Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Carbiz Inc. - Exhibit 10.32

SUBORDINATION AND INTERCREDITOR AGREEMENT

                    This
SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”), dated as of
March __, 2007, is among CARBIZ INC., a corporation incorporated under the laws
of the province of Ontario, Canada (“Carbiz Parent”), CARBIZ USA INC., a
Delaware corporation (“Carbiz USA”), CARBIZ AUTO CREDIT, INC., a Florida
corporation (“Carbiz Auto Credit”), CARBIZ AUTO CREDIT JV1, LLC, a
Florida limited liability company (“Carbiz JV”; Carbiz JV, Carbiz USA and
Carbiz Auto Credit, each a “Borrower” and collectively, the
“Borrowers”), TRAFALGAR CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG,
a Luxembourg SICAV fund (“Trafalgar”), and SWC SERVICES LLC, a Delaware
limited liability company, acting in its capacity as administrative agent (in
such capacity, “Administrative Agent”) for the Lenders (as hereinafter
defined).

R E C I T A L S 

                    A.
Carbiz Parent, the Borrowers, the lenders from time to time party thereto
(collectively, the “Lenders”) and Administrative Agent have entered into a Loan
and Security Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified and in effect from time to time,
the “Loan Agreement”), pursuant to which, among other things, the Lenders
have agreed, subject to the terms and conditions set forth in the Loan
Agreement, to make certain loans and financial accommodations to the Borrowers.

                    B.
Carbiz Parent and Trafalgar have entered into a Securities Purchase Agreement of
even date herewith (as the same may be amended, restated, supplemented or
otherwise modified and in effect from time to time as permitted hereunder, the
“Subordinated Purchase Agreement”) pursuant to which, among other
things, Subordinated Creditors have extended credit to Carbiz Parent as
evidenced by certain Secured Convertible Debentures dated as of even date
herewith issued by Carbiz Parent in favor of Subordinated Creditors in the
aggregate original principal amount of $1,000,000.00 (as the same may be
amended, restated, supplemented or otherwise modified and in effect from time to
time as permitted hereunder and including any debentures issued in exchange or
substitution therefor or replacement thereof, each individually a “Closing
Date Subordinated Debenture” and collectively the “Closing Date
Subordinated Debentures”) and, pursuant to the terms of the Subordinated
Purchase Agreement, may hereafter extend additional credit to Carbiz Parent in
an aggregate additional original amount not to exceed $1,500,000 pursuant to
additional Secured Convertible Debentures in the same form and on the same terms
as the Closing Date Subordinated Debentures (such additional debentures, as the
same may be amended, restated, supplemented or otherwise modified and in effect
from time to time as permitted hereunder and including any debentures issued in
substitution therefor or replacement thereof, each individually a
“Post-Closing Subordinated Debenture” and collectively the
“Post-Closing Subordinated Debentures”; the Closing Date Subordinated
Debentures and Post-Closing Subordinated Debentures, each individually a
“Subordinated Debenture” and collectively the “Subordinated
Debentures”).

                    C.
As an inducement to and as one of the conditions precedent to the agreement of
Administrative Agent and Lenders to consummate the transactions contemplated by
the Loan 

Agreement, Administrative Agent and Lenders have required the
execution and delivery of this Agreement by Subordinated Creditors and the
Obligors. 

                    NOW,
THEREFORE, in order to induce Administrative Agent and Lenders to consummate the
transactions contemplated by the Loan Agreement, 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
(including the preamble and recitals hereto) shall have the respective meanings
ascribed to such terms in the Loan Agreement (or, after the occurrence of a
Permitted Refinancing, in the Permitted Refinancing Loan Documents, to the
extent such terms, or terms substantively the same in all material respects, are
included therein). The following terms shall have the following meanings in this
Agreement: 

          Administrative
Agent shall have the meaning ascribed to such term in the preamble of
this Agreement; provided, that, after the consummation of any Permitted
Refinancing, the term “Administrative Agent” shall refer to any Person appointed
by the holders of the Senior Indebtedness as agent for themselves for the
purposes of this Agreement. 

          Bankruptcy
Code means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et
seq.), as amended and in effect from time to time and the regulations issued
from time to time thereunder. 

          Closing
Date Guarantors means, collectively, Jonross, Inc., a Florida
corporation, Carl W. Ritter, Ross Richard Lye and Stanton C. Heintz. 

          Debt
of a Person shall mean, at any date, without duplication, (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable arising and paid on a timely basis and in the ordinary
course of business, (iv) all capital leases of such Person, (v) all
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit, banker’s acceptance or
similar instrument, (vi) all obligations secured by a Lien on any asset of such
Person, whether or not such obligation is otherwise an obligation of such
Person, (vii) “earnouts” and similar payment obligations of such Person, (viii)
all letters of credit and (ix) all Debt of others guaranteed by such Person.
Without duplication of any of the foregoing, Debt of the Obligors shall include
any and all Senior Indebtedness under the Loan Documents or Permitted Senior
Refinancing Documents, as applicable. 

          Enforcement
Action is defined in subsection 2.7(b). 

          Lender
Collateral shall mean all of each Obligor’s Property, whether now owned
or existing or hereafter acquired or arising and wheresoever located, including,
without limitation, all accessions to, substitutions for and replacements,
products and proceeds of all of such Property. 

2 

          Lender
or Lenders shall mean any “Lender” or the “Lenders,” respectively, as
such terms are defined in the Loan Agreement; provided, that, after the
consummation of any Permitted Refinancing, such terms shall refer to any holder
or all of the holders, respectively, of the Senior Indebtedness. 

          Lien
means any mortgage, deed of trust, pledge, hypothecation, assignment, charge or
deposit arrangement, encumbrance, lien (statutory or otherwise) or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever and any contingent or other agreement to provide any of the
foregoing. 

          Loan
Documents shall have the meaning ascribed to the term “Loan Documents”
in the Loan Agreement (and each capitalized term used therein shall have) the
meaning ascribed to such term in the Loan Agreement), as in effect on the date
hereof. 

          Obligor
shall mean Carbiz Parent, each Borrower and each other Person that guarantees or
grants a Lien on any of its Property to secure the payment, observance or
performance of all or any part of the Senior Indebtedness, including, without
limitation, the Closing Date Guarantors.

          Paid
in Equity shall mean the payment of all or a portion of the
Subordinated Indebtedness through the issuance by Carbiz Parent of Conversion
Shares (as defined in the Subordinated Debentures) pursuant to the terms of the
Subordinated Loan Documents. 

          Paid
in Full or Payment in Full shall mean the payment in
full in cash of all Senior Indebtedness and termination of all commitments to
lend under the Loan Documents and Permitted Refinancing Loan Documents. Senior
Indebtedness shall be considered to be outstanding whenever any commitment to
make loans or otherwise extend credit under the Loan Agreement or Permitted
Refinancing Loan Documents is outstanding. 

          Permitted
Refinancing shall mean any refinancing of the Senior Indebtedness under
the Loan Documents, provided, that the financing documentation entered into by
Obligors in connection with such Permitted Refinancing constitutes Permitted
Refinancing Loan Documents. 

          Permitted
Refinancing Loan Documents shall mean any financing documentation which
replaces the Loan Documents and pursuant to which the Senior Indebtedness under
the Loan Documents is refinanced, as such financing documentation may be
amended, supplemented, restated or otherwise modified and in effect from time to
time as permitted hereunder, but specifically excluding any such financing
documentation to the extent that it contains, either initially or by amendment
or other modification, any terms, conditions, covenants or defaults other than
those which (a) then exist in the Loan Documents or (b) could be included in the
Loan Documents by an amendment or other modification that would not be
prohibited by the terms of this Agreement. 

3 

          Permitted
Subordinated Indebtedness Payments means: 

          (a)     
regularly scheduled cash payments of interest on account of the Subordinated
Indebtedness evidenced by the Subordinated Debentures at the non-default rate of
(i) twelve percent (12%) per annum for the period beginning on the date hereof
and ending on the date immediately preceding the date Carbiz Parent files the
Initial Registration Statement (as defined in the Registration Rights Agreement
as in effect on the date hereof), (ii) ten percent (10%) per annum for the
period beginning on the date Carbiz Parent files the Initial Registration
Statement and ending on the date such Initial Registration Statement becomes
effective and (iii) eight percent (8%) per annum thereafter (together with the
prepayment of two (2) months of interest payment by deduction of such amounts
from the principal amount of the Subordinated Indebtedness funded by the
Subordinated Creditors on each date Subordinated Indebtedness is advanced under
the Subordinated Debentures in accordance with Section 1.06 of the Subordinated
Indebtedness), in each case, less that portion of interest on the
Subordinated Debentures Paid in Equity (if any), and in any event excluding
interest on any principal amount of the Subordinated Indebtedness consisting of
interest payments paid-in-kind or on an accretion basis; 

          (b)      payments
of principal, interest or Subordinated Liquidated Damages on account of the
Subordinated Indebtedness evidenced by the Subordinated Debentures to the extent
Paid-In-Equity (and not paid in cash); 

          (c)      interest
payments on account of the Subordinated Indebtedness evidenced by the
Subordinated Debentures to the extent made on a paid-in-kind or accretion basis
(and not made in cash) in lieu of payment in cash or Payment in Equity in
accordance with the terms of the Subordinated Indebtedness Documents. 

          (d)      reimbursement
of any Subordinated Creditor for reasonable out-of-pocket costs and expenses,
including attorneys’ fees and expenses, actually incurred by such Person on
matters directly relating to the Subordinated Indebtedness, together with
reasonable and customary fees associated with an assessed in connection with
amendments of the Subordinated Indebtedness Documents permitted hereunder, in an
aggregate amount not exceeding $50,000 in any fiscal year of Carbiz Parent; 

          (d)      the
accrual (and not payment in cash) of default interest on Subordinated
Indebtedness evidenced by the Subordinated Debentures; 

          (e)     
the commitment and structuring fees payable to Trafalgar pursuant to Sections
4(f)(i) and (ii) of the Subordinated Purchase Agreement, in an aggregate amount
not to exceed $240,000; 

in each instance, to the extent then
due and payable in accordance with the terms of the Subordinated Indebtedness
Documents. 

          Person
means an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority. 

4 

          PPSA
means the Personal Property Security Act (Ontario) and the regulations
thereunder, as from time to time in effect, provided, however, if attachment,
perfection, priority or enforcement of a security interests in any Lender
Collateral are governed by the personal property security laws of any
jurisdiction of Canada other than Ontario, “PPSA” shall mean those personal
property security laws in such other jurisdiction for the purposes of the
provisions hereof relating to such attachment, perfection, priority or
enforcement and for the definitions related to such provisions. 

          Proceeding
is defined in Section 2.3. 

          Property
  means, with respect to any Person, all property and interests in property of
  such Person, whether real, personal or mixed, whether now owned or existing
  or hereafter acquired or arising and wheresoever located.

          Registration
Rights Agreement shall mean that certain Registration Rights
Agreement dated as of the date hereof between Carbiz Parent and Subordinated
Creditors, as amended, supplemented, restated or otherwise modified and in
effect from time to time as permitted hereunder. 

