EXHIBIT 10.18
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the "Subordination Agreement") is made
and dated as of the 18th day of December, 1998 by and among DOLLAR FINANCIAL
GROUP, INC., a New York corporation (the "Borrower"), XXXXX FARGO BANK, NATIONAL
ASSOCIATION, acting in its capacity as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders from time to time party to that
certain Credit Agreement dated as of December 18, 1998 by and among the
Borrower, the Parent, the Administrative Agent, the Arrangers, the Syndication
Agent and the Lenders (as amended, extended and replaced from time to time, the
"Credit Agreement," and with capitalized terms not otherwise defined herein used
with the meanings given such terms in the Credit Agreement), and DFG HOLDINGS,
INC., a Delaware corporation (the "Creditor").
RECITALS
A. Pursuant to the Credit Agreement the Lenders have agreed to extend
credit to the Borrower on the terms and subject to the conditions set forth
therein.
B. As a condition precedent to the Lenders' obligation to extend
credit under the Credit Agreement, the Creditor is required to subordinate its
right to the payment of monies from the Borrower to the payment and performance
of the Obligations under (and as defined in) the Credit Agreement (the "Senior
Obligations"), and to execute and deliver this Subordination Agreement to the
Administrative Agent for the benefit of the Lenders as evidence thereof.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. The Creditor has extended and may in the future extend credit to
the Borrower from time to time. The principal of all now existing and hereafter
arising indebtedness of the Borrower to the Creditor together with accrued but
unpaid interest thereon is hereinafter referred to as the "Claims".
2. The Creditor is or will be the sole and absolute owner of the
Claims and has not sold, assigned, transferred or otherwise disposed of any
right it may have to repayment of the Claims or any security therefor.
3. The Claims and all rights and remedies of the Creditor with
respect thereto and any lien securing payment thereof are and shall continue to
be subject, subordinate and rendered junior in the right of payment to the
Senior Obligations, as the same may be extended, amended or replaced form time
to time.
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4. The Borrower and the Creditor hereby agree that upon the
occurrence of any Event of Default which has not been expressed waived pursuant
to the Credit Agreement, until the Senior Obligations are paid in full and the
Lenders have no further obligation to make Loans under the Credit Agreement:
(a) The Borrower will not make or give, and the Creditor will
not receive, directly or indirectly, any payment, advance, credit or further
security of any kind whatsoever on account of the Claims, or any new or further
evidence thereof;
(b) The Creditor will not sell, assign, transfer or endorse the
Claims or any part or evidence thereof;
(c) The Creditor will not modify the Claims or any part or
evidence thereof; and
(d) The Creditor will not take, or permit any action to be taken,
to assert, collect or enforce the Claims or any part thereof.
5. Each of the Borrower and the Creditor waives notice of acceptance
of this Subordination Agreement by the Lenders, and each of the Creditor waives
notice of and consent to the amount and terms of any loan or loans which the
Lenders may from time to time make to the Borrower and any renewal or extension
thereof and any action which the Lenders in their sole and absolute discretion
may take or omit to take with respect thereto.
6. This Subordination Agreement shall constitute a continuing
agreement of subordination and the Lenders may, from time to time and without
notice to the Creditor, lend money to or make other financial arrangements with
the Borrower in reliance hereon until written notice of termination shall be
delivered by the Creditor to the Lenders by certified mail, return receipt
requested. The receipt by the Lenders of such notice shall not affect this
Subordination Agreement as it relates to any Senior Obligations then existing,
to any Senior Obligations incurred thereafter pursuant to a previous commitment
by the Lenders or to any amendments to, or extensions or renewals of, any such
Senior Obligations.
7. In the event of a default in the performance or observance of any
of the foregoing, the Senior Obligations shall forthwith become due and payable
at the election of the Lenders, without presentment, demand or notice of any
kind, all of which are hereby waived.
8. The Creditor agrees as follows:
(a) Upon any distribution of all of the assets of the Borrower to
creditors of the Borrower upon the dissolution, winding up, liquidation,
arrangement, or reorganization of the Borrower, whether in any bankruptcy,
insolvency, arrangement, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Borrower or otherwise, any payment or distribution of any
kind (whether in cash, property or securities) which otherwise would be payable
or deliverable upon or with respect to the Claims shall be paid or delivered
directly to the Administrative Agent for application (in the case of cash) to,
or as collateral (in the case of non-cash property or securities) for, the
payment or prepayment of the Senior Obligations until the Senior Obligations
shall have been paid in full.
