SUBORDINATION AGREEMENT
AMONG
IGX GLOBAL, INC.,
IGAMBIT INC.,
XXXXXX XXXXX
AND
KELTIC FINANCIAL PARTNERS II, LP
Dated as of December ____, 2012
THIS SUBORDINATION AGREEMENT is made as of December ____, 2012 between IGX
GLOBAL, INC., a corporation organized under the laws of the State of New Jersey (“Seller”),
IGAMBIT INC., a corporation organized under the laws of the State of Delaware (“iGambit”),
XXXXXX XXXXX, an individual residing at 00 Xxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000 (“Seller
Shareholder”) and KELTIC FINANCIAL PARTNERS II, LP, a Delaware limited partnership
(“Senior Creditor”).
RECITALS:
On the date of this Agreement IGXGLOBAL, CORP., a corporation organized under the laws of the
State of Delaware (“Borrower”), is acquiring substantially all of the assets of, and assuming certain
liabilities of, Seller, and is purchasing all of the issued and outstanding stock of IGX Global UK Limited
from Seller Shareholder, pursuant to the terms of an Asset and Stock Purchase Agreement dated on or
about the date hereof between Borrower, Seller, Seller Shareholder and the other parties named therein
(the “Asset Purchase Agreement”), and pursuant to the other agreements, documents and instruments
executed and/or delivered in connection with the transactions contemplated by such Asset Purchase
Agreement (collectively with the Asset Purchase Agreement, the “Asset Purchase Documents”).
Pursuant to the terms of the Asset Purchase Documents Borrower has delivered to Seller Shareholder a
Promissory Note dated December ___, 2012 in the original principal amount of $1,000,000 (the
“Subordinated Note”). Additionally, pursuant to the Asset Purchase Documents Seller may be entitled to
certain cash distributions from Borrower in an aggregate amount equal to Three Million Seven Hundred
Fifty Thousand and 00/100 Dollars ($3,750,000.00) (the “Earnout Distributions”) based on the
achievement of Borrower’s “IT Solutions Business” (as defined in the Asset Purchase Agreement) of
certain revenue and financial targets as described in the Asset Purchase Agreement.
iGambit owns all outstanding and issued shares of stock of Borrower (the “Borrower Stock”). Pursuant
to the terms of Borrower’s charter and organizational documents Borrower may be obligated to pay
certain dividends and distributions to iGambit. Additionally Borrower may be required to pay to iGambit
certain management fees and other amounts as compensation for services performed by iGambit, and for
reimbursable costs and expenses incurred by iGambit in the ordinary course of performing services for
Borrower (the “Management Fee Obligations”).
On or about the date of this Agreement Senior Creditor will be extending certain credit facilities to
Borrower pursuant to the terms of a Loan and Security Agreement between Senior Creditor and
Borrower, one or more promissory notes, collateral assignment, pledge and/or security agreements, and
such other agreements, documents and instruments executed and/or delivered to Senior Creditor (all such
agreements, documents and instruments, together with any amendments, restatements, extensions or other
modifications thereof, shall be collectively referred to herein as the “Senior Creditor Loan Documents”).
Each of Senior Creditor, Seller, Seller Shareholder and iGambit desires to establish the relative priority of
payment of the indebtedness, liabilities and obligations of Borrower to each such party, and requires that
Borrower acknowledge the terms hereof.
AGREEMENT:
1. Definitions. All capitalized terms not defined in the Recitals, above, in this Section 1, or in the body
of this Agreement shall have the meaning ascribed to such terms in the Uniform Commercial Code as in
effect in the State of New York. Each term defined in the singular shall be interpreted in a collective
manner when used in the plural, and each term defined in the plural shall be interpreted in an individual
manner when used in the singular. All references to dollar amounts shall mean amounts in lawful money
of the United States of America. When used in this Agreement, the following words shall have the
following meanings:
“Borrower Charter Documents” means Borrower’s Articles of Incorporation and Bylaws, and all
agreements, documents and instruments granting any individual, organization (whether or not
incorporated), trust or any combination of the foregoing, the right to vote or control any share or share of
Borrower’s issued and outstanding capital stock, the right to participate in the management and affairs of
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Borrower, or the right to participate in the issuance, assignment, transfer, redemption or repurchase of any
of Borrower’s equity interests, whether now issued or issued after the date hereof, and whether such euity
interests are capital stock, options, grants or other rights exchangeable or convertible into capital stock of
Borrower, and all amendments, restatements, extensions and other modifications thereof.
“Borrower Stock Obligations” means all present and future indebtedness, obligations (whether fixed or
contingent), liabilities (including but not limited to fees, costs and expenses) and claims payable by
Borrower to iGambit in connection with the Borrower Stock, pursuant to the Borrower Charter
Documents, by operation of law or equitable principles, including but not limited to all dividends payable
by Borrower to iGambit, whether regularly declared, declared by special vote, election or meeting, or
whether occasioned by the occurrence of any event or series of events.
“Business Day” means any day that commercial banks settle transactions in the State of New York.
“Collateral” means all of Borrower’s currently owned and hereafter acquired personal property, wherever
located, and all rights in personal property, including all (as such terms are defined in the New York
Uniform Commercial Code): “Money” (as specifically defined in Section 1-201(24) of the New York
Uniform Commercial Code); “Accessions”; “Accounts”; “Certificates of title”; “Chattel paper”;
“Commercial tort claims”; “Deposit accounts”; “Documents”; “Equipment”; “General intangibles”;
“Goods”; “Health-care-insurance receivables”; “Instruments”; “Inventory”; “Investment property”;
“Letter-of-credit rights”; “Proceeds” (as specifically defined in Section 9-102(64) of the New York
Uniform Commercial Code); “Records”; “Software”; and “Supporting obligations”.
“Collateral Distribution” means any payment, distribution, advance, assignment, exchange, transfer or
other direct or indirect hypothecation to or for the benefit of a Creditor (i) by Borrower of Collateral, or of
“Proceeds” (as specifically defined in Section 9-102(64) of the UCC) of Collateral, whether of “Money”
(as specifically defined in Section 1-201(24) of the UCC), cash, securities or in the form of any other
property, or (ii) by any Senior Guarantor of any asset or property that secures repayment of the
Obligations.
“Creditor” means each of Senior Creditor and the Junior Creditors.
“Distribution” means (i) any payment, whether of “Money” (as specifically defined in Section 1-201(24)
of the UCC), cash, securities, draft, check, note, negotiable instrument or other fungible property, by
Borrower or any Senior Guarantor to or for the benefit of a Creditor as payment, prepayment, repayment
or other reduction of such Creditor’s Obligations, whether regularly scheduled, or a voluntary or
involuntary payment, prepayment or repayment, (ii) any credit obtained by a Creditor, by setoff or
otherwise, in connection with such Creditor’s Obligations, and (iii) any Collateral Distribution. For
purposes hereof, a Distribution shall specifically include, but not be limited to any payment by Borrower
to iGambit in order to fund Borrower Stock Obligations or Management Fee Obligations.
