Document:

EXHIBIT
      B 

     

    FORM
      OF WARRANT 

     

    AIRBEE
      WIRELESS, INC. 

     

    WARRANT
      TO PURCHASE COMMON STOCK 

     

    WC-2008-
            

     

    THE
      OFFER AND SALE OF THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
“ACT”)
      OR QUALIFIED UNDER STATE SECURITIES LAWS AND SUCH SECURITIES MAY NOT BE SOLD,
      TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT AND EFFECTIVE QUALIFICATION THEREOF OR
      IF
      SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
      AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND THE QUALIFICATION
      REQUIREMENTS OF THE RELEVANT STATE. 

     

    This
      certifies that, for good and valuable consideration, receipt of which is hereby
      acknowledged, Richard P. Sommerfeld (the “Holder”),
      and/or its assigns, is entitled to purchase, from time to time and subject
      to
      the terms and conditions of this Warrant, from AIRBEE WIRELESS, INC., a Delaware
      corporation (the “Company”),
      fully
      paid and non-assessable shares of Common Stock of the Company, par value
      $0.00004 per share (each, a “Share”
and
      collectively, the “Shares”),
      in
      accordance with the terms hereof, during the period commencing on the date
      set
      forth on the signature page hereof (the “Commencement
      Date”).
      Terms
      not defined herein shall have the meaning ascribed to them in the Settlement
      Agreement being executed contemporaneously herewith (the “Settlement
      Agreement”).
      If
      there is any conflict between the terms of the Settlement Agreement and this
      Warrant, the Settlement Agreement shall govern. If this Warrant is silent as
      to
      any term, the terms of the Settlement Agreement shall govern. 

     

    1.
      Number
      of Shares; Vesting; Exercise Price and Expiration Date.
      

     

    (a) This
      Warrant may be exercised for 2,841,667 Shares. 

     

    (b) The
      right to exercise this Warrant shall fully vest on the Commencement Date.

     

    (c) The
      exercise or purchase price for the Shares shall be 1,550,000 warrants @ $0.10
      per share, 775,000 warrants @ $0.20 per share and 516,667 warrants @ $0.30
      per
      share. Such price shall be subject to adjustment pursuant to the terms hereof
      (such price, as adjusted from time to time, is hereinafter referred to as the
      “Exercise
      Price”).
      

     

    (d) The
      purchase right represented by this Warrant shall terminate on or before 5 p.m.
      Pacific standard time, on the fifth (5th) anniversary of the Commencement Date
      (the “Expiration
      Date”).
      

     

    2. Exercise
      and Payment.
      

     

    (a) Cash
      Exercise.
      At any
      time after the Commencement Date, this Warrant may be exercised in whole or
      in
      part, from time to time, by the Holder by surrender of this Warrant and the
      Notice of Exercise annexed hereto duly (the “Notice of Exercise”) completed and
      executed by the Holder to the Company at the principal executive offices of
      the
      Company, together with payment in the amount obtained by multiplying the
      Exercise Price then in effect by the number of Shares thereby purchased, as
      designated in the Notice of Exercise. Payment may be in cash or by check payable
      to the order of the Company. 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (b) Net
      Issuance Exercise.
      If the
      Fair Market Value of one share of Common Stock is greater than the Exercise
      Price (at the date of calculation as set forth below), then in lieu of the
      payment methods set forth in Section 2(a) hereof, this Warrant may be exercised
      in whole or in part, by the Holder by electing to exchange all or some of this
      Warrant for Warrant Shares equal to the value of the amount of the Warrant
      being
      exchanged on the date of exchange. If the Holder elects to exchange this Warrant
      as provided in this Section 2(b), Holder shall surrender this Warrant and
      the Notice of Exercise completed and executed by the Holder to the Company
      at
      the principal executive offices of the Company, and the Company shall issue
      to
      the Holder the number of Warrant Shares computed using the following formula:
      

     

    
      	
               

            	
               

            	
               

            	
               

            	
               

            
	
              X
                =

            	
               

            	
              (A*B)-(A*C)

            
	
               

            	
               

            	
              
                B

              

            
	
              X
                =
                

            	
               

            	
               

            	
               

            	
              The
                number of Warrant Shares to be issued to the Holder.

            
	
              A
                =
                

            	
               

            	
               

            	
               

            	
              The
                total number of Warrant Shares with respect to which this

              Warrant
                is then being exercised.

            
	
              B
                =
                

            	
               

            	
               

            	
               

            	
              The
                Fair Market Value of one Warrant Share on the date of

              exercise
                of this Warrant.

            
	
              C
                =
                

            	
               

            	
               

            	
               

            	
              The
                Exercise Price then in effect on the date of exercise of

              this
                Warrant.

