SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT dated as of August 31, 2000 by
and among GMAC BUSINESS CREDIT, LLC, a Delaware limited liability company, for
itself and as agent for the "Lenders" defined below ("Agent"), Wilmington Trust
Company and Xxxxxx Xxxx Xxxxxx, Co-Trustees u/a dated November 25, 1970 with
Xxxxxx X. Xxxxxx FBO Xxxx Xxxxx Xxxxxx (the "Creditor"), Onkyo America, Inc., an
Indiana corporation that will be successor by merger to Onkyo Acquisition
Corporation ("OAI"), and Onkyo Acquisition Corporation, an Indiana corporation
("OAC"; collectively or individually, OAI and OAC are referred to herein as
"Borrower", as the context may require).
W I T N E S S E T H:
WHEREAS, pursuant to a certain Credit Agreement of even date
herewith among Borrower, various financial institutions (such financial
institutions, together with their respective successors and assigns,
collectively the "Lenders"), and Agent (as supplemented, amended or modified
from time to time, the "Credit Agreement") and promissory notes, agreements and
documents related thereto (collectively, with the Credit Agreement, the
"Financing Agreements"), Borrower is indebted to the Agent and the Lenders in an
aggregate principal amount available of Thirty-One Million Five Hundred Thousand
Dollars ($31,500,000) outstanding from time to time, exclusive of accrued
interest, charges, expenses, attorneys' fees and other sums chargeable to
Borrower by Agent (all such indebtedness, interest (including, but not limited
to, any post-petition interest accruing on such indebtedness after the Borrower
becomes subject to an Insolvency Proceeding (as defined below), whether or not
such interest is enforceable against the Borrower or its bankruptcy estate),
charges and, expenses, along with any modification, amendment, refinancing or
supplement thereto, or any other obligations of Borrower to Agent being
hereinafter referred to as the "Senior Debt") (the term "Senior Debt" shall also
include all indebtedness, obligations and liabilities of the Borrower (a)
arising in connection with any advances made to the Borrower as a
debtor-in-possession, or a trustee for the Borrower under any Insolvency
Proceeding, (b) to repay any amount previously paid by the Borrower pursuant to
the Credit Agreement which amounts have been returned to the Borrower or to a
trustee pursuant to sections 547 or 548 of the Bankruptcy Code, and (c) owed by
Borrower to Lenders after giving effect to the merger of OAC with and into OAI);
WHEREAS, as security for the payment of all liabilities and
obligations due under the Senior Debt, Borrower, (a) pursuant to certain
Security Agreements of even date herewith (collectively, the "Security
Agreement"), has granted to the Agent, for itself and the ratable benefit of
Lenders, a first lien and unconditional security interest in and to, among other
things, all of its personal property including, without limitation, all of the
Collateral (as defined in the Security Agreement), and (b) pursuant to a
Mortgage and Security Agreement of even date herewith (the "Mortgage"), has
granted to the Agent, for itself and the ratable benefit of Lenders, a first
lien and security interest in and to, among other things, all of its real
property including, without limitation, all of the Premises (as defined in the
Mortgage) (the Collateral and the Premises shall hereinafter be collectively
referred to as the "Borrower's Collateral") (said lien and security interest of
Agent in the Borrower's Collateral and in the Premises (both before and after
giving effect to the merger of OAC with and into OAI) is referred to
collectively herein as the "Senior Lien");
WHEREAS, pursuant to that certain Senior Subordinated
Promissory Note dated as of August 31, 2000, in the original principal amount of
Seven Million Dollars ($7,000,000) payable by Borrower to Creditor (the "Note")
and that certain Subordinated Loan and Security Agreement dated as of August 31,
2000 by and between Borrower and Creditor (the "Subordinated Loan Agreement"),
Creditor is entitled to receive certain principal and interest payments from
time to time from Borrower (such payments and any other payment to Creditor
pursuant to such Note or the Subordinated Loan Agreement or any amendment,
supplement or restatement thereof or any other obligations of Borrower to
Creditor, including, without limitation, any obligations owed by Borrower to
Creditor after giving effect to the merger of OAC with and into OAI, are
referred to herein as the "Creditor Debt");
WHEREAS, the Creditor Debt is secured by a junior lien on the
Collateral (the "Creditor Lien"); and
WHEREAS, as an inducement to, and part of the consideration
for, the Agent's consent to the extensions of credit by Creditor to Borrower,
which Creditor and Borrower acknowledge that the Agent would be unwilling to
grant without this Agreement, Creditor has agreed, among other things, subject
to the terms and provisions of this Agreement, (a) to subordinate the Creditor
Debt to the Senior Debt, (b) to subordinate the Creditor Lien to the Senior Lien
and (c) to forebear from foreclosing upon any part of the Borrower's Collateral
or any other security, if any, with respect to the Creditor Debt or otherwise
exercising any creditor's remedy or taking any action against Borrower upon any
of its obligations to Creditor until the Senior Debt has been paid in full in
cash or otherwise satisfied (as evidenced by the cancellation of the Credit
Agreement by the Agent).