“iGambit Obligations” means all present and future indebtedness, obligations (including but not limited
to obligations for borrowed money of any kind or nature, whether funded or unfunded, contingent
obligations under guaranties, letters of credit or obligations for the acquisition or use of fixed assets),
liabilities (including but not limited to fees, costs and expenses, even if such amounts are added to the
principal amount of such obligations) and claims owing from Borrower to iGambit, and all rights and
demands of iGambit upon or against Borrower, any Senior Guarantor, or any other person in connection
with the indebtedness, liabilities and obligations of Borrower to iGambit, including the indebtedness,
liabilities and obligations of Borrower to iGambit in connection with the Management Fee Obligations,
the Borrower Stock Obligations or under the Borrower Charter Documents.
“Junior Creditor” means each of Seller, Seller Shareholder and iGambit.
“Junior Creditor Documents” means, individually and collectively, the Asset Purchase Documents, the
Borrower Charter Documents and the Management Agreement, as the same may be amended, restated,
extended or otherwise modified.
“Junior Obligations” means, individually and collectively, the Seller Obligations, the Seller Shareholder
Obligations and the iGambit Obligations.
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“Loan Documents” means, individually and collectively, the Senior Creditor Loan Documents and the
Junior Creditor Documents.
“Obligations” means, individually and collectively, the Senior Obligations and the Junior Obligations.
“Seller Obligations” means all present and future indebtedness, obligations (including but not limited to
obligations for borrowed money of any kind or nature, whether funded or unfunded, contingent
obligations under guaranties, letters of credit or obligations for the acquisition or use of fixed assets),
liabilities (including but not limited to fees, costs and expenses, even if such amounts are added to the
principal amount of such obligations) and claims owing from Borrower to Seller, and all rights and
demands of Seller upon or against Borrower, any Senior Guarantor, or any other person in connection
with the indebtedness, liabilities and obligations of Borrower to Seller, including the indebtedness,
liabilities and obligations of Borrower to Seller in connection with the Earnout Distributions or under the
Asset Purchase Documents.
“Seller Shareholder Obligations” means all present and future indebtedness, obligations (including but
not limited to obligations for borrowed money of any kind or nature, whether funded or unfunded,
contingent obligations under guaranties, letters of credit or obligations for the acquisition or use of fixed
assets), liabilities (including but not limited to fees, costs and expenses, even if such amounts are added to
the principal amount of such obligations) and claims owing from Borrower to Seller Shareholder, and all
rights and demands of Seller Shareholder upon or against Borrower, any Senior Guarantor, or any other
person in connection with the indebtedness, liabilities and obligations of Borrower to Seller Shareholder,
including the indebtedness, liabilities and obligations of Borrower to Seller Shareholder in connection
with the Subordinated Note or under the Asset Purchase Documents.
“Senior Guarantor” means any individual, partnership, limited liability company, limited liability
partnership, corporation, joint venture, joint stock company, land trust, business trust or unincorporated
organization, or a government or agency or political subdivision thereof, that is a co-borrower with
Borrower of the Senior Obligations, or that has guaranteed the repayment of the Senior Obligations or the
performance by the Borrower of the terms and conditions of the Senior Creditor Loan Documents in
whole or in part or that has provided any letter of credit, pledge, financial instrument or other
accommodation to the Senior Creditor as security for or in support of the Senior Obligations.
“Senior Obligations” means all present and future indebtedness, obligations (including but not limited to
obligations for borrowed money of any kind or nature, whether funded or unfunded, contingent
obligations under guaranties, letters of credit or obligations for the acquisition or use of fixed assets),
liabilities (including but not limited to fees, costs and expenses, even if such amounts are added to the
principal amount of such obligations) and claims owing from the Borrower to Senior Creditor, and all
rights and demands of Senior Creditor upon or against the Borrower, any guarantor, or any other person
in connection with the indebtedness, liabilities and obligations of Borrower to Senior Creditor, including
the indebtedness, liabilities and obligations of Borrower to Senior Creditor under the Senior Creditor
Loan Documents.
“UCC” means, individually and collectively, the New York Uniform Commercial Code, the Uniform
Commercial Code of the State of New Jersey, and the Uniform Commercial Code of each State in which
Collateral is located.
2. Consent. Each Junior Creditor hereby consents to and approves of the execution, delivery and
performance by Borrower of the Senior Creditor Loan Documents, the consummation of the transactions
contemplated thereby, the incurrence by Borrower of the Senior Obligations on or about the date hereof
and from time to time hereafter, and the grant by Borrower to Senior Creditor of security interests in, to
and on the Collateral on the date hereof and from time to time hereafter, notwithstanding anything to the
contrary contained in any of the Junior Creditor Documents.
3. Subordination of Junior Obligations.
(a) Subordination of Payment. Each Junior Creditor hereby agrees that during the term of this
Agreement, and notwithstanding anything to the contrary in the Junior Creditor Documents, the Junior
Obligations are subordinated in right of payment to the prior final and indefeasible payment in cash to
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Senior Creditor and performance of the Senior Obligations in full, in the manner and to the extent as
provided for herein, and that such subordination is for the benefit of Senior Creditor. Each Junior
Creditor hereby further agrees that except as otherwise specifically permitted in this Section 3, prior to
the final and indefeasible payment in cash to Senior Creditor and performance of the Senior Obligations
in full such Junior Creditor will not request, demand, take, accept, or receive any Distribution from or on
behalf of any Borrower or any Senior Guarantor.
(b) Permitted Payments to Junior Creditors. Subject to the terms and conditions contained herein,
Senior Creditor hereby consents to:
(1) cash distributions to iGambit to fund (A) Borrower Stock Obligations, but not any
extraordinary dividend, distribution, payment or other amount with respect to the Borrower Stock
Obligations and whether mandatory, voluntary or otherwise under the terms of the Borrower
Charter Documents, as the Borrower Charter Documents are in effect on the date of this
Agreement, and as the Borrower Charter Documents may be amended, restated, extended or
otherwise modified in accordance with the terms hereof (each, a “Permitted Stock Dividend”) and
(B) cash Distributions by Borrower to iGambit of management fees and other amounts as
compensation for services performed by iGambit, and for reimbursable costs and expenses
incurred by iGambit in the ordinary course of performing services for Borrower (each, a
“Permitted Management Fee Payment”, and together with Permitted Stock Dividends,
“Permitted iGambit Distributions”); and
(2) cash Distributions by Borrower to Seller Shareholder in amounts equal to the regularly
scheduled payments of principal and of interest due and payable under the terms of the
Subordinated Note, but not any Distribution, payment or other amount in prepayment of any
obligations or liabilities of, under or with respect to the Subordinated Note, whether mandatory,
voluntary or otherwise, or due to the acceleration of maturity thereof for any reason under the
terms of the Subordinated Note or Asset Purchase Documents, as the Subordinated Note and the
Asset Purchase Documents are in effect on the date of this Agreement, and disregarding any
amendment, modification, restatement or replacement of the Seller Note or the Asset Purchase
Documents after the date of this Agreement (each, a “Subordinated Note Permitted Payment”);
and
(3) cash Distributions by Borrower to Seller of payments of the Earnout Distributions due and
payable under the terms of the Asset Purchase Documents but not any Distribution, payment or
other amount in prepayment of any obligations or liabilities of, under or with respect to the
Earnout Distributions, whether mandatory, voluntary or otherwise, or due to the acceleration of
maturity thereof for any reason under the terms of the Asset Purchase Documents, as the Asset
Purchase Documents are in effect on the date of this Agreement, and disregarding any amendment,
modification, restatement or replacement of the Asset Purchase Documents after the date of this
Agreement (each, a “Permitted Earnout Distribution”).