            

    

     

    For
      purposes of this Section 2(b), “Fair
      Market Value”
shall
      be determined on a per Share basis as of the close of the business day preceding
      the date of exercise, which determination shall be made as follows: (a) if
      the Common Stock is listed on a national securities exchange or admitted to
      unlisted trading privileges on such an exchange or quoted on any automated
      quotation service operated by The Nasdaq Stock Market, Inc., the Fair Market
      Value shall be the last reported sale price of that security on such exchange
      or
      system on the day for which the current market price is to be determined or,
      if
      no such sale is made on such day, the average of the highest closing bid and
      lowest asked price for such day on such exchange or system; (b) if the
      Common Stock is not so listed or quoted or admitted to unlisted trading
      privileges, the Fair Market Value shall be the average of the last reported
      highest bid and lowest asked prices quoted on the Nasdaq Electronic Bulletin
      Board, or, if not so quoted, then by the National Quotation Bureau, Inc. on
      the
      last business day prior to the day for which the Fair Market Value is to be
      determined; or (c) if the Common Stock is not so listed or quoted or
      admitted to unlisted trading privileges and bid and asked prices are not
      reported, the Fair Market Value shall be determined by the Company’s Board of
      Directors in its reasonable, good faith judgment. 

     

    (c) Mandatory
      Exercise.
      Promptly following the first consecutive ten (10) trading day period of
      time prior to the Expiration Date during which the closing sale price of the
      Company’s Common Stock, as reported by the Nasdaq National Market or other
      securities exchange on which the Company’s Common Stock is then listed, is equal
      to or greater than 300% of the Exercise Price on each day during such period,
      the Company shall deliver to the Holder a Mandatory Exercise Notice, together
      with a computation demonstrating the basis for such Mandatory Exercise Notice.
      In such event, notwithstanding anything to the contrary in Section 2(a) or
      Section 2(b) above, the Holder agrees to exercise this Warrant in full within
      ten (10) days following receipt of the Mandatory Exercise Notice from the
      Company. To the extent that this Warrant is not so exercised, it shall expire
      and be of no further force or effect. For purposes of this Warrant,
“Mandatory
      Exercise Notice”
shall
      mean the notice delivered by the Company to the Holder advising the Holder
      that
      the closing sale price of the Company’s Common Stock, as reported by the Nasdaq
      National Market or other securities exchange on which the Company’s Common Stock
      is then listed, has been equal to or greater than 300% of the Exercise Price
      (as
      adjusted for splits, reverse splits, stock dividends, share combinations and
      the
      like) for ten (10) consecutive trading days. 

     

    3. Delivery
      of Certificates.
      Within
      a reasonable time after exercise, in whole or in part, of this Warrant, the
      Company shall issue in the name of and deliver to the Holder, a certificate
      or
      certificates for the number of fully paid and nonassessable Shares which the
      Holder shall have requested in the Notice of Exercise. If this Warrant is
      exercised in part, the Company shall deliver to the Holder a new Warrant for
      the
      unexercised portion of this Warrant at the time of delivery of such certificate
      or certificates. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4. No
      Fractional Shares.
      No
      fractional Shares or scrip representing fractional Shares will be issued upon
      exercise of this Warrant. If upon any exercise of this Warrant a fraction of
      a
      Share results, the Company will pay the Holder the difference between the cash
      value of the fractional Share and the portion of the Exercise Price allocable
      to
      the fractional Share. 

     

    5. Charges,
      Taxes and Expenses.
      The
      Holder shall pay all transfer taxes or other incidental charges, if any, in
      connection with the transfer of the Shares purchased pursuant to the exercise
      hereof from the Company to the Holder. 

     

    6. Loss,
      Theft, Destruction or Mutilation of Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant, and in case of loss, theft
      or
      destruction, of indemnity or security reasonably satisfactory to the Company,
      and upon reimbursement to the Company of all reasonable expenses incidental
      thereto, and upon surrender and cancellation of this Warrant, if mutilated,
      the
      Company will make and deliver a new Warrant of like tenor and dated as of such
      cancellation, in lieu of this Warrant. 

     

    7. Saturdays,
      Sundays, Holidays, Etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday or a Sunday or shall be
      a
      legal holiday, then such action may be taken or such right may be exercised
      on
      the next succeeding weekday which is not a legal holiday. 

     

    8
      Adjustment
      of Exercise Price and Number of Shares.
      The
      number of securities purchasable upon exercise of this Warrant and the Exercise
      Price shall be subject to adjustment from time to time as follows: 

     

    (a) Subdivisions,
      Combinations and Other Issuances.
      If the
      Company shall at any time after the date hereof but prior to the expiration
      of
      this Warrant subdivide its outstanding securities as to which purchase rights
      under this Warrant exist, by split-up or otherwise, or combine its outstanding
      securities as to which purchase rights under this Warrant exist, the number
      of
      Shares as to which this Warrant is exercisable as of the date of such
      subdivision, split-up or combination shall forthwith be proportionately
      increased in the case of a subdivision, or proportionately decreased in the
      case
      of a combination. Appropriate adjustments shall also be made to the purchase
      price payable per Share, so that the aggregate purchase price payable for the
      total number of Shares purchasable under this Warrant as of such date shall
      remain the same. 

