EXHIBIT
10.1
INTERCREDITOR AND
STANDBY AGREEMENT
This
Intercreditor and Standby Agreement (the " Agreement ") is
made effective as of the 4th day of September, 2008 (the "Effective
Date") by and between Execute Sports, Inc., a Nevada corporation ("
Borrower "), and all other Senior Lender(s) (as defined
below) of Borrower.
RECITALS
WHEREAS,
the Borrower's outstanding Senior Debt (as defined below) is
secured by a perfected senior security interest in all of
Borrower's assets more particularly described on Exhibit
A attached hereto and incorporated herein (the "
Collateral "); and
WHEREAS,
Borrower wishes to create additional senior security interests in
the Collateral so that Borrower may issue additional Senior Debt
for the payment or securing of any other obligation that Borrower,
in its sole and absolute discretion, decides is appropriate
(subject to the restrictions contained herein); and
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration
of the mutual promises and covenants herein made, the parties
hereto agree as follows:
1.
Senior Lender(s) Defined . For purposes of this
Agreement the term " Senior Lender(s) " shall mean any and
all holders of Borrower's Senior Debt now existing or hereafter
incurred or created.
"
Senior Debt " means all indebtedness and other obligations,
however incurred (including obligations and/or indebtedness owed to
employees, insiders and/or affiliates of Borrower), payable
directly or indirectly by Borrower, whether outstanding on the date
hereof or hereafter created, incurred, assumed or guaranteed by
Borrower, including, but not limited to: the principal of and
interest on all loans, letters of credit, lines of credit, other
extensions of credit, and all other indebtedness or obligations of
Borrower provided that (i) the instrument(s) evidencing
and/or securing such obligation(s) shall include an executed
(senior) Security Agreement that grants a senior security interest
in the Collateral, and (ii) the holder of any such instrument of
indebtedness described herein has executed this Agreement or has
agreed in writing to be bound by its terms.
2.
Senior Loan Documents . Senior Loan Documents are
all documents that evidence, define, secure, underlie or accompany
any Senior Debt now or hereafter outstanding, which may include,
but are not be limited to, the following (the " Senior Loan
Documents "):
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a.
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This
Intercreditor and Standby Agreement (must be included);
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b.
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Promissory Note(s)
(convertible or non-convertible) payable to the Senior
Lender(s);
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c.
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(senior) Security
Agreement(s) with the Senior Lender(s);
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d.
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UCC-1
Financing Statements in favor of the Senior Lender(s);
and
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e.
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Other
documents, assignments, certificates, affidavits, assignments
and/or warranties or representations executed in addition to or in
connection with the issuance of Senior Loan Documents.
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Notwithstanding
the foregoing, Senior Loan Documents must at least include an
executed (senior) Security Agreement that grants a senior security
interest in the Collateral and an executed version of this
Agreement.
3.
Issuance of Additional Senior Debt . Borrower may
issue additional Senior Debt, provided however, such additional
issuances must be approved by the holders of a majority of the
Senior Debt outstanding at the time of such new issuance. Any
additional Senior Debt issued by Borrower must conform to the
requirements of what constitutes Senior Debt as defined herein,
including, but not limited to, the requirement that any holder of
Senior Debt (now in existence or hereafter created) must execute
this Agreement.
4.
Priority of Liens . Senior Lender(s) agree that
at all times, whether before, after or during the pendency of any
bankruptcy, reorganization or other insolvency proceeding involving
Borrower, and notwithstanding the priorities which would ordinarily
result from the order of the granting of any lien, or the order of
filing of any financing statements or mortgages, the priorities of
the liens in favor of the Senior Lender(s) shall be as
follows:
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a.
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In the
event of any distribution of the proceeds of any of the Collateral
covered by the Senior Loan Documents whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for
the benefit of creditors or any other action or proceeding
involving the readjustment of the obligations and indebtedness of
Borrower, or the application of the assets of Borrower and
including without limitation, the payment or liquidation thereof,
or as a result of foreclosure of the Collateral, or the dissolution
or winding up of Borrower's business or the sale of the Collateral
(except in the ordinary course of business) or all or substantially
all of Borrower's assets, all distributions of proceeds of said
assets or Collateral shall be first made to the Senior Lender(s)
pro rata with one another until the Borrower's obligations to the
Senior Lender(s) under the Senior Loan Documents are paid in
full.
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Notwithstanding
anything in this Agreement to the contrary, payments made to any
Senior Lender pursuant to the stated terms of any Senior Debt shall
not be construed as a distribution for purposes of this Section
4.
5.
Conduct of Liquidation . The Senior Lender(s), or
any of them, including holders of Senior Debt that are insiders or
affiliates of the Borrower, may conduct a foreclosure or
liquidation of the Collateral in which they have a lien pursuant to
their respective loan documents subject, however, to the
following:
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a.
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Any
Senior Lender(s) which conducts a foreclosure or liquidation may
only do so upon the prior written consent of the holders of a
majority of the Senior Debt.
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b.
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The
proceeds of any foreclosure or liquidation shall be distributed in
accordance with Section 4 above.
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c.
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Any
party which conducts a foreclosure or liquidation shall, upon
request, provide any Senior Lender a written statement of the
results of such foreclosure or liquidation and the distribution of
the proceeds thereof.
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d.
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The
parties agree that the holders of Senior Debt hold a senior lien as
to the Collateral covered by the Senior Loan Documents and that
they may not conduct a foreclosure or liquidation without the prior
written consent of the holders of a majority of the Senior Debt,
which any Senior Lender may withhold its individual consent in the
sole and absolute discretion of any such Senior Lender.
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e.
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Any
Senior Lender may, in its sole discretion, accelerate or demand
payment of the Senior Debt held by such Senior Lender and may, with
the prior written consent of the holders of a majority of the
Senior Debt, initiate or conduct a liquidation, foreclose upon,
realize upon, or exercise any of the Senior Lender's rights, powers
and remedies with respect to the Collateral. subject to the
requirements outlined herein.
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f.
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Senior
Lender(s) each hereby waive any and all rights to require the other
to marshal the Collateral or any part thereof upon any foreclosure
or liquidation of any such Collateral, nor shall the Senior
Lender(s) be required to first pursue or otherwise realize upon any
other collateral (unconnected to the Collateral) and/or pursue its
right under any guarantees of the Senior Debt. The Senior Lender(s)
do hereby reserve their right to pursue all remedies afforded to
them under the Senior Loan Documents without affecting their rights
hereunder.
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g.
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Any
Senior Lender needing the prior written consent of a majority of
the holders within its class to take any particular action may
count its own holdings within such class when tabulating whether a
majority has been obtained. In the case of a Senior Lender
(including a Senior Lender that is an insider or affiliate of the
Borrower) which individually holds a majority of the outstanding
Senior Debt such Senior Lender need not solicit any consents from
any other Senior Lenders before proceeding with any action that
requires majority consent.
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6.
List of Senior Lenders . Borrower shall maintain
a list of Senior Lenders which will promptly be made available upon
written request to any holder of Senior Debt (" Secured Creditor
List "). By signing this Agreement all parties hereto agree to
maintain the Secured Creditor List in strict
confidentiality.
7.
Distribution of Insurance/Eminent Domain Proceeds
. In the event insurance or eminent domain proceeds are
realized in any asset of the Borrower in which more than one party
has a lien, then the proceeds thereof shall be distributed in
accordance with provisions of Section 4 above.
8.
Term . This Agreement shall be irrevocable by
Senior Lender(s) until all indebtedness, obligations and
liabilities of Borrower to Senior Lender(s) have been paid and
fully satisfied and all financing arrangements between Borrower and
Senior Lender(s) have been terminated. Notwithstanding the
foregoing, this Agreement may be terminated upon the
unani
