Contract
Exhibit 10.15
This SUBORDINATION AGREEMENT
(this "Agreement"),
dated as of October 1, 2009 is among Envision Solar International, Inc.,
a California corporation (the "Company"), Envision Solar
Construction, Inc., a California corporation ("ESC"), Envision Solar Residential,
Inc., a California corporation ("ESR"), Envision Africa, LLC
("EA"; the Company, ESC,
ESR and EA, each an "Obligor"
and, together, "Obligors"), Xxx Xxxx ("Subordinated
Creditor"), the Purchaser (as defined in the Purchase Agreement described
below), and Gemini Strategies, LLC, a Delaware limited liability company, in its
capacity as collateral agent for itself and for the Purchaser (including any
successor agent, hereinafter, the "Collateral
Agent").
R
E C I T A L S
A. The
Company has executed and delivered to the Purchaser that certain senior
note dated as of November 12, 2008 (as the same may be amended, supplemented,
restated
or modified and in effect from time to time, the "Note"). The Note was issued
pursuant to that
certain Securities Purchase Agreement, dated as of November 12, 2008 (as
amended, restated,
supplemented or otherwise modified and in effect from time to time, the "Purchase Agreement"), by and among the
Company and the Purchaser, and pursuant to which the Purchaser
has made certain loans ("Loans") to the
Company.
B. Each
of the Obligors (other than the Company) (each such entity, together
with each
other person or entity who becomes a party to the Guaranty (as defined herein)
by execution
of a joinder in the form of Exhibit A attached
thereto, is referred to individually as a "Guarantor" and collectively
as the "Guarantors")
have executed a Guaranty dated as of November
12, 2008 (as the same may be amended, supplemented, restated or modified and in
effect
from time to time, the "Guaranty") in favor of the
Collateral Agent in respect of the Company's
obligations under the Purchase Agreement and the Note.
C. The
Company has issued the Subordinated Creditor a 10% subordinated convertible
promissory note pursuant to which, among other things, the Subordinated Creditor
has
extended credit to the Company in the aggregate original principal amount of
$102,235.62(as the
same may be amended, supplemented, restated or otherwise modified from time to
time as
permitted hereunder and including any notes issued in exchange or substitution
therefor, collectively,
the "Subordinated Note"),
and pursuant to which the Company has incurred and may
hereafter incur other obligations and liabilities to the Subordinated Creditor.
NOW,
THEREFORE, in reliance upon this Agreement, to induce the Purchaser to continue
to make the Loans, and for other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms used
but not elsewhere defined in this Agreement shall have the respective meanings
ascribed to such terms in the Purchase Agreement and the Note. The following
terms shall have the following meanings in this Agreement:
Purchaser shall mean holders of
Senior Indebtedness including, without limitation, any holder of any Senior
Indebtedness after the consummation of any Permitted Refinancing.
Enforcement
Action is
defined in subsection 2.7.
Loan
Documents means the collective
reference to the Purchase Agreement and the Note, the Security Agreement, the
Guaranty and each of the other agreements to which any Obligor is a party or is
bound in connection with the transactions contemplated under the Purchase
Agreement and the Note.
Paid in
Full or
Payment
in Full shall mean the
indefeasible payment in full in cash or conversion in full of all Senior
Indebtedness and termination of all commitments to lend under the Loan Documents
and Permitted Refinancing Loan Documents.
Permitted
Refinancing means any refinancing of
the Senior Indebtedness.
Permitted
Refinancing Loan Documents means any and all
agreements, documents and instruments executed in connection with a Permitted
Refinancing of Senior Indebtedness.
Proceeding is defined in subsection
2.3.
Purchaser shall mean holders of
Senior Indebtedness including, without limitation, any holder of any Senior
Indebtedness after the consummation of any Permitted Refinancing.
Senior
Indebtedness shall mean the
obligations, liabilities and other amounts owed under the Purchase Agreement,
the Note or any other Loan Document including all interest, fees, expenses,
indemnities and enforcements costs, whether before or after the commencement of
a Proceeding and without regard to whether or not an allowed claim, and all
obligations and liabilities incurred with respect to Permitted Refinancings,
together with any amendments, restatements, modifications, renewals or
extensions of any thereof.
