Exhibit 10.51
SUBORDINATION AGREEMENT
This Subordination agreement is made this 13th day of December 1996 by
and among CLEARVIEW CINEMA GROUP, INC., a Delaware corporation ("Borrower" or
the "Company"), THE PROVIDENT BANK, an Ohio banking corporation, as Agent for
itself and various lenders under the Credit Agreement ("Bank") and MAGIC
CINEMAS, L.L.C. ("Subordinated Lender").
W I T N E S S E T H :
WHEREAS, the Borrower and the Bank propose to make certain loans to the
Borrower and to issue a Letter of Credit for the benefit of Subordinated Lender
pursuant to the Credit Agreement (capitalized terms having the meanings set
forth in Exhibit A hereto and incorporated herein by reference, unless otherwise
defined within the text of this Agreement);
WHEREAS, one of the conditions to the Bank's obligations to make the
Loans is the acceptance by Subordinated Lender of a Subordinated Promissory Note
issued contemporaneously herewith by the Borrower in the principal amount of Six
Hundred Thousand and 00/100 Dollars ($600,000.00) (such note, as the same may
from time to time be transferred or assigned, referred to as the "Subordinated
Note");
WHEREAS, in order to induce the Bank to extend credit, make the Loans,
and issue the Letter of Credit, and for an in consideration of such credit,
Loans, and Letter of Credit the Borrower and Subordinated Lender have agreed
that the Subordinated Note shall be subordinated to the Obligations in the
manner and to the extent set forth in this Agreement; and
WHEREAS, a condition to the bank's execution of the Credit Agreement is
the execution and delivery of this Subordination Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties agree as follows:
ARTICLE 1
DEFINITIONS
In addition to other words and terms defined elsewhere in this
Agreement, capitalized terms used herein and not otherwise defined shall have
the meanings given in the Credit Agreement.
ARTICLE 2
SUBORDINATION
Section 2.1 Agreement to Subordinate. The Company and Subordinated
Lender, for themselves and their successors and assigns, hereby agree that the
payment of the indebtedness and other obligations evidenced by the Subordinated
Note is subordinated to the Obligations and subject in right of payment to the
prior payment in full of the Obligations.
Each holder of the Subordinated Note, whether upon original issue or
upon transfer or assignment, by accepting such Subordinated Note further agrees
that the Bank has advanced funds and may from time to time advance additional
funds in reliance upon the subordination of the Subordinated Note to the
Obligations and that the provisions of this Agreement are for the benefit of the
Bank.
Section 2.2 Endorsement on Instruments. The Subordinated Note, and any
instrument issued by the Company in replacement, renewal, exchange for or
substitution thereof, or evidencing the transfer thereof, shall be endorsed with
a legend in the following form:
"The payment of this instrument, both principal and interest, and
all other indebtedness evidenced hereby, is subordinate, subject
and made junior in right of payment to the prior rights of The
Provident Bank, its successors and assigns, in the manner and to
the extent set forth in a certain Subordination Agreement dated
as of December 13, 1996, which Agreement is incorporated herein
by reference."
Section 2.3 Payment Upon Maturity, Liquidation, Dissolution or
Reorganization.
(a) On December 31, 2001, or upon the earlier maturity of any
Obligations by lapse of time, acceleration or otherwise, all such Obligations
shall first be paid in full, before any payment is made on account of principal
of or interest on the Subordinated Note or to acquire or redeem the Subordinated
Note.
(b) In the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company or its property, or any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings, or
any assignment by the Company for the benefit of creditors, or any other
marshaling of the assets of the Company, then and in any such event:
(i) all Obligations shall first be paid in full, or
provision made for such payment, together with, to the extent
provided for by law, interest thereon from the date such
Obligations were due as provided in the Credit Agreement, if
payment in full is not received, before any payment or
distribution of any character,
whether in cash, securities or other property, shall be made on
account of or applied on the Subordinated Note;
(ii) any property or distribution of any character,
whether in cash, securities or other property, which would
otherwise (but for this clause) be payable and deliverable in
respect of the Subordinated Note shall be paid or delivered
directly to the Bank, or the holders of such Note shall pay to
the Bank such amounts promptly upon receipt, until all
Obligations shall have been paid in full, together with, to the
extent provided for by law, interest as provided herein from the
date such Obligations were due if payment in full is not
received, to the Bank; and
(iii) all holders of the Subordinated Note irrevocably
authorize and empower the Bank to demand, xxx for, collect and
receive all such payments and distributions and to receipt
therefor, and to file and prove all such claims and take all such
other actions in the name of the Bank as it may determine to be
necessary or appropriate.
Section 2.4 Borrower Not to Make Payments with Respect to Subordinated
Note in Certain Circumstances.
