EXHIBIT 10.10
[LOGO] Western Financial Bank
SUBORDINATION AGREEMENT
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Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials
$16,000,000.00 09-27-2001 09-30-2002 0099 (CM) 4A0/3100 0001910 00905
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References in the shaded area are for Lender's use only and do not limit the applicability of
this document to any particular loan or item. Any item above containing "* * *" has been
omitted due to text length limitations.
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Borrower: Fresh Enterprises, Inc. Lender: Western Financial Bank
Baja Fresh Westlake Village, Inc. dba Baja Fresh Commercial Banking Group
Mexican Grill ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Creditor: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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THIS SUBORDINATION AGREEMENT dated September 27, 2001, is made and executed
among Fresh Enterprises, Inc.; and Baja Fresh Westlake Village, Inc. dba Baja
Fresh Mexican Grill; ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇; ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
("Borrower"); ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Creditor"); and Western Financial Bank, Commercial
Banking Group, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Lender").
CURRENT INDEBTEDNESS OWING TO CREDITOR. As of the date of this Agreement,
Borrower is indebted to Creditor in the aggregate amount of $2,000,000.00. This
amount is the total indebtedness of every kind from Borrower to Creditor.
REQUESTED FINANCIAL ACCOMMODATIONS. Borrower and Creditor each want Lender to
provide financial accommodations to Borrower in the form of (A) new credit or
loan advances, (B) an extension of time to pay or other compromises regarding
all or part of Borrower's present indebtedness to Lender, or (C) other benefits
to Borrower. Borrower and Creditor each represent and acknowledge to Lender that
Creditor will benefit as a result of these financial accommodations from Lender
to Borrower, and Creditor acknowledges receipt of valuable consideration for
entering into this Agreement. Based on the representations and acknowledgments
contained in this Agreement, Borrower and Creditor agree with Lender as follows:
SUBORDINATED INDEBTEDNESS. The words "Subordinated Indebtedness" as used in this
Agreement mean the following specific indebtedness from Borrower to Creditor,
including all renewals, extensions, modifications and substitutions for the
indebtedness, including principal, interest, and all costs and attorneys' fees,
relating to the indebtedness: $2,000,000.00.
SUPERIOR INDEBTEDNESS. The words "Superior Indebtedness" as used in this
Agreement mean and include all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be now or
hereafter owing from Borrower to Lender. The term "Superior Indebtedness" is
used in its broadest sense and includes without limitation all principal, all
interest, all costs, attorneys' fees, all sums paid for the purpose of
protecting Lender's rights in security (such as paying for insurance on
collateral if the owner fails to do so), all contingent obligations of Borrower
(such as a guaranty), all obligations arising by reason of Borrower's accounts
with Lender (such as an overdraft on a checking account), and all other
obligations of Borrower to Lender, secured or unsecured, of any nature
whatsoever.
SUBORDINATION. All Subordinated Indebtedness of Borrower to Creditor is and
shall be subordinated in all respects to all Superior Indebtedness of Borrower
to Lender. If Creditor holds one or more Security Interests, whether now
existing or hereafter acquired, in any of Borrower's real property or personal
property, Creditor also subordinates all Creditor's Security Interests to all
Security Interests held by Lender, whether now existing or hereafter acquired.
PAYMENTS TO CREDITOR. Except as provided below, Borrower will not make and
Creditor will not accept, at any time while any Superior Indebtedness is owing
to Lender, (A) any payment upon any Subordinated Indebtedness, (B) any advance,
transfer, or assignment of assets to Creditor in any form whatsoever that would
reduce at any time or in any way the amount of Subordinated Indebtedness, or (C)
any transfer of any assets as security for the Subordinated Indebtedness.
Notwithstanding the foregoing, Borrower may make regularly scheduled payments of
interest only to Creditor so long as Borrower is not in default under any
agreement between Lender and Borrower. Creditor may not accelerate any amounts
owed to Creditor without Lender's prior written consent.
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 the liquidation, dissolution or other winding-up of Borrower, or by
reason of 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, (A) the Superior Indebtedness shall be paid in full before any
payment is made upon the Subordinated Indebtedness, and (B) 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 Lender for
application in payment of the amounts then due on the Superior Indebtedness
until the Superior Indebtedness shall have been paid in full.
In order that Lender may establish its right to prove claims and recover for its
own account dividends based on the Subordinated Indebtedness, Creditor does
hereby assign all its right, title, and interest in such claims to Lender.