(c) Termination of Permitted Payments. Notwithstanding anything in paragraph (b) immediately
above to the contrary, or anything in the Asset Purchase Documents, the Subordinated Note, or the
Borrower Charter Documents to the contrary:
(1) As a condition to making any Permitted iGambit Distribution Borrower shall have provided
Senior Creditor with at least three (3) Business Days’ prior written notice of the amount and date
of such proposed Permitted iGambit Distribution, and (except as specifically provided in
paragraph 3(d), below) Borrower shall not make, and iGambit shall not directly or indirectly
request, demand, take, accept, or receive from or on behalf of Borrower any Permitted iGambit
Distribution:
(A) if any payment of principal or interest then due with respect to the Senior Obligations
shall not have been paid to Senior Creditor in full; or
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(B) if the aggregate amount of Permitted iGambit Distributions, including the proposed
Permitted iGambit Distribution, would exceed Five Hundred Thousand and 00/100 Dollars
($500,000.00) in any calendar year; or
(C) if after giving effect to such Permitted iGambit Distribution the remainder of the
“Borrowing Capacity” (as such term is defined in the Senior Creditor Loan Documents) less
the aggregate amount of all Senior Obligations relating to the “Revolving Credit” (as such term
is defined in the Senior Creditor Loan Documents) then outstanding would not exceed Five
Hundred Thousand and 00/100 Dollars ($500,000.00) (as determined on a pro forma basis); or
(D) if after giving effect to such Permitted iGambit Distribution a “Default” or “Event of
Default” (as such terms are defined in the Senior Creditor Loan Documents) would occur under
the Senior Creditor Loan Documents as a result thereof (as determined on a pro forma basis);
or
(E) during any period in which a “Default” or “Event of Default” (as such terms are
defined in the Senior Creditor Loan Documents) has occurred and is continuing.
(2) Except as specifically provided in paragraph 3(d), below, Borrower shall not make, and
Seller Shareholder shall not directly or indirectly request, demand, take, accept, or receive from or
on behalf of Borrower any Subordinated Note Permitted Payment:
(A) if any payment of principal or interest then due with respect to the Senior Obligations
shall not have been paid to Senior Creditor in full; or
(B) if after giving effect to such Subordinated Note Permitted Payment the remainder of
the “Borrowing Capacity” (as such term is defined in the Senior Creditor Loan Documents)
less the aggregate amount of all Senior Obligations relating to the “Revolving Credit” (as such
term is defined in the Senior Creditor Loan Documents) then outstanding would not exceed
Five Hundred Thousand and 00/100 Dollars ($500,000.00) (as determined on a pro forma
basis); or
(C) if after giving effect to such Subordinated Note Permitted Payment a “Default” or
“Event of Default” (as such terms are defined in the Senior Creditor Loan Documents) would
occur (as determined on a pro forma basis); or
(D) during any period in which a “Default” or “Event of Default” (as such terms are
defined in the Senior Creditor Loan Documents) has occurred and is continuing.
(3) As conditions to making any Permitted Earnout Distribution Borrower shall have provided
Senior Creditor with at least three (3) Business Days’ prior written notice of the amount and date
of such proposed Permitted Earnout Distribution, the “IT Solutions Business” of Borrower (as
such term is defined in the Asset Purchase Documents) shall have achieved the “EBITDA
Threshold” and “Revenue Threshold” described in the Asset Purchase Agreement applicable to
such proposed payment, and (except as specifically provided in paragraph 3(d), below) Borrower
shall not make, and Seller shall not directly or indirectly request, demand, take, accept, or receive
from or on behalf of Borrower any Permitted Earnout Distribution:
(A) if any payment of principal or interest then due with respect to the Senior Obligations
shall not have been paid to Senior Creditor in full; or
(B) if after giving effect to such Permitted Earnout Distribution the remainder of the
“Borrowing Capacity” (as such term is defined in the Senior Creditor Loan Documents) less
the aggregate amount of all Senior Obligations relating to the “Revolving Credit” (as such term
is defined in the Senior Creditor Loan Documents) then outstanding would not exceed Five
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Hundred Thousand and 00/100 Dollars ($500,000.00) (as determined on a pro forma basis); or
(C) if after giving effect to such Permitted Earnout Distribution a “Default” or “Event of
Default” (as such terms are defined in the Senior Creditor Loan Documents) would occur (as
determined on a pro forma basis); or
(D) during any period in which a “Default” or “Event of Default” (as such terms are
defined in the Senior Creditor Loan Documents) has occurred and is continuing.
(d) Enforcement of Junior Obligations by Senior Creditor following Default. Each Junior
Creditor will, upon the written request of Senior Creditor following of an Event of Default under the
Senior Creditor Loan Documents, prove, enforce and endeavor to obtain payment of the aggregate
outstanding amount of all unpaid payments due and payable on such Junior Creditor’s Obligations, or
thereafter becoming due and payable from Borrower to such Junior Creditor, and will turn over to Senior
Creditor in precisely the form received, any payment of any kind or character on account of the Junior
Obligations for application to the payment of any Senior Obligations then existing. In the event that a
Junior Creditor shall fail to take any such action requested by Senior Creditor, Senior Creditor may, as
attorney-in-fact for such Junior Creditor, take such action on behalf of Junior Creditor but for the use and
benefit of Senior Creditor. Each Junior Creditor hereby authorizes and empowers (without imposing any
obligation on) Senior Creditor, under the circumstances referred to in this paragraph 3(d) to demand, xxx
for, collect and receive every such payment and distribution and give acquittance therefor. Each Junior
Creditor or any other holder of the Junior Obligations shall execute and deliver to Senior Creditor or its
representative all such further instruments confirming the authorization referred to in this paragraph
3(d), and any powers of attorney specifically confirming the rights of Senior Creditor arising hereunder,
and all such proofs of claim, assignments of claim and other instruments and shall take all such other
actions as may be requested by Senior Creditor or its representative in order to enable Senior Creditor or
its representative to enforce any and all claims upon or in respect of such Junior Obligations and to collect
and give any and all Distributions or payments which may be payable or deliverable at any time upon or
with respect to the Junior Obligations.
4. Distributions; Payments in Trust. Any Distribution received by a Junior Creditor in contravention of
the terms of this Agreement shall not be commingled with any asset of such Junior Creditor, shall be held
by such Junior Creditor in trust for Senior Creditor, shall be delivered by such Junior Creditor to Senior
Creditor, and after delivery to Senior Creditor may be applied by Senior Creditor to the Senior
Obligations at such time and in such manner in Senior Creditor’s sole discretion. Should a Junior
Creditor receive any Distribution at any time contrary to the terms of this Agreement, such Junior
Creditor will promptly deliver such Distribution to Senior Creditor in precisely the form received (except
for the endorsement or assignment of the Junior Creditor where necessary) whether it is due or not due to
Senior Creditor under the terms of the Senior Creditor Loan Documents, and until so delivered the same
shall be held in trust by such Junior Creditor as property of Senior Creditor. A Distribution made under
this Agreement to a Junior Creditor and that is delivered to Senior Creditor by a Junior Creditor pursuant
to the foregoing, is not, as between such Junior Creditor and Borrower, a payment by Borrower of or on
the Junior Obligations of such Junior Creditor and the amount remitted by such Junior Creditor to Senior
Creditor shall be added back to the amount of such Junior Creditor’s Obligations if such Distribution was
credited by such Junior Creditor to the payment of such Junior Creditor’s Obligations prior to delivery to
Senior Creditor.
