EXHIBIT 10.44
INTERCREDITOR AGREEMENT
This Intercreditor Agreement dated as of this 19th day of August,
1999, is made by and between DGJ, L.L.C., a Delaware limited liability
company ("Creditor"), with an address at 000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx Xxxx, XX 00000 and LASALLE BUSINESS CREDIT, INC. ("LaSalle"), with
an address at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
PRELIMINARY STATEMENT
A. BPI PACKAGING TECHNOLOGIES, INC., a Delaware corporation
("Borrower"), has heretofore, now or may hereafter enter into certain
financing arrangements with LaSalle pursuant to a Loan and Security Agreement
dated as of August 19, 1999 (as it may be amended from time to time, the
"LaSalle Loan Agreement") between Borrower and LaSalle in connection with
which LaSalle has made or may now or from time to time hereafter make loans
and other extensions of credit to Borrower for working capital purposes.
Capitalized terms used herein without definition shall have the meanings
given in the LaSalle Loan Agreement. The financing arrangements and
extensions of credit made by LaSalle under the LaSalle Loan Agreement, as
well as any and all other indebtedness now or at any time or times hereafter
owing by Borrower to LaSalle, whether under the Loan Agreement or otherwise,
and whether such indebtedness is absolute or contingent, direct or indirect
and however so evidenced, including without limitation all interest thereon
(including interest accrued subsequent to the commencement of any Bankruptcy
Proceeding (as defined below)), are collectively referred to as the "LaSalle
Loans." The LaSalle Loan Agreement, together with all documents, instruments
and agreements executed and delivered in connection therewith or contemplated
thereby, as the same may be amended, modified or supplemented from time to
time, are hereinafter referred to as the "LaSalle Agreements." The LaSalle
Loans are or will be secured by a security interest in and lien on
substantially all of the personal property of Borrower, whether now existing
or hereafter arising and wheresoever located, including, without limitation,
all accounts, chattel paper, deposit accounts, documents, equipment,
fixtures, general intangibles, instruments, and inventory, together with all
proceeds of any and all of the foregoing (including insurance proceeds), all
as more fully set forth in the LaSalle Loan Agreement (all of such collateral
being hereinafter referred to as the "Collateral").
B. Creditor has provided, or will provide, certain financing to
Borrower pursuant to that certain Secured Promissory Note dated August 19,
1999 (the "Creditor Note") in the original principal amount of $4,773,584.88
made by Borrower and payable to Creditor. The indebtedness evidenced by the
Creditor Note is referred to as the "Creditor Term Loan."
C. Creditor is also leasing certain equipment to Borrower for use
in Borrower's business conducted at 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxx,
Xxxxxxxxxxxxx 00000 (the "Facility") under an Equipment Lease dated January
27, 1999, as amended on August 19, 1999 (as so amended, the "Equipment
Lease") between Borrower and Creditor. All of Borrower's "equipment," as
such term is defined in the Uniform Commercial Code as in effect in the State
of Illinois (the "UCC"), whether now owned or hereafter acquired, together
with all proceeds thereof is hereinafter referred to as the "Creditor
Equipment." The term "Creditor Equipment," as used herein, also includes all
equipment and fixtures subject to the Equipment Lease, and proceeds thereof.
That portion of the Creditor Equipment which is not leased to Borrower under
the Equipment Lease is hereinafter referred to as the "Borrower-Owned
Equipment." The Creditor Term Loan and the obligations of Borrower under the
Equipment Lease, as well as any and all other indebtedness now or at any time
or times hereafter owing by Borrower to Creditor, whether such indebtedness
is absolute or contingent, direct or indirect and however so evidenced,
including without limitation all interest thereon (including interest accrued
subsequent to the commencement of any Bankruptcy Proceeding (as defined
below)), are collectively referred to as the "Creditor Loans." The Creditor
Note, the Equipment Lease, and all of the documents, instruments and
agreements executed and delivered in connection therewith or contemplated
thereby, as the same may be amended, modified or supplemented from time to
time, are hereafter referred to as the "Creditor Agreements."
