DEBT SUBORDINATION AGREEMENT
THIS DEBT
SUBORDINATION AGREEMENT (this "Agreement") is made and entered into this _____
day of June, 2009, among __________________________
("Subordinate Creditor"), a ____________________________________, SMF ENERGY CORPORATION, a
Delaware corporation ("SMF"), SMF SERVICES, INC., a Delaware
corporation ("SSI"), H & W
PETROLEUM COMPANY, INC., a Texas corporation ("H&W"; each of SMF, SSI
and H&W is sometimes referred to herein individually as a "Debtor," and
collectively they are sometimes referred to herein as "Debtors"), and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association (together with its successors
and assigns, "Lender").
Recitals:
SMF is
now and may from time to time hereafter be indebted to Subordinate Creditor,
including under the Subordinated Note (defined below) executed by SMF in favor
of Subordinate Creditor.
Debtors
desire to continue to obtain loans, extensions of credit or other financial
accommodations from Lender, which loans shall materially benefit
Debtors.
Because
the Subordinated Note is convertible into shares of SMF’s common stock,
Subordinate Creditor has an equity stake in SMF and will therefore benefit from
Lender’s continuing to extend loans to Debtors.
Lender is
willing to continue to provide such financial accommodations to Debtors on the
condition that Subordinate Creditor and Debtors enter into this Agreement with
Lender.
NOW,
THEREFORE, for TEN DOLLARS ($10.00) and other valuable consideration and the
mutual covenants herein, and to induce Lender to provide financial
accommodations to or for the benefit of Debtors, the parties hereto, intending
to be legally bound hereby, do agree as follows:
1. Definitions;
Rules of Construction.
(a) In
addition to such other terms as are elsewhere defined herein, as used in this
Agreement, the following terms shall have the following meanings:
"Bankruptcy Code"
means title 11 of the United States Code.
"Business Day" shall
have the meaning ascribed to it in the Loan Agreement.
"Collateral" shall
have the meaning ascribed to it in the Loan Agreement.
"Default" shall have
the meaning ascribed to it in the Loan Agreement.
"Event of Default"
shall have the meaning ascribed to it in the Loan Agreement.
"Full Payment" means,
with respect to the Senior Debt, (i) the indefeasible payment in full, in cash,
of all of the Senior Debt, including, in the case of contingent obligations
(such as, by way of example only, undrawn letters of credit that are issued or
procured by Lender), the depositing of cash with Lender equal to 105% of the
amount of such contingent obligations as security for the payment of such
contingent obligations, and (ii) termination of all commitments or other
agreements of Lender to make further extensions of credit under the Loan
Agreement.
"Insolvency
Proceeding" means, with respect to any Obligor, an action, suit, case or
proceeding that is commenced by or against such Obligor for the appointment of a
receiver for such Obligor or any of such Obligor's property; for entry of an
order for relief under any chapter of the Bankruptcy Code with respect to such
Obligor; for an assignment for the benefit of creditors of such Obligor; or for
any debtor relief under any other insolvency law relating to adjustment of
debts, reorganization, composition or extension of debts owed by such
Obligor.
"Loan Agreement" means
that certain Loan and Security Agreement dated September 26, 2002, among Lender
and Debtors, as at any time amended, restated, supplemented or otherwise
modified.
"Loan Documents" means
the Loan Agreement and all other instruments or agreements now or hereafter
evidencing or securing the payment of any of the Senior Debt, in each case, as
at any time amended, restated, supplemented or otherwise modified.
"Obligor" means each
Debtor and any other Person who is or may become liable for the whole or any
part of the Senior Debt.
"Person" means any
individual, corporation, partnership, trust, joint venture, limited liability
company, other form of business organization, or governmental entity or
political subdivision.