(a) Except for the restrictions set forth in Section 2.5 hereof,
nothing contained in this Agreement shall limit the right of the holders of the
Subordinated Note to take any action to accelerate the maturity of the
Subordinated Note or to exercise any remedy available to it under applicable
law, including without limitation, the commencement or continuation of any
action or proceeding against the Company, whether to reduce the claims of the
holders of the Subordinated Note to judgment or to enforce the terms of the
Subordinated Note or otherwise, provided, however, that after the occurrence of
any proceeding referred to in Section 2.3(b) or the receipt of a Bank's Notice
(as defined below) any amounts received by such holders to any such action from
any source whatsoever will be received by them in trust for the Bank, and they
will pay over such amounts to the Bank until the payment of the entire principal
of and premium, if any, and interest on all the Obligations then owing to the
Bank.
(b) With respect to any default in payment on Obligations, if any
default shall occur and be continuing with respect to any Obligations permitting
the Bank to accelerate the maturity thereof, the holders of the Subordinated
Note shall not be entitled to receive any payment on account of principal
thereof or interest thereon (including any such payment which would cause such a
default) (i) while judicial proceedings shall be pending in respect of such
default with respect to which written notice of the commencement of such
proceedings shall have been given to the holders by the Bank or by the Company
or (ii) in the absence of such proceedings, if written notice of such default
shall have been given to Subordinated Lender or the then holders of the
Subordinated Note ("a Bank's Notice"). Notwithstanding the immediately preceding
sentence, unless the Subordinated Lender has actual notice of a default under
the Credit Agreement, the Company shall be permitted to pay, and the
Subordinated Lender shall be permitted to receive, use, enjoy and retain, free
and clear of all claims of the Bank, any payment
of principal or interest under the Subordinated Note, so long as, at the time
of the payment, the Subordinated Lender has not received a Bank's Notice.
Section 2.5 Standstill. If and when the holders of the Subordinated Note
have received a Bank's Notice, the holders of the Subordinated Note shall not
(a) accelerate the maturity of the Subordinated Note until they have first so
notified the Bank in writing, or (b) take any of the following actions for a
period of one hundred twenty (120) days after the receipt of a Bank's Notice by
the holders of the Subordinated Note:
(a) the commencement of any action or proceeding against the
Company, whether to reduce the claims of the holders to judgment or to enforce
the terms of the Subordinated Note or otherwise;
(b) any act to obtain possession of property of the Company or to
exercise control over property of the Company; or
(c) any act to create, perfect or enforce any lien against
property of the Company.
Subject to the provisions of this Section 2.5, nothing shall prevent the
holders of the Subordinated Note from exercising any remedy available to it
under applicable law, including without limitation, exercising any right of
setoff or counterclaim, the commencement of any action or proceeding against the
Company, whether to reduce the claims of the holders of the Subordinated Note to
judgment or to enforce the terms of the Subordinated Note or otherwise.
Section 2.6 Subrogation. Upon the payment in full of all Obligations,
the holders of the Subordinated Note shall be surrogated to the rights of the
Bank to receive payments or distributions of assets of the Company made on the
Obligations until the Bank shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the Bank of any cash, property or
securities to which holders of the Subordinated Note would be entitled except
for the provisions of this Article 2, and no payment over pursuant to the
provisions of this Article 2 to the Bank by the holders of the Subordinated
Note, shall, as between the Company, its creditors other than the Bank and the
holders of the Subordinated Note, be deemed to be a payment by the Company to or
on account of Obligations owed to the Bank, it being understood that the
provisions of this Article are solely for the purpose of defining the relative
rights of the Bank, on the one hand, and the holders of the Subordinated Note,
on the other hand.
If any payment or distribution to which the holders of the Subordinated
Note would otherwise have been entitled but for the provisions of this Article 2
shall have been applied, pursuant to the provisions of this Article 2, to the
payment of Obligations, then and in such case, the holders of the Subordinated
Note shall be entitled to receive from the Bank at the time outstanding any
payments or distributions received by the Bank in excess of the amount
sufficient to pay all Obligations in full.
Section 2.7 Relative Rights. This Article is intended solely to define
the relative rights of the holders of the Subordinated Note, on the one hand,
and the Bank, on the other hand. Nothing in this Article shall:
(a) impair, as between the Company and the holders of the
Subordinated Note, the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on the Subordinated
Note in accordance with its terms; or
(b) affect the relative rights of the holders of the
Subordinated Note and creditors of the Company other than the Bank; or
(c) prevent any holder of the Subordinated Note from
exercising all its available remedies hereunder or under applicable law
upon an Event of Default, subject to the rights of the Bank under this
Article 2 to receive payments or distributions otherwise payable or
distributable to holders of such securities.
Upon any distribution of assets of the Company referred to in this
Article 2, the holders of the Subordinated Note shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the liquidating trustee or agent or other person making any
distribution to the holders of such assets, for the purpose of ascertaining the
persons entitled to participate in such distribution, the Bank and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 2.
If the Company fails because of this Article to pay principal of or
interest on the Subordinated Note on the due date (after taking into account any
applicable grace periods), the failure is still an Event of Default under the
Subordinated Note.
Section 2.8 Subordination May Not Be Impaired By the Company. No right
of the Bank to enforce the subordination of the indebtedness evidenced by the
Subordinated Note shall be impaired by any act or failure to act by the Company
or the Bank or by the failure by the Company to comply with this Agreement,
regardless of any knowledge which the Bank may have or be otherwise charged
with.