     

    (b) Share
      Distribution.
      If at
      any time after the date hereof the Company makes a distribution on the Shares
      into which this Warrant is exercisable payable in Shares or other securities
      or
      rights convertible into Shares (“Share
      Equivalents”)
      without payment of any consideration by such holder for the additional Shares
      or
      the Share Equivalents (including the additional Shares issuable upon exercise
      or
      conversion thereof), then the number of Shares for which this Warrant may be
      exercised shall be increased as of the record date (or if no record date is
      set)
      for determining which holders of Shares shall be entitled to receive such
      distribution, in proportion to the increase in the number of outstanding Shares
      (and Shares issuable upon conversion of all such securities convertible into
      Shares) of as a result of such distribution, and the Exercise Price shall be
      adjusted so that the aggregate amount payable for the purchase of all the Shares
      issuable hereunder immediately after the record date (or on the date of such
      distribution, if applicable), for such distribution shall equal the aggregate
      amount so payable immediately before such record date (or on the date of such
      distribution, if applicable). 

     

    (c) Other
      Distributions.
      If at
      any time after the date hereof the Company distributes to holders of the class
      of Shares into which this Warrant is exercised, other than as part of its
      dissolution or liquidation or the winding up of its affairs, any Shares, any
      evidence of indebtedness or any of its assets (other than cash, Shares or
      securities convertible into Shares), then the Company may, at its option, either
      (i) decrease the per Share Exercise Price of this Warrant by an appropriate
      amount based upon the value distributed on each Share as determined in good
      faith by the Company’s Board of Directors or (ii) provide by resolution of
      the Company’s Board of Directors that on exercise of this Warrant, the Holder
      hereof shall thereafter be entitled to receive, in addition to the Shares
      otherwise receivable on exercise hereof, the number of Shares or other
      securities or property which would have been received had this Warrant at the
      time been exercised. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (d) Reclassification,
      Etc.
      If at
      any time after the date hereof there shall be a change or reclassification
      of
      the securities as to which purchase rights under this Warrant exist into the
      same or a different number or type of securities of any other class or classes,
      then the Holder shall thereafter be entitled to receive upon exercise of this
      Warrant, during the period specified herein and upon payment of the Exercise
      Price then in effect, the number of Shares or other securities or property
      resulting from such change or reclassification, which would have been received
      by Holder for the Shares subject to this Warrant had this Warrant at such time
      been exercised. 

     

    9. Notice
      of Adjustments.
      Whenever the Exercise Price or number of Shares purchasable hereunder shall
      be
      adjusted pursuant to Section 8 hereof, the Company shall execute and
      deliver to the Holder a certificate setting forth, in reasonable detail, the
      event requiring the adjustment, the amount of the adjustment, the method by
      which such adjustment was calculated and the Exercise Price and number of Shares
      purchasable hereunder after giving effect to such adjustment, and shall cause
      a
      copy of such certificate to be mailed (by first class mail, postage prepaid)
      to
      the Holder. 

     

    10. Rights
      as Shareholder.
      Prior
      to exercise of this Warrant, the Holder shall not be entitled to any rights
      as a
      shareholder of the Company with respect to the Shares, including (without
      limitation) the right to vote such Shares, receive distributions thereon, or
      be
      notified of shareholder meetings, and the Holder shall not be entitled to any
      notice or other communication concerning the business or affairs of the Company.
      

     

    11. Restricted
      Securities.
      The
      Holder understands that this Warrant and the Shares purchasable hereunder
      constitute “restricted
      securities”
under
      the federal securities laws inasmuch as they are, or will be, acquired from
      the
      Company in transactions not involving a public offering and accordingly may
      not,
      under such laws and applicable regulations, be resold or transferred without
      registration under the Securities Act of 1933, as amended (the “1933
      Act”),
      or an
      applicable exemption from such registration. In this connection, the Holder
      acknowledges that the securities legend on Exhibit 1
      to the
      Notice of Exercise attached hereto shall be placed on any Shares issued to
      the
      Holder upon exercise of this Warrant. 

     

    12. Certification
      of Investment Purpose.
      Unless
      a current registration statement under the 1933 Act shall be in effect with
      respect to the securities to be issued upon exercise of this Warrant, the Holder
      covenants and agrees that, at the time of exercise hereof, it will deliver
      to
      the Company a written certification executed by the Holder that the securities
      acquired by such Holder upon exercise hereof are for the account of such Holder
      and acquired for investment purposes only and that such securities are not
      acquired with a view to, or for sale in connection with, any distribution
      thereof. 

     

    13. Transferability.
      This
      Warrant shall be transferable on the books of the Company maintained at its
      principal office wherever then located, upon delivery thereof duly endorsed
      by
      the Holder or its assign(s), or their duly authorized attorney or
      representative, accompanied by proper evidence of succession, assignment or
      authority to transfer. Upon any registration of transfer, the Company shall
      execute and deliver new Warrants to the person entitled thereto. This Warrant
      may be transferred, divided or combined, upon request to the Company by the
      Holder, into a certificate or certificates representing the right to purchase
      the same aggregate number of Shares. 

     

    14. Miscellaneous.
      

     

    (a) Construction.
      Unless
      the context indicates otherwise, the term “Holder”
shall
      include any transferee or transferees of this Warrant pursuant to
      Section 13 and the term “Warrant”
shall
      include any and all warrants outstanding pursuant to this Agreement, including
      those evidenced by a certificate or certificates issued upon division, exchange,
      substitution or transfer pursuant to Section 13. 