"Subordinated Debt"
means all loans, advances, debts, liabilities, debit balances, covenants and
duties at any time or times owed by any Debtor to Subordinate Creditor, whether
direct or indirect, absolute or contingent, secured or unsecured, primary or
secondary, joint or several, liquidated or unliquidated, due or to become due,
now existing or hereafter arising, including (i) all debt, liabilities and
obligations of SMF to Subordinate Creditor under the Subordinated Note, (ii) all
debts, liabilities or obligations that are incurred by any Debtor to Subordinate
Creditor in any Insolvency Proceeding, (iii) all debts, liabilities or
obligations at any time owed by any Debtor to any other Person which Subordinate
Creditor may have obtained by assignment, pledge, purchase or otherwise, (iv)
all interest, fees, charges, expenses and attorneys' fees for which any Debtor
is now or hereafter becomes liable to pay to Subordinate Creditor under any
agreement or by law, and (v) any renewals, extensions or refinancings of any of
the foregoing.
"Subordinated Note"
means that certain Convertible Promissory Note dated June ____, 2009, made by
SMF to the order of Subordinate Creditor in the principal amount of
$____________, a true and correct copy of which is annexed hereto as Exhibit
A.
"Senior Debt" means
all loans, advances, debts, liabilities, debit balances, covenants and duties at
any time or times owed by Debtors to Lender, whether direct or indirect,
absolute or contingent, secured or unsecured, primary or secondary, joint or
several, liquidated or unliquidated, due or to become due, now existing or
hereafter arising, including (i) all debts, liabilities and obligations now or
hereafter owing by Debtors to Lender under the Loan Agreement or any of the
other Loan Documents, (ii) all debts, liabilities or obligations owing by any
Debtor to others which Lender may have obtained by assignment, pledge, purchase
or otherwise, (iii) all loans made or credit extended by Lender to any Obligor
during the pendency of any Insolvency Proceeding of such Obligor, (iv) all
interest, fees, charges, expenses and attorneys' fees for which any Obligor is
now or hereafter becomes liable to pay to Lender under any agreement or by law
(including all interest, legal fees and other charges that accrue or are
incurred in connection with any of the Senior Debt during the pendency of any
bankruptcy case or other Insolvency Proceeding of any Obligor, whether or not
Lender is authorized by 11 U.S.C. § 506 or otherwise to claim or collect any
such interest, legal fees or other charges from such Obligor), and (v) any
renewals, extensions or refinancings of any of the foregoing.
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(b) All
references in this Agreement to any instruments or agreements, including the
Subordinated Note or any Loan Documents, shall mean and include all amendments,
restatements, or modifications thereto and all extensions or renewals thereof;
all references to any statutes shall include all amendments thereto and rules or
regulations promulgated pursuant thereto; all references to the word "including"
shall mean "including, without limitation"; and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any
pronouns used herein shall be deemed to cover all genders.
2. Subordination.
(a) Subject
to the provisions of Section 5 hereof
relating to payments on the Subordinated Debt that are permitted to be made to
the extent and under the circumstances set forth in Section 5,
Subordinate Creditor hereby postpones and subordinates all of the Subordinated
Debt to the Full Payment of all of the Senior Debt. Without limiting
the generality of the foregoing, Lender shall be entitled to receive Full
Payment of all amounts due or to become due on or in respect of the Senior Debt
before Subordinate Creditor is entitled to receive any payment or distribution
of cash or other property on account of the Subordinated Debt.
(b) In
the event of any distribution, division or application, partial or complete,
voluntary or involuntary, by operation of law or otherwise, of all or any part
of the assets of any Obligor or the proceeds thereof to creditors of any Obligor
or upon any indebtedness of any Obligor, by reason of the liquidation,
dissolution or other winding up of such Obligor or such Obligor's business, or
in the event of any sale of any Obligor's assets outside the ordinary course of
business or the commencement by or against any Obligor of any Insolvency
Proceeding, then and in any such event any payment or distribution of any kind
or character, whether in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any of the Subordinated Debt
(including any payment or distribution that may be payable or deliverable by
reason of the payment of any other indebtedness of any Obligor being subordinate
to the payment of the Subordinated Debt) shall be paid or delivered directly to
Lender for application to the Senior Debt (whether or not the same is then due
or payable) until Full Payment of all of the Senior Debt. The
Subordinated Note shall at all times bear a conspicuous legend that the
Subordinated Debt evidenced thereby is subordinated to the Full Payment of the
Senior Debt pursuant to this Agreement. Debtors' and Subordinate
Creditor's books shall be marked to evidence the subordination of all of the
Subordinated Debt to the Full Payment of the Senior Debt. Lender is
authorized to examine such books from time to time and to make any notations
required by this Agreement. The provisions of this Section 2
shall remain effective and binding upon Subordinate Creditor, to the full extent
of the Senior Debt, even if any of the Senior Debt is avoided, equitably
subordinated or nullified in any Insolvency Proceeding of an
Obligor.
