INTERCREDITOR AND SUBORDINATION AGREEMENT
INTERCREDITOR
AND SUBORDINATION AGREEMENT
This
Subordination Agreement (“Agreement”)
dated
as of April 21, 2006, is entered into by and among the holders of secured
convertible notes of the Company listed on Schedule
A
hereto
(collectively, “Subordinated
Creditors”),
WinWin
Gaming, Inc.,
a
Delaware corporation (the “Company”),
and
Solidus
Networks, Inc.,
a
Delaware corporation (“Senior
Creditor”).
Recitals
A. Company
and Senior Creditor have entered into that certain Amended and Restated Secured
Promissory Note dated as of January 17, 2006,
as
amended
on April
___, 2006 (the “Senior
Note”)
pursuant
to which Senior Creditor has agreed to extend and make available to Company
certain advances of money upon the terms and conditions set forth in the Senior
Note and the other loan documents related to the Senior Note.
In
addition, Company has issued to Senior Creditor that certain Security Agreement
(the “Senior Security
Agreement”)
dated
as of September 30, 2005, as amended on April ___, 2006 under the Senior Note,
(the Senior Note, the Senior Security Agreement, all
as
amended, modified or supplemented from time to time,
including amendments, modifications, supplements and restatements thereof giving
effect to increases, renewals, extensions, refundings, deferrals,
restructurings, replacements or refinancings of, or additions to, the
arrangements provided in such agreements or instruments (whether provided by
the
original Senior Creditor under such agreements, by successors or assigns or
by
Refinancing Senior Lenders (as defined in Section
15
hereof)),
together with all instruments and documents executed in connection therewith,
are referred to herein as the “Senior
Creditor Documents”).
B. Company
has issued to Subordinated Creditors a Secured Convertible Promissory Note
dated
April __, 2006 in the aggregate principal amount of up to $2,000,000, a copy
of
which is attached hereto as Exhibit
A
(the
“Subordinated
Note”)
and as
purchased by the Subordinated Creditors as set forth on Schedule
A
hereto,
evidencing a certain loan made by Subordinated Creditors to Company. The
Subordinated Note is secured by a Security Agreement (the “Subordinated
Security Agreement”)
among
Subordinated Creditors and Company (Subordinated Note, Subordinated Security
Agreement, all
as
amended, modified or supplemented from time to time,
including amendments, modifications, supplements and restatements thereof giving
effect to increases, renewals, extensions, refundings, deferrals,
restructurings, replacements or refinancings of, or additions to, the
arrangements provided in such agreements or instruments,
together with all instruments and documents executed in connection therewith,
are referred to herein as the “Subordinated
Creditors Documents”).
C. Senior
Creditor requires that Subordinated Creditors subordinate, and Subordinated
Creditors has agreed to subordinate, the repayment of the Subordinated Debt
(as
defined below) and Subordinated Creditors’s rights and remedies relating thereto
under the Subordinated Creditors Documents to the payment and performance in
full of the Senior Debt (as defined below) and Senior Creditor’s rights and
remedies relating thereto under the Senior Creditor Documents.
D. Senior
Creditor requires that Subordinated Creditors subordinate, and Subordinated
Creditors has agreed to subordinate, the security interest and lien of
Subordinated Creditors in and to the Collateral (as defined in the Subordinated
Security Agreement and referred to herein as “Collateral”)
to the
security interest and lien of Senior Creditor in the Collateral, and to Senior
Creditor’s rights and remedies as a secured party related thereto.
E. Senior
Creditor and Subordinated Creditors desire to set forth their respective rights
with respect to the obligations, liabilities and indebtedness now or hereafter
owing to each of them by Company.
Agreement
Now,
Therefore,
for
good
and valuable consideration, receipt of which is hereby acknowledged, and
intending to be legally bound, each of Company, Senior Creditor and Subordinated
Creditors hereby agree as follows:
1. Definitions.
Unless
otherwise defined herein, the following terms shall have the following meanings
(such meanings being equally applicable to both the singular and plural forms
of
the terms defined):
“Bankruptcy
Code”
means
the Bankruptcy Code of 1978, as amended, as codified under the Title 11 of
the
United States Code, and the Bankruptcy Rules promulgated thereunder, as the
same
may be in effect from time to time.
“Senior
Debt”
means
(i) all indebtedness and other obligations of Company in favor of Senior
Creditor under the Senior Creditor Documents, including without limitation,
the
principal amount of all indebtedness outstanding from time to time under the
Senior Creditor Documents, provided that, for all purposes of this Agreement,
the aggregate principal amount of all indebtedness outstanding from time to
time
under the Senior Creditor Documents shall be deemed not to exceed the aggregate
principal amount of such indebtedness outstanding on the date of this Agreement
, and (ii) all amounts due or to become due relating to the foregoing,
including, without limitation, all interest, facility, commitment, prepayment
and other fees, commissions, fees and costs of enforcement, amounts reimbursable
and other liabilities (including interest, fees, professional fees and costs
which would become due but for the operation of the Bankruptcy Code).
“Subordinated
Debt”
means
(i) all indebtedness and other obligations of Company in favor of Subordinated
Creditors under the Subordinated Creditors Documents and (ii) all amounts
due or to become due relating to the foregoing, including, without limitation,
all interest, facility, commitment, prepayment and other fees, commissions,
fees
and costs of enforcement, amounts reimbursable and other liabilities (including
interest, fees, professional fees and costs which would become due but for
the
operation of the Bankruptcy Code).
2. Subordination;
Subrogation.
(a) Payment
Subordination.
