Exhibit 10.5
[LOGO]
American National Bank Subordination Agreement
and Trust Company of Chicago All Debt and Liens
A BANK [LOGO] ONE Company
Alltech Associates, Inc. (the "Borrower") is indebted to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Creditor"), whose address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, in the
principal amount of $2,800,000.00 as evidenced by promissory note(s) dated
5/30/02 and in the amount(s) as follows: $2,800,000.00. That debt is unsecured.
The Borrower and the Creditor wish to induce American National Bank and Trust
Company of Chicago, whose address is ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, and its successors and assigns (the "Bank"), to make or continue loans or
otherwise extend or continue credit to the Borrower or accept the Borrower's
guaranties of the debt of others to the Bank. The Bank is willing to extend or
continue such credit or accept such guaranties on the condition, among others,
that this agreement be executed by the Borrower and the Creditor and delivered
to the Bank.
THEREFORE, the Borrower and the Creditor severally represent and promise to each
other and to the Bank as follows:
1. Definitions.
As used in this agreement the following terms have the following meanings:
(a) "Bank Debt" means Liabilities to the Bank and to BANK ONE
CORPORATION, or any of its subsidiaries or affiliates or their
successors, including without limitation costs of collecting those
Liabilities and interest accruing on those Liabilities after the
commencement of bankruptcy or similar insolvency proceedings.
(b) "Liabilities" means all obligations, indebtedness or liabilities of
the Borrower now existing or later arising, including, without
limitation, all loans, advances, interest, costs, overdraft
indebtedness, credit card indebtedness, lease obligations, or
obligations relating to any Rate Management Transaction, all monetary
obligations incurred or accrued during the pendency of any bankruptcy,
insolvency, receivership or other similar proceedings, regardless of
whether allowed or allowable in such proceeding, and all renewals,
extensions, modifications, consolidations or substitutions of any of
the foregoing, whether the Borrower may be liable jointly with others
or individually liable as a debtor, maker, co-maker, drawer, endorser,
guarantor, surety or otherwise, and whether voluntarily or
involuntarily incurred, due or not due, absolute or contingent, direct
or indirect, liquidated or unliquidated.
(c) "Rate Management Transaction" shall mean any transaction (including an
agreement with respect thereto) whether now existing or hereafter
entered into between the Borrower and any person or entity, which is a
rate swap, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions) or
any combination thereof, whether linked to one or more interest rates,
foreign currencies, commodity prices, equity prices or other financial
measures.
(d) "Subordinated Debt" means Liabilities to the Creditor, including
without limitation the debt described above.
2. Subordination. The Subordinated Debt is subordinated in right of payment to
the Bank Debt in accordance with this agreement. The Creditor and the
Borrower agree to make appropriate entries in their books and records and
stamp all instruments or documents evidencing the Subordinated Debt with a
legend that the Subordinated Debt is expressly subject to this agreement.
3. Permitted Payments. Without the prior written consent of the Bank, the
Borrower shall not make or give, and the Creditor shall not accept, any
payment or other thing of value, on account of the Subordinated Debt,
except the Borrower may pay and the Creditor may accept currently accruing
interest on the Subordinated Debt if (a) the Borrower is not in default
under the Bank Debt and (b) the making of the payment to the Creditor will
not cause a default under the Bank Debt.
In any event, the Borrower shall not prepay and the Creditor shall not
accept prepayment of all or any portion of the Subordinated Debt without
the prior written consent of the Bank.
4. Payment to the Bank of Payments and Distributions on Account of
Subordinated Debt. Except for sums received by the Creditor in accordance
with Section 3, the Creditor shall promptly pay or otherwise deliver to the
Bank all amounts and other things of value which the Creditor may receive
on account of the Subordinated Debt (in this Section 4, "Non-Permitted
Payments"). Any Non-Permitted Payments shall be held in trust by the
Creditor for the benefit of the Bank until paid or delivered to the Bank.
in any bankruptcy, liquidation, insolvency, receivership, or similar
proceeding, whether law or in equity, or pursuant to state or federal law,
the Bank shall be entitled to receive payment in full of the Bank Debt from
payments or other distributions made on account of the Bank Debt and on
account of the Subordinated Debt from the assets of the Borrower,
(including interest after the commencement of any such proceeding at the
rate(s) specified in the Bank Debt, whether or not such interest is an
allowable claim in such proceeding) before the Creditor is entitled to
receive any payment or thing of value on account of the Subordinated Debt.