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3. Warranties
and Representations of Debtor and Subordinate Creditor. Each
Debtor and Subordinate Creditor hereby represent and warrant that: (a) it has
not relied nor will it rely on any representation or information of any nature
made by or received from Lender relative to any Debtor, any Debtor's financial
condition, or the existence, value or extent of any Collateral, in deciding to
execute this Agreement; (b) no part of the Subordinated Debt is evidenced by any
instrument or writing except the Subordinated Note; (c) Subordinate Creditor is
the lawful owner of the Subordinated Debt; (d) Subordinate Creditor has not
heretofore assigned or transferred any of the Subordinated Debt, any interest
therein or any Collateral or security pertaining thereto; and (e)
Subordinate Creditor has not heretofore given any subordination in respect of
the Subordinated Debt.
4. Negative
Covenants. For so long as this Agreement is in
effect: (a) no Debtor shall, directly or indirectly, make any payment
(other than a payment expressly permitted by Section 5 hereof) on
account of, repurchase, redeem or otherwise retire or grant a security interest
in, mortgage, pledge, assign or transfer any properties to secure or satisfy all
or any part of the Subordinated Debt; (b) Subordinate Creditor shall not demand,
collect or accept from any Obligor or any other Person any payment (other than a
payment permitted by Section 5 hereof) or
security on account of the Subordinated Debt or any part thereof, or accelerate
the maturity of the Subordinated Debt or realize upon or enforce any security
pledged by any Person as collateral for any of the Subordinated Debt; (c)
Subordinate Creditor shall not exchange, set off, release, otherwise discharge
any part of the Subordinated Debt, provided, however, that nothing herein shall
be construed to limit the rights of Subordinate Creditor to convert the
Subordinate Debt to Debtor’s Common Stock in accordance with the terms of the
Subordinate Debt; (d) Subordinate Creditor shall not give any subordination in
respect of the Subordinated Debt or sell, transfer, assign or grant a security
interest or participation in any of the Subordinated Debt to any Person other
than Lender without prior written notice to Lender and the execution by the
recipient of a subordination agreement substantially identical to this
Agreement, in form and substance reasonably satisfactory to Lender; (e) no
Debtor shall hereafter issue any instrument, security or other writing
evidencing any part of the Subordinated Debt, and Subordinate Creditor will not
receive any such writing, except upon the prior written approval of Lender or at
the request of and in the manner requested by Lender; (f) Debtors and
Subordinate Creditor shall not amend, alter or modify any provision of the
Subordinated Note or otherwise shorten the maturity of any of the Subordinated
Debt without the prior written consent of Lender; (g) Subordinate Creditor shall
not commence or join with any other creditors of an Obligor in commencing any
Insolvency Proceeding against such Obligor; and (h) neither any
Debtor nor Subordinate Creditor otherwise shall take or permit any action
prejudicial to or inconsistent with Lender's priority position over Subordinate
Creditor that is created by this Agreement.
5. Permitted
Payments.
(a) Except
as otherwise provided in Section 5(b), SMF may
pay to Subordinate Creditor, and Subordinate Creditor may accept and retain, any
regularly scheduled installments of interest due and owing to Subordinate
Creditor from SMF under
the Subordinated Note in accordance with its present tenor, but without
prepayment (whether mandatory or optional) or payment upon
acceleration.
(b) SMF
shall not be permitted to make, nor shall Subordinate Creditor be permitted to
accept or retain, any payments with respect to any Subordinated Debt (whether
constituting payments of principal, interest, fees or other charges) if any
Default or Event of Default exists at the time of or would result from such
payment.
In no
event shall Lender's continuing to honor any requests of Obligors for loans
under the Loan Agreement after the occurrence or existence of any Default or
Event of Default be deemed a waiver thereof, unless such Default or Event of
Default is expressly waived in writing by Lender.