On the
terms and conditions set forth below, the payment and performance of the
Subordinated Debt, and Subordinated Creditors’s right to receipt thereof, is and
shall be expressly subordinate and junior in time and right of payment to the
prior indefeasible payment and performance in full of the Senior Debt. Each
reference in this Agreement to “payment and performance in full,” “paid and
performed in full” or words to similar effect shall not be deemed to have
occurred until (i) the termination of all commitments to extend credit that
would constitute Senior Debt, (ii) the payment and performance in full in cash
or by other means acceptable to the Senior Creditor of all Senior Debt,
including without limitation principal, interest, fees, costs (including without
limitation post-petition interest, fees and costs even if such interest, fees
and costs are not an allowed claim enforceable against Company in a bankruptcy
case under applicable law, but excluding unasserted contingent obligations)
and
premium, (if any) and (iii) more than 90 days shall have expired after all
payments described in the foregoing clause (ii) shall have been made. Subject
to
and except as set forth in Sections 3,
4
and
6
below,
Subordinated Creditors will not ask, demand, xxx for, take or receive from
Company, by setoff, banker’s lien or in any other manner, the whole or any part
of any monies which may now or hereafter be owing by Company, or any successor
or assign of Company, including, without limitation, any receiver or trustee
(the term “Company”
for
all
purposes herein shall include any such successor or assign of Company) to
Subordinated Creditors on account of the Subordinated Debt, unless and until
all
Senior Debt, existing or hereafter arising, shall have been paid and performed
in full.
-2-
(b) Subrogation.
If cash
or other property otherwise payable or deliverable to Subordinated Creditors
shall have been applied pursuant to this Agreement to the payment of the Senior
Debt, and if the Senior Debt shall have been paid and performed in full, then
and in such case, Subordinated Creditors shall be subrogated to any rights
of
Senior Creditor to receive further payments or distributions applicable to
the
Senior Debt until the Subordinated Debt shall have been paid in full. No such
payments or distributions received by Subordinated Creditors by reason of such
subrogation, of cash or other property which would otherwise be paid or
distributed to Senior Creditor, shall, as between Company and its creditors
other than Senior Creditor, on the one hand, and Subordinated Creditors on
the
other hand, be deemed to be a payment by Company on account of the Subordinated
Debt.
(c) Lien
Subordination.
The
security interest and liens granted to Senior Creditor by Company for the
purpose of securing the Senior Debt, including without limitation, the
Collateral, whether or not perfected, or any other lien now or hereafter held
by
Senior Creditor for the purpose of securing the Senior Debt are and shall remain
senior to any security interest now or hereafter granted to Subordinated
Creditors by Company for the purpose of securing the Subordinated Debt and
any
other lien now or hereafter held by Subordinated Creditors, including a judgment
lien, for the purpose of securing the Subordinated Debt. The foregoing
allocation of priorities shall govern the relationship of the parties with
respect to such security interest and liens irrespective of the time or order
of
attachment or perfection of any of such security interest and liens, the time
or
order of filing of financing statements, the acquisition of purchase money
or
other liens, the time of giving or failure to give notice of the acquisition
or
expected acquisition of purchase money or other liens, the rules for determining
priority under any law or rule governing relative priorities of the parties
hereto, the fact that any such liens in favor of Senior Creditor with respect
to
any collateral are (i) subordinated to any lien securing any obligation of
Company other than the Subordinated Debt or (ii) otherwise subordinated, voided,
avoided, invalidated or lapsed, or any other circumstances whatsoever. For
the
purposes of the foregoing allocation of priorities, any claim of a right of
set-off shall be treated in all respects as a security interest, and no claimed
right of set-off shall be asserted by Subordinated Creditors to defeat or
diminish the rights or priorities of the lien of Senior Creditor provided for
herein.
-3-
3. Permitted
Payments; Payment Blockage.
(a) All
principal amounts owed under the Senior Creditor Documents shall remain senior
in all respects and be paid in full prior to any payments being made under
the
Junior Creditor Documents. Notwithstanding anything to the contrary contained in
Section
2,
above,
but subject expressly to Section
3(b),
below,
Company shall be permitted to make, and Subordinated Creditors shall be
permitted to accept or receive all regularly scheduled payments (interest and
principal) which shall become due and owing under the Subordinated Creditors
Notes when and as such amounts shall become due and payable in accordance with
the terms thereof. The payments permitted to be made by Company under this
Section 3(a)
shall
herein be collectively referred to as the “Permitted
Payments.”
(b) Notwithstanding
anything to the contrary contained in this Section 3
or
elsewhere in this Agreement, Subordinated Creditors shall not, after delivery
to
Subordinated Creditors of written notice from Senior Creditor stating that
an
event of default (“Event
of Default”)
(or an
event which with notice or lapse of time or both would become an Event of
Default) under the Senior Creditor Documents has occurred and is continuing
(a
“Default
Notice”),
accept or receive any payment of any kind, including any Permitted Payment,
of
or on account of the Subordinated Debt, except for Reorganization Subordinated
Securities in connection with any Insolvency or Liquidation Proceeding, unless
and until all amounts payable which gave rise to any Event of Default (or an
event which with notice or lapse of time or both would become an Event of
Default) arising from a failure to pay shall have been fully and finally paid
in
cash, or any other Event of Default (or an event which with notice or lapse
of
time or both would become an Event of Default) shall have been timely cured
or
waived. After expiration of the period described in the preceding sentence,
Subordinated Creditors shall be entitled to receive all Permitted Payments
not
previously paid.
4. Enforcement
Rights and Standstill. Notwithstanding
anything herein or in the Subordinated Creditors Documents to the contrary,
Subordinated Creditors may not accelerate the maturity of any Subordinated
Debt
or initiate or pursue any other remedies otherwise available to them, other
than
as permitted in Section
3,
including, without limitation, any enforcement remedy against any security
for
the Subordinated Debt, until the earlier of: (x) the date on which the Senior
Debt shall have been fully
and
finally paid or satisfied or (y) the passage of one hundred and eighty (180)
days following delivery of notice of an Event of Default under the Senior
Creditor Documents to Subordinated Creditors (such 180-day period being called
the “Standstill
Period”),
provided,
however
that:
(a) the
Standstill Period will not apply to Subordinated Creditors for more than an
aggregate of 180 days within any period of 360 consecutive days;
-4-
(b) no
such
Event of Default existing on the date any notice is given pursuant to this
Section 4 shall, unless the same shall have ceased to exist for a period of
at
least 90 consecutive days, be used as a basis for any subsequent such
notice;
(c) no
more
than one (1) such notice may be given in any 360 day period; and
(d) the
Subordinated Debt shall continue to accrue interest, it being agreed that
accrual of interest shall at all times be permitted under this
Agreement
(but
nothing herein constitutes an agreement or assurance by Senior Creditor for
the
benefit or reliance by Subordinated Creditors that such interest accrual will
be
permitted or enforceable under applicable law).
