoked written direction from
such party to the other parties hereto, in all cases with postage or other
charges prepaid. Any such properly given notice to a Secured Creditor
shall be effective when received. Any such properly given notice to
NWB shall be effective upon the earliest to occur of receipt, telephone
confirmation of receipt of telex or facsimile transmission communication, one
(1) Business Day after delivery to a nationally-recognized overnight courier,
five (5) Business Days after deposit in the mail, or when telephoned
(to the extent that notice is permitted by telephone).
7.3 No Implied Waiver;
Cumulative Remedies. No course of dealing and no delay
or failure of either Secured Creditor in exercising any right, power or
privilege hereunder or under any Loan Document, or any other documents or
instruments pursuant to or in connection herewith shall affect any other or
future exercise thereof or exercise of any other right, power or privilege; nor
shall any single or partial exercise of any such right, power or privilege or
any abandonment or discontinuance of steps to enforce such a right, power or
privilege preclude any further exercise thereof or of any other right, power or
privilege. The rights and remedies of each Secured Creditor under
this Agreement, the Loan Documents and all other agreements and instruments
pursuant to or in connection herewith or therewith are cumulative and not
exclusive of any rights or remedies which any of them would otherwise
have. Any waiver, permit, consent or approval of any kind or
character on the part of either Secured Creditors of any breach or default
under, or term or condition of, this Agreement or any Loan
18
Document
shall be in writing and shall be effective only to the extent specifically set
forth in such writing.
7.4 Severability. The
provisions of this Agreement and of the Loan Documents are intended to be
severable. If any provision of this Agreement or any Loan Document
shall be held invalid or unenforceable in whole or in part in any jurisdiction
such provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any manner affecting
the validity or enforceability thereof in any other jurisdiction or the
remaining provisions hereof or thereof in any jurisdiction. Where,
however, such invalidity or unenforceability may be waived, it is hereby waived
by NWB to the fullest extent permitted by Law, to the end that this Agreement
and the Loan Documents shall be valid and binding agreements enforceable in
accordance with their terms.
7.5 Prior
Understandings. This Agreement and the Loan Documents
supersede all prior understandings and agreements, whether written or oral,
among the parties hereto relating to the transactions provided for
herein.
7.6 No
Partnership. This Agreement shall not in any respect be
interpreted, deemed or construed as making Teles a partner or joint venturer
with any other person or entity, including, without limitation, P&S or NWB,
nor shall it be construed as making Teles the agent or representative of P&S
or NWB nor P&S the agent or representative of Teles or NWB, except as
otherwise expressly provided for in this Agreement.. The parties hereto
acknowledge and agree that the Revolving Credit Loans and the Term Loan are
separate and distinct financing transactions and that P&S and Teles hold
separate, distinct and non-combined security interests and liens in the
Collateral.
7.7 Survival. All
representations and warranties of NWB contained herein or in any Loan Document
or made in connection herewith or therewith shall be deemed to have been relied
upon by the Secured Creditors and shall survive the execution and delivery of
this Agreement and the Loan Documents, any knowledge of or investigation by any
Secured Creditor, and all other events and conditions whatever. All
statements in any financial statement, certificate, document or instrument from
time to time delivered by or on behalf of NWB under or in connection with this
Agreement or any Loan Document shall be deemed to constitute representations and
warranties by NWB.
7.8 Counterparts. This
Agreement and any Loan Document may be executed in any number of counterparts
and by the different parties hereto or thereto on separate counterparts each of
which, when so executed, shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.
7.9 Termination of
Liens. Except as otherwise provided in any Loan Document, upon
final and non-avoidable payment in full of all Secured Obligations (other than
indemnification obligations for which no claim is made) and termination of the
obligations of P&S to extend credit under the P&S Documents, the Liens
created hereby and by the Loan Documents shall terminate. Except as
otherwise provided in any Loan Document, upon such termination, Secured
Creditors will, at the expense of NWB, redeliver and reassign to NWB
any
19
remaining
Collateral in its possession and take all action necessary to terminate the Lien
of the Secured Creditors in the Collateral.
