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EXHIBIT 10.8
SUBORDINATION AND INTERCREDITOR AGREEMENT
This Subordination and Intercreditor Agreement (this "Agreement") is
executed this 11th day of November, 1999 by and between Xxxxxx Book Company, a
division of Xxxxxx Book Group Inc., a Tennessee corporation, with a principal
place of business at Xxx Xxxxxx Xxxxxxxxx, Xx Xxxxxx, Xxxxxxxxx 00000
("Subordinate Trade Creditor"), and Paragon Capital L.L.C., a Delaware limited
liability company with its principal place of business at Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 000, 00 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 ("Paragon")
and Foothill Capital Corporation, a California corporation, with its principal
executive offices at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, and, for the purpose of monitoring and servicing the facility
referenced herein, its regional offices located at 00 Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxxxxxxx 00000 ("Foothill") (Paragon and Foothill, collectively
being "Senior Lender").
W I T N E S S E T H:
WHEREAS, concurrently with the execution of this Agreement (the
"Borrower") and Subordinate Trade Creditor are entering into a Memorandum of
Understanding dated as of November 8, 1999 (the "Subordinate Trade Credit
Agreement") pursuant to which Subordinate Trade Creditor has agreed to continue
to make credit available to the Borrower, subject to certain pay out terms,
financial covenants and assurances in the Subordinate Trade Credit Agreement, up
to the amount of Eleven Million Six Hundred Thousand ($11,600,000) Dollars until
December 31, 1999 and up to Nine Million Six Hundred Thousand ($9,600,000)
Dollars thereafter pursuant to the terms of the Subordinate Trade Credit
Agreement, for the Borrower's purchase of inventory and charges related thereto
from the Subordinate Trade Creditor, which amounts, in excess of One Million
Five Hundred Thousand ($1,500,000) Dollars, are to be secured by a subordinate
security interest in substantially all of the assets of the Borrower.
Subordinate Trade Creditor has been extending credit to Borrower pursuant to a
Book Return Agreement and Post Petition Trade Facility Agreement, as amended and
as approved by the United States Bankruptcy court for the District of Delaware
("Trade Creditor's Post Petition Agreement") and under the Borrower's First
Amended Joint Plan of Reorganization as approved by the United States Bankruptcy
Court on October 7, 1999 (the "Plan"). Pursuant to the Subordinate Trade Credit
Agreement and the Plan, Borrower is to pay Subordinate Trade Creditor Two
Million Dollars ($2,000,000) on or before December 31, 1999. Pursuant to Trade
Creditor's Post Petition Agreement, the Subordinate Trade Creditor has been
extending credit to Borrower and Borrower currently owes Subordinate Trade
Creditor the approximate sum of Eleven Million Six Hundred Thousand
($11,600,000) Dollars.
WHEREAS, Senior Lender and the Borrower are parties to a Loan and
Security Agreement between Borrower and Lender dated July 15, 1998, as amended
by the First Amendment to Loan and Security Agreement dated August 17, 1998 and
the Second Amendment to Loan and Security Agreement dated as of September 9,
1998, and the Post Confirmation Credit Agreement and Ratifications and Third
Amendment Agreement dated October 1999 (the "Senior Loan Agreement"), pursuant
to which Senior Lender has extended credit to the Borrower; and
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WHEREAS, the Borrower has requested that the Senior Lender consent to
the Borrower's continuing to obtain subordinated trade credit; and
WHEREAS, Senior Lender has required as a condition to entering into
Senior Loan Agreement that Subordinate Trade Creditor enter into this Agreement;
and
WHEREAS, Subordinate Trade Creditor has agreed to enter into this
Agreement with full knowledge that Senior Lender would not continue the Senior
Loan Agreement and make loans and other extensions of credit under the Senior
Loan Agreement but for the agreements of Subordinate Trade Creditor herein
contained.
NOW, THEREFORE, in consideration of the foregoing, the premises and the
mutual promise and covenants contained herein, the parties hereby agree as
follows:
1. Terms Defined. As used herein (a) the terms "Senior Lender," and
"Subordinate Trade Creditor" shall have the mean meanings given such terms in
the preamble hereto, (b) the terms "Borrower," "Senior Loan Agreement," and
"Subordinate Trade Credit Agreement" shall have the meanings given such terms in
the recitals hereto, and (c) the following terms shall have the following
meanings:
"Collateral" means all rights, interests and property of the
Borrower of every nature, and whether now owned or hereafter acquired and
wherever located, which is subject to a Senior Lien.