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and for other good and valuable
consideration, it is hereby agreed as follows:
1. Priority of Liens. Notwithstanding anything to the contrary including without
limitation the date, time, manner or order of perfection or attachment of the
security interests and liens on the Borrower's Collateral granted by Borrower to
either of the Agent or Creditor, and notwithstanding the usual application of
the priority provisions of the Uniform Commercial Code as in effect in any
jurisdiction or any other applicable law or judicial decision of any
jurisdiction, or whether Creditor holds possession of all or any part of the
Borrower's Collateral, or if the Agent or Creditor is perfected without filing
or possession in any part of the Borrower's Collateral, the Senior Lien shall be
a first, senior and prior security interest in and lien on the Borrower's
Collateral, prior in interest and superior to the Creditor Lien. The priority of
liens set forth in the previous sentence states the relative priority of liens
of the parties to this Agreement, and no party hereto represents or warrants to
any other party that such other party's liens are prior to any lien on the
Borrower's Collateral of any person who is not a party to this Agreement (except
that Borrower represents and warrants to the Agent that the Senior Lien has been
granted in accordance with the terms and provisions of the Credit Agreement).
2. Subordination of Creditor Debt.
(a) Creditor hereby subordinates any and all claims now or hereafter
owing to it by Borrower under the Creditor Debt to any and all claims of the
Agent under the Senior Debt (including, without limitation, interest or other
payments on the Senior Debt paid or accrued after the commencement of an
Insolvency Proceeding) (as hereinafter defined), and payment of or for adequate
protection pursuant to any Insolvency Proceeding, and, except as set forth
below, agrees that all claims of the Agent shall be paid in full in cash or
otherwise satisfied before any payment may be made on the Creditor Debt, whether
of principal or interest or other indebtedness.
(b) Except as set forth below, Creditor agrees not to accept any payment
of the Creditor Debt without the express, prior written consent of Agent, and
Creditor agrees to pay over to the Agent any funds that may be received by it
from Borrower (i) as a prepayment at any time, (ii) as a payment on account of
(A) the Creditor Debt or (B) Borrower's Collateral or any proceeds thereof at
any time until the Senior Debt has been paid in full in cash or otherwise
satisfied (as evidenced by the cancellation of the Credit Agreement by the
Agent). In case any funds shall be paid or delivered to Creditor under the
circumstances described in clause (i) or (ii) of the preceding sentence before
the Senior Debt shall have been paid in full or otherwise satisfied, such funds
shall be held in trust by Creditor for and immediately paid and delivered to the
Agent (in the form received endorsed over to the Agent), for the benefit of the
Agent and the ratable benefit of the Lenders. Creditor further agrees not to
sell, assign, transfer or endorse any claim or claims against Borrower to anyone
except subject to the terms and conditions of this Agreement. Notwithstanding
anything contained herein to the contrary, Borrower may pay and Creditor may
receive regularly scheduled interest payments only on or with respect to the
Creditor Debt without violating this Agreement; provided, however, that no such
payments may be made (A) if, after giving effect to such payment, an Event of
Default (as defined in the Credit Agreement) will occur or (B) at any time after
the occurrence and during the continuance of an Event of Default.