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6. Turnover
of Prohibited Transfers. If any payment, distribution or
security, or the proceeds thereof, are received by Subordinate Creditor on
account of or with respect to any of the Subordinated Debt other than as
expressly permitted in Section 5 hereof,
Subordinate Creditor shall forthwith deliver same to Lender in the form received
(except for the addition of any endorsement or assignment necessary to effect a
transfer of all rights therein to Lender) for application to the Senior Debt or,
at Lender's option, Subordinate Creditor shall pay to Lender the amount thereof
on
demand. Lender is irrevocably authorized to supply any
required endorsement or assignment which may have been omitted. Until
so delivered, any such payment, distribution or security shall be held by
Subordinate Creditor in trust for Lender and shall not be commingled with other
funds or property of Subordinate Creditor. It
shall not be a defense to any obligation of Subordinated Creditor to return,
disgorge or otherwise pay to Lender the amount of any payment received by
Subordinate Creditor with respect to the Subordinated Debt pursuant to this
Section 6 that
Subordinate Creditor did not have notice or knowledge, at the time of its
receipt of any such payment, that such payment was not permitted to be made or
retained pursuant to the provisions of Section 5
hereof.
7. Authority
to Act for Subordinate Creditor. Until Full Payment of the
Senior Debt, Lender shall have the right to act as Subordinate Creditor's
attorney-in-fact for the purposes specified in this Section and Subordinate
Creditor hereby irrevocably appoints Lender as Subordinate Creditor's true and
lawful attorney, with full power of substitution, in the name of Subordinate
Creditor or in the name of Lender, for the use and benefit of Lender, without
notice to Subordinate Creditor or any of Subordinate Creditor's representatives,
successors or assigns, to perform the following acts, at Lender's option, at any
meeting of creditors of an Obligor or in connection with any Insolvency
Proceeding:
(a) to
enforce claims comprising the Subordinated Debt, either in its own name or in
the name of Subordinate Creditor, by proof of debt, proof of claim, suit or
otherwise;
(b) to
collect any assets of an Obligor distributed, divided or applied by way of
dividend or payment, or any securities issued, on account of the Subordinated
Debt and to apply the same, or the proceeds of any realization upon the same
that Lender in its discretion elects to effect, to the Senior Debt until Full
Payment of all of the Senior Debt (including all interest accruing on the Senior
Debt after the commencement of any Insolvency Proceeding), rendering any surplus
to Subordinate Creditor if and to the extent permitted by law;
(c) to
vote claims comprising the Subordinated Debt to accept or reject any plan of
partial or complete liquidation, reorganization, arrangement, composition or
extension; and
(d) to
take generally any action in connection with any such Insolvency Proceeding that
Subordinate Creditor would be authorized to take but for this
Agreement.
In no
event shall Lender be liable to Subordinate Creditor for any failure to prove
the Subordinated Debt, to exercise any right with respect thereto or to collect
any sums payable thereon.
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8. Certain
Waivers and Consents. Each Debtor and Subordinate Creditor
hereby waive any defense based on the adequacy of a remedy at law which might be
asserted as a bar to the remedy of specific performance of this Agreement in any
action brought therefor by Lender. To the fullest extent permitted by
law, Debtors and Subordinate Creditor each hereby further waives: (i)
presentment, demand, protest, notice of protest, notice of default or dishonor,
notice of payment or nonpayment and any and all other notices and demands of any
kind in connection with all negotiable instruments evidencing all or any portion
of the Senior Debt or the Subordinated Debt to which any Debtor or Subordinate
Creditor may be a party; (ii) the right to require Lender to marshal any
securities, or to enforce any security interest or lien that Lender may now or
hereafter have in any Collateral securing the Senior Debt or to pursue any claim
it may have against any Obligor, as a condition to Lender's entitlement to
receive any payment on account of the Subordinated Debt; (iii) notice of the
acceptance of this Agreement by Lender; (iv) notice of any loans made under,
extensions granted, amendments to the Loan Agreement or the other Loan
Documents, other action taken by Lender in reliance hereon or the existence of
any Default or Event of Default; and (v) all other demands and notices of every
kind in connection with this Agreement, the Senior Debt or the Subordinated
Debt. Subordinate Creditor acknowledges, understands and agrees that
it will not be authorized to rely upon Lender to provide Subordinate Creditor