Subordinated
Creditor shall mean the
"Subordinated Creditor" which is signatory to this Agreement and any other
holders of the Subordinated Note or any other Subordinated Indebtedness from
time to time as permitted hereunder.
Subordinated
Default shall mean a default in
the payment of the Subordinated Indebtedness, or performance of any term,
covenant or condition contained in the Subordinated Indebtedness Documents or
the occurrence of any event or condition, which default, event or condition
permits the Subordinated Creditor to accelerate or demand payment of all or any
portion of the Subordinated Indebtedness.
Subordinated
Default Notice shall mean a written
notice to the Collateral Agent pursuant to which the Collateral Agent is
notified of the existence of a Subordinated Default, which notice incorporates a
reasonably detailed description of such Subordinated Default.
Subordinated
Indebtedness shall mean all of the
obligations of Obligors to the Subordinated Creditor evidenced by the
Subordinated Note and all other amounts now or hereafter owed by Obligors to the
Subordinated Creditor pursuant to the Subordinated Indebtedness
Documents.
Subordinated
Indebtedness Documents shall mean the
Subordinated Note and all other documents and instruments evidencing or
pertaining to any portion of the Subordinated Indebtedness, as amended,
supplemented, restated or otherwise modified from time to time as permitted
hereunder.
2. Subordination of
Subordinated Indebtedness to Senior Indebtedness.
2.1 Subordination. The payment of any and all
of the Subordinated Indebtedness hereby expressly is subordinated, to the extent
and in the manner set forth herein, to the Payment in Full of the Senior
Indebtedness. Each holder of Senior Indebtedness, whether now outstanding or
hereafter arising, shall be deemed to have acquired Senior Indebtedness in
reliance upon the provisions contained herein.
2.2 Restriction
on Payments.
Notwithstanding any provision of the Subordinated Indebtedness Documents
to the contrary and in addition to any other limitations set forth herein or
therein, no payment (whether made in cash, securities or other property or by
set-off) of principal, interest or any other amount due with respect to the
Subordinated Indebtedness shall be made or received, and the Subordinated
Creditor shall not exercise any right of set-off or recoupment with respect to
any Subordinated Indebtedness, until all of the Senior Indebtedness is Paid in
Full.
2.3 Proceedings. In the event of any
insolvency, bankruptcy, receivership, custodianship, liquidation,
reorganization, assignment for the benefit of creditors or other proceeding for
the liquidation, dissolution or other winding up of any Obligor or any of its
Subsidiaries or any of their respective properties (a "Proceeding"):
(i) the
Purchaser shall be entitled to receive payment in full in cash of the
Senior Indebtedness before the Subordinated Creditor is entitled to receive
any payment upon the Subordinated Indebtedness, and the Purchaser
shall be entitled to receive for application in payment such Senior
Indebtedness any payment or distribution of any kind or character, whether
in cash, property or securities or by set-off or otherwise, which may be
payable or deliverable in any such Proceedings in respect of the Subordinated
Indebtedness;
(ii) any
payment or distribution of assets of any Obligor of any kind or character,
whether in cash, property or securities, by set-off or otherwise, to which
the Subordinated Creditor would be entitled pursuant to the Subordinated
Indebtedness but for the provisions hereof shall be paid by the
liquidating trustee or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the Collateral Agent for the benefit of Purchaser
until the Senior Indebtedness shall have been Paid in Full, and the
Subordinated Creditor acknowledges and agrees that such payment or distribution
may, particularly with respect to interest on Senior Indebtedness after the
commencement of a Proceeding, result in the Subordinated Creditor receiving less
than it would otherwise receive;
(iii) the
Subordinated Creditor hereby irrevocably (x) authorizes, empowers
and directs all receivers, trustees, debtors in possession, liquidators,
custodians, conservators and others having authority in the premises
to effect all such payments and deliveries, and the Subordinated Creditor
also irrevocably authorizes, empowers and directs, the Collateral Agent
until the Senior Indebtedness shall have been Paid in Full, to demand,
xxx for, collect and receive every such payment or distribution, and (y)
agrees to execute and deliver to the Collateral Agent and the Purchaser
all such further instruments confirming the authorization referred
to in the foregoing clause (x); and
(iv) the
Subordinated Creditor hereby irrevocably authorizes, empowers
and appoints the Collateral Agent (until the Senior Indebtedness
shall have been Paid in Full) as its agent and attorney in fact to (x)
execute, verify, deliver and file such proofs of claim upon the failure
of the
Subordinated Creditor promptly to do so (and in any event prior to thirty
(30) days before the expiration of the time to file any proof) and (y)
vote such
claims in any such Proceeding; provided that no holder of Senior
Indebtedness shall have any obligation to execute, verify, deliver and/or
file any such proof of claim or vote such claim. In the event the Collateral
Agent or the Purchaser (or any agent, designee or nominee thereof)
votes any claim in accordance with the authority granted hereby, the
Subordinated Creditor shall not be entitled to change or withdraw such
vote.