(e) The
Standstill Period will end on the earliest of:
(i) the
expiration of the 180-day period described above;
(ii) the
date
of any acceleration of any Senior Debt, provided, however, that if any such
acceleration of the Senior Debt is rescinded, the applicable Standstill Period
shall be deemed reinstated solely for the remaining portion of the original
Standstill Period and any related acceleration of the Subordinated Debt shall
be
similarly rescinded;
(iii) the
commencement of any Insolvency or Liquidation Proceeding;
(iv) the
date
of any initiation of any judicial proceeding or action against Company by Senior
Creditor to collect any portion of the Senior Debt;
(v) the
institution of any foreclosure proceeding with respect to the Collateral, or
the
date that a substantial portion of the assets of Company are offered for sale,
sold or otherwise disposed of outside of the ordinary course of business by
or
at the direction of Senior Creditor;
(vi) the
date
of any realization by Senior Creditor on a substantial portion of the Collateral
pursuant to or in lieu of its exercise of rights under the Senior Credit
Documents; and
(vii) the
date
on which any holder of any other indebtedness which is contractually
subordinated to the Senior Debt is permitted to exercise remedies either
pursuant to the terms of such contractual subordination or by virtue of any
waiver or consent granted by Senior Creditor.
5. Payment
in Trust for Senior Creditor; Specific Performance; Prohibition Against
Contesting Liens.
(a) Any
payments or distribution of assets of Company of any kind or character, whether
in cash or property, received by Subordinated Creditors on account of the
Subordinated Debt or any proceeds of the Collateral (whether or not
identifiable) or proceeds of proceeds thereof, other than as permitted in
Section
3,
shall
be held by Subordinated Creditors in
trust
for the
benefit of Senior Creditor, and shall be delivered to Senior Creditor in kind,
immediately upon receipt by Subordinated Creditors, for application to the
Senior Debt until all such Senior Debt is paid and performed in full.
-5-
(b) If
Subordinated Creditors, in violation of this Agreement, commence or participate
in any enforcement action against Company or the Collateral without the prior
written consent of Senior Creditor, Senior Creditor may interpose as a defense
or dilatory plea the making of this Agreement and may intervene and interpose
such defense or plea in its name or in the name of Company. Should Subordinated
Creditors, in violation of this Agreement, in any way take, or attempt to or
threaten to take any action with respect to any Collateral in violation of
this
Agreement (including, without limitation, any attempt to realize upon or enforce
any remedy with respect to the Subordinated Creditors Documents in violation
of
this Agreement), or fail to take any action required by this Agreement, Senior
Creditor (in its own name or in the name of Company) may obtain relief against
Subordinated Creditors by injunction, specific performance and/or other
appropriate equitable relief, it being understood and agreed by Subordinated
Creditors that (i) Senior Creditor’s damages from its actions may at that time
be difficult to ascertain and may be irreparable, and (ii) Subordinated
Creditors waives any defense that Company or Senior Creditor cannot demonstrate
damage and/or be made whole by the awarding of damages.
(c) Subordinated
Creditors agrees that they shall not, and hereby waives any right to, contest,
or support
any
other person in contesting, in any proceeding (including, without limitation,
any Insolvency or Liquidation Proceeding), the priority, validity or
enforceability of any
lien
securing the Senior Debt.
6. Dissolution,
Liquidation or Reorganization of Company.
(a) The
following terms shall have the following meanings for all purposes of this
Agreement:
“Insolvency
or Liquidation Proceeding”
means
(a) any
voluntary or involuntary case or proceeding under the Bankruptcy Code with
respect to Company as debtor, (b) any other voluntary or involuntary insolvency,
reorganization or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding with respect
to
Company as debtor or with respect to any substantial part of its assets, (c)
any
liquidation, dissolution, reorganization or winding up of Company whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy
or (d) any assignment for the benefit of creditors or any other marshalling
of
assets and liabilities of Company.
“Bankruptcy
Code”
means
Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter
in effect, or any successor statute.
“Reorganization
Subordinated Securities”
means
(i) equity securities or (ii) any notes or other securities issued in
substitution of all or any portion of the Subordinated Debt that are
subordinated in right of payment and lien priority to the Senior Debt (or any
notes or other securities issued in substitution of all or any portion of the
Senior Debt) at least to the same extent that the Subordinated Debt is
subordinated to the Senior Debt pursuant to the terms of this Agreement, and
which securities have maturities and other terms no less advantageous to Company
and Senior Creditor than the terms contained in the Subordinated Debt
Documents.
-6-
(b) Upon
the
distribution of any of Company’s assets, whether by reason of sale,
reorganization, liquidation, dissolution, arrangement, bankruptcy, receivership,
assignment for the benefit of creditors, foreclosure or otherwise, Senior
Creditor shall be entitled to receive payment and performance in full of the
Senior Debt prior to the payment of all or any part of the Subordinated
Debt.
