Exhibit 10.4

 

SUBORDINATION AGREEMENT

 

THIS SUBORDINATION AGREEMENT (this “Agreement”) is entered into as of this
March 15, 2017, by and among each of the undersigned subordinated lenders listed
on the signature pages hereto as “Subordinated Creditors” (collectively,
“Subordinated Creditor”), AGRITECH WORLDWIDE, INC., a Nevada corporation,
(“Company”), Jonathan Kahn and Mo Garfinkle (collectively, “Senior Lenders”),
and Jonathan Kahn, as Agent for the Senior Lenders (in such capacity “Agent”).

 

R E C I T A L S

 

A.     The Company and Senior Lenders have entered into that certain Demand Note
of even date herewith (as the same may be amended, supplemented or otherwise
modified from time to time, the “Senior Note”) pursuant to which, among other
things, Senior Lenders have agreed, subject to the terms and conditions set
forth in the Senior Note, to make certain loans and financial accommodations to
the Company. All of the Company’s obligations to Agent and Senior Lenders under
the Senior Note are secured by liens on and security interests in substantially
all of the now existing and hereafter acquired real and personal property of the
Company (the “Collateral”) pursuant to and in accordance with that certain
Security Agreement, dated as of the date hereof, between the Company and Agent
(the “Security Agreement”). Capitalized terms used but not defined herein shall
have the meanings set forth in the Senior Note.

 

B.     Subordinated Creditor has extended credit to the Company pursuant to that
certain Loan and Security Agreement, dated as of February 1, 2017, by and among
the Subordinated Creditor and the Company (the “Subordinated Loan Agreement”).
All of the Company’s obligations evidenced by the Subordinated Debt (as
hereinafter defined) are secured by liens on and security interests in the
Collateral.

 

C.     As an inducement to and as one of the conditions precedent to the
agreement of Agent and Senior Lenders to consummate the transactions
contemplated by the Senior Loan Documents (as hereinafter defined), Agent and
Senior Lenders have required the execution and delivery of this Agreement by
Subordinated Creditor and the Company in order to set forth the relative rights
and priorities of Agent, Senior Lenders and Subordinated Creditor under the
Senior Debt Documents and the Subordinated Debt Documents (as hereinafter
defined).

 

NOW, THEREFORE, in order to induce Agent and Senior Lenders to consummate the
transactions contemplated by the Senior Loan Documents, 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. The following terms shall have the following meanings in this
Agreement:

 

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended from
time to time and any successor statute and all rules and regulations promulgated
thereunder.

 

 

 

 

“Collateral” shall have the meaning set forth in the Recitals hereto.

 

“Distribution” means, with respect to any indebtedness or obligation: (a) any
payment or distribution by any Person of cash, securities or other property, by
set-off or otherwise, on account of such indebtedness or obligation; (b) any
redemption, purchase or other acquisition of such indebtedness or obligation by
any Person; or (c) the granting of any lien or security interest to or for the
benefit of the holders of such indebtedness or obligation in or upon any
property of any Person.

 

“Enforcement Action” shall mean: (a) to take from or for the account of the
Company or any guarantor of the Subordinated Debt, by set-off or in any other
manner, the whole or any part of any moneys which may now or hereafter be owing
by the Company or any such guarantor with respect to the Subordinated Debt;
(b) to sue for payment of, or to initiate or participate with others in any
suit, action or proceeding against the Company or any such guarantor to
(i) enforce payment of or to collect the whole or any part of the Subordinated
Debt or (ii) commence judicial enforcement of any of the rights and remedies
under the Subordinated Debt Documents or applicable law with respect to the
Subordinated Debt; (c) to accelerate the Subordinated Debt; (d) to exercise any
put option or to cause the Company or any such guarantor to honor any redemption
or mandatory prepayment obligation under any Subordinated Debt Document; (e) to
notify account debtors or directly collect accounts receivable or other payment
rights of the Company or any such guarantor; or (f) to take any action under the
provisions of any state or federal law, including, without limitation, the
Uniform Commercial Code, or under any contract or agreement, to enforce,
foreclose upon, take possession of or sell any property or assets of the Company
or any such guarantor.

 

“Paid in Full” and “Payment in Full” means that: (a) all Senior Debt has been
indefeasibly paid in full in cash; (b) all commitments to lend under the Senior
Debt Documents have been terminated and no Person has any further right to
obtain loans or other extensions of credit under the Senior Debt Documents; and
(c) any costs, expenses and contingent indemnification obligations which are not
yet due and payable but with respect to which a claim is pending or may
reasonably be expected to be asserted under the Senior Debt Documents are
(i) backed by standby letters of credit (issued by a bank, and in form and
substance acceptable to Senior Lenders) or (ii) cash collateralized, in each
case, as reasonably required by Senior Lenders and in an amount reasonably
estimated by Senior Lenders to be the amount of costs, expenses and such
contingent indemnification obligations which may become due and payable.

 

“Permitted Subordinated Debt Payments” means none.

  

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“Person” means any natural person, corporation, general or limited partnership,
limited liability company, firm, trust, association, government, governmental
agency or other entity, whether acting in an individual, fiduciary or other
capacity.

 

“Proceeding” shall mean any voluntary or involuntary insolvency, bankruptcy,
receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or any other proceeding for the
liquidation, dissolution or other winding up of a Person.

 

“Refinancing Senior Debt Documents” shall mean any financing documentation which
replaces the Senior Loan Documents and pursuant to which the Senior Debt under
the Senior Loan Documents are refinanced, as such financing documentation may be
amended, supplemented or otherwise modified from time to time in compliance with
this Agreement.

 

“Senior Debt” shall mean all obligations, liabilities and indebtedness of every
nature of the Company or any guarantor from time to time owed to Agent or any
Senior Lender under the Senior Debt Documents, including, without limitation,
the principal amount of all debts, claims and indebtedness, accrued and unpaid
interest and all fees, costs and expenses, whether primary, secondary, direct,
contingent, fixed or otherwise, heretofore, now and from time to time hereafter
owing, due or payable, whether before or after the filing of a Proceeding under
the Bankruptcy Code together with (a) any amendments, modifications, renewals or
extensions thereof to the extent not prohibited by the terms of this Agreement
and (b) any interest accruing thereon after the commencement of a Proceeding,
without regard to whether or not such interest is an allowed claim. Senior Debt
shall be considered to be outstanding whenever any loan commitment under the
Senior Debt Document is outstanding.

 

“Senior Debt Documents” shall mean the Senior Loan Documents and, after any
refinancing of the Senior Debt under the Senior Loan Documents, the Refinancing
Senior Debt Documents.

 

“Senior Loan Documents” shall mean the Senior Note, the Security Agreement, and
all other agreements, documents and instruments executed from time to time in
connection therewith, as the same may be amended, supplemented or otherwise
modified from time to time.

 

“Subordinated Debt” shall mean all of the obligations of the Company or any
guarantor to Subordinated Creditor evidenced by or incurred pursuant to the
Subordinated Debt Documents and any other debt obligations of the Company to
Subordinated Creditor.

 

“Subordinated Debt Documents” shall mean the Subordinated Loan Agreement, any
warrants, any guaranty with respect to the Subordinated Debt, any security
agreement or other collateral document securing the Subordinated Debt or
perfecting a security interest that secures the subordinated debt, and all other
documents, agreements and instruments now existing or hereinafter entered into
evidencing or pertaining to all or any portion of the Subordinated Debt.

 

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“Uniform Commercial Code” shall mean the Uniform Commercial Code, as enacted in
the applicable jurisdiction.

 

2.    Subordination.

 

2.1   Subordination of Subordinated Debt to Senior Debt. Company covenants and
agrees, and Subordinated Creditor by its acceptance of the Subordinated Debt
Documents (whether upon original issue or upon transfer or assignment) likewise
covenants and agrees, notwithstanding anything to the contrary contained in any
of the Subordinated Debt Documents, that the payment of any and all of the
Subordinated Debt shall be subordinate and subject in right and time of payment,
to the extent and in the manner hereinafter set forth, to the prior Payment in
Full of all Senior Debt. Each holder of Senior Debt, whether now outstanding or
hereafter created, incurred, assumed or guaranteed, shall be deemed to have
acquired Senior Debt in reliance upon the provisions contained in this
Agreement.

 

2.2   Liquidation, Dissolution, Bankruptcy. Prior to Payment in Full of all
Senior Debt, in the event of any Proceeding involving the Company or any
Subsidiary of the Company:

 

(a)     All Senior Debt shall first be Paid in Full before any Distribution,
whether in cash, securities or other property, shall be made to Subordinated
Creditor on account of any Subordinated Debt.

 

(b)     Any Distribution, whether in cash, securities or other property which
would otherwise, but for the terms hereof, be payable or deliverable in respect
of the Subordinated Debt shall be paid or delivered directly to Senior Lenders
(to be held and/or applied by Senior Lenders in accordance with the terms of the
Senior Debt Documents) until all Senior Debt is Paid in Full. Subordinated
Creditor irrevocably authorizes, empowers and directs any debtor, debtor in
possession, receiver, trustee, liquidator, custodian, conservator or other
Person having authority, to pay or otherwise deliver all such Distributions to
Senior Lenders. Subordinated Creditor also irrevocably authorizes and empowers
Senior Lenders, in the name of Subordinated Creditor, to demand, sue for,
collect and receive any and all such Distributions.

 

(c)     Subordinated Creditor agrees not to initiate, prosecute or participate
in any claim, action or other proceeding challenging the enforceability,
validity, perfection or priority of the Senior Debt or any liens and security
interests securing the Senior Debt.

 

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(d) Subordinated Creditor agrees that Agent and Senior Lenders may consent to
the use of cash collateral or provide financing to the Company on such terms and
conditions and in such amounts as Agent and Senior Lenders, in their sole
discretion, may decide and, in connection therewith, the Company may grant to
Agent and Senior Lenders liens and security interests upon all of the property
of the Company, which liens and security interests (i) shall secure payment of
all Senior Debt (whether such Senior Debt arose prior to the commencement of any
Proceeding or at any time thereafter) and all other financing provided by Senior
Lenders during such Proceeding and (ii) shall be superior in priority to the
liens and security interests, if any, in favor of Subordinated Creditor on the
property of the Company. Subordinated Creditor agrees that it will not object to
any of the foregoing. Subordinated Creditor agrees that it will: (x) not seek to
provide financing to the Company in any Proceeding; (y) support, and not object
to or oppose any sale or other disposition of any property (or any process
pertaining to such sale or other disposition of any property) securing all of
any part of the Senior Debt free and clear of security interests, liens or other
claims of Subordinated Creditor under Section 363 of the Bankruptcy Code or any
other provision of the Bankruptcy Code or applicable law if Agent and Senior
Lenders have consented to such sale or disposition and are releasing their
security interests and liens as well; and (z) not propose, seek and/or support
confirmation of any plan to which Agent has not consented to in writing;
Subordinated Creditor agrees to object to and vote to reject confirmation of any
plan which Agent has objected to and/or rejected in writing. Subordinated
Creditor agrees not to assert any right it may have to “adequate protection” of
Subordinated Creditor’s interest in any Collateral in any Proceeding and agrees
that it will not seek to have the automatic stay lifted with respect to any
Collateral without the prior written consent of Agent. Subordinated Creditor
waives any claim it may now or hereafter have arising out of Agent’s or Senior
Lenders’ election, in any Proceeding instituted under the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code by Borrower, as debtor in possession. Subordinated Creditor further agrees
that it will not seek to participate or participate on any creditor’s committee
without Agent’s prior written consent.

 

(e)     Subordinated Creditor agrees to execute, verify, deliver and file any
proofs of claim in respect of the Subordinated Debt requested by Agent in
connection with any such Proceeding and hereby irrevocably authorizes, empowers
and appoints Agent its agent and attorney-in-fact to (i) execute, verify,
deliver and file such proofs of claim upon the failure of Subordinated Creditor
promptly to do so prior to 30 days before the expiration of the time to file any
such proof of claim and (ii) vote such claim in any such Proceeding upon the
failure of Subordinated Creditor to do so prior to 15 days before the expiration
of the time to vote any such claim; provided Agent shall have no obligation to
execute, verify, deliver, file and/or vote any such proof of claim. In the event
that Agent votes any claim in accordance with the authority granted hereby,
Subordinated Creditor shall not be entitled to change or withdraw such vote.

 

(f)     The Senior Debt shall continue to be treated as Senior Debt and the
provisions of this Agreement shall continue to govern the relative rights and
priorities of Senior Lenders and Subordinated Creditor even if all or part of
the Senior Debt or the security interests securing the Senior Debt are
subordinated, set aside, avoided, invalidated or disallowed in connection with
any such Proceeding, and this Agreement shall be reinstated if at any time any
payment of any of the Senior Debt is rescinded or must otherwise be returned by
any holder of Senior Debt or any representative of such holder.

 

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2.3    Subordinated Debt Payment Restrictions. Notwithstanding the terms of the
Subordinated Debt Documents, Company hereby agrees that it may not make, and
Subordinated Creditor hereby agrees that it will not accept, any Distribution
with respect to the Subordinated Debt until the Senior Debt is Paid in Full,
other than Permitted Subordinated Debt Payments.

 

2.4   Subordinated Debt Standstill Provisions. Until the Senior Debt is Paid in
Full, Subordinated Creditor shall not, without the prior written consent of
Agent and Senior Lenders, take any Enforcement Action with respect to the
Subordinated Debt. Notwithstanding the foregoing, Subordinated Creditor may file
proofs of claim against the Company in any Proceeding involving such Company.
Any Distributions or other proceeds of any Enforcement Action obtained by
Subordinated Creditor in violation of the foregoing prohibition shall in any
event be held in trust by it for the benefit of Agent and Senior Lenders and
promptly paid or delivered to Senior Lenders in the form received until all
Senior Debt is Paid in Full.

 

2.5    Incorrect Payments. If any Distribution on account of the Subordinated
Debt not permitted to be made by the Company or accepted by Subordinated
Creditor under this Agreement is made and received by Subordinated Creditor,
such Distribution shall not be commingled with any of the assets of Subordinated
Creditor, shall be held in trust by Subordinated Creditor for the benefit of
Agent and Senior Lenders and shall be promptly paid over to Senior Lenders for
application to the payment of the Senior Debt then remaining unpaid, until all
of the Senior Debt is Paid in Full.

 

2.6    Subordination of Liens and Security Interests; Agreement Not to Contest;
Agreement to Release Liens. Until the Senior Debt has been Paid in Full, any
liens and security interests of Subordinated Creditor in the Collateral shall be
and hereby are subordinated for all purposes and in all respects to the liens
and security interests of Agent and Senior Lenders in the Collateral, regardless
of the time, manner or order of perfection of any such liens and security
interests. Subordinated Creditor agrees that it will not at any time contest the
validity, perfection, priority or enforceability of the Senior Debt, the Senior
Debt Documents, or the liens and security interests of Agent and Senior Lenders
in the Collateral securing the Senior Debt. In the event that Senior Lenders
release or agree to release any of their liens or security interests in the
Collateral in connection with the sale or other disposition thereof or any of
the Collateral is sold, disposed of or retained pursuant to a foreclosure or
similar action, Subordinated Creditor shall (or shall cause its agent to), upon
Agent’s request, promptly execute and deliver to Agent such termination
statements and releases as Agent shall reasonably request to effect the
termination or release of the liens and security interests of Subordinated
Creditor in such Collateral. In furtherance of the foregoing, Subordinated
Creditor hereby irrevocably appoints Agent its attorney-in-fact, with full
authority in the place and stead of Subordinated Creditor and in the name of
Subordinated Creditor or otherwise, to execute and deliver any document or
instrument which Subordinated Creditor may be required to deliver pursuant to
this Section 2.6.

 

2.7   Application of Proceeds from Sale or other Disposition of the Collateral.
In the event of any sale, transfer or other disposition (including a casualty
loss or taking through eminent domain) of the Collateral, the proceeds resulting
therefrom (including insurance proceeds) shall be applied in accordance with the
terms of the Senior Debt Documents or as otherwise consented to by Agent and
Senior Lenders until such time as the Senior Debt is Paid in Full.     

  

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2.8    Sale, Transfer or other Disposition of Subordinated Debt.

 

(a)    Subordinated Creditor shall not sell, assign, pledge, dispose of or
otherwise transfer all or any portion of the Subordinated Debt or any
Subordinated Debt Document unless (i) prior to the consummation of any such
action, the transferee thereof shall execute and deliver to Agent an agreement
substantially identical to this Agreement, providing for the continued
subordination of the Subordinated Debt to the Senior Debt as provided herein and
for the continued effectiveness of all of the rights of Agent and Senior Lenders
arising under this Agreement, (ii) each transferee is a Permitted Transferee and
(iii) following the consummation of any such action, there shall be no more than
three holders of the Subordinated Debt. As used herein, a Permitted Transferee
means (x) a Family Member of Subordinated Creditor, (y) a trust solely for the
benefit of Subordinated Creditor or of a Family Member of Subordinated Creditor,
but only if the trust is eligible to be a shareholder of an S corporation under
section 1361 of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder and (z) the estate of a deceased Subordinated
Creditor. As used herein, a Family Member means, with respect to a natural
person, his or her spouse, his or her children, his or her parents, and any
descendant of his or her parents, including those related by adoption, and any
spouse of any of the foregoing individuals.

 

(b)    Notwithstanding the failure of any transferee to execute or deliver an
agreement substantially identical to this Agreement, the subordination effected
hereby shall survive any sale, assignment, pledge, disposition or other transfer
of all or any portion of the Subordinated Debt in violation of the foregoing
prohibition, and the terms of this Agreement shall be binding upon the
successors and assigns of Subordinated Creditor, as provided in Section 10
hereof.

 

2.9    Legends. Until the termination of this Agreement in accordance with
Section 16 hereof, Subordinated Creditor will cause to be clearly, conspicuously
and prominently inserted on the face of any Subordinated Debt Document, as well
as any renewals or replacements thereof, the following legend:

 

“This instrument and the rights and obligations evidenced hereby and any
security interests or other liens securing such obligations are subordinate in
the manner and to the extent set forth in that certain Subordination Agreement
(the “Subordination Agreement”) dated as of March 15, 2017 among Morris
Garfinkle and Jonathan Kahn, as Senior Lenders, Agritech Worldwide, Inc.
(“Company”) and GKS Funding LLC, Susan A. Stone and Roger Stone, as Subordinated
Creditor, to the indebtedness (including interest) owed by the Company, and the
security interests or other liens securing such indebtedness, pursuant to that
certain Demand Note dated as of March 15, 2017 among the Company, and Senior
Lenders, as such Demand Note has been and hereafter may be amended,
supplemented, restated or otherwise modified from time to time and to
indebtedness refinancing the indebtedness under such agreement as contemplated
by the Subordination Agreement; and each holder of this instrument, by its
acceptance hereof, irrevocably agrees to be bound by the provisions of the
Subordination Agreement.”

 

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3.    Modifications.

 

3.1     Modifications to Senior Debt Documents. Senior Lenders may at any time
and from time to time without the consent of or notice to Subordinated Creditor,
without incurring liability to Subordinated Creditor and without impairing or
releasing the obligations of Subordinated Creditor under this Agreement, change
the manner or place of payment or extend the time of payment of or renew or
alter any of the terms of the Senior Debt, or amend in any manner any agreement,
note, guaranty or other instrument evidencing or securing or otherwise relating
to the Senior Debt.

 

3.2     Modifications to Subordinated Debt Documents. Until the Senior Debt has
been Paid in Full, and notwithstanding anything to the contrary contained in the
Subordinated Debt Documents, Subordinated Creditor shall not, without the prior
written consent of Agent and Senior Lenders, agree to any amendment,
modification or supplement to the Subordinated Debt Documents the effect of
which is to (a) increase the maximum principal amount of the Subordinated Debt
or rate of interest (or cash pay rate of interest) on any of the Subordinated
Debt, (b) change the dates upon which payments of principal or interest on the
Subordinated Debt are due, (c) change or add any event of default or any
covenant with respect to the Subordinated Debt, (d) change any redemption or
prepayment provisions of the Subordinated Debt, (e) alter the subordination
provisions with respect to the Subordinated Debt, including, without limitation,
subordinating the Subordinated Debt to any other indebtedness, (f) take or
perfect any other liens or security interests in any assets of the Company or
any guarantor of the Subordinated Debt or (g) change or amend any other term of
the Subordinated Debt Documents if such change or amendment would increase the
obligations of the Company or any guarantor of the Subordinated Debt or confer
additional material rights on Subordinated Creditor or any other holder of the
Subordinated Debt in a manner adverse to the Company, any such guarantor or
Senior Lenders.

 

4.    Waiver of Certain Rights by Subordinated Creditor.

 

4.1    Marshaling. Subordinated Creditor hereby waives any rights it may have
under applicable law to assert the doctrine of marshaling or to otherwise
require Agent or Senior Lenders to marshal any property of the Company or any
guarantor of the Senior Debt for the benefit of Subordinated Creditor.

 

4.2    Rights Relating to Agent’s Actions with respect to the Collateral.
Subordinated Creditor hereby waives, to the extent permitted by applicable law,
any rights which it may have to enjoin or otherwise obtain a judicial or
administrative order preventing Agent or Senior Lenders from taking, or
refraining from taking, any action with respect to all or any part of the
Collateral. Without limitation of the foregoing, Subordinated Creditor hereby
agrees (a) that it has no right to direct or object to the manner in which Agent
and Senior Lenders apply the proceeds of the Collateral resulting from the
exercise by Agent and Senior Lenders of rights and remedies under the Senior
Debt Documents to the Senior Debt and (b) that Agent has not assumed any
obligation to act as the agent for Subordinated Creditor with respect to the
Collateral. Agent shall have the exclusive right to enforce rights and exercise
remedies with respect to the Collateral until the Senior Debt is Paid in Full.
In exercising rights and remedies with respect to the Collateral, Agent and
Senior Lenders may enforce the provisions of the Senior Debt Documents and
exercise remedies thereunder, all in such order and in such manner as it or they
may determine in the exercise of its or their sole business judgment. Such
exercise and enforcement shall include, without limitation, the rights to sell
or otherwise dispose of Collateral, to incur expenses in connection with such
sale or disposition and to exercise all the rights and remedies of a secured
lender under the Uniform Commercial Code of any applicable jurisdiction. In
conducting any public or private sale under the Uniform Commercial Code, Agent
shall give the Subordinated Creditor such notice of such sale as may be required
by the applicable Uniform Commercial Code; provided, however, that 10 days’
notice to solely Subordinated Creditor shall be deemed to be commercially
reasonable notice.

 

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5.    Representations and Warranties.

 

5.1    Representations and Warranties of Subordinated Creditor. Subordinated
Creditor hereby represents and warrants to Agent and Senior Lenders that as of
the date hereof: (a) the Subordinated Creditor has the legal capacity and
authority to enter into, execute, deliver and carry out the terms of this
Agreement, all of which have been duly authorized by all proper and necessary
action; (b) the execution of this Agreement by the Subordinated Creditor will
not violate or conflict with any material agreement binding upon the
Subordinated Creditor, or any law, regulation or order or require any consent or
approval which has not been obtained; (c) the Subordinated Creditor has
delivered Agent a true, correct and complete executed copy of each Subordinated
Debt Document; (d) this Agreement is the legal, valid and binding obligation of
the Subordinated Creditor, enforceable against the Subordinated Creditor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by equitable
principles; and (e) the Subordinated Creditor is the sole owner, beneficially
and of record, of the rights and obligations under the Subordinated Debt
Documents and of the Subordinated Debt.

 

5.2    Representations and Warranties of Senior Lenders. Each Senior Lender
hereby represents and warrants to Subordinated Creditor that as of the date
hereof: (a) such Senior Lender has the legal capacity and authority to enter
into, execute, deliver and carry out the terms of this Agreement, all of which
have been duly authorized by all proper and necessary action; (b) the execution
of this Agreement by such Senior Lender will not violate or conflict with any
material agreement binding upon such Senior Lender or any law, regulation or
order or require any consent or approval which has not been obtained; and
(c) this Agreement is the legal, valid and binding obligation of such Senior
Lender, enforceable against such Senior Lender in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles.

  

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5.3    Representations and Warranties of Agent. Agent hereby represents and
warrants to Subordinated Creditor that as of the date hereof: (a) Agent has the
legal capacity and authority to enter into, execute, deliver and carry out the
terms of this Agreement, all of which have been duly authorized by all proper
and necessary action; (b) the execution of this Agreement by Agent will not
violate or conflict with any material agreement binding upon Agent or any law,
regulation or order or require any consent or approval which has not been
obtained; and (c) this Agreement is the legal, valid and binding obligation of
Agent, enforceable against Agent in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles.

 

6.    Subrogation. Until all Senior Debt is Paid in Full, Subordinated Creditor
shall be subrogated to the rights of Agent and Senior Lenders to receive
Distributions with respect to the Senior Debt until the Subordinated Debt is
paid in full. Subordinated Creditor agrees that in the event that all or any
part of a payment made with respect to the Senior Debt is recovered from the
holders of the Senior Debt in a Proceeding or otherwise, any Distribution
received by Subordinated Creditor with respect to the Subordinated Debt at any
time after the date of the payment that is so recovered, whether pursuant to the
right of subrogation provided for in this Agreement or otherwise, shall be
deemed to have been received by Subordinated Creditor in trust as property of
the holders of the Senior Debt and Subordinated Creditor shall forthwith deliver
the same to Agent for the benefit of Senior Lenders for application to the
Senior Debt until the Senior Debt is Paid in Full. A Distribution made pursuant
to this Agreement to Agent or Senior Lenders which otherwise would have been
made to Subordinated Creditor is not, as between the Company and Subordinated
Creditor, a payment by the Company to or on account of the Senior Debt.

 

7.    Modification. Any modification or waiver of any provision of this
Agreement, or any consent to any departure by any party from the terms hereof,
shall not be effective in any event unless the same is in writing and signed by
Agent, Senior Lenders and Subordinated Creditor, and then such modification,
waiver or consent shall be effective only in the specific instance and for the
specific purpose given. Any notice to or demand on any party hereto in any event
not specifically required hereunder shall not entitle the party receiving such
notice or demand to any other or further notice or demand in the same, similar
or other circumstances unless specifically required hereunder.

 

8.    Further Assurances. Each party to this Agreement promptly will execute and
deliver such further instruments and agreements and do such further acts and
things as may be reasonably requested in writing by any other party hereto that
may be necessary or desirable in order to effect fully the purposes of this
Agreement.

 

9.    Notices. Unless otherwise specifically provided herein, any notice
delivered under this Agreement shall be in writing addressed to the respective
party as set forth below and may be personally served, telecopied or sent by
overnight courier service or certified or registered United States mail and
shall be deemed to have been given (a) if delivered in person, when delivered;
(b) if delivered by telecopy, on the date of transmission if transmitted on a
business day before 4:00 p.m. (Chicago time) or, if not, on the next succeeding
business day; (c) if delivered by overnight courier, one business day after
delivery to such courier properly addressed; or (d) if by United States mail,
four business days after deposit in the United States mail, postage prepaid and
properly addressed.

 

 - 10 - 

 

 

Notices shall be addressed as follows:

 

If to Subordinated Creditor:

 

GKS Funding LLC 

2550 N. Lakeview Avenue 

Unit S2206 

Chicago, IL 60614 

Attention: Mo Garfinkle 

Facsimile No.:                 

 

With a copy to:

 

Greenberg Traurig, LLP

77 West Wacker Drive, Suite 3100 

Chicago, Illinois 60601 

Attention: Andrew R. Cardonick, Esq. 

Facsimile No.: (312) 899-0447

 

If to the Company:

 

Agritech Worldwide, Inc. 

1011 Campus Drive 

Mundelein, Illinois 60060 

Attention: Jonathan Kahn 

Facsimile No.:                 

 

 - 11 - 

 

  

With a copy to:

 

Chrysler Building

405 Lexington Avenue 

26th Floor, New York, New York 10174 

Attention: Leslie Marlow 

Facsimile No.: (212) 208-4657

 

If to Agent or Senior Lenders:

 

Mo Garfinkle 

13783 East Gail road 

Scottsdale AZ 85259 

Attention: Mo Garfinkle

Email: [           ] 

Telephone: [        ]

Facsimile No:                 

 

With a copy to: 

 

Jonathan Kahn 

1011 Campus Drive 

Mundelein, Illinois 60060 

Attention: Jonathan Kahn 

Email: [           ] 

Telephone: [        ] 

Facsimile No:                 

 

or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 9.

 

10.  Successors and Assigns. This Agreement shall inure to the benefit of, and
shall be binding upon, the respective successors and assigns of Agent, Senior
Lenders, Subordinated Creditor and the Company. To the extent permitted under
the Senior Debt Documents, Senior Lenders may, from time to time, without notice
to Subordinated Creditor, assign or transfer any or all of the Senior Debt or
any interest therein to any Person and, notwithstanding any such assignment or
transfer, or any subsequent assignment or transfer, the Senior Debt shall,
subject to the terms hereof, be and remain Senior Debt for purposes of this
Agreement, and every permitted assignee or transferee of any of the Senior Debt
or of any interest therein shall, to the extent of the interest of such
permitted assignee or transferee in the Senior Debt, be entitled to rely upon
and be the third party beneficiary of the subordination provided under this
Agreement and shall be entitled to enforce the terms and provisions hereof to
the same extent as if such assignee or transferee were initially a party hereto.

 

 - 12 - 

 

 

11.  Relative Rights. This Agreement shall define the relative rights of Agent,
Senior Lenders and Subordinated Creditor. Nothing in this Agreement shall
(a) impair, as among the Company, Agent and Senior Lenders and as among the
Company and Subordinated Creditor, the obligation of the Company with respect to
the payment of the Senior Debt and the Subordinated Debt in accordance with
their respective terms or (b) affect the relative rights of Agent, Senior
Lenders or Subordinated Creditor with respect to any other creditors of the
Company.

 

12.  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 Debt Documents, the provisions of this Agreement shall control and
govern.

 

13.  Headings. The paragraph headings used in this Agreement are for convenience
only and shall not affect the interpretation of any of the provisions hereof.

 

14.  Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile transmission or in a pdf or similar electronic
file shall be effective as delivery of a manually executed counterpart hereof.

 

15.  Severability. In the event that any provision of this Agreement is deemed
to be invalid, illegal or unenforceable by reason of the operation of any law or
by reason of the interpretation placed thereon by any court or governmental
authority, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby, and the
affected provision shall be modified to the minimum extent permitted by law so
as most fully to achieve the intention of this Agreement.

 

16.  Continuation of Subordination; Termination of Agreement. This Agreement
shall remain in full force and effect until the Senior Debt is Paid in Full
after which this Agreement shall terminate without further action on the part of
the parties hereto.

 

17.  Applicable Law. This Agreement shall be governed by and shall be construed
and enforced in accordance with the internal laws of the State of Illinois,
without regard to conflicts of law principles, except federal laws relating to
national banks.

 

 - 13 - 

 

 

18. CONSENT TO JURISDICTION. EACH OF SUBORDINATED CREDITOR AND THE COMPANY
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO
SENIOR LENDERS’ ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH OF SUBORDINATED
CREDITOR AND THE COMPANY EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH OF
SUBORDINATED CREDITOR AND THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
SUBORDINATED CREDITOR AND THE COMPANY AT THEIR RESPECTIVE ADDRESSES SET FORTH IN
THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE
SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE
RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT, ALL DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF SUBORDINATED CREDITOR, THE COMPANY OR ANY OF THEIR
RESPECTIVE AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF
SUBORDINATED CREDITOR OR THE COMPANY, AS APPLICABLE, FOR PURPOSES OF ALL
APPLICABLE LAW OR COURT RULES REGARDING THE PRODUCTION OF WITNESSES BY NOTICE
FOR TESTIMONY (WHETHER IN A DEPOSITION, AT TRIAL OR OTHERWISE). EACH OF
SUBORDINATED CREDITOR AND THE COMPANY AGREES THAT AGENT’S OR SENIOR LENDERS’
COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE
INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF
ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION.
EACH OF SUBORDINATED CREDITOR AND THE COMPANY IN ANY EVENT WILL USE ALL
COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT OR ANY SENIOR
LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM)
OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.

 

19.  WAIVER OF JURY TRIAL. SUBORDINATED CREDITOR, THE COMPANY, AGENT AND SENIOR
LENDERS HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE
SUBORDINATED DEBT DOCUMENTS OR ANY OF THE SENIOR DEBT DOCUMENTS. EACH OF
SUBORDINATED CREDITOR, THE COMPANY, AGENT AND SENIOR LENDERS ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE SENIOR
DEBT DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. EACH OF SUBORDINATED CREDITOR, THE COMPANY, AGENT AND
SENIOR LENDERS WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF
REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

[Signatures Immediately Follow]

  

 - 14 - 

 

 

IN WITNESS WHEREOF, Subordinated Creditor, the Company, Agent and Senior Lenders
have caused this Agreement to be executed as of the date first above written.

 

  SUBORDINATED CREDITORS:             GKS FUNDING LLC         By: /s/ Mo
Garfinkle   Name: Mo Garfinkle   Title:           SUSAN A. STONE         By: /s/
Susan A. Stone         ROGER STONE         By: /s/ Roger Stone

 

Signature Page to Subordination Agreement

 

 

 

 

  COMPANY:             AGRITECH WORLDWIDE, INC.         By: /s/ Jonathan Kahn  
Name: Jonathan Kahn   Title:  Chief Executive Officer

  

Signature Page to Subordination Agreement

 

 

 

 

  SENIOR LENDERS:             JONATHAN KAHN         By:  /s/ Jonathan Kahn      
  MO GARFINKLE         By:  /s/ Mo Garfinkle

  

Signature Page to Subordination Agreement

 

 

 

 

  AGENT:             JONATHAN KAHN, as Agent         By:  /s/ Jonathan Kahn

  

Signature Page to Subordination Agreement