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AMENDMENT, TERMINATION AGREEMENT AND MUTUAL
RELEASE
This Amendment, Termination Agreement and Mutual
Release (this “ Agreement ”), by and among
Winning Edge International, Inc., a Delaware Corporation (f/k/a
GWIN, Inc. and referred to herein as the “ Company
”), Global SportsEdge, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company (the “
Subsidiary ”) and CSI Business Finance, Inc., a
Texas corporation (the “ Lender ”), is
entered into on this 26 th day of September, 2007
(the “ Effective Date ”).
RECITALS:
WHEREAS , on September 7, 2006, the
Company and the Lender entered into a Loan Agreement (the
“ Loan Agreement ”) pursuant to which the
Lender loaned to the Company, and the Company borrowed from the
Lender, Six Hundred Fifty-Five Thousand Dollars ($655,000) in
the form of two (2) secured promissory notes, the first of which
was issued by the Company to the Lender on September 7, 2006 in
the principal amount of Three Hundred Fifty-Five Thousand
Dollars ($355,000) and the second of which was issued by the
Company to the Lender on September 21, 2006 in the principal
amount of Three Hundred Thousand Dollars ($300,000) (together,
the “ Notes ”) and
WHEREAS , the Notes are secured by (i) a
Pledge and Escrow Agreement (the “ Pledge Agreement
”), of even date with the Loan Agreement, by and among the
Company, the Lender and the Escrow Agent named therein, (ii) an
Insider Pledge and Escrow Agreement (“ Insider Pledge
Agreement ”), of even date with the Loan Agreement, by
and among the Company, the Lender, Wayne Allyn Root and the
Escrow Agent named therein, (iii) a Security Agreement (the
“ Security Agreement ”), of even date with
the Loan Agreement, by and between the Company and the Lender
and (iv) a Subsidiary Security Agreement (the “
Subsidiary Security Agreement ”), by and between
the Lender and the Subsidiary (collectively, the “
Security Instruments ” and together with the Loan
Agreement and the Notes, including all related transaction
documents executed in connection therewith, including all
amendments, schedules and exhibits thereto, the “
Transaction Documents ”); and
WHEREAS , the Company and the Lender
hereby acknowledge that as of June 30, 2007, the Notes have
matured and have become due and payable in accordance with the
terms of the Notes; and
WHEREAS , the Company has entered into an
agreement with Betbrokers, PLC, a company organized under the
laws of the United Kingdom (“ Betbrokers ”)
whereby the Company shall consummate the sale of all of its
assets (the “ Assets ”) to Betbrokers (the
“ Asset Sale ”) in exchange for the issuance
by Betbrokers of shares of its capital stock (the “
Betbroker Shares ”), which Betbroker Shares trade
on the London Stock Exchange Alternative Investment Market (the
“ AIM ”); and
WHEREAS , the Assets have been pledged
under the Security Agreement and the Subsidiary Security
Agreement and will need to be released in order to be sold
pursuant to the Asset Sale; and
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WHEREAS , the Company and the
Lender desire to (a) amend the Loan Agreement and the Notes in
order to extend the maturity dates, allow for the Company to
consummate the Asset Sale and to modify the payment terms
thereof, (b) provide for the termination of the Security
Agreement and the Subsidiary Security Agreement in order to
release the Assets from collateralization, (c) enter into a
pledge and security agreement to secure the Company’s
continuing obligations under the Notes with Betbroker Shares and
(c) provide mutual releases on the terms and conditions set
forth herein below.
AGREEMENT:
NOW, THEREFORE , in consideration of the
mutual covenants of the parties, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1.
Recitals . The above recitals are
true and correct and are incorporated herein, in their entirety,
by this reference.
2.
Amendment to the Notes . The
parties hereto hereby agree to the following amendments to the
Notes:
(a)
The June 30, 2007 maturity date in the Notes
shall be extended to such date which is nine (9) months
following the date of this Agreement;
(b)
On the one hundred twenty-first (121
st ) day following the date hereof, the Company shall
pay to the Lender all accrued and unpaid interest plus one fifth
(1/5 th ) of the then-outstanding balance due and
owing under the Notes. Every thirty (30) days thereafter
until all amounts under the Notes are paid in full, the Company
shall pay an equal amount plus accrued interest such that the
entire loan will be repaid in five (5) payments. In the
event that the Company does not make a full payment on any
payment date, it shall have a thirty (30) day grace period to
bring the payment current or such failure to make full payment
will constitute an “Event of Default” under the
Notes; and
(c)
The Company and the Lender shall execute addenda
(effective as of the date hereof) to such Notes (if necessary)
in the form of Exhibit A attached hereto in order to
further effect the agreements set forth in Sections 2(a) through
(c) herein above.
(d)
The Notes shall be increased by any additional
indebtedness of the Company that is acquired by Lender,
including, but not limited to any indebtedness of the Company to
Michael O. Sutton (approximately $32,200 as of October 1, 2007)
that is acquired by the Lender.
3.
Amendment to the Loan Agreement .
Lender hereby waives any and all provisions of Article 6
of the Loan Agreement to the extent such Article 6 might be
construed to prohibit the Asset Sale, and the Lender hereby
agrees and consents to the Asset Sale. Furthermore, the
Company shall continue to pay interest to the Lender on a
monthly basis with
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the funds received
by the Lender from the credit card deposits applied first to
monthly interest and then to principal on the Notes in
accordance with the terms of Item 3.3 of the Disclosure Schedule
made a part of the Loan Agreement and that certain assignment
letter executed by the Company and the Subsidiary dated on or
about the date of the Loan Agreement and addressed to Centerline
International.
4.
Termination of Certain Security Instruments;
Release of Pledged Property .
(a)
Effective upon the delivery of the Certificate
(as defined in the Pledge and Security Agreement [as defined
below], and without any further action on the part of Lender,
the Security Agreement and the Subsidiary Security Agreement
shall be terminated, and effective upon the delivery of the
Certificate, the Lender hereby acknowledges that it has no
further rights to the Pledged Property, as such term is defined
in both the Security Agreement and the Subsidiary Security
Agreement. The Company hereby acknowledges that the
Pledged Shares (as such term is defined both in the Pledge
Agreement and the Insider Pledge Agreement) and the Collateral,
as such term is defined in the Pledge and Security Agreement (as
that term is defined below) shall not constitute Pledged
Property as defined in the Security Agreement and the Subsidiary
Security Agreement, and that the Pledge Agreement, the Insider
Pledge Agreement and the Pledge and Security Agreement shall
remain in full force and effect.
(b)
The Lender agrees that it will, upon the
execution of this Agreement by both parties, file a UCC-3 with
the Secretaries of State of the States of Nevada and Delaware in
order to effectively modify and release from the collateral
descriptions therein the Pledged Property (as such terms are
defined in the Security Agreement and the Subsidiary Security
Agreement) in accordance with the terms set forth in Section
4(a) herein above.
5.
Pledge and Security Agreement . The
parties hereto agree that One Million Dollars ($1,000,000) worth
of Betbroker Shares beneficially owned by the Company shall be
pledged by the Company to secure the Company’s payment
obligations to the Lender under the Notes pursuant to the Pledge
and Security Agreement in the form of Exhibit B attached
hereto (the “ Pledge and Security Agreement
”).
6.
Additional Consideration; Restrictions on
Sale of Betbroker Shares .
(a)
In consideration for the Lender’s
willingness to extend the maturity dates under the Notes, to
consent to the Asset Sale and to terminate the Security
Agreement and the Subsidiary Security Agreement, and for other
good and val
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