Exhibit 10.17
SUBORDINATION AGREEMENT
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THIS SUBORDINATION AGREEMENT, made and entered into this 31st day of July,
1994 by and between GENERAL MOTORS CORPORATION, a Delaware corporation
("Subordinating Creditor") with an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, THE CIT GROUP/BUSINESS CREDIT, INC., as lender and agent for certain
lenders under the Financing Agreement (as hereinafter defined) (the "Agent"),
with a principal place of business at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 and WORLD SUBORDINATED DEBT PARTNERS, L.P., a limited partnership
("World Debt"), with a principal place of business at 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx (the Agent (which shall be deemed to include any successor agent acting
on behalf of the Lenders referred to below), in its capacity as lender and as
agent, the Lenders referred to below and World Debt being sometimes hereafter
collectively referred to as the "Senior Lenders").
W I T N E S S E T H:
WHEREAS, DRA, Inc. (the "Company") has executed and delivered to the
Subordinating Creditor its promissory note, dated the date hereof, in the
principal amount of $45,000,000.00 (the "Purchase Note"), and its Contingent
Purchase Price Note dated the date hereof (the "Contingent Note", collectively
with the Purchase Note, the "Subordinated Note") pursuant to the Asset Purchase
Agreement dated on or about the date hereof between the Company and the
Subordinating Creditor and the documents related thereto;
WHEREAS, the Company desires to borrow certain sums from certain lenders
(the "Original Lenders") pursuant to the Financing Agreement dated on or about
the date hereof by and among the Company, the Agent and the Original Lenders
("Original Financing Agreement"), certain Revolving Loan Promissory Notes in an
aggregate amount of up to $45,000,000 and certain Term Loan Promissory Notes in
the aggregate amount of $20,000,000 (collectively, the "Original Senior Notes")
executed in conjunction therewith to evidence the Revolving Loans and Term Loans
(as those terms are defined in the Original Financing Agreement) extended by the
Original Lenders to the Company thereunder; and may from time to time incur
additional indebtedness which is expressly senior to the Senior Subordinated
Note from certain lenders (collectively, with the Original Lenders, the
"Lenders") in connection with Permitted Acquisitions (subject to the terms and
conditions of and as such term is defined in the Senior Subordinated Credit
Agreement referred to below);
WHEREAS, the Company further desires to borrow certain sums from World Debt
pursuant to the Senior Subordinated Credit Agreement dated on or about the date
hereof between the Company and World Debt (the "Senior Subordinated Credit
Agreement"), which borrowing is evidenced by that certain Senior Subordinated
Note and the Interest Notes (as defined in the
Senior Subordinated Credit Agreement), if any, in the principal amount of
$75,000,000 (collectively, the "Senior Subordinated Note"); and
WHEREAS, the extension of credit by the Senior Lenders to the Company will
benefit the Subordination Creditor, and in extending such credit, the Senior
Lenders have relied on the subordination of the Subordinating Creditor as
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the Subordinating Creditor hereby agrees with the Senior Lenders
as follows:
1. Subordination. Subject to the terms hereof, the Subordinating
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Creditor hereby subordinates and defers the payment (including, without
limitation, in any Insolvency Proceeding, as herein defined) of any and all
amounts which may be now or hereafter owing by the Company to the Subordinating
Creditor pursuant to the Subordinated Note or any promissory notes now or
hereafter executed and delivered by the Company to the Subordinating Creditor in
payment of or as evidence of amounts now or hereafter owing to the Subordinating
Creditor arising pursuant to or in connection with said Subordinated Note and
all direct and indirect guarantees of any or all of the foregoing by any other
person or entity (all such amounts, notes, obligations and guarantees being
hereinafter referred to as the "Subordinated Debt") to the prior final and
indefeasible payment and satisfaction in full of any and all Senior Debt which
may be now or hereinafter owing to the Senior Lenders by the Company. "Senior
Debt", as used herein, shall mean all obligations, including, without
limitation, any and all now existing and future indebtedness, obligations, or
liabilities of the Company to any of the Senior Lenders, whether direct or
indirect, absolute or contingent, secured or unsecured, arising under the
Original Financing Agreement or any of the other loan instruments or any
guaranty now or hereinafter executed by the Company in favor of the Lenders
(collectively, with the Original Financing Agreement, the "Financing Agreement")
and any notes issued thereunder (collectively, with the Original Senior Notes,
the "Senior Notes"), as now written or as amended, supplemented, increased,
extended, renewed, refinanced, or deferred hereafter in accordance with the
terms and conditions hereof, or by operation of the law or otherwise, including
any and all expenses incurred in connection therewith and any interest thereon,
or arising under the Senior Subordinated Credit Agreement or any of the other
loan instruments or any guaranty executed by the Company in favor of World Debt,
as now written or as amended, supplemented, increased, extended, renewed,
refinanced or deferred hereafter in accordance with the terms and conditions
hereof, or by operation of law or otherwise, including any and all expenses
incurred in connection therewith and any interest thereon including, in the case
of both the Financing Agreement and the Senior Subordinated Credit Agreement,
without limitation, any post-petition interest accruing on such Senior Debt
after the Company becomes subject to an Insolvency Proceeding (whether or not
such interest is enforceable against the Company or recoverable against the
Company or its bankruptcy estate) and, further, any reasonable attorneys' fees
and disbursements incurred in connection with any of the foregoing. Senior Debt
shall also include all indebtedness, obligations and liabilities of the Company
to repay any amount previously paid by the Company pursuant to the Financing
Agreement or the Senior Subordinated Credit Agreement which amounts have
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been returned to the Company or to a trustee by any of the Senior Lenders
pursuant to sections 547 or 548 of the Bankruptcy Code of 1978, as amended.
"Insolvency Proceeding" shall mean (i) any insolvency or bankruptcy
case or proceeding, whether voluntary or involuntary, or any receivership,
liquidation, reorganization, readjustment, composition or other similar case or
proceeding relating to the Company or its assets, (ii) any liquidation,
dissolution, reorganization or winding up of the Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy proceedings or
(iii) any assignment for the benefit of creditors or any other marshalling of
the Company's assets.
2. Representations, Warranties and Covenants. The Subordinating Creditor
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hereby warrants, represents and covenants that no holder of the Subordinated
Debt will assert any right which it may have to setoff against the Subordinated
Debt any amounts which are or may be owing by such holder to the Company, and
that until such time as this Subordination Agreement is terminated as herein
below provided, and except as provided herein, the Subordinating Creditor will
not (a) directly or indirectly, demand or receive payment of (except as provided
in paragraph 8 hereof); exchange, forgive, or modify; request or obtain
collateral or security or guarantees for; or assert, or participate in, or bring
any sort of action, suit or proceeding (including without limitation any
Insolvency Proceedings) either at law or in equity for the enforcement,
collection or realization on the whole, or any part of, the Subordinated Debt,
and (b) assign or transfer any portion of the Subordinated Debt or any interest
therein to any person without the consent of the Agent and World Debt, which
consent will not be unreasonably withheld, it being understood that each such
assignee and transferee shall be bound in all respects by the terms and
conditions of this Subordination Agreement and will execute any required
documents to so confirm. The Subordinating Creditor further warrants and
represents that (i) as of the date hereof the Subordinating Creditor is the
exclusive owner of the Subordinated Debt, (ii) there are, and will be, no
guarantees or collateral or security for the Subordinated Debt and (iii) this
Subordination Agreement has been duly authorized, executed and delivered by the
Subordinating Creditor and constitutes a valid and binding obligation of the
Subordinating Creditor in accordance with its terms.
3. Inducement. This Subordination Agreement is executed as an inducement
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to the Senior Lenders to make loans or advances to the Company or otherwise to
extend credit or financial accommodations to the Company and to enter into and
continue financing arrangements with the Company and is executed in
consideration of the Senior Lenders' doing or having done any of the foregoing.
The Subordinating Creditor agrees that any of the foregoing shall be done or
extended by the Senior Lenders in their sole discretion and shall be deemed to
have been done or extended by the Senior Lenders in consideration of and in
reliance upon the execution of this Subordination Agreement, but that nothing
herein shall obligate the Senior Lenders to do any of the foregoing.
4. Termination. This Subordination Agreement may be terminated only (i)
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upon final and indefeasible payment and satisfaction in full of all Senior Debt
and termination of the Financing Agreement and the Senior Subordinated Credit
Agreement and the Senior
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Lenders' obligation to make loans, advances or extensions of credit thereunder,
or (ii) as of the seventh Anniversary Date (as defined in the Original Financing
Agreement), or any subsequent Anniversary Date, and then only upon actual
receipt by an officer of the Agent and a representative of World Debt of at
least one hundred and twenty (120) day's prior written notice of termination
sent by registered or certified mail; provided, however, that in the event of
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termination of this Subordination Agreement, the Subordinating Creditor shall
remain bound hereunder and this Subordination Agreement shall continue in full
force and effect with respect to any and all Senior Debt created or arising
prior to the effective date of such termination and with respect to any and all
extensions, renewals or modifications of said pre-existing Senior Debt. This is
a continuing agreement and written notice as above provided shall be the only
means of termination, notwithstanding the fact that for certain periods of time
there may be no Senior Debt owing to the Lenders by the Company.
5. Rights in Insolvency Proceedings. The Subordinating Creditor
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irrevocably authorizes and empowers the Agent in any Insolvency Proceeding
involving or relating to the Subordinated Debt to file a proof of claim on
behalf of the Subordinating Creditor with respect to the Subordinated Debt if
the Subordinating Creditor fails to file proof of its claim prior to 30 days
before the expiration of the time period during which such claims must be
submitted, to accept and receive any payment or distribution which may be
payable or deliverable at any time upon or in respect of the Subordinated Debt
in an amount not in excess of the Lenders' portion of the Senior Debt then
outstanding and to take such other action as may be reasonably necessary to
effectuate the foregoing. The Subordinating Creditor shall provide to the Agent
all information and documents reasonably necessary to present claims or seek
enforcement as aforesaid. The Subordinating Creditor agrees that even though it
shall retain the right to vote its claims and otherwise act in any such
Insolvency Proceeding relative to the Company (including, without limitation,
the right to vote to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition, or extension), the
Subordinating Creditor shall not take any action or vote in any way so as to
contest (i) the validity or the enforceability of the Financing Agreement, the
Senior Notes, the loan instruments or the liens and security interests to the
extent granted to the Lenders by the Company with respect to the Lenders'
portion of the Senior Debt, (ii) the validity or enforceability of the Senior
Subordinated Credit Agreement or the Senior Subordinated Note or the other loan
documents executed in connection with the Senior Subordinated Credit Agreement,
(iii) the rights of the Lenders established in the Financing Agreement, the Loan
Instruments (as that term is defined in the Original Financing Agreement), any
other agreements or instruments relating to the Financing Agreement or any
security documents with respect to such liens and security interests, or (iv)
the validity or enforceability of this Subordination Agreement or any agreement
or instrument to the extent evidencing or relating to the Senior Debt. The
Senior Lenders agree that while the Agent shall retain the right to vote the
Senior Debt and otherwise act in any such reorganization proceeding relative to
the Company (including, without limitation, the right to vote or accept or
reject any plan of partial or complete liquidation, reorganization, arrangement,
composition or extension), neither the Agent and the Lenders not World Debt
shall take any action or vote in any way so as to contest the enforceability of
this Subordination Agreement, the Subordinated Note or any other agreement or
instrument to the extent evidencing or relating to the Subordinated Debt. Upon
the final and
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indefeasible payment by the Company of all of its obligations under the
Financing Agreement and the Senior Notes, all of the rights of the Agent set
forth in this paragraph shall automatically inure to the benefit of World Debt.
The Agent, however, makes absolutely no representations or warranties whatsoever
in connection with such rights.
6. No Liability; Overpayment. Neither the Agent nor the Senior
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Lenders shall in any event be liable for any failure to prove the Subordinated
Debt; for failure to exercise any rights with respect thereto; or for failure to
collect any sums payable thereon; or for failure to take any affirmative action
in connection therewith. If any payments received by the Agent on the
Subordinated Debt, when added to the payments received directly by the Agent on
the debt arising out of or in connection with the Financing Agreement, shall
exceed the total debt arising out of or in connection with the Financing
Agreement, the Agent agrees, unless otherwise authorized by an unstayed, final
nonappealable order or decree of a court of competent jurisdiction in an
Insolvency Proceeding to promptly pay the excess to World Debt. If any payments
received by World Debt on the Subordinated Debt, when added to the payments
received directly by World Debt on the debt arising out of or in connection with
the Senior Subordinated Credit Agreement, shall exceed the total Senior Debt,
World Debt agrees, unless otherwise authorized by an unstayed, final
nonappealable order or decree of a court of competent jurisdiction in an
Insolvency Proceeding, to promptly pay the excess to the Subordinating Creditor.
7. Arrangements with the Company. It is agreed that the Senior
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Lenders may enter into any agreement or arrangements with respect to the
Financing Agreement, the Senior Notes, the Senior Subordinated Credit Agreement,
or the Senior Subordinated Note, and any amendments thereto, with the Company or
any guarantor of the Company as the Senior Lenders may deem proper; extend the
time for payment of or renew or refinance any or all Senior Debt; surrender any
security, collateral or guarantees underlying all or any of such Senior Debt,
and make any deferrals, settlements or compromises thereof; all without notice
to or consent from the Subordinating Creditor and without in any way impairing
or affecting this Subordination Agreement thereby; provided, that without the
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consent of the Subordinating Creditor (if the Subordinating Creditor is then a
holder of any of the Subordinated Debt), the Agent, with respect to the
Financing Agreement and the Senior Notes, and World Debt, with respect to the
Senior Subordinated Credit Agreement and the Senior Subordinated Note, will not
permit an amendment of their respective documents which would:
(a) shorten the earliest date on which the Line of Credit
under (and as defined in) the Original Financing Agreement may be terminated
pursuant to Section 12.01 of the Original Financing Agreement;
(b) shorten the stated maturity date of (i) the Term Loans (as
so defined) set forth in Section 4 of the Original Financing Agreement, (ii) the
Senior Subordinated Note as set forth in Section 2.1 of the Senior Subordinated
Credit Agreement or (iii) any term notes incurred in connection with any
Permitted Acquisition set forth in the applicable Financing Agreement as
in effect on the date of incurrence of such terms notes;
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(c) increase the rates of interest on (i) the Original
Senior Notes or any other notes issued pursuant to the Original Financing
Agreement from those set forth in or contemplated by the Original Financing
Agreement or (ii) any Senior Note or Financing Agreement incurred in connection
with a Permitted Acquisition pursuant to the applicable Financing Agreement in
excess of 2% per annum above those set forth in or contemplated by such
Financing Agreement as in effect on the date such indebtedness is incurred;
(d) increase the interest rates on the Senior
Subordinated Notes or any other notes, issued pursuant to the Senior
Subordinated Credit Agreement from those set forth in or contemplated by the
Senior Subordinated Credit Agreement:
(e) increase the principal amount of the obligations
evidenced by (i) the Original Senior Notes by more than $15,000,000 over the sum
of (1) the lesser of (x) $50,000,000 and (y) the then outstanding aggregate
commitments for the Revolving Loan (as defined in the Original Financing
Agreement), plus (2) the then outstanding aggregate principal amount of the Term
Loans, and (ii) any other Senior Notes in connection with a Permitted
Acquisition by more than the then outstanding aggregate principal amount of such
Senior Notes; or
(f) increase the principal amount of the obligations
evidenced by the Senior Subordinated Notes, over the then outstanding aggregate
principal amount of the Senior Subordinated Notes;
provided, that the limitations in clauses (a) and (b) shall not be applicable
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after an Event of Default (as defined in the Financing Agreement or the Senior
Subordinated Credit Agreement, as the case may be) has occurred.
8. Payments to the Subordinating Creditor.
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(a) Subject to the provisions of subparagraph (b)
hereof, should any payment with respect to the Subordinated Debt be received by
the Subordinating Creditor in any form and from any source whatsoever
(including, without limitation, any payment or distribution in respect of a
guaranty or of any other collateral security (if any) or the proceeds of any
such guaranty or other collateral security) prior to the final and indefeasible
satisfaction in full of all of the Senior Debt (other than (i) Reorganization
Securities or (ii) any such payment authorized by an unstayed, final,
nonappealable order or decree stating that effect is being given to the
subordination of the Subordinated Debt to the Senior Debt and made by a court of
competent jurisdiction in any Insolvency Proceeding), the Subordinating Creditor
shall immediately deliver to the Agent (or, if all obligations, under the
Financing Agreement (including all Obligations as defined in the Original
Financing Agreement), have been finally and indefeasibly paid in full, in cash,
World Debt) any monies, securities or other property received by it, or the
equivalent in cash, with proper endorsements or assignments, if necessary; and
pending such delivery the Subordinating Creditor shall hold such monies,
securities or other property as trustee solely for the account of the Senior
Lenders.
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(b) Notwithstanding anything to the contrary stated herein, the
Company may make payments of (i) interest when due in accordance with the terms
and provisions of the Purchase Note as in effect on the date hereof, (ii)
principal on or after July 31, 2004, to the Subordinated Creditor under and in
accordance with the terms and provisions of the Purchase Note as in effect on
the date hereof, and (iii) the Contingent Payment provided for in the Contingent
Note under and in accordance with the terms and provisions of the Contingent
Note as in effect on the date hereof, subject to the terms hereof, all without
prepayment or acceleration of the Subordinated Debt, and the Subordinating
Creditor may demand, receive and retain said payments unless the Agent or World
Debt shall have notified the Subordinating Creditor in writing that an Event of
Default has occurred under the Financing Agreement orthe Senior Subordinated
Credit Agreement, as the case may be (a "Suspension Notice"). Upon receipt of a
Suspension Notice, and at all times thereafter during the applicable Suspension
Period (as defined herein), subject to the terms hereof (i) the Subordinating
Creditor may not take, demand, receive or accelerate any payment of the
Subordinated Debt and the Company shall not give, make or permit any such
payment, including, without limitation, payment of any accrued interest on the
Subordinated Debt, and (ii) the Subordinating Creditor shall not asset,
participate in or bring any sort of action, suit or proceeding (including,
without limitation, any Insolvency Proceeding) either at law or in equity for
the enforcement, collection or realization of the Subordinated Debt (herein
"Commence Legal Action"). In the event the Senior Lenders determine that the
Event of Default has been cured to their reasonable satisfaction or waived by
the Senior Lenders, the Agent (or, if all obligations, under the Financing
Agreement (including all Obligations as defined in the Original Financing
Agreement), have been finally and indefeasibly paid in full, in cash, World
Debt) shall so notify the Subordinating Creditor and the Company in writing, the
Suspension Period shall terminate upon the Subordinating Creditor's and the
Company's receipt of such notice and the suspended payments shall resume and all
payments which would have been made but for this Subordination Agreement shall
be promptly made. Such resumed payments shall be subject to the terms and
provisions hereof. Upon the expiration of an applicable Suspension Period,
unless the Company has paid to the Subordinating Creditor all installments of
principal and interest that would have been due (without acceleration) during
such Suspension Period, the Subordinating Creditor may accelerate the
Subordinated Debt and Commence Legal Action. However, notwithstanding the
foregoing, should any Insolvency Proceeding occur at any time, the Subordinated
Debt shall be subordinated to the prior payment of all Senior Debt in accordance
with paragraph 1 hereof, and the provisions of subparagraph (a) of this
paragraph.
(c) "Reorganization Securities" shall mean securities of the Company,
as reorganized, arranged, adjusted, recapitalized or readjusted, provided for by
a plan of reorganization arrangement, adjustment, recapitalization or
readjustment of or involving the Company; provided that (i) such securities
shall constitute Subordinated Debt and be expressly subject to the provisions of
this Subordination Agreement, with the result that they are subordinated to the
Senior Debt at least to the extent to which the Subordinated Note is
subordinated hereby, (ii) no payment or mandatory prepayment of principal shall
be made prior to the maturity of the Senior Debt except as provided in the
Subordinated Note, (iii) such securities shall not require cash interest to be
paid at a higher rate or more frequently than the
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Subordinated Note, and (iv) the covenants in the documents governing such
securities shall be no more burdensome to the Company than the covenants
contained in the Subordinated Note.
(d) "Suspension Period" shall mean a period of up to 179
consecutive days commencing with the date on which the Agent or World Debt, as
the case may be, gives a Suspension Notice. With respect to Suspension
Notice(s), it is hereby understood and agreed that:
(i) there shall be no limit of the number of
Suspension Notices which the Agent or World Debt, as the case
may be, may give;
(ii) the Agent or World Debt, as the case may be,
shall not be entitled to give successive Suspension Notices
based on a continuing Event of Default under the Financing
Agreement or the Senior Subordinated Credit Agreement, as the
case may be, which Event of Default was the basis for a prior
Suspension Notice; and
(iii) nothing contained herein shall prohibit the
Agent or World Debt, as the case may be, from giving
successive Suspension Notices based upon an Event of Default
under the Financing Agreement or the Senior Subordinated
Credit Agreement, as the case may be, other than the Event of
Default which was the basis for any prior Suspension Notice
or any other Event of Default of which the Agent or World
Debt, as the case may be, had actual knowledge at the time it
gave such prior Suspension Notice; provided that no
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Subsequent Suspension Notice shall be effective prior to the
expiration of a number of days equal to the Suspension Period
last in effect.
