Exhibit 10.6

	
	4836-5562-9259 v.5


PREFERRED EQUITY SUBORDINATION AGREEMENT
THIS PREFERRED EQUITY SUBORDINATION AGREEMENT (this “Subordination
Agreement”) is entered into as of September 30, 2020, among EAST WEST BANK, a California state
bank (“Senior Lender”), USDM HOLDINGS, INC., a Texas corporation (“Preferred Unit Holder”), and
DIRECT DIGITAL HOLDINGS, LLC, a Texas limited liability company (the “Company”).
R E C I T A L S
A. The Company desires that Senior Lender extend credit to the Company and certain of its
affiliates, on a revolving basis as set forth in the Credit Agreement (as defined herein) and has entered into
a Security Agreement in favor of Senior Lender in connection therewith.  The Company and Preferred Unit
Holder have entered into that certain Amended and Restated Limited Liability Company Agreement dated
as of September 30, 2020 (the “Company Agreement”).
B. It is the agreement of the parties that the payment obligations owed by the Company to
Preferred Unit Holder shall be subordinate to the indebtedness owed by the Borrowers (as defined below)
to Senior Lender, all as hereafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt, sufficiency and adequacy
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.  The following terms shall have the respective meanings specified below or
in the Section or Recital referred to below:
 “Bankruptcy Proceeding” means any proceeding by or against any party for relief under any
bankruptcy, reorganization or insolvency law or laws relating to the relief of debtors, or any receivership,
insolvency or assignment for the benefit of creditors, or any proceeding for any liquidation, liquidating
distribution, dissolution or other winding up of such party, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings.
 “Credit Agreement” means that certain Credit Agreement by and among the Company, Colossus
Media, LLC, a Delaware limited liability company (“Colossus”), Huddled Masses LLC, a Delaware limited
liability company (“HM”), Orange142, LLC, a Delaware limited liability company (“Orange”), and
Universal Standard for Digital Marketing, LLC, a Delaware limited liability company (“USDM” and
together with the Company, Colossus, HM, and Orange, “Borrowers” and each individually a “Borrower”),
and Senior Lender dated of even date herewith, as amended, restated, supplemented or otherwise modified
from time to time.
 “Enforcement Action” means any judicial, arbitral or other proceeding, or any collection or
enforcement action of any kind, to enforce or attempt to enforce any right or remedy available to Preferred
Unit Holder to collect the Junior Obligations, including any judicial, arbitral or proceeding  or any collection
action against the Company or the Company’s assets seeking, directly or indirectly, to enforce any rights
or remedies, or to enforce any of the obligations incurred by the Company, under or in connection with the
Junior Obligations (but excluding demand notices and other similar notices); provided, however, that (1)
the imposition of surcharges as contemplated by Sections 3.1, 8.8, 8.9, or 8.10 of the Company Agreement,
(2) the submission to mediation or arbitration as contemplated by Sections 8.8, 8.9, 8.10 or Section 12.16
of the Company Agreement and/or (3) specific performance, injunctive or other equitable relief as
contemplated by Sections 8.11 or 12.16 of the Company Agreement (but still subject to Section 3 hereof)
shall not be an “Enforcement Action” hereunder.
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 “Junior Obligations” means the obligation of Company to pay distributions of available cash, to
allocate profits, to redeem preferred units, or make any other payments to Preferred Unit Holder in
accordance with Sections 3.1, 4.1, 8.8, and 8.9 of the Company Agreement.
 “Loan Documents” has the meaning given such term in the Credit Agreement.
 “Obligated Party” has the meaning given such term in the Credit Agreement.
 “Senior Debt” has the meaning given such term in Section 2 herein.
 “Subordination Event” means the occurrence and continuance of an Event of Default (as defined
in the Credit Agreement).
2. Subordination.  The Junior Obligations shall be subordinate and junior in right of payment
and collection to the payment and collection in full of all present and future indebtedness, obligations and
liabilities of the Borrowers and the other Obligated Parties to Senior Lender under the Loan Documents
(the “Senior Debt”).
3. Limitations on Distributions, Payments and Redemption.  Except as is hereinafter set
forth in this Section 3, no payment shall be made by or on behalf of the Company on account of or for
application against the Junior Obligations, whether as a result of setoff, realization upon collateral or
otherwise, and no distribution (other than Permitted Tax Distributions as defined in the Credit Agreement
and Tax Distributions as defined in the Term Loan Agreement) of any kind shall be received by Preferred
Unit Holder from the Company, and no redemption shall be made by Preferred Unit Holder any of the
Preferred Units (as defined in the Company Agreement) until the Senior Debt shall have been fully paid in
cash and satisfied (other than contingent indemnification obligations as to which no claim has been
asserted).  The provisions of the first sentence of this Section 3 notwithstanding, for so long as (i) no
Subordination Event shall have occurred and be continuing and (ii) after giving effect to the payment or
distribution with respect to the Preferred Units or the redemption of the Preferred Units, the Borrowers
would be in pro forma compliance with the financial covenants set forth in Article IX of the Credit
Agreement, the Company may make payments or distributions to the Preferred Unit Holder permitted by
the Company Agreement and the Company may pay the Preferred Unit Holder and the Preferred Unit
Holder may receive the distributions and redemption price set forth in the Company Agreement with respect
to such Preferred Units (the “Permitted Payments”). Upon the occurrence and during the continuation of a
Subordination Event, all further payments of Permitted Payments to Preferred Unit Holder shall
immediately cease; provided, that such Permitted Payments may continue to accrue and at such time as
there shall be no continuing Subordination Event such accrued Permitted Payments may be paid in full and
payments of Permitted Payments may resume hereunder. Senior Lender shall use commercially reasonable
efforts to provide Preferred Unit Holder with notice of the occurrence of a Subordination Event.
4. Certain Distributions.  Preferred Unit Holder agrees that in the event of any distribution,
division or any application, partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of the Company or the proceeds thereof to creditors of the Company, in any
case for reason of the liquidation, dissolution or winding up of the Company or the Company’s business,
or in the event of any sale, receivership, insolvency or Bankruptcy Proceeding or assignment for the benefit
of creditors, or any proceeding by or against the Company for any relief under any bankruptcy or insolvency
law or laws relating to the relief of debtors, the adjustment of indebtedness, reorganizations, compositions
or extensions, then and in any such event any payment or distribution of any kind or character, either in
cash, property, securities or otherwise, which shall thereafter be paid or delivered by the Company upon or
with respect to the Junior Obligations shall be turned over by Preferred Unit Holder to Senior Lender
(without liability for interest thereon) for application on the Senior Debt, until the Senior Debt shall have 