with any information concerning the financial condition or business prospects of
any Debtor, the existence, quantity or value of any of the Collateral, the
status of any Debtor's loan relationship with Lender under any of the Loan
Documents, the existence or non-existence of any Default or Event of Default or
any other matter arising out of or related to any of the Loan Documents, and
Subordinate Creditor alone shall be responsible for obtaining from Debtor all
information concerning the foregoing. Subordinate Creditor hereby
consents and agrees that Lender may, without in any manner impairing, releasing
or otherwise affecting the subordination provided for in this Agreement or any
of Lender's rights hereunder and without prior notice to or the consent of
Subordinate Creditor: (i) release, renew, extend, compromise, postpone the time
of payment of or forbear from collecting any of the Senior Debt; (ii)
substitute, exchange or release any or all of the Collateral or decline or
neglect to perfect or enforce Lender's security interest in any of the
Collateral; (iii) add or release any Person primarily or secondarily liable for
any of the Senior Debt; (iv) amend, modify, renew or extend any of the Loan
Documents or waive or grant forbearances with respect to any Event of Default
thereunder; and (v) increase or decrease the amount of the Senior Debt or the
rate of interest or the amount or time of payment of any other fees or charges
payable in connection therewith; (vi) elect in any case under the Bankruptcy
Code for the application of Section 1111(b)(2) of the Bankruptcy Code; and (vii)
consent to the use of any cash collateral or any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code.
9. Subrogation. Provided
that Full Payment of the Senior Debt has occurred, Subordinate Creditor shall be
subrogated (without any representation by or recourse to Lender) to the rights
of Lender to receive payments or distributions of cash, property or securities
payable or distributable on account of the Senior Debt, to the extent of all
payments and distributions paid over to or for the benefit of Lender pursuant to
this Agreement on account of the Subordinated Debt. In no event,
however, shall Subordinate Creditor have any rights or claims against Lender for
any alleged impairment of Subordinate Creditor's subrogation rights, Subordinate
Creditor acknowledging that any actions taken by Lender with respect to the
Senior Debt or the Collateral are authorized and consented to by Subordinate
Creditor.
10. Statement
of Account. Each Debtor and Subordinate Creditor hereby agree
to render to Lender from time to time upon Lender's request therefor a statement
of Debtors' account with Subordinate Creditor and to afford Lender access to the
books and records of Subordinate Creditor and Debtors in order that Lender may
make a full examination of the state of accounts of Debtors with Subordinate
Creditor.
11. Validity
of Subordinated Debt. The provisions of this Agreement
subordinating the Subordinated Debt are solely for the purpose of defining the
relative rights of Lender and Subordinate Creditor and shall not impair, as
between Subordinate Creditor and SMF, the obligation of SMF, which is
unconditional and absolute, to pay the Subordinated Debt in accordance with its
terms except as payment thereof may be postponed in accordance with this
Agreement.
12. Indulgences
Not Waivers. Neither the failure nor any delay on the part of
Lender to exercise any right, remedy, power or privilege hereunder shall operate
as a waiver thereof or give rise to an estoppel, nor be construed as an
agreement to modify the terms of this Agreement, nor shall any single or partial
exercise of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence. No waiver by a party hereunder shall be
effective unless it is in writing and signed by the party making such waiver,
and then only to the extent specifically stated in such
writing.
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13. Duration. This
Agreement shall become effective when executed by Debtors and Subordinate
Creditor and accepted by Lender, and, when so accepted, shall constitute a
continuing agreement of subordination, and shall remain in effect until Full
Payment of all of the Senior Debt and all instruments and agreements at any time
evidencing or securing the whole or any part of the Senior Debt, including the
Loan Agreement, have been terminated in accordance with their
terms. Lender may, without notice to Subordinate Creditor, extend or
continue credit and make other financial accommodations to or for the account of
Debtor in reliance upon this Agreement. The provisions of this
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time payment of any Senior Debt is rescinded or otherwise must be
returned by Lender upon or in connection with any Insolvency Proceeding or
otherwise, all as if any such payment had not been made.