The
Senior Indebtedness shall continue to be treated as Senior Indebtedness and the
provisions hereof shall continue to govern the relative rights and priorities of
the Purchaser and the Subordinated Creditor even if all or part of the Senior
Indebtedness or the security interests securing the Senior Indebtedness are
subordinated, set aside, avoided or disallowed in connection with any such
Proceeding and the provisions hereof shall be reinstated if at any time any
payment of any of the Senior Indebtedness is rescinded or must otherwise be
returned by the Collateral Agent, the Purchaser or any agent, designee or
nominee of such holder.
2.4 Incorrect
Payments. If any
payment (whether made in cash, securities or other property) not permitted under
this Agreement is received by the Subordinated Creditor on account of the
Subordinated Indebtedness before all Senior Indebtedness is Paid in Full, such
payment shall not be commingled with any asset of the Subordinated Creditor,
shall be held in trust by the Subordinated Creditor for the benefit of the
Purchaser and shall promptly be paid over to the Collateral Agent or its
designated representative, for application (in accordance with the Purchase
Agreement, the Note or the Permitted Refinancing Loan Documents) to the payment
of the Senior Indebtedness then remaining unpaid, until all of the Senior
Indebtedness is Paid in Full.
2.5 Sale,
Transfer. The
Subordinated Creditor shall not sell, assign, dispose of or otherwise transfer
all or any portion of the Subordinated Indebtedness (a) without giving prior
written notice of such action to the Collateral Agent, (b) unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the Collateral Agent a joinder to this Agreement, or an agreement
substantially identical to this Agreement and acceptable to the Collateral
Agent, in either case providing for the continued subordination and forbearance
of the Subordinated Indebtedness to the Senior Indebtedness as provided herein
and for the continued effectiveness of all of the rights of the Collateral Agent
and the Purchaser arising under this Agreement and (c) unless following such
sale, assignment, pledge, disposition or other transfer, there shall either be
(i) no more than two holders of Subordinated Indebtedness or (ii) one Person
acting as agent for all holders of the Subordinated Indebtedness pursuant to
documentation reasonably satisfactory to the Collateral Agent such that any
notices and communications to be delivered to the Subordinated Creditor
hereunder and any consents required by the Subordinated Creditor shall be made
to or obtained from such agent and shall be binding on the Subordinated Creditor
as if directly obtained from the Subordinated Creditor. In the event of a
permitted sale, assignment, disposition or other transfer, the Subordinated
Creditor engaging in such sale, assignment, disposition or other transfer, prior
to the consummation of any such action, shall cause the transferee thereof to
execute and deliver to the Collateral Agent a joinder to this Agreement, or an
agreement substantially identical to this Agreement and acceptable to the
Collateral Agent, in either case providing for the continued subordination and
forbearance of the Subordinated Indebtedness to the Senior Indebtedness as
provided herein and for the continued effectiveness of all of the rights of the
Purchaser and the Collateral Agent arising under this Agreement. Notwithstanding
the failure to execute or deliver any such agreement, the subordination effected
hereby shall survive any sale, assignment, disposition or other transfer of all
or any portion of the Subordinated Indebtedness, and the terms of this Agreement
shall be binding upon the successors and assigns of the Subordinated Creditor,
as provided in Section 10 below.
