RE C I T A L S
EX-10.15 17 f8k0210ex10xv_envision.htm SUBORDINATION AGREEMENT, DATED AS OF OCTOBER 1, 2009, BY AND AMONG ENVISION SOLAR INTERNATIONAL, INC., ENVISION SOLAR CONSTRUCTION, INC., ENVISION SOLAR RESIDENTIAL, INC., ENVISION AFRICA, LLC, JON EVEY, GEMINI MASTER FUND, LTD. AND GEMINI STRATEGIES, LLC f8k0210ex10xv_envision.htm
4. Representations and Warranties.
6. Modification. Any modification or waiver of any provision of this Agreement, or any consent to any departure by the Collateral Agent or the Subordinated Creditor therefrom, shall not be effective in any event unless the same is in writing and signed by the Collateral Agent and the holders of at least 51% of the then outstanding principal balance of the Subordinated Note, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific instance and for the specific purpose given. Any notice to or demand on the Subordinated Creditor in any event not specifically required of the Collateral Agent hereunder shall not entitle the Subordinated Creditor to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.
13. Conflict. In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant or condition of any of the Subordinated Indebtedness Documents, the provisions of this Agreement shall control and govern. For purposes of this Section 13, to the extent that any provisions of any of the Subordinated Indebtedness Documents provide rights, remedies and benefits to the Collateral Agent or the Purchaser that exceed the rights, remedies and benefits provided to the Collateral Agent or the Purchaser under this Agreement, such provisions of the applicable Subordinated Indebtedness Documents shall be deemed to supplement (and not to conflict with) the provisions hereof.
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"), Jon Evey ("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, sue 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. 4225 Executive Square Suite 1000 La Jolla, CA 92037 Attention: Chief Executive Officer Telecopy: (858) 799-4592 | |
| with a copy to: | Haynes and Boone, LLP 1221 Avenue of the Americas 26th Floor New York, NY 10020 Attention: Rick A. Werner, Esq. Telecopy: (212) 844-8234 | |
| If to the Collateral Agent: | Gemini Strategies, LLC 135 Liverpool Drive, Suite C Cardiff, CA 92007 Attention: Steven Winters Telecopy: (858) 509-8808 | |
| with a copy to: | Peter J. Weisman, P.C. 767 Third Avenue, 6th Floor New York, N.Y. 10017 Telecopy: (212) 676-5665 | |
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.
[remainder of page intentionally left blank]
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/ John Evey | |
| John Evey |
 |
| COLLATERAL AGENT: | |||
| Gemini Strategies, LLC in its capacity as collateral agent for the Purchaser | |||
| | By: | ||
| Name: Steven Winters | |||
| Title: President | |||
| THE PURCHASER: | |||
| Gemini Master Fund, Ltd., a Cayman Islands corporation | |||
| | By: | ||
| Gemini Strategies, LLC Its: Investment Adviser | |||
| By: | |||
| Name: Steven Winters | |||
| Title: President | |||
