Exhibit 10.9
NOTE PURCHASE AGREEMENT AMENDMENT NUMBER 1
This NOTE PURCHASE AGREEMENT AMENDMENT NUMBER 1 ("Amendment") is dated
as of [EFFECTIVE DATE OF PUBLIC OFFERING], 2002 and made among between MONTANA
XXXXX BREAD CO., INC. (the "Company"), a Delaware corporation with an address of
0000 Xxxxxx Xxxxxx, Xxxxx 000X, Xxxxxxxxx, Xxx Xxxx 00000, XXXXXX CAPITAL
PARTNERS, L.P. (the "Purchaser"), a New York limited partnership with an address
of 00 X. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, and XXXXXX X'XXXXXXX with an
address of 000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Shareholder").
This Note Purchase Agreement Amendment Number 1 amends the Note Purchase
Agreement among the Company, the Purchaser, and the Shareholder dated as of June
22, 2000 (the "Purchase Agreement"). Capitalized terms not otherwise defined
herein shall have the meanings given to them in the Purchase Agreement, and
references to the "Transaction Documents" shall include, among others,
references to this Amendment and the documents and agreements contemplated
hereby.
The parties hereto agree as follows:
1. The Note, and Exhibit B to the Purchase Agreement, are hereby
amended to read in their entirety as set forth in EXHIBIT A attached to and made
a part of this Amendment.
2. Section 1.2 of the Purchase Agreement is hereby amended to add the
following paragraph at the end thereof:
In consideration for the Amendment, the Company shall
(i) pay to the Purchaser on the date of the Amendment a
consent and waiver fee equal to $20,000, (ii) pay all fees
(not to exceed $3,500), expenses and disbursements incurred by
the Purchaser related to the transactions contemplated herein,
including, without limitation, the fees and disbursements of
the Purchaser's counsel, (iii) deliver to the Purchaser 15,000
shares of the common capital stock of the Company (the "Waiver
Shares"), and (iv) deliver to the Purchaser and cause to keep
in effect thereafter the Note (as amended) and a Security
Agreement in substantially the form attached hereto and made a
part hereof as EXHIBIT B. The Company will comply with all
securities laws regulating the offer and delivery of the
Waiver Shares and will assure that the Waiver Shares on the
date of delivery are duly authorized, issued, outstanding,
fully paid, and non-assessable.
3. Section 1.4 of the Purchase Agreement is hereby amended to read in
its entirety as follows:
The Conversion Price shall be $ [THE PER SHARE OFFERING PRICE
IN THE PUBLIC OFFERING] , subject to adjustment as provided in
Section 1.5.
4. Sections 1.5(b)(iv) and 1.5(c)(ii) of the Purchase Agreement are
hereby deleted.
5. On the date of this Amendment and immediately thereafter, all of the
authorized capital stock of the Company consists of the shares and classes of
stock described in EXHIBIT C attached hereto and made a part hereof. Exhibit C
sets forth all outstanding Equity Interests and the holders thereof (showing,
however, (i) all holders of shares registered in the Company's initial Public
Offering as a whole and not individually and (ii) other holders of outstanding
common stock of the Company constituting less than 5% of the stock of the
Company as a whole by groups of shares derived from each common source [for
example, the group derived from conversion of convertible notes]), all of which
Equity Interests are validly issued, fully paid, and nonassessable. As of the
date of this Amendment, the Company has no obligation (contingent or otherwise)
to issue, sell, create, repurchase or otherwise acquire or retire any Equity
Interests except as shown in Exhibit C. The Company has reserved sufficient
shares of its common stock for issuance of the Conversion Shares.
6. Article 5 of the Purchase Agreement is hereby deleted. Purchaser
agrees to execute and deliver to any holder of Senior Indebtedness, as defined
in the Purchase Agreement, an Intercreditor Agreement applicable to such Senior
Indebtedness in the form attached hereto and made a part hereof as EXHIBIT D,
provided that the Company and such holder of Senior Indebtedness also execute
and deliver such Intercreditor Agreement.
7. Section 7.1 is hereby amended to read in its entirety as follows:
7.1 Co-Sale Rights.
(a) Co-Sale. Except for Permitted Family Transfers,
transfers not exceeding an aggregate of 100,000 common shares
during any three-year period commencing on the date of the
Amendment (adjusted proportionally for stock splits, stock
combinations, or the like), transfers in open market, brokered
transactions made at a time when the Purchaser is free to make
similar transfers, or transfers made with the written consent
of the parties hereto, all transfers of any Equity Interests
by Shareholder (including transfers by holders who received
Equity Interests pursuant to Permitted Family Transfers) shall
be made only pursuant to and in accordance with this Section
7.1.
(b) Notice of Proposed Transfer. The transferring
Shareholder shall give prior written notice to Purchaser with
the details of the proposed transfer of any Equity Interests
(the "Offered Interests") held by such Shareholder. Purchaser
may elect to participate in the transfer (the "Co-Sale Right")
by giving written notice (the "Acceptance Notice") to the
transferring Shareholder within five (5) days after receipt of
the notice of proposed transfer from the transferring
Shareholder. The Acceptance Notice shall indicate the number
of Offered Interests
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that Purchaser wishes to sell on the terms and conditions
stated in the Offer Notice.
(c) Exercise of Rights. Purchaser shall have the
right to exercise its Co-Sale Right and to sell a portion of
its Conversion Shares (including shares into which the Note
may be converted) which is equal to or less than (the exact
amount to be determined by Purchaser) the product obtained by
multiplying (i) the total number of Offered Interests that
were proposed to be sold by the transferring Shareholder by
(ii) a fraction, the numerator of which is the total number of
Conversion Shares (including shares into which the Note may be
converted) plus the total number of Waiver Shares held by
Purchaser on the date of the Acceptance Notice, and the
denominator of which is the total number of shares of common
stock and other Equity Interests then held by the transferring
Shareholder plus the total number of Conversion Shares
(including shares into which the Note may be converted) plus
the total number of Waiver Shares held by Purchaser on the
date of the Acceptance Notice. The sale by the Purchaser shall
correspondingly reduce the number of Offered Interests to be
sold,
Within ten (10) days after the date by which
Purchaser was first required to notify the transferring
Shareholder of its intent to exercise its Co-Sale Rights, the
transferring Shareholder shall notify Purchaser of the date on
which such sale will be consummated, which shall be no later
than the later of (i) ninety (90) days after the date by which
Purchaser was required to notify the transferring Shareholder
of its intent to exercise its Co-Sale Rights and (ii) the
satisfaction or expiration of any governmental approval,
filing or "waiting period" requirements, if any.
Purchaser may effect such sale hereunder by delivery
to the proposed transferee, or to the Shareholder for delivery
to the proposed transferee, of one or more instruments or
certificates, properly endorsed for transfer, representing the
Conversion Shares and/or Waiver Shares it elects to sell
therein; provided that Purchaser shall not be required to make
any representations or warranties or provide any indemnities
in connection therewith other than with respect to (i) its
ownership of the Conversion Shares and/or Waiver Shares being
conveyed, free of liens and encumbrances, and (ii) it
authority to participate in such sale. At the time of
consummation of the sale, the proposed transferee shall remit
directly to Purchaser that portion of the sale proceeds to
which Purchaser is entitled by reason of its participation
therein. In the event that the sale is not consummated within
the period required hereby or the proposed transferee fails to
timely remit to
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Purchaser its portion of the sale proceeds, such sale shall be
deemed to lapse, and any transfers of Equity Interests
pursuant to such sale shall be deemed to be in violation of
the provisions of this Agreement unless the transferring
Shareholder once again complies with the provisions of this
Agreement.
8. Purchaser shall execute and deliver to the Company a Lockup
Agreement in the form attached hereto as Exhibit E (the "Lockup Agreement").