2.6 Legends. Until the Senior
Indebtedness is Paid in Full, each of the Subordinated Indebtedness Documents at
all times shall contain in a conspicuous manner the following
legend:
"This
Note and the indebtedness evidenced hereby are subordinate in the manner and to
the extent set forth in that certain Subordination Agreement (the "Subordination
Agreement") dated as
of____________, 2009 among Envision Solar International, Inc., a California
corporation, Envision Solar Construction, Inc., a California corporation,
Envision Solar Residential, Inc., a California corporation, Envison Africa, LLC,
a Delaware limited liability
company, [_____________], a [_______________], and Gemini Strategies,
LLC, to
the Senior Indebtedness (as defined in the Subordination
Agreement);
and each holder of this Note, by its acceptance hereof, shall be bound by the
provisions of the Subordination Agreement."
2.7 Restriction
on Action by the Subordinated Creditor.
(a) Until the
Senior Indebtedness is Paid in Full and notwithstanding anything contained in
the Subordinated Indebtedness Documents, the Purchase Agreement, the other Loan
Documents or the Permitted Refinancing Loan Documents to the contrary, the
Subordinated Creditor shall not, without the prior written consent of the
Collateral Agent, agree to any amendment, modification or supplement to the
Subordinated Indebtedness Documents, the effect of which is to (i) increase the
maximum principal amount of the Subordinated Indebtedness or rate of interest
(or cash pay rate of interest) on any of the Subordinated Indebtedness, (ii)
shorten the dates upon which payments of principal or interest on the
Subordinated Indebtedness are due, (iii) change in a manner adverse to any
Obligor or add any event of default or add or make more restrictive any covenant
with respect to the Subordinated Indebtedness, (iv) change the redemption,
prepayment or put provisions of the Subordinated Indebtedness, (v) alter the
subordination provisions with respect to the Subordinated Indebtedness,
including, without limitation, subordinating the Subordinated Indebtedness to
any other debt, (vi) shorten the maturity date of any of the Subordinated
Indebtedness or otherwise alter the repayment terms of the Subordinated
Indebtedness in a manner adverse to any Obligor, (vii) take any liens in any
assets of any Obligor or any of its Subsidiaries or any other assets securing
the Senior Indebtedness or (viii) obtain any guaranties or credit support from
any Person or (ix) change or amend any other term of the Subordinated
Indebtedness Documents if such change or amendment would increase the
obligations of any Obligor or confer additional material rights on the
Subordinated Creditor or any other holder of the Subordinated Indebtedness in a
manner adverse to any Obligor, the Collateral Agent or the
Purchaser.
(b) Until the
Senior Indebtedness is Paid in Full, the Subordinated Creditor shall not,
without the prior written consent of the Collateral Agent, take or continue any
action, or exercise any rights, remedies or powers in respect of any of the
Subordinated Note or any other Subordinated Indebtedness Documents, or exercise
or continue to exercise any other right or remedy at law or in equity that the
Subordinated Creditor might otherwise possess, to collect any amount due and
payable in respect of any Subordinated Note or any of the other Subordinated
Indebtedness, including, without limitation, the acceleration of the
Subordinated Indebtedness, the commencement of any action to enforce payment or
foreclosure on any lien or security interest, the filing of any petition in
bankruptcy or the taking advantage of any other insolvency law of any
jurisdiction (any of the foregoing, an "Enforcement Action"). If the
Subordinated Creditor shall attempt to take any Enforcement Action or otherwise
seek to collect or realize upon any of the Subordinated Indebtedness in
violation of the terms hereof, the holders of the Senior Indebtedness may, by
virtue of the terms hereof, restrain any such Enforcement Action or other
action, either in its own name or in the name of the applicable
Obligor.