"Enforcement Action" means any action to enforce payment or
performance of any of the Subordinate Obligations or subordinate Trade Credit
Documents, including, without limitation, any of the following action: (a)
acceleration of the maturity of the Subordinate Obligations, (b) suing for
(including, without limitation, the commencement or joining with any other
creditors of the Borrower in the commencement of any bankruptcy, reorganization,
receivership or insolvency proceeding against the Borrower), (c) the exercise of
any right of set-off for the collection of any amounts due in respect of the
Subordinate Obligations, except as allowed in this Agreement, or (d) a Lien
Enforcement Action. Notwithstanding the foregoing, none of the following shall
constitute an "Enforcement Action" for purposes of this Agreement; (i) delivery
of any choice of default or other notice to the Borrower pursuant to or in
connection with the Subordinate Trade Credit Documents, (ii) the imposition of a
"default rate" of interest to the extent permitted under the Subordinate Trade
Credit Documents, (iii) the institution by Subordinate Trade Creditor of any
action to enforce specific performance of any non-monetary obligation of the
Borrower under any of the Subordinate Trade Credit Documents, provided such
action and any specific performance is subject to the prior rights of the Senior
Lender, or (v) the request by Subordinate Trade Creditor for a draw on the
Letter of Credit in accordance with the terms thereof and to the extent
permitted by law and hereunder.
"Letter of Credit" means the Letter of Credit in the aggregate
amount of Two Million ($2,000,000) Dollars established by Borrower in favor of
Subordinate Trade Creditor which may be drawn by Subordinate Trade Creditor in
accordance with the payment terms of the Letter of Credit which shall be in the
same form and substance as the attached Exhibit A.
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"Letter of Credit Draw(s)" means any draw(s), up to an aggregate
maximum of Two Million ($2,000,000) Dollars, in accordance with the payment
terms of the Letter of Credit and to the extent permitted by law.
"Lien Enforcement Action" means any action, whether legal,
equitable, judicial, nonjudicial or otherwise instituted to enforce any
Subordinate Lien or Senior Lien, as the case may be, including without
limitation, any repossession, foreclosure, public sale, private sale, set-off,
recoupment, exercise of control over or retention of all or any part of the
Collateral or any other action that would dispossess Borrower of the Collateral.
"Permitted Refinancing" means any refinancing, replacement or
substitution of the Senior Obligations including any unused commitment under the
Senior Loan Agreement, and any number of subsequent refinancings, replacements
and substitutions therefore; provided that the principal balance of any such
refinancing, replacement or substitution therefor and the undrawn face amount of
all letters of credit issued for the account of the Borrower and the drawn but
unreimbursed portion of any such letters of credit, in each case provided as
part of such refinancing, replacement or substitution, shall not exceed Thirty
Five Million ($35,000,000) Dollars and said Permitted Refinancing is on
substantially the same terms as the Senior Loan Agreement including but not
limited to eligible inventory advance rate and loan reserve.
"Proceeding" means (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Borrower, (b) any
liquidation, dissolution or winding up of the Borrower, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
assignment or trust for the benefit of some or all of the Borrower, creditors or
any other marshalling of assets and liabilities of the Borrower.
"Senior Default" means any default or event of default under the
Senior Loan Documents.
"Senior Liens" means all liens, security interests, pledges,
hypothecations, mortgages, set-off, recoupment rights and other security devices
now or at any time hereafter securing the Senior Obligations.
"Senior Loan Documents" means the Senior Loan Agreement, the
Senior Note, the Senior Security Documents and all other documents, instruments
or agreements evidencing, securing or otherwise pertaining to the Senior
Obligations as the same may be modified, amended, renewed, extended or restated
from time to time.
"Senior Note" means the Master Note dated November 11, 1999
executed by the Borrower payable to the order of Senior Lender the principal
amount of Thirty Five Million ($35,000,000) Dollars.