5. Enforcement of Security Interests.
(a) Senior Creditor’s Rights and Remedies. At all times prior to the final and indefeasible payment
in cash to Senior Creditor and performance of the Senior Obligations in full, Senior Creditor shall have
the exclusive right to enforce rights and exercise remedies with respect to the Collateral. In exercising
rights and remedies with respect to the Collateral, Senior Creditor may enforce the provisions of the
Senior Creditor Loan Documents and exercise remedies thereunder, all in such order and in such manner
as provided in the Senior Creditor Loan Documents, provided that Senior Creditor is not otherwise
prohibited from taking such action by the applicable terms of the UCC or other applicable law. Such
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exercise and enforcement shall include, without limitation, the rights to sell, lease, license or otherwise
dispose of Collateral, to incur expenses in connection with such sale, lease, license or disposition and to
exercise all the rights and remedies of a mortgagor under applicable law, and of a secured lender under
the UCC and the Uniform Commercial Code of any applicable jurisdiction. Without in any manner
limiting the foregoing, Junior Creditor agrees that Senior Creditor may exercise its remedies against or
with respect to the Collateral in any order permitted under the terms of the Senior Creditor Loan
Documents.
(b) Right to Release; Cooperation. In the event that a Junior Creditor shall, despite the provisions
of paragraph 6(c), below, obtain any security interest, mortgage, lien, charge or encumbrance in, on or to
any Collateral pursuant to the Junior Creditor Documents, by operation of law, or by any legal,
administrative, judicial or quasi-judicial action or proceeding (collectively, “Junior Security Interests”),
then Senior Creditor’s rights with respect to the Collateral include, following the occurrence and during
the continuation of any “Event of Default” (as such term is defined in the Senior Loan Documents) the
right to release any or all of the Collateral from such Junior Security Interests in connection with the sale,
lease, license or other disposition of such Collateral, notwithstanding that the net proceeds of any such
disposition may not be sufficient to repay the Senior Obligations and/or Junior Obligations in full. If
Senior Creditor shall determine in connection with any sale, lease, license or other disposition of
Collateral following the occurrence and during the continuation of any “Event of Default” (as such term is
defined in the Senior Loan Documents) that the termination of Junior Security Interests on such Collateral
is necessary or advisable, Junior Creditor shall execute such documents and instruments and shall take
such further actions as Senior Creditor shall reasonably request to effectuate the release and termination
of all Junior Security Interests on such Collateral. Each Junior Creditor hereby irrevocably constitutes
and appoints Senior Creditor and any officer of Senior Creditor, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Junior
Creditor and in the name of such Junior Creditor or in Senior Creditor’s own name, from time to time in
Senior Creditor’s discretion, for the purpose of carrying out the terms of this paragraph, to take any and
all appropriate action and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this paragraph, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer or release. Each Junior Creditor
hereby agrees to cooperate in all reasonable respects with the Senior Creditor to permit the orderly
liquidation of any Collateral by Senior Creditor pursuant to the terms hereof.
(c) Assignment of Junior Security Interests. In the event that a Junior Creditor shall, despite the
provisions of paragraph 6(c), below, obtain any Junior Security Interest in, to or on any Collateral, then
without any further action such Junior Creditor such Junior Security Interest shall be deemed assigned to
Senior Creditor as collateral security for the final and indefeasible payment in cash to Senior Creditor
and performance of the Senior Obligations in full as provided in the Senior Creditor Loan Documents.
Additionally, in such case such Junior Creditor agrees that prior to the final and indefeasible payment in
cash to Senior Creditor and performance of the Senior Obligations in full, such Junior Creditor shall not
take any action, whether as a creditor, secured party or otherwise, to (1) enforce or foreclose upon such
Junior Security Interests, or levy upon, execute upon, attach, take possession of (directly or indirectly) or
otherwise obtain control over any Collateral, any property, real or personal, of any Senior Guarantor
securing the Senior Obligations, or any interest in any of the foregoing (including, but not limited to,
taking possession of, selling, leasing, licensing, assigning, disposing of or otherwise hypothecating any
Collateral), whether pursuant to the Junior Creditor Documents, applicable law (including, but not
limited to, the UCC), or otherwise, or (2) enforce any rights, powers or remedies with respect to or
against any Collateral, any property, real or personal, of any Senior Guarantor securing the Senior
Obligations, or any interest in any of the foregoing, whether under the Junior Creditor Documents,
applicable law (including, but not limited to, the UCC) or otherwise (including, but not limited to,
notifying Account Debtors with respect to any accounts, or exercising any rights of setoff affecting the
Collateral).
(d) Waiver of Claims. To the maximum extent permitted by law, each Junior Creditor waives any
claim it might have against Senior Creditor with respect to, or arising out of, any action or failure to act or
any error of judgment, negligence, or mistake or oversight whatsoever on the part of Senior Creditor, or
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its directors, officers, employees or agents with respect to any exercise of rights or remedies under the
Senior Creditor Loan Documents or under applicable law, the process or procedure elected by Senior
Creditor to sell, lease, license or otherwise dispose of any or all of the Collateral, or any transaction
relating to the Collateral, except with respect to any action, failure to act, error, negligence, mistake or
oversight by Senior Creditor constituting gross negligence or willful misconduct. Neither Senior
Creditor, nor any of its directors, officers, employees or agents shall be liable to any Junior Creditor or
any other person for failure to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of
Borrower or a Junior Creditor or any other person or to take any other action whatsoever with regard to
the Collateral or any part thereof.
6. Restrictions on Junior Creditors. Prior to the final and indefeasible payment in cash to Senior
Creditor and performance of the Senior Obligations in full, and notwithstanding anything contained in
any of the Junior Creditor Documents to the contrary, no Junior Creditor shall, without the prior written
consent of Senior Creditor, which consent may be granted or withheld in Senior Creditor’s sole
discretion, do any of the following:
(a) amend, modify, restate or supplement or agree to any amendment, modification, restatement or
supplement of, or to, the Junior Obligations or any of the Junior Creditor Documents in any manner;
provided, however, nothing contained herein shall prohibit iGambit as the shareholder of Borrower from
voting to or taking other actions to amend, restate or otherwise modify the Borrower Charter Documents
if such amendment, restatement or modification does not (i) increase the amount of the Borrower Stock
Obligations, or (ii) accelerate the payment of any Borrower Stock Obligations;
(b) accelerate the maturity of, demand repayment of or collect all or any portion of the Junior
Obligations, notwithstanding (1) the occurrence of any default or event of default under and as defined in
any of the Junior Creditor Documents or otherwise, or (2) any event, occurrence or condition, or series of
events, occurrences or conditions, that would permit a Junior Creditor to accelerate maturity of, or
demand repayment of, all or any portion of the Junior Obligations, under the Junior Creditor Documents,
applicable law or otherwise; or
(c) obtain any security interest, lien, charge, mortgage or other encumbrance in, on or to any of the
Collateral.