	
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been fully paid in cash and satisfied (other than contingent indemnification obligations as to which no claim
has been asserted).
5. Remedies Standstill.  Unless Senior Lender otherwise consents in writing, Preferred Unit
Holder will not commence any Enforcement Action prior to the earliest of:
(a) the date all Senior Debt is fully paid in cash and satisfied (other than contingent
indemnification obligations as to which no claim has been asserted); or
(b) the occurrence of a Bankruptcy Proceeding involving the Company.
For the avoidance of doubt, nothing contain herein shall be deemed to limit Preferred Unit Holder’s
ability to enforce or attempt to enforce any right or remedy available to Preferred Unit Holder under that
certain Membership Interest Purchase and Contribution Agreement, dated on or about the date hereof, by
and among Preferred Unit Holder, the Company, and Orange.
6. Additional Agreements.  Preferred Unit Holder agrees (a) that it will not commence or
pursue in any action of any kind (including any Enforcement Action or Bankruptcy Proceeding) to prohibit,
limit or impair the commencement or pursuit by Senior Lender of any of its rights or remedies under or in
connection with the Senior Debt, the Credit Agreement, the Loan Documents, or otherwise available to
Senior Lender under applicable law; (b) that Preferred Unit Holder will not assign or otherwise transfer the
Junior Obligations unless such assignment is made expressly subject to this Subordination Agreement; and
(c) not to amend in any material respects the terms of the payment of the Junior Obligations, or to increase
the distribution or other payments constituting Junior Obligations without the consent of Senior Lender
(other than the imposition of surcharges as contemplated by Sections 3.1, 8.8, 8.9, or 8.10 of the Company
Agreement).
7. Treatment of Payments.  In the event that notwithstanding the provisions of this
Subordination Agreement, any cash or distribution of assets of the Company, whether in cash, property,
securities or otherwise, which, under the provisions of this Subordination Agreement should not have been
paid to Preferred Unit Holder, is received by Preferred Unit Holder or any person on its behalf, or provision
is made for such payment or distribution, such payment or distribution shall be held for the benefit of and
shall immediately be paid or delivered directly to Senior Lender, with any necessary endorsement, for
application to the payment of the Senior Debt; until the Senior Debt shall have been fully paid cash and
satisfied (other than contingent indemnification obligations as to which no claim has been asserted);
provided, however, the Senior Lender must provide written notice to the Preferred Unit Holder within 10
days of such distribution that such distribution must be returned.
8. Modification to Senior Debt.  Senior Lender may, at any time and from time to time,
without the consent of or notice to Preferred Unit Holder, without incurring any responsibility to Preferred
Unit Holder, and without impairing or releasing the obligations of Preferred Unit Holder to Senior Lender
(a) change the manner, place or terms of payment of, or change or extend the time of payment of, or renew,
alter or increase the Senior Debt; (b) extend, modify or amend any agreement or any other document related
to the Senior Debt or the Senior Liens; (c) sell, exchange, release or otherwise deal with any property by
whomsoever at any time pledged or mortgaged to secure or howsoever securing, any of the Senior Debt;
(d) release anyone liable in any manner for the payment or collection of any of the Senior Debt, (e) exercise
or refrain from exercising any rights against the Company, any Borrower or any other person; or (f) take or
refrain from taking any other action whatsoever.
9. No Impairment.  The provisions of this Subordination Agreement are intended solely for
the purpose of defining the relative rights of Preferred Unit Holder or any holder of the Junior Obligations, 