"Senior Obligations" means all debts, liabilities and
obligations of the Borrower to Senior Lender without arising under or pursuant
to the Senior Loan Documents or otherwise, including, without limitation, all
obligations to pay principal and interest, including the principal, interest,
fees and costs including principal, interest, fees and costs on any Overadvances
(as
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defined in the Senior Loan Agreement) under the Senior Loan Agreement, all
reimbursement obligations with respect to letters of credit issued pursuant to
the Senior Loan Agreement, and all obligations to pay costs, fees and expenses
under the Senior Loan Documents, including without limitation, reasonable fees
and expenses of counsel to Senior Lender and costs of preservation and
protection of the Collateral.
"Senior Security Documents" means all security agreements,
pledge agreements, mortgages, deeds of trust, assignments, collateral
assignments, chattel mortgages, financing statements and other documents,
instruments or agreements evidencing, creating, establishing or perfecting
Senior Liens.
"Subordinate Liens" means all liens, security interests,
pledges, hypothecations, mortgages and other security devices (except for the
Letter of Credit) now or at any time hereafter securing the Subordinate
Obligations.
"Subordinate Trade Credit Documents" means the Subordinate Trade
Credit Agreement, the Subordinate Security Documents and all other documents,
instruments or agreements evidencing, securing or otherwise pertaining to the
Subordinate Obligations as the same may be modified, amended, renewed, extended
or restated from time to time.
"Subordinate Obligations" means all debts, liabilities and
obligations of the Borrower or of any guarantors, endorsers or sureties of the
Borrower to Subordinate Trade Creditor arising under or pursuant to the
Subordinate Trade Credit Documents or otherwise, including, without limitation,
all obligations to pay costs, fees and expenses under the Subordinate Trade
Credit Documents.
"Subordinate Security Documents" means all security agreements,
pledge agreements, mortgages, deeds of trust, assignments, collateral
assignments, chattel mortgages, financing statements and other documents,
instruments or agreements evidencing, creating, establishing or perfecting
Subordinate Liens.
"Trade Payments" means any payment (i) made by Borrower to
Subordinate Trade Creditor in the ordinary course of Borrower purchasing
inventory and services related thereto including return of product by Borrower
to Subordinate Trade Creditor for credit; (ii) The Trade Creditor Settlement
Payment;
"Trade Creditor Settlement Payment" means the Two Million
($2,000,000) Dollar payment Borrower is to pay Subordinate Trade Creditor on or
before December 31, 1999 pursuant to the Subordinate Trade Credit Agreement and
the Plan.
2. Subordination Generally. To the extent and in the manner
provided in this Agreement, the Subordinate Obligations and Subordinate Liens
shall be subordinate, junior and inferior in right of payment and priority to
the prior payment and priority of the Senior Obligations and the Senior Liens.
3. Insolvency Proceeding. In addition to the foregoing, upon any
distribution of assets of the Borrower pursuant to or during any Proceeding,
Senior Lender shall be entitled to
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receive payment in full from such assets of all amounts due or to become due on
or in respect of all Senior Obligations, before Subordinate Trade Creditor shall
be entitled to receive any payment of any type, excepting Letter of Credit Draws
from such assets on account of the Subordinate Obligations, and excepting return
of products for commensurate issuance of credit, dollar for dollar in accordance
with any so-called "546(g)* program" approved by order of the bankruptcy court
(and subject to Senior's Lender rights to object to entry of any such order)
will be permitted, and to that end, excepting Letter of Credit Draws and
receipts from an approved 546(g)* program, Senior Lender shall be entitled to
receive, for application to the payments of the Senior Obligations, any payment
or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Subordinate
Obligations in any such Proceeding. In the event that, notwithstanding the
foregoing provisions of this paragraph, Subordinate Trade Creditor shall have
received during or pursuant to any Proceeding any payment or distribution of
assets of the Borrower of any mind or character, whether in cash, property or
securities on account of the Subordinate Obligations, before all Senior
Obligations are paid in full or payment thereof provided for, excepting Letter
of Credit Draws and receipts from an approved 546(g)* program, such payment or
distribution shall be paid over or delivered forthwith to the Senior Lender for
application to the payment of all Senior Obligations remaining unpaid, to the
extent necessary to pay all Senior Obligations in full, after giving effect to
any concurrent payment or distribution to or for the holders of the Senior or
Obligations.