(c) Creditor agrees that the priority of the Senior Debt set forth above
shall continue during any insolvency, receivership, bankruptcy, dissolution,
liquidation, or reorganization proceeding, or in any other proceeding, whether
voluntary or involuntary, by or against Borrower, under any bankruptcy or
insolvency law or laws, federal or state relating to the relief of debtors of
any jurisdiction, whether now or hereafter in effect, and in any out-of-court
composition, assignment for the benefit of creditors, readjustment of
indebtedness, reorganization, extension or other debt arrangement of any kind
(collectively, "Insolvency Proceeding"). In the event of any payment,
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the
property, assets or business of Borrower, or the proceeds thereof, or any
securities of Borrower, to Creditor, by reason of any liquidation, dissolution
or other winding up of Borrower or its business or by reason of any sale or
Insolvency Proceeding, then any such payment or distribution of any kind or
character, whether in cash, property or securities, which, but for the
subordination provisions of this Section 2, would otherwise be payable or
deliverable upon or in respect of the Creditor Debt, shall instead be paid over
or delivered directly to the Agent, for application to the payment of the Senior
Debt, to the extent necessary to make payment on the Senior Debt remaining
unpaid after giving effect to any concurrent payment or distribution to the
Agent, and no holder of the Creditor Debt, shall receive any such payment or
distribution or any benefit therefrom to such extent until the Agent has been
fully paid in cash, after which such payments or distributions may be applied to
payment of the Creditor Debt.
(d) The Agent shall have the sole right to control all aspects of liquidation of
the Borrower's Collateral and disposition of the proceeds thereof, including all
proceedings pertaining thereto under any Insolvency Proceeding and the approval
of any plan of reorganization of Borrower thereunder.
3. Forbearance from Exercise of Remedies. As long as the Senior Debt has not
been paid in cash or otherwise satisfied, Creditor shall not (a) take any action
or exercise any remedy against Borrower to enforce the Creditor Debt; or (b)
take any action or exercise any remedy against the Borrower's Collateral as a
result of any breach or default under the Creditor Debt; or (c) commence, or
join with any other creditor of Borrower in commencing, any bankruptcy,
reorganization or Insolvency Proceeding against Borrower; or (d) take any action
or exercise any remedy against any guarantor of or pledgor securing the Senior
Debt in order to collect any of the Creditor Debt; or (e) take any action or
exercise any remedy against any property or assets of any guarantor of or
pledgor securing the Senior Debt; or (f) take any action or exercise any remedy
with respect to any securities, equity or otherwise, of Borrower pledged to
Creditor. Creditor understands and agrees that the Agent shall have the right,
but shall have no obligation, to cure any default under the Creditor Debt.
Notwithstanding anything contained in this Agreement to the contrary, in no
event shall Creditor be entitled to receive and retain any securities, equity or
otherwise, or other consideration provided for in (i) a plan of reorganization
or otherwise in connection with any bankruptcy or Insolvency Proceeding or (ii)
any other judicial or nonjudicial proceeding for the liquidation, dissolution or
winding up of Borrower or the assets or properties of Borrower, in any case
until the Senior Debt is paid in full in cash or otherwise satisfied.
4. Agent Authority to Act. For so long as any of the Senior Debt shall remain
unpaid, the Agent shall have the right to act as attorney-in-fact for the
Creditor and other holders of the Creditor Debt for the purposes specified
herein and the Creditor hereby irrevocably appoints the Agent its true and
lawful attorney, with full power of substitution, in the name of the Creditor or
in the name of holders of the Creditor Debt, for the use and benefit of holders
of the Senior Debt without notice to the holders of Creditor Debt or any of
their representatives, successors or assigns, to perform the following acts, at
the option of the holders of the Senior Debt, at any meeting of creditors of
Borrower or in connection with any Insolvency Proceeding:
5. (a) if a proper claim or proof of debt in respect of the Creditor Debt has
not been filed in the form required in any such Insolvency Proceeding at least
ten (10) business days prior to the expiration of the time for filing such
claims, to file an appropriate claim for and on behalf of the holders of
Creditor Debt;
(b) to collect any assets of the Borrower distributed, divided or applied by way
of dividend or payment, or any securities issued, on account of the Creditor
Debt and to apply the same, or the proceeds of any realization upon the same
that the Agent in its discretion elects to effect, to the Senior Debt until all
of the Senior Debt (including, without limitation, all interest and other
payments accruing or paid on the Senior Debt after the commencement of any
bankruptcy, reorganization, insolvency, receivership or Insolvency Proceeding at
the rate specified in the Senior Debt) has been paid in full, rendering any
surplus to the holders of Creditor Debt if and to the extent permitted by law;
and
(c) to take generally any action in connection with any such Insolvency
Proceeding either in its own name or in the name of Creditor (including without
limitation voting on any Plan of Reorganization) that the holders of Creditor
Debt would be authorized to take, but for this Agreement, in the event that the
Agent believes such action is reasonably necessary to protect its interests in
the Senior Debt and under this Agreement and after first giving Creditor five
(5) days' written notice of its intent to take such action (to the extent such
notice is practicable).