D. As collateral for the Creditor Loans, Creditor received a
security interest in and lien on substantially all of the assets of Borrower,
including, without limitation, the Creditor Equipment, and all proceeds of
the foregoing, and all replacements and substitutions of the foregoing
purchased with the proceeds of the foregoing.
E. As a condition to making the LaSalle Loans, LaSalle requires
that Creditor subordinate its debts and its liens on all of the assets of
Borrower, other than the Creditor Equipment, and that Creditor agree to
restrictions and limitations on its rights as a secured creditor and/or
lessor under the Equipment Lease with respect to Borrower, the Collateral and
the Creditor Equipment, and with respect to any action, whether judicial or
nonjudicial, to repossess, collect, set off, give notification to third
parties with respect to, sell, dispose of, foreclose on, give notice of sale,
disposition or foreclosure with respect to, or obtain equitable or injunctive
relief with respect to, the Collateral, the Creditor Equipment, the Equipment
Lease or the Creditor Loans (any and all of the foregoing being hereinafter
referred to as an "Enforcement Action"), all as set forth in this
Intercreditor Agreement.
NOW, THEREFORE the parties hereby certify, covenant and agree as
follows:
1. LIEN SUBORDINATION BY CREDITOR. Notwithstanding: (a) the
time, order, manner or method of creation, attachment or perfection of the
respective security interests and/or liens granted to Creditor and LaSalle in
or on any or all of the property or assets of Borrower; (b) the time or
manner of filing of their respective financing statements; (c) whether
Creditor or LaSalle or any agent or bailee of either of them holds possession
of any or all of the property or assets of the Company; (d) the dating,
execution or delivery of any agreement, document or instrument granting
Creditor or LaSalle security interests in or on any or all of the assets of
property of Borrower; (e) any provision of the Uniform Commercial Code or any
other applicable law to the contrary, Creditor and LaSalle hereby stipulate
and agree to the following allocation of priorities of security interests in
the assets and property of the Company:
(A) LaSalle shall have a first, senior and prior security
interest in and lien on the Collateral other than the
Creditor Equipment, and a second and subordinate security
interest in the Borrower-Owned Equipment junior only to
that of Creditor; and
(B) Creditor shall have a first, senior and prior security
interest in and lien on the Creditor Equipment, and a
second and subordinate security interest in the Collateral
other than the Creditor Equipment junior only to that of
LaSalle.
Concurrently with the execution of this Agreement and at LaSalle's request,
made at any time, Creditor will provide to LaSalle such statements of
amendment, partial release or other appropriate documents which LaSalle shall
deem reasonably necessary to give effect to Creditor's subordination of its
security interests in the Collateral. In the event Creditor receives from
Borrower any security for the Creditor Loans other than the Creditor
Equipment, which security interest is senior or prior to that of LaSalle,
Creditor agrees that such security interest shall by virtue of this Agreement
and without further action, be junior and subordinate to that of LaSalle.
LaSalle and Creditor understand and agree that the lien priorities stated in
this Agreement shall continue during any Bankruptcy Proceeding.
2. PROCEEDS. The order of priority of liens set forth in this
Agreement shall also apply to all proceeds of the Collateral, including,
without limitation, any insurance proceeds payable in the event of loss of,
or damage to, the Collateral. Any loss payable under any property or
casualty insurance policy relating to the Collateral other than the Creditor
Equipment shall be made payable solely to LaSalle, and if such insurance
proceeds payable in respect of the Collateral other than the Creditor
Equipment are received by Creditor, all such funds shall be held in trust for
LaSalle by Creditor and shall be paid over to LaSalle immediately upon demand
therefor. Creditor irrevocably constitutes and appoints LaSalle as its true
and lawful attorney and agent in fact for the purpose of making, settling and
adjusting any claim under any such policy, and for making all determinations
and decisions with respect to any such policy. Any insurance proceeds
payable in the event of loss of, or damage to, the Creditor Equipment shall
be made payable solely to Creditor, and if such insurance proceeds payable in
respect of the Creditor Equipment are received by LaSalle, such funds shall
be held in trust for Creditor by LaSalle and shall be paid over to Creditor
immediately upon demand therefor. In the event either LaSalle or Creditor
collect and receive any insurance proceeds in excess of the amounts necessary
to discharge in full the obligations secured thereby, such parties shall turn
over such excess to the other party (for application on such other party's
second priority secured claims) to the full extent consistent with applicable
law and any other obligation to which they are subject.
