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Exhibit 4.14
SUBORDINATION AGREEMENT
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Agreement dated as of April 16, 1998 between Fleet Capital
Corporation ("Senior Lender") and Robert Fleming Inc. ("Fleming"), as agent for
the "Holders" under and as defined in the Subordinated Note Agreement referred
to below (Fleming and such Holders collectively, the "Subordinated Lender")
BACKGROUND
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Senior Lender and National Record Mart, Inc. (the "Company")
are parties to a Loan and Security Agreement dated as of June 11, 1993 (as same
has been or may be amended from time to time, the "Loan Agreement"). The
Company, Guarantor and Subordinated Lender are entering into a Senior
Subordinated Secured Note Purchase Agreement as of this date pursuant to which
Subordinated Lender will provide credit accommodations to the Company (as the
same may be amended from time to time, the "Subordinated Note Agreement"). As an
inducement for Senior Lender to consent to the Company entering into the
Subordinated Note Agreement and to induce Senior Lender to continue to provide
credit accommodations to the Company, Subordinated Lender has agreed to enter
into this subordination agreement to provide for the subordination of the
"Subordinated Indebtedness" to the "Senior Indebtedness".
AGREEMENTS
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NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1.. DEFINITIONS.
1.1. GENERAL TERMS. For purposes of this
Agreement, the following terms shall have the following meanings:
"AGREEMENTS" shall mean, collectively, the Senior
Lending Agreements and the Subordinated Lending Agreements.
"COMPANY" shall mean the Company and its successors
and assigns.
"CREDITORS" shall mean, collectively, Senior Lender
and Subordinated Lender and their respective successors and assigns.
"DISTRIBUTION" shall mean any payment, whether in
cash, in kind, securities or any other property, or security for any such
Distribution.
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"DOCUMENTS" shall have the meaning given to the term
"Other Agreements" in the Loan Agreement.
"EVENT" shall have the meaning set forth in Section
2.2 (c) hereof.
"GUARANTOR" shall mean NRM Investments, Inc., a
Delaware corporation.
"HOLDER OF SUBORDINATED INDEBTEDNESS" or "SUBORDINATED
LENDER" shall mean Robert Fleming Inc. and any other Person(s) at any time or in
any manner acquiring any right or interest in any of the Subordinated
Indebtedness.
"LOAN AGREEMENT" shall mean the Loan and Security
Agreement dated June 11, 1993 between the Company and Senior Lender as the same
has been or may be amended, supplemented, modified or restated from time to
time.
"PERSON" shall mean an individual, a partnership, a
corporation (including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture, a limited liability company, a
limited liability partnership or other entity, or a government or any agency,
instrumentality or political subdivision thereof.
"SENIOR INDEBTEDNESS" shall mean all Obligations of
any kind owed by the Company or Guarantor to Senior Lender from time to time
under or pursuant to any of the Senior Lending Agreements including, without
limitation, all principal, interest (including all interest accruing after
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company) accruing thereon, charges,
expenses, fees and other sums chargeable to the Company or Guarantor by the
Senior Lender, and reimbursement, indemnity or other obligations due and payable
Senior Lender. Senior Indebtedness shall continue to constitute Senior
Indebtedness, notwithstanding the fact that such Senior Indebtedness or any
claim for such Senior Indebtedness is subordinated, avoided or disallowed under
the federal Bankruptcy Code or other applicable law. Senior Indebtedness shall
also include any indebtedness of the Company incurred in connection with a
refinancing of the Senior Indebtedness under the Senior Lending Agreements if
the terms and conditions of the agreements, documents and instruments related to
such refinancing, taken as a whole, are not materially more onerous to the
Holder of Subordinated Indebtedness than those set forth in the Senior Lending
Agreements, as in effect on the date hereof. For purposes of this Agreement
only, the principal amount of Senior Indebtedness shall not exceed $42,500,000.