          Reorganization
Subordinated Securities shall mean any notes or other securities
issued in substitution of all or any portion of the Subordinated Indebtedness
that are subordinated, including in right of payment, to the Senior Indebtedness
(or any notes or other securities issued in substitution of all or any portion
of the Senior Indebtedness) at least to the same extent and on substantially the
same terms that the Subordinated Indebtedness is subordinated to the Senior
Indebtedness pursuant to the terms of this Agreement, and with respect to any
debt securities, do not have the benefit of the obligation of any Person
(whether as issuer, guarantor or otherwise) unless the Senior Indebtedness has
at least the same benefit of the obligation of such Person, and which securities
have terms no less advantageous to Obligors and Lenders than the terms contained
in the Subordinated Indebtedness Documents, which securities, if not permitted
to by Paid in Equity by Carbiz Parent (or its successor), mature and have no
principal amortization until at least six (6) months following the ultimate
schedule maturity of the Senior Indebtedness (or any notes or other securities
issued in substitution of all or any portion of the Senior Indebtedness). 

          Required
Lenders shall have the meaning ascribed to such term in the Loan
Agreement; provided, that, after the consummation of any Permitted Refinancing,
the term “Required Lenders” shall mean the holders of Senior Indebtedness having
the right and/or ability under the Permitted Refinancing Loan Documents to
effectuate the waiver, amendment, granting of consent or other matter in
question. 

          Senior
Covenant Default shall mean any “Default” or “Event of Default” under
the Loan Agreement or Permitted Refinancing Loan Documents, other than a Senior
Payment Default. 

          Senior
Default Notice shall mean a written notice from Administrative Agent to
Subordinated Creditors and Carbiz Parent pursuant to which Subordinated
Creditors are notified of the existence of a Senior Covenant Default. 

5 

          Senior
Indebtedness shall mean all Debt, liabilities and other obligations of
any and every kind and nature now existing or hereafter arising, contingent or
otherwise, of any Obligor or any other Person under, in connection with, or
evidenced or secured by the Loan Agreement or any of the other Loan Documents,
including, without limitation, all such obligations to pay (i) principal, (ii)
interest or premium (including interest accruing after the commencement of any
Proceeding, whether or not constituting an allowed claim in such Proceeding),
(iii) fees, (iv) costs, expenses and other amounts related to any indemnity
against loss, damage or liability, (v) any other monetary obligation, and all
such Debt, obligations and liabilities incurred with respect to Permitted
Refinancings, together with any amendments, restatements, modifications,
renewals or extensions of any thereof permitted hereunder; provided,
that, in no event shall the original principal amount of the Senior Indebtedness
exceed the sum of (a) $20,000,000 plus (b) costs and expenses incurred following
the occurrence of a Senior Payment Default or Senior Covenant Default, as the
case may be, by or for the account of the holders of Senior Indebtedness (or any
representatives thereof). 

          Senior
  Payment Default shall mean a Default or Event of Default described in
  Section 7.1(a) of the Loan Agreement or any similar provision in the
  Permitted Refinancing Loan Documents, or any other Default or Event of Default
  resulting from the failure of any Obligor to pay, on a timely basis, any principal
  interest, premium, fees or other obligations under any Loan Document or Permitted
  Refinancing Loan Document, including, without limitation, in each case, any
  default in payment of Senior Indebtedness after acceleration thereof. 

          Subordinated
Creditor shall mean Trafalgar and any other holder of the Subordinated
Debenture(s) or any other Subordinated Indebtedness from time to time (whether
or not such subsequent holder executes a joinder hereto). 

          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 other event or
condition constituting a default or event of default under the Subordinated
Indebtedness Documents.

          Subordinated
Default Notice shall mean a written notice to Administrative Agent and
Carbiz Parent from the Subordinated Creditors pursuant to which Administrative
Agent is notified of the existence of a Subordinated Default, which notice (i)
states that it is a “Subordinated Default Notice” for purposes of this Agreement
and (ii) sets forth the specific sections of the Subordinated Indebtedness
Documents giving rise to such Subordinated Default. 

          Subordinated
Indebtedness shall mean all Debt, liabilities and other obligations of
any and every kind and nature now existing or hereafter arising, contingent or
otherwise, of any Obligor or any other Person under, in connection with, or
evidenced or secured by any of the Subordinated Indebtedness Documents, in each
case including, without limitation, obligations to pay (i) principal, (ii)
interest or premium (including interest accruing after the commencement of any
Proceeding, whether or not constituting an allowed claim in such Proceeding, and
any premium payable with respect to any 

6 

prepayment of the Subordinated
Indebtedness pursuant to the Subordinated Purchase Agreement), (iii) fees, (iv)
costs, expenses and other amounts related to any indemnity against loss, damage
or liability, and (v) any other monetary obligation. 

          Subordinated
Indebtedness Documents shall mean the Subordinated Debentures,
Subordinated Purchase Agreement, the Subordinated Security Agreement, any
guaranty with respect to the Subordinated Indebtedness, and all other
agreements, documents and instruments evidencing, securing or pertaining to any
portion of the Subordinated Indebtedness, as amended, supplemented, restated or
otherwise modified and in effect from time to time as permitted hereunder. 

          Subordinated
  Liquidated Damages shall mean “Liquidated Damages,” as such
  term is defined in that certain Registration Rights Agreement dated as of the
  date hereof by and between Carbiz Parent and Trafalgar, as in effect on the
  date hereof.

          Subordinated
Security Agreement shall mean that certain Security Agreement dated as
of the date hereof between Carbiz Parent and Trafalgar, as the same may be
amended, restated, supplement or otherwise modified from time to time as
permitted hereunder. 

          UCC
means the Uniform Commercial Code, as in effect from time to time in any
applicable jurisdiction. 

          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
indefeasible 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, premium or
any other amount due with respect to the Subordinated Indebtedness shall be made
or received, and no Subordinated Creditor shall exercise any right of set-off or
recoupment with respect to any Subordinated Indebtedness, until all of the
Senior Indebtedness is Paid in Full; provided, that, except as provided in the
immediately succeeding sentence or in Section 2.3, Carbiz Parent may
make, and Subordinated Creditors may accept and retain Permitted Subordinated
Indebtedness Payments. Notwithstanding the foregoing, no Obligor may make, and
no Subordinated Creditor may accept or retain, any payment of principal,
interest, premium, Subordinated Liquidated Damages or any other amount with
respect to the Subordinated Indebtedness (other than payments Paid in Equity
consisting of Permitted Subordinated Indebtedness Payments of the type specified
in clause (b) of the definition of Permitted Subordinated Indebtedness Payments)
if, at the time of such payment or, with respect to clause (a) below,
immediately after giving effect thereto: 

                    (a)      a
Senior Payment Default exists; or 

7 

                         (b)
subject to the penultimate sentence of this Section 2.2, Subordinated
Creditors shall have received a Senior Default Notice from Administrative Agent
stating that a Senior Covenant Default exists or would be created by the making
of such payment. 

          Carbiz
Parent may resume Permitted Subordinated Indebtedness Payments (and may make any
Permitted Subordinated Indebtedness Payments missed due to the application of
clauses (a) or (b) of this Section 2.2), and Subordinated
Creditors may accept and retain such Permitted Subordinated Debt Payments:

          (1)     
in the case of a Senior Payment Default referred to in clause (a) of this
Section 2.2, upon a cure or waiver (as evidenced by a written waiver from
Administrative Agent to the Borrowers) thereof in accordance with the terms of
the Loan Agreement or Permitted Refinancing Loan Documents; or

          (2 )     
in the case of a Senior Covenant Default referred to in clause (b) of
this Section 2.2, upon the earlier to occur of (x) the cure or waiver (as
evidenced by a written waiver from Administrative Agent to the Borrowers) of all
such Senior Covenant Defaults in accordance with the terms of the Loan Agreement
or Permitted Refinancing Loan Documents, and (y) the expiration of one hundred
and twenty (120) days from the date on which the Senior Default Notice was
received.

Notwithstanding any provision of this
Section 2.2 to the contrary: 

                    
(A)      Carbiz Parent shall not be prohibited
from making, and Subordinated Creditors shall not be prohibited from receiving,
payments on account of the Subordinated Indebtedness to the extent Paid in
Equity (and not in cash) and consisting of Permitted Subordinated Indebtedness
Payments of the type specified in clause (b) of the definition of Permitted
Subordinated Indebtedness Payments; and 

                    (B)      subject
in any event to the limitations set forth in the definition of the term
“Permitted Subordinated Indebtedness Payments,” Carbiz Parent shall not be
prohibited from making, and Subordinated Creditors shall not be prohibited from
receiving, payments on account of the Subordinated Indebtedness to the extent
made on a paid-in-kind or accretion basis (and not made in cash). 

          The
provisions of this Section 2.2 shall not apply to any payment with
respect to which Section 2.3 would be applicable. 

          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 Property (a
“Proceeding”): (i) all Senior Indebtedness first shall be Paid in Full
before any payment (whether made in cash, securities or other Property) of or
with respect to the Subordinated Indebtedness shall be made in such Proceeding
(other than a distribution of Reorganization Subordinated Securities); (ii) any
payment which, but for the terms hereof, otherwise would be payable or
deliverable in such Proceeding in respect of the Subordinated Indebtedness
(other than a distribution of Reorganization Subordinated Securities), shall be
paid or delivered 8 

directly to Administrative Agent (to
  be held and/or applied by Administrative Agent in accordance with the terms
  of the Loan Agreement or the Permitted Refinancing Loan Documents) until all
  Senior Indebtedness is Paid in Full, and each Subordinated Creditor each irrevocably
  authorizes, empowers and directs all receivers, trustees, liquidators, custodians,
  conservators and others having authority in the premises to effect all such
  payments and deliveries, and each Subordinated Creditor each also irrevocably
  authorizes, empowers and directs Administrative Agent to demand, sue for, collect
  and receive every such payment or distribution; (iii) each Subordinated Creditor
  each agrees to execute and deliver to Administrative Agent or its representative
  all such further instruments confirming the authorization referred to in the
  foregoing clause (ii) as Administrative Agent may reasonably request; and (iv)
  each Subordinated Creditor each hereby irrevocably authorizes, empowers and
  appoints Administrative Agent its agent and attorney-in-fact to (x) execute,
  verify, deliver, file and vote any proofs of claim in respect of the Subordinated
  Indebtedness in connection with any such Proceeding upon the failure of such
  Person to do so thirty (30) days before the expiration of the time to file any
  such proof of claim, and (y) vote such claim in any such Proceeding upon the
  failure of Subordinated Creditor to do so prior to fifteen (15) days before
  the expiration of the time to vote any such claim; provided, that Administrative
  Agent shall have no obligation to execute, verify, deliver, file and/or vote
  any such proof of claim. In the event that Administrative Agent votes any claim
  in accordance with the authority granted hereby, no Subordinated Creditor shall
  be entitled to change or withdraw such vote. The Senior Indebtedness shall continue
  to be treated as Senior Indebtedness and the provisions of this Agreement shall
  continue to govern the relative rights and priorities of Administrative Agent,
  Lenders and Subordinated Creditors even if all or part of the Senior Indebtedness
  or the Liens securing the Senior Indebtedness are subordinated, set aside, avoided
  or disallowed in connection with any such Proceeding. This Agreement shall be
  reinstated if at any time any payment of any of the Senior Indebtedness is rescinded
  or must otherwise be returned by any holder of the Senior Indebtedness or any
  representative of such holder and the Senior Indebtedness, or portion thereof,
  intended to have been satisfied shall be deemed to be reinstated and outstanding
  as if such payment had not occurred. 