3. PAYMENT ON SUBORDINATED DEBT. Except to the extent set forth
below, Creditor shall not accept, and understands that Borrower may not make,
any payments on any Creditor Loans unless: (A) no Default or Event of Default
under the LaSalle Loan Agreement shall have occurred and be continuing, (B)
Borrower shall have Excess Availability (as defined in the LaSalle Loan
Agreement) in an amount not less than Three Hundred Thousand and no/100
Dollars ($300,000.00) after taking into account the payment then proposed to
be made on the Creditor Loans, and (C) the Borrower's required Consolidated
Tangible Net Worth, as determined under the LaSalle Loan Agreement, shall be
not less than the amount then required both as of the date of, and after
giving effect to, the proposed payment; PROVIDED, HOWEVER, that Borrower may
make regularly scheduled, current payments under the Equipment Lease unless
and until LaSalle shall have given Creditor notice of an Event of Default
under paragraph 16(a) of the LaSalle Loan Agreement (i.e., default with
respect to payment of the Liabilities owed to LaSalle), but Borrower may not
pay any amount under the Equipment Lease which was past due or delinquent as
of the date of the initial funding of the Revolving Loan unless all of the
foregoing conditions are satisfied. This paragraph 3 shall not be construed
to prohibit payments on Creditor Loans made with the proceeds of recoveries
under Enforcement Actions initiated by Creditor in accordance with the terms
of this Intercreditor Agreement, including but not limited to the following,
all to the extent consistent with the other restrictions contained in this
Intercreditor Agreement:
(a) payments on Creditor's claims in bankruptcy proceedings;
(b) payments made in the form of turn-over of Creditor
Equipment, such as by repossession or recovery of leased
equipment, strict foreclosure or deed in lieu of
foreclosure;
(c) payments made pursuant to foreclosure sales of Creditor
Equipment; and
(d) other payments made in exchange for Creditor's release of
its security interest in Creditor Equipment.
4. LIMITATIONS ON ENFORCEMENT ACTIONS. Prior to payment in full
of the LaSalle Loans, and notwithstanding any term or provision of the
documents evidencing or securing the Creditor Loans, Creditor shall not,
without the prior written consent of LaSalle, which may be withheld by
LaSalle in its sole and absolute discretion, take any Enforcement Action;
provided, however, that:
(a) If a default shall occur under the Creditor Agreements,
then Creditor may commence an Enforcement Action against
the Creditor Equipment provided that Creditor shall have
given to LaSalle at least one hundred eighty (180) days'
prior written notice of such default; provided, that if
Borrower or LaSalle cures such default within that one
hundred eighty-day period, Creditor shall cease and
desist from further pursuit of the Enforcement Action;
(b) In addition to the circumstances described in paragraph
4(a), above, at any time after LaSalle shall have taken
any Enforcement Action against the Collateral or shall
have accelerated the maturity of all of the Liabilities
under the LaSalle Loan Agreement, then Creditor may
commence an Enforcement Action under the Creditor
Agreements, subject, however, to the following
limitations: (I) Any Enforcement Action by Creditor shall
be limited to remedies against the Creditor Equipment,
and Creditor acknowledges, understands and agrees that it
shall not take any Enforcement Action against any of the
Collateral other than the Creditor Equipment unless and
until all of the Liabilities owed to LaSalle under the
LaSalle Agreements have been paid in full; and (II)
LaSalle shall have the sole right to control all aspects
of liquidation of the Collateral, other than the Creditor
Equipment, and the disposition of all proceeds thereof;
(c) In the event Borrower or any successor or assign of