14. Default
and Enforcement. Subordinate Creditor shall give written
notice to Lender of any default or event of default with respect to the
Subordinated Debt, promptly after having obtained knowledge of the occurrence or
existence of any such default or event of default. If an Event of
Default shall occur or exist, all of the Senior Debt shall, at the option of
Lender, become immediately due and payable without presentment, demand, protest,
or notice of any kind, notwithstanding any time or credit otherwise
allowed. At any time Subordinate Creditor fails to comply with any
provision of this Agreement that is applicable to Subordinate Creditor, Lender
may demand specific performance of this Agreement, whether or not Debtors have
complied with this Agreement, and may exercise any other remedy available at law
or equity. Without limiting the generality of the foregoing, if
Subordinate Creditor, in violation of this Agreement, shall institute or
participate in any action, suit or proceeding against any Obligor, Debtors may
interpose as a defense or dilatory plea this Agreement and Lender is irrevocably
authorized to intervene and to interpose such defense or plea in its or any
Debtor's name. If Subordinate Creditor attempts to enforce or realize
upon any security for the Subordinated Debt in violation of this Agreement, any
Debtor or Lender (in any Debtor's or Lender's name) may by virtue of this
Agreement restrain such realization or enforcement.
15. Litigation;
Jurisdiction and Venue. Subordinate Creditor and Debtor each
hereby irrevocably consents to the jurisdiction of the courts of the State of
Florida and of any federal court located in the State of Florida, in connection
with any action or proceeding arising out of or relating to this
Agreement. In any such litigation, Subordinate Creditor and Debtor
each waives personal service of any summons, complaint or other process, and
agrees that the service thereof may be made by certified or registered mail
direct to Subordinate Creditor and Debtors at their respective places of
business set forth in Section
16 hereof. In
the alternative, in its sole discretion, Lender may effect service upon either
Subordinate Creditor or any Debtor in any other form or manner permitted by
law. The choice of forum set forth herein shall not be deemed to
preclude the enforcement of any judgment obtained in such forum or the taking of
any action under this Agreement to enforce the same in any appropriate
jurisdiction, or the commencement by Lender, in its sole discretion, of any
action or suit in any jurisdiction where any Collateral may be found to
repossess or foreclose upon any such Collateral.
16. Notices. All
notices, requests, demands and other communications required or permitted under
this Agreement or by law shall be in writing and shall be deemed to have been
duly given, made and received when delivered against receipt, or when received
by telecopy at the office of the noticed party or on the third Business Day
after deposit in the United States mails, postage prepaid, addressed as set
forth below:
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(a)
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If to Lender:
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Wachovia
Bank, National Association
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▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention:
Portfolio Manager
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Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
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(b)
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If to Subordinate Creditor:
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(c)
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If to any Debtor:
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SMF
Energy Corporation
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H
& W Petroleum Company, Inc.
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SMF
Services, Inc.
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▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
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Facsimile:
__________________________
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Any
addressee may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section for the giving of notice. Notice given in any other manner
shall nevertheless be effective as to the noticed party on the date actually
received by such noticed party.
17. Lender's
Duties Limited. The rights granted to Lender in this Agreement
are solely for its protection and nothing herein contained imposes on Lender any
duties with respect to any property either of an Obligor or of Subordinate
Creditor heretofore or hereafter received by Lender beyond reasonable care in
the custody and preservation of such property while in Lender's actual
possession. Lender has no duty to preserve rights against prior
parties on any instrument or chattel paper received from Debtor or Subordinate
Creditor as collateral security for the Senior Debt or any portion
thereof.
18. Amendments
to Loan Documents. Whether or not any Debtor has agreed with
Subordinate Creditor not to enter into any amendments to the Loan Documents
without notice to or the consent of Subordinate Creditor, Debtors and Lender may
amend or modify the Loan Documents at any time and in any manner and such
amendments or modifications shall be effective notwithstanding Debtors' failure
to give notice thereof to Subordinate Creditor or to obtain Subordinate
Creditor's consent thereto, and Subordinate Creditor shall have no claim or
cause of action against Lender by reason of Debtors' failure to give such notice
or obtain such consent even if Lender is aware of such failure.