     

    (b) Restrictions.
      By
      receipt of this Warrant, the Holder makes the same representations with respect
      to the acquisition of this Warrant as the Holder is required to make upon the
      exercise of this Warrant and acquisition of the Shares purchasable hereunder
      as
      set forth in the Form of Investment Letter attached as Exhibit 1
      to the
      Notice of Exercise attached hereto. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (c) Notices.
      Unless
      otherwise provided, any notice required or permitted under this Warrant shall
      be
      given in writing and shall be deemed effectively given upon personal delivery
      to
      the party to be notified or three (3) days following deposit with the
      United States Post Office, by registered or certified mail, postage prepaid
      and
      addressed to the party to be notified (or one (1) day following timely deposit
      with a reputable overnight courier with next day delivery instructions), or
      upon
      confirmation of receipt by the sender of any notice by facsimile transmission,
      at the address indicated below or at such other address as such party may
      designate by ten (10) days’ advance written notice to the other parties.

     

    To
      Holder: Richard P. Sommerfeld, Jr. 

     

    115
      S.
      Oak Street 

     

    Falls
      Church, Virginia 22046 

     

    with
      a
      copy to: 

     

    Savit
      & Szymkowicz, LLP 

    7315
      Wisconsin Avenue 

    North
      Tower — Suite 601

    Bethesda,
      Maryland 20814 

    Attention:
      Diana M. Savit, Esq. 

     

    
      	
               

            	
               

            	
               

            
	
              To
                the Company: 

            	
               

            	
              Telephone:
                (301) 951-9191

              Facsimile:
                (301) 718-7788

              AIRBEE
                WIRELESS, Inc.

              9400
                Key West Avenue

              Rockville,
                Maryland 20850

              Attention:
                Eugene Sharer, President

              Facsimile:
                (301) 517-1861

            
	
               

            	
               

            	
              With
                a copy to:

            
	
               

            	
               

            	
              Stradling
                Yocca Carlson & Rauth

              660
                Newport Center Drive

              Newport
                Beach, California 92660

              Attention:
                Shivbir S. Grewal, Esq.

              Facsmile:
                (949) 725-4100

            

    

     

    (d) Governing
      Law; Venue.
      Any
      dispute in the meaning, effect or validity of this Warrant shall be resolved
      in
      accordance with the laws of the State of New York without regard to the conflict
      of laws provisions thereof. 

     

    (e) Attorneys’
      Fees.
      In the
      event that any suit or action is instituted under or in relation to this
      Warrant, including without limitation to enforce any provision in this Warrant,
      the prevailing party in such dispute shall be entitled to recover from the
      losing party reasonable fees, costs and expenses of enforcing any right of
      such
      prevailing party under or with respect to this Warrant, including without
      limitation, such reasonable fees and expenses of attorneys and accountants,
      which shall include, without limitation, reasonable fees, costs and expenses
      of
      appeals. 

     

    (f) Entire
      Agreement.
      This
      Warrant, the exhibit, and the Settlement Agreement to which it is attached,
      constitute the entire agreement and understanding of the parties hereto with
      respect to the subject matter hereof, and supersede all prior and
      contemporaneous agreements and understandings, whether oral or written, between
      the parties hereto with respect to the subject matter set froth below.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (g) Binding
      Effect.
      This
      Warrant and the various rights and obligations arising hereunder shall inure
      to
      the benefit of and be binding upon the Company and its successors and assigns,
      and Holder and its successors and assigns. 

     

    (h) Waiver;
      Consent.
      This
      Warrant may not be changed, amended, terminated, augmented, rescinded or
      discharged (other than by performance), in whole or in part, except by a writing
      executed by the parties hereto, and no waiver of any of the provisions or
      conditions of this Warrant or any of the rights of a party hereto shall be
      effective or binding unless such waiver shall be in writing and signed by the
      party claimed to have given or consented thereto. 

     

    (i) Severability.
      If one
      or more provisions of this Warrant are held to be unenforceable under applicable
      law, such provision shall be excluded from this Warrant and the balance of
      the
      Warrant shall be interpreted as if such provision were so excluded and the
      balance shall be enforceable in accordance with its terms. 

     

    (j) Assignment.
      Holder
      shall have the right, without the prior written consent of the Company, to
      (i) sell, assign, mortgage, pledge or otherwise transfer any interest or
      right created hereby, or (ii) delegate its duties or obligations under this
      Agreement. This Agreement is made solely for the benefit of the parties hereto,
      and no other person, partnership, association or corporation shall acquire
      or
      have any right under or by virtue of this Agreement. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Warrant effective as
      of
      the date set forth below. 

     

    
      	 	 	 
	 	
              “Company”

              AIRBEE
                WIRELESS, INC.

            
	 
 	 
 	 
	
              DATED:
                April 15, 2008

            	By:  	/s/
              E. Eugene Sharer
	 	
              
Name:
              E. Eugene Sharer
	 	Title:
              President 

    

     

    
      	 	 	 
	 	“Holder” 
              
              RICHARD
                P. SOMMERFELD, JR.