"SENIOR LENDER" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"SENIOR LENDING AGREEMENTS" shall mean collectively
the Loan Agreement, and the other Documents between the Company and Senior
Lender or Guarantor and Senior Lender each as from time to time in effect.
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"SUBORDINATED INDEBTEDNESS" shall mean all principal, premium,
if any, interest and other amounts payable or chargeable in connection with the
Subordinated Lending Agreements.
"SUBORDINATED LENDING AGREEMENTS" shall mean, collectively,
the Subordinated Note Agreement, the Subordinated Note and all promissory notes,
agreements, guarantees, documents and instruments now or at any time hereafter
executed and/or delivered by the Company, Guarantor or any other person to, with
or in favor of the Subordinated Lender in connection therewith or related
thereto, as all of the foregoing now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
"SUBORDINATED NOTE OR NOTE(S)" shall mean that certain
promissory note issued by the Company to Subordinated Lender in the original
principal amount of $7,500,000 dated April 16, 1998 together with any
extensions thereof, securities issued in exchange therefor or modifications or
amendments thereto.
1.2. OTHER TERMS. Capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan Agreement.
1.3. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. Wherever
appropriate in the context, terms used herein in the singular also include the
plural and VICE VERSA. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations. All
references to any instruments or agreements, including, without limitation,
references to any of the Senior Lending Agreements or Subordinated Lending
Agreements shall include any and all modifications or amendments thereto and any
and all extensions or renewals thereof.
2. COVENANTS. The Company and each Holder of Subordinated
Indebtedness hereby covenant that until the Senior Indebtedness shall have been
paid in full and satisfied in cash and the Senior Lender's obligation to provide
advances under the Loan Agreement shall have been irrevocably terminated, all in
accordance with their respective terms, each will comply with such of the
following provisions as are applicable to it:
2.1. INTENTIONALLY OMITTED.
2.2. SUBORDINATION PROVISIONS. To induce Senior Lender to
enter into the Loan Agreement and to make loans and advances thereunder,
notwithstanding any other provision of the Subordinated Indebtedness to the
contrary, any Distribution with respect to the Subordinated Indebtedness is and
shall be expressly junior and subordinated in right of payment to all amounts
due and owing upon all Senior Indebtedness outstanding from time to time.
Specifically, but not by way of limitation:
(a) PAYMENTS. Neither the Company nor Guarantor shall make any
Distribution on the Subordinated Indebtedness until such time as the Senior
Indebtedness shall have been paid in full in cash and any commitments to provide
advances under the Senior Lending Agreements shall have been irrevocably
terminated; PROVIDED, HOWEVER, so long as no Event of Default shall have
occurred under the Senior Lending Agreements, the Company may pay and the
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Holders of Subordinated Indebtedness may receive regularly scheduled payments of
principal and interest on the Subordinated Indebtedness as set forth on the
Closing Date in the Subordinated Lending Agreements.
Following the occurrence of an Event of Default under the
Senior Lending Agreements resulting from a failure by the Company to make
payment of any sums due and owing to Senior Lender (any such event, a "Payment
Default"), (i) neither the Company nor Guarantor shall make any Distribution on
the Subordinated Indebtedness and (ii) upon and after receipt by the Holders of
Subordinated Indebtedness of written notice of such Payment Default from Senior
Lender (such notice, a "Payment Default Notice") no such Holder of Subordinated
Indebtedness shall be entitled to receive or retain any such Distribution in
respect of the Subordinated Indebtedness. Following the occurrence of an Event
of Default other than a Payment Default under the Senior Lending Agreements, (i)
neither the Company nor Guarantor shall make any Distribution on the
Subordinated Indebtedness and (ii) upon and after receipt by the Holders of
Subordinated Indebtedness of written notice of such Event of Default from Senior
Lender (any such notice, a "Default Notice") no such Holder of Subordinated
Indebtedness shall be entitled to receive or retain any such Distribution in
respect of the Subordinated Indebtedness, PROVIDED, FURTHER, that
notwithstanding the foregoing restriction, the Company may pay and the Holders
of Subordinated Indebtedness shall be entitled to receive and retain any
principal or interest payment which shall have become due and payable (on a
non-accelerated basis) on the earliest to occur of (x) the date on which all
such Events of Default specified in the Default Notice shall have been cured or
waived, or (y) payment in full in cash of all Senior Indebtedness and the
irrevocable termination of any commitments to provide advances under the Senior
Lending Agreements or (z) the expiration of a period of ninety (90) days from
delivery of the Default Notice.