Creditor further agrees to supply such information and evidence, provide access
to and copies of such of Creditor's records as may pertain to the Subordinated
Indebtedness, and execute such instruments as may be required by Lender to
enable Lender to enforce all such claims and collect all dividends, payments, or
other disbursements which may be made on account of the Subordinated
Indebtedness. For such purposes, Creditor hereby irrevocably authorizes Lender
in its discretion to make and present for or on behalf of Creditor such proofs
of claims on account of the Subordinated Indebtedness as Lender may deem
expedient and proper and to vote such claims in any such proceeding 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 Superior Indebtedness.
Should any payment, distribution, security, or proceeds thereof be received by
Creditor at any time on the Subordinated Indebtedness contrary to the terms of
this Agreement, Creditor immediately will deliver the same to Lender in
precisely the form received (except for the endorsement or assignment of
Creditor if necessary), for application on or to secure the Superior
Indebtedness, whether it is due or not due, and until so delivered the same
shall be held in trust by Creditor as property of Lender. In the event Creditor
fails to make any such endorsement or assignment, Lender, or any of its officers
on behalf of Lender, is hereby irrevocably authorized by Creditor to make the
same.
CREDITOR'S NOTES. Creditor agrees to deliver to Lender, at Lender's request, all
notes of Borrower to Creditor, or other evidence of the Subordinated
Indebtedness, now held or hereafter acquired by Creditor, while this Agreement
remains in effect. At Lender's request, Borrower also will execute and deliver
to Creditor a promissory note evidencing any book account or claim now or
hereafter owed by Borrower to Creditor, which note also shall be delivered by
Creditor to Lender. Creditor agrees not to sell, assign, pledge or otherwise
transfer any of such notes except subject to all the terms and conditions of
this Agreement.
CREDITOR'S REPRESENTATIONS AND WARRANTIES. Creditor represents and warrants to
Lender that: (A) no representations or agreements of any kind have been made to
Creditor which would limit or qualify in any way the terms of this Agreement;
(B) this Agreement is executed at the Borrower's request and not at the request
of Lender; (C) Lender has made no representation to Creditor as to the
creditworthiness of Borrower; and (D) Creditor has established adequate means of
obtaining from Borrower on a continuing basis information regarding Borrower's
financial condition. Creditor agrees to keep adequately informed from such means
of any facts, events, or circumstances which might in any way affect Creditor's
risks under this Agreement, and Creditor further agrees that Lender shall have
no obligation to disclose to Creditor information or material acquired by Lender
in the course of its relationship with Borrower.
CREDITOR'S WAIVERS. Creditor waives any right to require Lender: (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 the
Superior Indebtedness or of any nonpayment related to any Security Interests, or
notice of any action or nonaction on the part of Borrower, Lender, any surety,
endorser, or other guarantor in connection with the Superior Indebtedness, or in
connection with the creation of new or additional Superior Indebtedness; (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
Interests held by Lender from Borrower, any other guarantor, or any other
person; (E) to pursue any other remedy within Lender's power; or (F) to commit
any act or omission of any kind, at any time, with respect to any matter
whatsoever.
LENDER'S RIGHTS. Lender may take or omit any and all actions with respect to the
Superior Indebtedness or any Security Interests for the Superior Indebtedness
without affecting whatsoever any of Lender's rights under this Agreement. In
particular, without limitation, Lender may, without notice of any kind to
Creditor, (A) make one or more additional secured or unsecured loans to
Borrower; (B) repeatedly alter, compromise, renew, extend, accelerate, or
otherwise change the time for payment or other terms of the Superior
Indebtedness or any part thereof, including increases and decreases of the rates
of interest on the Superior indebtedness; extensions may be repeated and may be
for longer than the original loan term; (C) take and hold Security Interests for
the payment of the Superior Indebtedness, and exchange, enforce, waive, and
release any such Security Interests with or without the substitution of new
collateral; (D) release, substitute, agree not to ▇▇▇, or deal with any one or
more of Borrower's sureties, endorsers, or guarantors on any terms or manner
Lender chooses; (E) determine how, when and what application of payments and
Credits, shall be made on the Superior Indebtedness; (F) apply such security and
direct the order or manner of sale thereof, as Lender in its discretion may
determine
SUBORDINATION AGREEMENT
Loan No: 0099(CM) (Continued) Page 2
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and (G) assign this Agreement in whole or in part.
DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt, this Agreement
shall remain in full force and effect.