          2.4      Incorrect
Payments. If any payment (whether made in cash, securities or other
Property) not permitted to be accepted by Subordinated Creditors under this
Agreement is received by any Subordinated Creditor on account of any
Subordinated Indebtedness before all Senior Indebtedness is Paid in Full, such
payment shall not be commingled with any asset of such Person, shall be held in
trust by such Person for the benefit of Administrative Agent and Lenders and
shall be paid over to Administrative Agent, or its designated representative,
for application (in accordance with the Loan Agreement or the Permitted
Refinancing Loan Documents, as the case may be) to the payment of the Senior
Indebtedness then remaining unpaid, until all of the Senior Indebtedness is Paid
in Full. 

          2.5      Sale,
Transfer. No Subordinated Creditor shall sell, assign, dispose of or
otherwise transfer all or any portion of the Subordinated Indebtedness unless
following such sale, assignment, disposition or other transfer, there shall
either be (i) no more than two (2) holders of Subordinated Indebtedness,
or (ii) one Person acting as agent for all holders of the Subordinated
Indebtedness pursuant to documentation reasonably 

9 

satisfactory to Administrative Agent,
such that any Senior Default Notices and other notices and communications to be
delivered to Subordinated Creditors hereunder and any consents required by
Subordinated Creditors shall be made to or obtained from such agent and shall be
binding on each Subordinated Creditor as if directly delivered to or obtained
from such Subordinated Creditor. In the event of a permitted sale, assignment,
disposition or other transfer, prior to or substantially contemporaneously with
the consummation of any such action, the transferee thereof shall execute and
deliver to Administrative Agent a joinder to this Agreement, or an agreement
substantially identical to this Agreement, 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 Administrative Agent and Lenders 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 each Subordinated Creditor, as provided in Section
10 below. 

          2.6
Legends. Until the Senior Indebtedness is indefeasibly Paid in
Full, the Subordinated Purchase Agreement, each of the Subordinated Debentures
and all other Subordinated Indebtedness Documents evidencing or otherwise
containing the grant of any Lien on any Lender Collateral at all times shall
contain in a conspicuous manner the following legend: 

  
    
      
        “This Debenture [or other applicable Subordinated
          Indebtedness Document] and the indebtedness evidenced hereby are
          subordinate in the manner and to the extent set forth in that certain
          Subordination and Intercreditor Agreement (the “Subordination
          Agreement”) dated as of March __, 2007 among Trafalgar Capital
          Specialized Investment Fund, Luxembourg, a Luxembourg SICAV fund, the
          “Obligors” signatories thereto and SWC Services, LLC, as Administrative
          Agent, to the Senior Indebtedness (as such terms are defined in the
          Subordination Agreement), and each holder of this Debenture [or other
          applicable Subordinated Indebtedness Document], by its acceptance
          hereof, shall be bound by the provisions of the Subordination Agreement.”
        

      

    

  

     2.7     
Restriction on Action by Subordinated Creditors. 

                    (a)     
Until the Senior Indebtedness is Paid in Full and notwithstanding anything
contained in the Subordinated Indebtedness Documents, the Loan Agreement, the
other Loan Documents or the Permitted Refinancing Loan Documents to the
contrary, no Subordinated Creditor shall, without the prior written consent of
Administrative Agent, agree to any amendment, restatement, modification or
supplement to the Subordinated Indebtedness Documents, the effect of which is to
(i) increase the principal amount of the Subordinated Indebtedness, (ii)
increase the rate of interest on any of the Subordinated Indebtedness, (iii)
shorten the dates upon which payments of principal or interest on the
Subordinated Indebtedness are due, (iv) change in a manner adverse to any 

10 

Obligor or add any event of default, or
add or make more restrictive any covenant with respect to the Subordinated
Indebtedness, (v) change the redemption, conversion, prepayment or put
provisions of the Subordinated Indebtedness (including, without limitation, the
Conversion Price (as defined in the Subordinated Debentures as in effect on the
date hereof)), (vi) alter the subordination provisions with respect to the
Subordinated Indebtedness or any Lien securing the same, including, without
limitation, subordinating the Subordinated Indebtedness or any Lien securing the
same to any other indebtedness, (vii) alter the repayment terms of the
Subordinated Indebtedness in a manner adverse in any material respect to any
Obligor, (viii) take any Liens on any Property of any Obligor, any Subsidiary of
any Obligor or any other Person, except for the Liens granted pursuant to the
Subordinated Security Agreement (as in effect on the date hereof), (ix) obtain
any guaranties or credit support from any Person, unless (A) Administrative
Agent shall have consented to the delivery of such guaranty or credit support,
(B) Administrative Agent and Lenders have obtained a guaranty or credit support,
as the case may be, in respect of the Senior Indebtedness from such Person and
(C) such Person’s obligations in respect of such guaranty or credit support, as
the case may be, in favor of the Subordinated Creditors in respect of the
Subordinated Indebtedness is subordinated to its obligations in respect of the
Senior Indebtedness on the same terms and to the same extent that the
Subordinated Indebtedness is subordinated to the Senor Indebtedness pursuant the
terms of this Agreement, or (x) 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 any
Subordinated Creditor or any other holder of the Subordinated Indebtedness in a
manner adverse to any Obligor, Administrative Agent or Lenders. 

                    (b)     
Until the Senior Indebtedness is Paid in Full, no Subordinated Creditor shall,
without the prior written consent of Administrative Agent, take any action to
collect, enforce payment or accelerate any of the Subordinated Indebtedness,
exercise any of the remedies with respect to the Subordinated Indebtedness set
forth in any of the Subordinated Indebtedness Documents or that otherwise may be
available to any Subordinated Creditor, either at law or in equity, by judicial
proceedings (including by filing a Proceeding) or otherwise including, without
limitation, taking any action under applicable law (including the UCC or PPSA)
to foreclose upon, take possession of or sell any Lender Collateral (an
“Enforcement Action”), except as provided in the following sentence.
Subject in any event to the terms and provisions of Section 21, upon the
earliest to occur of:

	 	(i) 	
      the passage of one hundred and twenty (120) days from the
      date of Administrative Agent’s receipt of a Subordinated Default Notice
      that includes a statement that Subordinated Creditors are commencing the
      one hundred and twenty (120) day standstill period provided for herein if
      the Subordinated Default described therein shall not have been cured or
      waived within such period;

	 	 	 
	 	(ii) 	
      acceleration of the Senior Indebtedness (provided,
      that if, following any such acceleration of the Senior Indebtedness, such
      acceleration in respect of the Senior Indebtedness is rescinded, then all
      Enforcement Actions taken by any Subordinated
Creditor

11 

	 		
      shall likewise be rescinded if (A) such Enforcement
      Actions are based solely on a cross-acceleration to the Senior
      Indebtedness and (B) no Subordinated Creditor shall have any right under
      any other clause of this subsection 2.7(b) to take any Enforcement
      Actions; provided, further, that any such rescission in
      respect of Enforcement Actions taken by any Subordinated Creditor shall
      only take effect to the extent such Enforcement Actions can reasonably be
      rescinded without impairing in any material respect or otherwise adversely
      affecting in any material respect the validity or enforceability of the
      Subordinated Indebtedness or any substantial part thereof);

	 	 	 
	 	(iii) 	
      the occurrence of a Proceeding (provided, that if
      such Proceeding is dismissed, the corresponding prohibition Subordinated
      Creditors taking any Enforcement Action shall automatically be reinstated
      as of the date of dismissal as if such Proceeding had not been initiated,
      unless Subordinated Creditors shall have the right to take any Enforcement
      Action under another clause of this subsection 2.7(b);
      provided, further, that (A) such reinstatement shall not
      affect the running of the one hundred and twenty (120) day period under
      clause (a) above to the extent the Subordinated Default giving rise
      thereto is not based on an acceleration of the Senior Indebtedness or the
      initiation of such Proceeding, and (B) any such reinstatement shall only
      take effect to the extent that any Enforcement Actions commenced by any
      Subordinated Creditor prior thereto can reasonably be rescinded without
      impairing in any material respect or otherwise adversely affecting in any
      material respect the validity or enforceability of the Subordinated
      Indebtedness); or

	 	 	 
	 	(iv) 	
      Payment in Full of the Senior
  Indebtedness;

Subordinated Creditors may, upon (i)
five (5) Business Days’ prior written notice to Administrative Agent and (ii)
such required prior written notice to Carbiz Parent as is required by the terms
of the Subordinated Indebtedness Documents, take Enforcement Actions;
provided, that (x) no such notice shall be required in the case of any
Enforcement Action permitted to be taken under clauses (iii) or
(iv) of this subsection 2.7(b), and (y) any such notice
given with respect to Enforcement Actions permitted to be taken under clause
(i) of this subsection 2.7(b), may be given at any time following,
but no earlier than five (5) Business Days prior to, the end of any applicable
one hundred and twenty (120) day period).

          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 Subordinated Creditors, Administrative Agent and Lenders
arising hereunder, shall not be affected, modified or impaired in any manner or

12 

to any extent by: (i) any amendment,
restatement, modification or supplement to the Loan Agreement, any other Loan
Document, any Permitted Refinancing Loan Document or any Subordinated
Indebtedness Document (to the extent such amendment, modification or supplement
is not prohibited under the terms of this Agreement); (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)      Administrative
Agent and Lenders may at any time and from time to time without the consent of
or notice to any Subordinated Creditor, without incurring liability to any
Subordinated Creditor and without impairing or releasing the obligations of any
Subordinated Creditor under this Agreement, change the manner or place of
payment or extend the time of payment of or renew or alter any Senior
Indebtedness, or amend, supplement, restate or otherwise modify in any manner
any Loan Document or Permitted Refinancing Loan Document; provided, that
Lenders shall not amend or otherwise modify the terms of the Senior Indebtedness
without the consent of the Subordinated Creditors, if the effect of such
amendment or modification is to (i) increase the principal amount of the Senior
Indebtedness to an amount in excess of the maximum amount determined pursuant to
the proviso to the definition of Senior Indebtedness set forth herein, or (ii)
extend the final maturity of the Senior Indebtedness (as set forth in the Loan
Documents in effect on the date hereof, other than in connection with a
Permitted Refinancing) by more than six months. 

          4.      Representations
and Warranties. Each Subordinated Creditor hereby represents and
warrants (as to itself and not as to any other Person) to Administrative Agent
and the Lenders, and Administrative Agent hereby represents and warrants (as to
itself and not as to any other Person) to each Subordinated Creditor, in each
case as follows: 

          4.1      Existence
and Power. Such Person is duly organized, validly existing and in good
standing under the laws of the state of its organization. 

          4.2      Authority.
Such Person 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 such Person. In
addition, Administrative Agent has the authority to act hereunder on behalf of
all Lenders and no Lender is authorized or empowered, under the terms of the
Loan Documents, to act on any matter hereunder other than through the
Administrative Agent. 

          4.3      Binding
Agreements. This Agreement, when executed and delivered, will constitute
the valid and legally binding obligation of such Person enforceable 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. 

          4.4      Conflicting
Agreements; Litigation. No provisions of any mortgage, indenture,
contract, agreement, statute, rule, regulation, judgment, decree or order
binding on such Person or affecting the Property of such Person conflicts with,
or 

13 

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 such Person pursuant to the terms of any such mortgage,
indenture, contract or agreement. No pending or, to the best of such Person’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. Solely in the case of each Subordinated Creditor,
on the date hereof, Subordinated Creditors which are signatory hereto are the
current owners and holders of each Subordinated Debenture and all other
Subordinated Indebtedness Documents. 

          4.6      Default
under Subordinated Indebtedness Documents and Senior
Indebtedness Documents.

                    (a)      Solely
in the case of each Subordinated Creditor, on the date hereof, to the knowledge
of such Subordinated Creditor, no default exists under or with respect to any of
the Subordinated Indebtedness Documents. 