Purchaser hereby agrees that notwithstanding the provisions of the Registration
Agreement dated as of June 22, 2000, (i) no request for a demand registration
shall be made by Purchaser during the period covered by the Lockup Agreement,
(ii) no piggy-back registration demand shall be made by the Purchaser with
respect to a sale of shares by the Company only during the period covered by the
Lockup Agreement, and (iii) said Registration Agreement shall be terminated and
expire at such time as all of the Conversion Shares and the Waiver Shares may be
sold without restriction pursuant to Rule 144.
9. Section 8.3 of the Purchase Agreement is hereby amended to read in
its entirety as follows:
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein, all covenants and agreements
contained in this Agreement by or on behalf of any of the
parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto. In
addition, and whether or not any express assignment has been
made, the provisions of this Agreement which are for the
Purchaser's benefit as a purchaser or holder of the Securities
or any Waiver Shares, Conversion Shares or other securities
issued in connection therewith are also for the benefit of,
and enforceable by, any subsequent holder of the same.
10. All other terms of the Purchase Agreement shall remain in full
force and effect.
11. The Company represents and warrants that (a) each of the
representations and warranties set forth in the Purchase Agreement is true and
correct as of the date hereof (and with respect to the representations and
warranties set forth in or referring to Section 2.5 of the Purchase Agreement,
the financial statements referred to therein shall mean the financial statements
of the Company for the most recent quarterly period ended), and (b) no Event of
Default or event that, with the giving of notice or the passage of time or both
would constitute an Event of Default, has occurred and is continuing.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date first
above written.
[Signature Pages Follow]
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MONTANA XXXXX BREAD CO., INC.
By: _____________________________
Title: _____________________________
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XXXXXX CAPITAL PARTNERS, L.P.
By: Chephas LLC
Title: General Partner
By: ____________________________
Title: Managing Member
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XXXXXX X'XXXXXXX
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EXHIBIT A
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FORM OF AMENDED AND RESTATED
----------------------------
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
----------------------------------------
The security represented by this instrument was originally issued on
June 22, 2000, was amended and restated by this instrument, and has not been
registered under the Securities Act of 1933, as amended. The transfer of such
security is subject to the conditions specified in the Note Purchase Agreement,
dated as of June 22, 2000, as the same has been and may in the future be amended
and modified from time to time, between the issuer (the "Company") and the
original holder of this instrument, and the Company reserves the right to refuse
the transfer of such security until such conditions have been fulfilled with
respect to such transfer. Upon written request, a copy of such conditions shall
be furnished by the Company to the holder hereof without charge.
---------------
AMENDED AND RESTATED
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
FOR VALUE RECEIVED, MONTANA XXXXX BREAD CO., INC., a Delaware
corporation (the "Company") with an address of 0000 Xxxxxx Xxxxxx, Xxxxx 000X,
Xxxxxxxxx, Xxx Xxxx 00000, hereby promises to pay to the order of XXXXXX CAPITAL
PARTNERS, L.P., which has an address of 00 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx
00000, or registered assigns, ("Holder") the principal sum of Two Million
Dollars ($2,000,000) together with interest thereon calculated from the date
hereof in accordance with the provisions of this Note on June 22, 2007, or
sooner as provided herein.
This Note was issued pursuant to a Note Purchase Agreement, dated as of
June 22, 2000 (as the same has been and may in the future be amended and
modified from time to time, the "Purchase Agreement"), between the Company and
the Holder and all provisions thereof are hereby incorporated herein in full by
reference. The Purchase Agreement contains terms governing the rights of the
Holder of this Note and the Holder is entitled to the benefits thereof. All
capitalized terms used herein and not otherwise defined shall have the meanings
given thereto in the Purchase Agreement.
THIS NOTE IS SUBJECT TO ANY INTERCREDITOR AGREEMENT
EXECUTED PURSUANT TO THE TERMS OF
AMENDMENT NUMBER 1 TO THE PURCHASE AGREEMENT
1. INTEREST. Except as otherwise expressly provided herein, interest
shall accrue on the unpaid principal amount of this Note outstanding from the
date hereof until such time as payment therefor is actually delivered to the
Holder (including after acceleration, maturity, or judgment) at the rate of 8%
per annum. All interest shall be calculated on the basis of twelve thirty-day
months per year.
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2. PAYMENTS. All accrued interest shall be due and payable on the first
day of each month, commencing August 1, 2000. In addition to interest, principal
installments of $83,833 shall be due and payable on the first day of each month
commencing on June 1, 2005. All remaining outstanding principal and remaining
accrued interest shall be due and payable on June 22, 2007.
This Note may be freely prepaid in whole or in part at any time.
Prepayments (whether prior to the maturity date or due to acceleration of this
Note under Section 3) shall be accompanied by a prepayment premium equal to the
following percentage of the amount of principal prepaid during the following
periods:
Year Percentage
---- ----------
6/22/01 - 6/21/02 4%
6/22/02 - 6/21/03 3%
6/22/03 - 6/21/04 2%
6/22/04 - 6/21/05 1%
3. EVENTS OF DEFAULT. In case an Event of Default shall occur, the
principal of this Note may be declared or become immediately due and payable in
the manner and with the effect provided in the Purchase Agreement.
In addition, upon the occurrence of an Event of Default at Holder's
option interest on the outstanding principal hereunder shall accrue at a rate
per annum from time to time equal to the rate of interest then in effect on this
Note plus five percentage points (5%) per annum. Any increase in the interest
rate shall not be the Holder's exclusive remedy in the event of an Event of
Default.
The Holder shall also have any other rights which the Holder may have
been afforded under any contract or agreement at any time and any other rights
which such holder may have pursuant to applicable law. The Company hereby waives
diligence, presentment, protest and demand and notice of protest and demand,
dishonor and nonpayment of this Note and expressly agrees that this Note, or any
payment hereunder, may be extended from time to time and that the Holder may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of the Company hereunder.
4. CONVERSION RIGHTS. The Holder shall have the conversion rights
related to this Note described in the Purchase Agreement.
5. AMENDMENT AND WAIVER. Except as otherwise expressly provided herein,
the provisions of this Note may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder.
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6. CANCELLATION. After all principal and accrued interest at any time
owed on this Note has been paid in full, this Note shall be surrendered to the
Company for cancellation and shall not be reissued.
7. PAYMENTS. Unless otherwise expressly provided herein, all payments
to be made to the Holders shall be made in the lawful money of the United States
of America in immediately available funds which shall be delivered to the
address designated by the Holder.
8. TRANSFER OF NOTE. This Note may be transferred pursuant to the terms
of the Purchase Agreement and the Company shall treat the Person to whom this
Note is assigned in accordance therewith for the purpose of receiving payment
and for all other purposes, and the Company shall not be affected by any notice
to the contrary.
9. BUSINESS DAYS. If any payment is due, or any time period for giving
notice or taking action expires, on a day which is a Saturday, Sunday or legal
holiday in the State of New York, the payment shall be due and payable on, and
the time period shall automatically be extended to, the next business day
immediately following such Saturday, Sunday or legal holiday, and interest shall
continue to accrue at the required rate hereunder until any such payment is
made.
10. USURY LAWS. It is the intention of the Company and the Holder to
conform strictly to all applicable usury laws now or hereafter in force, and any
interest payable under this Note shall be subject to reduction to the amount not
in excess of the maximum legal amount allowed under the applicable usury laws as
now or hereafter construed by the courts having jurisdiction over such matters.
If the maturity of this Note is accelerated by reason of an election by the
Holder resulting from an Event of Default, voluntary prepayment by the Company
or otherwise, then earned interest may never include more than the maximum
amount permitted by law, computed from the date hereof until payment, and any
interest in excess of the maximum amount permitted by law shall be canceled
automatically and, if theretofore paid, shall at the option of the Holder either
be rebated to the Company or credited on the principal amount of this Note, or
if this Note has been paid, then the excess shall be rebated to the Company. The
aggregate of all interest (whether designated as interest, service charges,
points or otherwise) contracted for, chargeable or receivable under this Note
shall under no circumstances exceed the maximum legal rate upon the unpaid
principal balance of this Note remaining unpaid from time to time. If such
interest does exceed the maximum legal rate, it shall be deemed a mistake and
such excess shall be canceled automatically and, if theretofore paid, rebated to
the Company or credited on the principal amount of this Note, or if this Note
has been repaid, then such excess shall be rebated to the Company.
11. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Note shall be given in
accordance with the Purchase Agreement.
12. NEW YORK LAW. This Note is intended to be performed in the State of
New York and shall be construed and enforced in accordance with the laws of such
State.
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IN WITNESS WHEREOF, the Company has executed and delivered this Note as
of the ___ of ____________, 2002.
MONTANA XXXXX BREAD CO., INC.
By: _________________________
Title: _________________________
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EXHIBIT B
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FORM OF SECURITY AGREEMENT
--------------------------
THIS SECURITY AGREEMENT is made _____________, 2002 in favor of XXXXXX
CAPITAL PARTNERS, L.P. ("Investor") by MONTANA XXXXX BREAD CO., INC.
("Grantor"). Grantor is a corporation chartered under the laws of the State of
Delaware (Identification Number _________), has its chief executive office
located at 0000 Xxxxxx Xxxxxx, Xxxxx 000X, Xxxxxxxxx, Xxx Xxxx 00000, and has a
taxpayer identification number of _____________.
1. DEFINITIONS. Unless otherwise indicated in this Agreement, all terms
used herein shall have the same meanings as given to them in the Purchase
Agreement (defined below), and to the extent not inconsistent therewith, the
same meanings as given to them in the Uniform Commercial Code of the State of
New York (the "UCC") as amended from time to time. The following terms shall
have the following meanings when used in this Agreement:
"Collateral" means, as defined in the UCC, all assets and
property of any kind or nature with the exception of real estate,
including all accounts, cash, chattel paper (including electronic
chattel paper and tangible chattel paper), securities (whether
certificated or uncertificated), deposit accounts, documents,
equipment, financial assets, fixtures, general intangibles, goods,
instruments, inventory, investment property, letter-of-credit rights,
letters of credit, promissory notes, securities accounts, security
entitlements, software, supporting obligations, vehicles, leasehold
improvements, goodwill, insurance policies and proceeds thereof, and
intellectual property (including among others operating systems,
patents, copyrights, trademarks, trade names, licenses, trade secrets,
know-how, franchises, and proprietary and other rights in data,
engineering, technical plans, drawings, information, methods, systems,
processes, inventions, formulas, applications, software, programs,
manuals, and technology, and all other technology and proprietary
rights of Grantor and all applications to acquire such rights, and in
all rights and interests in any of them unless the same are licensed or
leased pursuant to an agreement that prohibits the granting of a
security interest in or similar assignment of the same), of any kind or
nature in which the Grantor has an interest now or in the future, and
which are now existing or hereafter created or acquired, together with
all additions, replacements, accessions, products, and proceeds in any
form thereof.
"Liabilities" mean all indebtedness, liabilities, and
obligations of every kind or nature, whether absolute or contingent,
primary or secondary, direct or indirect, joint or several, and whether
heretofore or hereafter created, arising, or existing or at any time
due and owing from Grantor to Investor (including without limitation
all sums expended by the Investor for protection of its interests such
as payments made for taxes, insurance, and expenses of collection).
"Purchase Agreement" means the Note Purchase Agreement between
the Investor and Grantor dated as of June 22, 2000 as the same has been
and may in the future be modified, extended, or replaced from time to
time.
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2. SECURITY INTEREST. The Grantor hereby grants to the Investor a
security interest in the Collateral to secure the payment and performance of the
Liabilities. This security interest is specifically intended to be a continuing
interest and shall cover Collateral in which the Grantor acquires an interest
after the date of this Agreement as well as Collateral in which the Grantor now
has an interest. This security interest shall continue until terminated as
described in this Agreement even if all Liabilities are paid in full from time
to time. The Investor shall have the right to apply the Collateral and any
proceeds therefrom to all or any part of the Liabilities as and in the order the
Investor may elect, whether such Liabilities are otherwise secured.
3. LOCATIONS OF GRANTOR AND COLLATERAL. The chief executive office of
the Grantor is at the address shown in the preamble to this Agreement. Upon
request of Investor from time to time, Grantor will provide Investor with a list
of all locations at which the Collateral will be kept and at which the Grantor
does business. Grantor will notify the Investor immediately of any changed
location of its chief executive office, change in the name of the Grantor,
and/or change in the jurisdiction in which the Grantor is registered. If any of
the Collateral is or will be a fixture, upon request of the Investor Grantor
will provide legal descriptions and the names of record owners of the premises
to which the Collateral will be affixed sufficient for perfection of the
security interests of the Investor. At the request of Investor, the Grantor will
provide disclaimers of interest and removal agreements, in form satisfactory to
the Investor, signed by all parties other than Grantor having an interest in
premises at which any Collateral is located.
4. SUBORDINATION TO SENIOR INDEBTEDNESS. The lien granted hereunder is
hereby subordinated to any lien which is granted by the Grantor to secure Senior
Indebtedness and the rights of Investor with respect to the Collateral will be
subject to the provisions of any Intercreditor Agreement executed pursuant to
the terms of Amendment Number 1 to the Purchase Agreement. Subject to the
foregoing, (i) except for the security interest granted hereby and as otherwise
allowed by the Purchase Agreement, Grantor is the owner of the Collateral free
from all liens, encumbrances, and security interests, (ii) Grantor will not sell
or transfer the Collateral or any interest (including, without limitation, a
security interest) therein without the prior written consent of the Investor
except for sales in the ordinary course of business for fair value and not
prohibited by the Purchase Agreement, and (iii) Grantor will defend the
Collateral against the claims and demands of all persons (except for those
persons who have a claim or lien permitted under the Purchase Agreement), and
will cause the immediate removal and termination of any levy, execution,
judgment or other lien, or similar claim of third persons to the Collateral
(except for those persons who have a claim or lien permitted under the Purchase
Agreement).
5. PERFECTION OF SECURITY INTEREST. Grantor will execute and deliver to
the Investor such financing statements, security agreements, assignments, and
other documents as Investor may at any time reasonably request that are required
to perfect or protect the security interest granted hereby. Grantor hereby
authorizes the Investor to execute and file financing statements with or without
the signature of the Grantor from time to time as the Investor may deem
necessary or desirable. If the Collateral is a motor vehicle required to be
titled under applicable law, Grantor warrants that the Investor's security
interest will be recorded on the title certificates covering the Collateral and
will deliver such certificates or other evidence of ownership to the Investor,
as the Investor requests. Grantor hereby appoints Investor as its attorney in
fact to
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execute and deliver notices of lien, financing statements, assignments, and any
other documents, notices, and agreements necessary for the perfection of
Investor's security interests in the Collateral. Grantor agrees to pay the costs
of filing or perfection of the Investor's security interests, searches of the
public records, and releases or assignments of the Investor's interests.
6. USE OF COLLATERAL/MAINTENANCE. Grantor will keep the Collateral in
good order and repair except for normal wear and tear in the ordinary course of
business. Grantor will not use the Collateral in violation of law or any policy
of insurance thereon. The Investor or its nominees may inspect the Collateral
and Grantor's records regarding the same at any reasonable time, wherever
located, and may make extracts therefrom and copies thereof.
7. TAXES. Grantor will pay promptly, when due, all taxes and
assessments upon the Collateral or its use or operation, or upon this Agreement.
