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EXHIBIT
10.24
Execution Copy
CONFIDENTIAL TREATMENT
REQUESTED – CONFIDENTIAL PORTIONS OF
THIS DOCUMENT HAVE BEEN
REDACTED AND HAVE BEEN SEPARATELY
FILED WITH THE
COMMISSION
FIRST AMENDMENT TO
INTERCREDITOR AND SUBORDINATION AGREEMENT
This FIRST AMENDMENT TO
INTERCREDITOR AND SUBORDINATION AGREEMENT (this “
Amendment ”) is entered into as of this 2nd day of
September, 2006 by and among those parties identified as Senior
Interest Holders on Schedule A attached hereto
(collectively, the “ Senior Interest Holders ”),
those parties identified as Subordinated Lenders on Schedule
A attached hereto and who have signed a counterpart signature
page to this Agreement (collectively, the “ Subordinated
Lenders ”) and Raser Technologies, Inc. (“
Raser ”). This Amendment modifies the Intercreditor
and Subordination Agreement, dated June 5, 2006, by and among
the Senior Interest Holders and *** (the “ Original
Agreement ”). Capitalized terms used, but not defined,
herein shall have the meaning ascribed to such terms in the
Original Agreement.
RECITALS
A. The Obligor
(i) issued the First *** Note to ***, the original
Subordinated Lender on January 23, 2006, (ii) issued the
Second *** Note to *** on May 23, 2006, and (iii) issued
an additional note, in the principal amount of $*** to *** on
August 1, 2006 (“Third *** Note”).
B. Pursuant to an Early
Redemption Request (as defined in the Amended and Restated
Operating Agreement of Obligor dated March 17, 2005;
hereinafter “Operating Agreement”) delivered to the
Obligor by the Senior Interest Holders, the Obligor was obligated
to pay to the Senior Interest Holders the Senior
Obligations.
C. The Obligor has granted a
security interest in and to the Collateral to *** and, as a
condition to such grant, the Senior Interest Holders and ***
entered into the Original Agreement pursuant to which (1) the
Senior Obligations held by the Senior Interest Holders, are senior
and prior to any liens or security interests in the Collateral held
by the Subordinated Lenders, and (2) the Senior Obligations
are senior and prior in right of payment to the Subordinated
Indebtedness to the extent and on the terms set forth in the
Original Agreement.
D. Concurrent with the
execution of this Amendment, the Obligor is issuing a promissory
note to Raser in the principal amount of $5,547,552 (the “
Raser Note ”).
E. In connection with the
Raser Note, each of the parties to the Original Agreement, for and
on behalf of itself and each of its successors and assigns, desires
to enter into this Amendment to (i) include Raser as a
Subordinated Lender for purposes of the Original Agreement and
(ii) clarify their respective rights and priorities in the
Collateral and of their respective claims against
Obligor.
***CONFIDENTIAL MATERIAL
REDACTED AND SEPARATELY FILED WITH THE COMMISSION***
NOW THEREFORE, in
consideration of the mutual covenants set out herein, the
sufficiency of which is acknowledged by all Parties, the
undersigned hereby agree as follows:
1. Section 2.6 of the
Original Agreement is amended and restated in its entirety as
follows:
2.6 Acknowledgment of
Liens; Agreement not to Further Subordinate . Subordinated
Lenders agree that they shall not obtain a Lien on any asset or
Collateral to secure all or any portion of the Subordinated
Indebtedness unless concurrently therewith, the parties hereby
agree that all such Liens are and will be subject to this
Agreement. The Senior Interest Holders acknowledge and agree that
*** has been granted Liens by affiliates of Obligor upon all of the
Collateral, and the Senior Interest Holders and Raser hereby
consent thereto. The subordination of Liens and claims by
Subordinated Lenders in favor of the Senior Interest Holders shall
not be deemed to subordinate the Liens or claims of the
Subordinated Lenders to the Liens or claims of any
Person.
2. Section 2.7 of the
Original Agreement is amended and restated in its entirety as
follows:
2.7 Priority of
Subordinated Indebtedness Between Subordinated Lenders . Each
of the Subordinated Lenders hereby acknowledges and agrees that
their respective Subordinated Debt Documents and the Subordinated
Indebtedness held by each of them, their rights to payment and
their rights in the Collateral shall be treated pari passu
as between each of them; provided, however, that, due to the
Obligor’s termination of that certain Agreement and Plan of
Acquisition, dated January 19, 2006, by and among Raser,
Obligor and certain other parties (as amended, the “
Acquisition Agreement ”) on June 16, 2006 (the
“ Termination Date ”) pursuant to
Section 8.1(b) of such Acquisition Agreement, a portion of the
principal amount of the Subordinated Indebtedness held by Raser
that was outstanding on the Termination Date and that was incurred
by the Obligor on or after May 1, 2006, in the amount of
$863,901.60 shall be deemed to be senior to the Subordinated
Indebtedness held by ***. Nothing in this Section 2.7 shall be
in any way interpreted to alter the rights of the Senior Interest
Holders as set forth herein.
3. The definition of “
Subordinated Indebtedness ” set forth on Schedule A to
the Original Agreement is amended and restated in its entirety as
follows:
“ Subordinated
Indebtedness ” means (i) all obligations and all
other amounts owing or due to the Subordinated Lenders under the
Subordinated Debt Documents and (ii) an
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