                    (b)     
Solely in the case of Administrative Agent, on the date hereof, to the knowledge
of Administrative Agent, no default exists under or with respect to the Loan
Agreement or any of the other Loan Documents. 

          5.      Cumulative
Rights, No Waivers. Each and every right, remedy and power granted
to Administrative Agent or Lenders hereunder shall be cumulative and in addition
to any other right, remedy or power specifically granted herein, in the Loan
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 Administrative Agent or Lenders, from time to time,
concurrently or independently and as often and in such order as Administrative
Agent or Lenders may deem expedient. Any failure or delay on the part of
Administrative Agent or Lenders 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 Administrative Agent’s or Lenders’ 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 Administrative Agent’s or Lenders’
rights hereunder shall be deemed to establish a custom or course of dealing or
performance among the parties hereto. 

          6.     
Modification. Any modification or waiver of any provision of
this Agreement, or any consent to any departure by Administrative Agent or any
Subordinated Creditor therefrom, shall not be effective in any event unless the
same is in writing and signed by Administrative Agent and the Subordinated
Creditors, 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 any Subordinated Creditor in any event
not specifically required of Administrative Agent hereunder shall not entitle
any Subordinated Creditor to any 

14 

other or further notice or demand in the same, similar or other
circumstances unless specifically required hereunder. 

          7.     
Additional Documents and Actions. Each Subordinated Creditor at
any time, and from time to time, after the execution and delivery of this
Agreement, upon the request of Administrative Agent and at the expense of the
Borrowers, promptly will execute and deliver such further documents and do such
further acts and things as Administrative Agent may reasonably request in order
to effect fully the purposes of this Agreement. 

          8.      Notices.
All notices and communications under this Agreement shall be in writing and
shall be (i) delivered in person, (ii) mailed, postage prepaid, either by
registered or certified mail, return receipt requested, (iii) delivered by
overnight express courier, or (iv) sent by telecopy (with such telecopy to be
confirmed promptly in writing sent in accordance with (i), (ii) or (iii) above),
addressed in each case as follows: 

15 

	 	  	Trafalgar Capital Specialized 
	 	  	Investment Fund, Luxembourg 
	 	  	8-10 Rue Mathias Hardt 
	 	  	B{ 3023 
	 	  	L-1030 Luxembourg 
	 	  	Attention: Andrew Garai, Chairman 
	 	  	                    of
      Trafalgar Capital Sarl 
	 	  	Facsimile:   011-44-207-405-0161
  
	 	  	 
	 	  	 
	 	  	 
	 	  	 
	 	with a copy to: 	James G. Dodrill II, P.A. 
	 	  	5800 Hamilton Way 
	 	  	Boca Raton, FL 33496 
	 	  	Attention: James G. Dodrill, Esq. 
	 	  	Telephone: (561) 862-0529 
	 	  	Facsimile: (561) 892-7787 
	 	  	 
	 	If to any Obligor: 	c/o Carbiz Inc. 
	 	  	7405 N. Tamiami Trail 
	 	  	Sarasota, FL 34243 
	 	  	Attention: Stanton C. Heintz 
	 	  	Facsimile: (941) 308-2718 
	 	  	 
	 	with a copy to: 	Thomas M. Rose 
	 	  	Troutman Sanders LLP 
	 	  	222 Central Park Avenue, Suite 2000 
	 	  	Telephone: (757) 687-7715 
	 	  	Facsimile: (757) 687-1529 

16 

	 	If to Administrative Agent: 	SWC Services, LLC 
	 	  	1033 Skokie Boulevard 
	 	  	Suite 620 
	 	  	Northbrook, Illinois 60062 
	 	  	Attention: Greg Bell 
	 	  	Telephone: (847) 504-0993 
	 	  	Facsimile: (847) 504-0994 
	 	  	  
	 	  	  
	 	 with a copy to: 	Katten Muchin Rosenman LLP 
	 	  	525 West Monroe Street 
	 	  	Suite 1900 
	 	  	Chicago, IL 60661-3693 
	 	  	Attention: Zack Wagman 
	 	  	Telephone: (312) 902-5200 
	 	  	Facsimile: (312) 902-1061 

or to any other address, as to any of the parties hereto
(including any Person that becomes a holder of Subordinated Indebtedness after
the date hereof), as such party shall designate in a written notice to the other
parties hereto. All notices sent pursuant to the terms of this Section 8
shall be deemed received (i) if personally delivered, then on the Business Day
of delivery, (ii) if sent by overnight, express carrier, on the next Business
Day immediately following the day sent, (iii) if sent by registered or certified
mail, on the earlier of the third Business Day following the day sent or when
actually received or (iv) if delivered by telecopy, on the date of transmission
if transmitted on a Business Day before 4:00 p.m. (Chicago time), otherwise on
the next Business Day. 

          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 Administrative Agent, the Lenders, the Subordinated
Creditors, and shall be binding upon the successors and assigns of
Administrative Agent, the Subordinated Creditors and the Obligors. 

          11.      Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which taken together shall be one and
the same instrument. Any such counterpart which may be delivered to
Administrative Agent by facsimile, email or similar electronic transmission
shall be deemed the equivalent of an originally signed counterpart and shall be
fully admissible in any enforcement proceedings regarding this Agreement. 

17 

          12.      Defining
Rights of Creditors; Subrogation. 

                    (a)     
The provisions of this Agreement are solely for the purpose of defining the
relative rights of the Subordinated Creditors, on the one hand, and
Administrative Agent and Lenders, on the other hand, and shall not be deemed to
create any rights or priorities in favor of any other Person, including, without
limitation, any Obligor. The failure of any Obligor to make any payment to any
Subordinated Creditor due to the operation of this Agreement shall not be
construed as prohibiting the occurrence of a Subordinated Default. 

                    (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
(provided, that if, after Payment in Full of all Senior Indebtedness,
Administrative Agent or any Lender takes action against an Obligor for any
indemnity obligations owing to Administrative Agent or any Lender under the Loan
Documents or Permitted Refinancing Loan Documents, each Subordinated Creditor
agrees that its rights of subrogation hereunder shall be suspended during such
period of time that Administrative Agent or any Lender is taking any such action
to enforce any such indemnity obligations under the Loan Documents or Permitted
Refinancing Loan Documents and each Subordinated Creditor agrees that it shall
not be permitted to receive or retain any payment or distribution made on
account of the Subordinated Indebtedness during such period); 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. 

          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 Administrative Agent or Lenders that exceed the rights,
remedies and benefits provided to Administrative Agent or Lenders 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 Creditors. Carbiz Parent shall
furnish to Administrative Agent, upon demand, a statement of the indebtedness
owing from Obligors to Subordinated Creditors, and will give Administrative
Agent access to the books of Obligors in accordance with the Loan Agreement so
that Administrative Agent can make a full examination of the status of such
indebtedness. Carbiz Parent shall furnish to each Subordinated 

18 

Creditor, upon demand, a statement of the indebtedness owing
from Obligors to Administrative Agent and the Lenders, and will give each
Subordinated Creditor access to the books of Obligors in accordance with the
Subordinated Purchase Agreement so that such Subordinated Creditor 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 indefeasible Payment in Full of the
Senior Indebtedness. 

          17.      Subordinated
Default Notice. Carbiz Parent shall provide Administrative Agent
with prompt written notice of the occurrence of a Subordinated Default (which
notice shall incorporate a reasonably detailed description of such Subordinated
Default) and of any cure or waiver thereof. Carbiz Parent shall provide the
Subordinated Creditors with prompt written notice of the occurrence of a Senior
Payment Default or Senior Covenant Default, as the case may be (which notice
shall incorporate a reasonably detailed description of such Senior Payment
Default or Senior Covenant Default), and of any cure or waiver thereof.

          18.     
APPLICABLE LAW. THIS AGREEMENT, AND ALL MATTERS RELATING HERETO OR
THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR
OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES. 

          19.     
JURISDICTION AND VENUE. EACH SUBORDINATED CREDITOR 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 ADMINISTRATIVE AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH SUBORDINATED CREDITOR
EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH SUBORDINATED CREDITOR HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE UPON SUCH PERSON BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO SUCH PERSON AT THE ADDRESS SET FORTH IN
SECTION 8 OF THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN
(10) DAYS AFTER THE SAME HAS BEEN POSTED. 

          20.     
WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY HERETO (INCLUDING, WITHOUT
LIMITATION, ANY PERSON THAT BECOMES A HOLDER OF SUBORDINATED INDEBTEDNESS OR A
LENDER AFTER THE DATE HEREOF) HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED 

19 

HEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH PARTY HERETO (INCLUDING,
WITHOUT LIMITATION, ANY PERSON THAT BECOMES A HOLDER OF SUBORDINATED
INDEBTEDNESS OR A LENDER AFTER THE DATE HEREOF) ACKNOWLEDGES THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH PERSON
HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT SUCH PERSON
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
PARTY HERETO (INCLUDING, WITHOUT LIMITATION, ANY PERSON THAT BECOMES A HOLDER OF
SUBORDINATED INDEBTEDNESS OR A LENDER AFTER THE DATE HEREOF) WARRANTS AND
REPRESENTS THAT SUCH PERSON HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY
WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS.

          21.      Liens
on Lender Collateral; Enforcement of Liens on Lender Collateral.

          21.1     
Rights as Unsecured Creditors. Subject to the terms and
provisions of this Agreement, including, without limitation, Section 2.7
hereof, each of the Subordinated Creditors may exercise at any time against any
Obligor or its Property the respective rights and remedies of such Persons as
unsecured creditors of such Obligor under the Subordinated Indebtedness
Documents and applicable law. In furtherance and not in limitation of the
foregoing, and (i) notwithstanding the provisions of Sections 21.5,
21.7 or 21.10, each Subordinated Creditor shall be free to propose, or
vote for or against, any plan of reorganization in its capacity as an unsecured
creditor, (ii) except to the extent expressly prohibited pursuant to Sections
2.7 and 21 hereof, the Subordinated Creditors shall have and hereby expressly
retain and reserve any claim, motion, objection or argument that otherwise could
be asserted by an unsecured creditor of any Obligor, including any objections or
claims that any transfer (including any strict foreclosure) constitutes a
fraudulent conveyance or transfer under Section 548 of the Bankruptcy Code or
any applicable state law or a violation by any Obligor of any applicable law
(including any breach of fiduciary duty) and, (iii) except to the extent
expressly prohibited pursuant to Sections 2.7 and 21 hereof, the Subordinated
Creditors shall be entitled to file any pleadings, claims, objections, motions
or arguments that assert rights or interests available to unsecured creditors of
the applicable Obligors arising under the Bankruptcy Code or other applicable
law.

          21.2     
Lien Subordination. Notwithstanding the date, manner or
order of grant, attachment or perfection of the Liens on all or any part of the
Lender Collateral granted to Administrative Agent and Subordinated Creditors,
respectively, and notwithstanding the provisions of the UCC or any other
applicable law or decision, or the terms or provisions of the Loan Documents (or
Permitted Refinancing Loan Documents, as applicable) or Subordinated
Indebtedness Documents, respectively, or any other circumstance whatsoever,
Administrative Agent and each Subordinated Creditor hereby agrees that (a)
Administrative Agent on behalf of Administrative Agent and Lenders shall have a
first, prior, senior and continuing Lien on all of the Lender Collateral to
secure the prompt and complete payment, performance and observance of all Senior
Indebtedness, and (b) any Lien on all or any part of the Lender Collateral now
or hereafter held by any 

20 

Subordinated Creditor, regardless of
when or how acquired, whether by grant, statute, operation of law, subrogation
or otherwise, shall be in all respects and for all purposes subject to, junior
to and subordinate to all Liens on all or any part of the Lender Collateral
granted to or held by Administrative Agent on behalf of Administrative Agent and
Lenders. Subject to the terms and provisions of this Agreement, including
the respective definitions of “Senior Indebtedness” and “Subordinated
Indebtedness” set forth in Section 1 hereof, the relative priorities of
the respective Liens described in this Section 21.2 shall not be altered
or otherwise affected by any amendment, modification, supplement, extension,
renewal, restatement, replacement or refinancing of the Senior Indebtedness or
Subordinated Indebtedness, respectively, or by any action or inaction which
Administrative Agent and any Lender, on the one hand, or any Subordinated
Creditor, on the other hand, may take or fail to take, in each case in respect
of the Lender Collateral. 

          21.3      Release
of Lender Collateral. Each Subordinated Creditor shall, promptly upon
the written notice of Administrative Agent, release or otherwise terminate such
Subordinated Creditor’s Lien on the Lender Collateral (or applicable portion
thereof) contemporaneously with the release by the Administrative Agent of its
Lien thereon if the Lender Collateral (or a portion thereof) is sold or
otherwise disposed of by the Administrative Agent (or any representative
thereof), whether by strict foreclosure or otherwise, or such Lender Collateral
is sold or otherwise disposed of by the record owner thereof as permitted by the
Loan Documents or otherwise with the consent of the requisite holders of Senior
Indebtedness (or any representative thereof) provided, that, (i) the
subordinate Lien of the Subordinated Creditors securing the Subordinated
Indebtedness shall attach to the proceeds of such sale or other disposition to
the extent not applied to the reduction of the Senior Indebtedness, and (ii)
such subordinate Lien on such proceeds shall in all respects remain subject to
all of the terms and provisions of this Agreement. In connection with any
release of Lien pursuant to the terms hereof, each Subordinated Creditor will
immediately deliver such release documents as the Administrative Agent (or any
representative thereof) may require in connection therewith. In furtherance of
the foregoing, each Subordinated Creditor hereby irrevocably appoints
Administrative Agent as its lawful attorney and agent, and fully authorizes
Administrative Agent under the UCC and other applicable law, to execute (to the
extent requiring execution by Subordinated Creditors) any and all such release
documents (including, without limitation, UCC and PPSA termination statements
and/or partial releases) and to record and/or file such release documents as
Administrative Agent deems necessary if such release documents are not received
promptly after written request therefor. Each Subordinated Creditor agrees that
Administrative Agent has not assumed any obligations to act as agent for any
Subordinated Creditor with respect to the Lender Collateral. 

          21.4     
Perfection. Except to the extent otherwise expressly
provided in Section 23 hereof, Administrative Agent, on the
one hand, and Subordinated Creditors, on the other hand, shall be solely
responsible for perfecting and maintaining the perfection of their respective
Liens on each item constituting Lender Collateral. The provisions of this
Section 21 are intended solely to govern the respective Lien priorities
as between the holders of Senior Indebtedness and the holders of Subordinated
Indebtedness and shall not impose on any such Person any obligations in respect
of the disposition of proceeds 

21 

of any Lender Collateral which would
conflict with prior perfected claims therein in favor of any other Person or any
applicable order or decree of any court or governmental authority or any
applicable law. 

          21.5      Management
of Collateral. Until the Senior Indebtedness has been Paid in
Full, the holders of Senior Indebtedness (or any representative thereof) shall
have the exclusive right to manage, perform and enforce the terms of the Senior
Indebtedness, the Loan Documents and Permitted Refinancing Loan Documents with
respect to all Lender Collateral and to exercise and enforce all privileges and
rights thereunder and with respect thereto, in each case in the exercise of
their business judgment and sole and absolute discretion, including, without
limitation, the sole and exclusive right to take or retake control or possession
of any Lender Collateral, to hold, prepare for sale, process, sell, lease,
foreclose upon, collect, exercise rights or remedies with respect to, dispose
of, or liquidate any Lender Collateral, to incur expenses in connection with any
of the foregoing and to exercise all rights and remedies of a secured lender
under the UCC, the PPSA or other applicable law, and no Subordinated Creditor
shall take or seek to take any such action. In furtherance and not in limitation
of the foregoing, each Subordinated Creditor waives any and all rights of such
Person to direct the method or challenge the appropriateness of any action by
any holder of Senior Indebtedness (or any representative thereof) in connection
with, and any right to object to, a strict foreclosure with respect to any
Lender Collateral, waives any and all rights of redemption and hereby consents
to each holder of Senior Indebtedness (or any representative thereof) dealing in
all respects with the Lender Collateral as if there were no Liens on the Lender
Collateral securing Subordinated Indebtedness. 

          21.6     
Lien Enforcement. Notwithstanding anything to the contrary set
forth in this Agreement, including, without limitation, Section 2.7
hereof, but subject in any event to Section 21.1 hereof: 

                    (a)      Until
Payment in Full of all Senior Indebtedness, except as otherwise expressly
permitted in subsections 21.6(b) and (c) below, other than
Permitted Subordinated Indebtedness Payments, in each case to the extent
permitted at the time of payment thereof to be paid to and received and retained
by Subordinated Creditors pursuant to the other terms and provisions of this
Agreement, no Subordinated Creditor shall ask, demand or sue for any right or
remedy in respect of all or any part of the Lender Collateral and each
Subordinated Creditor agrees not to take or receive from any Obligor, directly
or indirectly, in cash or other Property or by set-off or in any other manner,
whether pursuant to any enforcement, collection, execution, levy or foreclosure
proceeding or otherwise, all or any part of the Lender Collateral. Without
limiting the generality of the foregoing, until Payment in Full of all Senior
Indebtedness, (i) no Subordinated Creditor shall exercise or otherwise assert
any right or remedy in respect of all or any part of the Lender Collateral or
any Liens thereon; (ii) the sole right of the Subordinated Creditors with
respect to the Lender Collateral shall be to hold a Lien thereon to the extent
granted pursuant to the Subordinated Indebtedness Documents (until such time as
such Lien is released or required to be released pursuant to Sections
21.3 or 21.7 hereof) and to receive proceeds thereof remaining after
such Payment in Full; and (iii) without the prior written consent of
Administrative Agent, no Subordinated Creditor shall exercise any right such
Person may have under the Subordinated Indebtedness 

22 

Documents or under the UCC, the PPSA or
other applicable law to deliver any notices to account debtors informing them of
such Person’s interest in any accounts of any Obligor or direct such account
debtors to make payments in any particular manner of amounts due in respect of
any such account. 

                    (b)      Each
Subordinated Creditor each agrees that, until Payment in Full of all Senior
Indebtedness, such Person will not commence, or join with any creditor other
than Administrative Agent in commencing, any enforcement, collection, execution,
levy or foreclosure proceeding with respect to any Lien held by it in, or
otherwise with respect to, all or any part of the Lender Collateral, including,
without limitation, petitioning, filing or joining in any involuntary Proceeding
pursuant to Section 303 of the Bankruptcy Code. 

                    (c)      The
provisions of this Section 21.6 are intended to limit the enforcement of
the rights and remedies of the Subordinated Creditors with respect to the Lender
Collateral or any Lien thereon for so long and to the extent set forth in
subsections 21.6(a) and (b) hereof. Nothing in this Section
21.6 is intended or shall be deemed or construed to prohibit Subordinated
Creditor from receiving and retaining at any time any Permitted Subordinated
Debt Payments to the extent such receipt and retention is permitted hereunder at
such time, or to the extent such action is permitted hereunder at such time,
from making any demand for payment or any declaration of acceleration with
respect to the Subordinated Indebtedness or commencing any judicial or other
action to collect (without enforcement of any of such Person’s rights and
remedies with respect to all or any part of the Lender Collateral) the
Subordinated Indebtedness under the Subordinated Indebtedness Documents. 

          21.7      Proceedings.
In the event of any Proceeding involving any Obligor, no Subordinated Creditor
shall assert any claim, motion, objection or argument in respect of all or any
part of the Lender Collateral in connection with such Proceeding that could
otherwise be asserted or raised in connection with such Proceeding by any such
Person as a secured creditor of such Obligor, except, subject to the terms
hereof, to the extent such claim, motion, objection or argument could be
asserted by an unsecured creditor of such Obligor. Without limiting the
generality of the foregoing, each Subordinated Creditor agrees that it will:

                    (a)      not
object to or oppose (or support any other Person in objecting to or opposing)
any sale or other disposition of all or any part of the Lender Collateral free
and clear of Liens or other claims of the Subordinated Creditors under Section
363 of the Bankruptcy Code or any other provision of the Bankruptcy Code or any
other law applicable to such Proceeding if Administrative Agent and Lenders have
consented to such sale or disposition, provided that the subordinate Lien
of the Subordinated Creditors securing the Subordinated Indebtedness shall
attach to the proceeds of such sale or other disposition to the extent not
applied to the reduction of the Senior Indebtedness (or any senior
debtor-in-possession financing); 

                    (b)     
(i) at the request of Administrative Agent, challenge or otherwise object to any
use of cash collateral or debtor-in-possession financing that is challenged or
otherwise objected to by Administrative Agent and Lenders; and (ii) not
challenge or 

23 

otherwise object to (or support any
other Person in challenging or otherwise objecting to) any use of cash
collateral or debtor-in-possession financing consented to or provided by any
Lender if and to the extent that (A) the interest rate, fees, advance rates,
lending sublimits and limits and other terms are determined by the bankruptcy
court with jurisdiction over the Proceeding to be commercially reasonable under
the circumstances, (B) the principal amount (including unfunded commitments) of
such debtor-in-possession financing, together with the aggregate principal
amount of the Senior Indebtedness outstanding immediately after giving effect to
any payment thereof with proceeds of any such debtor-in-possession financing,
does not exceed the greater of (x) one hundred fifty percent (150%) of the
aggregate principal amount of the pre-petition Senior Indebtedness (including
unfunded commitments) outstanding immediately prior to the commencement of the
applicable Proceeding and (y) the aggregate maximum permitted principal amount
of the pre-petition Senior Indebtedness, (C) the Liens granted to the Person
providing such financing rank prior to or pari passu with the pre-petition Lien
of Administrative Agent; 

                    (c)      not
assert (or support any other Person in asserting) any right it may have to
“adequate protection” of its interest in any Lender Collateral in any
Proceeding; 

                    (d)      will
not seek (except as expressly permitted by clause (c) above) and will, in any
event, turn over to Administrative Agent for the pro rata benefit of
Administrative Agent and Lenders any payment or distribution of property
received as “adequate protection” of their interest in any Lender Collateral
that they receive in any Proceeding for application to the Senior Indebtedness
owed to Administrative Agent and Lenders; and 

                    (e)      not
seek to have the automatic stay of Section 362 of the Bankruptcy Code (or any
similar stay under any other applicable law) lifted or modified with respect to
any Lender Collateral without the prior written consent of Administrative Agent;
provided, that, in the case of this clause (e), if Administrative Agent
and Lenders seek such aforementioned relief, each Subordinated Creditor hereby
irrevocably consents thereto and shall join in any such motion or application
seeking such relief if requested by Administrative Agent. Each Subordinated
Creditor waives any claim it may now or hereafter have arising out of the
election of Administrative Agent and Lenders, in any Proceeding instituted under
the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy
Code. 