Borrower defaults on its obligations to LaSalle and, as a
result, LaSalle undertakes to enforce its security
interests in and liens on the Collateral, other than the
Creditor Equipment, Creditor agrees that it will not
hinder, delay or otherwise prevent LaSalle from taking
any and all action to the extent permitted under law
which LaSalle deems necessary to enforce its security
interests and liens and to realize thereon;
(d) To the extent consistent with the terms of this
Intercreditor Agreement, in the event Borrower or any
successor or assign of Borrower defaults on its
obligations to Creditor and, as a result, Creditor
undertakes to enforce its security interest, lease and/or
liens on the Creditor Equipment, LaSalle agrees that it
will not hinder, delay or otherwise prevent Creditor from
taking any and all action to the extent permitted under
the law which Creditor deems necessary to enforce its
security interest and liens and to realize thereon; and
(e) Prior to each of Creditor's and LaSalle's commencement of
any Enforcement Action or acceleration of any obligation
owned by Borrower to it, LaSalle and Creditor shall give
written notice to the other party of its intention to
commence such Enforcement Action or to declare such
acceleration.
5. CREDITOR DEBT; ADDITIONAL ADVANCES. The principal of the
Creditor Note is $4,773,584.88. There are no past-due payments under the
Equipment Lease, except for the sum of $1,573,584.88, which represents such
past-due amounts and is included as part of the principal balance of the
Creditor Note. LaSalle and Creditor agree that Creditor may make further
advances which would be secured by a first and prior lien on the Creditor
Equipment and a junior and subordinate lien on the Collateral other than the
Creditor Equipment, with all such additional advances deemed part of the
Creditor Loans and subject to the terms and conditions of this Agreement;
provided, however, that all such loans and advances are made for the purpose
of purchasing additional equipment, and shall not exceed the annual aggregate
limit placed on Borrower's capital expenditures (including the sublimit on
the amount of capital expenditures financed) in Section 14(n) of the LaSalle
Loan Agreement.
6. DEBT SUBORDINATION IN BANKRUPTCY PROCEEDINGS. In the event of
any liquidation, bankruptcy, arrangement, receivership, assignment,
reorganization or dissolution proceedings, whether filed by or against
Borrower (any of the foregoing being referred to as a "Bankruptcy
Proceeding"), and the proceeds of Creditor's Collateral are insufficient to
pay in full the Creditor Term Loan, Creditor irrevocably agrees that any
portion of the Creditor Term Loan that is an unsecured claim in any
Bankruptcy Proceeding shall be junior and subordinate to any portion of the
LaSalle Loans that is an unsecured claim in such Bankruptcy Proceeding, and
Creditor hereby irrevocably authorizes LaSalle to collect, receive, enforce
and accept any and all sums or distributions of any kind that may become due,
payable or distributable on or in respect of the Creditor Term Loan, whether
paid directly by Borrower or paid or distributed in any Bankruptcy Proceeding
or otherwise, for application to the LaSalle Loans. After all of the LaSalle
Loans shall have been paid in full, and until the Creditor Term Loan is paid
in full, with respect to the Creditor Term Loan, Creditor shall be subrogated
to the rights of LaSalle to receive distributions applicable to the LaSalle
Loans to the extent that distributions otherwise payable to Creditor with
respect to the Creditor Term Loan have been applied to the payment of the
LaSalle Loans. A distribution made under this Section 6 for application to
the LaSalle Loans which otherwise would have been made to Creditor with
respect to the Creditor Term Loan is not, as between Creditor and Borrower, a
payment by Borrower on the LaSalle Loans.