4. Payment Following Acceleration of Subordinate Obligations. In
the event the Subordinate Obligations become due and payable before the stated
maturity thereof, the Senior Obligations outstanding at such time shall be paid
in full, or provision shall be made for such payment in money or in properties
or securities acceptable to Senior Lender, and all obligations of the Senior
Lender under the Senior Loan Documents shall be terminated, before any
Subordinate Lender shall be entitled to receive any payment from the Borrower on
account of the Subordinate Obligations excepting Letter of Credit Draws.
5. Permitted Payments on Subordinate Obligation. Subject to the
conditions described in Sections 2, 3, 4 and 6 hereof, and that there has not
occurred any Senior Default for which Senior Lender has served upon Borrower and
Subordinate Trade Creditor a notice of default (or if a Senior Default has
occurred it has been expressly waived, rescinded or annulled writing by Senior
Lender) Borrower may make Trade Payments provided further, that the Borrower
shall be (i) prohibited from making any prepayment of any such obligations,
provided that return of products for commensurate issuance of credit, dollar for
dollar will be permitted and (ii) notwithstanding its receipt of the notice of
default reference in the first sentence of this section 5, Trade Creditor may be
paid Letter of Credit Draws.
6. Senior Default. Excepting Letter of Credit Draws, in the event
of the occurrence of any Senior Default for which Senior Lender has served upon
Borrower and Subordinate Trade Creditor a notice of default no payment shall be
made by the Borrower on account of the Subordinate Obligations until such Senior
Default shall have been expressly waived in writing and acceleration (if any) as
a result thereof shall have been expressly waived, rescinded or annulled in
writing.
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7. Lien Subordination. Regardless of the validity of, or order of
creation, possession, attachment, perfection, filing, recording, execution, or
delivery of any financing statement, security agreement, pledge agreement,
mortgage or other document evidencing, creating or perfecting any Senior Lien or
Subordinate Lien, and notwithstanding any contrary provisions of any law, rule
or regulation, all Subordinate Liens, and any and all rights of Subordinate
Trade Creditor with respect to any Collateral and all proceeds thereof,
including, without limitation, rights to receive payment from the proceeds
thereof, shall remain inferior and subordinate to the rights of Senior Lender
with respect to such Collateral. Until such time as the Senior Obligations are
paid in full, Subordinate Trade Creditor shall not at any time commence any Lien
Enforcement Action without the express written consent of Senior Lender, which
consent is in Senior Lender's discretion; and, in the event that any such
consent is granted, any Lien Enforcement Action by Subordinate Trade Creditor
shall be expressly undertaken, prosecuted, settled, compromised or otherwise
effected at all times subject to the senior and prior rights of the Senior
Lender in and to any such Collateral, and all such Collateral or proceeds
thereof, or rights obtained with respect thereto, shall be subject to the senior
and prior rights of Senior Lender.
8. Remedial Standstill. Subordinate Lender hereby agrees that in
the event any Default of Event of Default occurs under and as defined in the
Subordinate Credit Agreement, and as a result thereof Subordinate Trade Creditor
intends to commence any Enforcement Action, (other than a Lien Enforcement
Action) Subordinate Trade Creditor shall deliver notice thereof (an "Enforcement
Notice") to Senior Lender and, unless Senior Lender otherwise consents in
writing, Subordinate Trade Creditor shall be prohibited from commencing or
prosecuting any Enforcement Action for a period (an "Enforcement Blockage
Period") of 120 days following the date of such Enforcement Notice; provided
that Subordinate Trade Creditor's commencement of any Lien Enforcement Action
shall be governed by Section 7 hereof. After the conclusion of such 120 days,
or, in the event Senior Lender accelerates the maturity of the Senior
Obligations or commences any Lien Enforcement Action, any Enforcement Blockage
Period shall terminate immediately (except as to Subordinate Trade Creditor's
commencement of a Lien Enforcement Action which shall be subject to the
provisions of paragraph 7 above).