Section 2.9 Moneys Held in Trust for Bank. In the event that any holder
of the Subordinated Note shall receive any payment or distribution with respect
to such Note from any source whatsoever which such holder is not at the time
entitled to receive under the provisions of this Article 2, such holder will
hold any amount so received in trust for the Bank and will pay over such payment
to the Bank on account of the principal of and premium, if any, and interest on
such Obligations, until all such Obligations are paid in full.
Payments of principal and interest on the Subordinated Note in
accordance with the terms thereof when none of the events prohibiting such
payment described in section 2.3 or section 2.4 shall have occurred and be
continuing may be retained by such holders.
Section 2.10 Grant of Security Interest. The Company shall not grant to
the holders of the Subordinated Note any lien, mortgage, assignment or other
security interest, or enter into any transaction having the effect of securing
the repayment of the Subordinated Note with any property owned or used by the
Company.
ARTICLE 3
MISCELLANEOUS
Section 3.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement shall be effective unless in a written instrument
executed by the Bank, the holders of the Subordinated Note and all parties
affected by such amendment or waiver.
Section 3.2 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder, or under the Credit Agreement, shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, remedy,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement and the Credit Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
Section 3.3 Notices. All notices, consents, requests and demands to or
upon the respective parties hereto shall be in writing and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, postage prepaid, or, in the
case of telex, telegraphic or telecopy notice, five (5) days after being sent,
addressed as follows:
If to the Bank:
The Provident Bank
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Phone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxxxxxxx X. Xxxxxxx
With a copy to:
Xxxxxxx, Muething & Xxxxxxx, P.L.L.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Phone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Company:
Clearview Cinema Group, Inc.
0 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attn: A. Xxxx Xxx, President
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
If to the Subordinated Creditor:
Magic Cinemas, L.L.C.
000 Xxxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Phone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxxx Dandson
With a copy to:
Orloff, Lowenbach, Xxxxxxxxx & Xxxxxx, P.A.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Phone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxx, Esq.
Notices of changes of address shall be given in the same manner.
Section 3.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
Section 3.5 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
Section 3.6 WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR THE BANK TO EXTEND CREDIT TO THE BORROWER, AND AFTER HAVING THE
OPPORTUNITY TO CONSULT COUNSEL, EACH PARTY HEREBY EXPRESSLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR ARISING
IN ANY WAY FROM THE OBLIGATIONS.
[Remainder of page intentionally left blank. Signature page follows.]
IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their duly authorized officers as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By: /s/
-----------------------------
Name: A. Xxxx Xxxx
Title: Pres.
THE PROVIDENT BANK
By: /s/
-----------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: AVP
MAGIC CINEMAS, L.L.C.
By: /s/
-----------------------------
Name: Xxxxxxx Dandson
Title: _____________________________
EXHIBIT A
DEFINITIONS
As used in this Subordination Agreement, the following terms shall have
the meanings ascribed hereto to them:
"Borrowers" means Clearview Cinema Group, Inc., CCC Madison Triple
Cinema Corp., CCC Xxxxxxx Twin Cinema Corporation, CCC Manasquan Cinema
Corporation, Clearview Theatre Group, Inc., CCC Herricks Cinema Corp., CCC Port
Washington Cinema Corp., CCC Grand Avenue Cinema Corp., CCC Washington Cinema
Corp., CCC Xxxxxxx Cinema Corp., CCC Xxxxxxx Cinema Corp., CCC New City Cinema
Corp., 000-000 Xxxxxxxxxxx Xxxxxx Corp. CCC Bedford Cinema Corp., CCC Kisco
Cinema Corp., CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp., CCC
Tenafly Cinema Corp., and CCC B.C. Realty Corp.
"Credit Agreement" means a certain Credit Agreement dated as of May 29,
1996 by and among Borrowers, The Provident Bank, as "Agent," and the lenders
from time to time thereunder, as amended by the Joinder Agreement dated as of
July 18, 1996, as further amended by the Joinder Agreement and First Amendment
to Credit Agreement, dated as of December 13, 1996, as the same may be amended,
modified or supplemented from time to time (the "Credit Agreement").
"Loans" mean, collectively, the Revolving Credit Loan and each of the
Term Loans, each singly a "Loan" made or to be made to Borrowers by the Lenders
pursuant to the Credit Agreement in an aggregate principal amount available
thereunder on the date hereof of $8,900,000.
"Obligations" means, collectively, all of the indebtedness, obligations,
covenants, promises, agreements, and liabilities existing on the date hereof or
arising from time to time hereafter, whether direct, indirect, absolute,
contingent, joint or several, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise, of
Borrowers to the Bank or any Lenders under the Credit Agreement (i) in respect
of the Loans made pursuant to the Credit Agreement; or (ii) under or in respect
of any one or more of the loan documents executed in connection therewith.
Obligations shall also include all interest, charges and other fees chargeable
hereunder to Borrowers or due hereunder from Borrowers to lenders thereunder
from time to time and all costs and expenses of Agent authorized under the
Credit Agreement.
