EXHIBIT
10.3
SUBORDINATION
AGREEMENT
THIS SUBORDINATION AGREEMENT (“
Agreement ”) dated June __, 2009, is made by and among
the Investors listed on Schedule A hereto (singly and collectively,
“ New Lender ”), Advaxis, Inc., a Delaware
corporation (“ Borrower ”) and Thomas A. Moore
(“ Subordinating Creditor ”).
WHEREAS, the New Lender and the Borrower are
parties to a Note Purchase Agreement, dated the date hereof,
pursuant to which, among other things, the New Lender has made
certain loans to the Borrower which are secured by, among other
things security interests in substantially all of the now-owned and
hereafter-acquired assets of the Borrower (the “ New
Loan ”); and
WHEREAS, the Borrower is indebted to the
Subordinating Creditor under a promissory note dated September 22,
2008, as amended on December 15, 2008 and in connection herewith
issued by the Borrower to the Subordinating Creditor (the “
Junior Note ”); and
WHEREAS, the New Lender and the Subordinating
Creditor wish to confirm their agreements and understandings with
respect to the relative priorities of their respective claims
against the Borrower and its assets as more particularly set forth
herein;
NOW, THEREFORE, the parties hereto, for good and
valuable consideration, the receipt of which is hereby
acknowledged, hereby agree as follows:
(a) Subordinating
Creditor hereby expressly subordinates and makes inferior in
priority, operation, and effect the obligations of Borrower to
Subordinated Creditor pursuant to the Junior Note (but no other
obligations) and all modifications, renewals, extensions,
consolidations, and substitutions thereof (the “
Subordinated Indebtedness ”) to the obligations owing
by Borrower to New Lender pursuant to the New Loan (the “
Protected Indebtedness ”).
(b) The
New Lender acknowledges that the Notes provide that Borrower pay to
the Subordinating Creditor certain payments of interest and
principal, as more fully provided in the Junior Note (the “
Permitted Payments ”), including without limitation
payments of accrued interest and principal pursuant to the Junior
Note. The New Lender hereby agrees that the Company may
pay to the Junior Creditor, and the Junior Creditor may accept from
the Company, the Permitted Payments as and when due and payable in
accordance with the Junior Note, provided that no event of default
under the Protected Indebtedness (a “ New Debt Event of
Default ”) has occurred or would occur upon the making of
such Permitted Payment. If a New Debt Event of Default occurs, New
Lender will act in a commercially reasonable manner to notify
Borrower and Subordinating Creditor of such fact; provided that New
Lender’s failure to provide such notification will not waive
or affect any such existing New Debt Event of Default; and provided
further that neither Borrower nor Subordinating Creditor will be in
breach of this Agreement if a Permitted Payment is made or received
and applied after a New Debt Event of Default but before Borrower
or Subordinating Creditor have actual knowledge of
same. For all purposes of this Agreement, no Protected
Indebtedness shall be deemed to have been paid in full until the
New Lender shall have received payment in full in immediately
available funds.
2.
Covenants of Subordinating Creditor
. Subordinating Creditor hereby agrees as
follows:
(a) In
order to enable the New Lender to enforce its rights hereunder,
Subordinating Creditor will do all acts necessary or convenient to
preserve for the New Lender the benefits of this
Agreement, and will execute all agreements which the New Lender may
request for that purpose. Upon a New Debt Event of Default, the New
Lender is hereby authorized, but shall not be obligated, to do any
one or more of the following in the name of Subordinating Creditor
or otherwise: (i) demand, collect, compromise, and receive payment
of the Subordinated Indebtedness or any part thereof; (ii) make,
prove, and vote any and all claims in respect of the Subordinated
Indebtedness of Subordinating Creditor in any proceeding (formal or
informal) with respect to the bankruptcy reorganization,
arrangement, insolvency, liquidation, or other similar relief of
Borrower, or any guarantor or hypothecator, including without
limitation, voting such claims at any meeting of creditors, and
including without limitation, voting to accept or reject any plan
of reorganization in such proceeding; (iii) receive all payments or
dividends on such claims; (iv) accept any new securities or other
property to which Subordinating Creditor would otherwise be
entitled in respect of such claims under any such plan of
reorganization or proceeding; and (v) in general, do any act in
connection with the obligations or proceedings which Subordinating
Creditor might do, it being understood that New Lender shall
account to Subordinating Creditor for any such payment or dividend
received by the New Lender in excess of the amount necessary to
satisfy the Protected Indebtedness in full with interest, and
including reasonable attorneys’ fees incurred in connection
with the claim and this Agreement. Subordinating Creditor hereby
irrevocably constitutes and appoints New Lender as its true and
lawful attorney for the purposes set forth above.
(b) Subordinating
Creditor agrees that it will provide New Lender with notice of any
default or event of default under the Subordinated Indebtedness of
which it becomes aware and, upon request by New Lender, will
furnish New Lender with statements of account for the Subordinated
Indebtedness and will make all records of Subordinating Creditor
relating thereto available to New Lender.
(c) The
Subordinating Creditor agrees that, so long as this Agreement is in
effect, it will not, without the prior written consent of the New
Lender, (i) commence, prosecute or participate in any
administrative, legal or equitable action, or (ii) take any other
enforcement action, or assert any right or remedy whatsoever
against Borrower or any of its subsidiaries, whether under
applicable law, in any bankruptcy proceeding or otherwise, unless,
in the case of each such action (hereinafter an “
Enforcement Action ”), at or prior to the time at
which the Subordinating Creditor wishes to take such Enforcement
Action, all Protected Indebtedness shall have been indefeasibly
paid in full and all commitments in respect of the New Loan shall
have terminated. Notwithstanding the forego
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