9. Subrogation. Subject to the payment in full of all Senior
Obligations, Subordinate Trade Creditor shall be subrogated to the extent of the
payments or distributions made to Senior Lender pursuant to the provisions of
the Subordinate Loan Documents and this Agreement, to the rights of Senior
Lender to receive payments or distributions of cash, property or securities
applicable to the Senior Obligations. For purposes of such subrogation, no
payments or distributions to Senior Lender of any cash, property or securities
to which Subordinate trade Creditor would be entitled except for the provisions
of this Agreement and no payments turned over to Senior Lender pursuant to the
provisions of this Agreement by Subordinate Trade Creditor shall, as between the
Borrower and creditors of the Borrower other than Senior Lender and Subordinate
Trade Creditor, be deemed to be a payment or distribution by the Borrower to or
on account of the Subordinate Obligations. Subordinate Trade Creditor shall have
no subrogation rights unless and until Senior Lender has received payments in
full after Senior Obligations.
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10. No Reliance. Each of the Senior Lender and Subordinate Trade
Creditor represents to the other that: (a) it is entering into this Agreement on
its own account: (b) entering into this agreement in accordance with all laws,
regulations and statutes affecting or otherwise applicable to it; (c) it has
reviewed and approved the documents regarding its transactions with the Borrower
with its legal counsel; (d) is aware of and able to bear the economic risks
involved entering into the arrangements with Borrower; (e) it has been given
adequate opportunity to review, and have reviewed all financial and other data
and information relating to the Borrower as it deems necessary for it to make a
determination to enter into transactions with the Borrower; (f) it has not
relied upon the credit judgment or analysis of the other, or otherwise,
concerning the Borrower and has, with the assistance of legal counsel,
independently reached its own decision, based upon its own assessment and
analysis of the financial condition and affairs of the Borrower, as to making
any loans or other financial accommodation to the Borrower; and (g) except as
expressly provided herein, neither party has any obligation to provide the other
with notice with respect to the Borrower's performance of the Senior Obligations
or the Subordinate Obligations as the case may be.
11. Parties in Interest. The provisions of this Agreement are
intended solely for the purpose of defining the relative rights of the
Subordinate Trade Creditor and the Senior Lender. Nothing contained in this
Agreement is intended to or shall impair, as between the Borrower and its
creditors other than Senior Lender, and Subordinate Trade Creditor, the
obligations of the Borrower which are absolute and unconditional, to pay to
Subordinate Trade Creditor the Subordinate Obligations as and when the same
shall become due and payable in accordance with their terms.
12. Rights Not Impaired. No right of Senior Lender to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Borrower or by any act
or failure to act, in good faith, by Senior Lender, or by any noncompliance by
the Borrower or the Subordinate Trade Creditor with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof Senior Lender
may have or be otherwise charged, with.
13. Disgorged Payments. To the extent any payment of Senior
Obligations (whether by or on behalf of the Borrower, as proceeds of security or
enforcement of any right of set off or otherwise) is (a) declared to be
fraudulent or preferential, (b) set aside or (c) required to be paid to a
trustee, receiver or other similar party under any applicable bankruptcy or
insolvency law, then, if such payment is recovered by, or paid over to, such
trustee, receiver or other similar party, the Senior Obligations or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.
14. Modifications and Amendments to Senior Obligations. Senior
Lender may renew, extend, amend, restructure, waive, compromise or otherwise
change the terms of the Senior Obligations and the Senior Loan Documents or
release any obligor on, or collateral for, the Senior Obligations on reasonable
written notice to Subordinate Trade Creditor. Consistent with the foregoing,
Senior Lender may, without notice, (a) extend the date on which payments are
required on the Senior Obligations, (b) reduce the interest rate applicable to
the Senior Obligations, (c) waive compliance with the terms of the Senior Loan
Agreement, including,
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without limitation, charging fee in connection therewith. However, Senior Lender
may not extend credit to Borrower in excess of the greater of (i) the Borrowing
Base, but not to exceed Advance Rates equal to the lesser of sixty-five (65%)
per cent of the Cost of Acceptable Inventory or ninety-five (95%) per cent of
the Net Retail Liquidation Value (all as defined in the Senior Loan agreement)
and (ii) Forty-Five Million ($45,000,000) Dollars without Subordinate Trade
Creditor's Agreement or said amounts in excess of such limits will not have
priority over the Subordinate Obligations.
15. Modifications and Amendments to Subordinate Obligation. Except
as expressly provided in the following sentence, without the prior written
consent of the Senior Lender, Subordinate Trade Creditor shall not renew,
extend, amend, restructure, waive, compromise or otherwise change the terms of
the Subordinate Obligations and the Subordinate Trade Credit Documents.
