EXHIBIT 99.5
SUBORDINATION AGREEMENT
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This Subordination Agreement (this "Agreement") is entered into by and
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among BANK OF AMERICA NT & SA, doing business as SEAFIRST BANK, a national
savings and trust association (the "Subordinated Lender"), whose address is 701
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Fifth Avenue, Seattle, Washington 98104, FLEET CAPITAL CORPORATION, a Rhode
Island corporation ("Fleet"), with an office located at 2711 ▇. ▇▇▇▇▇▇▇ Avenue,
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Suite 2100, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, THE FIRST NATIONAL BANK OF BOSTON, a national
banking association ("Boston") with an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
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▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fleet and Boston are hereinafter collectively referred to
as "Senior Lenders" and each individually a "Senior Lender") and FLEET, as agent
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for Senior Lenders (Fleet, in such capacity, the "Agent").
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Preliminary Statements:
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1. Brazos, Inc., a Texas corporation ("Debtor"), a wholly-owned
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subsidiary of Brazos Sportswear, Inc., a Delaware corporation ("Parent"),
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executed to the order of Subordinated Lender that certain Convertible
Subordinated Note Agreement and Convertible Promissory Note, dated as of or
about the date hereof, in the stated principal amount of $1,500,000 (together,
the "Subordinated Note"). The Subordinated Note contains a conversion option,
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that will under certain conditions, allow the Subordinated Lender to convert
obligations due under the Subordinated Note to common stock in Parent.
2. Senior Lenders, Agent and Debtor have entered into that certain Second
Amended and Restated Loan and Security Agreement, dated as of August 9, 1996 (as
the same may be renewed, extended, modified, amended or replaced from time to
time, the "Senior Loan Agreement").
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3. Subordinated Lender acknowledges that the extension of credit and
other financial accommodations granted to Debtor by Senior Lenders are of value
to Subordinated Lender.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce Senior
Lenders, now or from time to time hereafter, to extend credit and grant other
financial accommodations to or for the benefit of Debtor or to grant such
renewals or extensions thereof as Senior Lenders may deem advisable, and to
better secure Senior Lenders in respect of the foregoing, Subordinated Lender
hereby agrees with Senior Lenders as follows:
1. Definitions.
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"Default" shall have the meaning ascribed to such term in the Senior
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Loan Agreement.
"Event of Default" shall have the meaning ascribed to such term in the
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Senior Loan Agreement.
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"Obligations" shall mean any and all obligations, liabilities and
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indebtedness of Debtor or any successor or assign of Debtor, including without
limitation, a receiver, trustee or debtor in possession, to Agent and Senior
Lenders, whether now existing or hereafter arising, whether direct, indirect,
contingent, joint, several or independent, whether created directly or acquired
by assignment or otherwise, whether evidenced by a written instrument or not and
whether such obligations, liabilities and indebtedness (including, but not
limited to, interest on any such obligations, liabilities and indebtedness)
arises or accrues before or after the commencement of any bankruptcy, insolvency
or receivership proceeding. The Obligations shall be entitled to the benefits
of this Agreement irrespective of the amount or terms thereof, and shall
continue to constitute Obligations for all purposes of this Agreement,
notwithstanding the fact that such Obligations or any claim in respect thereof
shall be disallowed, avoided or subordinated pursuant to the provisions of Title
11 of the United Stated Code, as amended from time to time, or other applicable
law.
"Permitted Payments" means regularly scheduled interest payments due
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under the Subordinated Debt.
"Proceeds" shall have the meaning assigned to it under the Uniform
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Commercial Code, shall also include "products" (as defined in the Uniform
Commercial Code), and, in any event, shall include, but not be limited to (a)
any and all proceeds of any insurance, indemnity, warranty, letter of credit or
guaranty or collateral security payable to any grantor from time to time with
respect to any of the Senior Lender Collateral, (b) any and all payments (in any
form whatsoever) made or due and payable to or on behalf of the owner of the
Senior Lender Collateral from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Senior Lender Collateral by any governmental body, authority, bureau or agency
(or any person acting under color of governmental authority) and (c) any and all
other amounts from time to time paid or payable under or in connection with any
of the Senior Lender Collateral.