(d) In no event shall the holders of the Senior Debt be liable to the Creditor
or any other holders of Creditor Debt for any failure to prove the Creditor
Debt, to exercise any right with respect thereto or to collect any sums payable
thereon. A distribution made under this Agreement to holders of Senior Debt that
otherwise would have been made to holders of Creditor Debt is not, as between
the Borrower, its other creditors and holders of Creditor Debt, a payment by
such Borrower on the Senior Debt, it being understood that the provisions of
this Agreement are solely for the purpose of defining the relative rights of the
holders of Creditor Debt, on the one hand, and the holders of Senior Debt, on
the other hand.
6. Duration and Termination. This Agreement shall constitute a continuing
agreement of subordination, and shall remain in effect until indefeasible
payment in full of the Senior Debt. The holders of Senior Debt may, without
notice to the Creditor or the other holders of Creditor Debt, extend or continue
credit and make other financial accommodations to or for the account of the
Borrower in reliance upon this Agreement. The obligations of the Creditor and
the other holders of Creditor Debt under this Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time any payment in
respect of any Senor Debt is rescinded or must otherwise be restored or returned
by a holder of Senior Debt by reason of any bankruptcy, reorganization,
arrangement, composition or Insolvency Proceeding or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, Borrower or any substantial part of its property, or otherwise, all
as though such payment had not been made.
7. Subordinated Creditor's Waivers. All of the Senior Debt shall be deemed to
have been made or incurred in reliance upon this Agreement. The Creditor
expressly waives all notice of the acceptance by the Agent 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 the Creditor
expressly consents to reliance by the Agent upon the subordination and other
agreements as herein provided. The Creditor agrees that the Agent has made no
warranties or representations with respect to the due execution, legality,
validity, completeness or enforceability of either of the Financing Agreements
or the collectibility of the obligations thereunder, that the Agent shall be
entitled to manage and supervise the Agent's loans in accordance with applicable
law and its usual practices, modified from time to time as it deems appropriate
under the circumstances, without regard to the existence of any rights that the
Creditor may now or hereafter have in or to any of the Borrower's Collateral,
and that the Agent shall have no liability to the Creditor for, and the Creditor
waives any claim (except with respect to wilful misconduct) which the Creditor
may now or hereafter have against, the Agent arising out of (i) any and all
actions which the Agent takes or omits to take (including, without limitation,
actions with respect to the creation, perfection or continuation of liens or
security interests in the Senior Debt or Senior Lien, actions with respect to
the occurrence of an Event of Default, actions with respect to the foreclosure
upon, sale, release, or depreciation of, or failure to realize upon, the
Borrower's Collateral and actions with respect to the collection of any claim
for all or any part of the obligations from any account debtor, guarantor or any
other party) with respect to the documents regarding the Senior Debt or any
other agreement related thereto or to the collection of the obligations or the
valuation, use, protection or release of the Borrower's Collateral and/or other
security for the obligations, (ii) the Agent's election, in any proceeding
instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C.
ss.101 et seq.) (the "Bankruptcy Code"), of the application of Section
1111(b)(2) of the Bankruptcy Code, and /or (iii) any borrowing of, or grant of a
security interest under Section 364 of the Bankruptcy Code to, Borrower as
debtor-in-possession.
8. Proceeds. The order of priority of liens set forth in Section 1 hereof
shall apply to all proceeds of the Borrower's Collateral, including, without
limitation, any insurance proceeds payable in the event of loss of, or damage
to, the Borrower's Collateral.
9. Waiver of Marshaling. In the event that the Senior Debt is, or hereafter
becomes, secured by property, instruments, documents or agreements other than
the Borrower's Collateral (including, without limitation, any pledge securing or
guaranty of the Senior Debt by any person), Creditor agrees that the Agent shall
have no obligation to marshal such other property, instruments, documents,
agreements or guaranties before enforcing its rights against the Borrower's
Collateral or its rights herein as against Creditor.