(b) LIMITATION ON ACCELERATION. During any period described in
Section 2.2 (a) hereof in which a Distribution is not permitted to be made on
Subordinated Indebtedness (any such period, a "Non-Payment Period"), no Holder
of Subordinated Indebtedness shall be entitled to accelerate the maturity of the
Subordinated Indebtedness, exercise any remedies or commence any action or
proceeding to recover any amounts due or to become due with respect to
Subordinated Indebtedness, PROVIDED, HOWEVER, the foregoing limitation on
acceleration or exercise of any remedies shall not be applicable following (x)
the occurrence of an Event (as to which Section 2.2 (c) shall apply), (y) the
maturity or acceleration of all Senior Indebtedness or (z) ninety (90) days
after the Subordinated Lender has given the Senior Lender written notice of its
intention to take such action.
(c) PRIOR PAYMENT OF SENIOR INDEBTEDNESS IN BANKRUPTCY, ETC.
In the event of any insolvency or bankruptcy proceedings relative to the
Company, Guarantor or their respective property, or any receivership,
liquidation, reorganization or other similar proceedings in connection
therewith, or, in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company, Guarantor or distribution or
marshalling of their respective assets or any composition with creditors of the
Company or Guarantor, whether or not involving insolvency or bankruptcy, or if
the Company or Guarantor shall cease its operations, call a meeting of its
creditors or no longer do business as a going concern (each individually or
collectively, an "Event") then all Senior Indebtedness shall be paid in full and
satisfied in cash and any commitments to provide advances under the Senior
Lending Agreements irrevocably terminated
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before any Distribution shall be made on account of any Subordinated
Indebtedness. Any such Distribution which would, but for the provisions hereof,
be payable or deliverable in respect of the Subordinated Indebtedness, shall be
paid or delivered directly to the Senior Lender or its representatives, in the
proportions in which they hold the same, until amounts owing upon Senior
Indebtedness shall have been paid in full in cash and any commitments to provide
advances under the Senior Lending Agreements have been irrevocably terminated.
(d) ACCELERATION. In the event of any Senior Indebtedness
becoming due and payable, whether by acceleration, maturity or otherwise, no
Distribution shall thereafter be made on account of the Subordinated
Indebtedness until all Senior Indebtedness shall be paid in full in cash and the
Loan Agreement be irrevocably terminated.
(e) POWER OF ATTORNEY. To enable the Senior Lender to assert
and enforce its rights hereunder in any proceeding referred to in Section 2.2(c)
or upon the happening of any Event, the Senior Lender or any person whom it may
designate is hereby irrevocably appointed attorney in fact for the Subordinated
Lender with full power to act in the place and stead of the Subordinated Lender
including the right to make, present, file and vote such proofs of claim against
the Company on account of all or any part of the Subordinated Indebtedness as
the Senior Lender may deem advisable in the event that Subordinated Lender shall
fail to do so and to receive and collect any and all dividends or other payments
made thereon and to apply the same on account of the Senior Indebtedness. The
Subordinated Lender will execute and deliver to the Senior Lender such
instruments as may be required by the Senior Lender to enforce any and all
Subordinated Indebtedness, to effectuate the aforesaid power of attorney and to
effect collection of any and all dividends or other payments which may be made
at any time on account thereof, and the Subordinated Lender hereby irrevocably
appoints the Senior Lender as the lawful attorney and agent of the Subordinated
Lender to execute financing statements on behalf of the Subordinated Lender and
hereby further authorizes the Senior Lender to file such financing statements in
any appropriate public office.