          21.8     
Notice of Liens. Each Subordinated Creditor and
Administrative Agent each acknowledges that this Agreement shall constitute
notice of their respective interests in the Lender Collateral under and for any
purpose such a notice may be required by the UCC. 

          21.9      Proceeds
of Events of Loss. 

                    (a)      Proceeds
of the Lender Collateral include proceeds of insurance in respect of, and
compensation and other awards and payments made on account of, in each case, any
of the following events or occurrences (each such event or occurrence being an

24 

“Event of Loss”): (i) any loss,
theft or destruction of, or damage to, any Lender Collateral, (ii) any pending
or threatened institution of any proceedings for the condemnation or seizure of
any Lender Collateral or for the exercise of any right of eminent domain with
respect thereto; or (ii) any actual condemnation, seizure or taking, by exercise
of the power of eminent domain or otherwise, of any Lender Collateral, or
confiscation thereof, and therefore, anything contained in the Subordinated
Indebtedness Documents to the contrary notwithstanding, the priorities provided
for herein shall govern and control the ultimate application and disposition of
all of such proceeds. 

                    (b)      Until
the Senior Indebtedness has been Paid in Full, (i) Administrative Agent shall
have the sole and exclusive right, as against the Subordinated Creditors, to
adjust settlement of each and every claim with respect to any Event of Loss, and
(ii) all proceeds of each Event of Loss shall be paid to Administrative Agent
for application to the Senior Indebtedness in accordance with the respective
terms and provisions of the Loan Documents or Permitted Refinancing Loan
Documents, as applicable, and, to the extent necessary or desirable, the
Subordinated Creditors shall cooperate promptly and in a reasonable manner in
effecting the payment of all of such proceeds to Administrative Agent. If the
requisite holders of Senior Indebtedness (or any representative thereof), in
their (or its) sole discretion or pursuant to agreement with any Obligor
(pursuant to the terms and provisions the Loan Documents or the Permitted
Refinancing Loan Documents, as the case may be, or otherwise), permit such
Obligor to utilize any proceeds of any Event of Loss to repair or replace the
affected Lender Collateral, or purchase other Lender Collateral, the consent of
the holders of Senior Indebtedness (or any representative thereof) to such
utilization automatically shall be deemed to include the consent of the
Subordinated Creditors to such repair, replacement or purchase, as the case may
be. 

          21.10      Prohibition
on Contesting Liens. Administrative Agent and each Subordinated
Creditor each agrees not to seek to challenge, to avoid, to subordinate or to
contest or directly or indirectly to support any other Person in challenging,
avoiding or contesting in any judicial or other proceeding, including, without
limitation, any Proceeding, the priority, validity, extent, perfection or
enforceability of any Lien held by Administrative Agent, the Lenders or the
Subordinated Creditors, as the case may be, on all or any part of the Lender
Collateral; provided, that nothing in this Section 21.10 is intended or
shall be deemed or construed to limit in any way the ability of Administrative
Agent or Subordinated Creditors to enforce all of the terms and provisions of
this Agreement. As between Administrative Agent and Lenders, on the one hand,
and the Subordinated Creditors, on the other hand, the terms of this Agreement
shall govern and control even if part or all of the Subordinated Indebtedness or
Senior Indebtedness, as the case may be, or the respective Liens securing
payment, observance and performance thereof are avoided, disallowed, set aside
or otherwise invalidated in any Proceeding or otherwise. 

          21.11     
Marshalling; Additional Waiver. Each Subordinated Creditor
hereby waives to the fullest extent permitted by applicable law any rights such
Person may have under applicable law to assert the doctrine of marshalling or
otherwise to require Administrative Agent or any Lender to marshall any Property
of any Obligor for the benefit of the Subordinated Creditors. Each Subordinated
Creditor each expressly waives 

25 

all notice of the acceptance by
Administrative Agent and Lenders of the subordination and other terms and
provisions of this Agreement and all the notices whatsoever not specifically
required pursuant to the terms of this Agreement or under the UCC, the PPSA or
other applicable law in connection with any foreclosure on or sale of Property
of any of the Obligors and each Subordinated Creditor expressly consents to
reliance by Administrative Agent and Lenders upon the subordination and other
terms and provisions of this Agreement. 

          21.12     
Turnover of Lender Collateral. Upon payment of all Indebtedness
under the Loan Agreement, in full, and the termination of all commitments of the
Administrative Agent and all Lenders thereunder, if and to the extent that the
Subordinated Creditors still hold a Lien on any of the Lender Collateral,
Administrative Agent agrees to, upon written request of Subordinated Lenders,
use reasonable efforts to deliver to Subordinated Creditors all of the Lender
Collateral then in the possession or control of Administrative Agent in order
that Subordinated Creditors may hold such Lender Collateral as security for the
Subordinated Indebtedness; provided, however, that the failure of
Administrative Agent to make such delivery to the Subordinated Creditors for any
reason whatsoever (including making such delivery to the Borrowers) shall not
create any liability for Administrative Agent or any Lender or subject
Administrative Agent or any Lender to any claim for damages, whether based in
tort or on contract. Nothing herein is intended or shall be construed to make
Administrative Agent an agent for any Subordinated Creditor or to impose upon
Administrative Agent or any Lender any duty or obligation, fiduciary or
otherwise, in favor of any Subordinated Creditor. Each Subordinated Creditor
acknowledges and agrees that it is not relying on the turnover of any Lender
Collateral by Administrative Agent in entering into the Subordinated
Indebtedness Documents or the transactions contemplated thereunder.
Notwithstanding any provision to the contrary contained in the Loan Agreement,
each Obligor hereby authorizes and directs the Administrative Agent to deliver
any and all such Lender Collateral to Subordinated Creditors as aforesaid and
agree, jointly and severally, to indemnify and hold Administrative Agent and
each Lender harmless from any and all claims in connection with complying, or
for failing to comply, with the provisions of this Section 21.12. 

          22.      Subordinated
Creditors’ Perfection Rights. Notwithstanding any terms of the
Subordinated Indebtedness Documents to the contrary, until the Payment in Full
of the Senior Indebtedness, no Obligor shall be required to take any action to
‘perfect’ the Liens of Subordinated Creditors, and no Subordinated Creditor
shall be permitted to take any action to ‘perfect’ the Liens of Subordinated
Creditors other than the filing of UCC financing statements and PPSA filings in
such offices as Subordinated Creditors may require from time to time. 

          23.     
Collateral In Possession.

          23.1     
Control by Administrative Agent. If Administrative Agent
takes possession of or has “control” (as such term is defined in the UCC) over
any Lender Collateral for purposes of perfecting its Lien thereon (including
equity certificates, chattel paper, deposit accounts and investment property),
Administrative Agent, to the extent such Liens may be perfected only by such
possession or control, shall be deemed to be holding such Lender Collateral as
agent for the Subordinated Creditors, solely for 

26 

purposes of perfection of their Liens
under the UCC on such Lender Collateral; provided that Administrative
Agent shall have no duty or liability to protect or preserve any rights
pertaining to any of the Lender Collateral for any Subordinated Creditor, and
each Subordinated Creditor hereby waives and releases Administrative Agent from
all claims and liabilities arising pursuant to its role as such agent.

          23.2      Control
by Subordinated Creditors. If, notwithstanding the terms of Section 22
hereof, any Subordinated Creditor takes possession of or has “control” (as such
term is defined in the UCC) over any Lender Collateral for purposes of
perfecting its Lien thereon (including equity certificates, chattel paper,
deposit accounts and investment property), such Subordinated Creditor shall be
deemed to be holding such Lender Collateral as agent for Administrative Agent,
solely for purposes of perfection of Administrative Agent’s Lien under the UCC
on such Lender Collateral; provided that such Subordinated Creditor shall have
no duty or liability to protect or preserve any rights pertaining to any of the
Lender Collateral for Administrative Agent or any of the Lenders, and,
Administrative Agent and each of the Lenders each hereby waives and releases
such Subordinated Creditor from all claims and liabilities arising pursuant to
its role as such agent, except for claims and liabilities arising from such
Subordinated Creditor’s gross negligence or willful misconduct. 

          23.3     
No Alteration of Priorities. It is understood and agreed that this
Section 23 is intended solely to assure continuous perfection of
the Liens granted under the Loan Documents or Subordinated Indebtedness
Documents, as applicable, and nothing in this Section 23 is intended or
shall be deemed or construed to alter the respective priorities or obligations
set forth elsewhere in this Agreement. 

- Remainder of Page Intentionally Left Blank; Signature Pages
Follow - 

27 

                         IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the
date first above written. 

SUBORDINATED CREDITOR: 

TRAFALGAR CAPITAL SPECIALIZED

INVESTMENT FUND, LUXEMBOURG, a Luxembourg 
SICAV fund

By:      
Trafalgar Capital Sarl 
Its:       General
Partner 

By:      
_______________________________
Name:  Andrew Garai, Chairman of the
Board 
Its:       Chairman of the Board 

ADMINISTRATIVE AGENT: 

SWC SERVICES LLC, a Delaware
corporation, as 
Administrative Agent 

By:     
_______________________________
Name: _______________________________
Its:     
_______________________________

                         IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the
date first above written. 

OBLIGORS: 

CARBIZ INC., an Ontario
corporation

By:     
_______________________________
Name: _______________________________
Its:     
_______________________________

CARBIZ USA INC., a Delaware
corporation

By:     
_______________________________
Name: _______________________________
Its:     
_______________________________

CARBIZ AUTO CREDIT, INC., a
Florida corporation

By:     
_______________________________
Name: _______________________________
Its:     
_______________________________

CARBIZ AUTO CREDIT JV1, LLC, a
Florida limited liability company

By:     
_______________________________
Name: _______________________________
Its:     
_______________________________EXHIBIT 10.1

                     2007 CONSULTING AND ADVISORY AGREEMENT

     THIS CONSULTING  AGREEMENT ("2007 Agreement"),  made effective as of the 28
day of August  2007,  is entered  into by and between  Xsunx,  Inc.,  a Colorado
corporation  ("Company"),  and Michael A.  Russak,  Ph.D.,  ("Consultant").  The
Company and  Consultant  are  sometimes  herein  referred to  individually  as a
"party" and collectively as the "parties".

                                 R E C I T A L S

     WHEREAS,  Consultant has developed experience and expertise in the areas of
thin film  materials  and devices for magnetic  recording,  photovoltaic,  solar
thermal applications,  semiconductor devices as well as glass, glass-ceramic and
ceramic  materials.  Consultant  has also  benefited  from  thirty five years of
industrial  scientific  research and product  development  experience  with over
twelve years  experience  at the executive  management  level all of which is of
interest to the Company; and

     WHEREAS,  Consultant  currently  holds the position of  Executive  Director
IDEMA-U.S. with such duties and responsibilities incident thereto; and

     WHEREAS,  the  Company  desires to obtain the  services of  Consultant  and
Consultant desires to provide the Company with consultancy and advisory services
as contemplated pursuant to the terms and conditions contained herein; and

     WHEREAS,  the  undersigned  parties  desire to formalize  such  consultancy
relationship;

     NOW,  THEREFORE,  in  consideration  of the promises,  mutual covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the parties to this
Agreement agree as follows:

     1. Definitions

     1.1  "XsunX   Field  of  Use"  means  the   business  of   developing   and
commercializing   semi-transparent  and  opaque  solar  cells  and  photovoltaic
technologies, solar cell panels, and methods of manufacture.

     1.2  "Business of XsunX" means the business of  developing,  manufacturing,
and  marketing   semi-transparent   and  opaque  solar  cells  and  photovoltaic
technologies, solar cell panels, and methods of manufacture.

     2.  Engagement of Services.  The Company  hereby  engages  Consultant as an
independent  contractor to provide consulting and advisory services as set forth
herein.  All such  consulting and services shall be performed in accordance with
the  terms and  conditions  contained  herein.  Consultant  shall  report to the
Chairman  of the  Scientific  Advisory  Board,  or in  his  absence,  the  Chief
Executive  Officer of the Company.  Consultant hereby accepts such engagement in
accordance with such terms and conditions.

<PAGE>

     3.  Services  of  Consultant.  Consultant  shall  provide  consultancy  and
advisory  services as a member of the XsunX Scientific  Advisory Board under the
title of Member of the  Advisory  Board.  Notwithstanding  the  foregoing  title
Consultant shall remain an independent contractor. Consultant shall provide such
services  incident  thereto as may be necessary from time to time which services
shall include,  without limitation,  providing the Company with his best efforts
in  providing  technical  expertise  in  advising  the  Company  in the areas of
research & development,  process and product development,  planning, third party
technical and resource requirements,  analysis of research and development data,
and the management of  intellectual  assets  pertaining to the Business of XsunX
and the XsunX Field of Use. Consultant is not a corporate officer or director of
XsunX and will not be represented as such.

     3.1.  Consultant  shall  provide  such  other  related  services  as may be
requested  of  Consultant  by the Company and as are not  inconsistent  with the
provisions of this  Agreement.  Consultant  agrees to devote  Consultant's  best
efforts,  skills,  and  technical  expertise  to the  Business  of XsunX,  to do
Consultant's  utmost to further enhance and develop the interests and welfare of
the Company,  and to devote  necessary time and attention to the business of the
Company, while recognizing Consultant's duties as an independent consultant.

     3.2. Consultant shall truthfully and accurately make, maintain and preserve
all records and reports  that the  Company  may,  from time to time,  request or
require, and shall fully account for all money, records, equipment, materials or
other property belonging to the Company of which Consultant may have custody and
shall pay over and deliver same promptly whenever and however  Consultant may be
directed to do so.

     3.3. Consultant shall make available to the Company any and all information
of which  Consultant has knowledge  that is relevant to the Company's  business,
but is not otherwise  prohibited from  disclosing,  and make all suggestions and
recommendations which Consultant believes will be of benefit to the Company.

     3.4.  Consultant  shall,  at his own  cost,  prepare  for and  attend  such
meetings as may be reasonably requested by the Company, provided,  however, that
the Company shall pay for the  reasonable  travel and lodging costs  incurred by
Consultant in regard to the foregoing.  In addition to incidental  communication
of data,  questions,  and progress  updates provided to Consultant via email for
comment by  Consultant,  the  Company  may  request at least one  teleconference
review  meeting  per month and one meeting  requiring  attendance  per  calendar
quarter for the purpose of planning,  analysis, and collaborative  discussion of
the development and business matters referenced hereinabove, and the conformance
or variance of the foregoing to or with the Business of XsunX.

     4. Duty to  Consultancies.  The parties  recognize  that  Consultant is and
shall remain an independent  consultant  and that as an independent  consultant,
Consultant  shall devote time and effort to its  business.  Notwithstanding  the
same,  Consultant   shall  conform  its  conduct  to  the  fiduciary  duties  of

                                       2
<PAGE>

confidentiality  and loyalty  owed to the Company.  In that  regard,  Consultant
shall inform the Company at the earliest  opportunity at such time as Consultant
may perceive a potential conflict of interest with regard to Consultant's duties
to other consultancies and Consultant's duties to the Company.  Consultant shall
not make any unauthorized  disclosure of the  confidential  information of other
clients to the Company. Consultant shall not make any unauthorized disclosure of
the confidential  information of the Company to any other party not permitted to
receive such information.

     5. Compensation.  For and in consideration of the performance by Consultant
of the services,  terms, conditions,  covenants and promises herein recited, the
Company  agrees and promises to pay to Consultant at the times and in the manner
herein stated and as set forth below:

     5.1. As the  principal  consideration  of the  services to be  performed by
Consultant hereunder during the term of this Agreement, Consultant shall receive
from the Company One  Thousand  Dollars  ($1,000)  monthly,  an  additional  One
Thousand Dollars ($1,000) for each quarterly meeting of the Scientific  Advisory
Board,  and an initial  grant of a  Consultancy  and  Advisory  Warrant  for the
purchase of up to One Hundred  Thousand  (100,000) shares of common voting stock
of the Company. Such warrant will vest in accordance with the vesting provisions
set for within an appropriate warrant agreement ("Warrant  Instrument").  Except
as may otherwise be set forth herein,  the cash  compensation  and warrant grant
shall   constitute  the  sole   compensation  of  Consultant   hereunder.   Such
compensation  may  sometimes  be  herein  referred  to  as  Consultant's   "Base
Compensation".

     5.2.  The  Company  shall  reimburse  Consultant,  from time to time,  upon
Consultant's  submission of expense account and supporting  documents on Company
approved  format,  and as  required by the  Internal  Revenue  Service,  for all
reasonable  out of town travel,  and other  ordinary,  reasonable  and necessary
business  expenses  incurred by Consultant as part of and in connection with the
direct performance of duties specified herein.

     6. Relationship of the Parties

     6.1 Legal  Status.  Consultant  shall be an  independent  contractor of the
Company in accordance  with the  provisions  of Sections  2750.5 and 3353 of the
California  Labor Code,  or any other  corresponding  provision  of the Colorado
Statutes, and not an employee,  agent, or partner. It is expressly declared that
such  independent  contractor  status is bona fide and not a subterfuge to avoid
employee   status.   This  Agreement  shall  not  create  an   employer-employee
relationship and shall not constitute a hiring of such nature by either party.

     6.2. Items  Furnished to  Consultant.  Unless  expressly  agreed in writing
otherwise by the parties,  the Company shall not provide any telephone equipment
or  services,  office  equipment,  stationery,  secretarial  or  office  support
services or other items or services  for the benefit of  Consultant.  Consultant

                                       3
<PAGE>

shall,  at its own  expense,  provide and make  arrangement  for all  equipment,
stationery, secretarial and office support services.

     6.3. Consent of Company. Consultant shall have no right or authority at any
time to make any  contract  or  binding  promise  of any nature on behalf of the
Company,  whether oral or written,  without the express prior written consent of
the Company.

     6.4. Manner of Performing Services.  Consultant shall retain all discretion
and  judgment  in regard to the  manner  and means of  carrying  out its  duties
hereunder  subject,   however,  to  the  reasonable  requests  of  the  Company.
Consultant  shall have the right to control and  discretion  as to the manner of
performance of its services hereunder in that the result of the work and not the
means by which it is  accomplished  shall be the  primary  factor  for which the
parties have bargained  hereunder in accordance with Sections 2750.5 and 3353 of
the  California  Labor  Code  or any  corresponding  provision  in the  Colorado
Statutes.  Consultant's  obligations for performance of services hereunder shall
be limited to the completion of the consultation and services described above in
accordance  with the  Business of XsunX and the XsunX  Field of Use.  Consultant
shall have no obligation to work any particular  hours or days or any particular
number of hours or days.  The  Company  shall have no right to control or direct
the details, manner or means by which Consultant accomplishes the results of the
services performed hereunder.

     6.5.  Payment  of  Taxes.  Consultant  shall  be  responsible  for  and pay
Consultant's own  self-employment  taxes,  estimated tax  liabilities,  business
equipment or personal  property  taxes and other  similar  obligations,  whether
federal,  state or local.  The Company shall not pay or withhold any FICA,  SDI,
federal  or state  income  tax or  unemployment  insurance  or tax or any  other
amounts  because  the  relationship  of  the  parties  hereto  is  not  that  of
employer-employee,  but  that of  independent  contractor.  Consultant  shall be
solely responsible for the payment of all taxes,  withholdings and other amounts
due in regard to Consultant's own employees.

     6.6. Employees of Consultant. Consultant may subcontract with and/or employ
such parties upon such terms and conditions as it may deem proper or necessary.

     7. Warranties and Indemnification

     7.1.  Warranties.  Consultant  warrants and represents that the services of
Consultant's  subcontractors  or employees shall be performed in full compliance
with the  terms  and  conditions  of this  Agreement,  and,  that  all  services
performed hereunder shall be performed in accordance with all federal, state and
local laws, rules or regulations.

     7.2. Indemnification by Consultant.  Consultant shall indemnify, defend and
hold the Company and the property of the Company, free and harmless from any and
all claims, losses, damages, injuries, and liabilities,  including the Company's
reasonable  attorney fees and costs (the Company may choose its own counsel when
defended  hereunder),  arising from or in any way connected with the performance
of services under this Agreement or any other act or omission by Consultant, its
agents, subcontractors, or employees.

                                       4
<PAGE>

     7.3.  Indemnification by the Company.  The Company shall indemnify,  defend
and hold  Consultant and the property of Consultant,  free and harmless from any
and  all  claims,  losses,   damages,   injuries,  and  liabilities,   including
Consultant's  reasonable  attorney  fees and costs,  arising  from or in any way
connected with any act or omission on the part of the Company,  its  constituent
partners, agents, subcontractors, or employees.

     8. Term.  Consultant's engagement pursuant to this Agreement shall be for a
period of two (2) years and shall  commence  upon the date of  execution  hereof
(the  "Commencement  Date") and shall continue to and including  August 28, 2009
(the  "Termination  Date") unless  earlier  terminated  in  accordance  with the
provisions  of Section 9 of this  Agreement;  provided  further that the term of
this Agreement may be extended by the mutual agreement of the parties hereto.

     9.  Termination.  Notwithstanding  any other provision of this Agreement to
the contrary,  either party may terminate this Agreement at any time upon ninety
(90)  days  prior  written  notice  to the  other.  This  Agreement  may also be
terminated  by the Company,  at its option,  at any time during the term of this
Agreement  without  notice,  for good  cause.  Termination  for good cause shall
include, but not be limited to, any of the following:

     9.1.  The  commission  by  Consultant  of an  act of  fraud  or  other  act
materially evidencing bad faith or dishonesty;

     9.2. The  misappropriation  by Consultant of any funds or property or other
rights of the Company;

     9.3. The  suspension or removal or  termination  of Consultant by or at the
request or requirement of any governmental  authority having  jurisdiction  over
the Company;

     9.4. The breach by  Consultant of any material  terms of this  Agreement or
any other agreement between  Consultant on the one hand and the Company,  or any
affiliate of the Company, on the other hand, including,  but not limited to, the
Technology Agreement;

     9.5. Upon the death of the Consultant;

     9.6. The failure by Consultant to reasonably  achieve the goals and purpose
of the consultant relationship or projects within the time frame assigned.