8. INSURANCE.
a. Grantor at all times will keep the Collateral insured in such
amounts, with such insurance companies chosen by Grantor, and against such
risks, all as are reasonably satisfactory to the Investor. All insurance
policies shall name Investor as additional insured and shall provide for losses
covered thereby to be payable to Investor and Grantor as their respective
interests may appear. All policies of insurance shall provide for not less than
thirty (30) days' prior notice of cancellation to the Investor. Grantor will
deliver evidence of required insurance to the Investor upon its request and in
any event at least annually.
b. After any Event of Default hereunder, the Investor may, but
need not, (i) cancel, in accordance with applicable law, any insurance contract
covering the Collateral or its ownership or operation, (ii) demand and receive
any return premiums, unearned premium refunds and dividends payable in respect
thereof (the Grantor hereby irrevocably designating, constituting and appointing
Investor as its true and lawful agent so to do) and (iii) apply any and all sums
received by the Investor as a result of such cancellation, after deducting
therefrom any and all expenses incident thereto, toward payment of the
Liabilities.
c. Grantor will notify insurer and Investor in the event of any
loss, damage, or other casualty affecting the Collateral. Grantor hereby assigns
to the Investor any and all monies which may become due and payable under any
policy insuring the Collateral, directs any such insurance company to make
payments directly to the Investor, and authorizes the Investor to apply such
monies in payment on account of the Liabilities, whether or not due, and to
remit any surplus to Grantor; provided, however, that Investor will make
available to Grantor such insurance proceeds to repair or replace Collateral
provided that no Event of Default has occurred and that Grantor has provided
evidence satisfactory to the Investor that such proceeds together with any
necessary additional funds from sources acceptable to the Investor are available
for such repair or replacement and that such repair or replacement can be
accomplished within a reasonable period of time and without unreasonable
disruption of the Grantor's business or operations beyond any period covered by
business interruption insurance. After an Event of Default, Grantor hereby
irrevocably appoints the Investor as its attorney in fact, with full power of
substitution, to (i) make and adjust claims, (ii) receive all proceeds and
payments including
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the return of unearned premiums, (iii) execute proofs of claim, (iv) endorse
drafts and other instruments for the payment of money, (v) execute releases,
(vi) negotiate settlements, (vii) cancel any insurance referred to in this
contract, and (viii) do all other things necessary and required to effect a
settlement under or to realize the benefits of any insurance policy.
9. PROTECTION OF INVESTOR'S INTEREST. Seven or more days after the day
the Investor mails the Grantor notice, upon failure of the Grantor to (i) remove
liens or interests prohibited by Section 4 of this Agreement, (ii) comply with
obligations to maintain Collateral pursuant to Section 6 of this Agreement,
(iii) pay taxes or assessments as required by Section 7 of this Agreement, or
(iv) provide evidence satisfactory to the Investor of insurance as required by
Section 8 of this Agreement, the Investor in its discretion may discharge any
such liens or interests, pay taxes or assessments, and obtain insurance coverage
on the Collateral. The Investor also may pay any costs of perfection, searches,
releases, or assignments pursuant to Section 5 of this Agreement. Grantor agrees
to reimburse the Investor on demand for any and all expenditures so made, and
until paid the amount thereof also shall be part of the Liabilities secured by
the Collateral. Investor shall have no obligation to Grantor to make any such
expenditures nor shall the making thereof relieve any default hereunder.
10. GRANTOR'S COVENANTS. So long as this Agreement remains in effect:
a. Grantor will: (i) furnish Investor at such intervals as
Investor may prescribe with a certificate (in such reasonable form as Investor
may from time to time specify) containing such information with respect to the
Collateral as Investor may reasonably require, including, without limitation,
inventory listings and account agings; and (ii) keep accurate and complete
records of the Collateral in accordance with generally accepted accounting
principles consistently applied.
b. If requested by the Investor, Grantor will: (i) xxxx its
records evidencing the Collateral in a manner satisfactory to the Investor so as
to indicate the security interest of the Investor hereunder; (ii) deliver to the
Investor to hold pursuant hereto any chattel paper, instruments, certificated
securities, promissory notes, or other documents representing or relating to any
of the Collateral; (iii) promptly reflect in its books, records, and reports to
the Investor any claims made in regard to any Collateral; (iv) cause to be
delivered to the Investor a control agreement covering any Collateral for which
such an agreement is necessary for perfection of Investor's interest, (v)
immediately notify the Investor if any of the Collateral arises out of contracts
for the improvement of real property, deals with a public improvement or is with
the United States, any state, or any department, agency or instrumentality
thereof, and execute any instruments and take any steps reasonably required by
the Investor in order that all moneys due or to become due under any such
contract shall be assigned to the Investor and notice thereof be given as
required bylaw; and (vi) fully cooperate with the Investor in the exercising of
its rights and methods for verification of the Collateral.
11. DEFAULT. The following events or conditions shall be an "Event of
Default" under this Agreement: (a) any Event of Default under the Purchase
Agreement, (b) loss, theft, material damage or destruction of a material portion
of the Collateral, or (c) material or reasonably projected material decline in
the value of the Collateral, taken as a whole.
15
12. REMEDIES.
a. Upon the occurrence of an Event of Default, the Investor may
declare all of the Liabilities to be immediately due and payable and Investor
shall have the rights and remedies of a secured party under the Uniform
Commercial Code of the State of New York as amended from time to time in any
jurisdiction where enforcement of this Agreement is sought, in addition to all
other rights and remedies at law or in equity. Among other remedies, the
Investor may take immediate possession of the Collateral and for that purpose
the Investor may, so far as Grantor can give authority therefor, enter upon any
premises on which the Collateral or any part thereof may be situated and secure
or remove the same therefrom. Upon request of the Investor, Grantor will
assemble and make the Collateral available to the Investor, at a reasonable
place and time designated by the Investor. Grantor's failure to take possession
of any Collateral at any time and place reasonably specified by the Investor in
writing to the Grantor shall constitute an abandonment of such property. Grantor
agrees that notice of the time and place of public sale of any of the Collateral
or of the time after which any private sale thereof is to be made or of other
disposition of the Collateral shall be deemed reasonable notice ten days after
such notice is deposited in the mail or otherwise delivered to Grantor at the
address shown in the preamble of this Agreement.
b. In addition to its other rights, the Investor may but shall
not be obligated to notify any parties which are obligated to pay Grantor any
Collateral or proceeds thereof, to make all payments directly to the Investor.
Grantor authorizes such parties to make such payments directly to the Investor
and to rely on notice from the Investor without further inquiry. The Investor
may demand and take all necessary or desirable steps to collect such Collateral
in either its or Grantor's, name, with the right to enforce, compromise, settle,
or discharge any of the foregoing. The Investor may endorse Grantor's name on
any checks, commercial paper, instruments, and the like pertaining to the
foregoing.
c. The Investor shall not be responsible to Grantor for loss or
damage resulting from the Investor's failure to enforce or collect any
Collateral or any monies due or to become due under any Liability of Grantor to
Investor. The Investor shall have no obligation to take, and Grantor shall have
the sole responsibility for taking, any and all steps to preserve rights against
any and all prior parties to any Collateral, whether or not in Investor's
possession.
d. After an Event of Default, the Grantor (i) will make no change
in any account (or any contract underlying such account), chattel paper, or
general intangible, and (ii) shall receive as the sole property of the Investor
and hold in trust for the Investor all monies, checks, notes, drafts, and other
property (collectively called "items of payment") representing the proceeds of
any Collateral.
e. After an Event of Default, the Investor may but shall be under
no obligation to: (i) notify all appropriate parties that the Collateral, or any
part thereof, has been assigned to the Investor; (ii) collect any or all
accounts, chattel paper, promissory notes, or general intangibles in its or
Grantor's name, and apply any such collections against such Liabilities as the
Investor may select; (iii) take control of any cash, or any cash or non-cash
16
proceeds of any item of the Collateral; (iv) compromise, extend or renew any
account, chattel paper, general intangible, or document, or deal with the same
as it may deem advisable; and (iv) make exchanges, substitutions or surrender of
items comprising the Collateral.
f. The rights of the Investor are cumulative, and the Investor
may enforce its rights under this Agreement irrespective of any other
collateral, guaranty, right, or remedy it may have. The exercise of all or a
part of its rights or remedies hereunder shall not prevent the Investor from
exercising at the same or any other time any other right or remedy with respect
to the Liabilities. The Grantor authorizes the Investor in its sole discretion
to direct the order or manner of the disposition of the Collateral.