5. Subordination of Liens. Except for the property described as security
above, the Borrower has not given and shall not give, and the Creditor has
not received and shall not accept any security for the Subordinated Debt.
The Creditor expressly subordinates all of its rights in any collateral now
or later securing the Subordinated Debt (the "Collateral") to all present
and future rights of the Bank in any of the Collateral to secure the Bank
Debt, without regard to the time or order of attachment or perfection of
any security interest, the time or order of filing any financing statement,
or the giving or failure to give any notice of the acquisition or expected
acquisition of any purchase money security interest. The Creditor consents
to the creation and continuance of all present and future security
interests of the Bank in the Collateral to secure the Bank Debt and to the
enforcement of those security interests, including the removal of the
Collateral from the real property of the Borrower. The Creditor agrees to
fully cooperate with the Bank and not to delay, impede or otherwise
interfere with the efforts of the Bank to secure payment from the assets
which secure the Bank Debt including actions, proceedings, motions, orders,
agreements or other matters relating to relief from automatic stay,
abandonment of property, use of cash collateral and sale of the Bank's
collateral free and clear of all liens. This subordination as to the
Collateral is intended to define the rights and duties of the Bank and the
Creditor; it is not intended that any third party shall benefit from it. If
the effect of any provision of this subordination would be to give any
third party a priority status to which that party would not otherwise be
entitled, that provision shall, to the extent necessary to avoid that
priority, be given no effect and the rights and priorities of the Bank and
the Creditor shall be determined in accordance with applicable law.
6. Grant of Security Interest in Subordinated Debt. To secure the prompt
payment and performance of the Bank Debt, the Creditor grants the Bank a
security interest in the Subordinated Debt, in all instruments evidencing
the Subordinated Debt, in the Collateral, and in all other rights of the
Creditor related to the Subordinated Debt. The Creditor shall deliver to
the Bank all notes and other instruments evidencing any Subordinated Debt,
with such endorsement as the Bank may reasonably require. In addition, the
Creditor shall execute and deliver to the Bank all financing statements
that the Bank may reasonably require in order to perfect the Bank's rights
and interests under this agreement. The Creditor authorizes the Bank, if
permitted by applicable law, to file one or more financing statements
related to the security interests created by this agreement.
7. Bank's Authority to Act with Respect to Subordinated Debt. The Creditor
irrevocably appoints the Bank its attorney-in-fact, with full power of
substitution, in either the Bank name or the Creditor's name, to sign
financing statements, to endorse instruments, to execute and file proofs of
claim or other documents, and to take any other action regarding all or any
part of the Subordinated Debt necessary or appropriate to insure payment to
the Bank of all payments and other distributions on account of the
Subordinated Debt, instruments evidencing the Subordinated Debt, or the
Collateral. The Creditor will pay to the Bank all costs reasonably incurred
by the Bank for the purpose of enforcing its rights hereunder, to the
extent not prohibited by law, including, without limitation: costs of
foreclosure; costs of obtaining money damages; and a reasonable fee for the
services of internal and outside attorneys employed or engaged by the Bank
for any purpose related to this agreement, including, without limitation,
consultation, drafting documents, sending notices or instituting,
prosecuting or defending litigation or any proceeding. The Bank's
compliance with any applicable state or federal law requirements in
connection with the disposition of the collateral granted pursuant to this
agreement will not adversely affect the commercial reasonableness of any
sale of such collateral. Notwithstanding the foregoing, the Bank shall not
be liable to the Creditor for any failure to prove the existence, amount,
or circumstances of the Subordinated Debt, to exercise any right related to
it or to collect any sums payable on it or distributions attributable to
it.