	
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on one hand, and Senior Lender or any holder of the Senior Debt, on the other hand, and nothing contained
in this Subordination Agreement is intended to or shall impair, as between the Company, other creditors,
and Preferred Unit Holder or any holder of the Junior Obligations, all amounts due and payable in
accordance with the Junior Obligations, or to affect the relative rights of Preferred Unit Holder or any holder
of the Junior Obligations and creditors of the Company other than Senior Lender or holders of the Senior
Debt, nor shall anything herein or therein prevent Preferred Unit Holder or any holders of the Junior
Obligations from exercising all remedies against the Company otherwise permitted by applicable law,
subject to the rights of Senior Lender under the provisions of this Subordination Agreement.
10. Obligations Hereunder Not Affected.  No action or inaction of Senior Lender or any
other person, and no change of law or circumstances, shall release or diminish the obligations, liabilities,
agreements or duties hereunder of Preferred Unit Holder or the Company, or affect this Subordination
Agreement in any way or provide any party any recourse against Senior Lender.
11. Specific Performance.  Senior Lender is hereby authorized to demand specific
performance of this Subordination Agreement at any time when any other party shall have failed to comply
with any of the provisions of this Subordination Agreement applicable to it.  The Company and Preferred
Unit Holder hereby irrevocable waive any defense based upon the adequacy of a remedy at law which might
be asserted as a bar to such remedy of specific performance and waive any requirement of the posting of
any bond which might otherwise be required before such remedy of specific performance granted.
12. Subrogation.  No payment or distribution to Senior Lender pursuant to the provisions of
this Subordination Agreement shall entitle Preferred Unit Holder to exercise any rights of subrogation in
respect thereof until the Senior Debt shall have been paid in cash and satisfied in full (other than contingent
indemnification obligations as to which no claim has been asserted) or the Senior Lender shall have
consented in writing to the exercise of such rights.  After the payment of the Senior Debt in cash in full
(other than contingent indemnification obligations as to which no claim has been asserted) and provided no
payments are voidable, Preferred Unit Holder shall be subrogated to the rights of Senior Lender to receive
payments or distributions applicable to the Senior Debt to the extent the distributions otherwise payable to
Preferred Unit Holder have been applied to the payment of the Senior Debt.
13. Choice of Law.  THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
14. Representations.  Preferred Unit Holder represents and warrants that it has full power and
authority to execute this Subordination Agreement and that this Subordination Agreement constitutes the
valid and binding obligation of Preferred Unit Holder enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of
reasonableness and general principles of equity, regardless of whether considered in a proceeding in equity
or at law.  Preferred Unit Holder represents and warrants that it has furnished Senior Lender with true and
complete copies of all documents which evidence the Junior Obligations.
15. Waivers and Amendments.  Until the Senior Debt shall have been fully paid or satisfied,
this Subordination Agreement may not be amended, waived, terminated or otherwise modified except with
the consent of Senior Lender and Preferred Unit Holder.
16. No Implied Waiver.  Any delay in the exercise of or any failure to exercise any right or
remedy of Senior Lender shall not be deemed a waiver of any such right or remedy. 