10. Perfection and Release of Liens. Creditor hereby represents and warrants
that Creditor has no liens on or security interests in the Borrower's Collateral
other than the Creditor Lien, and covenants that it will not encumber any other
assets of Borrower. Creditor hereby agrees to execute and deliver such
documents, instruments, lien releases, assignments and financing statements and
do such acts as may be necessary in order for the Agent to establish and
maintain a first, valid, prior and perfected security interest in the Borrower's
Collateral. Upon payment and satisfaction in full of the Creditor Debt, Creditor
shall cooperate fully in releasing the Creditor Lien, if any and if in existence
at such time, as soon as practicable upon the request of the Agent.
11. No Contest of Security Interest. The Creditor shall not contest the
validity, perfection or enforceability of any lien or security interest granted
to the Agent by Borrower, and Creditor agrees to cooperate in the defense of any
action contesting the validity, perfection or enforceability of such liens or
security interests. Nothing in this Agreement shall be construed as in any way
limiting a party's right to enforce the order of priorities of liens and debts
set forth herein as against any person.
12. Subordination Not Affected, Etc. Nothing in this Agreement shall be
construed as affecting or in any way limiting the extension of new or additional
financial accommodations by the Agent or Lenders to Borrower and the terms and
conditions hereof shall apply to such new and additional financial
accommodations. Notwithstanding the preceding sentence or anything contained in
this Agreement to the contrary, none of the provisions of this Agreement shall
be deemed or construed to constitute a commitment or an obligation on the part
of the Agent or the Lenders to make any future loans, advances or other
extensions of credit or financial accommodation to Borrower. Creditor
understands and agrees that all additional principal, accrued interest, charges,
expenses, attorneys' fees and other liabilities and obligations under the Credit
Agreement shall constitute part of the Senior Debt, and nothing in this
Agreement shall be construed as affecting or in any way limiting any indulgence
granted by the Agent or the Lenders with respect to any existing financial
accommodation to Borrower. The subordinations effected, and the rights created,
hereby shall not be affected by (a) any amendment of or any addition of or
supplement to any instrument, document or agreement relating to the Senior Debt,
(b) any exercise or non-exercise of any right, power or remedy under or in
respect of the Senior Debt or any instrument, document or agreement relating
thereto, (c) the release, sale, exchange or surrender, in whole or in part, of
any part of the Borrower's Collateral or any additional Borrower's Collateral to
which the Agent may become entitled, (d) any release of any guarantor of or
pledgor securing the Senior Debt or any security for such pledge or guaranty, or
(e) any waiver, consent, release, indulgence, extension, renewal, modification,
delay or other action, inaction or omission in respect of the Senior Debt or any
instrument, document or agreement relating thereto or any security therefor or
pledge or guaranty thereof, whether or not Creditor shall have had notice or
knowledge of any of the foregoing and regardless of whether Creditor shall have
consented or objected thereto. Any provision of any document, instrument or
agreement evidencing, securing or otherwise relating to the Creditor Debt
purporting to limit or restrict in any way Borrower's ability to enter into any
agreement with the Agent to amend or modify any document, instrument or
agreement evidencing, securing or otherwise relating to the Senior Debt shall be
deemed of no force or effect until the Senior Debt has been repaid in full in
cash or otherwise satisfied or the Credit Agreement has otherwise been
terminated by the Agent.
13. Legend. Creditor will cause all agreements, notes, bonds, debentures or
other instruments from time to time evidencing the Creditor Debt or any part
thereof to contain a specific statement thereon to the effect that the
indebtedness evidenced thereby is subject to the provisions of this Agreement,
and Borrower agrees to the foregoing.
14. Voided Payments. To the extent that Borrower makes any payment on the Senior
Debt which, within twelve (12) months of the date of such payment, is
subsequently invalidated, declared to be fraudulent, avoidable or preferential,
set aside or is required to be repaid to a trustee, receiver, the estate of
Borrower or any other party under any bankruptcy act, state or Federal law,
common law or equitable cause (such payment being hereinafter referred to as a
"Voided Payment"), then to the extent of such Voided Payment that portion of the
Senior Debt which had been previously satisfied by such Voided Payment shall be
revived and shall continue in full force and effect as if such Voided Payment
had never been made. In the event that a Voided Payment is sought to be
recovered from the Agent, an "Event of Default" under the Credit Agreement shall
be deemed to have occurred and to be continuing from the date of such recovery
from Agent of such Voided Payment until the full amount of such Voided Payment
is fully and finally restored to the Agent, and until such time, the provisions
of this Agreement shall be in full force and effect.