13. PROTECTION OF COLLATERAL. From the proceeds realized from the
Collateral the Investor shall be entitled to retain all sums secured hereby as
well as their reasonable expenses of collection including without limitation
those of retaking, holding, safeguarding, accounting for, preparing for sale,
selling, and reasonable attorneys' fees and legal expenses. If the proceeds
realized from the Collateral are not sufficient to defray said expenses and to
satisfy the balance due on the Liabilities, the Grantor shall remain liable for
such expenses. Any payments or proceeds from realization on the Collateral may
be applied to the Liabilities in whatever order or manner the Investor elect.
14. CONTINUING AGREEMENT, TERMINATION. This is a continuing Agreement,
and no notice of the creation or existence of the Liabilities, renewal,
extension or modification thereof need be given to Grantor. This security
interest shall continue in effect notwithstanding that from time to time no
Liabilities may exist. This Agreement may be terminated only (i) by a written
agreement of the Investor, or (ii) upon written request of Grantor at such time
as the Liabilities have been satisfied in full and the Investor has no remaining
commitments to Debtor of any kind.
15. NO WAIVER. Grantor agrees that no representation, promise, or
agreement made by the Investor or by any officer or employee of the Investor,
at, prior, or subsequent to the execution and delivery of this Agreement shall
modify, alter, limit, or otherwise abridge the rights and remedies of the
Investor hereunder unless agreed by the Investor in writing. None of the rights
and remedies of Investor hereunder shall be modified, altered, limited, or
otherwise abridged or waived by any representation, promise, or agreement
hereafter made or by any course of conduct hereafter pursued by the Investor. No
delay or omission on the part of the Investor in exercising any right hereunder
shall operate as a waiver of such right or of any other right under this
Agreement, and waiver of any right shall not be deemed waiver of any other right
unless expressly agreed by the Investor in writing.
16. CONFLICT WITH PURCHASE AGREEMENT. If any provision hereof expressly
conflicts with any specific provision of the Purchase Agreement, the terms of
the Purchase Agreement shall be controlling.
17. LAWS. The validity, construction, and performance of this Agreement
shall be governed by the laws of the State of New York, without giving effect to
any choice of law or
17
conflict of law rules or provisions (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
18. PARTIES IN INTEREST. All of the terms and provisions of this
Agreement shall inure to the benefit of, be binding upon and be enforceable by
the respective heirs, executors, legal representatives, successors, and assigns
of the parties hereto.
19. SEVERABILITY. Any partial invalidity of the provisions of this
Agreement shall not invalidate the remaining portions hereof or thereof.
20. MISCELLANEOUS. Grantor hereby expressly waives demand, presentment,
protest, or notice of dishonor on any and all of the Liabilities and with
respect to the Collateral.
IN WITNESS WHEREOF, Grantor has caused this Agreement to be executed by
its duly authorized officer as of the date first set forth above.
MONTANA XXXXX BREAD CO., INC.
By: __________________________
Title: __________________________
18
EXHIBIT C
---------
SCHEDULE OF EQUITY INTERESTS
----------------------------
19
EXHIBIT D
---------
FORM OF INTERCREDITOR AGREEMENT
-------------------------------
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT is entered into among:
MONTANA XXXXX BREAD CO., INC.
0000 Xxxxxx Xxxxxx, Xxxxx 000X
Xxxxxxxxx, Xxx Xxxx 00000
(a Delaware corporation called the "Borrower")
_______________
___________________________
___________________________
(a ___________ called the "Senior Creditor")
XXXXXX CAPITAL PARTNERS, L.P.
00 X. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
(a New York limited partnership called the "Subordinated Creditor").
Borrower has requested each of the Senior Creditor and the Subordinated
Creditor to provide financial accommodations to Borrower. The Senior Creditor
and Subordinated Creditor are willing to provide and/or continue such
accommodations, subject however to execution of this Agreement setting forth the
terms of their respective relationships. In consideration of the mutual
representations and covenants contained in this Agreement, and other good and
valuable consideration, receipt of which is hereby acknowledged, the Senior
Creditor, the Subordinated Creditor, and the Borrower hereby agree as follows:
1. DEFINITIONS. The following words shall have the following meanings
when used in this Agreement. All reference to dollar amounts shall mean amounts
in lawful money of the United States of America.
"Agreement" shall mean this Intercreditor Agreement together with
all exhibits and schedules attached to this Agreement from time to time, if any,
and as amended from time to time.
"Senior Creditor Agreements" means the __________________ between
the Senior Creditor and the Borrower dated _____________, and the related notes,
security agreements, and other documents and agreements, as the same may be
modified, extended, or replaced from time to time.
"Senior Creditor Indebtedness" means and includes (i) all
outstanding and committed indebtedness, obligations, liabilities, claims, rights
and demands owing from Borrower to Senior Creditor under the Senior Creditor
Agreements as it and they exist on the
20
date of this Agreement and as they may be modified, replaced, or extended
without increase in the principal amount thereof (the "Existing Senior Creditor
Indebtedness"), as well as (ii) all other indebtedness and obligations of any
kind from Borrower to Senior Creditor ("Additional Senior Creditor
Indebtedness") provided the total unpaid principal balance of the Existing
Senior Creditor Indebtedness, the Additional Senior Creditor Indebtedness at the
time such Additional Senior Creditor Indebtedness is incurred, and any other
outstanding indebtedness and obligations defined as "Senior Indebtedness" in the
Subordinated Creditor Agreements, as they exist on the date of this
Intercreditor Agreement, does not exceed the maximum amount of indebtedness and
obligations defined as Senior Indebtedness in the Subordinated Creditor
Agreements, as they exist on the date of this Intercreditor Agreement. Until the
Existing Senior Creditor Indebtedness is paid in full and the Borrower no longer
has any rights to borrow or to request to borrow under the Senior Creditor
Agreements (as amended, extended, or replaced in principal amounts not exceeding
the principal amount outstanding or committed on the date hereof), the Existing
Senior Creditor Indebtedness shall at all times constitute Senior Creditor
Indebtedness. If Additional Senior Creditor Indebtedness constituted Senior
Creditor Indebtedness at the time it was incurred, the Additional Senior
Creditor Indebtedness shall remain Senior Creditor Indebtedness until paid in
full without regard to any subsequent change in Borrower's financial condition
or otherwise.
"Business Day" shall mean any day that commercial banks settle
transactions in the State of New York.
"Event of Default" shall means any default which would constitute
an event of default permitting the respective creditor to exercise some or all
of its remedies under the Senior Creditor Agreements or the Subordinated
Creditor Agreements, as the case may be.
"Security Interest" shall mean and include without limitation any
type of collateral security, whether in the form of a lien, charge, mortgage,
deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor's
lien, equipment trust, conditional sale, trust receipt, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract or
otherwise.
"Standstill Period" shall have the meaning given to it in Section
7 of this Agreement.
"Subordinated Creditor Agreements" shall mean that certain Note
Purchase Agreement by and between Borrower, Subordinated Creditor, and Xxxxxx
X'Xxxxxxx dated as of June 22, 2000, and the related notes, security agreements,
and other documents and agreements, as the same has been and may in the future
be modified, extended, or replaced from time to time.
"Subordinated Creditor Indebtedness" means and includes without
limitation all present and future indebtedness, obligations, liabilities,
claims, rights and demands owing from Borrower to Subordinated Creditor
including without limitation obligations of the Borrower to the Subordinated
Creditor arising under the Subordinated Creditor Agreements.
21
2. SUBORDINATION. As provided for in this Agreement, all Subordinated
Creditor Indebtedness is junior and shall be subordinated in all respects to the
Senior Creditor Indebtedness.