            
	 
 	 
 	 
 
	 	By:  	/s/
              Richard P. Sommerfeld, Jr.
	 	
              

              Name:
                Richard P. Sommerfeld, Jr. 

            
	 	 

    

    

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

     

    NOTICE
      OF EXERCISE 

     

    To:
      AIRBEE WIRELESS, INC. 

     

    The
      undersigned hereby elects to purchase      Shares
      (the “Shares”)
      of
      AIRBEE WIRELESS, INC., a Delaware corporation (the “Company”)
      pursuant to the terms of the attached Warrant, and tenders herewith payment
      of
      the purchase price pursuant to the terms of the Warrant. 

     

    Attached
      as Exhibit 1
      is an
      investment representation letter addressed to the Company and executed by the
      undersigned as required by Section 12 of the Warrant. 

     

    Please
      issue certificates representing the Shares purchased hereunder in the names
      and
      in the denominations indicated on Exhibit 1
      attached
      hereto. 

     

    Please
      issue a new Warrant for the unexercised portion of the attached Warrant, if
      any,
      in the name of the undersigned. 

     

    Dated:
      

     

    Name:
      

     

    Title:
      

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Exhibit 1
      

     

    To:
      AIRBEE WIRELESS, INC. 

     

    In
      connection with the purchase by the undersigned of      Shares
      of
      (the “Shares”)
      of
      AIRBEE WIRELESS, INC., a Delaware corporation (the “Company”),
      upon
      exercise of that certain Warrant dated as of April      ,
      2008,
      the undersigned hereby represents and warrants as follows: 

     

    The
      Shares to be received by the undersigned upon exercise of the Warrant are being
      acquired for its own account, not as a nominee or agent, and not with a view
      to
      resale or distribution of any part thereof, and the undersigned has no present
      intention of selling, granting any participation in, or otherwise distributing
      the same. The undersigned believes it has received all the information it
      considers necessary or appropriate for deciding whether to purchase the Shares.
      

     

    The
      undersigned understands that the Shares are characterized as “restricted
      securities” under the federal securities laws inasmuch as they are being
      acquired from the Company in transactions not involving a public offering and
      that under such laws and applicable regulations such securities may be resold
      without registration under the Securities Act of 1933, as amended (the
“Act”),
      only
      in certain limited circumstances. In this connection, the undersigned represents
      that it is familiar with Rule 144 of the Act, as presently in effect, and
      understands the resale limitations imposed thereby and by the Act. 

     

    The
      undersigned understands the instruments evidencing the Shares may bear the
      following legend: 

     

    THE
      OFFER
      AND SALE OF THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “ACT”)
      OR
      QUALIFIED UNDER STATE SECURITIES LAWS AND SUCH SECURITIES MAY NOT BE SOLD,
      TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT, OR, THAT SUCH SALE, TRANSFER, ASSIGNMENT
      OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
      REQUIREMENTS OF THE ACT AND THE QUALIFICATION REQUIREMENTS OF THE RELEVANT
      STATE. 

     

    Dated:
      

     

    Name:
      

     

    Title:
      

    
      
        
        

      

      
        9INTERCREDITOR
      AND SUBORDINATION AGREEMENT 

     

    THIS
      INTERCREDITOR AND SUBORDINATION AGREEMENT (this “Agreement”),
      dated
      as of April 15, 2008, is made by and among Airbee Wireless, Inc., a Delaware
      corporation (“Airbee”
or
      the
“Company”),
      each
      of the parties signing this Agreement under the title “Senior Creditors” on the
      signature pages hereto (together with each of their heirs, successors and
      assigns, each a “Senior
      Creditor”,
      and
      collectively, the “Senior
      Creditors”),
      and
      Richard P. Sommerfeld, Jr. (the “Subordinated
      Creditor”),
      and
      is made with reference to the following: 

     

    A. Pursuant
      to (1) that certain Assignment Agreement dated as of January 30, 2008
      (as amended, modified, renewed, extended or replaced from time to time, the
      “Assignment
      Agreement”)
      by and
      between the Company, BARTFAM, a California Limited Partnership and one of the
      Senior Creditors (“Bartfam”),
      and
      YA Global Investment, L.P. (f/k/a Montgomery Equity Partners, L.P.), a Cayman
      Islands exempted limited partnership, Bartfam purchased, among other securities,
      a secured convertible debenture in the amount of One Hundred Fifty Thousand
      Dollars ($150,000) (the “Montgomery
      Debenture”)
      dated
      April 5, 2007 which is convertible into shares of the Company’s common
      stock and which, following certain conversions into common stock, has an
      outstanding principal balance of $53,300; which indebtedness is secured by
      perfected liens and security interests on all of the Company’s assets that were
      concurrently assigned to Bartfam pursuant to the Assignment Agreement; and
      (2) that certain Debenture and Warrant Purchase Agreement (the
“Senior
      Creditor D&W Purchase Agreement”)
      dated
      as of January 30, 2008, by and between the Company and each of the Senior
      Creditors, the Senior Creditors have purchased, among other securities, $500,000
      in principal amount of secured convertible debentures and the Company has agreed
      to sell and the Senior Creditors have the right to purchase an additional
      $901,157.00 in principal amount of secured convertible indentures from the
      Company, all of which indebtedness is and shall remain secured by perfected
      first priority liens and security interests on all of the Company’s assets in
      favor of the Senior Creditors (any and all such secured convertible debentures,
      collectively, the “2008
      Senior Creditor Debentures”,
      and
      together with the Montgomery Debenture, the “Senior
      Debentures”).
      