Notwithstanding the foregoing, Subordinate Trade Creditor may, without the
consent of Senior Lender, (a) extend the date on which payments are required on
the Subordinate Obligations, (b) reduce the interest rate applicable to the
Subordinate Obligations, or (c) relax or make less restrictive any covenant in
the Subordinate Trade Credit Documents, provided however, that Subordinate Trade
Creditor may not, without prior written consent of the Senior Lender, waive any
default relative to the Subordinate Obligations or Subordinate Loan Obligations.
16. Payments Held in Trust. Notwithstanding the provisions hereof,
any payment or distribution of any character (whether in cash, securities or
other property) or any security shall be received by Subordinate Trade Creditor
at any time that payment to or receipt by Subordinate Trade Creditor is
prohibited hereunder and of which Subordinate Trade Creditor has received
notice, then Subordinate Trade Creditor shall immediately notify Senior Lender
of the receipt of such payment, distribution or security and the Subordinate
Trade Creditor shall hold all payments received in contravention of the terms
hereof in trust for the benefit of, and shall immediately pay the same over or
deliver or transfer the same to, Senior Lender for application to the Senior
Obligations until all Senior Obligations have been paid in full.
17. Rights of Refinancing Lender. In the event the Senior
Obligations are paid in whole with the proceeds of one or more Permitted
Refinancings, regardless of whether or not the Senior Loan Documents are
assigned to the refinancing lender, the refinancing lender shall be entitled to
all rights of the Senior Lender hereunder and the Subordinate Trade Creditor
shall be entitled to all rights hereunder. The obligations of the Borrower to
such refinancing lender with respect to such Permitted Refinancing shall
constitute "Senior Obligations" as herein defined and shall be on substantially
the same terms. Upon request by such refinancing lender, Subordinate Trade
Creditor shall enter into a subordination agreement with such refinancing lender
on terms substantially similar to this Subordination Agreement.
18. Continuing Agreement. This is a continuing Agreement and will
remain in full force and effect until all of the Senior Obligations have been
fully paid, performed and satisfied and until all financing agreements between
Senior Lender and the Borrower have been terminated. In the event following such
termination and payment in full, any payment of the Senior Obligations is
rescinded or must otherwise be returned by Senior Lenders, this Agreement will
be deemed to be reinstated.
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19. Assignment of Subordinate Obligations. Subordinate Trade
Creditor shall not assign, syndicate, participate to any other person, pledge,
encumber or subordinate any part of the Subordinate Obligations or the
Subordinate Loan Documents unless the party to which the Subordinate Obligations
and the Subordinate Loan Documents are assigned, syndicated, participated,
pledged, encumbered or subordinated expressly consents and agrees in writing to
the terms and provisions of this Agreement.
20. Other Subordinate Trade Creditors. Any other subordinate trade
creditors of Borrower who are allowed secondary security interests in Collateral
of Borrower will be subject to a Subordination and Intercreditor Agreement with
Senior Lender on terms no less favorable to Senior Lender than this Agreement.
21. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
22. Notices. All notices, requests, demands and other communications
to any party hereunder shall be in writing (including bank wire, facsimile and
similar writing) and shall be given to such party at its address, facsimile
number set forth on the signature pages hereof, or to such other address,
facsimile number as such party may hereafter specify for the purpose by notice
to the other party. Each such notice, request, or other communications shall be
effective (1) if given by facsimile, when such facsimile is transmitted to the
facsimile numbers specified below and receipt is confirmed by recipient, (ii) if
given by mail, three (3) Business Days after deposit in the mails with first
class postage prepaid, addressed as aforesaid, or (iii) if given by any other
means, when delivered at the address specified below.
23. Counterparts, Effectiveness. This Agreement may be signed in a
number of identical counterparts, each of which shall be an original, with the
same effect as if the signature thereto and hereto were upon the same
instrument. This Agreement shall become effective when each Subordinate Trade
Creditor and Senior Lender shall have received counterparts hereof signed by all
of the parties hereto.