	
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17. Binding Effect.  This Subordination Agreement shall be binding upon the parties and their
respective successors, transferees and assigns.  Each reference in this Subordination Agreement to Preferred
Unit Holder shall include any assignee or transferee of the Junior Obligations, and each reference in this
Subordination Agreement to Senior Lender shall include any assignee or transferee of the Senior Debt and
the Senior Liens.
18. Invalid Provisions.  If any term or provision of this Subordination Agreement shall be
determined to be illegal or unenforceable, all other terms and provisions hereof shall nevertheless remain
effective and shall be enforced to the fullest extent permitted by law.
19. Further Assurances.  Preferred Unit Holder and the Company further agree to execute
such subordinations and other documents that may be reasonably requested by Senior Lender to more fully
give effect to the provisions of this Subordination Agreement.
20. Notices.  All notices, requests, consents, demands and other communications required or
permitted under this Subordination Agreement shall be in writing and, unless otherwise specifically
provided in this Subordination Agreement, (i) shall be deemed sufficiently given or furnished (a) if
delivered by a commercial messenger service regularly retaining receipts for such delivery, effective on the
date of delivery by the commercial messenger service; (b) if sent by electronic mail, effective on the date
of delivery if sent return receipt acknowledged; (c) if sent by registered or certified mail, return receipt
requested, effective forty-eight (48) hours after deposit; (d) if sent by telephonic facsimile transmission
with a copy sent by regular mail, effective on the date imprinted on the facsimile transmission form; or
(e) if delivered by the air courier services known as FedEx, Express Mail, Airborne or Emory Air, effective
upon delivery thereof to the courier, and (ii) shall be addressed to the parties as listed as follows:
Senior Lender’s address:
East West Bank
5001 Spring Valley Road; Suite 825W
Dallas, Texas 75244
Attention: Hamilton LaRoe
email:  Hamilton.Laroe@EastWestBank.com
Company’s address:
Direct Digital Holdings, LLC
1233 West Loop South
Suite 1170
Houston, Texas 77027
Attention: Keith W. Smith
Email: ksmith@directdigitalholdings.com
Phone: 713.540.4545

Preferred Unit Holder’s address:
USDM Holdings, Inc
5729 Krause Lane, Unit #13
Austin, Texas 78738
Attention: Leah Woolford and Jeff Woolford
Email: leah@usdmholdings.com
 jeff@usdmholdings.com 





	
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with a copy (not constituting notice) to:

Fredrikson & Byron, P.A.
200 South Sixth Street, Suite 4000
Attention: Jessica D. Manivasager
Email: jmanivasager@fredlaw.com

21. Costs and Expenses.  The Company agrees to pay, upon demand to Senior Lender, all
reasonable and documented out-of-pocket costs and expenses (including court costs and reasonable
attorneys’ fees for one primary counsel) incurred by Senior Lender in the enforcement of this Subordination
Agreement.
22. Counterparts.  This Subordination Agreement may be executed in any number of identical
counterparts, each of which when so executed constitutes an original and all of which constitute,
collectively, one agreement.
[Remainder of Page Intentionally Blank; Signatures Begin on Next Page] 





	
	IN WITNESS WHEREOF, this Subordination Agreement is executed as of the date first above
written.
PREFERRED UNIT HOLDER:
USDM HOLDINGS, INC.
B ~~
Title: Chief Executive Officer
Signature Page to
Preferred Equity Subordination Agreement 





	
	COMPANY:
DIRECT DIGIT AL HOLDINGS, LLC
By: )~.1?- Name: \~l:t H k) ~. i{_
Title: pr ..e. s ; ~f
Signature Page to
Preferred Equity Subordination Agreement 





	
	SENIOR LENDER:
Title: First Vice President
Signature Page to
Preferred Equity Subordination Agreement