(c) Until
the Senior Indebtedness is Paid in Full, any Liens of the Subordinated Creditor
in the Collateral which may exist in breach of the Subordinated Creditor's
agreement pursuant to subsection 2.7(a)(vii) or Section 18 of this Agreement
shall be and hereby are subordinated for all purposes and in all respects to the
Liens of the Collateral Agent and the Purchaser in the Collateral, regardless of
the time, manner or order of perfection of any such Liens. In the event that the
Subordinated Creditor obtains any Liens in the Collateral in violation of
subsection 2.7(a)(vii) or Section 18 of this Agreement, the Subordinated
Creditor (i) shall (or shall cause their agent) to promptly execute and deliver
to the Collateral Agent such termination statements and releases as the
Collateral Agent shall request to effect the release of the Liens of the
Subordinated Creditor in such Collateral and (ii) shall be deemed to have
authorized the Collateral Agent to file any and all termination statements
required by the Collateral Agent in respect of such Liens. In furtherance of the
foregoing, the Subordinated Creditor hereby irrevocably appoints the Collateral
Agent its attorney-in-fact, with full authority in the place and stead of the
Subordinated Creditor and in the name of the Subordinated Creditor or otherwise,
to execute and deliver any document or instrument which the Subordinated
Creditor may be required to deliver pursuant to this subsection
2.7(c).
3. Continued Effectiveness of
this Agreement; Modifications to Senior
Indebtedness.
(a) The terms
of this Agreement, the subordination effected hereby, and the rights and the
obligations of the Subordinated Creditor, the Collateral Agent and the Purchaser
arising hereunder, shall not be affected, modified or impaired in any manner or
to any extent by: (i) any amendment or modification of or supplement to the
Purchase Agreement, any other Loan Document or any Permitted Refinancing Loan
Document or any Subordinated Indebtedness Document; (ii) the validity or
enforceability of any of such documents; or (iii) any exercise or non-exercise
of any right, power or remedy under or in respect of the Senior Indebtedness or
the Subordinated Indebtedness or any of the instruments or documents referred to
in clause (i) above.
(b) The
Collateral Agent and the Purchaser may at any time and from time to time in
their sole discretion, renew, amend, refinance, extend or otherwise modify the
terms and provisions of Senior Indebtedness (including, without limitation, the
terms and provisions relating to the principal amount outstanding thereunder,
the rate of interest thereof, the payment terms thereof and the provisions
thereof regarding default or any other matter) or exercise (or refrain from
exercising) any of their rights under the Loan Documents, all without notice to
or consent from the Subordinated Creditor and without incurring liability to the
Subordinated Creditor and without impairing or releasing the obligations of the
Subordinated Creditor under this Agreement. No compromise, alteration,
amendment, renewal, restatement, refinancing or other change of, or waiver,
consent or other action in respect of any liability or obligation under or in
respect of, any terms, covenants or conditions of Senior Indebtedness or the
Loan Documents, whether or not in accordance with the provisions of the Senior
Indebtedness, shall in any way alter or affect any of the subordination
provisions hereof.
(a) The
Subordinated Creditor hereby represents and warrants to the Collateral
Agent and the Purchaser as follows:
4.1 Existence
and Power. The
Subordinated Creditor is duly organized, validly existing and in good standing
under the laws of the state of its organization.
4.2 Authority. The Subordinated Creditor
has full power and authority to enter into, execute, deliver and carry out the
terms of this Agreement and to incur the obligations provided for herein, all of
which have been duly authorized by all proper and necessary action and are not
prohibited by the organizational documents of the Subordinated
Creditor.
4.3 Binding
Agreements. This
Agreement, when executed and delivered, will constitute the valid and legally
binding obligation of the Subordinated Creditor enforceable in accordance with
its terms.
4.4 Conflicting
Agreements; Litigation.
No provisions of any mortgage, indenture, contract, agreement, statute,
rule, regulation, judgment, decree or order binding on the Subordinated Creditor
or affecting the property of the Subordinated Creditor conflicts with, or
requires any consent which has not already been obtained under, or would in any
way prevent the execution, delivery or performance of the terms of this
Agreement. The execution, delivery and carrying out of the terms of this
Agreement will not constitute a default under, or result in the creation or
imposition of, or obligation to create, any Lien upon the property of the
Subordinated Creditor pursuant to the terms of any such mortgage, indenture,
contract or agreement. No pending or, to the best of the Subordinated Creditor's
knowledge, threatened, litigation, arbitration or other proceedings if adversely
determined would in any way prevent the performance of the terms of this
Agreement.