15. Violation of Agreement by Borrower. Borrower agrees to make no payment
whatsoever on the Creditor Debt nor consent to or participate in any act which
is in violation of the provisions of this Agreement.
16. Immediate Effect. This Agreement shall be effective immediately upon its
execution by each of the parties hereto, and there are no conditions precedent
or subsequent to the effectiveness of this Agreement.
17. Successors and Assigns; Continuing Effect, Etc. This Agreement is being
entered into for the benefit of, and shall be binding upon, each of Agent, the
Lenders, Creditor, Borrower and their respective heirs, executors, personal
representatives, successors and assigns, as applicable. Any Lender may
participate out to other parties any portion of its interests under the Senior
Debt and no such participant shall be required to become a signatory hereto. Any
assignee or transferee shall execute and deliver to the other parties hereto an
agreement pursuant to which they become parties hereto as fully as if they were
signatories hereto and providing for the effectiveness of this Agreement as to
such transferee or assignee and other parties, and the lien and debt priority of
such party shall be that of his assignor or transferor. This Agreement shall be
a continuing agreement, shall be irrevocable and shall remain in full force and
effect so long as any of the Senior Debt or the Creditor Debt is outstanding and
so long as the Credit Agreement has not been terminated.
18. Notification of Defaults. Each of the Agent and Creditor shall give written
notice to the other of an Event of Default by Borrower under the Senior Debt or
a breach or default by Borrower under the Creditor Debt, respectively; provided,
however, that the failure to give such notice for any reason whatsoever shall
not be deemed to be a breach of this Agreement and shall not affect the
effectiveness of any declaration of such breach, default or event of default, as
the case may be. Creditor understands that, subject to any grace or cure period
under its agreements with Borrower, any breach or default by Borrower under the
Creditor Debt is, automatically, an Event of Default of Borrower under the
Senior Debt. Nothing in this Agreement shall be interpreted to limit or restrict
the right of Agent and Creditor to waive any default under their respective
documents, and each of Agent, and Creditor agrees that any waiver will be in
writing and to provide the other parties hereto with a copy of any such waiver.
19. Notices. Any notices, consents, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed duly given to any party or parties (a) upon delivery to the address of
the party or parties set forth below if delivered in person or by courier or if
sent by certified or registered mail (return receipt requested), or (b) upon
dispatch if transmitted by telecopy or other means of facsimile transmission, in
any case to the party or parties at the telecopy numbers set forth below:
If to Agent:
GMAC Business Credit, LLC
000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telephone No: (000) 000-0000
Telecopy No: (000) 000-0000
If to Borrower:
Onkyo Acquisition Corporation
c/o Global Technovations, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Xx.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Creditor:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attn:
Telephone No: ________________
Telecopy No: ________________
Xxxxxx Xxxx Xxxxxx
c/o TMF Investments, Inc.
00X Xxxxxxx Xxxx
Xxxxxxx Xxxx, XX 00000
Telephone No: ________________
Telecopy No: ________________
Any party hereto may designate any other address or telecopy number, as
applicable, to which any notices or other communications shall be given by
notice duly given hereunder; provided, however, that any such notice of other
address or telecopy number shall be deemed to have been given hereunder only
when actually received by the party to which it is addressed.
20. Amendments; Modifications. This Agreement may not be modified, altered or
amended except by an agreement in writing executed by all of the parties hereto.
21. Amendment of Creditor Debt Documents. Each of Creditor and Borrower agrees
to forbear from modifying, altering or amending any payment amount or payment
term of the Note, the Subordinated Loan Agreement, or any other document,
instrument or agreement evidencing the Creditor Debt without the prior written
consent of Agent.