7. PAYMENTS IN BREACH OF AGREEMENT. Creditor and LaSalle each
agree to receive and hold in trust for and promptly turn over to the other,
in the form received (except for the indorsement or assignment where
necessary), any sums at any time paid to, or received by, either of them in
violation of the terms of this Agreement and to reimburse each other for all
costs, including reasonable attorney's fees, incurred by the other in the
course of collecting said sums should the party having received the same fail
to voluntarily turn the same over to the other as herein required. If either
Creditor or LaSalle fail to indorse or assign any items of payment wrongfully
received by either of them, as the case may be, Creditor and LaSalle hereby
irrevocably make, constitute and appoint each other (and all persons
designated by either of them for that purpose) as its true and lawful
attorney and agent-in-fact, to make such indorsement or assignment in the
other's name.
8. WAIVER OF MARSHALING. In the event that the LaSalle Loans
are, or hereafter become, secured by property, instruments, documents or
agreements other than the Creditor Equipment, including, without limitation,
any guaranty of the LaSalle Loans by any person, Creditor agrees that LaSalle
shall have no obligation to marshal such other property, instruments,
documents, agreements, or guaranties before enforcing its rights against the
Collateral or its rights herein as against Creditor. In the event that the
Creditor Loans are, or hereafter become, secured by property, instruments,
documents or agreements, including, without limitation, any guaranty of the
Creditor Loans by any person, LaSalle agrees that Creditor shall have no
obligation to marshal such other property, instruments, documents,
agreements, or guaranties before enforcing its rights against the Collateral
or its rights herein as against LaSalle.
9. NO CONTEST OF LIENS. Neither LaSalle nor Creditor shall
contest the validity, perfection of enforceability of any lien or security
interest granted to the other by Borrower, if any, and each party agrees to
reasonably cooperate in the defense of any action contesting the validity,
perfection or enforceability of such liens or security interests. Nothing in
this Agreement shall be construed as in any way limiting a party's right to
enforce the order of priorities of liens and debts set forth herein as
against any person.
10. AMENDMENTS TO CREDITOR AGREEMENTS. Except for amendments to
the Creditor Agreements to reflect additional advances permitted under
Section 5 of this Agreement, and except for increases in rates of interest on
certain Creditor Loans as permitted under a letter agreement of even date
herewith between Creditor and LaSalle, Creditor agrees that it shall not
modify or amend any agreement, instrument or document evidencing the Creditor
Loans without prior written notice to LaSalle; and agrees that it shall not
modify or amend any agreement, instrument or document securing the Creditor
Loans without the prior written consent of LaSalle.
11. SUBORDINATION NOT AFFECTED BY CREDITOR AGREEMENTS. Nothing in
this Agreement shall be construed as affecting or in any way limiting the
extension of new or additional financial accommodation by LaSalle to
Borrower, all of which shall constitute and be deemed part of the LaSalle
Loans and be entitled to the benefits and priorities afforded under this
Agreement. The subordinations effected, and the rights created, hereby shall
not be affected by (a) any amendment of, or any addition of or supplement to,
any LaSalle Agreement, (b) any exercise or non-exercise of any right, power,
or remedy under or in respect of the LaSalle Loans or any instrument,
document or agreement relating thereto, (c) the release, sale, exchange or
surrender, in whole or in part, of any part of the Collateral or any
additional collateral to which LaSalle may become entitled, (d) any release
of any guarantor of the LaSalle Loans or any security for any such guaranty,
or (e) any waiver, consent, release, indulgence, extension, renewal,
modification, delay or other action, inaction or omission in respect of the
LaSalle Loans or any LaSalle Agreement, regardless of whether or not Creditor
or Borrower shall have had notice or knowledge thereof, and regardless of
whether Creditor or Borrower shall have consented or objected thereto. Any
provision of any Creditor Agreement purporting to limit or restrict in any
way Borrower's ability to enter into any agreement with LaSalle or to amend
or modify any LaSalle Agreement, shall be deemed void and of no force or
effect unless and until the Liabilities have been repaid in full to LaSalle
and LaSalle has no further obligation to make advances under the LaSalle
Agreements.