19. Authority. Each
Debtor and Subordinate Creditor each represents and warrants that it has
authority to enter into this Agreement and that the Person signing for them is
authorized and directed to do so.
20. Entire
Agreement. This Agreement constitutes and expresses the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, inducements or
conditions, whether express or implied, oral or written. If and to
the extent the terms hereof are inconsistent with any subordination provisions
contained in the Subordinated Note, the terms of this Agreement shall govern and
control. Neither
this Agreement nor any portion or provision hereof may be changed, waived or
amended orally or in any manner other than by an agreement in writing signed by
Lender, Debtors and Subordinate Creditor.
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21. Additional
Documentation. Debtors and Subordinate Creditor shall execute
and deliver to Lender such further instruments and shall take such further
action as Lender may at any time or times reasonably request in order to carry
out the provisions and intent of this Agreement.
22. Expenses. Debtors
jointly and severally agree to pay Lender, on demand, all expenses of every
kind, including reasonable attorneys' fees, that Lender may incur in enforcing
any of Lender's rights under this Agreement.
23. Successors
and Assigns. This Agreement shall inure to the benefit of
Lender and its successors and assigns, and shall be binding upon each Debtor and
Subordinate Creditor and their respective successors and
assigns. Without limiting the generality of the foregoing sentence,
any Person whose loans or advances to any Debtor hereafter are used to refinance
and pay indefeasibly in full the Senior Debt shall be deemed (unless otherwise
elected by such Person) for all purposes hereof to be the successor to Lender,
and from and after the date of any such refinancing and satisfaction in full of
the Senior Debt such Person shall be deemed (unless otherwise elected by such
Person) a party hereto in the place and stead of Lender as if such Person had
been the original signatory hereto, and all loans, advances, liabilities, debit
balances, covenants and duties at any time or times owed by any Debtor to such
successor to Lender, whether direct or indirect, absolute or contingent, secured
or unsecured, due or to become due, then existing or thereafter arising,
including any renewals, extensions, modifications, or replacements of any of the
foregoing, shall be deemed (unless otherwise elected by such Person) for all
purposes hereunder to constitute and be Senior Debt. The term
"Debtor" and "Subordinate Creditor" as used in this Agreement shall include the
individuals, firms or corporations named herein as Debtor or Subordinate
Creditor and (a) any successor individual, firm or corporation to which all or
substantially all of the business or assets of either of them shall have been
transferred; (b) in the case of a partnership, any new partnership which shall
have been created by reason of the admission of any new partner therein or the
dissolution of the then existing partnership; and (c) in the case of a
corporation, any other corporation into or with which any corporate Debtor or
corporate Subordinate Creditor shall have been merged, consolidated, reorganized
or absorbed.
24. Defects
Waived. This Agreement is effective notwithstanding any defect
in the validity or enforceability of any instrument or document at any time
evidencing or securing the whole or any part of the Senior Debt.
25. Governing
Law. The validity, construction and enforcement of this
Agreement shall be governed by the internal laws of the State of
Florida.
26. Severability. The
provisions of this Agreement are independent of and separable from each
other. If any provision hereof shall for any reason be held invalid
or unenforceable, it is the intent of the parties that such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.
27. Execution
in Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. In proving this Agreement
in any judicial proceeding, it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom such enforcement
is sought. Any signatures delivered by a party by facsimile
transmission shall be deemed an original signature hereto.
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of page intentionally left blank;
signatures
begin on following page.]
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28. Jury
Trial Waiver. In the event of any
litigation with respect to any matter concerned with this Agreement or the
Senior Debt, Subordinate Creditor, Debtors and Lender each hereby waives all
rights to a trial by jury.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed,
sealed and delivered on the day and year first above written.
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SUBORDINATE CREDITOR:
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By:
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Name:
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Title:
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DEBTORS:
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SMF
ENERGY CORPORATION
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By:
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Name:
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Title:
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H
& W PETROLEUM COMPANY, INC.
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By:
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Name:
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Title:
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SMF
SERVICES, INC.
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By:
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Name:
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Title:
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LENDER:
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WACHOVIA
BANK, NATIONAL ASSOCIATION
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By:
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Name:
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Title:
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