7.10 Independent Credit
Investigation. Neither Secured Creditor, nor any of its
respective directors, officers, agents or employees, shall be responsible to the
other Secured Creditor for the solvency or financial condition of NWB or the
ability of NWB to repay any of the Secured Obligations, or the statements of
NWB, oral or written, or for the validity, sufficiency or enforceability of any
of the Secured Obligations, the P&S Documents, the Teles Documents, or any
document or agreement executed or delivered in connection with or pursuant to
any of the foregoing. Each Secured Creditor has entered into its
respective financial agreements with NWB based upon its own independent
investigation, and makes no warranty or representation to the other, nor does it
rely upon any representation by the other, with respect to the matters
identified or referred to in this Section.
7.11 Successors and
Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of NWB and the Secured Creditors, and each of
their respective successors and permitted assigns, except that NWB may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Secured Creditor and no Secured Creditor may
assign or otherwise transfer any of its rights or obligations hereunder, and no
new Secured Creditor may join as a party to any Loan Documents, unless (a) such
transfer or joinder is in accordance with terms of the applicable Loan Document
and (b) such transferee delivers a joinder or other agreement, reasonably
satisfactory to the other Secured Creditor, evidencing the transferee’s
agreement to be bound by the terms and conditions of this Intercreditor
Agreement (and any other attempted assignment or transfer by any party hereto
shall be null and void).
7.12 Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN THE STATE; PROVIDED THAT EACH SECURED
CREDITOR SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(a) ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX SITTING IN THE CITY OF
WILMINGTON OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH PARTY HERETO IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH PARTY HERETO WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
20
7.13 Waiver of Right to Trial by
Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 7.12 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.
[Remainder
of Page Intentionally Left Blank]
21
IN WITNESS WHEREOF, the parties hereto,
by their respective duly authorized officers, have executed this Intercreditor
Agreement as of the date first above written.
|
P&S
SPIRIT, LLC
|
||||
|
By: ______________________________
|
||||
|
Name: ______________________________
|
||||
|
Title: ______________________________
|
||||
|
0000
Xxxxxxxxxx Xxxxx Xxxx
Xxxxx
000
Xxxxxxxxx,
Xxxxxxxx 00000
|
||||
|
TELES AG
INFORMATIONSTECHNOLOGIEN
|
||||
|
By: ______________________________
|
||||
|
Name: ______________________________
|
||||
|
Title: ______________________________
|
||||
|
Xxxxx-Xxxxxx-Xxxxx
0
00000
Xxxxxx, Xxxxxxx
|
||||
|
NEW
WORLD BRANDS, INC.
|
||||
|
By: _______________________________
|
||||
|
Name: M.
Xxxxx Xxxxxx
|
||||
|
Title: CEO
|
||||
|
000 X.
0xx
Xxxxxx
Xxxxxx,
Xxxxxx 00000
|
||||
ACKNOWLEDGMENT
On this ____ day of February, 2008, the
undersigned QUALMAX, INC., a Delaware corporation, hereby acknowledges and
agrees to the foregoing terms and provisions. By its signature below,
the undersigned agrees that it will, together with its successors and assigns,
be bound by the provisions hereof; provided that, nothing in the
foregoing Intercreditor Agreement shall amend, modify, change
or supersede the respective terms of any agreements or obligations of
the undersigned to P&S including, without limitation, that certain Guaranty
dated May 30, 2007 and that certain Collateral Pledge Agreement dated May 30,
2007, as the same may be amended, restated, modified, supplemented or replaced
from time to time. The undersigned acknowledges and agrees that it is not a
party to the foregoing Intercreditor Agreement and does not and will not receive
any right, benefit, priority or interest under or because of the existence of
the foregoing Intercreditor Agreement. The undersigned will execute and deliver
such additional documents and take such additional action as may be necessary or
desirable in the opinion of either Secured Creditor to effectuate the provisions
and purposes of the foregoing Intercreditor Agreement.
|
QUALMAX,
INC.
|
|
By: ______________________________
|
|
Name: ______________________________
|
|
Title: ______________________________
|
|
000
Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
|