     

    B. The
      Company and the Subordinated Creditor are parties to (1) that certain
      Settlement Agreement made and entered into as of April 15, 2008 (the
“Settlement
      Agreement”)
      pursuant to which, inter
      alia,
      the
      Company has or will issue to the Subordinated Creditor a Subordinated Secured
      Convertible Debenture (the “Subordinated
      Debenture”)
      in the
      original principal balance of $465,000. The indebtedness evidenced by the
      Subordinated Debenture shall be secured by subordinated liens and security
      interests in substantially all of the Company’s assets. 

     

    C. It
      is a condition precedent to the Company’s entry into the Settlement Agreement
      that the Subordinated Creditor enter into deliver this Agreement with the Senior
      Creditors to provide for the subordination of the Company’s indebtedness to the
      Subordinated Creditor. The Subordinated Creditor has agreed to the subordination
      of all of the Company’s indebtedness to it, upon the terms and subject to the
      conditions set forth in this Agreement. 

     

    Accordingly,
      the parties hereto agree as follows: 

     

    ARTICLE
      I

     

    DEFINITIONS;
      INTERPRETATION 

     

    1.1
      Certain
      Other Defined Terms.
      As used
      in this Agreement, the following terms shall have the following meanings:

     

    “Bankruptcy
      Code”
means
      Title 11 of the United States Code entitled “Bankruptcy”, as now or hereafter in
      effect, or any successor statute. 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Bankruptcy
      Law”
means
      the Bankruptcy Code and any other federal, state, or foreign law for the relief
      of debtors. 

     

    “Collateral”
means
      all assets and rights of any nature, wherever located, whether in existence
      or
      hereafter arising or acquired, of the Company. 

     

    “Disposition”
or
      “Dispose” means the sale, assignment, transfer, license, lease (as lessor), or
      other disposition of any property by any person (or the granting of any option
      or other right to do any of the foregoing). 

     

    “Distribution”
means
      any payment or distribution by any Person of assets of any kind or character
      (whether in cash, securities, assets, by set-off, or otherwise and including
      by
      purchase redemption or other acquisition). 

     

    “Enforcement
      Action”
means
      any action by the Subordinated Creditor to enforce payment or performance by
      the
      Company of any of its Subordinated Debt or Subordinated Debt Agreements,
      including, but not limited to, any of the following: (a) acceleration of
      the maturity of Subordinated Debt, (b) commencement of, prosecution of, or
      participation in any lawsuit, action or proceeding, whether private, judicial,
      equitable, administrative, or otherwise, against the Company, including without
      limitation (x) the commencement or joining with any other creditors in the
      commencement of any Reorganization, (y) the initiation, prosecution and/or
      completion of a judicial or non-judicial foreclosure action (including without
      limitation the recordation of any notice of default or notice of sale), or
      (z) the acceptance of a deed in lieu of foreclosure or strict foreclosure,
      (c) the exercise of any right of setoff for the collection of any amounts
      due in respect of the Subordinated Debt, (d) exercise of any Secured
      Creditor Remedy; or (e) in the event of an Reorganization:
      (i) prosecuting a motion for relief from the automatic stay to exercise an
      Enforcement Action; (ii) objecting to the Senior Creditors’ motion for
      relief from the automatic stay to foreclose on and sell any of the Collateral;
      (iii) seeking to provide debtor in possession loans or advances to the
      Company wherein Senior Creditors’ liens would be subordinated in priority,
      (iv) seeking or acquiescing in any request to convert an Reorganization
      under chapter 11 of Title 11 of the Bankruptcy Code to a case under
      chapter 7 of Title 11 of the Bankruptcy Code; (v) seeking the
      appointment of a trustee or examiner with expanded powers for the Company or
      any
      of its subsidiaries or affiliates, if any; (vi) opposing the confirmation
      of the Company’s plan of reorganization if such action might adversely affect
      the Company’s business or the Company’s ability to repay the Senior Debt.
      Notwithstanding the foregoing, none of the following shall constitute an
“Enforcement Action” for purposes of this Agreement: (x) the delivery of
      any (unrecorded) notice of default or other notice to the Company pursuant
      to or in connection with the Subordinated Debt Agreements, or (y) the
      filing by Subordinated Creditor of a proof of claim in a Reorganization, which
      proof of claim indicates Subordinated Creditor’s subordination hereunder and
      otherwise complies with the terms of this Agreement. 