"Senior Lender Collateral" shall mean the "Collateral" as such term is
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defined in the Senior Loan Agreement. Agent and Senior Lenders acknowledge that
the term "Collateral" does not include the capital stock of Parent or the
treasury stock of Parent.
"Subordinated Debt" shall mean the Subordinated Note and any and all
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other obligations, liabilities and indebtedness of Debtor to Subordinated Lender
for borrowed money, whether now existing or hereafter arising, whether direct,
indirect, contingent, joint, several or independent, whether created directly or
acquired by assignment or otherwise, whether evidenced by a written instrument
or not and whether such obligations, liabilities and indebtedness arise or
accrue before or after the commencement of any bankruptcy, insolvency or
receivership proceeding including without limitation, interest on any such
obligations, liabilities and indebtedness.
"Subordinated Loan Documents" shall mean any and all documents,
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agreements and instruments executed or delivered pursuant to or in connection
with the Subordinated Note.
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2. Debt Subordination. The Subordinated Debt is hereby subordinated to
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the Obligations, and each holder of Subordinated Debt, by acceptance of all or
any portion of the Subordinated Debt, whether upon original issuance, transfer,
assignment or exchange, agrees to be bound by the provisions of this Agreement.
Except as specifically permitted in this Agreement, Subordinated Lender will not
ask, demand, ▇▇▇ for, take or receive from Debtor, by setoff or in any other
manner, all or any part of the Subordinated Debt, except the Permitted Payments,
or take or receive any payment or distribution of any character, whether in
cash, securities or other property from Debtor on account of or in respect of
the Subordinated Debt, including, without limitation, the taking of any
negotiable instruments evidencing such amounts or any security for any of the
foregoing, unless and until all of the Obligations shall have been fully and
irrevocably paid in cash and all financing arrangements between Debtor and
Senior Lenders shall have been terminated. However, notwithstanding any other
provisions contained herein, in the Senior Loan Documents, or in any
acknowledgment of this Agreement by Debtor, Subordinated Lender shall have the
right without notice to Senior Lenders to ask for, demand, take and receive a
distribution of shares of common stock of Parent (or the common stock of any
successor entity to Parent, including the common stock of Debtor if Debtor is
the successor entity pursuant to a merger or similar corporate reorganization of
Parent and Debtor as long as such merger or similar corporate reorganization is
permitted by the provisions of the Senior Loan Agreement) as provided in the
conversion option of the Subordinated Note, and Debtor, if it becomes a
successor entity to Parent pursuant to merger or similar corporate
reorganization, shall have the right to deliver such shares to Subordinated
Lender pursuant to the terms and conditions of the Subordinated Note.
3. Mutual Recognition and Consent. The Subordinated Lender acknowledges
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and consents to the existence of the Senior Loan Documents and the liens and
security interests in the Senior Lender Collateral granted in connection
therewith as security for the prompt payment and performance by Debtor of the
Obligations. The Agent and Senior Lenders acknowledge and consent to the
existence of the Subordinated Loan Documents. The provisions of this Agreement
are intended by the parties hereto to control any conflicting provisions,
including, without limitation, any covenants contained in the Senior Loan
Documents or the Subordinated Loan Documents.
4. Priorities Regarding Collateral. The Subordinated Debt is unsecured
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and shall not be secured, by any lien on or security interest in any assets or
properties of Debtor, or otherwise, in any way during the term of this
Agreement. Without affecting Subordinated Lender's obligations set forth in
this Agreement not to obtain any lien or security interest, any and every lien
and security interest in the Senior Lender Collateral in favor of or held for
the benefit of the Senior Lenders has and shall have priority over any lien or
security interest that Subordinated Lender might have or acquire in the Senior
Lender Collateral notwithstanding any statement or provision contained in the
Subordinated Loan Documents or otherwise to the contrary and irrespective of the
time or order of filing or recording of financing statements, deeds of trust,
mortgages or other notices of security interests, liens or assignments granted
pursuant thereto, and irrespective of anything contained in any filing or
agreement to which any party hereto or its respective successors and assigns may
now or hereafter be a party, and irrespective of the ordinary rules for
determining priorities under the Uniform Commercial Code or under any other law
governing the relative priorities of secured creditors.
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5. Management of Collateral. Agent and Senior Lenders shall have the
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exclusive right to manage, perform and enforce the terms of the Senior Loan
Documents with respect to the Senior Lender Collateral, to exercise and enforce
all privileges and rights thereunder according to their discretion and the
exercise of their business judgment including, but not limited to, the exclusive
right to take or retake possession of the Senior Lender Collateral and to hold,
prepare for sale, process, sell, lease, dispose of, or liquidate the Senior
Lender Collateral, pursuant to a foreclosure or otherwise. Notwithstanding
anything to the contrary contained in any document, instrument or agreement
evidencing, securing or otherwise executed in connection with the incurrence of
the Subordinated Debt, only the Senior Lenders shall have the right to restrict
or permit, or approve or disapprove, the sale, transfer or other disposition of
Senior Lender Collateral. Accordingly, should Agent or any Senior Lender elect
to exercise its rights and remedies with respect to any of the Senior Lender
Collateral, Agent or such Senior Lender may proceed to do so in a commercially
reasonable manner as required by the Uniform Commercial Code, without regard to
any interest of Subordinated Lender, and Subordinated Lender waives any claims
that it may have against Agent and Senior Lenders for any disposition of the
Senior Lender Collateral, provided that any such disposition by Agent and Senior
Lenders is conducted in a commercially reasonable ma nner as required by the
applicable provisions of the Uniform Commercial Code. Without affecting
Subordinated Lender's obligations set forth in this Agreement not to obtain any
lien or security interest in any of the Senior Lender Collateral, Subordinated
Lender agrees, whether or not a default has occurred in the payment of the
Subordinated Debt or the performance of any other obligations to it, that any
liens on and security interests in the Senior Lender Collateral or any portion
thereof that it might have or acquire shall automatically be fully released ipso
facto as to all indebtedness and other obligations secured thereby owing to
Subordinated Lender if and when Senior Lenders release their lien in and
security interest on such Senior Lender Collateral or any portion thereof.
6. Distribution of Proceeds of Collateral. At any time during which all
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or any part of the Obligations remains outstanding, and whether or not the same
is then due and payable, the Proceeds of any sale, disposition or other
realization by Agent, Senior Lenders or other party hereto (or any agent
therefor) upon all or any part of the Senior Lender Collateral shall be applied
in the following order of priorities irrespective of the application of any rule
of law or the defect or impairment of any Senior Loan Document, Subordinated
Loan Document or security interest, lien or assignment thereunder:
first, to the payment of all reasonable costs and expenses of
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Agent, Senior Lenders and/or their agent or agents (including,
without limitation, the reasonable fees and expenses of counsel
to Agent and Senior Lenders) incurred in connection with the
collection of such Proceeds or the protection of the rights and
interests of Agent or any Senior Lender therein; and
second, to the payment in full of all the Obligations in such
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order as Agent and Senior Lenders shall determine in their sole
discretion; and
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finally, to pay any surplus then remaining to the owner of the
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Senior Lender Collateral or its successors or assigns or as a
court of competent jurisdiction may direct.
7. Permitted Payments. Notwithstanding the provisions of Section 2 of
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this Agreement, Debtor may pay to Subordinated Lender, and Subordinated Lender
may accept from Debtor the Permitted Payments; provided, however, that the
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rights of Subordinated Lender to 2 receive the Permitted Payments may be
suspended pursuant to the provisions of Section 8 of this Agreement. Under no
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circumstances shall prepayments on the Subordinated Debt constitute Permitted
Payments. Except as provided in Section 11 of this Agreement, prior to full and
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irrevocable payment in cash of the Obligations and the termination of all
financing arrangements between Debtor and Senior Lenders, Subordinated Lender
shall have no right to enforce payment of any Permitted Payment, or to otherwise
take any action against Debtor or Debtor's property without Senior Lenders'
prior written consent.
8. Effect of Certain Events on Permitted Payments.
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(a) If any Default or Event of Default has occurred under the Senior
Loan Documents or would be caused as a result of any Permitted Payment,
then (i) the rights of Subordinated Lender to receive the Permitted
Payments shall be suspended from and after the date that Subordinated
Lender receives a notice to suspend payments under the Subordinated Debt
which is accompanied by a copy of the notice of such Default that Agent or
Senior Lenders sent to Debtor (a "Stop Payment Notice"), and (ii) no
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payment of Subordinated Debt shall be made by Debtor, or received or
accepted by Subordinated Lender from Debtor, unless and until such Default
shall have been cured or waived.
(b) Notwithstanding anything to the contrary contained in this Section
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8, (i) Debtor may pay and Subordinated Lender may take and retain any
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Permitted Payment before receipt by Subordinated Lender of a Stop Payment
Notice; provided, however, that in the event that a Stop Payment Notice is
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issued within fifteen (15) business days after receipt of such Permitted
Payment, Subordinated Lender shall, in accordance with Section 13 hereof,
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hold such payment in trust and forthwith deliver the same to Agent, for the
benefit of Senior Lenders, and (ii) Debtor shall be entitled to resume the
making of payment of Subordinated Debt otherwise prohibited under Section
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8(a) of this Agreement at such time as the Agent and/or Senior Lenders
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provide Subordinated Lender writt en Notice that the Default described in
Section 8(a) of this Agreement has been cured or waived.
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9. Modification of Subordinated Debt. Subordinated Lender shall not
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increase the aggregate principal amount of the Subordinated Debt without the
prior written consent of Senior Lenders. Further, Subordinated Lender shall not
otherwise amend, modify or supplement any instruments, agreements or documents
evidencing or related to the Subordinated Debt without the prior written consent
of Senior Lenders, if such amendment, modification or supplement would, in
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the opinion of Senior Lenders, have an adverse effect on Senior Lenders, any of
the Senior Lender Collateral or the rights of Agent or any Senior Lender under
this Agreement.
10. Representations and Warranties Regarding Subordinated Debt.
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Subordinated Lender represents and warrants that as of the date of this
Agreement (i) all of the Subordinated Debt outstanding on the date hereof is
evidenced by the Subordinated Loan Documents, (ii) Subordinated Lender has not
previously assigned any interest in the Subordinated Debt or granted any
security interest therein, (iii) no other party owns any interest in the
Subordinated Debt other than Subordinated Lender (whether as joint holders of
the Subordinated Debt, participants or otherwise), other than any such interest
arising by operation of law and (iv) the entire Subordinated Debt is owing only
to Subordinated Lender.
11. Standstill. Subordinated Lender agrees to promptly send to Agent and
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each Senior Lender a copy of any notice of default under the Subordinated Loan
Documents sent to any loan party and further agrees that, except as specifically
permitted in this Section 11, and in exercising its conversion option for a
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distribution of common stock of Parent as provided in Section 2, Subordinated
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Lender shall not exercise any rights or remedies or take any enforcement action
available upon the occurrence of a default or an event of default or otherwise
under the Subordinated Loan Documents or take any action toward the collection
of any Subordinated Debt, until all of the Obligations shall have been paid in
full and all of the commitments of Senior Lenders to Debtor under the Senior
Loan Documents shall have expired or terminated. The failure to make a payment
of principal of, interest on, or fees, costs or expenses relative to any of the
Subordinated Debt by reason of any provision of this Agreement shall not be
construed as preventing the occurrence of a default or event of default with
respect to such Subordinated Debt.
12. Commencement of Proceeding; Grant of Authority to Agent and Senior
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Lenders. Subordinated Lender will not join with any creditor, unless Senior
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Lenders shall also join, in bringing any Proceeding against Debtor unless and
until the Obligations shall have been fully and irrevocably paid in cash and all
financing arrangements between Debtor and Senior Lenders shall have been
terminated. The provisions of this Agreement shall continue in full force and
effect, notwithstanding the commencement of any Proceeding under the Federal
Bankruptcy Code by or against Debtor. In furtherance of the foregoing, if
Subordinated Lender receives any property of, or payments from Debtor after the
commencement of such Proceeding on account of a secured claim which is
subordinated by the terms of this Agreement (whether as "adequate protection"
payments or otherwise), Subordinated Lender shall immediately turn such property
or payments over to the Agent, for the benefit of Senior Lenders, for
distribution by it in accordance with the applicable provisions of Section 6
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hereof. To the extent that Subordinated Lender has or acquires any rights under
Section 363 or Section 364 of the Federal Bankruptcy Code with respect to the
Senior Lender Collateral, Subordinated Lender hereby agrees not to assert such
rights without the prior written consent of the Senior Lenders. The
Subordinated Lender hereby grants to the Agent and each Senior Lender the right,
but neither Agent nor any Senior Lender shall be obligated, to file, prove and
vote claims on account of the Subordinated Indebtedness in any receivership,
bankruptcy, or other Proceeding commenced by or against Debtor. Subordinated
Lender will execute and deliver to Agent, for the benefit of Senior Lenders such
powers of attorney, assignments and other instruments or documents, including
notes and stock certificates (together
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with such assignments or endorsements as Agent shall deem necessary), as may be
requested by Senior Lenders in order to enable Agent and Senior Lenders to
enforce any and all claims upon or with respect to any or all of the
Subordinated Debt and to collect and receive any and all payments and
distributions which may be payable or deliverable to Agent or any Senior Lender
at any time upon or with respect to the Subordinated Debt, all for Agent's and
each Senior Lender's own benefit. In the event Debtor makes any payment,
distribution, or transfer to Subordinated Lender, which Subordinated Lender is
required to hold in trust for and/or deliver to Agent or Senior Lenders under
Section 8 and Section 13 of this Agreement, and in the further event
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Subordinated Lender is required in a preference action, a fraudulent transfer
action, or otherwise by operation of law to return such payments to a bankruptcy
trustee, a receiver, a court, or any other third party, Senior Lenders shall
reimburse Subordinated Lender for all such payments, distributions, or transfers
actually delivered to Agent or Senior Lenders, with Subordinated Lender hereby
agreeing to contest in good faith the return of any such payment in such an
action and to permit Senior Lenders to participate in the defense of any such
attempt to require the return of any such payment. Notwithstanding anything to
contrary in this Section 12, Subordinated Lender may take such actions or bring
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or join in such Proceedings as necessary to enforce its right to reimbursement
for any such payments, distributions, or transfers so held or delivered.
13. Payments Received by Subordinated Lender. If any payment or
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distribution or security (other than a distribution of common stock of Parent as
provided in Section 2) or instrument or proceeds thereof is received by
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Subordinated Lender upon or with respect to the Subordinated Debt in
contravention of any of the terms of this Agreement and prior to the full and
irrevocable payment in cash of the Obligations and termination of all financing
arrangements between Debtor and Senior Lenders, Subordinated Lender shall
receive and hold the same in trust, as trustee for the benefit of Senior Lenders
and shall forthwith deliver the same to Agent, for the benefit of Senior
Lenders, in precisely the form received (except for the endorsement or
assignment of Subordinated Lender where necessary), for application on the
Obligations, due or not due, and, until so delivered, the same shall be held in
trust by Subordinated Lender as the property of Senior Lenders. In the event of
the failure of Subordinated Lender to make any such endorsement or assignment to
Agent or Senior Lenders, then Agent, Senior Lenders, or any of their officers or
employees, is hereby irrevocably authorized to make the same.
14. Instrument Legend. Any instrument now or hereafter evidencing any of
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the Subordinated Debt will be inscribed with a legend conspicuously indicating
that payment thereof is subject to the terms of this Agreement, and a copy
thereof will be delivered to Agent and each Senior Lender on or before the date
hereof (or, with respect to hereafter arising indebtedness of Debtor to
Subordinated Lender, if any, upon execution thereof or within five days
thereafter).
15. Continuing Nature of Subordination. This Agreement shall be effective
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and may not be terminated or otherwise revoked by Subordinated Lender until the
Obligations shall have been fully and irrevocably paid and all financing
arrangements between Debtor and Senior Lenders have been terminated. This is a
continuing agreement and Senior Lenders may continue, at any time and without
notice to Subordinated Lender, to extend credit or other financial
accommodations to or for the benefit of Debtor on the faith hereof.
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16. Additional Agreements Between Agent, Senior Lenders and Debtor. Agent
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and Senior Lenders at any time and from time to time, either before or after any
such aforesaid notice of termination or revocation, may enter into such
agreement or agreements with the Debtor as Agent and Senior Lenders may deem
proper. Not in limitation of the foregoing, Agent and Senior Lenders may, at
any time and from time to time, without the consent of or notice to Subordinated
Lender, and without impairing or releasing any of Agent's or any Senior Lender's
rights, or any of Subordinated Lender's obligations, under this Agreement, do
any of the following: (i) change the amount, manner, place, or terms of payment
or change or extend the time of payment of or renew or alter the Obligations, or
any part thereof, or enter into or amend in any manner any agreement or
instrument relating to the Obligations, (ii) sell, exchange, release, or
otherwise deal with the Senior Lender Collateral, or any part thereof in a
commercially reasonable manner, (iii) release anyone liable in any manner for
the payment or collection of the Obligations, or (iv) exercise or refrain from
exercising any rights against Debtor, Subordinated Lender or any other person.
17. Subordinated Lender's Waivers. All of the Obligations shall be deemed
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to have been made or incurred in reliance upon this Agreement. Subordinated
Lender waives any right it may have to require that Senior Lenders marshal their
collateral in favor of Subordinated Lender. Subordinated Lender expressly waives
all notice of the acceptance by Agent and Senior Lenders of the subordination
and other provisions of this Agreement and all other notices not specifically
required pursuant to the terms of this Agreement whatsoever, and Subordinated
Lender expressly waives reliance by Agent and Senior Lenders upon the
subordination and other agreements as herein provided.
18. Agent's and Senior Lenders' Waivers. No waiver shall be deemed to be
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made by Agent or any Senior Lender of any of its rights hereunder, unless the
same shall be in writing signed on behalf of Agent or such Senior Lender, and
each waiver, if any, shall be a waiver only with respect to the specific
instance involved and shall in no way impair the rights of Agent or any Senior
Lender or the obligations of Subordinated Lender to Agent or any Senior Lender
in any other respect at any other time.
19. Information Concerning Financial Condition of Debtor. Subordinated
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Lender hereby assumes responsibility for keeping itself informed of the
financial condition of Debtor, any and all other makers, endorsers and
guarantors of the Obligations and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and/or the Subordinated Debt that diligent
inquiry would reveal, and Subordinated Lender hereby agrees that neither Agent
nor any Senior Lender shall have any duty to advise Subordinated Lender of
information known to Agent or any Senior Lender regarding such condition or any
such circumstances. In the event, Agent or any Senior Lender, in its sole
discretion, undertakes, at any time or from time to time, to provide any such
information to Subordinated Lender, neither Agent nor any Senior Lender shall be
under any obligation (i) to provide any such information to Subordinated Lender
on any subsequent occasion or (ii) to undertake any investigation not apart of
its regular business routine and shall be under no obligation to disclose any
information which, pursuant to accepted or reasonable commercial finance
practices, Agent and Senior Lenders wish to maintain confidential. Subordinated
Lender hereby agrees that all payments received by Agent, for the benefit of
Senior
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Lenders, may be applied, reversed, and reapplied, in whole or in part, to any of
the Obligations, as Agent and Senior Lenders, in their sole discretion, deems
appropriate.
