SUBORDINATION AND SECURITY AGREEMENT
THIS SUBORDINATION AND SECURITY
AGREEMENT (this “Agreement”) is made, entered into and effective as of
the 12th day of February, 2010 by and between (i) LY
Holdings, LLC, a Kentucky limited liability company (“LYH”), and (ii) Libra
Alliance Corporation, a Nevada corporation (“Libra”).
RECITALS:
A. LYH
is the Maker of a Term Note dated February 12, 2010, in the principal amount of
$5,149,980.00 payable to the order of Libra (the “Note”).
B. Libra
has agreed that the Note shall be subordinated to other indebtedness of LYH
pursuant to the terms hereof.
C. LYH
has agreed to grant to Libra a security interest in certain assets of LYH as
security for repayment of the Note.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Subordination.
a. Subordination to Senior
Obligations. The indebtedness evidenced by the Note, including
principal, interest, and any other sums due thereunder is subordinated, junior
and subject in right of payment, to the extent and in the manner hereinafter
provided, to the prior payment of all Senior Obligations indefeasibly in
cash. The term “Senior Obligations” means all indebtedness,
liabilities and obligations, whether direct or indirect, joint or several,
absolute or contingent, related or unrelated, now or in the future existing and
whether consisting of principal, interest, fees, expenses (including reasonable
attorney’s fees), indemnities, charges or other sums, owed by LYH under the
terms of its existing indebtedness, as such obligations currently exist or as
such obligations may be modified, amended or extended by agreement of LYH and
the lenders of such indebtedness (“Senior Lenders”). Any and all
documents, instruments and agreements evidencing the Senior Obligations, as
amended, restated and/or supplemented from time to time, shall be referred to
herein as the “Senior Loan Documents.”
b. Restrictions on
Payment. Subject to the restrictions set forth in this Section
1, LYH shall make payments of the principal of, and any interest on, the Note in
accordance with the terms hereof. Subject to Section 1.d. hereof, no
payment on account of principal, interest or other sum due under on the Note
shall be made, if at the time such payment is scheduled to be made, there then
exists, or would then be created by such payment, a default or event of default
under the Senior Loan Documents, and a Senior Lender gives to LYH a payment
blockage notice. If no such default or event of default has occurred
or would be created by such payment, LYH shall make payments of the principal
of, and any interest on, the Note as and when due. If the default or
event of default has been cured to the satisfaction of, or waived in writing by,
the Senior Lenders, the payment blockage set forth in this Section 1.b. shall,
solely with respect to that particular default or event of default, be
removed.
c. Payment upon Dissolution,
Etc. Upon payment or distribution of assets of LYH of any kind
or character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or total or partial liquidation or reorganization of
LYH, whether voluntary or involuntary, in bankruptcy, insolvency, receivership
or other proceedings, the Senior Obligations shall first be paid in full, before
Libra shall be entitled to receive any payment or distribution on account of the
Note; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment or distribution of assets of LYH of any kind or
character, whether in cash, property or securities, to which Libra would be
entitled except for the provisions of this Section 1 shall be paid by LYH or by
any receiver, trustee in bankruptcy, liquidating trust, agent or other person
making such payment or distribution, or by Libra who shall have received such
payment or distribution, directly to the Senior Lenders or their representatives
to the extent necessary to pay all such Senior Obligations in full after giving
effect to any concurrent payment or distribution to or for the Senior Lenders,
before any payment or distribution is made to Libra. In the event of
any such dissolution, winding-up, liquidation or reorganization of LYH, Libra
shall be entitled to be paid 100% of the amounts owed to it in respect of the
Note before any distribution of assets shall be made among the holders of any
class of equity interests in LYH in their capacities as holders of such equity
interests.
d. Rights of Libra
Unimpaired. The provisions of this Section 1 are for the
purposes of defining the relative rights of Libra and the Senior Lenders and
nothing in this Section 1 shall impair, as between LYH and Libra, the obligation
of LYH, which is unconditional and absolute, to pay Libra the principal thereof
and interest thereon, in accordance with the terms of the Note.
e. No Commencement of Any
Proceeding. Libra agrees that, so long as the Senior
Obligations shall not have been paid in full indefeasibly in cash, Libra will
not commence, or join with any creditor other than the Senior Lenders in
commencing, or directly or indirectly cause LYH to commence, or assist LYH in
commencing, any proceeding or action involving any dissolution, winding up,
liquidation, arrangement, reorganization, adjustment, protection, relief or
composition of LYH or its debts, whether voluntary or involuntary, in any
bankruptcy, insolvency, arrangement, reorganization, receivership, relief or
other similar case or proceeding under any Federal or State bankruptcy or
similar law or an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of LYH.
2. Grant of Security
Interest. LYH hereby pledges, assigns and grants to Libra a
junior security interest in and to all right, title and interest of LYH in and
to any and all shares of capital stock of Libra held by LYH, wherever located
and whether now owned or hereafter acquired, including without limitation the
10,000,000 shares of common stock of Libra currently held by LYH and the
9,500,000 shares of preferred stock of Libra currently held by LYH.
3. Singular and Plural
Terms. Wherever the context requires, the singular number
shall include the plural, the plural the singular, and the use of any gender
shall include all genders.
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4. Binding
Effect. This Agreement shall bind and inure to the benefit of
the parties and their respective successors and permitted assigns.
5. Governing Law. This
Agreement has been delivered and accepted at and will be deemed to have been
made at Lexington, Kentucky and will be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the laws of the
Commonwealth of Kentucky, without regard to conflicts of law
principles.
6. Jurisdiction. The
parties hereby irrevocably agree and submit to the exclusive jurisdiction of any
state or federal court located within Fayette County, Kentucky, and waive any
objection based on forum non conveniens and any objection to venue of any such
action or proceeding.
7. Waiver of Jury
Trial. The parties hereto each waive any right to trial by
jury in any action or proceeding relating to this Agreement, or any actual or
proposed transaction or other matter contemplated in or relating to any of the
foregoing.
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IN WITNESS WHEREOF, the
parties have executed this Agreement on the date first above
written.
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LY
Holdings, LLC
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By:
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/s/
J. Xxxxxxx Xxxxxxxxx, III
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Title:
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President
& CEO
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(“LYH”)
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Libra
Alliance Corporation
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By:
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/s/
Xxxx X. Xxxxxx
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Title:
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VP/General
Counsel
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(“Libra”)
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