(f) KNOWLEDGE; DELIVERY OF PAYMENT DEFAULT NOTICE OR DEFAULT
NOTICE. No holder of any Subordinated Indebtedness shall at any time be charged
with knowledge of any of the events described in Section 2.2 (a) hereof or on
such account be prohibited from receiving or retaining any payment of monies or
from taking any action regarding acceleration or the exercise of remedies,
unless and until such holder shall have received Default Notice or Payment
Default Notice; PROVIDED, HOWEVER, any "default" or "event of default" under the
Subordinated Note and/or Subordinated Lending Agreements shall automatically
constitute an Event of Default under the Senior Lending Agreements so that
payments received by any Holder of Subordinated Indebtedness following any such
occurrence shall not be retained irrespective of the lack of receipt by such
holder of a Default Notice or Payment Default Notice, UNLESS (i) the Event of
Default is waived by the required Holders of Subordinated Indebtedness, (ii) a
copy of such waiver is given in writing by Subordinated Lender to Senior Lender,
and (iii) no Default Notice or Payment Default Notice is thereafter forthcoming
from Senior Lender within five (5) Business Days following the giving of notice
of the aforesaid waiver, in which event any Holder of Subordinated Indebtedness
may retain all payments previously or thereafter received, subject to the
provisions of Section 2.2 (a).
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Each Default Notice and Payment Default Notice shall be deemed
to be properly given by Senior Lender or other holder of Senior Indebtedness to
the Subordinated Lender if such Default Notice or Payment Default Notice is
delivered in accordance with Section 3.7 hereof.
No more than two (2) Default Notices may be given in any
365-day period, and no Default or Event of Default which existed or which was
continuing with respect to any Senior Indebtedness to which any Default Notice
relates on the date such Default Notice was given shall be the basis for the
commencement of any subsequent Default Notice by any holder of Senior
Indebtedness unless such Default or Event of Default is cured or waived for a
period of not less than 90 days.
(g) PAYMENTS HELD IN TRUST. Should any Distribution or the
proceeds thereof, in respect of the Subordinated Indebtedness, be collected or
received by the Subordinated Lender or any Affiliate (as such term is defined in
Rule 405 of Regulation C adopted by the Securities and Exchange Commission
pursuant to the Securities Act of 1933) of the Subordinated Lender at a time
when the Subordinated Lender is not permitted to receive any such Distribution
or proceeds thereof including if same is collected or received when there is or
would be after giving effect to such payment an Event of Default under the Loan
Agreement, then the Subordinated Lender will forthwith deliver, or cause to be
delivered, the same to the Senior Lender in precisely the form held by the
Subordinated Lender (except for any necessary endorsement) and until so
delivered, the same shall be held in trust by the Subordinated Lender, or any
such Affiliate, as the property of the Senior Lender and shall not be commingled
with other property of the Subordinated Lender or any such Affiliate.
(h) SUBROGATION. Subject to the prior payment in full in cash
of the Senior Indebtedness and the irrevocable termination of any commitments to
provide advances under the Senior Lending Agreements, to the extent that Senior
Lender has received any Distribution on the Senior Indebtedness which, but for
this Agreement, would have been applied to the Subordinated Indebtedness, the
Subordinated Lender shall be subrogated to the then or thereafter rights of the
Senior Lender including, without limitation, the right to receive any
Distribution made on the Senior Indebtedness until the principal of, premium, if
any, interest on and other charges due under the Subordinated Indebtedness shall
be paid in full; and, for the purposes of such subrogation, no Distribution to
the Senior Lender to which the Subordinated Lender would be entitled except for
the provisions of this Agreement shall, as between the Company, Guarantor, their
respective creditors (other than the Senior Lender) and the Subordinated Lender,
be deemed to be a Distribution by the Company or Guarantor to or on account of
Senior Indebtedness, it being understood that the provisions hereof are and are
intended solely for the purpose of defining the relative rights of the
Subordinated Lender on the one hand, and the Senior Lender on the other hand.
(i) SCOPE OF SUBORDINATION. The provisions of this Agreement
are solely to define the relative rights of any Holder of Subordinated
Indebtedness and the Senior Lender. Nothing in this Agreement shall impair, as
between the Company, Guarantor and the Subordinated Lender the unconditional and
absolute obligation of the Company and/or Guarantor to punctually pay the
principal, interest and any other amounts and obligations owing under the
Subordinated Note and/or Subordinated Lending Agreements in accordance with the
terms thereof,
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subject to the rights of the Senior Lender under this Agreement. If the Borrower
fails because of this Agreement to pay principal of, premium, if any, and
interest on the Subordinated Notes or any other obligations owing under the
Subordinated Lending Agreements on the date when such payment is due (other than
any payment due after, and during the effectiveness of, a Default Notice), the
failure to make such payment shall be an Event of Default under the Subordinated
Lending Agreements notwithstanding any provision of this Agreement.
(j) Tender of Subordinated Notes for Warrants. Each Holder of
Subordinated Indebtedness shall at all times, notwithstanding any provisions of
this Agreement regarding prohibitions on receiving payments or exercising rights
and remedies with respect to Subordinated Indebtedness, have the right to tender
the Subordinated Note held by it to the Company to pay the exercise price of the
Warrants (as defined in the Subordinated Note Agreement) in lieu of cash.
3. MISCELLANEOUS.
3.1. PROVISIONS OF SUBORDINATED NOTE. From and after the date
hereof, the Company, Guarantor and the Subordinated Lender shall cause each
Subordinated Note and any guarantee to contain a provision to the following
effect:
"This Agreement is subject to the Subordination Agreement,
dated April __, 1998, among the Maker, the Payee and Senior
Lender, under which this Agreement and the Maker's obligations
hereunder are subordinated in the manner set forth therein to
the prior payment of certain obligations to the holders of
Senior Indebtedness as defined therein."
Proof of compliance with the foregoing shall be promptly given
to Senior Lender.
3.2. ADDITIONAL AGREEMENTS. In the event that the Senior
Indebtedness is refinanced in full, Subordinated Lender agrees at the request of
such refinancing party to enter into a subordination agreement on terms
substantially similar to this Subordination Agreement; PROVIDED that the
refinancing Indebtedness shall be in compliance with Section 3.6.
3.3. SURVIVAL OF RIGHTS. The right of Senior Lender to enforce
the provisions of this Agreement shall not be prejudiced or impaired by any act
or omitted act of the Company, Guarantor or Senior Lender including forbearance,
waiver, consent, compromise, amendment, extension, renewal, or taking or release
of security in respect of any Senior Indebtedness or noncompliance by the
Company or Guarantor with such provisions, regardless of the actual or imputed
knowledge of Senior Lender.
3.4. RECEIPT OF AGREEMENTS. Subordinated Lender hereby
acknowledges that it has delivered to Senior Lender a correct and complete copy
of the Subordinated Lending Agreements as in effect on the date hereof. The
Subordinated Lender, solely for the purposes of this Agreement, hereby
acknowledges receipt of a correct and complete copy of each of the Senior
Lending Agreements as in effect on the date hereof.
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3.5. NO AMENDMENT OF SUBORDINATED LENDING AGREEMENTS. So long
as the Loan Agreement remains in effect, neither the Company nor any Holder of
Subordinated Indebtedness shall enter into any amendment to or modification of
any Subordinated Lending Agreements which increases the principal amount,
increases the interest rate by more than three percent (3%) per annum or
shortens or accelerates the maturity or due date of any payments thereunder,
without the prior written consent of Senior Lender.
3.6. AMENDMENTS TO SENIOR LENDING AGREEMENTS. Nothing
contained in this Agreement, or in any other agreement or instrument binding
upon any of the parties hereto, shall in any manner limit or restrict the
ability of any Senior Lender from increasing or changing the terms of the loans
under the Senior Lending Agreements, or to otherwise waive, amend or modify the
terms and conditions of the Senior Lending Agreements, in such manner as such
Senior Lender and the Company shall mutually determine. Each Holder of
Subordinated Indebtedness hereby consents to any and all such waivers,
amendments, modifications and compromises, and any other renewals, extensions,
indulgences, releases of collateral (subject to the provisions of the Collateral
Sharing and Agency Agreement dated as of this date among the Company, Senior
Lender, Subordinated Lender and Fleet Capital Corporation, as collateral agent)
or other accommodations granted by the Senior Lender to the Company from time to
time, and agrees that none of such actions shall in any manner affect or impair
the subordination established by this Subordination Agreement in respect of the
Subordinated Indebtedness.
3.7. NOTICE OF DEFAULT AND CERTAIN EVENTS. The Senior Lender
and the Holders of Subordinated Indebtedness shall undertake in good faith to
notify the other of the occurrence of any of the following as applicable, within
five (5) Business Days after obtaining knowledge thereof, :
(a) the obtaining of actual knowledge of the occurrence of any
default under the Subordinated Lending Agreements;
(b) the acceleration of any Senior Indebtedness by the Senior
Lender or of any Subordinated Indebtedness by any Holder of Subordinated
Indebtedness;
(c) the granting by Senior Lender of any waiver of any Event
of Default under the Loan Agreement or the granting by any Holder of
Subordinated Indebtedness of any waiver of any "default" or "event of default"
under the Subordinated Lending Agreements;
(d) the payment in full by the Company (whether as a result of
refinancing or otherwise) of all Senior Indebtedness; or
(e) any amendment to any of the Agreements.
The failure of any party to give such notice shall not affect
the subordination of the Subordinated Indebtedness as provided in this
Subordination Agreement.
3.8. NOTICES. Any notice or other communication required or
permitted pursuant to this Agreement shall be deemed given (a) when personally
delivered to any officer of
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the party to whom it is addressed, (b) on the earlier of actual receipt thereof
or three (3) days following posting thereof by certified or registered mail,
postage prepaid, or (c) upon actual receipt thereof when sent by a recognized
overnight delivery service or (d) upon actual receipt thereof when sent by
telecopier to the number set forth below with telephone communication confirming
receipt and subsequently confirmed by registered, certified or overnight mail to
the address set forth below, in each case addressed to each party at its address
set forth below or at such other address as has been furnished in writing by a
party to the other by like notice:
If to Senior Lender: Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, Connecticut 06033
Attention: Northeast Loan Administrator
Telephone: (860) 659-3200
Telecopier: (860) 657-7759
with a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118-0075
Attention: Daniel J. Krauss, Esq.
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
If to Subordinated c/o Robert Fleming Inc.
Lender: 320 Park Avenue, 11th Floor
New York, New York 10022
Attention: Michael E. Rowe
Telephone: (212) 508-3672
Telecopier: (212) 508-3579
with a copy to: Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
Attention: Gary J. Cohen, Esq.
Telephone: (213) 896-6000
Telecopier: (213) 896-6600
If to the Company
or Guarantor: c/o National Record Mart, Inc.
507 Forest Avenue
Carnegie, Pennsylvania 15106
Attention: Theresa Carlisle
Telephone: (412) 276-6200
Telecopier: (412) 276-6201
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with a copy to: Reed Smith Shaw & McClay
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: Robert Morris, Esq.
Telephone: (412) 288-3131
Telecopier: (412) 288-3063
3.9. BOOKS AND RECORDS. The Subordinated Lender shall furnish
Senior Lender, upon request from time to time, a confirmation of the amount due
and owing to Subordinated Lender and the status of the account between the
Subordinated Lender and the Company
3.10. BINDING EFFECT; OTHER. This Subordination Agreement
shall be a continuing agreement, shall be binding upon and shall inure to the
benefit of the parties hereto from time to time and their respective successors
and assigns, shall be irrevocable and shall remain in full force and effect
until the Senior Indebtedness shall have been satisfied or paid in full in cash
and any commitments to provide advances under the Senior Lending Agreements
shall have been irrevocably terminated, but shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any amount paid by or on behalf of the Company or Guarantor with regard to
the Senior Indebtedness is rescinded or must otherwise be restored or returned
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Company or Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee, custodian, or similar
officer, for the Company or Guarantor any substantial part of their respective
property, or otherwise, all as though such payments had not been made. No action
which any Senior Lender or the Company or Guarantor may take or refrain from
taking with respect to the Senior Indebtedness, including any amendments
thereto, shall affect the provisions of this Subordination Agreement or the
obligations of any Subordinated Lender hereunder. Any waiver or amendment
hereunder must be evidenced by a signed writing of the party to be bound
thereby, and shall only be effective in the specific instance. This
Subordination Agreement shall be governed by and construed in accordance with
the laws of the State of New York. The headings in this Subordination Agreement
are for convenience of reference only, and shall not alter or otherwise affect
the meaning hereof.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) By its acceptance of its Subordinated Note, each Holder of
Subordinated Indebtedness agrees that it shall not assign or transfer any of the
Subordinated Indebtedness without such assignment or transfer being made
expressly subject to the terms of this Subordination Agreement. Subordinated
Lender warrants to Senior Lender that it has full right, power and authority to
enter into this Subordination Agreement and, to the extent Subordinated Lender
is an agent or trustee for other parties, that this Subordination Agreement
shall fully bind all such other parties.
(b) Senior Lender agrees that it shall not assign or transfer
any of the Senior Indebtedness without such assignment or transfer being made
expressly subject to the terms and provisions of the Subordination Agreement.
Senior Lender further warrants to Subordinated
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Lender that it has full right, power and authority to enter into this
Subordination Agreement and, to the extent Senior Lender is an agent or trustee
for other parties, that this Subordination Agreement shall fully bind all such
other parties.
5. PROCEEDINGS. ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST
ANY HOLDER OF SUBORDINATED INDEBTEDNESS WITH RESPECT TO THIS OR ANY RELATED
AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE SUPREME
COURT OF THE STATE OF NEW YORK, ANY FEDERAL DISTRICT COURT WITHIN THE STATE OF
NEW YORK, OR ELSEWHERE AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH ANY
HOLDER OF SUBORDINATED INDEBTEDNESS, SENIOR LENDER AND THE COMPANY ACCEPT FOR
THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE SENIOR
LENDER TO BRING PROCEEDINGS AGAINST THE ANY HOLDER OF SUBORDINATED INDEBTEDNESS
IN ANY COURTS OF ANY OTHER JURISDICTION ANY JUDICIAL PROCEEDING BY ANY HOLDER OF
SUBORDINATED INDEBTEDNESS AGAINST THE SENIOR LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR
CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN
A COURT LOCATED IN THE CITY OF NEW YORK, STATE OF NEW YORK; PROVIDED THAT
NOTWITHSTANDING THE FOREGOING, IF IN ANY JUDICIAL PROCEEDING BY OR AGAINST ANY
HOLDER OF SUBORDINATED INDEBTEDNESS THAT IS BROUGHT IN ANY OTHER COURT SUCH
COURT DETERMINES THAT SENIOR LENDER IS AN INDISPENSABLE PARTY, SUCH ANY HOLDER
OF SUBORDINATED INDEBTEDNESS SHALL BE ENTITLED TO JOIN OR INCLUDE SENIOR LENDER
IN SUCH PROCEEDINGS IN SUCH OTHER COURT. EACH ANY HOLDER OF SUBORDINATED
INDEBTEDNESS WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.
6. WAIVER OF JURY TRIAL. EACH CREDITOR HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY CREDITOR OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR AGREEMENT
EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH CREDITOR
HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY
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COURT TRIAL WITHOUT JURY, AND THAT EITHER OF THEM MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned have entered into this
Agreement this 16th day of April, 1998.
FLEET CAPITAL CORPORATION,
as Senior Lender
By: /s/ John Edmondson
--------------------------------
Name: John Edmondson
Title:Senior V.P.
ROBERT FLEMING INC.,
as agent for Subordinated Lender
By: Phillip S. Schaeffer
--------------------------------
Name: Phillip S. Schaefer
Title:Senior V.P.
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COMPANY'S AND GUARANTOR'S ACKNOWLEDGEMENT
The undersigned Company and Guarantor hereby acknowledges and
agrees to the foregoing Subordination Agreement. The undersigned agrees to be
bound by the terms and provisions thereof as they relate to the relative rights
of the Creditors with respect to each other. However, nothing therein shall be
deemed to amend, modify, supersede or otherwise alter the terms of the
respective agreements between the undersigned and each Creditor. The undersigned
further agrees that the Subordination Agreement is solely for the benefit of the
Creditors and shall not give the undersigned, its successors and assigns, or any
other person, any rights vis-a-vis any Creditor.
NATIONAL RECORD MART, INC.,
Company
By: /s/ Theresa Carlise
-------------------------------
Name: Theresa Carlise
Title: Senior Vice President & CEO
NRM INVESTMENTS, INC.,
Guarantor
By: /s/ Theresa Carlise
-------------------------------
Name: Theresa Carlise
Title: President
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STATE OF New York )
: ss.:
COUNTY OF New York )
On the 14th day April, 1998, before me personally came
Phillip S. Schaeffer, to me known, who being by me duly sworn, did depose and
say that he resides at C/O RFI, 320 Park Ave. N.Y., N.Y., that he is the
Senior VP of Robert Fleming Inc, the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the board of directors of said corporation, and that he
signed his name thereto by like order.
/s/ Michele Muniz
-------------------------------
Notary Public
MICHELE MUNIZ
Notary Public, State of New York
No. 31-497501
Certified in New York County
Commission Expires 11-26-98
STATE OF Connecticut )
: ss.:
COUNTY OF Hartford )
On the 14th day of April, 1998, before me personally came
John Edmondson, to me known, who being by me duly sworn, did depose and say
that he resides at 260 Hebron Ave., Glastonbury, CT, that he is the
SVP of Fleet Capital Corporation, the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the board of directors of said corporation, and that he
signed his name thereto by like order.
/s/ Lisa A. Giampaolo
-------------------------------
Notary Public
Lisa A. Giampaolo
Notary Public
My Commission Expires Oct. 28, 2000
Member, Pennsylvania Association of Notaries
STATE OF Pennsylvania )
: ss.:
COUNTY OF Allegheny )
On the 15th day of April, 1998, before me personally came
Theresa Carlise, to me known, who being by me duly sworn, did depose and say
that he resides at 507 Forest Avenue, that he is the Senior Vice President &
CFO, National Record Mart, Inc., the corporation described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the board of directors of said corporation, and that he signed his
name thereto by like order.
/s/ Geraldine A. Steele
-------------------------------
Notary Public
Notarial Seal
Geraldine A. Steele, Notary Public
Carnegie Boro, Allegheny County
My Commission Expires Dec. 24, 1998
Member, Pennsylvania Association of Notaries
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STATE OF PENNSYLVANIA )
: ss.:
COUNTY OF ALLEGHENY )
On the 15th day of April, 1998, before me personally came
Theresa Carlise, to me known, who being by me duly sworn, did depose and
say that he resides at 507 Forest Avenue, that he is the President of
____________________, NRM Investments, Inc., the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
/s/ Geraldine A. Steele
-------------------------------
Notary Public
Notarial Seal
Geraldine A. Steele, Notary Public
Carnegie Boro, Allegheny County
My Commission Expires Dec. 24, 1998
Member, Pennsylvania Association of Notaries