DURATION AND TERMINATION. This Agreement will take effect when received by
Lender, without the necessity of any acceptance by Lender, in writing or
otherwise, and will remain in full force and effect until Creditor shall notify
Lender in writing at the address shown above to the contrary. Any such notice
shall not affect the Superior Indebtedness owed Lender by Borrower at the time
of such notice, nor shall such notice affect Superior Indebtedness thereafter
granted in compliance with a commitment made by Lender to Borrower prior to
receipt of such notice, nor shall such notice affect any renewals of or
substitutions for any of the foregoing. Such notice shall affect only
indebtedness of Borrower to Lender arising after receipt of such notice and not
arising from financial assistance granted by Lender to Borrower in compliance
with Lender's obligations under a commitment. Any notes lodged with Lender
pursuant to the section titled "Creditor's Notes" above need not be returned
until this Agreement has no further force or effect.
OTHER TERMS AND CONDITIONS. The following provisions are a part of this
Agreement: Interest payments are made quarterly in arrears. A principal payment
of $500,000.00 shall be allowed on November 24, 2001, and the remaining
principal, as well as any accrued and unpaid interest, shall be paid in full on
November 24, 2002.
A copy of the Promissory Note between Fresh Enterprises, Inc. and Creditor dated
November 24, 1998, in the amount of $2,000,000.00 is attached hereto and made a
part hereof.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Arbitration. Borrower and Creditor and Lender agree that all disputes,
claims and controversies between them whether individual, joint, or class
in nature, arising from this Agreement or otherwise, including without
limitation contract and tort disputes, shall be arbitrated pursuant to the
Rules of the American Arbitration Association in effect at the time the
claim is filed, upon request of either party. No act to take or dispose of
any Collateral shall constitute a waiver of this arbitration agreement or
be prohibited by this arbitration agreement. This includes, without
limitation, obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage; obtaining a
writ of attachment or imposition of a receiver; or exercising any rights
relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the
Uniform Commercial Code. Any disputes, claims, or controversies concerning
the lawfulness or reasonableness of any act, or exercise of any right,
concerning any Collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Borrower and Creditor and
Lender agree that in the event of an action for judicial foreclosure
pursuant to California Code of Civil Procedure Section 726, or any similar
provision in any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully
may be referred to arbitration. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. Nothing in this
Agreement shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable
in an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be
deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
Attorneys' Fees; Expenses. Creditor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Creditor shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Creditor also shall pay all court costs
and such additional fees as may be directed by the court.
Authority. The person who signs this Agreement as or on behalf of Creditor
represents and warrants that he or she has authority to execute this
Agreement and to subordinate the Subordinated Indebtedness and the
Creditor's security interests in Borrower's property, if any.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Governing Law. This Agreement will be governed by, construed and enforced
in accordance with federal law and the laws of the State of California.
This Agreement has been accepted by Lender in the State of California.
Choice of Venue. If there is a lawsuit, Creditor agrees upon Lender's
request to submit to the jurisdiction of the courts of Orange County, State
of California.
Interpretation. In all cases where there is more than one Creditor, then
all words used in this Agreement in the singular shall be deemed to have
been used in the plural where the context and construction so require; and
where there is more than one Creditor named in this Agreement or when this
Agreement is executed by more than one, the words "Creditor" shall mean all
and any one or more of them. Reference to the phrase "Creditor" includes
the heirs, successors, assigns, and transferees of each of them.
Successors and Assigns. This Agreement shall be understood to be for the
benefit of Lender and for such other person or persons as may from time to
time become or be the holder or owner of any of the Indebtedness or any
interest therein, and this Agreement shall be transferable to the same
extent and with the same force and effect as any such Indebtedness may be
transferable.
No Waiver by Lender. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Creditor, shall
constitute a waiver of any of Lender's rights or of any of Creditor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender in
any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
Waive Jury. All parties to this Agreement hereby waive the right to any
jury trial in any action, proceeding, or counterclaim brought by any party
against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word "Agreement" means this Subordination Agreement, as this
Subordination Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Subordination
Agreement from time to time.
Borrower. The word "Borrower" means Fresh Enterprises, Inc.; and Baja Fresh
Westlake Village, Inc. dba Baja Fresh Mexican Grill, and all other persons
and entities signing the Note in whatever capacity.
Creditor. The word "Creditor" means ▇▇▇▇▇ ▇▇▇▇▇▇▇.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents.
Lender. The word "Lender" means Western Financial Bank, its successors and
assigns.
Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
Security Interest. The words "Security Interest" mean, without limitation,
any and all types of collateral security, present and future, whether in
the form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral 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.
Subordinated Indebtedness. The words "Subordinated Indebtedness" mean the
indebtedness described in the section of this Agreement titled
"Subordinated Indebtedness".
SUBORDINATION AGREEMENT
Loan No: 0099 (CM) (Continued) Page 3
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Superior Indebtedness. The words "Superior Indebtedness" mean the
indebtedness described in the section of this Agreement titled "Superior
Indebtedness".