7. Protective Actions by Subordinated Creditors. Notwithstanding anything to the contrary contained
in Section 6, above, but subject to the other provisions of this Agreement, each Subordinated Creditor
may:
(a) Specifically subject to the provisions of Sections 11 and 12, below, file a proof of claim, or
statement of interest, vote on a plan of reorganization, and make other filings, arguments and motions
with respect to the Subordinated Obligations in any insolvency proceeding, by or against the Borrower;
(b) Take action as may be necessary to preserve such Subordinated Creditor’s rights to enforce the
Subordinated Obligations against Borrower, including actions necessary to preserve the right to
accelerate the Subordinated Obligations, actions necessary to preserve the right to declare a default of the
Subordinated Obligations, actions necessary to preserve the right to demand payment from the Borrower
of the Subordinated Obligations, and actions necessary to a prevent the tolling of an applicable statute of
limitations on such Subordinated Creditor’s right to xxx for payment or performance of such
Subordinated Creditor’s Subordinated Obligations;
(c) File necessary pleadings in opposition to a claim objecting to or otherwise seeking the
disallowance of such Subordinated Creditor’s Subordinated Obligations;
(d) Specifically subject to the provisions of Sections 11 and 12, below, take such actions as
generally permitted to be taken by unsecured creditors in a Bankruptcy Proceeding, provided that no
such actions are adverse to the rights of the Senior Lender under this Agreement; and
(e) With respect to the Subordinated Note, impose and accrue interest at the default rate of interest
under the Subordinated Note following a Subordinated Default under the Subordinated Note as permitted
by the terms of the Subordinated Note.
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8. Senior Creditor’s Rights; Continued Effectiveness of this Agreement. Senior Creditor may take,
refrain from taking or omit to take any and all actions with respect to the Senior Obligations without
affecting whatsoever any of Senior Creditor’s rights and remedies under this Agreement, and without
affecting whatsoever any of Junior Creditors’ agreements, liabilities and obligations under this
Agreement. In particular, and without limitation, the subordination effected hereby, and the rights and
remedies of Senior Creditor and the agreements, liabilities and obligations of each Junior Creditor arising
hereunder, shall not be affected, modified or impaired in any manner or to any extent by Senior Creditor
at any time and from time to time and without notice of any kind to any Junior Creditor:
(a) making one or more additional loans to Borrower whether pursuant to the terms of the Senior
Creditor Loan Documents or otherwise;
(b) altering, amending, restating, extending, replacing or otherwise modifying any or all of the
Senior Creditor Loan Documents;
(c) altering, compromising, renewing, extending, accelerating or otherwise changing the time for
payment or other terms of the Senior Obligations or any part thereof, including but not limited to
increasing or decreasing of the principal amount of, and rate of interest payable on, the Senior
Obligations, and granting one or more extensions of the Senior Obligations that may be for longer than
the original loan term;
(d) granting or refrain from granting any waiver, consent, release, indulgence, extension, renewal,
modification, or taking, delaying in taking or refraining from or failing to take, any action in respect of
the Senior Obligations or available to Senior Creditor under any of the Senior Creditor Loan Documents
or under applicable law;
(e) taking and holding security interests, mortgages, liens, charges and encumbrances in, on or to
Collateral and other properties and assets for the payment of the Senior Obligations, and exchanging,
enforcing, waiving, surrendering and/or releasing any such security interests, mortgages, liens, charges
and encumbrances in, on or to any Collateral subject thereto, with or without the substitution of new
collateral on any terms or manner in Senior Creditor’s sole discretion;
(f) releasing, substituting, agreeing not to xxx, or dealing with any one or more of Borrower’s
sureties, endorsers, or guarantors on any terms or manner in Senior Creditor’s sole discretion;
(g) determining how, when and what application of payments and credits shall be made with respect
to the Senior Obligations;
(h) applying any Collateral subject to any Security Interests of Senior Creditor, or any proceeds
thereof, and directing the order or manner of sale, lease, license or other disposition thereof, as Senior
Creditor in its sole discretion may determine; or
(i) assigning this Agreement in whole or in part, or any interest therein, in connection with an
assignment in whole or in part of the Senior Obligations and/or the Senior Creditor Loan Documents;
provided, however, that notwithstanding anything to the contrary contained in this Agreement, after any
such assignment the assignee thereof shall have the rights and obligations of Senior Creditor only with
respect to the portion of the Senior Obligations and/or Senior Creditor Loan Documents so assigned.
9. Creditor Representations. Each Creditor represents that:
(a) no representations or agreements of any kind have been made to such party which would limit or
qualify in any way the terms of this Agreement;
(b) no Creditor has made any representation to the other Creditor as to the creditworthiness of
Borrower;
(c) such Creditor has established adequate means of obtaining from Borrower on a continuing basis
such information regarding the Borrower as it deems necessary. Each Creditor agrees that no other
Creditor shall have any obligation to disclose to it information or material acquired by such Creditor in
the course of its relationship with Borrower;
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(d) nothing contained in this Agreement or otherwise will in any event be deemed to create any
fiduciary relationship between the Creditors or to constitute any Creditor the agent of the other Creditor
for any purpose. Each Creditor shall be individually responsible for managing its relationship with
Borrower; and
(e) notwithstanding anything to the contrary contained herein, neither Senior Creditor’s right
receive repayment of the Senior Obligations prior to repayment of the Junior Obligations as described in
this Agreement, nor Senior Creditor’s right to prohibit Distributions and other payments in connection
with the Junior Obligations pursuant to the terms of this Agreement, shall directly or indirectly require or
otherwise obligate any Creditor to provide any loan, financing or other financial accommodation to
Borrower.
10. Waivers of Creditors. Each Creditor waives any right to require the other Creditor:
(a) to make, extend, renew, replace or modify any loan to Borrower or to grant any other financial
accommodation to Borrower whatsoever;
(b) to make or deliver to Borrower any presentment, protest, demand, or notice of any kind,
including notice of any nonpayment of any Obligations;
(c) except as expressly provided by the terms of this Agreement, to make or deliver to such Creditor
notice of any action, non-action, waiver or default on the part of Borrower in connection with any
Obligations owed to such Creditor;
(d) except as expressly provided by the terms of this Agreement, to make or deliver to such Creditor
notice of any action, non-action, or waiver by any other creditor of Borrower or any surety, endorser, or
other guarantor in connection with any Obligations of such Creditor;
(e) to resort for payment or to proceed directly or at once against any person, including Borrower;
(f) to proceed directly against or exhaust any security interests, mortgages, liens, charges or other
encumbrances on any Collateral or any other assets or properties securing repayment of such Creditor’s
Obligations, if any;
(g) except as expressly provided by the terms of this Agreement, to pursue any right or remedy
within such Creditor's power; or
(h) to commit any act or omit to take any action of any kind, at any time, with respect to any matter
whatsoever, except as provided in this Agreement.