     10.  Confidentiality.  All  information  derived or provided to  Consultant
under the terms and specific to the  performance  of this  Agreement,  including
lists and  databases,  and any part of such lists,  databases,  or  information,
pertaining to customers,  salespersons,  financial  records,  computer  software
programs,   strategic  plans,  contracts,   agreements,   literature,   manuals,
brochures, books, records,  correspondence,  computer programs, software, source
codes, computations,  data files, algorithms,  techniques,  processes,  designs,
specifications,  drawings,  charts,  plans,  schematics,  books, files, records,
reports, documents, Instruments, agreements, contracts, correspondence, letters,

                                       5
<PAGE>

memoranda,  financial,  accounting, sales, purchase and consultant data, capital
structure information,  corporate organizational information,  identities, names
and address of, and any  information  pertaining  to,  shareholders,  directors,
officers,  consultants,  contractors,  vendors, suppliers,  customers,  clients,
lenders,  financing and business  participants,  and all persons associated with
the  Company,   information  pertaining  to  business  models,  business  plans,
projections,  assumptions and analyses,  particular projects, and all other data
and  information  and similar items  relating to the business of the Company and
all other data and  information  and  similar  items  relating to the Company of
whatever  kind or nature and whether or not  prepared or compiled by the Company
and all other materials furnished or made available to Consultant by the Company
or any of its  affiliates  (as  hereinafter  defined)  relating to the  business
conducted by the Company  ("Confidential  Information"),  is and are proprietary
and  confidential  and are and shall  remain the sole  property of the  Company.
Affiliate  as used in this section  shall mean the Company,  any entity in which
Company owns a majority ownership (directly or indirectly),  or any entity which
owns a  majority  ownership  of Company  (directly  or  indirectly).  Consultant
acknowledges  that the Confidential  Information  derives  independent  economic
value,  actual or potential,  from not being generally known to the public or to
other persons who can obtain  economic value from its disclosure or use and that
this confidentiality provision constitutes efforts that are reasonable under the
circumstances to maintain the secrecy thereof.  Consultant further  acknowledges
that  the  Confidential   Information  constitutes  trade  secrets  pursuant  to
California Civil Code ss.3426.1.  Consultant shall not,  directly or indirectly,
at any time during or after  termination of consultant  use or reveal,  divulge,
disclose, disseminate,  distribute, license, sell, transfer, assign or otherwise
make known, directly or indirectly,  the Confidential  Information to any person
or entity not expressly  authorized by the Company to receive such  Confidential
Information.

     10.1 Consultant shall exercise the highest degree of care and discretion in
accordance  with the duty of  Consultant  hereunder  to prevent  improper use or
disclosure of the Confidential Information and will retain all such Confidential
Information in trust in a fiduciary  capacity unless: (i) such use or disclosure
has been authorized in writing by the Company through an officer or director, or
(ii) is required to be disclosed by law, a court of competent  jurisdiction or a
governmental or regulatory agency. Further,  Consultant shall return and deliver
all such materials,  including all copies,  remnants,  or derivatives thereof to
the Company upon the  termination of consultant with the Company or at any other
time upon request by the Company.

     11. Patents and Inventions.  Any interest in patents,  patent applications,
inventions,   technological   innovations,   copyrights,   copyrightable  works,
developments,   discoveries,   designs,   and  processes   ("Inventions")  which
Consultant may develop under the scope of the  Consulting  agreement and without
the use or  involvement  of any  non  Company  resources,  shall  belong  to the
Company.  As soon as  Consultant  owns,  conceives  of,  or  develops  any  such
Invention,  Consultant agrees immediately to communicate such fact in writing to

                                       6
<PAGE>

the Chief Executive  Officer of the Company,  and without further  compensation,
but  at  the  Company's  expense,  immediately  upon  request  of  the  Company,
Consultant  shall execute all such  assignments and other  documents  (including
applications for patents,  copyrights,  trademarks, and assignments thereof) and
perform any and all acts as the Company may  reasonably  request in order (a) to
vest in the Company all Consultant's  right,  title, and interest in and to such
Inventions,  free and clear of liens,  mortgages,  security interests,  pledges,
charges,  and  encumbrances  arising  from the acts of  Consultant  and (b),  if
patentable  or  copyrightable,   to  obtain  patents  or  copyrights  (including
extensions and renewals)  therefore in any and all countries in such name as the
Company shall determine. Notwithstanding the foregoing, pursuant to Section 2872
of the California  Labor Code,  this Agreement  shall not apply to any Invention
which  qualifies  fully under the  provisions of Section 2870 of the  California
Labor Code. Consultant  acknowledges receipt of a copy of 2870 of the California
Labor Code.

     12.  Assignment.  The  obligations  of Consultant  under this Agreement are
unique and may not be assigned.

     13. Securities Compliance. No Offer or Sale. This Agreement is not intended
to be an offer for the sale or issuance of  securities,  whether  pertaining  to
stock,  options,  or otherwise,  unless the same is exempt from registration and
qualification  pursuant to an  applicable  exemption.  The issuance of stock and
warrants  is  expressly  subject  to  compliance  with  all  state  and  federal
securities  laws,  rules and regulations by the parties.  While the Company does
not  consider  this  Agreement  itself  to  be a  securities  or  offer  of  any
securities,  whether pertaining to stock,  warrants, or otherwise,  in the event
that this  letter is  construed  to be an offer,  the  parties  acknowledge  the
following  disclosure  in  accordance  with Section  25102(a) of the  California
Corporations Code:

                  The  sale of the  securities  which  are the  subject  of this
                  agreement  has not been  qualified  with the  Commissioner  of
                  Corporation  of the State of  California  and the  issuance of
                  such  securities  or the payment or receipt of any part of the
                  consideration   therefore  prior  to  such   qualification  is
                  unlawful,  unless the sale of  securities  is exempt  from the
                  qualification  by  Section  25100,  25102,  or  25105  of  the
                  California  Corporations  Code.  The rights of all  parties to
                  this   agreement   are   expressly    conditions   upon   such
                  qualification being obtained unless the sale is so exempt.

     13.1 General Securities Compliance.  Notwithstanding  anything contained in
this Agreement to the contrary, this Agreement, and the stock warrants discussed
herein,  shall be, and are,  expressly subject to all SEC and securities,  laws,
rules,  regulations  and reporting and  disclosure  requirements,  to the extent
applicable to the Company as a reporting company,  the shares,  and\or any party
hereto, including, but not limited to, shareholder voting and proxy solicitation
rules. All issuances,  sales,  transfers, or other dispositions of shares of the
Company shall be made in compliance with all applicable  securities  laws, rules
and regulations, and pursuant to registration of securities under the Securities

                                       7
<PAGE>

Act  of  1933  ("Act")  (and  qualification  under  General  Corporation  Law of
California)  or pursuant to an exemption  from  registration  under the Act (and
qualification under General Corporation Law of California).  Notwithstanding the
foregoing,  nothing  in  this  Agreement  shall  obligate  the  Company  to seek
registration or qualification of any of its shares,  and, to the extent that any
obligation  hereunder cannot be performed without  registration or qualification
of any of its  shares,  such  obligation  shall  be  excused  on the part of the
Company to the extent that the Company  provides  other  adequate  consideration
therefore.

     14. Rule 144. Consultant acknowledges that the shares of the Company may be
subject  to the  restrictions  on  transfer  set  forth in Rule 144 of the Rules
promulgated  under  the  Act.  Any and all  offers,  sales,  transfer  or  other
dispositions of shares of the Company shall be made only in compliance with Rule
144. Consultant agrees to comply with all policies and procedures established by
the Company with regard to Rule 144 matters.  Consultant  acknowledges  that the
Company or its attorneys or transfer  agent may require a restrictive  legend on
the  certificate  or  certificates  representing  the  shares  pursuant  to  the
restrictions on transfer of the shares imposed by Rule 144.

     15.  Amendments.  This Agreement may be amended only in writing executed by
Consultant and Company and approved in writing by the majority vote of the Board
of Directors of the Company.

     16.  Effect  of  Headings.  The  subject  headings  of the  paragraphs  and
subparagraphs  of this Agreement are included for purposes of convenience  only,
and  shall  not  affect  the  construction  or  interpretation  of  any  of  its
provisions.

     17.  Parties in Interest.  Nothing in this  Agreement,  whether  express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement  on any  persons  other than the  parties  to it and their  respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the  obligation or liability of any third persons to any party to this
Contract, nor shall any provision give any third person any right of subrogation
or action over against any party to this Agreement.

     18. Recovery of Litigation Costs. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute,  breach, default or misrepresentation in connection with any
of the  provisions of this  Agreement,  the  successful  or prevailing  party or
parties shall be entitled to recover as an element of their damages,  reasonable
attorneys'  fees and other  costs  incurred  in that  action or  proceeding,  in
addition to any other relief to which they may be entitled.

     19. Gender;  Number.  Whenever the context of this Contract  requires,  the
masculine gender includes the feminine or neuter gender, and the singular number
includes the plural.

                                       8
<PAGE>

     20. Time of Essence.  Time shall be of the essence in all things pertaining
to the performance of this Agreement unless waived in writing by the undersigned
parties.

     21.  Authority.  The parties to this  Agreement  warrant and represent that
they have the power and  authority  to enter into this  Agreement  in the names,
titles and capacitates  herein stated and on behalf of any entities,  persons or
firms represented or purported to be represented by each respective party.

     22. Waiver.  A Waiver by either party of any of the terms and conditions of
this  Agreement in any instance  shall not be deemed or construed to a waiver of
such terms of condition for the future, or of any subsequent breach thereof,  or
of any other term and condition of this  Agreement.  All waivers must be made in
writing executed by the waiving party.

     23. Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
between  the parties  respecting  the subject  matter  hereof,  and there are no
representations,  warranties,  agreements  or  commitments  between  the parties
hereto  except as set forth  herein;  provided  that the terms of any  Option or
Award may be set forth in a Grant Instrument, which shall be read in conjunction
with this Agreement. This Agreement shall control over any and all provisions or
guidelines  contained in any Consultant  Manual,  Consultant  Handbook,  Company
Policy Manual or other similar  document that may now exist or that may exist in
the  future.  Consultant  expressly  acknowledges  that  no  Consultant  Manual,
Consultant Handbook, Company Policy Manual or other similar document is or shall
become a contract between the Company and Consultant.

     24. Notices. Any notice,  request,  demand or other communication permitted
to be given  hereunder  shall be in writing and shall be deemed to be duly given
when  personally  delivered  to an  Consultant  officer  of  the  Company  or to
Consultant,  as the case may be, or when deposited in the United States mail, by
certified or registered mail, return receipt requested,  postage prepaid, at the
respective  addresses of the Company and  Consultant  as shown on the  signature
page hereto.  Either party may change by notice the address to which notices are
to be sent.

     25. Severability. If any provision of this Agreement shall, for any reason,
be held  unenforceable,  such provision shall be severed from the contract.  The
invalidity  of  such  specific   provision,   however,   shall  not  affect  the
enforceability of any other provision herein, and the remaining  provision shall
remain in full force and effect.

     26. Choice of Law and Venue.  This Agreement  shall,  to the fullest extent
allowed by law, be construed,  interpreted  and enforced in accordance  with the
laws of the State of Colorado,  without  regard to or application of conflict of
law rules, and the venue in regard to any disputes  arising  hereunder shall, to
the fullest extent allowed by law, be in Orange County, California.

                                       9
<PAGE>

     27.  Press   Releases.   Any  press  release,   company   disclosures   and
advertisement made by the Company relating to Consultant shall be subject to the
approval of Consultant prior to public release. Consultant will not unreasonably
withhold  such  approval  and agrees to respond to such  requests  for  approval
within two (2) business days.

IN WITNESS  WHEREOF,  this  Agreement is made  effective by  Consultant  and the
Company on the date set first forth above.

COMPANY:                                    CONSULTANT:

Xsunx, Inc.,                                Michael A. Russak, Ph.D.

a Colorado corporation

By:_________________________                By: ____________________________
Tom M. Djokovich, as CEO                    Michael A. Russak, Ph.D., as
                                            Consultant

                                       10

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