24. No Waiver. No failure or delay by Senior Lender in exercising
any power or privilege, hereunder or under the Senior Loan Documents shall
operate as a waiver hereof or thereof, nor shall any single or partial exercise
of any right hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law or any of the other Senior Loan Documents.
25. Amendments and Modifications. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by Senior Lender and Subordinate Trade Credit.
26. SUBORDINATE TRADE CREDITOR AGREES THAT NEITHER IT NOR ANY OF ITS
ASSIGNEES OR SUCCESSORS SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT,
ANY SECURITY DOCUMENTS, ANY
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COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN THE BORROWER AND ITS
ASSIGNS AND SUCCESSORS AND THE SENIOR LENDER, OR (B) SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAD NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
SENIOR LENDER AND THE SUBORDINATE TRADE CREDITOR, AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. THE SUBORDINATE TRADE CREDITOR ACKNOWLEDGES THAT THE
SENIOR LENDER HAS NOT AGREED WITH OR REPRESENTED TO IT THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
27. AS BETWEEN SENIOR LENDER AND SUBORDINATE TRADE CREDITOR, WAIVER
OF SPECIAL DAMAGES, EXCEPT AS PROHIBITED BY LAW, THE SUBORDINATE TRADE CREDITOR
AND SENIOR LENDER HEREBY WAIVE ANY RIGHTS WHICH IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION WITH RESPECT TO ANY OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THE SENIOR LOAN DOCUMENTS OR THE SUBORDINATE TRADE CREDIT
DOCUMENTS, INCLUDING WITHOUT LIMITATION THIS AGREEMENT, AND ANY AMENDMENTS
THEREOF, ANY SPECIAL, EXEMPLARY, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.
THE SUBORDINATE TRADE CREDITOR AND SENIOR LENDER AGREE THAT DAMAGES FROM ANY
BREACH BY THE OTHER MAY NOT EXCEED THE AMOUNT OUTSTANDING UNDER THE SENIOR LOAN
DOCUMENTS OR THE SUBORDINATE TRADE CREDIT DOCUMENTS AND THEN ONLY TO THE EXTENT
THOSE DAMAGES ARE A DIRECT RESULT OF THE BREACH. THE SUBORDINATE TRADE CREDITOR
AND SENIOR LENDER HEREBY (A) CERTIFIES THAT NEITHER THE SUBORDINATE TRADE
CREDITOR NOR SENIOR LENDER, NOR ANY AGENT, REPRESENTATIVE, OR ATTORNEY THEREOF
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SUBORDINATE TRADE CREDITOR OR
SENIOR LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT, IN ENTERING INTO THIS AGREEMENT,
BOTH PARTIES ARE RELYING UPON, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 27.
28. FINAL AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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Executed and delivered as a document under seal as of the date and year
first above written.
SUBORDINATE TRADE CREDITOR Address for Notice:
--------------------------
XXXXXX BOOK COMPANY Xxxxx X. Xxxxxxxx
Xx. VP and CFO
Xxxxxx Book Company
By: /s/ Xxxxx X. Xxxxxxxx One Xxxxxx Blvd.
------------------------------------ Xxx Xxxxx, XX 00000
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer With a copy to:
General Counsel
Xxxxxx Book Group Inc.
Xxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
SENIOR LENDER
-------------
PARAGON CAPITAL, L.L.C. Address for Notice:
Xxxxxx X. Xxxxx, President
By: /s/ Xxxxxx X. Xxxxxxxxxx Paragon Capital, L.L.C.
------------------------------------ Xxxxxxxx Xxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxx X. Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Executive Vice President and Fax No. (000) 000-0000
Chief Credit Officer
SENIOR LENDER:
---------------
FOOTHILL CAPITAL CORPORATION Address for Notice:
By: /s/ Xxxxxxxxxxx X'Xxxxxx Xxxxxx Xxxx, Vice President
------------------------------------ Foothill Capital Corporation
Xxxxxxxxxxx X'Xxxxxx 00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax No. (617) 722 -9493
With a copy to:
Xxxxxxx, Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
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ACKNOWLEDGED AND AGREED
The Borrower hereby acknowledges and consents to the terms of this
Agreement as set forth above and hereby agrees to observe each and every
provision of this Agreement applicable to the Borrower.
CROWN BOOKS CORPORATION
BORROWER
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, Responsible Officer
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