11. Liquidation; Dissolution; Bankruptcy. In the event of (x) any insolvency, bankruptcy, receivership,
custodianship, liquidation, reorganization, readjustment of debt, arrangement, composition, assignment
for the benefit of creditors, or other similar proceeding relative to Borrower or its creditors, as such, or its
property, or (y) any proceeding of Borrower for voluntary liquidation, dissolution, winding down or
bankruptcy proceedings (collectively, an “Insolvency Event”), then and in any such event:
(a) All of the Senior Obligations shall first be finally and indefeasibly paid in cash to the Senior
Creditor in full before any Distribution or other payment or distribution of any kind or character and
whether in cash, property, or securities, shall be made in respect of the Junior Obligations;
(b) Until the Senior Obligations are finally and indefeasibly paid in cash to Senior Creditor in full,
any Distribution or other payment or distribution of any kind or character and whether in cash, property,
or securities, which shall be payable or deliverable upon or in respect of the Junior Obligations to any
Junior Creditor shall be paid or delivered directly to Senior Creditor for application in payment of the
amounts then due with respect to the Senior Obligations, and each Junior Creditor irrevocably authorizes,
empowers and directs all receivers, custodians, trustees, liquidators, conservators and others having
authority in the assets, property or premises of Borrower to effect all such payments and deliveries;
(c) Notwithstanding any statute, including, without limitation, the United States Bankruptcy Code
(the “Bankruptcy Code”), any rule of law or bankruptcy procedures to the contrary, the right of Senior
Creditor hereunder to have all of the Senior Obligations paid and satisfied in cash in full prior to the
payment of any of the Junior Obligations shall include, without limitation, the right of Senior Creditor to
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be paid in full all interest accruing on the Senior Obligations due to it after the filing of any petition by or
against Borrower in connection with any bankruptcy or similar proceeding or any other proceeding
referred to in this paragraph, hereof, prior to the payment of any amounts in respect to the Junior
Obligations, including, without limitation, any interest due to any Junior Creditor accruing after such
date; and
(d) Each Junior Creditor hereby authorizes Senior Creditor to file an appropriate claim for and on
behalf of such Junior Creditor on account of such Junior Creditor’s Obligations, if such Junior Creditor
does not file, and there is not otherwise filed on behalf of such Junior Creditor, a proper claim or proof of
claim in connection with such Junior Creditor’s Obligations in the form required in any proceeding
relating to an Insolvency Event prior to ten (10) days before the expiration of the time to file such claim,
claims or proof of claim. In connection with such authorization, each Junior Creditor hereby irrevocably
authorizes, empowers, and appoints Senior Creditor as such Junior Creditor’s agent and attorney-in-fact
to execute, verify, deliver and file such proofs of claim and to receive and collect any and all dividends,
payments, or other disbursements made thereon in whatever form the same may be paid or issued and to
apply the same on account of such Junior Creditor’s Obligations.
12. Provisions Applicable After Bankruptcy.
(a) This Agreement shall continue in full force and effect after the filing of any petition (“Petition”)
by or against Borrower under the Bankruptcy Code and all converted or succeeding cases in respect
thereof. All references herein to Borrower, any subsidiary or any Senior Guarantor shall be deemed to
apply to Borrower, any subsidiary or such Senior Guarantor as debtor-in-possession and to a trustee for
Borrower, any subsidiary or such Senior Guarantor. The Senior Obligations shall continue to be treated
as Senior Obligations and the provisions of this Agreement shall continue to govern the relative rights
and priorities of Senior Creditor and the Junior Creditors even if all or part of the Senior Obligations or
the Senior Creditor’s Security Interests in any Collateral are subordinated, set aside, avoided or
disallowed in connection with any Insolvency Event, and this Agreement shall be reinstated if at any
time any payment of any of the Senior Obligations is rescinded or must otherwise be returned by any
holder of all or any portion of the Senior Obligations or any representative of such holder.
(b) Each Creditor agrees not to initiate or prosecute or encourage any other person, group of
persons, any organization or enterprise, or group of organizations or enterprises, to initiate or prosecute
any claim, action or other proceeding challenging the enforceability of the Senior Obligations or the
Junior Obligations, as applicable, or any Security Interests of Senior Creditor in any Collateral.
(c) Each Junior Creditor agrees that it shall not propose or enter into any debtor-in-possession
financing that benefits from any Security Interests that is or are equal to or prior in right to Senior
Creditor’s Security Interests in any Collateral, whether arising pre-Petition or post-Petition, and whether
all or any portion of the Senior Obligations or all or any of the Senior Creditor’s Security Interests in any
Collateral are pre-Petition or post-Petition.
(d) Each Junior Creditor agrees that it will not vote for any plan of reorganization or propose a plan
of reorganization which provides for other than payment in full of the Senior Obligations in cash to
Senior Creditor at the time of the effective date of such plan of arrangement.
(e) No Junior Creditor shall contest (or support any other person contesting) (i) any request by
Senior Creditor for adequate protection, or (ii) any objection by Senior Creditor to any motion, relief,
action or proceeding based on Senior Creditor claiming a lack of adequate protection.
(f) If Borrower, any subsidiary or any Senior Guarantor shall become subject to a proceeding under
the Bankruptcy Code, and if Senior Creditor shall desire to permit the use of cash collateral or to provide
post-Petition financing to Borrower under the Bankruptcy Code, each Junior Creditor agrees as follows:
(i) adequate notice to such Junior Creditor shall be deemed to have been provided for such consent or
post-Petition financing if such Junior Creditor receives notice thereof two (2) Business Days (or such
shorter notice as is given to Senior Creditor) prior to the earlier of (a) any hearing on a request to approve
such post-Petition financing, or (b) the date of entry of an order approving same, and (ii) no objection
will be raised by such Junior Creditor to any such use of cash collateral or such post-Petition financing
from Senior Creditor (and such Junior Creditor shall be deemed to have consented thereto) and such
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Junior Creditor will not request adequate protection or any other relief in connection therewith, except as
expressly agreed upon in writing by Senior Creditor.
(g) No Junior Creditor shall seek relief from the automatic stay or any other stay in any federal or
state bankruptcy, insolvency or liquidation proceeding in respect of the Senior Obligations.
(h) Each Junior Creditor agrees that it will not raise any objection or oppose a sale or other
disposition of any Collateral that is subject to any Security Interests of Senior Creditor in such Collateral,
whether pre- or post-Petition, free and clear of any Security Interests of such Junior Creditor on such
Collateral, if any and whether pre- or post-Petition, or other claims under Section 363 of the Bankruptcy
Code if Senior Creditor has consented to such sale or disposition of such Collateral. Each Junior
Creditor will be deemed to have consented under Section 363 of the Bankruptcy Code to any such sale or
other disposition supported by Senior Creditor and to have released its Security Interests in such
Collateral, if any and whether pre- or post-Petition, provided that (i) such Junior Creditor’s Security
Interests in such Collateral, if any and whether pre- or post-Petition, attach to the proceeds of such sale or
disposition with the same priority and validity as such Junior Creditor’s Security Interests, if any and
whether pre- or post-Petition, held on the Collateral disposed of in such sale or disposition, and (ii) such
Junior Creditor will not be deemed to have waived any right to bid in connection with such sale or
disposition, and will retain its right to credit bid on the Collateral in any such sale or disposition in
accordance with Section 363 of the Bankruptcy Code.