22. Cost and Expenses of Enforcement. Creditor agrees to pay all costs, legal
expenses and attorneys' and paralegals' fees of every kind, paid or incurred by
Agent in enforcing its rights hereunder, including, but not limited to,
litigation instituted in a State or Federal Court, as hereinafter provided
(including proceedings under the United States Bankruptcy Code) in enforcing
this Agreement, or in defending against any defense, cause of action,
counterclaim, setoff or crossclaim based on any act of commission or omission by
Agent with respect to the Senior Debt or Borrower's Collateral for the Senior
Debt promptly on demand of Agent or other person paying or incurring the same;
provided, however, that in the event of litigation between Agent and Creditor,
Agent shall only be entitled to recover such costs, fees and expenses if it is
the prevailing party in such litigation.
23. TO INDUCE AGENT AND LENDERS TO AFFORD FINANCIAL ACCOMMODATIONS TO BORROWER,
CREDITOR IRREVOCABLY AGREES THAT ALL ACTIONS ARISING DIRECTLY OR INDIRECTLY AS A
RESULT OR IN CONSEQUENCE OF THIS AGREEMENT SHALL BE INSTITUTED AND LITIGATED
ONLY IN COURTS HAVING SITUS IN THE CITY OF CHICAGO, ILLINOIS, AND CREDITOR
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT LOCATED AND HAVING ITS SITUS IN SAID CITY AND STATE. CREDITOR HEREBY
WAIVES ANY OBJECTION BASED ON FORUM NONCONVENIENS, AND CREDITOR HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS. THE PARTIES CONSENT THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO AGENT OR CREDITOR AT THE RESPECTIVE ADDRESSES SET FORTH HEREIN IN
THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT, OR OTHERWISE.
24. CREDITOR WAIVES EVERY DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF,
WHICH CREDITOR MAY NOW HAVE, OR HEREAFTER MAY HAVE, TO ANY ACTION BY AGENT IN
ENFORCING THIS AGREEMENT AND RATIFIES AND CONFIRMS WHATEVER AGENT MAY DO
PURSUANT TO THE TERMS HEREOF AND AGREES THAT AGENT SHALL NOT BE LIABLE FOR ANY
ERRORS OF JUDGMENT OR MISTAKE OF FACT OR LAW. AGENT AND CREDITOR, AND EACH ONE
OF THEM, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, THE RIGHT
EITHER OR ANY MAY HAVE TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND
ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE
OF CONDUCT OR COURSE OF DEALING, IN WHICH AGENT AND CREDITOR ARE ADVERSE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR AGENT MAKING LOANS TO
BORROWER.
25. Governing Law; Benefit of Agreement. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Illinois. All of
the understandings, agreements, covenants and representations contained herein
are solely for the benefit of the Agent and Creditor, and there are no other
persons who are intended to be benefitted in any way whatsoever by this
Agreement.
26. Severability. In the event any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
27. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
28. Borrower's Acknowledgment. Borrower hereby consents to this Agreement,
agrees to abide by the terms hereof, agrees to make no payments or distributions
contrary to the terms and provisions hereof and to do every act and thing
necessary to carry out such terms and provisions.
29. Agent References. It is understood and agreed that all references herein to
Agent shall be deemed references to Agent, for the benefit of the Lenders.
30. Merger. It is understood and agreed that (a) OAC will merge with and into
OAI (with OAI emerging as the surviving corporation thereof), (b) all
indebtedness and obligations of OAC including, but not limited to, the Creditor
Debt and the Senior Debt will be assumed by OAI as the surviving corporation,
(c) the Senior Lien shall include all assets of OAI after giving effect to such
merger, and (d) this Agreement shall remain in full force and effect after such
merger with respect to all such indebtedness, obligations and liens.
[SIGNATURE PAGE TO FOLLOW]
(Signature page to Subordination Agreement)
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AGENT:
GMAC BUSINESS CREDIT, LLC
By:
Name: Xxxx X. Xxxxxxx
Title: Vice President
CREDITOR:
WILMINGTON TRUST COMPANY AND
XXXXXX XXXX XXXXXX, CO-TRUSTEES U/A
DATED 11/25/70 WITH XXXXXX X. XXXXXX
FBO XXXX XXXXX XXXXXX
By:
WILMINGTON TRUST COMPANY,
Co-Trustee
By:
Its:
XXXXXX XXXX XXXXXX, Co-Trustee
By:
BORROWER:
ONKYO ACQUISITION CORPORATION
By:
Xxxxx Xxxxx, President
ONKYO AMERICA, INC.
By:
Its:
