SUBORDINATION OF LOANS AGREEMENT

THIS SUBORDINATION AGREEMENT (the “Agreement”) is executed effective as of the
_____ day of ___________, 2012, by and between ______________ (the “Loan
Holder”), TCA GLOBAL CREDIT MASTER FUND, LP (“Lender”) and T. O ENTERTAINMENT,
INC., a Colorado corporation, T. O ENTERTAINMENT, INC., a Japan corporation, T.
O ENTERTAINMENT UNITED KINGDOM LTD, a United Kingdom corporation, T. O
ENTERTAINMENT RUS, LLC, a Russia limited liability company, and T. O
ENTERTAINMENT SINGAPORE PTE LTD, a Singapore corporation (each of the foregoing
hereinafter sometimes individually referred to as a “Borrower” and all such
 entities sometimes hereinafter collectively referred to as “Borrowers”).

W I T N E S S E T H:

WHEREAS, the Borrowers have borrowed, or may in the future borrow, funds from
Loan Holder, for which Borrowers is or may become indebted to and in favor of
Loan Holder (all present or future indebtedness of any Borrower to Loan Holder,
of every kind and description, direct or contingent, due or not due, secured or
unsecured, original, renewed or extended and whether now in existence or
hereafter arising, hereinafter collectively referred to as the “Subordinated
Debt”); and

WHEREAS, the Lender has made or will make a loan to Borrowers in the principal
amount of up to Five Million and No/100 Dollars ($5,000,000.00) (the “Loan”),
which Loan is evidenced by that certain Credit Agreement dated of even date
herewith by and among Lender and Borrowers (the “Credit Agreement”), which
Credit Agreement and related Loan Documents provide to Lender a first priority
security interest (“Lender’s Security Interest”) in the Collateral of Borrowers.
Capitalized terms used in this Agreement and not otherwise defined herein, shall
have the same meanings ascribed to such terms in the Credit Agreement; and
WHEREAS, Loan Holder is a guarantor and/or shareholder, director, officer or
otherwise associated with Borrowers, and will materially benefit as a result of
the Lender making the Loan to Borrowers; and

WHEREAS, Loan Holder acknowledges that the Lender is willing to make the Loan
only on the condition that the Subordinated Debt be subordinate and inferior to
the Loan, and to all other indebtedness of any Borrower to Lender, whether now
in existence or hereafter created; and

WHEREAS, Loan Holder has agreed to subordinate the Subordinated Debt to the lien
and effect of the Loan and Lender’s Security Interest and all security
instruments securing the Loan, and all other indebtedness of Borrowers to Lender
of every kind and description, direct or contingent, due or not due, secured or
unsecured, original, renewed or extended, whether now in existence or hereafter
arising; and

WHEREAS, Loan Holder acknowledges that Lender would not effectuate the Loan
without the execution of this Agreement by Loan Holder.

NOW, THEREFORE, in consideration of, and as an inducement to Lender to make the
Loan, Loan Holder, Lender and Borrowers do hereby agree as follows:

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1.

Recitals. The recitals set forth above are true and correct and are incorporated
herein by reference.

2.

No Further Indebtedness. Loan Holder and each Borrower do hereby warrant and
represent that as of the date hereof, the only Subordinated Debt currently
outstanding which is due and owing from any Borrower to Loan Holder is
$________.00, and that no further indebtedness shall be incurred between any
Borrower and Loan Holder during the term of the Loan and this Agreement.

3.

Subordination. Loan Holder does hereby unconditionally subordinate the

Subordinated Debt to the Loan and all other present and future debts and
obligations of each Borrower to Lender, said indebtedness including all
obligations of Borrowers to Lender of every kind and description, direct or
contingent, due or not due, secured or unsecured, original, renewed or extended,
whether now in existence or hereafter arising and to the lien and effect of
Lender’s Security Interest in and to the Collateral and to all Loan Documents
and all other debts and obligations of Borrowers, or any one of them, to Lender.

4.

No Payments on Subordinated Debt; Event of Default. Loan Holder and each
Borrower do hereby warrant, represent and agree that no payment (principal,
interest or any other payment) shall be made, permitted or accepted under or
with respect to any of the Subordinated Debt (or under any other document or
agreement) during the term of the Loan. If any payment is made by any Borrower
in payment of the Subordinated Debt, or if any security or proceeds thereof is
received by Loan Holder on account of the Subordinated Debt contrary to the
terms of this Agreement, the same shall be and constitute an Event of Default
under the Credit Agreement and the Loan Documents. Upon the occurrence of an
Event of Default under the Credit Agreement or any other Loan Documents, Lender
shall be entitled to immediately exercise all remedies provided to Lender in
connection with the Collateral and under the Loan Documents, and each and every
amount paid by or on behalf of any Borrower to Loan Holder, or any payments,
security, proceeds or other items received by Loan Holder (from any Borrower or
from an individual or an entity on behalf of any Borrower) will be forthwith
paid by Loan Holder to Lender, in precisely the form received (except for Loan
Holder’s endorsement, where necessary), to be credited and applied, in Lender’s
sole discretion, upon any indebtedness (principal and/or interest and/or
otherwise as Lender may elect, in its sole discretion) then owing to Lender by
any Borrower and, whether matured or unmatured, and, until so delivered, the
same shall be held in trust by Loan Holder as the property of Lender. In the
event of a failure of Loan Holder to endorse any instrument for the payment of
monies so received by Loan Holder payable to Loan Holder’s order, Lender, or any
officer or employee of Lender, is hereby irrevocably constituted and appointed
attorney-in-fact (coupled with an interest) for Loan Holder with full power to
make any such endorsement and with full power of substitution.

5.

No Enforcement By Loan Holder. Loan Holder will not exercise any collection
rights with respect to the Subordinated Debt, will not take possession of, sell
or dispose of, or otherwise deal with any Collateral, and will not exercise or
enforce any right or remedy which may be available to them with respect to the
Subordinated Debt, unless and until such time as the Loan, as the same may be
modified from time to time, including all principal, interest and other charges
associated therewith, has been paid in full and no other debts or obligations
are due and owing from Borrowers to Lender. Loan Holder shall

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immediately notify Lender, in writing, of any default by any Borrower under any
Subordinated Debt, and any default under or with respect to any Subordinated
Debt shall be and constitute a default under the Loan entitling Lender to
exercise all of its rights in connection with the Collateral and under the Loan
Documents.

6.

No Impairment of Lender Remedies. Lender may exercise collection rights, may
take possession of, sell or dispose of, and otherwise deal with, the Collateral
and may exercise or enforce any right or remedy available to Lender under the
Loan Documents with respect to the Collateral, whether available prior to or
after the occurrence of any default in connection with the Subordinated Debt.

7.

Additional Security. In order to effectuate the foregoing subordination, Loan
Holder does hereby transfer and assign to Lender, as additional collateral and
security for the Loan, any and all debts and obligations of Borrowers to Loan
Holder, all of the said claims or demands of Loan Holder against any Borrower,
with full right on the part of Lender, in its own name or in the name of Loan
Holder, to collect and enforce said claims by suit, proof of debt in bankruptcy,
or other liquidation proceedings or otherwise.

8.

Payments Upon Bankruptcy Events. Upon any distribution of the assets or

readjustment of indebtedness of any Borrower, whether by reason of
reorganization, liquidation, dissolution, bankruptcy, receivership, assignment
for the benefit of creditors, or any other action or proceeding involving the
readjustment of all or any part of the Subordinated Debt or the application of
the assets of any Borrower to the payment or liquidation thereof, either in
whole or in part, Lender shall be entitled to receive payment in full of any and
all indebtedness under the Loan or otherwise then owing to Lender by any
Borrower prior to the payment of all or any of the Subordinated Debt.

9.

Restrictions on Transferability of Subordinated Debt. Each person comprising a
Loan Holder (jointly and severally) agrees that he/she shall not transfer,
assign, encumber, hypothecate or subordinate, at any time while this Agreement
remains in effect, any right, claim or interest of any kind in or to any of the
Subordinated Debt, either principal or interest or otherwise, and there shall
promptly be placed on each promissory note or other document or agreement
constituting a portion of the Subordinated Debt, a legend reciting that the same
is subject to this Agreement.

10.

Lender’s Rights. Loan Holder acknowledges that Lender may, at any time, in its
discretion, renew or extend the time of payment of all or any portion of the
Loan, or any other existing or future indebtedness or obligations of Borrowers
to Lender and/or waive or delay in enforcing any rights or release any
collateral relative thereto at any time(s) and, in reference thereto, to modify
or amend the Loan Documents and/or make and enter into such agreement(s),
compromise(s) and other indulgence(s), as Lender may deem proper or desirable,
without notice to or further assent of Loan Holder, all without in any manner
impairing or affecting this Agreement or any of Lender’s rights hereunder.

11.

Statement of Account. Loan Holder hereby agrees to provide and deliver to
Lender, upon demand, from time to time, a statement of the account of Loan
Holder with any Borrower, and that each Borrower will duly comply with and
conform with each and every term of this Agreement, on its part required to be
performed.

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12.

Entire Agreement. This Agreement and the other Loan Documents: (i) are valid,
binding and enforceable against each Borrower and Loan Holder in accordance with
their respective provisions and no conditions exist as to their legal
effectiveness; (ii) constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof; and (iii) are the final
expression of the intentions of Loan Holder, Borrowers and Lender. No promises,
either expressed or implied, exist between Loan Holder, Borrowers and Lender,
unless contained herein or therein. This Agreement, together with the other Loan
Documents, supersedes all negotiations, representations, warranties,
commitments, term sheets, discussions, negotiations, offers or contracts (of any
kind or nature, whether oral or written) prior to or contemporaneous with the
execution hereof with respect to any matter, directly or indirectly related to
the terms of this Agreement and the other Loan Documents. This Agreement and the
other Loan Documents are the result of negotiations between Loan Holder,
Borrowers and Lender and have been reviewed (or have had the opportunity to be
reviewed) by counsel to all such parties, and are the products of all parties.
Accordingly, this Agreement and the other Loan Documents shall not be construed
more strictly against Lender merely because of Lender’s involvement in their
preparation.

13.

Amendments; Waivers. No delay on the part of Lender in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise by Lender of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the other Loan Documents shall in any event be
effective unless the same shall be in writing and acknowledged by Lender, and
then any such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

14.

WAIVER OF DEFENSES. LOAN HOLDER AND BORROWERS, AND

EACH OF THEM, WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION,
COUNTERCLAIM OR SETOFF WHICH EITHER OF THEM MAY NOW HAVE OR HEREAFTER MAY HAVE
TO ANY ACTION BY LENDER IN ENFORCING THIS AGREEMENT. PROVIDED LENDER ACTS IN
GOOD FAITH, LOAN HOLDER AND EACH BORROWER EACH RATIFIES AND CONFIRMS WHATEVER
LENDER MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO
BORROWERS.

15.

FORUM SELECTION AND CONSENT TO JURISDICTION. TO INDUCE LENDER TO MAKE FINANCIAL
ACCOMODATIONS TO BORROWERS, LOAN HOLDER AND BORROWERS EACH AGREES THAT ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE FEDERAL OR STATE COURTS OF CLARK COUNTY, NEVADA; PROVIDED
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. LOAN
HOLDER AND BORROWERS EACH HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF CLARK COUNTY, NEVADA, FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. LOAN HOLDER, BORROWERS AND LENDER EACH FURTHER
IRREVOCABLY CONSENT TO THE

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SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEVADA. LOAN HOLDER AND BORROWERS EACH HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

16.

WAIVER OF JURY TRIAL. LOAN HOLDER, BORROWERS AND LENDER, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT,
 INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING
RELATIONSHIP EXISTING IN  CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF
CONDUCT OR COURSE OF DEALING IN WHICH LENDER, BORROWERS AND LOAN HOLDER ARE
ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWERS.

17.

Assignability. Lender, prior to the occurrence of an Event of Default and with
the consent of Borrowers, which consent will not be unreasonably withheld, and
after the occurrence of an Event of Default without consent from or notice to
anyone, may at any time assign Lender’s rights in this Agreement, the other Loan
Documents, the Obligations, or any part thereof and transfer Lender’s rights in
any or all of the Collateral, and Lender thereafter shall be relieved from all
liability with respect to such Collateral. This Agreement shall be binding upon
Lender, Loan Holder and Borrowers and their respective legal representatives,
heirs and successors.

18.

Binding Effect. This Agreement shall become effective upon execution by Loan
Holder, Borrowers and Lender.

19.

Governing Law. This Agreement shall be delivered and accepted in and shall be
deemed to be a contract made under and governed by the internal laws of the
State of Nevada, without regard to conflict of laws principles.

20.

Enforceability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by, unenforceable or
invalid under any jurisdiction, such provision shall as to such jurisdiction, be
severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

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21.

Time of Essence. Time is of the essence in making payments of all amounts due
Lender under the Loan Documents and in the performance and observance by Loan
Holder and Borrowers of each covenant, agreement, provision and term of this
Agreement and the other Loan Documents.

22.

Counterparts; Facsimile Signatures. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. Receipt
of an executed signature page to this Agreement by facsimile or other electronic
transmission shall constitute effective delivery thereof. Electronic records of
executed Loan Documents maintained by Lender shall be deemed to be originals
thereof.

23.

Notices. Except as otherwise provided herein, Loan Holder and Borrowers each
waives all notices and demands in connection with the enforcement of Lender’s
rights hereunder. All notices, requests, demands and other communications
provided for hereunder shall be made in accordance with the terms of the Credit
Agreement.

24.

Costs, Fees and Expenses. Loan Holder and Borrowers, and each of them, jointly
and severally, shall pay or reimburse Lender for all reasonable costs, fees and
expenses incurred by Lender or for which Lender becomes obligated in connection
with the enforcement of this Agreement, including costs and expenses and
attorneys’ fees, costs and time charges of counsel to Lender throughout all
court levels.

25.

Termination. This Agreement shall not terminate until the termination of the
Credit Agreement and the commitments to make Loans thereunder and the full and
complete performance and satisfaction and payment in full of all the Obligations
(other than contingent indemnification obligations to the extent no claim giving
rise thereto has been asserted).

[Signatures on the following page]

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IN WITNESS WHEREOF, the undersigned have executed this Subordination Agreement
as of the date first written above.

LOAN HOLDER:

 

 

 

 

 

Name

 

 

 

 

 

BORROWERS:

 

 

 

 

 

T. O ENTERTAINMENT, INC.,

a Colorado corporation

 

T. O ENTERTAINMENT, INC.,

a Japan corporation

 

 

 

By: /s/Takeichi Honda

Name: Takeichi Honda

Title: Chief Executive Officer

 

By: /s/Takeichi Honda

Name: Takeichi Honda

Title: Chief Executive Officer

 

 

 

T. O ENTERTAINMENT UNITED

KINGDOM LTD, a United Kingdom corporation

 

T. O ENTERTAINMENT RUS, LLC,

a Russia limited liability company

 

 

 

By: /s/Takeichi Honda

Name: Takeichi Honda

Title: Director

 

By: /s/Takeichi Honda

Name: Takeichi Honda

Title: Founder

 

 

 

T. O ENTERTAINMENT SINGAPORE

PTE LTD, a Singapore corporation

 

 

 

By: /s/Takeichi Honda

Name: Takeichi Honda

Title: Director

 

 

 

 

 

LENDER:

 

 

TCA GLOBAL CREDIT MASTER FUND, LP

 

 

 

By: TCA Global Credit Fund GP, Ltd.

 

 

Its: General Partner

 

 

By: /s/Robert Press

 

 

Robert Press, Director

 

 

Subordination of Loans Agreement - Signature Page

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