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INTERCREDITOR AGREEMENT
June
3, 2008
THIS
AGREEMENT is made by and between (a) YA Global Investments,
L.P. (the "
Lender "),
a Cayman Island exempt limited partnership having an office at 101
Hudson Street, Suite 3700, Jersey City, New Jersey 07303, (b)
Wherify Wireless, Inc., a Delaware corporation, and Wherify
California, Inc., a California corporation (collectively, the
“
Borrower ”),
both with offices at 63 Bovet Road, #521, San Mateo, California
94402-3104 and (c) Laidlaw Holdings PLC ("
Laidlaw "),
a United Kingdom corporation with offices at 90 Park Avenue, New
York, New York 10016), and the purchasers of the Bridge Loan(s) as
defined below (collectively, with Laidlaw, the “
Laidlaw Persons ”).
In
consideration of the mutual covenants contained herein and
benefits to be derived herefrom,
WITNESSETH:
As
used herein, the following terms have the following meanings
or are defined in the provision of this Agreement so
indicated:
“
150K Loan ”:
That certain loan arrangement by and between Laidlaw and the
Borrower in a principal amount of up to $150,000.00.
"Borrower" :
Defined in Preamble.
"Business Day" :
Any day, other than (a) any Saturday or Sunday and (b) any day on
which banks in Jersey City, New Jersey are not open to the general
public for the purpose of conducting commercial banking
business.
“
Bridge Loan(s) ”:
A loan or loans that may be made by the Laidlaw Persons to the
Borrower in an aggregate principal amount of up to $800,000.00,
evidenced by documents in the forms collectively attached hereto as
Exhibit “A”.
"Business Day" :
Any day, other than (a) any Saturday or Sunday and (b) any day on
which banks in Jersey City, New Jersey are not open to the general
public for the purpose of conducting commercial banking
business.
"Collateral Interest" :
Any encumbrance, including, without limitation, any security
interest, mortgage, deed of trust, voluntary lien or any security
interest, mortgage, deed of trust or lien granted to the Parties by
the Borrower.
“
Forbearance Agreement ”:
That certain Forbearance Agreement by and among the Borrower,
Wherify California, Inc., and Lender dated as of May 16, 2008, a
copy of which is annexed as
Exhibit V to
the Purchase Agreement.
“
Forbearance Period ”:
As defined in the Forbearance Agreement.
“
Laidlaw ”:
Defined in the Preamble.
“
Laidlaw Persons ”:
Defined in the Preamble.
"Lender" :
Defined in the Preamble.
"Liquidation" :
The exercise by a Party of any rights upon default as a secured
creditor seeking to collect or realize upon a Collateral Interest
granted by the Borrower to that Party.
"Party; Parties" :
Lender, Laidlaw and Laidlaw Persons.
“
Purchase Agreement ”
means the Bridge Note and Warrant Purchase Agreement by and between
Laidlaw and the Borrower (and any other Laidlaw Person), dated the
date hereof.
"Shared Collateral" :
Those present and future assets of the Borrower in which the
Parties, at any time, have been or are granted Collateral
Interests.
"UCC" :
The Uniform Commercial Code as in effect in New York.
(a)
Lender
acknowledges and consents to the Borrower’s creation of
Collateral Interests in the Shared Collateral in favor of the
Laidlaw Persons.
(b)
The
Laidlaw Persons consent to the Borrower’s creation of
Collateral Interests in the Shared Collateral in favor of
Lender.
(a)
Notwithstanding
the order of creation, attachment, perfection, or the ordering
of the filing of any financing statement or other instrument
to reflect or evidence the Collateral Interests of the Parties
in and to the Shared Collateral, but subject to
Section 3(b) ,
below, the relative priorities of the Parties in and to the Shared
Collateral and all proceeds thereof are as follows:
First:
Laidlaw
Persons (but only to the extent necessary to repay the
principal amount outstanding, accrued but unpaid interest and
any fees and expenses in respect of the Bridge
Loan(s)).
Second:
Lender
(b)
The
relative priorities set forth above are intended as an
agreement between the Parties hereto and are not for the
benefit of any third party. Such agreement by the Parties
assumes the due creation, attachment, and perfection of the
Collateral Interests of each of the Parties in such collateral
and that such Collateral Interests are not subject to
avoidance, equitable subordination, invalidation, or the like.
Neither Party shall challenge such due creation, attachment,
or perfection of the Collateral Interests granted to, or any
guaranty executed in favor of, the other Party by the
Borrower, nor seek to have any such Collateral Interests
avoided, set aside, or (other than solely to implement the
relative priorities set forth in Section 3(a) above)
subordinated to the other. Without limiting the foregoing
sentence, in the event of any judicial determination that such
due creation, attachment, or perfection is invalid, legally
insufficient, or otherwise avoidable with respect to any asset
comprising the Shared Collateral, and in the event of the
avoidance, setting aside, or (other than in a manner which
reflects the relative priorities set forth in Section 3(a),
above) subordination of any Party’s Collateral
Interests, the agreement of the Parties set forth above with
respect to the relative priorities of the Parties in and to
that asset shall terminate.
4.
STANDSTILL .
Laidlaw Persons agree that they will not, directly or indirectly,
take any action to accelerate or demand payment by Borrower, to
exercise any of its remedies against the Borrower, to initiate any
reorganization of, or litigation against, Borrower, or to foreclose
or otherwise realize on any security given by Borrower or any other
person to secure the Bridge Loan(s) (
“Legal Action ”);
provided ,
however, that
notwithstanding anything to the contrary provided
herein,
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