     

    “Lien”
means
      any mortgage, deed of trust, pledge, security interest, assignment, deposit
      arrangement, judgment lien, attachment, writ, charge or encumbrance, lien
      (statutory or other) or other preferential arrangement (including any
      conditional sale or other title retention agreement, any financing lease having
      substantially the same economic effect as any of the foregoing or any agreement
      to give any security interest). 

     

    “Reorganization”
of
      a
      Person means (i) any distribution of assets of that Person upon any
      voluntary or involuntary dissolution, winding up, total or partial liquidation
      or reorganization, (ii) any bankruptcy or other action pursuant to the
      Bankruptcy Code or any insolvency, receivership or other statutory or common
      law
      proceeding or arrangement involving a readjustment of the obligations of that
      Person, (iii) any assignment for the benefit of creditors of that Person,
      or (iv) any marshalling of the assets or obligations of that Person.

     

    “Secured
      Creditor Remedies”
means
      any action by a secured creditor in furtherance of the sale, foreclosure,
      realization upon, or the repossession or liquidation of any of the Collateral,
      including without limitation, (i) the exercise of any remedies or rights of
      a “Secured Creditor” under Article 9 of the Uniform Commercial Code, as
      enacted in the State of New York (or, to the extent the laws of any other state
      govern the perfection, effect of perfection, priority or enforcement of any
      rights of the parties hereto with respect to the exercise of their rights as
      secured parties, the Uniform Commercial Code as enacted in such other
      jurisdiction), such as, without limitation, the notification of account debtors;
      (ii) the exercise of any remedies available to a judgment creditor;
      (iii) appointment of a receiver; or (iv) any other remedy available in
      respect of the Collateral available to such secured creditor under any agreement
      to which it is a party. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Secured
      Creditors’ Agreements”
means,
      collectively, the Senior Debt Agreements and the Subordinated Debt Agreements.
      

     

    “Senior
      Credit Facility”
means
      one or more credit facilities entered into by and among the Company and one
      or
      more commercial banks or financial institutions and providing for senior term
      or
      revolving credit borrowings (including the issuance of letters of credit) of
      a
      type similar to credit facilities typically entered into by commercial banks
      and
      financial institutions and one or more commercial paper or other senior
      securities programs pursuant to which the Company is able to raise monies in
      the
      capital markets, including in each case any related notes, guarantees,
      collateral documents, instruments and agreements executed in connection
      therewith, as such credit facilities, commercial paper and senior securities
      programs and related agreements may be amended, extended, refinanced, renewed,
      restated, replaced or refunded from time to time. 

     

    “Senior
      Debt”
means
      all present and future indebtedness, liabilities and other obligations of the
      Company to the Senior Creditors or any of them under or in connection with
      the
      Senior Debt Agreements or otherwise, whether created under, arising out of
      or in
      connection with the Senior Debt Agreements or otherwise, including all unpaid
      principal of any Senior Debentures, all interest accrued thereon, all fees,
      costs, expenses, premiums and reimbursements due under any of the Senior Debt
      Agreements, all indemnification obligations and all other amounts payable by
      Company to the Senior Creditors or any of them thereunder, or in connection
      therewith or otherwise, and any other senior indebtedness of the Company to
      which the Senior Debt held by the Senior Creditors agree to subordinate to,
      whether now existing or hereafter arising, and whether due or to become due,
      absolute or contingent, liquidated or unliquidated, determined or undetermined.
      

     

    “Senior
      Debt Agreements”
means,
      collectively, the Assignment Agreement, the Senior Creditor D&W Purchase
      Agreement, the Senior Debentures, any security agreements, pledge agreements,
      and any and all other documents and security instruments executed in connection
      therewith, and all other agreements and instruments executed and delivered
      by
      Company in connection therewith or otherwise creating any financial obligation
      of the Company in favor of the Senior Creditors or any of them. 

     

    “Senior
      Debt Collateral”
means
      all Collateral in which one or more of the Senior now has or at any time obtains
      a Lien. 

     

    “Subordinated
      Debt”
means
      all indebtedness, liabilities and other obligations of the Company to the
      Subordinated Creditor, whether now existing or hereafter arising and whether
      due
      or to become due, absolute or contingent, liquidated or unliquidated, determined
      or undetermined, including all amounts payable by Company to the Subordinated
      Creditor under or in connection with the Subordinated Debt Agreements or
      otherwise including, without limitation, all amounts due to the Subordinated
      Creditor pursuant to the Subordinated Debenture and all expenses and costs
      incurred by the Subordinated Creditor in connection with the enforcement of any
      of its rights under the Subordinated Agreements. 

     

    “Subordinated
      Debt Agreements”
means,
      collectively, the Settlement Agreement, the Subordinated Debenture, any security
      agreements and any and all other documents and security instruments executed
      in
      connection therewith, and all other agreements, judgments, orders and
      instruments executed and delivered by Company in connection therewith or
      otherwise creating any financial obligation of the Company in favor of the
      Subordinated Creditor. 

