Exhibit 10.3
INTERCREDITOR
AGREEMENT
THIS INTERCREDITOR AGREEMENT (the
“Agreement”) is made July 13, 2007 by and among GEM
SOLUTIONS, INC. , a Delaware corporation (the
“Company”), FEQ GAS, LLC, a Delaware
limited liability company (“ FEQ” ), and
TRIDENT GROWTH FUND, L.P. (“
Trident” ).
R E
C I T A L S:
A. Pursuant to that certain
Loan and Security Agreement, dated the date hereof (the
“ FEQ Loan Agreement” ) between FEQ and the
Company, FEQ has extended a $100,000 line of credit to the
Company;
B. The Company and Trident
have entered into that certain Loan Agreement dated April 1, 2005
(such agreement, and all other loan agreements between the Company
and Trident, each as amended to date, being the (“ Trident
Loan Agreement” ), pursuant to which Trident made
available to the Company loans in the maximum aggregate principal
amount of $1,600,000. The Company’s obligations under
the Trident Loan Agreement are secured by a perfected security
interest in substantially all of the Company’s
assets.
C. FEQ and Trident wish to
enter into this Intercreditor Agreement to set forth and evidence
the relative rights and interests of FEQ and Trident in respect of
the indebtedness evidenced by FEQ Loan Agreement and Trident Loan
Agreement;
NOW THEREFORE, in
consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In addition to the
terms defined in the preamble and recitals of this Agreement, the
following terms shall have the respective meanings set forth
below.
“
Bankruptcy Code ” means the United States Bankruptcy
Code (11 U.S.C. § 101 et seq .), as
amended, and any successor statute.
“
Business Days ” means any day that is not Saturday or
Sunday with the exception of nationally recognized
holidays.
“
Debt ” of any person means, without duplication, (a)
all obligations of such person for borrowed money and all
obligations of such person evidenced by bonds, debentures, notes or
other similar instruments on which interest charges are customarily
paid, (b) all obligations,
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contingent or
otherwise, relative to the face amount of all letters of credit,
whether or not drawn, and banker’s acceptances issued for the
account of such person, (c) all capitalized lease obligations of
such person (to the extent required by generally accepted
accounting principles to be included on the balance sheet of such
person) and (d) all obligations of such person (contingent or
otherwise) to guarantee, purchase or otherwise acquire, or
otherwise assure a creditor against loss in respect of, another
person.
“ Event
of Default ” shall mean the occurrence of any default or
event of default and the expiration of any application grace or
notice periods under FEQ Loan Agreement and the documents executed
and delivered in connection therewith.
“ FEQ
Debt ” means all obligations to pay money pursuant to FEQ
Loan Agreement or evidenced by the Note referred to therein, not to
exceed the principal amount of $100,000 and the non-default rate of
interest on such amount as provided in the FEQ Loan Agreement and
the other fees and costs described therein.
“
Proceeding” means (a) any insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment,
composition or other similar proceeding relating to the Company,
its properties or its creditors as such, (b) any proceeding for any
liquidation, dissolution or other winding-up of the Company,
whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy proceedings, or (c) any assignment for the
benefit of creditors or marshaling of assets of the Company or the
appointment of a trustee, receiver, sequestrator or other custodian
for the Company or any of its properties.
“
Satisfied ” means with respect to the FEQ Debt that
all of the FEQ Debt shall have been paid in full in cash and all
financing arrangements and accommodations between the Company and
FEQ shall have been terminated and FEQ shall have no obligation to
make any loans, financial accommodations or advance any funds which
would constitute FEQ Debt to the Company.
“ Senior
Loan Documents ” means FEQ Loan Agreement and all notes,
guaranties, security agreements, pledge agreements, mortgages,
debentures, charges, assignments of deposit, deed of trust,
assignments of leases, collateral assignments, UCC financing
statements and other documents, instruments and agreements executed
and delivered from time to time pursuant to or in connection with
FEQ Loan Agreement or in connection with any FEQ Debt.
“ Trident
Debt” means the principal not in excess of $1,600,000 and
the non-default rate of interest on such amount as provided in
Trident Loan Agreement in respect of the Debt of the Company
incurred under Trident Loan Agreement and all other amounts owing
from time to time by the Company, any affiliate or subsidiary of
the Company and any guarantor of the Trident Debt to
Trident.
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ARTICLE II
SUBORDINATION
Section 2.1 Payment
Subordination . Upon the terms and conditions set forth
in this Agreement, (a) Trident hereby subordinates all Trident Debt
and all claims and demands arising therefrom to all of the FEQ
Debt; (b) Trident agrees that all of the FEQ Debt shall be
Satisfied in full (including without limitation all interest
accruing on any FEQ Debt after commencement of any Proceeding
whether or not such interest is allowable in any such Proceeding)
before Trident shall be paid anything (of any kind or character) on
account of the principal of any Trident Debt or any other sums
payable in connection therewith except for current interest at the
non-default rate; and (c) until all of the FEQ Debt is Satisfied,
the Company will make, and Trident will not demand or accept,
either directly or indirectly, payment (of any kind or character)
of all or any part of Trident Debt, except for current interest at
the non-default rate, without the prior written consent of
FEQ.
Section 2.2 Lien
Subordination . Trident hereby agrees that, regardless of
the time, manner or order of attachment or perfection or lack of
perfection and regardless of any priority otherwise available to
Trident, if any, Trident’s lien and security interest, if
any, in any and all of the collateral for Trident Debt is and shall
be fully subject and subordinate (i) to FEQ’s claims to and
lien and security interest in such collateral and any and all other
property of the Company, (ii) to all FEQ’s rights therein,
and (iii) to FEQ’s rights to be repaid in full prior to the
repayment of Trident Debt. FEQ shall have the right, at all
times and from time to time, to apply all or any part of the
collateral and the other property of the Company, and the proceeds
thereof and all collections and remittances thereof, and all other
collections and payments from or on behalf of the Company to the
repayment of FEQ Debt, and Trident shall not have the right to
proceed against all or any portion of the collateral or other
property of the Company for Trident Debt until FEQ Debt has been
Satisfied. No claim of or under Trident Debt shall have any claim
to or against any assets of the Company on a parity with or prior
to the claim of FEQ Debt
Section 2.3 Payment
Blockage . No payment or distribution shall be made on account
of any Trident Debt, except for current interest at the non-default
rate, or in respect of any redemption, retirement, purchase or
other acquisition by the Company of any Trident Debt, at any time
during which FEQ shall have notified Trident that any FEQ Debt
shall have been declared due and payable prior to or upon its
stated final maturity or otherwise and remains unpaid.
Section 2.4
Subordination in Event of Insolvency, Etc. In the
event of any Proceeding, (a) FEQ Debt shall first be Satisfied
before any payment or distribution, whether in cash, securities or
other property shall be made in respect of Trident, and (b) any
payment or distribution of assets which would otherwise (but for
this Agreement) be payable or deliverable in respect of Trident
Debt shall be paid or delivered directly to FEQ for application
towards any payment of FEQ Debt until all FEQ Debt shall have been
Satisfied.
Section 2.5 Turnover
of Improper Payments . If any payment or distribution,
whether in cash, securities or other pro
