INTERCREDITOR AGREEMENT
This
INTERCREDITOR AGREEMENT, dated as of December 4, 2008 (this “Agreement”), is
entered into by and among the noteholders whose names and addresses are set
forth on the signature pages hereto (the “Noteholders”).
WITNESSETH:
WHEREAS,
Novint Technologies, Inc., a Delaware corporation (the “Company”) has issued
8% Senior Secured Promissory Notes (the “8% Notes”) pursuant
to that certain Subscription Agreement dated on or around December 4,
2008.
WHEREAS,
in the event that the 8% Notes are not repaid within one year from the Initial
Closing Date, the Company shall have the option to refinance the Notes and
accrued interest by issuing to each of the Noteholders a 10% Convertible Senior
Secured Promissory Note (the “10%
Notes”).
WHEREAS,
the Noteholders agree that the 8% Notes and the 10% Notes (collectively, the
“Notes”), are
secured by the Collateral and the rights and obligations of the Noteholders with
respect to the Notes and the Collateral shall be governed by this
Agreement.
WHEREAS,
each Noteholder recognizes the security interests granted to such Noteholder
under the Notes ranks pari passu in right of payment and right of lien priority
with the security interests granted by the Company to the other Noteholders and
signatories to this Agreement.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Defined
Terms. Any and all capitalized terms used herein shall have
the meanings ascribed thereto in the Notes or Subscription Agreement, unless
specifically defined herein.
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(a)
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The
following terms, as used in this Agreement, shall have the following
meanings:
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“Indebtedness” means all
indebtedness and other obligations of the Company to the
Noteholders.
“Insolvency Event” means any
insolvency or bankruptcy proceedings, and any receivership, liquidation,
reorganization or other similar proceedings in connection therewith, relative to
the Company or to its creditors, as such, or to its property, and in the event
of any proceedings for voluntary liquidation, dissolution or other winding up of
the Company, whether or not involving insolvency or bankruptcy.
“Lien” means any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights).
“Paid in Full” means all
principal, interest and fees payable under the Note and all other Secured
Obligations shall have been paid in full in cash (other than contingent
obligations or indemnification obligations for which no claim has been
asserted).
“Person” means any person or
entity of any nature whatsoever, specifically including an individual, a firm, a
company, a corporation, a partnership, a limited liability company, a trust or
other entity.
(b) The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter
forms. The words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”. The word
“will” shall be construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise, (i) any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, restated, supplemented or otherwise modified (subject to
any restrictions on such amendments, restatements, supplements or modifications
set forth herein), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (iv)
all references herein to Sections, clauses and Exhibits shall be construed to
refer to Sections and clauses of, and Exhibits to, this Agreement and (v) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any right or interest in or to assets and properties of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible. The Exhibit
attached to this Agreement shall be deemed incorporated herein by
reference.
2. Noteholder
Rights
(a) Relative
Priorities. Notwithstanding the date, time, method, manner or
order of grant, attachment or perfection of any Liens securing the Indebtedness
granted on the Collateral and notwithstanding any provision of the UCC, or any
other applicable law or any defect or deficiencies in, or failure to perfect,
the Liens securing the Indebtedness or any other circumstance whatsoever, each
Noteholder hereby agrees that any Lien on the Collateral securing Indebtedness
now or hereafter held by or on behalf of a Noteholder regardless of how
acquired, whether by grant, possession, statute, operation of law, subrogation
or otherwise, shall be deemed pari passu in right, priority, operation, effect
and all other respects to any Lien on the Collateral securing any other
Indebtedness.
(b) Prohibition on Contesting
Liens. Each Noteholder agrees that it will not (and hereby
waives any right to) contest or support any other Person in contesting, in any
proceeding (including any Insolvency Event), the perfection, priority, validity
or enforceability of a Lien held by or on behalf of any other Noteholder in the
Collateral or the provisions of this Agreement; provided that nothing
in this Agreement shall be construed to prevent or impair the rights of the
Noteholders to enforce this Agreement.
(c) Similar Liens and
Agreements. The
Noteholders agree that it is their intention that the Collateral be
substantially identical and that the documents and agreements creating or
evidencing the Collateral shall be in all material respects the same forms of
documents.
(d) Exercise of
Remedies. The Noteholders agree that upon an Event of Default
the Noteholders may exercise any rights or remedies available with respect to
the Collateral or institute any action or proceeding with respect to such rights
or remedies upon consent by a majority of the Noteholders based on the
outstanding amount of the Indebtedness.
(e) Application of
Proceeds. So long as the Indebtedness has not been Paid in
Full, whether or not any Insolvency Event has been commenced by or against the
Company, Collateral or proceeds thereof received in connection with the sale or
other disposition of, or collection on, such Collateral upon the exercise of
remedies by a Noteholder, shall be applied ratably to the Indebtedness then
outstanding. Any proceeds of a distribution of Collateral made in
connection with an Insolvency Event shall be applied ratably to the Indebtedness
then outstanding.
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(f)
Insurance. The
Noteholders shall have the sole and exclusive right to adjust settlement for any
insurance policy covering the Collateral in the event of any loss thereunder and
to approve any award granted in any condemnation or similar proceeding (or any
deed in lieu of condemnation) affecting the Collateral. Unless and
until the Indebtedness is Paid in Full, all proceeds of any such policy and any
such award (or any payments with respect to a deed in lieu of condemnation) if
in respect to the Collateral shall be paid ratably to the Noteholders based on
the outstanding amount of the Indebtedness owed to each Noteholder.
(g) Credit
Bid(s). Any Noteholder may make a credit bid at any
foreclosure sale or other sale of any of the Collateral; provided, that the
other Noteholders receive a cash payment as a result of such credit bid equal to
their ratable share of the consideration that would have been received under
this Agreement had such credit bid been paid in cash.