BORROWER AND CREDITOR EACH ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
SUBORDINATION AGREEMENT, AND BORROWER AND CREDITOR EACH AGREE TO ITS TERMS. THIS
AGREEMENT IS DATED SEPTEMBER 27, 2001.
BORROWER:
FRESH ENTERPRISES INC.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- ---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO of ▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice Pres. &
Fresh Enterprises, Inc. CFO of Fresh Enterprises, Inc.
BAJA FRESH WESTLAKE VILLAGE INC. DBA BAJA FRESH MEXICAN GRILL
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- ---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President & CEO of ▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice Pres. &
Baja Fresh Westlake Village, Inc. CFO of Baja Fresh Westlake Village,
dba Baja Fresh Mexican Grill Inc. dba Baja Fresh Mexican Grill
CREDITOR:
x /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
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THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED IN RIGHT
OF PAYMENT TO THE OBLIGATIONS (AS DEFINED HEREIN) PURSUANT TO, AND TO
THE EXTENT PROVIDED IN SECTION 2 HEREIN.
PROMISSORY NOTE
$2,000,000 November: 24. 1998
FOR VALUE RECEIVED, Fresh Enterprises, Inc., a California corporation
("Maker"), promises to pay to ▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual resident in
California ("Payee"), in lawful money of the United States of America, the
principal sum of Two Million Dollars ($2,000,000), together with interest
payable quarterly in arrears on the unpaid principal balance at an annual rate
equal to 6.0%, in the manner provided below. Accrued interest charges hereunder
shall be calculated on the basis of a year of 365 or 366 days, as applicable,
and charged for the actual number of days elapsed.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of the Recapitalization Agreement,
dated October 12, 1998, by and among Carterton-Simon Partners III, L.P., Grumman
Hill Investments III, L.P., Oak Investment Partners VIII, L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the other Buyers named therein (collectively, the
"Buyers") and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇"), ▇▇▇▇ Yonkich. Maker and Payee (as
amended or modified from time to time, the "Recapitalization Agreement", and is
subject to the terms and conditions of the Recapitalization Agreement, which
are, by this reference, incorporated herein and made a part hereof. Payee and
▇▇. ▇▇▇▇▇▇▇ are sometimes together referred to herein as the "Sellers."
Capitalized terms used in this Note without definition shall have the respective
meanings set forth in the Recapitalization Agreement.
1. PAYMENTS
1.1 PRINCIPAL AND INTEREST
Five Hundred Thousand Dollars ($500,000) of the principal amount and
accrued but unpaid interest thereon under this Note shall be due and payable on
the date three years after the Closing Date (as defined in the Recapitalization
Agreement) with the remaining principal amount and accrued but unpaid interest
thereon due on the date four years after the Closing Date.
1.2 MANNER OF PAYMENT
All payments of principal and interest on this Note shall be made by
certified check at Westlake Village, California, or at such other place in the
United States of America as Payee shall designate to Maker in writing or by wire
transfer of immediately available funds to an account designated by Payee in
writing. If any payment of principal or interest on this Note is
due on a day which is not a Business Day, such payment shall be due on the next
succeeding Business Day, and such extension of time shall be taken into account
in calculating the amount of interest payable under this Note. "Business Day"
means any day other than a Saturday, Sunday or legal holiday in the State of
California.
1.3 PREPAYMENT
Maker may, without premium or penalty, at any time and from time to
time, prepay all or any portion of the outstanding principal balance due under
this Note, provided that each such prepayment is accompanied by accrued interest
on the amount of principal prepaid calculated to the date of such prepayment.
Any partial prepayments shall be applied to installments, of principal in
inverse order of their maturity.
2. SUBORDINATION
2.1 AGREEMENT TO SUBORDINATE
Payee and the Maker each agree that this Note is and shall be
subordinated in right of payment to all Secured Debt of the Maker or any
subsidiary of the Maker ("Subsidiary") whether now or hereafter existing and,
whether for principal, interest (including, without limitation, interest
accruing after the filing of a petition initiating any bankruptcy or insolvency
proceeding, whether or not such interest accrues after the filing of such
petition for purposes of the Bankruptcy Code or is an allowed claim in such
proceeding), fees, premiums, expenses or otherwise (such indebtedness being the
"Obligations"). For the purposes of this Note, "Secured Debt" shall mean all
indebtedness of the Maker and its Subsidiaries for which the Maker or any
Subsidiary has granted a security interest, pledge, encumbrance or other lien in
collateral, whether personal or real.
2.2 EVENTS OF SUBORDINATION
In the event that any default under any Obligation shall have occurred
and be continuing, then no payment shall be made by or on behalf of the Maker
for or on account of this Note or any other indebtedness of the Maker being
subordinated to payment of this Note, and the Payee shall not take or receive
from the Maker, directly or indirectly, in cash or other property or by set-off
or in any other manner, including, without limitation, from or by way of
collateral payment of all or any of the amount due on this Note, unless and
until such default has been cured or waived.
2.3 RIGHT TO CURE OF INSTITUTIONAL LENDERS
Payee shall not accelerate or seek any enforcement or collection
action on this Note on account of any Event of Default of Maker without written
notice to the representatives of Institutional Lenders of Maker and its
Subsidiaries, or their designers, and first providing to
2
such representatives or their designees the right to cure such default within 30
days from the date notice of default is delivered to such representatives or
their designees. The term "Institutional Lenders" shall mean institutional
lenders of the Maker or its Subsidiaries that are holders of any obligations.
2.4 NO INVOLUNTARY BANKRUPTCY PETITION
Notwithstanding the foregoing, so long as there are outstanding
Obligations owed to the Institutional Lenders, Payee shall not commence, or join
with others in commencing, an involuntary bankruptcy or insolvency proceeding
and shall not file, or join with others in filing. an involuntary petition
seeking (a) liquidation, reorganization or other relief in respect of Maker or
any Subsidiary or, in any such case, its debts, or a substantial part of its
assets, under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (b) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the Maker
or any Subsidiary or for a substantial part of any of their respective assets.
2.5 BENEFITS OF SUBORDINATION
The provisions of Sections 2.1 and 2.2 of this Note are made for the
benefit of the holders of obligations, whether now or hereafter existing. The
provisions of Sections 2.3 and 2.4 of this Note are made for the benefit of the
Institutional Lenders, whether now or hereafter existing.
3. RIGHT TO OFFSET
Pursuant to Section 8.3 of the Recapitalization Agreement, Buyers are
given the right to offset any amounts owed to them by the Sellers against
amounts due to Payee hereunder. Reference is hereby made to the Recapitalization
Agreement for a description of the nature and extent of the Buyers' offset
rights thereunder with respect to this Note.
4. DEFAULTS
4.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events with respect
to Maker shall constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for five (5)
days after Payee notifies Maker therein writing.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to
insolvency or relief of
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debtors (a "Bankruptcy Law"), Maker shall (i) commence a
voluntary case or proceeding; (ii) consent to the entry of an
order for relief against it in an involuntary case; or (iii)
consent to the appointment of a trustee, receiver, assignee or
liquidator.
4.2 NOTICE BY MAKER
Maker shall notify Payee in writing within five days after the
occurrence of any Event of Default of which Maker acquires knowledge.
4.3 REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all
Events of Default have been cured or waived by Payee), Payee may by written
notice to Maker, declare the entire unpaid principal balance of this Note,
together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance.
5. MISCELLANEOUS
5.l WAIVER
No waiver by Payee of any right or remedy under this Note shall be
effective unless in a writing signed by Payee. Neither the failure nor any delay
in exercising any right, power or privilege under this Note will operate as a
waiver of such right, power or privilege and no single or partial exercise of
any such right, power or privilege by Payee will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege.
5.2 NOTICES
All notices, requests, demands and other communications which are
required or may be given under this Note shall be in writing and shall be deemed
to have been duly given when received if personally delivered; when transmitted
if transmitted by telecopy, electronic or digital transmission method; the day
after it is sent, if sent for next day delivery to a domestic address by
recognized overnight delivery service (e.g., Federal Express); and upon receipt,
if sent by certified or registered mail, return receipt requested. In each case
notice shall be sent to:
If to Maker, addressed to:
Fresh Enterprises, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Atnn: President
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
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If to Payee, addressed to:
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
If to the representatives of the Institutional Lenders, addressed to:
Imperial Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other place and with such other copies as either party may
designate as to itself by written notice to the other.
5.3 SEVERABILITY
If any provision in this Note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will remain
in full force and effect. Any provision of this Note held invalid or
unenforceable only to part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
5.4 GOVERNING LAW
This Note will be governed by the laws of the State of California
without regard to conflicts of laws principles.
5.5 PARTIES IN INTEREST
This Note shall not be assigned, conveyed, pledged, hypothecated,
discounted or otherwise transferred or disposed of by Payee.
5.6 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Note are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Note unless otherwise specified.
All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
words "hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof.
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IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
FRESH ENTERPRISES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
By: ___________________________
Name: ▇▇▇▇▇ ▇. Vert Jr.
Title: Secretary
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
FRESH ENTERPRISES, INC.
By: __________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇. Jr.
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇. Jr.
Title: Secretary
