SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT, made and effective as of ____________, 1996,
by and among ROYALE INVESTMENTS, INC., a Minnesota corporation ("Current
Lessor") whose address is 0000 Xxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000,
WIGEST CORPORATION, an Indiana corporation ("Current Lessee") whose address is
0000 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000 and Xxxxxx X.
XxXxx, Xxxxx X. XxXxx, Xxxxxxx X. XxXxx XX, Xxxxxx X. XxXxx, Xx., Xxxxxxxx
XxXxx, Xxxx X. Xxxxxxxx and Xxxxx X. Xxxxx ("Shareholders").
PRELIMINARY RECITALS
WHEREAS, Super Valu Stores, Inc., a Delaware corporation, now known as
SUPERVALU INC., as the initial lessor entered into a Building Lease with
Goldmark, Inc., an Indiana corporation, as Lessee, which Lease was dated as of
July 2, 1991 and which Lease was amended by First Amendment to Lease dated June
25, 1992, and Second Amendment of Lease dated ________________, 1996, which
Lease together with the Amendments are hereinafter referred to as the "Lease".
The Lease demises property commonly known as the Cub Store at the Intersection
of Tenth Street and I-465, 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000,
and
WHEREAS, SUPERVALU INC. assigned its lessor's interest in the Lease to
Current Lessor in 1992, and
WHEREAS, Goldmark, Inc. assigned its lessee's interest in the Lease to
Current Lessee in 1996, contemporaneously with the date hereof.
NOW THEREFORE, in consideration of Current Lessor's consenting to the
Assignment of Lessee's Interest in the Lease to Wigest Corporation as a
successor to the Lessee's Interest therein Current Lessor agree as follows:
1. SUBORDINATION OF LOANS TO LEASE PAYMENTS. Shareholders subordinate to
the extent and in the manner provided in this Agreement any and all rights to
receive payments on their Loans, whether principal, interest, fees, charges or
otherwise ("Loan Payments") to the right of Current Lessor to receive required
payments of rent and other obligations (as specified in the Lease) and shall not
make demand upon or accept from Current Lessee nor deduct from, pay out of nor
offset against any revenues or receipts arising from the operation of the
business of Current Lessee. Provided that Lessee is not then in default with
respect to any of the terms or conditions of the Lease, then:
a) scheduled payments of interest may be made by the Current Lessee to
the Shareholders with respect to their Loans and
b) in the event insurance proceeds are received by the Current Lessee
with respect to life insurance or term insurance owned by the Current
Lessee relating to the life of any individual Shareholder, such
insurance proceeds may be used by Current Lessee to reduce or retire
any Loans to such Shareholder independent of and notwithstanding the
terms of paragraph 1(c) hereof, and
c) Current Lessee may reduce or retire all or any portion of the
principal portion of such Loans to any Shareholder provided that,
after such payment, the Current Lessee shall have a balance sheet
equity of not less than $3,250,000 inclusive of the principal portion
of such Shareholder Loans which is not being paid or reduced (all as
determined otherwise according to generally accepted accounting
principals) which shall include but not be limited to paid in capital,
retained earnings, and the principal portion of the subordinated
Shareholder Loans which remain outstanding and subject to continued
subordination pursuant to this Agreement. By way of example, if
Shareholder's current subordinated Loan principal is $1,200,000 and
Current Lessee's equity exclusive of Shareholder Loans is $3,000,000,
then $950,000 of principal of the Shareholder Loans may be paid.
Current Lessee further agrees not to make any other Loan Payments to the
Shareholders without the express written consent of Current Lessor.
2. ENFORCEMENT ACTIONS. For so long as the Lease remains in effect, the
Shareholders shall not initiate any action to seek or enforce collection of any
loan payments or fees, including (i) initiating a filing of a Petition for
Relief under any bankruptcy or insolvency laws, and (ii) enforcing any security
interest during any period in which the Lease is in default and/or rent is
delinquent without the prior written consent of Current Lessor.
3. NO WAIVERS. No renewal, modification or extension of the Lease or
payment of the rent and no releases or surrender of any security therefore, nor
the obligations of any endorsers, sureties or guarantees thereof, nor any delay
or omission in exercising any right or power contained therein shall in any
event impair or affect the subordinations contained herein and/or the rights and
obligations of the parties hereunder. Current Lessor in its uncontrolled
discretion, may waive or release any right or option under the Lease and may
exercise or refrain from exercising any right thereunder. The Shareholders
waive notice of the creation, existence, renewal, modification or extension of
time and payment of the Lease, and any modifications or amendments thereof. The
parties agree that Current Lessor at any time or from time to time, may enter
such agreement or agreements with Current Lessee, as Current Lessor may deem
appropriate, extending the time of payment of renewing or otherwise altering the
terms of any or all of the obligations of Current Lessee to Current Lessor,
without notice to the Shareholders and without in any way impairing or affecting
Current Lessor's rights under this Subordination Agreement.
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4. SUCCESSORS AND ASSIGNS. This Subordination Agreement and each and
every covenant, agreement and other provision hereof shall be binding upon each
of the parties hereto and their successors and assigns and all holders of any
note evidencing the Loans and shall inure to the benefit of each of the parties
hereto and their successors and assigns. Notice of acceptance of this
Subordination Agreement is hereby waived on behalf of all parties and their
successors and assigns.
5. GOVERNING LAW. This Agreement is made in and shall be construed in
accordance with the laws of the State of Indiana. In the event it becomes
necessary for either party to commence any action or cause of action based on
this agreement or the breach thereof the party substantiating a breach by the
other party shall be entitled to recover its attorney's fees and costs and any
court shall so direct.
6. MODIFICATIONS. This Agreement may be changed only by an instrument in
writing executed by the parties hereto. No waiver, amendment or modification by
custom, usage or by implication shall be effective unless in writing signed by
the parties.
7. NOTICES. Any notices and other communications permitted or required
by the provisions of this Agreement (except for telephonic notices expressly
permitted) shall be in writing and shall be deemed to have been properly given
or served by depositing the same with the United States Postal Service, or any
official successor thereto, designated as Registered or Certified Mail, Return
Receipt Requested, bearing adequate postage, or delivery by reputable private
carrier such as Federal Express, Airborne, DHL, or similar overnight delivery
service, and addressed as hereinafter provided. Each such notice shall be
effective upon being deposited as aforesaid. The time period within which a
response to any such notice must be given, however, shall commence to run from
the date of receipt of the notice by the addressee thereof. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice sent. By
giving to the other party hereto at least ten (10) days' notice thereof, either
party hereto shall have the right from time to time and at any time during the
term of this Subordination Agreement to change its address and shall have the
right to specify as its address any other address within the United States of
America. Each notice shall be addressed to the address of the recipient as set
forth in the preamble to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Subordination
Agreement to be executed as of the date first above-written. This agreement may
be executed in counterparts and where so executed shall constitute one agreement
binding on all parties notwithstanding that they are not signatory to the same
original or same counterpart.
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ROYALE INVESTMENTS, INC.,
A MINNESOTA CORPORATION
By:
--------------------------------
Its:
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Royale Investments, Inc.
0000 Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
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WIGEST CORPORATION,
AN INDIANA CORPORATION
By:
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Its:
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Wigest Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
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SHAREHOLDERS:
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Xxxxxx X. XxXxx
Xxxxxx X. XxXxx
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Telephone:
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Xxxxx X. XxXxx
Xxxxx X. XxXxx
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Telephone:
Xxxxxxx X. XxXxx XX
Xxxxxxx X. XxXxx XX
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Telephone:
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Xxxxxx X. XxXxx, Xx.
Xxxxxx X. XxXxx, Xx.
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Telephone:
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Xxxxxxxx XxXxx
Xxxxxxxx XxXxx
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Telephone:
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Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
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Telephone:
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Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
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Telephone:
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EXHIBIT A
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WIGEST WIGEST OWNERSHIP % SUBORDINATED
SHAREHOLDERS AFTER STOCK SHAREHOLDER NOTES
EXCHANGE
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XxXxx, Xxxxx X. 4.59% $ 35,000
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XxXxx, Xxxxxx X. 5.10% $ 883,000
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XxXxx ("Xxxxx") Xxxxxxx 17.86% $ 80,000
T., II
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XxXxx, Xxxxxx X. Xx. 17.43% $ 80,000
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XxXxx ("Xxx") Xxxxxxxx 17.43% $ 80,000
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Xxxxxxxx, Xxxx X. 4.94% $ 21,000
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Xxxxx, Xxxxx X. 4.94% $ 21,000
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$1,200,000
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