8. Creditor's Representations and Promises. The Creditor represents to the
Bank that (a) it is the sole holder of the Subordinated Debt with full
power to make the subordinations and assignments set forth in this
agreement, (b) it has not made or permitted any assignment or transfer, as
security or otherwise, of the Subordinated Debt, of any instrument
evidencing the Subordinated Debt, or of any of the Collateral, and it shall
not do so as long as this agreement remains in effect, and (c) it has
extended the Subordinated Debt and entered into this agreement based on its
own independent investigation (or decision not to investigate) the
financial condition of the Borrower, and has not relied on and shall not
rely on any representation or information of any nature regarding the
Borrower made by or received from the Bank.
9. Waivers. The Borrower and the Creditor each waive (a) notice of acceptance
of this agreement, and (b) demand, presentment, notice of dishonor and
protest in the collection of the Bank Debt or the Subordinated Debt. No
waiver of any provision of this agreement shall be effective against the
Bank unless such waiver is in writing and signed by the Bank. No delay or
omission by the Bank in exercising any right shall operate as a waiver of
such right or any other right.
10. Action Regarding Bank Debt. Without notice to or the consent of the
Creditor, the Bank may take or refrain from taking any action regarding the
Bank Debt that it deems appropriate, including without limitation (a)
amending, modifying, extending or renewing the Bank Debt or changing any
interest rate applicable to it, (b) releasing, compromising, or settling
any claim related to the Bank Debt, (c)
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forbearing or agreeing to forbear from forcing any right or remedy related
to the Bank Debt, including rights and remedies against any guarantor,
surety or accommodation party of all or any part of the Bank Debt, (d)
determining when and in what order payments and credits shall be made to
the Bank Debt; or (e) substituting, releasing or exchanging any Collateral
for or other property securing the Bank Debt. The Bank shall not be
required to perfect any security interest in any Collateral or other
property securing the Bank Debt. The Creditor waives and agrees not to
assert any rights or defenses with respect to any actions the Bank may take
or refrain from taking with regard to the Bank Debt or any Collateral or
other property now or hereafter securing any of the Bank Debt.
11. Reinstatement. If, after the receipt of any payment or application of the
proceeds of any Collateral or other property securing the Bank Debt to
payment of all or any part of the Bank Debt, the Bank is required to return
or surrender such payment or proceeds to any person, because such payment
or the application of such proceeds is or may be avoided, invalidated, set
aside or declared void or voidable as a preference, fraudulent conveyance,
impermissible set-off or other cause, then this agreement shall continue in
effect as if such payment or application of proceeds had not been received
by the Bank, whether or not the Bank is in possession of this agreement.
The surrender, return or cancellation of any instrument relating to the
Bank Debt shall not affect this provision.
12. Assignment. The Bank may assign or transfer all or any portion of its
rights under this agreement, including any instrument relating to the Bank
Debt or any Collateral or other property securing the Bank Debt, to any
person or entity, and such assignee or transferee shall be vested with all
rights and powers given to the Bank in this agreement.
13. Continued Reliance. The Bank, by accepting delivery of this agreement,
shall be deemed to have relied upon all of its terms and conditions and
shall be entitled to continue that reliance. This agreement constitutes a
continuing agreement of subordination, even though at times the Borrower
may not be indebted to the Bank. The Bank may continue, without notice to
the Creditor, to lend monies, accept guarantees, extend credit, or modify,
renew or make other financial accommodations to or for the account of the
Borrower until the Bank sends the Creditor written notice of cancellation
of this agreement or until the forty-fifth (45th) day following written
acknowledgement by an officer of the Bank that the Bank has received
written notice of revocation of this agreement from the Creditor. Any such
notice of revocation shall not be effective as to (a) Bank Debt existing on
the effective date of revocation, (b) Bank Debt later created pursuant to a
credit facility existing on the effective date of revocation (whether or
not advances or readvances by the Bank under the credit facility are
optional or obligatory), or (c) any modifications or renewals of any of the
Bank Debt, whether in whole or in part.
14. Subrogation. So long as this agreement remains in effect, the Creditor
shall not exercise any right of subrogation or other similar rights with
respect to the Bank Debt.
15. Construction. As used in this agreement the term "or" shall mean "and/or".
Each person or entity executing this agreement as a "Borrower" or
"Creditor" shall be jointly and severally obligated with every other person
and entity executing this agreement as a "Borrower" or "Creditor"
respectively. The terms "Creditor" and "Borrower" refer to any or all of
the persons signing in that capacity. Section headings are for convenience
of reference only and do not affect the interpretation of this agreement.
16. Expenses. The Creditor and the Borrower, jointly and severally, agree to
pay upon demand all of the Bank's costs, expenses, attorney fees, including
costs and attorney fees resulting from any bankruptcy proceedings, incurred
by the Bank in connection with any enforcement of this agreement.
17. Notice. Any notices and demands under or related to this document shall be
in writing and delivered to the intended party at its address stated
herein, and if to the Bank, at its main office if no other address of the
Bank is specified herein, by one of the following means: (a) by hand, (b)
by a nationally recognized overnight courier service, or (c) by certified
mail, postage prepaid, with return receipt requested. Notice shall be
deemed given: (a) upon receipt if delivered by hand, (b) on the Delivery
Day after the day of deposit with a nationally recognized courier service,
or (c) on the third Delivery Day after the notice is deposited in the mail.
"Delivery Day" means a day other than a Saturday, a Sunday, or any other
day on which national banking associations are authorized to be closed. Any
party may change its address for purposes of the receipt of notices and
demands by giving notice of such change in the manner provided in this
provision.
18. Binding Effect; Counterparts. This agreement binds the Borrower and the
Creditor and their respective heirs, personal representatives, successors
and assigns, and benefits the Bank, its successors and assigns. This
agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which taken together shall
constitute one and the same agreement. This agreement may not be amended
or modified except by a writing signed by each of the parties to this
agreement.
19. Governing Law and Venue. This agreement is delivered in the State of
Illinois and governed by Illinois law (without giving effect to its laws of
conflicts). The Borrower and the Creditor agree that any legal action or
proceeding against it with respect to any of its obligations under this
agreement may be brought in any state or federal court located in such
state, as the Bank in its sole discretion may elect. By the execution and
delivery of this agreement, the Borrower and the Creditor submit to and
accepts, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts. The Borrower and
Creditor waive any claim that the State of Illinois is not a convenient
forum or the proper venue for any such suit, action or proceeding.
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WAIVER OF SPECIAL DAMAGES. THE BORROWER AND THE CREDITOR WAIVE, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THE UNDERSIGNED MAY HAVE TO CLAIM OR
RECOVER FROM THE BANK IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.
JURY WAIVER. THE BORROWER, THE CREDITOR AND THE BANK HEREBY VOLUNTARILY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) AMONG THE BORROWER, THE CREDITOR AND THE BANK ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE OR
CONTINUE PROVIDING THE FINANCING EVIDENCED BY THE BANK DEBT.
EXECUTED by each party on the date indicated below its signature, but
effective as of 5/31, 2002.
Borrower: Creditor:
Alltech Associates, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CFO ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Printed Name Title Printed Name
Dated: MAY 30, 2002 Dated: MAY 31, 2002
Bank:
American National Bank and Trust Company of
Chicago
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ First Vice President
Printed Name Title
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$2,800,000 Date: 5/30/02
For Value Received, the undersigned Alltech Associates, Inc., an Illinois
corporation, promises to pay the order of ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual
TWO MILLION, EIGHT HUNDRED THOUSAND AND NO\100 DOLLARS
At Deerfield, Illinois
Due on Demand.
No. Alltech Associates, Inc.
--------------------- an Illinois corporation
Due on Demand
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: CFO
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