EX-10.32
[Letterhead of EAB] AGREEMENT OF SUBORDINATION AND ASSIGNMENT
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THIS AGREEMENT OF SUBORDINATION AND ASSIGNMENT, is entered into as of
January 31, 1996 by Trust U/W ▇. ▇▇▇▇▇▇ Trust located at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Creditor"), in favor of and for the benefit of EUROPEAN
AMERICAN BANK, a New York banking corporation (the "Bank").
RECITALS
A. The Bank has made and may make, from time to time, loans, advances,
extensions of credit and/or other financial accommodations (collectively, the
"Loans") for the account of The Puro Water Group, Inc. (the "Debtor").
B. The Creditor, being affiliated with the Debtor, acknowledges and agrees
that the Creditor will receive direct and indirect benefits from the extension
of the Loans and any further extensions of credit made to the Debtor from time
to time.
C. In order to induce the Bank, its successors or assigns, from time to
time to make the Loans and such other advances, loans, discounts or extensions
of credit as it may deem advisable, directly or indirectly, to or for the
account of the Debtor, or to others upon the Debtor's obligations, or to acquire
obligations (direct or indirect) of the Debtor, or to have the Debtor become
obligated to the Bank in any manner, and/or to grant to or for the account of
the Debtor such renewals, extensions, forbearance's, releases of collateral or
other relinquishments of legal rights, as the Bank may deem advisable and in
consideration of advances, loans, discounts or extensions of credit, due or to
become due, whether heretofore or hereafter made to the Debtor and for other
valuable consideration, receipt of which is hereby duly acknowledged, the
Creditor agrees to subordinate the obligations of the Debtor to the Creditor on
the terms set forth herein.
Accordingly, the Creditor hereby agrees as follows:
1. Subordination. The Creditor agrees that all indebtedness now or
hereafter owing to the Creditor by the Debtor whether for principal, interest,
extensions of credit after the filing of a petition initiating any proceeding
referenced in paragraph 2 hereof, premiums, fees, indemnities, expenses or
otherwise and all claims and demands which the Creditor now has or may hereafter
have or acquire against the Debtor (such indebtedness, claims and demands,
collectively, hereinafter called "Subordinated Indebtedness") are not to be
payable, and that no payment on account thereof, nor any security therefor,
shall be received, accepted or retained by the Creditor and no suit or
proceeding seeking such payment or to foreclose or take any other action with
respect to the collateral therefor shall be commenced unless and until the
Debtor has paid and satisfied in full all its obligations to the Bank of every
kind and description whether for principal, interest (including, without
limitation, interest after the filing of a petition initiating any proceeding
referenced in paragraph 2 hereof), premiums, fees, indemnities, expenses or
otherwise, whether or not represented by negotiable instruments or other
writings, whether direct or indirect, absolute or contingent, due or not due,
secured or unsecured, original, deferred, renewed or extended, now in existence
or hereafter incurred, originally contracted with the Bank or, with another and
assigned or transferred to or otherwise acquired by the Bank, or in which the
Bank may acquire a participation, and whether contracted by the Debtor alone or
jointly and/or severally with another or others (such obligations, collectively,
hereinafter called the "Senior Indebtedness").
2. Assignment. The Creditor pledges, transfers and assigns, and grants to
the Bank a security interest in, the Subordinated Indebtedness and all
collateral therefor and all proceeds thereof with the full and irrevocable right
on the part of the Bank, but without obligation, in its own name or in the name
of the Creditor, to enforce, demand, collect, compromise and receive payment of
the Subordinated Indebtedness or any part thereof by suit, proof of claim in any
proceeding with respect to bankruptcy, reorganization, arrangement, adjustment
of debts, insolvency or liquidation or otherwise and to vote the Subordinated
Indebtedness in any such proceedings for or against any proposal or resolution,
for a trustee or trustees or for a committee of creditors or for the acceptance
or rejection of any proposed arrangement, plan of reorganization, wage earner's
plan, composition, settlement or extension, all as the Bank deems necessary to
protect its interest. The Creditor shall not transfer, assign, encumber or
subordinate any right, claim or interest of any kind in or to any of the
Subordinated Indebtedness except as expressly contemplated by this agreement.