13. Subrogation. After the Senior Obligations are finally and indefeasibly paid in cash to Senior
Creditor in full and until a Junior Creditor’s Obligations are finally and indefeasibly in cash to such Junior
Creditor in full, such Junior Creditor shall be subrogated to the rights of Senior Creditor to receive
Collateral Distributions applicable to the repayment of the Senior Obligations to the extent that Collateral
Distributions otherwise payable to such Junior Creditor have been applied to the payment of the Senior
Obligations. A Distribution made under this Agreement to Senior Creditor on account of the Senior
Obligations which otherwise would have been made to a Junior Creditor, or that is made to a Junior
Creditor in violation of any term or provision of this Agreement and that is delivered to Senior Creditor
by such Junior Creditor, is not, as between such Junior Creditor and Borrower, a payment by the
Borrower of or on such Junior Creditor’s Obligations.
14. Obligations of the Borrower Unconditional. Subject to the provisions of this Agreement, nothing
contained in this Agreement is intended to or shall impair, as between Borrower and any Creditor, the
obligations of Borrower, which are absolute and unconditional, to pay to such Creditor all Obligations of
Borrower to such Creditor, as and when the same shall become due and payable in accordance with such
Creditor’s Loan Documents, or is intended to or shall affect the relative rights of the creditors of the
Borrower other than the Creditors.
15. Duration and Termination; Reinstatement. This Agreement shall remain in full force and effect
until (a) the final and indefeasible payment to Senior Creditor in cash of all of the Senior Obligations in
full, and (b) the termination of Senior Creditor’s obligations to lend to Borrower under the Senior
Creditor Loan Documents. In the event that Senior Creditor is required, pursuant to any provisions of the
Bankruptcy Code or any successor statute thereto, or reason of any bankruptcy, reorganization,
arrangement, composition or similar proceeding or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any substantial part of Borrower’s
property, or otherwise, to repay any amount of any Collateral Distribution paid to Senior Creditor by
Borrower in satisfaction of the Senior Obligations, this Agreement will be revived and continue in full
force and effect, all as though such Collateral Distribution had not been made.
16. Miscellaneous Provisions.
(a) Further Assurances. Junior Creditors at their own expense and at any time from time to time,
upon the written request of Senior Creditor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as Senior Creditor reasonably may request for
the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers
herein granted.
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(b) Entire Agreement; Amendments. This Agreement constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Agreement. To the extent there is any conflict
between this Agreement and any Loan Document or any other document evidencing the Obligations, this
Agreement shall control among the Creditors, but shall not provide the Borrower with any rights in
connection with such Loan Document. Notwithstanding anything contained herein to the contrary, no
provision of this Agreement is intended to benefit any party other than the signatories hereto, nor shall
any such provision be enforceable by any other party. The provisions of this Agreement supersede and
replace, in their entirety, any other intercreditor agreement or subordination agreement entered into
among any of the parties hereto with respect to the matters set forth in this Agreement. No alteration of
or amendment to this Agreement shall be effective unless made in writing and signed by each of the
Creditors and Borrower; provided that the Creditors may enter into an amendment of this Agreement
without the consent of Borrower in the event that such amendment does not in any way affect any
agreements or obligations of Borrower hereunder.
(c) No Third Party Beneficiaries. The terms and provisions of this Agreement are solely for the
benefit of the Creditors and their respective successors and assigns and shall not benefit in any way any
other person not specifically a party to the agreement, including but not limited to Borrower or any
guarantor of the Obligations. Nothing in this Agreement is intended to effect, limit, or in any way
diminish the interests that each Creditor claims in their respective Security Interests so far as the rights of
Borrower and third parties are concerned. The Creditors specifically reserve any and all of their respective
rights, security interest, and right to assert interest against Borrower and any third parties, including
guarantors of the Obligations.
(d) Rights and Remedies Cumulative. Senior Creditor’s rights and remedies under this Agreement
shall be cumulative and not alternative or exclusive, irrespective of any other rights or remedies that may
be available to Senior Creditor under any Senior Creditor Loan Document, by operation of law or
otherwise, and may be exercised by Senior Creditor at such time or times and in such order as Senior
Creditor in Senior Creditor’s sole discretion may determine, and are for the sole benefit of Senior
Creditor. Senior Creditor’s failure to exercise or delay in exercising any right or remedy shall not (a)
preclude Senior Creditor from exercising such right or remedy thereafter, (b) preclude Senior Creditor
from exercising any other right or remedy of Senior Creditor, or (c) result in liability to Senior Creditor or
Senior Creditor’s affiliates or their respective members, managers, shareholders, directors, officers,
partners, employees, consultants or agents.
(e) Strict Performance. The failure by Senior Creditor at any time to require any Junior Creditor’s
strict compliance with or performance of any provision of this Agreement shall not waive, affect, impair
or diminish any right of Senior Creditor thereafter to demand Junior Creditors’ strict compliance with and
performance of such provision. Any suspension or waiver by Senior Creditor of any default by a Junior
Creditor of the terms of this Agreement shall not suspend, waive or affect any other default by any Junior
Creditor, whether the same is prior or subsequent to such suspension or waiver and whether of the same
or a different type.
(f) Successors and Assigns. This Agreement, without further reference, shall pass to and may be
relied on and enforced by any assignee, transferee or subsequent holder of any of the Obligations. In the
event of any sale, assignment, disposition or other transfer of any of the Obligations, the transferring
Creditor shall cause the transferee thereof to execute and deliver to the other Creditor a written
acknowledgment of the binding effect of this Agreement on such transferee and of the continued
effectiveness of all of the rights of such other Creditor arising under this Agreement, or an agreement
substantially identical with this Agreement in form and substance acceptable to such other Creditor in
such other Creditor’s reasonable discretion.
(g) General Waivers. No party shall be deemed to have waived any rights granted to such party
under this Agreement unless such waiver is given in writing and signed by the party against whom such
waiver is enforced. No delay or omission on the part of any party in exercising any right shall operate as
a waiver of such right or any other right. A waiver by any party of any provision of this Agreement shall
not prejudice or constitute a waiver of such party's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by any party, nor any course of
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dealing between any of the parties, shall constitute a waiver of any of such party's rights or of another
party's obligations as to any further transactions. Whenever the consent of a party is required under this
Agreement, the granting of such consent by such party in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in all cases such further consent may
be granted or withheld in the sole discretion of such party.
(h) Severability. In the event that any provision of this Agreement is deemed to be invalid, illegal
or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon
by any court or governmental authority, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected
provision shall be modified to the minimum extent permitted by law so as most fully to achieve the
intention of this Agreement.
(i) Notice. Wherever this Agreement provides for notice to any party (except as expressly provided
to the contrary), it shall be given by messenger, facsimile, certified U.S. mail with return receipt
requested, or nationally recognized overnight courier with receipt requested, effective when either
received or receipt rejected by the party to whom addressed, and shall be addressed as provided in the
Notice Schedule, or to such other address as the party affected may hereafter designate.
(j) GOVERNING LAW; CONSENT TO JURISDICTION.