4.5 No
Divestiture. On
the date hereof, the Subordinated Creditor is the current owner and holder of
its Subordinated Note and all other Subordinated Indebtedness
Documents.
4.6 Default
under Subordinated Indebtedness Documents. (a) On the date hereof, no
default exists under or with respect to the Subordinated Note or any of the
other Subordinated Indebtedness Documents.
(b) Each
Obligor hereby represents and warrants to the Collateral Agent and the
Purchaser that the signatories to this Agreement under the heading "Subordinated
Creditor" constitute
all of the holders of the Subordinated Note and the other Subordinated
Indebtedness.
5. Cumulative
Rights, No Waivers.
Each and every right, remedy and power granted to the Collateral Agent or
the Purchaser hereunder shall be cumulative and in addition to any other right,
remedy or power specifically granted herein, in the Purchase Agreement, the
other Loan Documents or Permitted Refinancing Loan Documents or now or hereafter
existing in equity, at law, by virtue of statute or otherwise, and may be
exercised by the Collateral Agent or the Purchaser, from time to time,
concurrently or independently and as often and in such order as the Collateral
Agent or the Purchaser may deem expedient. Any failure or delay on the part of
the Collateral Agent or the Purchaser in exercising any such right, remedy or
power, or abandonment or discontinuance of steps to enforce the same, shall not
operate as a waiver thereof or affect the Collateral Agent's or the Purchaser's
right thereafter to exercise the same, and any single or partial exercise of any
such right, remedy or power shall not preclude any other or further exercise
thereof or the exercise of any other right, remedy or power, and no such
failure, delay, abandonment or single or partial exercise of the Collateral
Agent's or the Purchaser's rights hereunder shall be deemed to establish a
custom or course of dealing or performance among the parties
hereto.
7. Additional
Documents and Actions.
The Subordinated Creditor at any time, and from time to time, after the
execution and delivery of this Agreement, upon the request of the Collateral
Agent and at the expense of the Company, promptly will execute and deliver such
further documents and do such further acts and things as the Collateral Agent
may request in order to effect fully the purposes of this
Agreement.
8. Notices. Any notices, consents,
waivers or other communications required or permitted to be given under the
terms of this Agreement must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
(1) Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
|
If to a
Subordinated
Creditor:
|
[___________________________] | |
| with a copy to: | [____________________________] | |
|
|
||
| If to any Obligor: | Envision
Solar International, Inc.
0000
Xxxxxxxxx Xxxxxx Xxxxx
0000
Xx Xxxxx, XX 00000
Attention:
Chief Executive Officer
Telecopy:
(000) 000-0000
|
|
| with a copy to: | Xxxxxx
and Xxxxx, LLP
0000
Xxxxxx xx xxx Xxxxxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxx X. Xxxxxx, Esq.
Telecopy:
(000) 000-0000
|
|
| If to the Collateral Agent: |
Gemini
Strategies, LLC
000
Xxxxxxxxx Xxxxx, Xxxxx X
Xxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxxxx
Telecopy:
(000) 000-0000
|
|
| with a copy to: |
Xxxxx X.
Xxxxxxx, P.C.
000
Xxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx, X.X.
00000
Telecopy: (000) 000-0000
|
|
or, in
the case of party named above, at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or deposit with a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
9. Severability. In the event that any
provision of this Agreement is deemed to be invalid by reason of the operation
of any law or by reason of the interpretation placed thereon by any court or
governmental authority, this Agreement shall be construed as not containing such
provision and the invalidity of such provision shall not affect the validity of
any other provisions hereof, and any and all other provisions hereof which
otherwise are lawful and valid shall remain in full force and
effect.
10. Successors
and Assigns. This
Agreement shall inure to the benefit of the successors and assigns of the
Collateral Agent and the Purchaser and shall be binding upon the successors and
assigns of the Subordinated Creditor and Obligors.
11. Counterparts. This Agreement may be
executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to each other party; provided that a
facsimile signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.
12. Defines Rights of Creditors;
Subrogation.
(a) The
provisions of this Agreement are solely for the purpose of defining the relative
rights of the Subordinated Creditor, the Collateral Agent and the Purchaser and
shall not be deemed to (i) create any rights or priorities in favor of any other
Person, including, without limitation, any Obligor, or (ii) amend any of the
Loan Documents or in any way waive any of the rights that the Collateral Agent
and the Purchaser have against any Obligor under the Loan
Documents.