(h) No
Marshaling. No Noteholder shall have any obligation to marshal
any assets in favor of, or against or in payment of, any other Noteholder or any
Indebtedness.
3. Reinstatement. This
Agreement shall continue to be effective or shall be reinstated, as the case may
be, if, for any reason, any payment of Indebtedness by or on behalf of the
Company shall be rescinded or must otherwise be restored by any Noteholder,
whether as a result of an Insolvency Event or otherwise.
4. Obligations of the Company
Not Affected. The provisions of this Agreement are intended
solely for the purpose of defining the relative rights of Noteholders against
the other Noteholders. Nothing contained in this Agreement shall
impair the obligation of the Company to pay its obligations with respect to the
Indebtedness as and when it shall become due and payable; provided that the
exercise of remedies in connection with a failure to make such payments shall be
limited as provided herein.
5. No Waivers;
Remedies. No failure on the part of any party to this
Agreement to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The rights and remedies of the parties to this
Agreement or any other Person hereunder provided herein are cumulative and are
in addition to, and not exclusive of, any rights or remedies provided by
law. Rights hereunder are not conditional or contingent on any
attempt by any party to exercise any of its rights under any other document,
agreement or instrument.
6. Amendments. No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any party therefrom, shall in any event be effective unless the
same shall be in writing and signed by all parties, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that any addition of a Noteholder pursuant to
Section 15
hereof shall not constitute a modification hereto for purposes of this Section
6.
7. Successors and
Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
8. Exculpation. In
connection with any exercise of foreclosure upon Collateral or enforcement of
Noteholders’ remedies, no Noteholder nor any of its partners nor any of their
respective directors, officers, employees, attorneys, accountants, or agents
shall be liable as such for any action taken or omitted by it or them, except
for its or their own gross negligence or willful misconduct with respect to its
duties under this Agreement. No Noteholder shall be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it,
if the selection of such agents or attorneys-in-fact was done without gross
negligence or willful misconduct.
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9. Notices. Unless
otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except informal documents which may be sent by
first class mail, postage prepaid) shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by facsimile, or
by reputable overnight delivery service, to the secured parties, at their
respective addresses or fax numbers set forth on the signature pages
below.
10. GOVERNING
LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
11. Headings. Headings
used in this Agreement are for convenience of reference only and shall neither constitute a
part of this Agreement for any other purpose nor affect the construction of this
Agreement.
12. No Inconsistent
Requirements. In the event of a direct conflict between the
terms and provisions contained in this Agreement and the terms and provisions
contained in the Notes, it is the intention of the parties hereto that such
terms and provisions in such documents shall be read together and construed, to
the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this Agreement
shall control and govern.
13. Reliance. Each
of the parties hereto hereby agrees that this Agreement may be relied upon by
the other parties hereto and this Agreement shall be enforceable by each party
against the other parties hereto.
14. Counterparts. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by facsimile also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.
15. Joinder. The
Company shall cause each party which, from time to time, after the date
hereof purchases any Note or other Indebtedness from the Company
which is secured by the Collateral, to execute and deliver a counterpart
signature page hereto substantially in the form of Exhibit I hereto and
upon the execution and delivery of such counterpart signature page shall become
a Noteholder hereunder and shall become bound by the terms and provisions hereof with the same
force and effect as if originally named a party herein. Each party
hereto shall cause each party which, from time to time, acquires an interest in
any Indebtedness from such party to execute and deliver a counterpart signature
page hereto substantially in the form of Exhibit I hereto and
upon the execution and delivery of such counterpart signature page shall become
a Noteholder hereunder and shall become bound by the terms and provisions hereof with the same
force and effect as if originally named a party herein. The
obligations of each party hereunder shall remain in full force and effect
notwithstanding the addition of any new party hereunder. The
execution and delivery of such counterpart signature page shall require the
consent of the Company.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the undersigned Noteholder has, agreeing to be bound, executed
this Intercreditor Agreement as of the date set forth below.
Date: _____________________
ENTITIES:
_____________________________________
Print
Name of Company, Limited
Liability
Company, Corporation or Trust
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By:
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_______________________
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| Name: | _______________________ |
| Title: | _______________________ |
INDIVIDUALS:
_____________________________________
Print
Name: _____________________
ACKNOWLEDGED
AND AGREED TO
THIS ___
DAY OF _____________, 2008
Novint
Technologies, Inc., a Delaware corporation
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By:
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______________________________
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| Name: | Xxxxxx X. Xxxxxxxx |
| Title: | Chief Executive Officer |
Exhibit I
to
[Form of
Counterpart Signature Page to Intercreditor Agreement]
By
signing below, [each of] the undersigned becomes a Noteholder under the
Intercreditor Agreement dated as of December 4, 2008 (as amended, restated,
supplemented or otherwise modified from time to time, the “Agreement”) to which
this signature page is attached and is made a part, and agrees that, upon the
execution and delivery of this signature page to the Company (as defined in the
Agreement), it is bound by the terms, conditions and obligations thereof
applicable to it as a Noteholder under the Agreement and further represents and
warrants to the Company and other Noteholders that this Form of Counterpart
Signature Page to Agreement has been duly executed and delivered by
it.
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Address:
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NOTEHOLDER
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Date:
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By:
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ACKNOWLEDGED
AND AGREED TO
THIS ___
DAY OF _____________, 2008
Novint
Technologies, Inc., a Delaware corporation
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By:
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______________________________
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| Name: | Xxxxxx X. Xxxxxxxx |
| Title: | Chief Executive Officer |