THIS AGREEMENT WAS
NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY SENIOR CREDITOR AND
ACCEPTED BY EACH JUNIOR CREDITOR IN THE STATE OF NEW YORK. THE PARTIES
AGREE THAT THE STATE OF NEW YORK HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED ENTIRELY IN SUCH STATE WITHOUT REGARD TO ITS PRINCIPLES OF
CONFLICTS OF LAWS. TO THE FULLEST EXTENT PERMITTED BY LAW, SENIOR CREDITOR
AND EACH JUNIOR CREDITOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE
ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT, AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED ENTIRELY IN SUCH STATE WITHOUT REGARD TO
ITS PRINCIPLES OF CONFLICTS OF LAWS. ANY LEGAL SUIT, ACTION OR PROCEEDING
AGAINST SENIOR CREDITOR OR ANY JUNIOR CREDITOR ARISING OUT OF OR RELATING
TO THIS AGREEMENT SHALL BE INSTITUTED IN THE SOLE OPTION OF SENIOR CREDITOR
IN ANY FEDERAL OR STATE COURT LOCATED IN WESTCHESTER COUNTY, NEW YORK
PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW;
PROVIDED, HOWEVER, SENIOR CREDITOR MAY, AT ITS OPTION, COMMENCE ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION
TO OBTAIN POSSESSION OF OR FORECLOSE UPON ANY COLLATERAL, TO OBTAIN
EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER OBTAINED BY SENIOR
CREDITOR AGAINST ANY JUNIOR CREDITOR OR BORROWER OR WITH RESPECT TO ANY
COLLATERAL, TO ENFORCE ANY RIGHT OR REMEDY UNDER THIS AGREEMENT OR TO
OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY SENIOR CREDITOR, AND SENIOR
CREDITOR AND EACH JUNIOR CREDITOR WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND SENIOR CREDITOR AND EACH JUNIOR CREDITOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. EACH OF THE PARTIES ACCEPTS FOR ITSELF THE EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH JUNIOR CREDITOR REPRESENTS AND ACKNOWLEDGES THAT IT HAS
REVIEWED THIS CONSENT TO JURISDICTION PROVISION WITH ITS LEGAL COUNSEL, AND
HAS MADE THIS WAIVER KNOWINGLY AND VOLUNTARILY, WITHOUT COERCION OR
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DURESS.
(k) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES THE RIGHT TO
A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY WHICH CASE OR CONTROVERSY
ARISES OUT OF OR IS IN RESPECT OF ANY DEALINGS AMONG THEM OR ANY ONE OF
THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
(l) Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same instrument.
(m) UCC Notice. Each Creditor hereby (i) acknowledges that this Agreement constitutes notice, for
the purposes of Section 9-611 of the UCC, that the other Creditor holds a security interest in, on or to its
respective Collateral, and (ii) waives any right to compel any marshaling of the Collateral by such other
Creditor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, each of the parties intending to be bound hereby has caused this Agreement
to be executed by its duly authorized representative as of the date first above written.
SENIOR CREDITOR:
KELTIC FINANCIAL PARTNERS II, LP
By: KELTIC FINANCIAL SERVICES, LLC, its General Partner
By:
Name:
Its:
JUNIOR CREDITORS:
IGX GLOBAL, INC.
By:
Name:
Its:
By:
Name:
Its:
SELLER SHAREHOLDER
XXXXXX XXXXX
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Page 16 of 18
NOTICE SCHEDULE
If to Senior Creditor:
Keltic Financial Partners II, LP
Attn: Xxxx X Xxxxxx, President and CEO
580 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000 (ext. 208)
Fax: (000) 000-0000
Keltic Financial Partners II, LP
Attn: Xxxx Xxxxxxxx, Executive Vice President and Chief
Credit Officer
580 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000 (ext. 221)
Fax: (000) 000-0000
With a copy to:
Xxxxxxxx X. Xxxxxxx, Esq.
5600 Xxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to iGambit:
Xxxxx Xxxxxx
Executive Vice President and General Counsel
iGambit Inc.
1000 X. Xxxxxxx Xxxxxxxx
Xxxxx X
Xxxxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxx Xxxxxxxxx, Esq.
Xxxxxxx & Xxxxxxx
350 Xxxx Xxx Xxxx Xxxxxxxxx
Las Olas Centre II, Suite 1150
Foxx Xxxxxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Seller:
Xxxxxx Xxxxx
Chief Executive Officer
IGXGLOBAL, CORP.
50 Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx, Xxxxx & Xxxxxxxx, P.C.
100 Xxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
15 IGX Subord Agree Final.docx
Page 17 of 18
BORROWER ACKNOWLEDGMENT
IGXGLOBAL, CORP., a corporation organized under the laws of the State of Delaware (“Borrower”),
herby acknowledges and agrees that it has read and understands the terms and provisions of the
Subordination Agreement (the “Subordination Agreement”) dated on or about the date of this
Acknowledgment between IGX GLOBAL, INC., a corporation organized under the laws of the State of
New Jersey (“Seller”), XXXXXX XXXXX, an individual residing at 18 Xxxx Drive, Wallingford,
Connecticut 06492 (“Seller Shareholder”), IGAMBIT INC., a corporation organized under the laws of
the State of Delaware (“iGambit”, and together with Seller, the “Junior Creditors”) and KELTIC
FINANCIAL PARTNERS II, LP, a Delaware limited partnership (“Senior Creditor”). All capitalized
terms not defined in this Acknowledgment shall have the meanings ascribed to such terms in the
By executing this Acknowledgment, Borrower confirms that payment of the Junior Obligations is
subordinated to the prior final and indefeasible payment in cash to Senior Creditor and performance of the
Senior Obligations in full to the extent and in the manner described in the Subordination Agreement, and
that pursuant thereto:
1.
During the term of the Subordination Agreement, Borrower shall not make any Distribution to a
Junior Creditor, other than any Distributions specifically permitted under the provisions of Section 3 of
2.
Nothing contained in the Subordination Agreement is intended to or shall impair, as between
Borrower and any Creditor, the obligations of Borrower, which are absolute and unconditional, to pay to
such Creditor all Obligations of Borrower to such Creditor, as and when the same shall become due and
payable in accordance with such Creditor’s Loan Documents;
3.
Borrower will, at its own expense and at any time from time to time, promptly and duly execute
and deliver such further instruments and documents and take such further actions as any Creditor
reasonably may request for the purposes of obtaining or preserving the full benefits of the Subordination
Agreement and of the rights and powers granted to such Creditor therein;
4.
Borrower agrees to pay upon demand all costs and expenses of Senior Creditor incurred in
connection with the enforcement of the Subordination Agreement. Such costs and expenses shall include
Senior Creditor’s reasonable attorney's fees and legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (and including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated post-judgment collection services.
Borrower also shall pay all court costs and such additional fees as may be directed by the court in any suit
or legal proceeding instituted in connection with the enforcement of the Subordination Agreement; and
5.
The terms and provisions of the Subordination Agreement are solely for the benefit of the
Creditors and their respective successors and assigns and shall not benefit in any way any other person
not specifically a party to the agreement including but not limited to Borrower or any guarantor of the
Obligations. To the extent there is any conflict between the Subordination Agreement and any Loan
Document or any other document evidencing the Obligations, the Subordination Agreement shall control
among the Creditors, but shall not provide Borrower with any rights in connection with such Loan
Document.
BORROWER:
IGXGLOBAL, CORP.
By:
Name:
Its:
Date:
15 IGX Subord Agree Final.docx
Page 18 of 18