3. Waiver and Consent. The Creditor waives any and all notice of acceptance
of this agreement and of the creation, modification, renewal or extension or
accrual of the Senior Indebtedness, or any part thereof, present or future, and
of the reliance of the Bank upon this agreement. The Creditor hereby consents
that, without notice to or further assent by the Creditor, the Senior
Indebtedness, or any part thereof, may from time to time in whole or in part, be
renewed, extended, modified, compromised or released by the Bank, as the Bank
may deem advisable, that any collateral and/or lien or liens for the Senior
Indebtedness, or any part thereof, may from time to time, in whole or in part,
be exchanged, sold or surrendered by the Bank, as it deems advisable, and that
any deposit balance or balances as to the credit of the Debtor may from time to
time, in whole or in part, be surrendered or released by the Bank, as it may
deem advisable, all
without impairing, abridging, affecting or releasing the subordination and
rights of the Bank contained in this agreement.
4. Payments. Should any payment, dividend, security, proceeds or other
distribution be received by the Creditor for or on account of the Subordinated
Indebtedness, or any part thereof, prior to the satisfaction of all Senior
Indebtedness, the Creditor shall promptly deliver and assign the same to the
Bank in the form received and, if necessary, properly endorsed to permit
collection, for application on account of the Senior Indebtedness or any part
thereof principal and/or interest as the Bank may elect), whether matured or
unmatured, and until so delivered, the same shall be held in trust by the
Creditor as the property of the Bank and shall not be commingled with any assets
of the Creditor. In the event of the failure of the Creditor to endorse or
assign any security or instrument for the payment of money so received by the
Creditor or payable to the Creditor's order, the Bank or any officer or employee
thereof is hereby irrevocably constituted and appointed attorneys in fact for
the Creditor, with full power to make any such endorsement or assignment and
with full power of substitution.
5. Representations and Warranties; Additional Instruments; Books and
Records. The Creditor represents and warrants to the Bank that: (i) the
aggregate principal sum of the Subordinated Indebtedness on the date hereof is
$4,000,000 without counterclaim, defense or offset, (ii) the Subordinated
Indebtedness is not represented by any notes or other negotiable instruments,
except such notes or other negotiable instruments, if any, as have been endorsed
and delivered by the Creditor to the Bank simultaneously with the execution of
this agreement or have been marked with a legend, referring to this agreement,
in form and substance satisfactory to the Bank, and (iii) the Creditor is
solvent and has granted no security interest in and has made no prior transfer
or assignment of the Subordinated Indebtedness or any part thereof. The Creditor
agrees that at no time hereafter will the Subordinated Indebtedness, or any part
thereof, be represented by any notes, other negotiable instruments or other
writings, except notes, other negotiable instruments or other writings endorsed
and delivered to the Bank, or marked with a legend, as above provided. The
Creditor agrees that (i) its books and records shall appropriately indicate that
the Subordinated Indebtedness is subject to this agreement and (ii) the Bank
shall have access from time to time to its books and records in order that the
Bank may examine the state of accounts of the Creditor with the Debtor and the
Bank shall be permitted to make copies thereof.
6. Continuing Agreement. This is a continuing agreement of subordination
and assignment and shall remain in full force and effect and be binding upon the
undersigned and its legal representatives, successors and assigns until the Bank
shall actually receive from the Creditor written notice of its discontinuance;
provided, however, this agreement shall remain in full force and effect
thereafter until all of the Senior Indebtedness outstanding, or contracted or
committed for, whether or not outstanding, before the receipt of such notice by
the Bank, and any extension or renewals thereof, whether made before or after
receipt of such notice, together with interest accruing thereon after such
notice, shall be finally and irrevocably paid in full. If after receipt of any
payment of all or any part of the Senior Indebtedness, the Bank is for any
reason compelled to surrender such payment to any person or entity, because such
payment is determined to be void or voidable as a preference, impermissible set
off, or a diversion of trust funds, or for any other reason, this agreement
shall continue in full force and effect notwithstanding any contrary action
which may have been taken by the Bank in reliance upon such payment; and any
such contrary actions so taken shall be without prejudice to the Bank's right
under this agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable. The Creditor agrees that payment in
full of the Senior Indebtedness from time to time shall not operate as a
termination of this agreement.
7. Further Assurances. The Creditor agrees, upon request of the Bank, to
execute such further documents and instruments, including, without limitation,
additional notes or negotiable instruments, assignments, security agreements and
financing statements under the Uniform Commercial Code, as the Bank may require.
The Bank is authorized to file financing statements signed only by the Bank and
the cost of filing shall be payable by the Creditor.
8. Expenses. In the event that the Bank shall retain or engage an attorney
or attorneys to collect, enforce or protect its interest with respect to this
agreement or the Subordinated Indebtedness, all the costs and expenses of such
collection, enforcement or protection, including, without limitation, reasonable
attorneys' fees, shall be payable by the Creditor to the extent such collection,
enforcement or protection is sought against the Creditor.
