INTERCREDITOR AGREEMENT
THIS
INTERCREDITOR AGREEMENT (this “Agreement”), dated as of January 30, 2008, by and
among Karat Platinum, LLC, a New York limited liability company, with an address
at 00 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (the “Company”), Sentra Consulting
Corp., a Nevada corporation, with an address at 00 Xxxxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000 (“Sentra”), and Continental Capital, LLC, a New York limited
liability company, with an address at 0000 X. 00xx
Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000 (“Continental”).
WITNESSETH:
WHEREAS,
in connection with the issuance of a series of Secured
Promissory Notes
by the
Company to Sentra (the “Sentra Notes”), the Company previously granted and
delivered to Sentra a continuing lien on, and first priority security interest
in and to, all of the Company's right, title and interest with respect to all
of
the personal property of the Company on the terms and conditions set forth
in
the General Security Agreement between the Company and Sentra, dated July 11,
2007, as amended on August 22, 2007 (the “Sentra Security
Agreement”);
WHEREAS,
in connection with the issuance of a Secured Promissory Note by the Company
to
Continental (the “Continental Note”), the Company will be granting and
delivering to Continental a continuing lien on and first priority security
interest in and to the inventory of the Company (the “Inventory”) in accordance
with the terms and conditions of the Security Agreement, dated as of the date
hereof, between the Company and Continental (the “Continental Security
Agreement”);
WHEREAS,
the Sentra Notes and the Continental Note are sometimes hereinafter referred
together as the “Secured Promissory Notes”;
WHEREAS,
Sentra and Continental (collectively, the “Secured Creditors”) desire to enter
into this Agreement in order to set forth their agreement and understanding
with
respect to the enforcement of their respective rights pertaining to their
respective promissory notes and their respective security interests in the
Inventory (the “Security Interests”).
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises,
representations, warranties, and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Ownership
Interest in the Inventory. Sentra
agrees to subordinate its first priority security interest in and to the
Inventory for the benefit of Continental. Notwithstanding anything contained
herein to the contrary, the Investors expressly agree and acknowledge that
Sentra shall retain its current perfected continuing lien and first priority
security interest in all of the other assets and personal property of the
Company, in accordance with and pursuant to the Sentra Security Agreement.
2.
Action
for Foreclosure. Continental
agrees and acknowledges that the initiation, or threat of initiation, of any
notification, claim, action or proceeding regarding an Event of Default (as
such
term is defined in the Continental Note) or with respect to the foreclosure
of
its Security Interest shall require 10 days’ prior written notice to Sentra.
3. No
Representation or Warranty Relating to the Secured Promissory
Notes.
Neither
of the Secured Creditors has made any warranty or representation to the other,
expressed or implied, with respect to the Secured Promissory Notes, the adequacy
of security for such Secured Promissory Notes, the existing or future solvency
or financial worth of the Company, or the ability of the Company to repay the
Secured Promissory Notes. The Secured Creditors do not assume any liability
to
each other.
4. Distribution
of Sale or Refinance Proceeds.
4.1.
If
there is an Event of Default (as defined in any of the Secured Promissory Notes)
and as a result thereof in accordance with the terms and provisions of their
respective security agreements and this Agreement, the Secured Creditors shall
be entitled to the proceeds of a sale of the Inventory, the net proceeds shall
be distributed in the following order of priority among the
Investors:
(a)
First, repayment to Continental of all outstanding principal and accrued
interest due in accordance with the Continental Note until such promissory
note
has been repaid in full; and
(b)
Second,
the balance if any, to Sentra of all outstanding principal and accrued interest
thereon, due in accordance with the Sentra Notes.
4.2.
The
priorities of allocation set forth in Section 4.1 shall apply in all
circumstances, including with respect to any distribution made in any case
or
proceeding under Title 11 of United States Code or any other proceeding relating
to the Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation.
4.3.
If
any Secured Creditor (an "Excess Party") shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of setoff, or
otherwise) as a result of the realization, sale or other remedial disposition
of, or foreclosure on, the Inventory or any repayment under any of the Secured
Promissory Notes in excess of the amount it is then entitled to receive under
the terms of this Agreement or under its respective Secured Promissory Note,
such Excess Party shall hold such amount in trust for the ratable benefit of
the
other Secured Creditors in accordance with the terms of this
Agreement.
4.4
Notwithstanding anything contained herein to the contrary, Continental agrees
that subsequent to the date hereof the Company can grant third parties
additional first priority security interests in the Inventory and said parties
shall share pari passu with Continental in the distributions upon a sale of
the
Inventory upon an Event of Default, provided, that (i) each new secured creditor
shall agree to be bound by this Agreement, in writing, in form and substance
satisfactory to Continental, (ii) copies of all promissory notes, security
agreements and other loan agreements are submitted to Continental for its prior
approval, which approval shall not be unreasonably withheld, and shall be deemed
automatically granted in the event Continental does not respond within 5
business days after such submission, and (iii) the sum of all such loans secured
by the Inventory of the Company shall not exceed $1,600,000, in the
aggregate.
5.
Miscellaneous.
5.1.
Authorization.
Each of
the Secured Creditors warrants and represents that it is duly authorized to
execute this Agreement and comply with its obligations hereunder.
5.2.
Survival.
The
representations, warranties, covenants and agreements made herein shall survive
the execution of this Agreement.
5.3.
Assignment.
This
Agreement and the rights and obligations hereunder shall not be assignable
or
transferable by a Secured Creditor without the prior written consent of the
other parties. Any instrument purporting to make an assignment in violation
of
this Section 5.3 shall be void.
5.4.
Benefits
of Agreement.
This
Agreement and all obligations hereunder shall be binding upon the respective
successors and permissible assigns of the parties hereto.
5.5.
Entire
Agreement.
This
Agreement, the Sentra Notes, the Sentra Security Agreement, the Continental
Note
and the Continental Security Agreement together constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by
any
representations, warranties, covenants and agreements except as specifically
set
forth herein and therein.
5.6.
Severability.
In case
any provision of the Agreement shall be invalid, illegal or unenforceable,
the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby.
5.7.
Further
Assurances.
Each
party agrees to execute such other documents, instruments, agreements and
consents, and take such other actions as may be reasonably requested by the
other parties hereto to effectuate the purposes of this Agreement.
5.8.
Amendment
and Waiver.
This
Agreement may be amended, modified or waived only with the prior written consent
of each of the parties.
5.9.
Delays
or Omissions.
It is
agreed that no delay or omission to exercise any right, power or remedy accruing
to any party, upon any breach, default or noncompliance by another party under
this Agreement, shall impair any such right, power or remedy, nor shall it
be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent
or
approval of any kind or character of any breach, default or noncompliance under
this Agreement, or any waiver on such party's part of any provisions or
conditions therein and must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies shall be cumulative
and not alternative.
5.10.
Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified,
(b)
when sent by confirmed facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (c) three (3) business days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) business day after deposit with
a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. Any notice herein required or permitted to
be
given shall be given by depositing the same in the United States first class
mail, postage prepaid, or hand delivered or transmitted by facsimile, in any
case with a copy sent by overnight courier service, and addressed to the parties
at the respective address set forth on the signature page hereto, or, to such
other place or places as any of the parties shall designate by written notice
to
the other parties.
5.11.
Titles
and Pronouns.
The
titles of the sections and subsections of the Agreement are for convenience
of
reference only and are not to be considered in construing this Agreement. All
pronouns contained herein, and any variations thereof, shall be deemed to refer
to the masculine, feminine or neutral, singular or plural, as the identity
of
the parties hereto may require.
5.12.
Counterparts.
This
Agreement may be executed in any number of counterparts (facsimile or
otherwise), each of which shall be an original, but all of which together shall
constitute one instrument.
5.13.
Governing
Law.
This
Agreement shall be construed in accordance with, and governed by, the laws
of
the State of New York (without giving effect to conflict of laws
principles).
5.14.
Construction
and Joint Preparation.
This
Agreement shall be construed to effectuate the mutual intent of the parties.
The
parties and their counsel have cooperated in the drafting and preparation of
this Agreement, and this Agreement therefore shall not be construed against
any
party by virtue of its role as the drafter thereof. No drafts of this Agreement
shall be offered by any party, nor shall any draft be admissible in any
proceeding, to explain or construe this Agreement. The headings contained in
this Agreement are intended for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
5.15 Consent
to Jurisdiction and Service of Process.
Each of
the parties hereby irrevocably and unconditionally submits to the jurisdiction
of the courts of the State of New York and of the Federal courts sitting in
the
State of New York in any action or proceeding directly or indirectly arising
out
of or relating to this Agreement or the transactions contemplated hereby
(whether based in contract, tort, equity or any other theory). Each of the
parties agrees that all actions or proceedings arising out of or relating to
this agreement must be litigated exclusively in any such State or, to the extent
permitted by law, Federal court that sits in the County of New York, and
accordingly, each party irrevocably waives any objection which it may now or
hereafter have to the laying of the venue of any such action or proceeding
in
any such court. Each party further irrevocably consents to service of process
in
the manner provided for notices in Section 5.10. Nothing in this Agreement
will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law. Each party waives any right it may have to a trial
by
jury in any action or proceeding directly or indirectly arising out of or
relating to this Agreement or the transactions contemplated hereby (whether
based on contract, tort, equity or any other theory).
[Remainder
of this page intentionally left blank; signature pages to
follow]
IN
WITNESS WHEREOF, the undersigned have executed this Intercreditor Agreement
on
the date first set forth above.
| |
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| By: | /s/ Xxxx X. Xxxxxx | |
|
Name: Xxxx X. Xxxxxx |
||
| Title: Chief Financial Officer | ||
| CONTINENTAL CAPITAL, LLC | ||
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| By: | /s/ Xxxxx Xxxxxxxxxx | |
|
Name: Xxxxx Xxxxxxxxxx |
||
| Title: Managing Member | ||
| KARAT PLATINUM, LLC | ||
| |
|
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| By: | /s/ Xxxx X. Xxxxxx | |
|
Name: Xxxx X. Xxxxxx |
||
| Title: Chief Financial Officer | ||