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(b) If any proceeding referred to in subsection (a) above is commenced
by or against the Borrower:
(1) The Lenders are hereby irrevocably authorized and
empowered (in their own name or in the name of the Creditor or otherwise), but
shall have no obligation, to demand, xxx for, collect and receive every payment
or distribution referred to in subsection (a) above and give acquittance
therefor and to file claims and proofs of claim and take such other action
(including, without limitation, voting the Claims or enforcing any security
interest or other lien securing payment of the Claims) as the Lenders may deem
necessary or advisable for the exercise or enforcement of any of the rights or
interests of the Lenders hereunder; and
(2) The Creditor shall duly and promptly take such action
as the Lenders may request (i) to collect the Claims for account of the Lenders
and to file appropriate claims or proofs of claim in respect of the Claims, (ii)
to execute and deliver to the Administrative Agent such powers of attorney,
assignments, or other instruments as it may request in order to enable it to
enforce any and all claims with respect to, and any security interests and other
liens securing payment of, the Claims, and (iii) to collect and receive any and
all payments or distributions which may be payable or deliverable upon or with
respect to the Claims.
(c) All payments or distributions upon or with respect to the Claims
which are received by the Creditor contrary to the provisions of this
Subordination Agreement shall be received in trust for the benefit of the
Lenders, shall be segregated from other funds and property held by the Creditor
and shall be forthwith paid over to the Administrative Agent in the same form as
so received (with any necessary endorsement) to be applied (in the case of cash)
to, or held as collateral (in the case of non-cash property or securities) for,
the payment or prepayment of the Senior Obligations.
(d) The Administrative Agent on behalf of the Lenders is hereby
authorized to demand specific performance of this Subordination Agreement,
whether or not the Borrower shall have complied with any or all of the
provisions hereof applicable to the Borrower, at any time when the Creditor
shall have failed to comply with any of the provisions of this Subordination
Agreement applicable to it.
9. It is the intent of the Creditor to create by this Subordination
Agreement a security interest in favor of the Administrative Agent for the
benefit of the Lenders in the Claims and in the Creditor's other rights to
receive money or other property from the Borrower, whether such rights shall
constitute accounts, contract rights, chattel paper, instruments, general
intangibles or otherwise. The Creditor hereby grants to the Administrative Agent
for the benefit of the Lenders a security interest in the Claims in order to
secure the payment and performance of the Creditor' obligations pursuant to this
Subordination Agreement.
10. The Creditor authorizes the Administrative Agent and the Lenders
(whether or not after revocation of this Subordination Agreement), without
notice or demand (except as shall be required by applicable statute and cannot
be waived), and without affecting or impairing the Creditor's obligations
hereunder, from time to time to (a) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change the
terms of the Senior Obligations or any part thereof, including without
limitation to increase
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or decrease the rate of interest thereon; (b) take and hold security for the
payment of the Senior Obligations and exchange, enforce, waive and release any
such security; (c) apply such security and direct the order or manner of sale
thereof as the Administrative Agent and the Lenders in their sole discretion may
determine; and (d) release and substitute any one or more endorsers, warrantors,
the Borrower or other obligors.
11. This Subordination Agreement shall extend to and be binding upon
the successors and assigns of each of the parties hereto.
12. This Subordination Agreement may be executed in any number of
counterparts all of which taken together shall constitute one agreement and any
party hereto may execute this Subordination Agreement by signing any such
counterpart.
13. This Subordination Agreement shall be governed by and construed
in accordance with the laws of the State of California without giving effect to
its choice of law rules.
14. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUBORDINATION
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS SUBORDINATION AGREEMENT, EACH OF THE CREDITOR, THE BORROWER AND
THE ADMINISTRATIVE AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE CREDITOR, THE
BORROWER AND THE ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
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NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
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OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS SUBORDINATION AGREEMENT.
EACH OF THE CREDITOR, THE BORROWER AND THE ADMINISTRATIVE AGENT WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY CALIFORNIA LAW.
15. EACH OF THE CREDITOR, THE BORROWER AND THE ADMINISTRATIVE AGENT
WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS SUBORDINATION AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE CREDITOR, THE BORROWER AND THE
ADMINISTRATIVE AGENT AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF
THE CREDITOR, THE BORROWER AND THE ADMINISTRATIVE AGENT FURTHER AGREES THAT ITS
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR
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ENFORCEABILITY OF THIS SUBORDINATION AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS SUBORDINATION AGREEMENT.
XXXXX FARGO BANK, NATIONAL ASSOCIATION, as the
Administrative Agent
By: ____________________________
Name:___________________________
Title:__________________________
DOLLAR FINANCIAL GROUP, INC.,
a New York corporation, as the Borrower
By: ____________________________
Name:___________________________
Title:__________________________
DFG HOLDINGS, INC., a Delaware corporation, as the
Creditor
By: ____________________________
Name: __________________________
Title: _________________________
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