12. BORROWER INFORMATION. Creditor hereby assumes responsibility
for keeping itself informed of the financial condition of Borrower, and of
all other circumstances bearing upon the risk of nonpayment of the LaSalle
Loans and the Creditor Loans that diligent inquiry would reveal, and Creditor
hereby agrees that LaSalle shall have no duty to advise Creditor of
information known to LaSalle regarding such condition or any such
circumstances or to undertake any investigation not a part of its regular
business routine. If LaSalle, in its sole discretion, undertakes, at any
time or from time to time, to provide any information of the type described
herein to Creditor, LaSalle shall be under no obligation to subsequently
update any such information or to provide any such information to Creditor on
any subsequent occasion.
13. FORUM; JURIES. To induce LaSalle to accept this Agreement,
Creditor irrevocably agrees that, subject to LaSalle's sole and absolute
election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING
OUT OF OR FROM OR RELATED TO THIS AGREEMENT SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. CREDITOR HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE
OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. Creditor hereby
irrevocably agrees that service of legal process may be made to it, as DGJ,
L.L.C., at the address specified in Section 14 below. Creditor agrees that
service of such process upon such person shall constitute personal service of
such process upon Creditor. CREDITOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST CREDITOR BY
LASALLE IN ACCORDANCE WITH THIS PARAGRAPH.
CREDITOR HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT.
14. NOTICE. For purposes of this paragraph, any notice required
or desired to be served, given or delivered hereunder shall be in writing
(including facsimile transmission), and shall be deemed to have been validly
served, given or delivered upon the earlier of (a) personal delivery to the
address set forth below (b) in the case of mailed notice, five (5) days after
deposit in the United States mails, with proper postage for certified mail,
return receipt requested, prepaid, or in the case of notice by Federal
Express or other reputable overnight courier service, one (1) business day
after delivery to such courier service, and (c) in the case of facsimile
transmission, upon transmission with confirmation of receipt, in any such
case addressed to the party to be notified as follows:
(i) If to the LaSalle at:
LaSalle Business Credit, Inc.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx PLLC
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Attention: Xxxx X. Xxxxxx
Facsimile Number:(000) 000-0000
(ii) If to Creditor:
DGJ, L.L.C.
000 Xxxxxxx Xxxxxx
Xxxxx 000
Attention: Xxxx Xxxxxx
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxx & Coff
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Attention: Xxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
or to such other address as each party designates to the other in the manner
herein prescribed.
15. SUCCESSORS, ASSIGNS, ETC. This Intercreditor Agreement shall
be binding on the parties hereto and their successors and assigns. Creditor
and LaSalle agree that they will, at the request of the other, enter into an
agreement, in the form of this Intercreditor Agreement, MUTATIS MUTANDIS,
with another lender in the event the obligations of Borrower or any successor
or assign of Borrower are refinanced by such lender.
16. GOVERNING LAW. This Intercreditor Agreement shall be governed
as to validity, interpretation, enforcement and effect by the laws of the
State of Illinois without giving effect to conflicts of law principles
thereunder.
IN WITNESS WHEREOF, Creditor has executed this Intercreditor
Agreement as of the date first above written.
LASALLE BUSINESS CREDIT, INC. DGJ, L.L.C.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
--------------------- ----------------------
Its: F.V.P. Its: President
BORROWER'S CONSENT
Borrower hereby consents to the foregoing Intercreditor Agreement
(and the terms thereof) and agrees to abide thereby and to keep, observe and
perform the several matters and things therein intended to be kept, observed
and performed by it, and specifically agrees not to make any payments
contrary to the terms of said Agreement.
A breach of any of the terms and conditions of this consent shall
constitute an "Event of Default" under the Loan and Security Agreement dated
August 19, 1999 between Borrower and Bank.
BORROWER:
BPI PACKAGING TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
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Title: Chief Financial Officer
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