(b) Subject
to the Payment in Full of the Senior Indebtedness, in the event and to the
extent cash, property or securities otherwise payable or deliverable to the
holders of the Subordinated Indebtedness shall have been applied pursuant to
this Agreement to the payment of Senior Indebtedness, then and in each such
event, the holders of the Subordinated Indebtedness shall be subrogated to the
rights of each holder of Senior Indebtedness to receive any further payment or
distribution in respect of or applicable to the Senior Indebtedness; and, for
the purposes of such subrogation, no payment or distribution to the holders of
Senior Indebtedness of any cash, property or securities to which any holder of
Subordinated Indebtedness would be entitled except for the provisions of this
Agreement shall, and no payment over pursuant to the provisions of this
Agreement to the holders of Senior Indebtedness by the holders of the
Subordinated Indebtedness shall, as between any Obligor, its creditors other
than the holders of Senior Indebtedness and the holders of Subordinated
Indebtedness, be deemed to be a payment by such Obligor to or on account of
Senior Indebtedness.
14. Statement
of Indebtedness to Subordinated Creditor. The Company will furnish to
the Collateral Agent upon demand, a statement of the indebtedness owing from
Obligors to the Subordinated Creditor, and will give the Collateral Agent access
to the books of Obligors in accordance with the Purchase Agreement so that the
Collateral Agent can make a full examination of the status of such
indebtedness.
15. Headings. The paragraph headings used
in this Agreement are for convenience only and shall not affect the
interpretation of any of the provisions hereof.
16. Termination. This Agreement shall
terminate upon the Payment in Full of the Senior Indebtedness.
17. Subordinated
Default Notice.
The Subordinated Creditor and the Company each shall provide the
Collateral Agent with a Subordinated Default Notice upon the occurrence of each
Subordinated Default, and the Subordinated Creditor shall notify the Collateral
Agent in the event such Subordinated Default is cured or waived.
18. No
Contest of Senior Indebtedness or Liens; No Security for Subordinated
Indebtedness. The
Subordinated Creditor agrees that it will not, and will not encourage any other
Person to, at any time, contest the validity, perfection, priority or
enforceability of the Senior Indebtedness or Liens in the Collateral granted to
the Collateral Agent pursuant to the Purchase Agreement, the other Loan
Documents or the Permitted Refinancing Loan Documents or accept or take any
collateral security for the Subordinated Indebtedness. In furtherance of the
foregoing, on the date hereof, the Subordinated Creditor hereby represents and
warrants that it has not taken or received a security interest in, or lien upon,
any asset of any Obligor, whether in respect of the Subordinated Indebtedness or
otherwise.
19. Governing
Law, Jurisdiction Waiver of Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR
ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
20. Waiver of
Consolidation.
The Subordinated Creditor acknowledges and agrees that (i)
Obligors are each separate and distinct entities; and (ii) it will not at any
time insist upon, plead or
seek advantage of any substantive consolidation, piercing the corporate veil or
any other order or
judgment that causes an effective combination of the assets and liabilities of
Obligors in any case
or proceeding under Title 11 of the United States Code or other similar
proceeding.
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IN
WITNESS WHEREOF, each Subordinated Creditor, each Obligor, the Collateral Agent
and the Purchaser have caused this Agreement to be executed as of the date first
above written.
| SUBORDINATED CREDITOR: | |
|
/s/ Xxxx Xxxx
|
|
| Xxxx Xxxx |
 |
| COLLATERAL AGENT: | |||
| Gemini Strategies, LLC in its capacity as collateral agent for the Purchaser | |||
|
|
By:
|
||
| Name: Xxxxxx Xxxxxxx | |||
| Title: President | |||
| THE PURCHASER: | |||
| Gemini Master Fund, Ltd., a Cayman Islands corporation | |||
|
|
By:
|
||
| Gemini Strategies, LLC Its: Investment Adviser | |||
| By: | |||
| Name: Xxxxxx Xxxxxxx | |||
| Title: President | |||