(c) In
connection with any Insolvency or Liquidation Proceeding, until the Senior
Debt
has been paid (or otherwise satisfied) and performed in full, Subordinated
Creditors agree that (a) if Senior Creditor shall desire to permit the use
of
cash collateral, Subordinated Creditors will not raise any objection to and
will
not contest (or support any person in objecting to or contesting) such use
of
cash collateral, (b) Subordinated Creditors will not raise any objection to
and
will not contest (or support any person in objecting to or contesting) (u)
any
sale or disposition of any assets of Company that is supported by Senior
Creditor, and Subordinated Creditors will be deemed to have consented under
Section 363 of the Bankruptcy Code (and otherwise) to any sale supported by
Senior Creditor and to have released its liens, if any, in such assets upon
the
consummation of such sale, (v) any debtor in possession financing approved
by
Senior Creditor, (w) any request by Senior Creditor for adequate protection,
(x)
any objection by Senior Creditor to any motion, relief, action or proceeding
based on Senior Creditor claiming a lack of adequate protection, (y) the payment
of interest, fees, expenses or other amounts to Senior Creditor under Section
506(b) or 506(c) of the Bankruptcy Code or otherwise, and (z) to any “carve-out”
for professional and United States Trustee fees agreed to by Senior Creditor,
provided,
however,
that
the foregoing shall not prohibit Subordinated Creditors from seeking adequate
protection as provided in Section
6(d),
below,
and (c) Subordinated Creditors shall not seek to provide any debtor in
possession financing without the prior written consent of Senior Creditor.
Until
the Senior Debt has been paid (or otherwise satisfied) and performed in full,
each Subordinated Creditor agrees that it shall not seek relief from the
automatic stay or any other stay in any Insolvency or Liquidation Proceeding
in
respect of the Collateral, without the prior written consent of Senior
Creditor.
(d) Notwithstanding
anything to the contrary in the foregoing, in any Insolvency or Liquidation
Proceeding, (x)
Subordinated Creditors may seek, support, accept or retain adequate protection
(A) only if Senior Creditor is granted adequate protection that includes
replacement liens on additional collateral and superpriority claims and (B)(1)
solely in the form of a replacement lien on such additional collateral,
subordinated to the liens in favor of Senior Creditor on the same basis as
the
other liens in favor of Subordinated Creditors are so subordinated to the liens
securing the Senior Debt under this Agreement and (2) solely to the extent
that
the Collateral pledged or secured by the Subordinated Creditors Documents has
been diminished in connection with such Insolvency or Liquidation Proceeding,
superpriority claims subordinated to the Senior Debt and all claims granted
to
Senior Creditor in the manner and on the terms set forth herein, and (y) in
the
event Subordinated Creditors receives adequate protection, including in the
form
of additional collateral, then Subordinated Creditors agrees that any lien
on
any additional collateral securing the Subordinated Debt shall be subordinated
to the liens on such collateral securing the Senior Debt and any debtor in
possession financing provided by Senior Creditor and any other liens granted
to
Senior Creditor as adequate protection, with such subordination to be on the
same terms that the other liens securing the Subordinated Debt are subordinated
to the Senior Debt under this Agreement. Subject
to the foregoing, Senior Creditor agrees that it shall not object, contest
or
support any other person objecting to or contesting, in each case, unless it
has
not received adequate protection in respect of the Senior Debt, (i) any request
by Subordinated Creditors for adequate protection permitted by this Agreement
or
(ii) any objection by Subordinated Creditors which Subordinated Creditors is
not
prohibited from making under this Agreement to any motion, relief, action or
proceeding based on a claim or a lack of adequate protection or (iii) the
payment of interest, fees, expenses or other amounts to Subordinated Creditors
under Section 506(b) or 506(c) of the Bankruptcy Code or otherwise.
-7-
(e) Notwithstanding
anything to the contrary in this Section
6,
in any
Insolvency or Liquidation Proceeding, Subordinated Creditors may (a) file any
necessary responsive or defensive pleadings in opposition to any motion, claim,
adversary proceeding or other pleading made by any person objecting to or
otherwise seeking the disallowance of the claims of Subordinated Creditors,
including any claims secured by the Collateral, if any, in each case in
accordance with the terms of this Agreement (it being agreed nothing in the
foregoing permits Subordinated Creditors to file any pleadings adverse to Senior
Creditor), (b) file any proof of claim, make other filings and make any
arguments and motions that are, in each case, in accordance with the terms
of
this Agreement, with respect to the Subordinated Debt and the Collateral, or
propose debtor in possession financing if debtor in possession financing is
not
then being proposed by Senior Creditor, and (c) cash bid at any Section 363
hearing or with respect to any other Collateral disposition. Notwithstanding
clause (b) above, in the event Subordinated Creditors has not filed a proof
of
claim prior to the tenth (10th)
business day prior to the date claims may last be filed in any such Insolvency
or Liquidation Proceeding, Senior Creditor may file such proof of claim on
behalf of Subordinated Creditors and is hereby authorized to do so.
(f) Subordinated
Creditors acknowledges and agrees that (a) the grants of liens pursuant to
the
Senior Creditor Documents and the Subordinated Creditors Documents constitute
two separate and distinct grants of liens and (b) because of, among other
things, their differing rights in the Collateral, the claims of Subordinated
Creditors are fundamentally different from the claims of Senior Creditor and
must be separately classified in any plan of reorganization proposed or adopted
in an Insolvency or Liquidation Proceeding. To further effectuate the intent
of
the parties as provided in the immediately preceding sentence, if it is held
that the claims of Senior Creditor and Subordinated Creditors in respect of
the
Collateral constitute only one secured claim (rather than separate classes
of
senior and junior secured claims), then Subordinated Creditors hereby
acknowledge and agree that all distributions shall be made as if there were
separate classes of senior and junior secured claims against Company in respect
of the Collateral with the effect being that, to the extent that the aggregate
value of the Collateral is sufficient (for this purpose ignoring all claims
held
by Subordinated Creditors), Senior Creditor shall be entitled to receive, in
addition to amounts distributed to it in respect of principal, pre-petition
interest and other claims, all amounts owing in respect of post-petition
interest before any distribution is made in respect of the claims held by
Subordinated Creditors, with each Subordinated Creditor hereby acknowledging
and
agreeing to turn over to Senior Creditor amounts otherwise received or
receivable by it to the extent necessary to effectuate the intent of this
sentence, even if such turnover has the effect of reducing the claim or recovery
of such Subordinated Creditor.
-8-
(g) Except
as
contemplated in Section
6(d)
above
with respect to Subordinated Creditors seeking adequate protection, nothing
contained herein shall prohibit or in any way limit Senior Creditor from
objecting in any Insolvency or Liquidation Proceeding or otherwise to any action
taken by Subordinated Creditors.
