SUBORDINATION AGREEMENT AND ASSIGNMENT
In order to induce THE BANK OF NEW YORK (hereinafter called the
"Bank") at its discretion, to extend or to continue to extend financial
accommodations from time to time to AMPLACO GROUP, INC., a New York corporation
(hereinafter called the "Borrower") or to the aggregate principal amount or
$1,000,000 outstanding at any time, plus interest accrued thereon, fees in
respect thereof, and costs and expenses of the Bank in respect thereof, with
such maturity or maturities, to bear such rate or rates of interest, to be
unsecured or to be secured by such collateral security, and to contain such
other terms and provisions as may be agreed by such collateral security, and to
contain such other terms and provisions as may be agreed upon between the Bank
and the Borrower (all such credit and extensions thereof and all other
indebtedness, liabilities and obligations of every kind and nature of the
Borrower to the Bank, whether joint, several, or joint and several, direct or
indirect or acquired by assignment or otherwise, absolute or contingent,
secured or unsecured, now or hereafter existing or incurred, due or to become
due, including any indebtedness, liability or obligation arising after payment
in full or any prior indebtedness of the Borrower, together with all
extensions, renewals or modifications thereof, up to the aggregate principal
amount of $1,000,000.00 outstanding at any time, plus interest accrued thereon,
fees in respect thereof, and costs and expenses of the Bank in respect thereof,
all of which being hereinafter collectively referred to as the "Superior
Indebtedness"), the undersigned, to whom the Borrower is indebted, (hereinafter
called the "Creditor" whether one or more creditors executes this instrument)
hereby warrants and represents to and agrees with the Bank as follows:
As of the date hereof, the Borrower was indebted to the Creditor in
the amount of $850,000.00, represented by the following instruments or
agreements:
Secured Promissory Note dated as of September 30, 1997 made by Amplaco
Group, Inc. to Koszegt Industries, Inc. in the principal sum of $850,000.00
(the "Subordinated Note").
None of the above is subject to any counter claim, defense or offset
of any kind, and no part thereof has previously been assigned, encumbered or
disposed of by Creditor.
The Creditor hereby subordinates the payment of the principal and
interest on all indebtedness, liabilities and obligations of every nature of
the Borrower to the Creditor, whether now existing or hereafter created, with
all extensions and renewals thereof or of any part thereof (all such
indebtedness, liabilities, and obligations whether now existing or hereafter
created, being hereinafter collectively referred to as the "Subordinated
Indebtedness"), to the prior payment of the principal and interest on the
Superior Indebtedness. Notwithstanding the foregoing, Borrower may make, and
Credit may receive, only regularly scheduled mandatory payments of principal of
and interest on the Subordinated Indebtedness under the Subordinated Note when
the same shall be due and payable as long as (i) no amount in respect of
Superior Indebtedness (whether principal interest, fees, commissions or
otherwise) shall be due and payable (whether a regularly scheduled payment at
stated maturity upon demand, acceleration or otherwise) and (ii) there has
occurred no default in respect of any Superior Indebtedness which default shall
be continuing ("Permitted Subordinated Debt Payments").
In order to bring about and accomplish the intent and purpose of this
Subordinated Agreement and Assignment (hereinafter referred to as the
"Agreement") the Creditor hereby grants to the Bank a security interest in and
irrevocably assigns to the Bank all the Creditors' right, title and interest in
and to the Subordinated Indebtedness and any collateral security at any time
held therefor, and at the Bank's request will assign over and deliver to it any
and all writings (endorsed without recourse in the case of negotiable
instruments) evidencing such Subordinated Indebtedness, or will cause any and
all writings to indicate by a notation thereon that they are subject to this
Agreement. If any Subordinated Indebtedness is not evidenced by a negotiable
instrument, the Creditor hereby agrees, upon request, to obtain a writing from
the Borrower evidencing such Subordinated Indebtedness, and to assign over and
deliver such writing to the Bank or to make such notation as the Bank shall
direct. The Creditor further agrees that if the Borrower shall at any time
hereafter become otherwise indebted to the Creditor directly, contingently or
otherwise, the Creditor will, if requested, require such indebtedness to be
evidenced by a writing signed by the Borrower which the Creditor will
immediately assign over to and deliver to the Bank (endorsed without recourse
in the case of a negotiable instrument) or at the Bank's request, in the
alternative, will cause any such writing to indicate that it is subject to this
Agreement.
In furtherance of the foregoing, the Creditor hereby grants to the
Bank irrevocable authority in the name, place and stead of the Creditor or in
the Bank's name but for its use, at any time or times after any default in the
payment of any amounts due on account of the Superior Indebtedness, in the
Bank's absolute discretion to demand, collect, compromise, file proofs or claim
with respect to, receive (by way of dividends or otherwise) and take any and
all legal proceedings for the recovery of any and all moneys due or to become
due on account or the Subordinated Indebtedness, and to vote, give consents and
take any other action with respect thereto). Any and all moneys collected,
received and retained by the Bank after first deducting the expenses
hereinafter authorized, shall be applied on account of the principal and
interest then outstanding on the Superior Indebtedness provided, however, that
upon the payment to the Bank of moneys collected, received and retained on
account of Subordinated Indebtedness and on account of Superior Indebtedness
aggregating an amount equivalent to all Superior Indebtedness, including both
principal, interest and the expenses hereinafter authorized, the Bank shall pay
over to the Creditor the excess, if any, of all moneys so received, collected
and retained on the Subordinated Indebtedness and on the Superior Indebtedness
which is still unpaid, and deliver to the Creditor any and all writings,
without any warranties of any nature or type whatsoever with respect thereto
(endorsed to the Creditor without recourse in the case of negotiable
instruments) evidencing such Subordinated Indebtedness and Superior
Indebtedness which is still unpaid, and deliver to the Creditor any and all
writings, without any warranties of any nature or type whatsoever with respect
thereto (endorsed to the Creditor without recourse in the case of negotiable
instruments) evidencing such Subordinated Indebtedness and Superior
Indebtedness. If the Bank receives oral or written notice of any claim or
demand, whether reasonable or unreasonable, adverse to the rights or interests,
as hereinabove set forth, of the Creditor in and to the Subordinated
Indebtedness, or any moneys held by the Bank in respect thereof, the Bank shall
be entitled to retain any and all such moneys, and writings evidencing such
Subordinated Indebtedness and Superior Indebtedness without incurring any
liability or debt to the Creditors, until the adjudication or final settlement
of the rights of such claimant, and the Creditor hereby agrees to pay to the
Bank on demand, all expenses of every kind, including reasonable counsel fees,
which the Bank may incur in enforcing any of its rights hereunder.
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The Creditor further agrees that so long as any Superior Indebtedness
remains unpaid, the Creditor will not accept any payment on account of, or any
collateral security for any Subordinated Indebtedness, other than Permitted
Subordinated Debt Payments, whether from the Borrower or any other person
liable with respect to the Subordinated Indebtedness. In the event that the
Borrower or any other person liable with respect to the Subordinated
Indebtedness shall offer any payment, other than Permitted Subordinated Debt
Payments, on account of, or any collateral security for, any Subordinated
Indebtedness, the Creditor will direct that the same be made or delivered to
the Bank, and if any moneys and/or collateral security, other than Permitted
Subordinated Debt Payments, shall come into the hands of the Creditor on
account of any Subordinated Indebtedness from any source whatsoever, the
Creditor will receive the same solely as the Bank's agent and will immediately
turn the same, in the form received, except for the endorsement of the
Creditor when appropriate, over to the Bank for application on account of the
Superior Indebtedness, and that until so delivered, the Creditor will hold the
same in trust as the Bank's property. If the Creditor shall fail or refuse
to endorse any writing for the payment of money, other than Permitted
Subordinated Debt Payments, payable to the Creditor or to the order of the
Creditor, which has been delivered to the Bank, the Bank is hereby irrevocably
constituted and appointed attorney-in-fact for the Creditor with full power
to make such endorsement.
If requested by the Bank, the Creditor shall (a) make notations on the
books of the Creditor beside all accounts or on other statements evidencing or
recording any Subordinated Indebtedness to the effect that such Subordinated
Indebtedness is subject to the provisions of this Agreement, (b) give the Bank
upon request from time to time, full and free access to the Creditors' books
pertaining to such accounts, with the right to make copies thereof, and (c)
furnish the Bank upon request from time to time, a statement of the account
between the Creditor and the Borrower.
Creditor hereby consents to the granting by Borrower to the Bank of
security interests in all fixtures and personal property of the Borrower now
owned or hereafter acquired and wherever located, and all proceeds
(collectively, the "Collateral") as security for the payment of the Superior
Indebtedness. The Bank's security interest in the Collateral, to the extent
perfected and enforceable, shall be deemed to have a priority senior to any
security interest of the Creditor in such Collateral. The Bank's priority in
respect of the Collateral shall be irrespective of the time, order or method of
attachment or perfection of security interests, or the time or order of the
filing of financing statements, or the giving of or failure to give notice of
purchase money security interests.
Until such time as all Superior Indebtedness shall have been paid in
full and the Bank's obligations to advance other sums to Borrower shall have
been terminated, the Creditor agrees that it will not commence or continue any
default foreclosure or liquidation proceedings or remedies in respect of any of
the Collateral. In the event any Collateral, or any collections or other
proceeds thereof, shall be received by the Creditor at any time or for any
reasons, such Collateral and proceeds shall be held in trust for the benefit
of, and promptly remitted to, the Bank, so long as there shall be any
outstanding Superior Indebtedness.