9. Acceleration Rights. Notwithstanding anything contained in
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the Subordinated Note to the contrary, the Subordinating Creditor shall have no
right to accelerate the Subordinated Debt, except that the Subordinating
Creditor may accelerate and Commence Legal Action in the event that:
(a) (i) the Company has failed to make an installment
payment of interest or principal to the Subordinating
Creditor under the Subordinated Note; or (ii) there shall
have occurred an Event of Default in respect of a default
under Section 7 of the Purchase Note or Section 3 of the
Contingent Note; or (iii) the Subordinated Creditor has
become entitled to require the Company to repay the Purchase
Note pursuant to the provisions of Section 9 of the Purchase
Note; or (iv) an amendment is made to the Financing Agreement
or the Senior Subordinated Credit Agreement in violation of
the proviso to Section 7 hereof and, in any such case, the
Subordinating Creditor shall have notified the Senior Lenders
of the occurrence of such event and none of the Senior
Lenders shall have sent
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a Suspension Notice to the Subordinating Creditor within
twenty (20) days after the Senior Lenders' receipt of the
Subordinating Creditor's notification and thirty (30) days
shall have elapsed from the Senior Lenders' receipt of such
notice and the Company shall have not paid to the
Subordinating Creditor all installments of principal and
interest that would have been due (within acceleration) on
the Subordinated Note during such period, or cured, as the
case may be, such Event of Default (it being understood that
all such Events of Default may be cured prospectively);
(b) the Company commences or has commenced against it (other
than by the Subordinating Creditor) any Insolvency
Proceeding, provided that any such involuntary Insolvency
Proceeding which is commenced against the Company is not
dismissed or discharged within sixty (60) days after
commencement thereof;
(c) the Senior Lenders accelerate the Senior Debt in
accordance with the terms of the Financing Agreement and ten
(10) days have elapsed from such acceleration and the Senior
Lenders have not rescinded or revoked such acceleration; or
(d) a Suspension Period expires and the Company has not paid
to the Subordinating Creditor all installments of principal
and interest that would have been due (without acceleration)
during such Suspension Period and cured all other Events of
Default under the Subordinated Note (it being understood that
all such Events of Default may be cured prospectively);
provided, that any amount received by the Subordinating Creditor as a result of
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any acceleration permitted above, prior to payment in full of the Senior Debt,
shall be held in trust and paid to the Senior Lenders in accordance with the
provisions of this Subordination Agreement.
10. Action Against. If the Subordinating Creditor in violation of
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this Subordination Agreement shall assert or bring any action, suit or
proceeding against the Company or any guarantor of the Company, the Company or
any guarantor of the Company may interpose as a defense or dilatory plea the
making of this Subordination Agreement, and the Senior Lenders, acting through
the Agent (or, if all obligations under and in the Financing Agreement
(including all Obligations as defined in the Original Financing Agreement) have
been finally and indefeasibly paid in full, in cash, World Debt), are hereby
irrevocably authorized to intervene and to interpose such defense or plea in its
name or in the name of the Company or such guarantor. If the Subordinating
Creditor shall attempt to enforce, collect or realize upon any Subordinated
Debt or, any collateral, security or guarantees (if any) securing the
Subordinated Debt in violation of this Subordination Agreement, the Company or
any guarantor of the Company may, by virtue of this Subordination Agreement,
restrain any such enforcement, collection or realization, or upon failure to do
so, any of the Senior Lenders, acting through the Agent may restrain such
enforcement, collection or realization, either in its own name or in the name of
the Company or
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any guarantor of the Company, as the case may be.
11. Endorsement of Note; Other Documents. The Subordinating
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Creditor agrees to xxxx the Subordinated Note with a notation in substantially
the following form:
"This Note is subject to the terms and provisions of the
Subordination Agreement executed by the Payee in
favor of The CIT Group/Business Credit, Inc., as Agent,
and World Subordinated Debt Partners, L.P.",
and to deliver proof of such notation to the Senior Lenders. In the event the
Agent (or, if all obligations under the Financing Agreement (including all
Obligations as defined in the Original Financing Agreement) have been finally
and indefeasibly paid in full, in cash, World Debt), requires the possession of
the Subordinated Note in order to present claims or seek enforcement against the
Company for payment of the Subordinated Note in accordance with the provisions
of this Subordination Agreement, the Subordinating Creditor agrees, subject to
the terms hereof, to endorse and deliver the Subordinated Note and all other
evidences of the Subordinated Debt to the Agent (or, if all obligations under
the Financing Agreement (including all Obligations as defined in the Original
Financing Agreement) have been finally and indefeasibly paid in full, in cash,
World Debt).
12. Modifications to the Subordinated Note. The Subordinated Note
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shall not be amended without obtaining the prior written consent of the Agent
and World Debt for (i) any increase in the rate of interest charged thereunder
(other than an increase pursuant to Section 3 or Section 6(b) of the Purchase
Note as in effect on the date hereof, (ii) any increase in the principal amount
of the Subordinated Note or any installment due thereunder, (iii) reduction of
the maturity date of any payment of principal or interest, (iv) amendment of the
form or method of payment (v) the granting or obtaining of any collateral
security or obtaining any lien on any collateral pledged to the Lenders, (vi)
providing for any additional financial covenants or events of default or making
more restrictive any existing covenants or events of default applicable to the
Company, or (vii) any other amendment which might have an adverse effect on the
operations of the Company, the Lenders' security interest in any collateral
pledged to the Lenders, the Agent's claims under the Financing Agreement or the
Senior Lender's position under this Subordination Agreement.
13. No Impairment of Company's Obligation. Subject to all of the
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Senior Lenders' rights as expressly provided in this Subordination Agreement,
nothing contained in this Subordination Agreement shall (i) impair, as between
the Company and the Subordinating Creditor, the obligation of the Company, which
is unconditional and absolute, to pay the Subordinated Debt to the Subordinating
Creditor as and when all or any portion thereof shall become due and payable in
accordance with its terms, including, without limitation, the Company's
obligations under Section 3 of the Purchase Note as in effect on the date hereof
and the Company's obligation to make the payments set forth on Schedule A to the
Contingent Note
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as in effect on the date hereof, or (ii) prevent the Subordinating Creditor,
upon any default under the Subordinated Debt, from exercising all rights,
powers and remedies otherwise provided therein or by applicable law.
14. Subrogation. Until such time as all Senior Debt is finally and
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indefeasibly paid in full and this Subordination Agreement is terminated as
herein provided, the Subordinating Creditor shall not assert or be entitled to
any subrogation rights. Subject to the prior sentence, if any payment or
distribution to which the Subordinating Creditor would otherwise have been
entitled (but for the provisions of this Subordination Agreement) shall have
been turned over to any Senior Lender or otherwise applied to the payment of the
Senior Debt pursuant to the provisions of this Subordination Agreement, then the
Subordinating Creditor shall be entitled to receive from such Senior Lender any
payments or distributions received by such Senior Lender in excess of the amount
sufficient to pay all Senior Debt in full, and upon such final and indefeasible
payment in full of the Senior Debt, the Subordinated Creditor shall be
subrogated (without any representation by, or any recourse whatsoever to the
Agent or World Debt) to all rights of such Senior Lender to receive all further
payments or distributions applicable to the Senior Debt until the Subordinated
Debt shall have been paid in full. For purposes of the Subordinating Creditor's
subrogation rights hereunder, payments to such Senior Lender with respect to the
Senior Debt which the Subordinating Creditor would have been entitled to receive
with respect to the Subordinated Debt but for the provisions of this
Subordination Agreement shall not, as between the Company, its creditors (other
than any Senior Lender) and the Subordinating Creditor, be deemed payments with
respect to the Senior Debt. The Senior Lenders make absolutely no
representations or warranties whatsoever in connection with such rights or
Senior Debt, including, without limitation, any representations or warranties as
to the enforceability of the Financing Agreement, the Senior Subordinated Credit
Agreement, the Senior Debt, or any lien upon any collateral therefor, or the
collectibility of said Senior Debt.
15. Entire Agreement. This Subordination Agreement embodies the whole
----------------
agreement of the parties and may not be modified except in writing. The Senior
Lenders' failure to exercise any right hereunder shall not be construed as a
waiver of the right to exercise the same or any other rights at any other time
and from time to time thereafter, and such rights shall be considered as
cumulative rather than alternative. No knowledge of any breach or other
non-observance by the Subordinating Creditor of the terms and provisions of this
Subordination Agreement shall constitute a waiver thereof by the Senior Lenders,
nor a waiver of any obligations to be performed by the Subordinating Creditor
hereunder.
16. Waiver of Notices. The Subordinated Creditor hereby waives any
-----------------
and all demands, presentments or notices (other than notices specifically
provided for in this Subordination Agreement) to which it might otherwise be
entitled, including, without limitation, any and all notice of the creation or
accrual of any claims; of any extension, modification, renewal, refinancing,
increase or deferral of any of said claims, and of the Senior Lenders' reliance
on this Subordination Agreement.
17. Notices. All notices and other communications hereunder shall be
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in
11
writing or by telex, telegram or telecopy, and shall be deemed to have been duly
made when delivered in person or sent by telex, telegram, telecopy, same day or
overnight courier, or when deposited in the United States first class or
registered or certified mail, return receipt requested, postage prepaid. Notices
shall be sent:
If to the Subordinating Creditor:
General Motors Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Treasurer
Fax No.: (000) 000-0000
and to:
General Counsel
General Motors Corporation
0000 Xxxx Xxxxx Xxxx.
Xxxxxxx, Xxxxxxxx 00000
If to World Debt:
Citicorp Mezzanine Investment Fund
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Fax No.: (000) 000-0000
and to
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Esquire
Fax No.: (000) 000-0000
12
If to the Company:
DRA, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
and to
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: G. Xxxxxx X'Xxxxxxx, Esquire
Fax No.: (000) 000-0000
If to the Agent:
The CIT Group/Business Credit, Inc.
1211 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Fax No.: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.
18. General Provisions. When used in this Subordination Agreement all
------------------
pronouns shall, wherever applicable, be deemed to include the plural as well as
the masculine and feminine gender. This Subordination Agreement; shall inure
to the benefit of the Agent, the Lenders and World Debt and their respective
successors and assigns and any parent, subsidiary or affiliate of the Agent, the
Lenders, or World Debt as well as any concern for which the Agent, the Lenders
or World Debt may now or hereafter factor or finance; shall be binding upon and
inure to the benefit of the respective successors and assigns of the
Subordinating Creditor; and shall pertain to the Company and its successors and
assigns. This Subordination Agreement shall become effective upon the execution
of a counterpart hereof by each of the parties hereto, and written or telephonic
notification of such execution and authorization of delivery thereof has been
received by the parties hereto.
19. CHOICE OF LAW. THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ITS PROVISIONS RELATING TO
13
CHOICE OR CONFLICTS OF LAWS. THE SUBORDINATING CREDITOR AND THE SENIOR LENDERS
EACH HEREBY ABSOLUTELY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF THIS
SUBORDINATION AGREEMENT. THE PARTIES AGREE THAT XXX XXXXXX XX XXX XXXXX XX XXX
XXXX LOCATED IN NEW YORK COUNTY AND THE FEDERAL COURTS LOCATED IN THE SOUTHERN
DISTRICT OF NEW YORK, COUNTY OF NEW YORK HAVE EXCLUSIVE JURISDICTION OVER ANY
AND ALL PROCEEDINGS INVOLVING THIS SUBORDINATION AGREEMENT AND THE PARTIES
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE TO SUBMIT TO THE JURISDICTION OF
SUCH COURTS FOR PURPOSES OF ANY SUCH ACTION OR PROCEEDING. THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION AS TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING, INCLUDING ANY CLAIM THAT SUCH COURT IS AN INCONVENIENT
FORUM, WAIVE PERSONAL SERVICE OF PROCESS AND CONSENT TO SERVICE OF PROCESS
PROVIDED THE SAME IS IN ACCORDANCE WITH THE TERMS HEREOF. FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Subordination Agreement effective as of the date above set forth.
WORLD SUBORDINATED DEBT PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.,
its general partner
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: President
THE CIT GROUP/BUSINESS CREDIT, INC., as Agent
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: XXXXXX X. XXXXX
Title: VICE PRESIDENT
GENERAL MOTORS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Attorney-in-Fact
The undersigned, the Company referred to in the foregoing Subordination
Agreement, hereby agrees to comply with all of the terms and provisions of said
Subordination Agreement in all respects. In the event of a breach by either
the Company or the Subordinating Creditor in the performance of any of the
material terms of the Subordination Agreement, all of said Senior Debt shall,
without notice or demand, become immediately due and payable. The Company
hereby covenants that it will not (except as otherwise provided in the
Subordination Agreement) make any payment on account of, recognize any
forgiveness, assignment or transfer of, nor give any security for, the
Subordination Debt while said Subordination Agreement is in effect or until the
Senior Debt has been finally and indefeasibly satisfied in full and said
Subordination Agreement is terminated as herein provided.
DRA, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: EVP
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