(h) To
the
extent that Subordinated Creditors has or acquires rights under Section 363
or
Section 364 of the Bankruptcy Code with respect to any of the Collateral,
Subordinated Creditors agrees not to assert any of such rights without the
prior
written consent of Senior Creditor; provided
that if
requested by Senior Creditor, Subordinated Creditors shall timely exercise
such
rights in the manner requested by Senior Creditor, including any rights to
payments in respect of such rights.
(i) This
Agreement, which the parties hereto expressly acknowledge is a “subordination
agreement” under Section 510(a) of the Bankruptcy Code, shall be effective
before and after the commencement of an Insolvency or Liquidation Proceeding.
All references in this Agreement to Company shall include Company as a debtor
in
possession and any receiver or trustee for Company in any Insolvency or
Liquidation Proceeding.
7. Negative
Covenants of Subordinated Creditors.
Except
as expressly permitted by Section
4
above,
Subordinated Creditors covenants and agrees that it shall not, until the Senior
Debt shall have been paid and performed in full, directly or indirectly:
(a) take
any
action with respect to the Collateral, whether by judicial or non-judicial
foreclosure, notification to Company’s account debtors, setoff or
otherwise;
(b) exercise
or enforce any right of acceleration, demand or set off against Company or
the
assets or property of Company;
(c) make
any
claim or commence or initiate any action, lawsuit, case or proceedings against
Company or join together with any creditor in any action, lawsuit, case or
proceeding against Company;
(d) ask
for,
demand, take, accept, receive or take any action to obtain, any security
interest or lien on the assets or property of Company or exercise any right
of
foreclosure or any right or remedy with respect to Company or the assets or
property of Company;
(e) contact
any account debtors of Company or otherwise seek payment from any obligor on
any
Collateral;
-9-
(f) direct
Senior Creditor to exercise any right, remedy or power with respect to any
Collateral or pursuant to the Senior Creditor Documents; or
(g) object
to, impede, interfere with or attempt to restrict or restrain any foreclosure
or
other exercise by Senior Creditor of any right, remedy or power with respect
to
any Collateral or pursuant to the Senior Creditor Documents or to the timing
or
manner in which any such right is exercised or not exercised (or, to the extent
it may have any such right, whether as a junior lien creditor or otherwise,
Subordinated Creditors hereby irrevocably waives such right).
8. Amendment
of Senior Debt.
(a) Each
Subordinated Creditor hereby waives any rights it may have to claim that the
enforceability of this Agreement may be affected by any subsequent modification,
release, extension, or other change, material or otherwise, in the Senior Debt,
other than (i) an increase in the interest rate of the Senior Debt to an amount
greater than the interest rate payable pursuant to the Subordinated Note and
(ii) an increase in the principal amount or the Senior Debt.
(b) Senior
Creditor may at any time, in Senior Creditor’s discretion and without notice to
or the consent of Subordinated Creditors, renew or extend the time of payment
of
any portion of the Senior Debt, amend or modify the Senior Creditor Documents,
or waive or release any collateral which may be held therefor, and Senior
Creditor may otherwise enter into such agreements with Company as Senior
Creditor may deem desirable without notice to or further assent from
Subordinated Creditors and without in any way affecting Senior Creditor’s rights
hereunder. In no event shall the Senior Creditor amend the Senior Creditor
Documents to (i) increase the interest rate of the Senior Debt to an amount
greater than the interest rate payable pursuant to the Subordinated Note or
(ii)
increase the principal amount of the Senior Debt.
9. Representations,
Warranties and Affirmative Covenants of Subordinated Creditors.
Each
Subordinated Creditor, severally and not jointly, represents, covenants and
agrees that it:
(a) is
the
sole owner and holder of the Subordinated Debt listed opposite its name on
Schedule
A
hereto
and that it has not sold or assigned any interest therein;
(b) has
not
granted any prior subordinations with respect to the Subordinated
Debt;
(c) does
not
have a security interest or lien on any property or assets of Company other
than
as set forth in the Subordinated Creditor Documents, other than any indirect
security interest or lien arising solely from such Subordinated Creditor’s
ownership of equity securities of Senior Creditor ;
(d) will
not,
at any time while this Agreement is in effect, sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of the Subordinated Debt to
any
entity other than one that has agreed in a writing to become bound to this
Agreement and to succeed to the rights and to be bound by all of the obligations
of Subordinated Creditors hereunder;
-10-
(e) will
allow the Company to place a legend on the Subordinated Creditor Documents
to
state that the Subordinated Debt is subordinate to the Senior Debt and is
subject to the terms and conditions of this Agreement;
(f) will
give
Senior Creditor prompt (and in no event later than 10 days after Subordinated
Creditors shall become aware thereof) notice of any written notice of any event
of default delivered to Company under the Subordinated Creditors
Documents;
(g) will
not
modify, amend, alter, change, substitute or extend any of the terms or
provisions of the Subordinated Debt or any of the Subordinated Creditors
Documents without the prior written consent of Senior Creditor;
(h) will,
at
the request of Senior Creditor, release any lien and security interest it has
on
any of the Collateral to the extent necessary to facilitate a transfer or sale
of the Collateral pursuant to the Senior Creditor’s exercise of remedies after
an Event of Default under the Senior Creditor Documents, so long as the proceeds
thereof are applied against the Senior Debt and any excess is paid to
Subordinated Creditors to be applied against the Subordinated Debt;
(i) will
execute and deliver such additional instruments and documents and take such
additional actions as Senior Creditor may reasonably request in order to carry
out and evidence the terms of this Agreement;
(j) will
not
take or cause to be taken any action, the purpose or effect of which is to
make
any lien in respect of any of the Collateral pari
passu
with or
senior to, or to give Subordinated Creditors any preference or priority relative
to, the liens in favor of Senior Creditor with respect to the Collateral;
and
(k) will
not,
except with the written approval of Senior Creditor, acquire or hold any lien
on
any assets of Company securing the Subordinated Debt except to the extent Senior
Creditor has been granted and holds a perfected security interest in such assets
with priority in right of time of perfection and subject to the subordination
and other terms provided in this Agreement.
10. Waiver
of Marshaling.
Subordinated Creditors irrevocably waives any right to compel Senior Creditor
to
marshal assets of Company, whether such rights arise under California Civil
Code
§§2899 and 3433 or otherwise.
11. Term.
The
subordinations and agreements set forth herein shall remain in full force and
effect until Senior Creditor advises Subordinated Creditors that Company has
paid and performed, or satisfied in full, the Senior Debt and Senior Creditor
has terminated its security interests in and to the Collateral. The rights
and
obligations of Subordinated Creditors and Senior Creditor hereunder shall not
be
affected by any act or failure to act by Company (regardless of any knowledge
Senior Creditor may have thereof) or the bankruptcy or insolvency of Company
and
shall be effective regardless of whether either Senior Creditor or Subordinated
Creditors in the future seeks to rescind, amend, terminate or reform by
litigation or otherwise their respective agreements with Company.
-11-
12. Preference
and Reinstatement.
If
Company makes a payment to Senior Creditor and if Senior Creditor is required
in
any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise
pay to the estate of Company any amount of such payment as a preference (a
“Recovery”),
then
the claims of Senior Creditor shall be revived to the extent of such Recovery
and continue in full force and effect as Senor Debt entitled to the benefits
of
this Agreement, as if such payment had not been received by Senior Creditor.
If
this Agreement shall have been terminated prior to such Recovery, this Agreement
shall be reinstated in full force and effect, and such prior termination shall
not diminish, release, discharge, impair or otherwise affect the obligations
of
the parties hereto from such date of reinstatement.
13. The
Collateral.
(a) Subject
to applicable law, except as otherwise expressly provided for herein, until
the
Senior Debt is paid and performed in full, Senior Creditor shall be entitled
to
deal with the Collateral in accordance with the terms of the Senior Creditor
Documents as if the liens of Subordinated Creditors did not exist. The rights
of
Subordinated Creditors with respect to the Collateral shall at all times be
subject to the terms of this Agreement.
(b) Senior
Creditor shall have no obligation whatsoever to Subordinated Creditors to assure
that the Collateral is genuine or owned by Company or to preserve the rights
or
benefits of any person or entity. Senior Creditor shall not be under any
obligation to Subordinated Creditors to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, the Senior Creditor Documents or the Subordinated Creditors Documents,
or to
inspect the properties, books or records of Company or any of its
subsidiaries.
(c) Senior
Creditor shall not have any fiduciary relationship in respect of Subordinated
Creditors. Subordinated Creditors shall not have a fiduciary relationship in
respect of Senior Creditor. Senior Creditor makes no representations as to
the
value or condition of the Collateral or any part thereof, as to the title of
Company to the Collateral, as to the security afforded by this Agreement or
any
other document relating to the Collateral or, as to the validity, execution,
enforceability, legality or sufficiency of this Agreement or any other document
relating to the Collateral, and Senior Creditor shall incur no liability or
responsibility in respect of any such matters. Senior Creditor shall not
be responsible for insuring the Collateral, for the payment of taxes, charges,
assessments or liens upon the Collateral or otherwise as to the maintenance
of
the Collateral. Senior Creditor shall have no duty to Company or to the
holders of any of the Subordinated Debt, as to any Collateral in its possession
or control or in the possession or control of any agent or nominee of Senior
Creditor or any income thereon or as to the preservation of rights against
prior
parties or any other rights pertaining thereto.
(d) Upon
the
payment and performance in full of the Senior Debt, Senior Creditor shall
deliver to Subordinated Creditors the Collateral held or received by it,
together with any necessary endorsement and any other proceeds of Collateral
held by it. Senior Creditor further agrees, upon payment and performance in
full
of the Senior Debt, to take all other action reasonably requested by
Subordinated Creditors in connection with Subordinated Creditors obtaining
a
first priority perfected security interest in the Collateral or as a court
of
competent jurisdiction may otherwise direct.
-12-
(e) Senior
Creditor and Subordinated Creditors shall each be entitled to rely upon any
certificate, notice, consent or other instrument in writing (including any
facsimile transmission) believed by such person to be genuine and correct and
to
have been signed or sent or made by or on behalf of a proper person and
shall
be entitled to advice of counsel concerning all matters pertaining to this
Agreement.
(f) Notwithstanding
any provision to the contrary elsewhere in this Agreement and the other
documents relating to the Collateral, Senior Creditor shall not have any duties
or responsibilities, except those expressly set forth in this Agreement, and
no
implied covenants, functions or responsibilities fiduciary or otherwise shall
be
read into this Agreement or otherwise exist against the Senior
Creditor.
14. Attorneys’
Fees.
In any
dispute between Senior Creditor and any Subordinated Creditor regarding this
Agreement, the non-prevailing party shall pay the prevailing party its
reasonable attorneys fees and expenses incurred in connection with such dispute.
It shall be presumed (subject to rebuttal only by the introduction of competent
evidence to the contrary) that the amount recoverable is the amount billed
to
the prevailing party by its counsel and that such amount will be reasonable
if
based on counsel customary billing rates charged to the prevailing party by
its
counsel in similar matters. For the purposes of Section 1717 of the California
Civil Code, a party shall be the “prevailing party” if it recovers any funds
whatsoever from the other party, whether by settlement, judgment or
otherwise.
15. Refinancing
of Senior Debt.
In the
event that any person(s) (“Refinancing
Senior Lenders”)
at any
time hereafter extends credit to Company and the proceeds of such extension
of
credit are applied to the payment and performance in full of all of the Senior
Debt, then all indebtedness and liabilities of Company to the Refinancing Senior
Lenders shall be entitled to the benefits of this Agreement to the same extent
as the Senior Debt and Senior Creditor, provided such Refinancing Senior Lenders
agree in writing to be bound hereby, and Subordinated Creditors and Company
shall promptly execute and deliver any agreement which the Refinancing Senior
Lenders shall reasonably request with respect thereto confirming the terms
and
conditions of this Agreement in favor of the Refinancing Senior Lenders. Any
reference contained in this Agreement to “Senior
Creditor”
shall
be deemed to include any holder of Senior Debt at any time, including, without
limitation, any Refinancing Senior Lender.
16. Conflicts.
Senior
Creditor acknowledges and agrees that to the extent the terms and provisions
of
this Agreement are inconsistent with the terms and provisions of the Senior
Creditor Documents or any other agreements relating to or evidencing the Senior
Debt, the terms and provisions of this Agreement shall be controlling.
Subordinated Creditors acknowledges and agrees that, to the extent the terms
and
provisions of this Agreement are inconsistent with the terms and provisions
of
the Subordinated Creditors Documents or any other agreements relating to or
evidencing the Subordinated Debt, the terms and provisions of this Agreement
shall be controlling. The provisions of this Section
16 are
for
the purpose of defining the relative rights of Senior Creditor, on the one
hand,
and Subordinated Creditors, on the other hand, and nothing herein shall impair,
as between Company and Subordinated Creditors, the obligation of Company, which
is unconditional and absolute, to pay to Subordinated Creditors the Subordinated
Debt in accordance with its terms and the provisions of the Subordinated
Creditors Documents. All understandings, agreements, representations and
warranties contained herein are solely for the benefit of the parties hereto
and
there are no other parties (including, without limitation, Company) who are
intended to be benefited in any way by this Agreement.
-13-
17. Governing
Law; Jurisdiction; Jury Waiver; Judicial Reference.
(a) This
Agreement, and each and every term and provision hereof, shall be governed
by
and construed in accordance with the internal law of the State of California.
(b) The
undersigned hereby submit to the exclusive jurisdiction of the state and federal
courts located in the County of San Francisco, State of California. Any
arbitration pertaining to the this Agreement or the transactions described
herein shall be held in San Francisco, California.
(c) THE
UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL
ONE
BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED
BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT)
WITH COUNSEL OF ITS CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL
BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT,
INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.
Senior
Creditor Initials ______ Subordinated
Creditors Initials ______ Company
Initials ______
(d) In
the
event the jury trial waiver set forth above is not enforceable, the parties
elect to proceed under this Judicial Reference Provision.
(i) With
the
exception of the items specified in clause (ii), below, any controversy, dispute
or claim (each, a “Claim”)
between the parties arising out of or relating to this Agreement or any other
document, instrument or agreement between the undersigned parties (collectively
in this Section, the “Documents”),
will
be resolved by a reference proceeding in California in accordance with the
provisions of Sections 638 et seq. of the California Code of Civil Procedure
(“CCP”),
or
their successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the reference
proceeding. Except as otherwise provided in the Documents, venue for the
reference proceeding will be in the state or federal court in the county or
district where the real property involved in the action, if any, is located
or
in the state or federal court in the county or district where venue is otherwise
appropriate under applicable law (the “Court”).
-14-
(ii) The
matters that shall not be subject to a reference are the following: (A)
nonjudicial foreclosure of any security interests in real or personal property,
(B) exercise of self-help remedies (including, without limitation, set-off),
(C)
appointment of a receiver and (D) temporary, provisional or ancillary remedies
(including, without limitation, writs of attachment, writs of possession,
temporary restraining orders or preliminary injunctions). This reference
provision does not limit the right of any party to exercise or oppose any of
the
rights and remedies described in clauses (A) and (B) or to seek or oppose from
a
court of competent jurisdiction any of the items described in clauses (C) and
(D). The exercise of, or opposition to, any of those items does not waive the
right of any party to a reference pursuant to this reference provision as
provided herein.
(iii) The
referee shall be a retired judge or justice selected by mutual written agreement
of the parties. If the parties do not agree within ten (10) days of a written
request to do so by any party, then, upon request of any party, the referee
shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an
ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).
(iv) The
parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change
in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law
or
fact within one hundred twenty (120) days after the date of the conference
and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.
(v) The
referee will have power to expand or limit the amount and duration of discovery.
The referee may set or extend discovery deadlines or cutoffs for good cause,
including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party
shall
be entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery shall
be responded to within fifteen (15) days after service. All disputes relating
to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.
(vi) Except
as
expressly set forth herein, the referee shall determine the manner in which
the
reference proceeding is conducted including the time and place of hearings,
the
order of presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding. All proceedings and hearings
conducted before the referee, except for trial, shall be conducted without
a
court reporter, except that when any party so requests, a court reporter will
be
used at any hearing conducted before the referee, and the referee will be
provided a courtesy copy of the transcript. The party making such a request
shall have the obligation to arrange for and pay the court reporter. Subject
to
the referee’s power to award costs to the prevailing party, the parties will
equally share the cost of the referee and the court reporter at
trial.
-15-
(vii) The
referee shall be required to determine all issues in accordance with existing
case law and the statutory laws of the State of California. The rules of
evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject
of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or
from
any appealable decision or order entered by the referee. The parties reserve
the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this
provision.
(viii) If
the
enabling legislation which provides for appointment of a referee is repealed
(and no successor statute is enacted), any dispute between the parties that
would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or justice, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time. The limitations with respect
to
discovery set forth above shall apply to any such arbitration
proceeding.
(ix) THE
PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED
UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.
AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
ITS
OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT
OF
ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY,
DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED
TO,
THIS AGREEMENT OR
THE
OTHER DOCUMENTS EXCEPT AS PROVIDED IN CLAUSE (II) ABOVE.
18. Miscellaneous.
(a) This
Agreement shall be binding upon, and inure to the benefit of, the successors
and
assigns of the parties hereto. For the avoidance of doubt, Senior Creditor
may
at any time assign all of its rights and obligations hereunder to any
Refinancing Senior Lender.
(b) In
case
any provision hereof shall be determined to be unenforceable, the remaining
provisions hereof shall remain valid and enforceable.
(c) This
Agreement constitutes the final and complete agreement of the parties thereto
and shall not be amended or modified except in writing signed by Senior Creditor
and Subordinated Creditors.
-16-
(d) No
failure or delay on the part of any party hereto in the exercise of any power,
right, remedy or privilege under this Agreement shall impair such power, right,
remedy or privilege or shall operate as a waiver thereof; nor shall any single
or partial exercise of any such power, right or privilege preclude any other
or
further exercise of any other power, right or privilege. The waiver of any
such
right, power, remedy or privilege with respect to particular facts and
circumstances shall not be deemed to be a waiver with respect to other facts
and
circumstances.
(e) Each
notice hereunder shall be in writing and may be personally served or sent by
telefacsimile or United States mail or courier service and shall be deemed
to
have been given when delivered in person or by courier service and signed for
against receipt thereof, upon receipt of telefacsimile, or three Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. Unless otherwise specified in a notice mailed or delivered in
accordance with the foregoing provisions of this Section
18(d),
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses indicated on the signature pages hereof.
(f) This
Agreement and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in any number of counterparts and by
different parties hereto or thereto in separate counterparts, each of which
when
so executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages
may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
-17-
[Senior
Creditor Signature Page]
IN
WITNESS WHEREOF,
the
Senior Creditor has caused this Agreement to be duly executed and delivered
by
its officer thereunto duly authorized as of the date first above
written.
Solidus
Networks, Inc.,
as
Senior Creditor
| By: | /s/ Xxxxx Xxxxxx | |||
|
|
||||
| Title: | Executive Vice President | |||
|
|
Address
for Notice:
Solidus
Networks, Inc.
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
with
a
copy, not constituting notice, to:
Xxxxxx
Godward, LLP
c/o
Xxxxxxx X. Xxxxxxxx
000
Xxxxxxxxxx Xx., 0xx
Xxxxx
Xxx
Xxxxxxxxx, XX 00000
-18-
[Subordinated
Creditors Signature Page]
IN
WITNESS WHEREOF,
the
Subordinated Creditors has caused this Agreement to be duly executed and
delivered by itself or by its officer thereunto duly authorized, as applicable,
as of the date first above written.
For
Individuals:
Print Name Above
Sign Name Above
For
Entities:
Calico
Capital Group
Print Name Above
| By: | /s/ Xxxxxxx Xxxxxxx | |||
|
Name: Xxxxxxx Xxxxxxx Title:
Partner
|
||||
|
|
[Subordinated
Creditor should also initial Section 17(c)]
-19-
[Subordinated
Creditors Signature Page]
IN
WITNESS WHEREOF,
the
Subordinated Creditors has caused this Agreement to be duly executed and
delivered by itself or by its officer thereunto duly authorized, as applicable,
as of the date first above written.
For
Individuals:
Xxxxxx
Xxxxx
Print Name Above
/s/
Xxxxxx Xxxxx
Sign Name Above
For
Entities:
Print Name Above
| By: | ||||
|
Name: Title:
|
||||
|
|
[Subordinated
Creditor should also initial Section 17(c)]
-20-
[Subordinated
Creditors Signature Page]
IN
WITNESS WHEREOF,
the
Subordinated Creditors has caused this Agreement to be duly executed and
delivered by itself or by its officer thereunto duly authorized, as applicable,
as of the date first above written.
For
Individuals:
Print Name Above
Sign Name Above
For
Entities:
Patriot
Capital Limited
Print Name Above
| By: | /s/ Xxxxxxx Xxxxx | |||
|
Name: Xxxxxxx Xxxxx Title:
President
|
||||
|
|
[Subordinated
Creditor should also initial Section 17(c)]
-21-
[Subordinated
Creditors Signature Page]
IN
WITNESS WHEREOF,
the
Subordinated Creditors has caused this Agreement to be duly executed and
delivered by itself or by its officer thereunto duly authorized, as applicable,
as of the date first above written.
For
Individuals:
Print Name Above
Sign Name Above
For
Entities:
MLA
Capital, Inc.
Print Name Above
| By: | /s/ Xxxx Tunnery | |||
|
Name: Xxxx Tunnery Title:
President
|
||||
|
|
[Subordinated
Creditor should also initial Section 17(c)]
-22-
[Subordinated
Creditors Signature Page]
IN
WITNESS WHEREOF,
the
Subordinated Creditors has caused this Agreement to be duly executed and
delivered by itself or by its officer thereunto duly authorized, as applicable,
as of the date first above written.
For
Individuals:
Print Name Above
Sign Name Above
For
Entities:
Ridgewood
Ltd.
Print Name Above
| By: | /s/ N.J. Xxxxx | |||
|
Name: N.J. Xxxxx Title:
President
|
||||
|
|
[Subordinated
Creditor should also initial Section 17(c)]
-23-
COMPANY
ACKNOWLEDGMENT AND AGREEMENT
Company
does hereby accept and acknowledge receipt of a copy of the foregoing Agreement,
and agree that (a) it will not pay any of the Subordinated Debt except as the
foregoing Agreement provides; (b) it will be bound by all provisions of the
foregoing Agreement; (c) it will place a legend on the Subordinated Creditor
Documents to state that the Subordinated Debt is subordinate to the Senior
Debt
and is subject to the terms and conditions of the foregoing Agreement; and
(d)
it will have no rights, remedies or priorities either directly or as a third
party beneficiary by virtue of the foregoing Agreement except as expressly
set
forth herein.
Company
agrees not to take any action that would be contrary to the provisions of the
foregoing Agreement and agrees that no party shall have any liability to Company
for acting in accordance with the provisions of the foregoing Agreement and,
except as otherwise provided therein, the Senior Creditor Documents and the
Subordinated Creditors Documents.
IN
WITNESS WHEREOF,
the
undersigned has caused this Acknowledgment and Agreement to be duly executed
under seal as of the day and year first above written.
WinWin
Gaming,
Inc., a
Delaware corporation
| By: | /s/ Xxxxxxx Xxxxxx | |||
|
|
||||
| Name: | Xxxxxxx Xxxxxx | |||
|
|
||||
| Title: | President & Chief Executive Officer | |||
|
|
-24-