The Creditor authorizes the Bank to file, without the signature of the
Creditor or the Borrower, a financing statement and any amendments thereto,
with respect to any Subordinated
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Indebtedness if the Bank deems such a filing is advisable to protect the rights
granted to it hereunder.
This Agreement is a continuing agreement and, unless the Bank shall
have specifically consented in writin to its revocation, shall remain in full
force in all respects whether or not the Borrower shall at any time be indebted
to the Bank. If after the payment of both prinicpal and interest on all
Superior Indebtedness and any expenses hereinafter authorized and provided for,
the Borrower shall thereafter become liable to the Bank on account of any new
Superior Indebtedness, this Agreement shall thereupon be applicable in all
respects to any such new Superior Indebtedness without the necessity of any
further action, notice, understanding or writing by, between or among the Bank,
the Creditor and/or the Borrower.
If the Creditor receives any payment on account of or any collateral
security for any Subordinated Indebtedness at a time when there is no
outstanding Superior Indebtedness, the Creditor shall immediately notify the
Bank in writing of the receipt thereof. If the Creditor fails to notify the
Bank, and a new Superior Indebtedness is thereafter created, and if the
Borrower defaults with respect to the payment of such new Superior
Indebtedness, in addition to and not in limitation of any other rights or
remedies available to the Bank hereunder, the Bank shall have the right to
receive and the Creditor will immediately pay to the Bank an amount equal to
any such payment or the value of any such security received by the Creditor and
not reported to the Bank.
With or without notice to or further asset from the Creditor, the Bank
may at any time or times, in its absolute discretion, either prior to or after
any default on the part of the Borrower with respect to either the Subordinated
Indebtedness or the Superior Indebtedness, (i) extend, renew or change, refuse
to extend, renew or change any of the Superior Indebtedness, waive any default,
modify, rescind or waive any provision of any related agreement or collateral
undertaking including, but not by way of limitation, any provision relating to
acceleration of maturity, (ii) fail to set off any deposit balances or any
part thereof on its books in favor of the Borrower and release the same,
(iii) release, exchange, fail to resort to, or realize upon, or apply, any
collateral security or any part thereof held by or available to it for the
Superior Indebtedness, and (iv) generally deal with the Borrower in such
manner as the Bank may see fit, all without impairing or affecting its rights
and remedies under this Agreement. The Creditor hereby waives any and all
notice of the receipt and acceptance of this Agreement by the Bank and of the
creation, renewal, extension or accrual of any of the Superior Indebtedness,
present or future, in whole or in part by the Bank or of the reliance by the
Bank on this Agreement at any time or times, and further waives notice of any
default at any time on the part of the Borrower. The Creditor waives any
right to interpose any defense, counterclaim or offset with respects to the
Superior Indebtedness or the Subordinated Indebtedness.
The Creator agrees to pay to the Bank on demand all expense of every
kind, including reasonable counsel fees, which it may incur in enforcing its
rights hereunder.
If this Agreement is executed by more than one Creditor, the liability
and obligations of the Creditors hereunder shall be joint and several.
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Any notice to the Bank shall be effective only if directed to and
received by it at the office making the loan or Superior Indebtedness to the
Borrower.
The Creditor waives trial by jury, and the right to interpose any
defense, counterclaim or offset of any nature or description in any litigation
arising out of or in any way connected with the Subordinated Indebtedness of
this Agreement, and agrees that the venue of any such litigation shall be the
county in which is located the Bank's office making the loan or Superior
Indebtedness to the Borrower.
No delay on the Bank's part in exercising any right or rights
hereunder or in failing to exercise the same shall operate as a waiver of such
right or rights; and no notice to or demand on the Borrower or the Creditor
shall be deemed a waiver of the Bank's right to take further action without
notice or demand; nor in any event shall any modification, alteration or waiver
of any of the provisions hereof be effective unless in writing and signed for
or on behalf of the Bank and then only in the specific instance for which
given.
This Agreement shall be deemed to be a contract made in the State of
New York and entered into under and pursuant to the laws of said State and
shall be governed, construed and enforced and all rights and obligations
hereunder shall be determined in accordance with the laws of the said State.
This Agreement may be executed in one or more counterparts and copies
of this Agreement delivered by facsimile transmission shall be enforceable as
originals.
IN WITNESS WHEREOF, this Agreement has been executed by the creditor
on this 30 day of September, 1997.
Name of Creditor: KOSZEGI INDUSTRIES, INC.
Address of Creditor: 000 Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxx
Signature of Creditor:
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