9. No Waiver: Cumulative Remedies. No waiver shall be deemed to have been
made by the Bank of any of its rights hereunder unless same shall be in writing
and each waiver, if any, shall be a waiver only with respect to the specific
instance involved and shall in no way impair the Bank's rights and/or the
obligations of the Creditor to the Bank in any other respect or at any other
time, nor shall same establish a course of conduct. The rights, remedies, powers
and privileges provided in this Agreement are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
10. Amendments; Continued Enforceability. No modification, waiver, release
or amendment of any provision of this Agreement
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shall be made except by a written agreement executed by the Creditor and a duly
authorized officer of the Bank. Any provision of this agreement which may prove
unenforceable under any law shall not affect the validity of any other
provisions contained herein.
11. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Creditor and the Bank and their respective successors and
assigns and, if applicable, heirs and legal representations.
12. Notices. Any notice to the Bank shall be deemed effective only if in
writing and sent to and received at the branch, division or department of the
Bank conducting the transaction or transactions hereunder. Any notice to the
Creditor shall be deemed sufficient when sent to the Creditor at the last known
address of the Creditor appearing on the records of the Bank.
13. Severability. If any one or more of the provisions contained in this
agreement, or any application thereof, shall be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein, and any other application thereof, shall
not in any way be affected or impaired thereby.
14. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE CREDITOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK AND ANY
COURT IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST
THE CREDITOR AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE CREDITOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT THE
CREDITOR IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY
DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER THEREOF MAY
NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE CREDITOR AGREES (i) NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY
REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR
JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT
AND (ii) NOT TO ASSERT ANY COUNTERCLAIM, IN ANY SUCH SUIT, ACTION OR PROCEEDING
UNLESS SUCH COUNTERCLAIM COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR STATE
PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION. THE
CREDITOR AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON THE CREDITOR BY
CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS
AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK. THE CREDITOR
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed on the date written in the first paragraph hereof.
CREDITOR
Trust U/W ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, AVP By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: Trust U/W ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Trustee
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INDIVIDUAL ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF _____ )
On this ____ day of ___________, _____, before me personally came
____________________________, to me known and known to me to be the individual
described in and who executed the foregoing instrument and acknowledged to me
that [HE/SHE] executed the same.
_____________________________
Notary Public
CORPORATE ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF _____ )
On the _____ day of _________, ____, before me personally came
_____________________________, to me known, who, being by me duly sworn did
depose and say that [HE/SHE] resides at ________________________; that [he/she]
is the __________ ________ of ____________________; the corporation described in
and which executed the above instrument; and that [HE/SHE] signed [HIS/HER] name
thereto by authority of the Board of Directors of said corporation.
_____________________________
Notary Public
GENERAL PARTNERSHIP ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF _____ )
On the _____ day of ___________, ____, before me personally came
_______________________________ and ____________________, to me known and known
to me to be the partners of _________________________, a _____________________
general partnership, and known to me to be the individuals described in and who
executed the foregoing instrument as partners of __________________________, and
acknowledged before me that they executed the same as partners aforesaid for the
uses and purposes in said instrument set forth.
_____________________________
Notary Public
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AGREEMENT OF THE DEBTOR
The undersigned, the Debtor described in the Agreement of Subordination and
Assignment dated the date hereof between Trust U/W ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ and European
American Bank (the "Agreement"), hereby acknowledges receipt of a copy thereof,
acknowledges that the Subordinated Indebtedness mentioned therein is payable as
stated therein, and agrees to make no payment, whether principal, interest fees,
indemnities, expenses or otherwise on the Subordinated Indebtedness so long as
the undersigned shall be indebted to the Bank, except such payments as may be
made to the Bank or with the prior written consent of the Bank. If (i) the
undersigned makes any other payment of the Subordinated Indebtedness, (ii) the
undersigned makes any loan, advances or extensions of credit to the Creditor or
acquires any notes receivables or other obligations as to which the Creditor is
the obligor, (iii) any term of the foregoing agreement or this Agreement of the
Debtor is breached by any party which executed same, or (iv) the undersigned
fails to make any payment of the Subordinated Indebtedness when due after the
Bank has given its written consent to the making of such payment, then the Bank
may, at its sole election, declare all or any part of the Senior Indebtedness or
the Subordinated Indebtedness as defined in the Agreement to be immediately due
and payable without demand or notice of any kind.
Dated: January 31, 1996
The Puro Water Group, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, AVP
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Witness:
