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.
 

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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.

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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;
 

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(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.
 

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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."
 

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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.
 

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(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.

 

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4.   Representations and Warranties.
 
(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.
 

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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.
 
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
     

 
 

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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.

 

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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.
 
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.
 

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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.

 
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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

 
 
 
 

 
 

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  COLLATERAL AGENT:     Gemini Strategies, LLC in its capacity as collateral
agent for the Purchaser        
 
By:
        Name: Steven Winters       Title: President          

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  THE PURCHASER:     Gemini Master Fund, Ltd., a Cayman Islands corporation    
   
 
By:
        Gemini Strategies, LLC Its: Investment Adviser                          
  By:         Name: Steven Winters       Title: President  

 
 

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