3. PAYMENT TO SUBORDINATED CREDITOR. Except as provided below, Borrower
will not make and Subordinated Creditor will not accept, at any time while any
Senior Creditor Indebtedness is owing (i) any payment upon any Subordinated
Indebtedness, (ii) any advance, transfer or assignment of assets to Subordinated
Creditor in any form whatsoever that would reduce at any time or in any way the
amount of Subordinated Indebtedness, or (iii) any transfer of any assets as
security for the Subordinated Indebtedness, except upon Senior Creditor's prior
written consent. Notwithstanding the foregoing:
(a) Borrower may deliver a Security Interest to Subordinated
Creditor covering all assets of Borrower which Security
Interest and the rights thereunder are hereby expressly agreed
to be subordinate and subject in all respects to any Security
Interest held by Senior Creditor, irrespective of the order of
filing any financing statements or otherwise,
(b) Borrower may make regularly scheduled payments (but not
prepayments or payments due to the acceleration of maturity)
to Subordinated Creditor under the Subordinated Creditor
Agreements, and
(c) Subordinated Creditor may receive the proceeds of life
insurance policies assigned to Subordinated Creditor covering
the life of Xxxxxx X'Xxxxxxx (the "Assignment of Life
Insurance");
provided, no direct or indirect payment by or on behalf of the Borrower of
Subordinated Indebtedness, whether pursuant to the terms of the Subordinated
Creditor Agreements, upon acceleration or otherwise, shall be made (except from
proceeds of the Assignment of Life Insurance) if at the time of such payment
there exists an Event of Default under the Senior Creditor Agreements and such
Event of Default shall not have been cured or waived by the Senior Creditor in
writing. Upon the occurrence of such waiver, payment of scheduled payments
(including past-due scheduled payments) with respect to the Subordinated
Indebtedness shall be resumed. This section is not intended to preclude
Subordinated Creditor from exercising its rights and remedies subject to the
terms of Section 7 of this Agreement, but to require that any payments or
proceeds received other than as permitted by this Section 3 shall be held in
trust for Senior Creditor and applied to the Senior Creditor Indebtedness.
In the event of any distribution, division, or application, whether
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of Borrower's assets, or the proceeds of Borrower's assets,
in whatever form, to creditors of Borrower or upon any indebtedness of Borrower,
whether by reason of liquidation, dissolution or other winding-up of Borrower,
or by reasons or any execution sale, receivership, insolvency, or bankruptcy
proceeding, assignment for the benefit of creditors, proceedings for
reorganization, or readjustment of Borrower or Borrower's properties, then and
in such event, (i) the Senior Creditor Indebtedness shall be paid in full before
any payment is made upon the Subordinated
22
Indebtedness (other than from the proceeds of the Assignment of Life Insurance),
and (ii) all payments and distributions, of any kind or character and whether in
cash, property, or securities, which shall be payable or deliverable upon or in
respect of the Subordinated Indebtedness shall be paid or delivered directly to
Senior Creditor for application in payment of the amounts then due on the Senior
Creditor Indebtedness until the Senior Creditor Indebtedness shall have been
paid in full, but not including payments of proceeds of the Assignment of Life
Insurance.
The Senior Creditor is hereby authorized to file an appropriate claim
for and on behalf of the Subordinated Creditor on account of the Subordinated
Indebtedness, if Subordinated Creditor does not file, and there is not otherwise
filed on behalf of the Subordinated Creditor, a proper claim or proof of claim
in the form required in any dissolution, liquidation or reorganization
proceeding prior to thirty (30) days before the expiration of the time to file
such claim or claims. In connection with such authorization, the Subordinated
Creditor hereby irrevocably authorizes, empowers, and appoints the Senior
Creditor as the Subordinated Creditor's agent and attorney-in-fact to execute,
verify, deliver and file such proofs of claim and to receive and collect any and
all dividends, payments, or other disbursements made thereon in whatever form
the same may be paid or issued and to apply the same on account of the Senior
Creditor Indebtedness.
Should any payment, distribution, security, or proceeds thereof be
received by the Subordinated Creditor at any time on the Subordinated
Indebtedness contrary to the terms of this Agreement, Subordinated Creditor
immediately will deliver the same to Senior Creditor with respect to the Senior
Creditor Indebtedness in precisely the form received (except for the endorsement
or assignment of Subordinated Creditor where necessary), for application on or
to secure the Senior Creditor Indebtedness whether it is due or not due, and
until so delivered the same shall be held in trust by Subordinated Creditor as
property of Senior Creditor. In the event Subordinated Creditor fails to make
any such endorsements or assignment, Senior Creditor or any of its officers on
behalf of Senior Creditor is hereby irrevocably authorized by Subordinated
Creditor to make the same.
4. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to
creditors of the Borrower in a liquidation or dissolution of the Borrower or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Borrower or its property or in any assignment for the benefit of
creditors or any marshaling of the assets and liabilities of the Borrower:
(a) Senior Creditor shall be entitled to receive payment in full
of all Senior Creditor Indebtedness (including interest after
the commencement of any such proceeding at the rate specified
in the applicable Senior Creditor Agreements, whether or not
such interest is an allowable claim in any such proceeding)
before Subordinated Creditor shall be entitled to receive any
payment of any Subordinated Indebtedness (except proceeds of
Life Insurance); and
(b) until all Senior Creditor Indebtedness is paid in full, any
distribution to which Subordinated Creditor would be entitled
but for this section (but not including proceeds of the
Assignment of Life Insurance) shall be made to the Senior
Creditor.
23
5. ASSIGNMENTS. Senior Creditor and Subordinated Creditor each agree
not to sell, assign, pledge or otherwise transfer the Senior Creditor
Indebtedness and Subordinated Indebtedness respectively except subject to all
the terms and conditions of this Agreement. Any note evidencing the Senior
Creditor Indebtedness or the Subordinated Indebtedness shall bear the following
legend or a legend substantially similar thereto:
"THIS NOTE IS SUBJECT TO ANY INTERCREDITOR AGREEMENT
EXECUTED PURSUANT TO THE TERMS OF
AMENDMENT NUMBER 1 TO THE PURCHASE AGREEMENT"
6. SUBORDINATED CREDITOR REPRESENTATIONS AND WARRANTIES. Subordinated
Creditor represents and warrants to Senior Creditor that:
(a) no representations or agreements of any kind have been made to
such party which would limit or qualify in any way the terms
of this Agreement,
(b) Senior Creditor has made no representation to the Subordinated
Creditor as to the creditworthiness of Borrower; and
(c) Subordinated Creditor has established adequate means of
obtaining from Borrower on a continuing basis such information
regarding Borrower's financial condition as it deems
necessary. Subordinated Creditor agrees that Senior Creditor
shall have no obligation to disclose to it information or
material acquired by Senior Creditor in the course of its
relationships with Borrower.
7. STANDSTILL PERIOD. Prior to the Subordinated Creditor notifying
Senior Creditor that an Event of Default has occurred with respect to the
Subordinated Indebtedness, and during the Standstill Period (defined below), the
Subordinated Creditor shall have no authority to enforce the Subordinated
Creditor Indebtedness by legal proceedings or otherwise, or in any manner
interfere with the Security Interests held by Senior Creditor, until all of the
Senior Creditor Indebtedness has been paid in full; provided however, that
Subordinated Creditor may enforce its rights to proceeds of the Assignment of
Life Insurance. The term "Standstill Period" shall mean one hundred twenty (120)
days following the date on which either the Senior Creditor has notified the
Subordinated Creditor that an Event of Default has occurred under the Senior
Creditor Agreements, or the Subordinated Creditor has notified the Senior
Creditor that an Event of Default has occurred under the Subordinated Creditor
Agreements and that the Subordinated Creditor has determined to exercise its
rights and remedies with respect thereto, unless in either case on or before the
expiration of the Standstill Period the Senior Creditor is diligently pursuing
its rights and remedies with respect to any Security Interests held by Senior
Creditor in respect of the Senior Creditor Indebtedness, in which case the
Standstill Period shall continue for an additional sixty (60) days. If, during
the Standstill Period, the Events of Default under the Senior Creditor
Agreements are waived by the Senior Creditor, the applicable Standstill Period
shall cease running, and a new Standstill Period shall commence running when the
Subordinated Creditor receives notice from the Senior Creditor of the occurrence
of a new Event of Default with respect the Senior Creditor Indebtedness;
provided, however, that no more than one
24
Standstill Period shall be imposed during any one (1) year period. The
Standstill Period shall be tolled during any period of time that there is in
effect an automatic stay under the Bankruptcy Code or an injunction or
restraining order issued by a court prohibiting the Senior Creditor from
exercising its remedies, until a court of competent jurisdiction has lifted such
stay, injunction, or restraint. During the applicable Standstill Period, the
Subordinated Creditor shall not take any action to exercise its rights and
remedies with respect to the Subordinated Indebtedness; provided, however, that
Subordinated Creditor may enforce its right hereunder to receive payments from
the Assignment of Life Insurance and such limited rights as may be necessary to
prevent loss of rights and remedies due to any applicable statute of
limitations. Nothing in this Agreement shall restrict or prohibit the
Subordinated Creditor from taking any action to declare the Borrower in default
of its obligations to the Subordinated Creditor and/or sending notice of any
Event of Default under the Subordinated Creditor Agreements.
8. WAIVERS. Each of Senior Creditor, and Subordinated Creditor waives
any right to require any of the other:
(a) to make, extend, renew, or modify any loan to Borrower or to
grant any other financial accommodations to Borrower
whatsoever;
(b) to make any presentment, protest, demand, or notice of any
kind, including notice of any nonpayment of any indebtedness
or of any nonpayment related to any Security Interests, or
except as expressly required by this Agreement notice of any
action or non-action or the part of Borrower or any other
party to this Agreement as the case may be, any surety,
endorser, or other guarantor in connection with any
indebtedness, or in connection with the creation of new or
additional indebtedness as the case may be;
(c) to resort for payment or to proceed directly or at once
against any person, including Borrower;
(d) to proceed directly against or exhaust any Security Interest;
(e) to pursue any other remedy within any creditor's power; or
(f) to commit any act or omission of any kind, at any time, with
respect to any matter whatsoever.
9. SENIOR CREDITOR'S RIGHTS. Except as expressly provided herein,
Senior Creditor may take or omit any and all actions with respect to the Senior
Creditor Indebtedness or any Security Interests for the Senior Creditor
Indebtedness without affecting whatsoever any of Senior Creditor's rights under
this Agreement. In particular, without limitation, Senior Creditor may, without
notice of any kind to Subordinated Creditor:
(a) make one or more additional loans to Borrower whether pursuant
to the terms of the Senior Creditor Agreements or otherwise
(provided that such loans shall constitute Senior Creditor
Indebtedness only as provided in Section 1 hereof);
25
(b) repeatedly alter, amend, modify, or otherwise change the fees,
or any part thereof, applicable under the Senior Creditor
Agreements;
(c) repeatedly alter, compromise, renew, extend, accelerate, or
otherwise change the time for payment or other terms of the
Senior Creditor Indebtedness or any part thereof, including
increases and decreases of the rate of interest on the Senior
Creditor Indebtedness, and repeated extensions that may be for
longer than the original loan term;
(d) take and hold Security Interests for the payment of the Senior
Creditor Indebtedness, and exchange, enforce, waive, and
release any such Security Interests, with or without the
substitution of new collateral;
(e) release, substitute, agree not to xxx, or deal with any one or
more of Borrower's sureties, endorsers, or guarantors on any
terms or manner Senior Creditor chooses;
(f) determine how, when and what application of payments and
credits shall be made on the Senior Creditor Indebtedness;
(g) apply such security and direct the order or manner of sale
thereof, as Senior Creditor in its discretion may determine;
and
(h) assign this Agreement in whole or in part, or any interest
therein, in connection with an assignment in whole or in part
of the Senior Creditor Agreements to a financial institution;
provided however, that notwithstanding anything to the
contrary contained in this Agreement, after any such
assignment the assignee shall have the rights of the Senior
Creditor only with respect to Senior Creditor Indebtedness as
defined herein.
10. MARSHALING. Senior Creditor may foreclose on its Security Interests
in any manner which it, in its sole discretion, chooses even though a higher
price might have been realized if the Senior Creditor had proceeded to foreclose
on its Security Interests in another manner. Without in any manner limiting the
foregoing, the Subordinated Creditor agrees that Senior Creditor may exercise
its remedies against the property in which it holds Security Interests in any
order that the Senior Creditor, in its sole discretion, chooses; and
Subordinated Creditor confirms that the Senior Creditor shall in no manner be
required to marshal its claims against one or more properties in which it holds
a Security Interest.
11. MODIFICATION OF SUBORDINATED INDEBTEDNESS. Subordinated Creditor
and Borrower waive any right to modify or amend the terms of the payment of
interest or the repayment of principal (other than to decrease the amount of
payments due or extend the time for payments) with respect to the Subordinated
Indebtedness during the term of this Agreement absent the prior written consent
of Senior Creditor.
26
12. DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt,
this Agreement shall remain in full force and effect. In the event of a
corporate reorganization or corporate arrangement of Borrower under the
provisions of the Bankruptcy Code, as amended, this Agreement shall remain in
full force and effect and the court having jurisdiction over the reorganization
or arrangement is hereby requested and authorized by the parties to preserve
such priority and subordination in approving any such plan or reorganization or
arrangement. Any payment default under the terms of the Subordinated
Indebtedness or Senior Creditor Indebtedness, or any other Event of Default
under the Subordinated Creditor Agreements or Senior Creditor Agreements, which
could result in an acceleration of the Subordinated Indebtedness or Senior
Creditor Indebtedness respectively shall be an Event of Default under the terms
of each of the Subordinated Indebtedness and Senior Creditor Indebtedness.
13. DURATION AND TERMINATION. This Agreement shall remain in full force
and effect until all of the Senior Creditor Indebtedness has been irrevocably
paid in full and the Senior Creditor's obligation to lend under the Senior
Creditor Agreements has been terminated.
14. SUBROGATION. After all Senior Creditor Indebtedness is irrevocably
paid in full and until the Subordinated Indebtedness is paid in full,
Subordinated Creditor shall be subrogated to the rights of the Senior Creditor
to receive distributions applicable to the Senior Creditor Indebtedness to the
extent that distributions otherwise payable to Subordinated Creditor have been
applied to the payment of the Senior Creditor Indebtedness. A distribution made
under this Agreement to the Senior Creditor on account of the Senior Creditor
Indebtedness which otherwise would have been made to Subordinated Creditor is
not, as between the Subordinated Creditor and the Borrower, a payment by the
Borrower on the Subordinated Indebtedness. After irrevocable payment in full of
the Senior Creditor Indebtedness, Subordinated Creditor shall be entitled to
receive from the Senior Creditor any payments or distributions received by
Senior Creditor in excess of the amounts sufficient to pay all Senior Creditor
Indebtedness in full.
15. OBLIGATIONS OF BORROWER UNCONDITIONAL. Subject to the subordination
provisions of this Agreement, nothing contained in this Agreement is intended to
or shall impair, as between Borrower and the Subordinated Creditor, the
obligations of Borrower, which are absolute and unconditional, to pay to the
Subordinated Creditor all obligations under the Subordinated Creditor Agreements
as and when the same shall become due and payable in accordance with their
respective terms, or is intended to or shall affect the relative rights of the
creditors of Borrower other than the Senior Creditor and Subordinated Creditor.
16. NOTICE TO SUBORDINATED CREDITOR AND SENIOR CREDITOR BY BORROWER.
Borrower shall give prompt written notice to the Subordinated Creditor and
Senior Creditor of any fact known to Borrower which would prohibit the making of
any payment in respect of the Subordinated Indebtedness, but failure to give
such notice shall not affect the subordination of the Subordinated Indebtedness
to the Senior Creditor Indebtedness as provided in this Agreement.
Notwithstanding the provisions of this Agreement, the Subordinated
Creditor shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment in respect of the Subordinated
Indebtedness, unless and until the Subordinated Creditor
27
shall have received written notice thereof from the Borrower and/or the Senior
Creditor. Prior to the receipt of any such written notice, subject to the
provisions of this Agreement, the Subordinated Creditor shall be entitled in all
respects to assume no such facts exist and to receive payments otherwise
permitted hereunder without obligation to hold them in trust for the Senior
Creditor; provided however notice shall not be a condition precedent to any
prohibition of the making of any such payments if such prohibition is a result
of a default with respect to the Subordinated Indebtedness with respect to which
Subordinated Creditor has determined to exercise any of its rights or remedies.
17. MISCELLANEOUS PROVISIONS.
(a) AMENDMENTS. This Agreement constitutes the entire
understanding and agreement of the parties as to the matters set forth in this
Agreement. To the extent there is any conflict between this Agreement and any
document evidencing the Senior Creditor Indebtedness or the Subordinated
Indebtedness, this Agreement shall control. No alteration of or amendment to
this Agreement shall be effective unless made in writing and signed by Senior
Creditor, Borrower, and Subordinated Creditor.
(b) ATTORNEY'S FEES; EXPENSES. Borrower agrees to pay upon
demand all of Senior Creditor's costs and expenses incurred in connection with
enforcement of this Agreement. Costs and expenses include Senior Creditor's
reasonable attorney's fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
shall pay all court costs and such additional fees as may be directed by the
court.
(c) SUCCESSORS. This Agreement shall bind the respective
successors and assigns of the parties to this Agreement. The covenants of the
parties hereto respecting subordination of the Subordinated Indebtedness in
favor of Senior Creditor Indebtedness shall extend to, include, and be
enforceable by any financial institution that is a transferee or endorsee to
whom Senior Creditor may transfer any or all of the Senior Creditor
Indebtedness.
(d) GENERAL WAIVERS. No party shall be deemed to have waived
any rights under this Agreement unless such waiver is given in writing and
signed by the party against whom such waiver is enforced. No delay or omission
on the part of any party in exercising any right shall operate as a waiver of
such right or any other right. A waiver by any party of any provision of this
Agreement shall not prejudice or constitute a waiver of such party's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by any party, nor any course of dealing
between any of the parties, shall constitute a waiver of any of such party's
rights or of another party's obligations as to any further transactions.
Whenever the consent of a party is required under this Agreement, the granting
of such consent by such party in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in all cases
such further consent may be granted or withheld in the sole discretion of such
party.
28
(e) SEVERABILITY. In the event that any provision of this
Agreement is deemed to be invalid, illegal or unenforceable by reason of the
operation of any law or by reason of the interpretation placed thereon by any
court or governmental authority, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Agreement.
(f) NOTICE. Any notice, demand, request, consent, or other
communication hereunder shall be in writing, shall be addressed to the
respective party shown in the preamble to this Agreement or to such other
address as such party may, by notice given in compliance with this Section,
designate. Notices shall be deemed to have been given and received upon the
earlier of: (i) if by facsimile, upon confirmed transmission if transmission
occurs between 8:00 a.m. and 5:00 p.m. New York time on any Business Day
provided that a copy of such notice is deposited with FedEx or other nationally
recognized overnight delivery service for next Business Day delivery; (ii) if by
FedEx or other nationally recognized overnight delivery service deposited for
next Business Day delivery, on the next Business Day following deposit with such
delivery service; (iii) if by personal delivery, upon completion of delivery; or
(iv) if by mail, three (3) Business Days after deposit in the U.S. Mail, first
class, postage prepaid.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard or
reference to its conflict of laws principles. The parties each hereby consent to
the jurisdiction of any state or federal court located in Monroe County, New
York and irrevocably agree that all actions or proceedings arising out of or
relating to this Agreement shall be litigated in such courts. Each of the
parties accepts for itself the exclusive jurisdiction of the aforesaid courts
and waives any defense of forum non coveniens.
(h) WAIVER OF JURY TRIAL. EACH OF THE PARTIES WAIVES THE RIGHT
TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY WHICH CASE OR CONTROVERSY
ARISES OUT OF OR IS IN RESPECT OF ANY DEALINGS AMONG THEM OR ANY ONE OF THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
(i) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(j) REPRODUCTIONS. This Agreement may be reproduced by the
parties hereto by any photographic, photostatic, microfilm, xerographic or
similar process, and any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made in
the regular course of business).
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IN WITNESS WHEREOF, each of the parties intending to be bound hereby
has caused this Agreement to be executed by its duly authorized representative
as of the date first above written.
[Signature Pages Follow]
30
MONTANA XXXXX BREAD CO., INC.
("Borrower")
By: _______________________________
Its: _______________________________
31
XXXXXX CAPITAL PARTNERS, L.P.
("Subordinated Creditor")
By: Chephas LLC, its general partner,
By:___________________________
Its: Managing Member
32
______________
("Senior Creditor")
By: ____________________________
Its: ____________________________
33
EXHIBIT E
---------
FORM OF LOCKUP AGREEMENT
------------------------
Montana Xxxxx Bread Company, Inc.
Xxxxx 000-X
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned, a beneficial owner(1) of the common stock, $.001 par
value (the "Common Stock"), of Montana Xxxxx Bread Company, Inc. (the
"Company") and/or options, warrants or other rights to purchase, or securities
convertible into, Common Stock, understands that the Company is preparing to
file with the Securities and Exchange Commission a registration statement on
Form S-1/SB-2 for the registration of securities of the Company (the
"Registration Statement") in connection with a proposed public offering of such
securities (the "Offering"). The undersigned further understands that the
Company and Xxxxxx Securities, Inc. ("Xxxxxx"), as representative of the
several underwriters (including Xxxxxx), intend to enter into an underwriting
agreement relating to the Offering upon the effectiveness of the Registration
Statement (the "Underwriting Agreement").
In order to induce Xxxxxx to proceed with the Offering, the undersigned
agrees, for the benefit of the Company and Xxxxxx, that should the Offering
become effective, the undersigned will not, without Xxxxxx'x prior written
consent (and, if required by applicable state blue sky laws, the securities
commissions in any such states), offer, sell, assign, hypothecate, pledge,
transfer or otherwise dispose of, directly or indirectly, any shares of Common
Stock owned by him/her on the date of the Offering, or subsequently acquired
through the exercise of any options, warrants or other rights, or the conversion
of any other security, or by reason of any stock split or other distribution of
stock, or grant options, warrants or other rights with respect to any such
securities, all during the 13-month period commencing on the "Effective Date" of
the Company's Registration Statement. Furthermore, the undersigned will permit
all certificates evidencing any such securities to be endorsed with the
appropriate restrictive legends, and consents to the placement of appropriate
stop transfer orders with the transfer agent for the Company. A copy of this
Agreement will be available from the Company or the Company's transfer agent
upon request and without charge.
The terms and conditions of this Agreement only can be modified
(including premature termination of this Agreement) with the prior written
consent of Xxxxxx.
------------------------------------------- ---------------------------------------------
Number of shares beneficially owned Shareholder Name
-------------------------------------------
Number of shares subject to options,
warrants, rights and/or convertible
securities By:
---------------------------------------------
Signature
---------------------------------------------
Printed Name
------------
1 It is agreed that, for purposes of this letter, the undersigned beneficially
owns, among other shares, any shares owned by (i) members of his or her family
and (ii) any person or entity controlled by the undersigned or under common
control with the undersigned.
34