20. Subrogation. The provisions of this Agreement are solely for the
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purpose of defining the relative rights of Agent and Senior Lenders on the one
hand and the Subordinated Lender on the other hand, and nothing herein shall
impair as between the Subordinated Lender and the Debtor, the Debtor's
obligations to pay to the Subordinated Lender the principal, interest, and other
charges due on the Subordinated Debt as and when the same shall become due in
accordance with the terms thereof; nor shall anything herein prevent the
Subordinated Lender from exercising all rights and remedies otherwise permitted
by applicable law upon default, subject, however, to the terms and conditions of
this Agreement and rights of the Agent and Senior Lenders hereunder. In the
event that the Obligations shall have been irrevocably paid in full in cash, and
cash, securities or other property otherwise payable or deliverable to the
Subordinated Lender shall have been applied pursuant to this Agreement to the
payment of the Obligations, then the Subordinated Lender shall be subrogated to
any right of the Agent and/or Senior Lenders to receive any further payments or
distributions applicable to the Obligations until the Subordinated Debt shall
have been paid in full; provided, however, that for purposes of such
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subrogation, as among the Debtor, its creditors other than the Senior Lenders,
and the Subordinated Lender, no payments or distributions to Agent or any Senior
Lender of any cash, property, or securities to which the Subordinated Lender
would be entitled, except for the provisions hereof, shall be deemed to be a
payment by or on account of the Obligations.
21. Notice. Except as otherwise provided herein, all notices, requests
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and demands to or upon a party hereto shall be in writing and shall be sent by
certified or registered mail return receipt requested, by personal delivery
against receipt, or by telegraph or telex and, unless otherwise expressly
provided herein, shall be deemed to have been validly served, given or delivered
when delivered against receipt or one business day after deposit in the U.S.
mail postage prepaid, or, in the case of telegraphic notice, when delivered to
the telegraph company, or, in the case of telex notice, when sent, answerback
received, addressed to the parties at the addresses specified on the first page
hereof, or to such other address as each party may designate for itself by like
notice given in accordance with this paragraph. Any written notice that is not
sent in conformity with the provisions hereof shall nevertheless be effective on
the date that such notice is actually received by the noticed party.
22. Governing Law. This Agreement shall be deemed to have been made in
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Dallas, Texas, and shall be interpreted, and the rights and obligations of the
parties hereto determined, in accordance with the laws and decisions of the
State of Texas.
23. Binding Obligations; Successors and Assigns. This Agreement shall be
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immediately binding upon Subordinated Lender and its successors and assigns, and
shall inure to the benefit of the successors and assigns of Agent and Senior
Lenders. Subordinated Lender will not assign or transfer all or any part of the
Subordinated Debt unless it first advises any such transferee in writing that
the Subordinated Debt is subject in all respects to the terms of this Agreement.
This Agreement may be assigned by Agent and Senior Lenders in connection with
any assignment or transfer of the Obligations.
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24. Section Titles. The Section titles contained in this Agreement are
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and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
25. Entire Agreement. This Agreement embodies the entire agreement
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between the parties and supersedes all prior agreements regarding the subject
matter hereof.
26. Counterparts. This Agreement may be executed by one or more of the
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parties hereto in any number of separate counterparts, each of which shall be an
original, but all of which shall constitute but one agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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EXECUTED as of this 14th day of March, 1997.
SUBORDINATED LENDER:
BANK OF AMERICA NT & SA,
doing business as SEAFIRST BANK
By:____________________________________
Name:__________________________________
Title:_________________________________
SENIOR LENDERS:
FLEET CAPITAL CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
THE FIRST NATIONAL BANK OF BOSTON
By:____________________________________
Name:__________________________________
Title:_________________________________
AGENT:
FLEET CAPITAL CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
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ACKNOWLEDGMENT BY DEBTOR
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Debtor hereby acknowledges receipt of a copy of the foregoing Subordination
Agreement, confirms that the Subordinated Note represents all of Debtor's
existing indebtedness and obligations to Subordinated Lender, and agrees that it
will not pay any indebtedness subordinated by the foregoing Subordination
Agreement (except as otherwise permitted thereby) until all Obligations
described therein shall have been paid in full in cash and Senior Lenders'
financing arrangements with Debtor are terminated. In the event of any breach
of the provisions of the foregoing Subordination Agreement, Debtor agrees that,
in addition to any other rights and remedies Agent or any Senior Lender may
have, all of Debtor's obligations and liabilities to Agent and Senior Lenders
shall, without notice or demand, become immediately due and payable, unless
Agent and Senior Lenders shall otherwise elect.
BRAZOS, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
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