     

    “Subordinated
      Debt Payment”
means
      any payment or distribution by or on behalf of the Company, directly or
      indirectly, of assets of the Company of any kind or character, whether in cash,
      property or securities, including on account of the purchase, redemption or
      other acquisition of the Subordinated Debt, as a result of any collection,
      sale
      or other disposition of collateral, or by setoff, exchange or in any other
      manner, for or on account of the Subordinated Debt. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.2
      Interpretation.
      In this
      Agreement, except to the extent the context otherwise requires (i) any
      reference in this Agreement to an Article, Section, Schedule or Exhibit is
      a
      reference to an article, section schedule or exhibit of or to this Agreement,
      respectively, and to a subsection or clause is, unless otherwise stated, a
      reference to a subsection or a clause of the Section or subsection in which
      the
      reference appears; (ii) the words “hereof,” “herein,” “hereto,” “hereunder”
and the like refer to this Agreement as a whole and not merely to the specific
      Article, Section, subsection, paragraph or clause in which the reference
      appears; (iii) the meaning of defined terms shall be equally applicable to
      both the singular and plural forms of the terms defined; (iv) the words
“including,” “includes” and “include” shall be deemed to be followed by the
      words “without limitation”; (v) references to agreements and other
      contractual instruments shall be deemed to include all subsequent amendments
      and
      other modifications thereto; (vi) references to statutes or regulations are
      to be construed as including all statutory and regulatory provisions
      consolidating, amending or replacing the statute or regulation referred to;
      and
      (vii) the captions and headings are for convenience of reference only and
      shall not affect the construction of this Agreement. 

     

    ARTICLE
      II 

     

    AGREEMENT
      OF SUBORDINATION 

     

    2.1
      Subordination
      to Payment of Senior Debt.
      All
      Subordinated Debt Payments on account of the Subordinated Debt shall be subject,
      subordinate and junior in right of payment and exercise of remedies to the
      prior
      payment in full in cash of the Senior Debt. 

     

    2.2
      Subordination
      of Liens.
      All
      Liens of the Subordinated Creditor now existing or hereafter acquired in any
      assets that serve as Senior Debt Collateral for all or any portion of the Senior
      Debt or the Subordinated Debt shall be subject, subordinate and junior in all
      respects and at all times to the Liens of the Senior Creditors now or hereafter
      existing therein, regardless of the time or order of attachment or perfection
      of
      such Liens, the time or order of filing of financing statements, the acquisition
      of purchase money or other Liens, the time of giving or failure to give notice
      of the acquisition or expected acquisition of any purchase money or other Liens,
      or any other circumstances whatsoever. 

     

    2.3
      Benefit
      of Subordination Provisions.
      The
      provisions of this Agreement relating to the subordination of the Subordinated
      Debt and the Liens relating thereto to the Senior Debt and the Liens relating
      thereto (collectively, the “Subordination
      Provisions”)
      are
      made for the benefit of the Senior Creditors collectively and each of them
      individually, and each of the Senior Creditors may proceed to enforce the
      Subordination Provisions. 

     

    2.4
      No
      Challenge.
      The
      Subordinated Creditor shall not, whether in a Reorganization proceeding or
      otherwise, challenge the validity, perfection or relative priority of the Senior
      Creditors’ Liens nor any of the Senior Creditors’ right to prior payment
      established by this ARTICLE II. 

     

    2.5
      Subordination
      to Senior Facilities, Private Equity and Venture Capital
      Investments.
      The
      Subordinated Creditor shall, upon the request and at the expense of the Company,
      promptly enter into an intercreditor and subordination agreement with the
      provider(s) of (1) any Senior Credit Facility if the entry by the
      Subordinated Creditor into any such agreement is a condition precedent to the
      Company’s ability to obtain such Senior Credit Facility and (2) any private
      equity and/or venture capital financing in the Company if the entry by the
      Subordinated Creditor into any such agreement is a condition precedent to the
      Company’s ability to obtain such private equity, venture capital or similar
      financing, and provided that the Senior Creditors, so long as the Senior Debt
      remains outstanding, also enter into such an intercreditor and subordination
      agreement required as a condition precedent by the provider(s) of such Senior
      Credit Facility, private equity or venture capital financing. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III 

     

    SUBORDINATION
      UPON ANY DISTRIBUTION OF ASSETS OF THE COMPANY 

     

    In
      the
      event of any payment or Distribution of assets of the Company, whether in cash,
      property or securities, in connection with any Reorganization of the Company
      or
      otherwise: 

     

    (a) all
      amounts owing on account of the Senior Debt shall first be paid in full in
      cash
      before any Subordinated Debt Payment is made; and 

     

    (b) to
      the extent permitted by applicable law, any Subordinated Debt Payment to which
      the Subordinated Creditor would be entitled but for the provisions of this
      Agreement shall be paid or delivered by the trustee in bankruptcy, receiver,
      assignee for the benefit of creditors or other liquidating Person making such
      payment or distribution directly to the Senior Creditors for application to
      the
      payment of the Senior Debt in accordance with clause (a), before making any
      payment or Distribution or provision therefor to the Subordinated Creditor
      in
      respect of the Subordinated Debt. 

     

    ARTICLE
      IV 

     

    PAYMENT
      BLOCKAGE 

     

    Notwithstanding
      any provision to the contrary herein or in any of the Subordinated Debt
      Agreements, until such time as the Senior Debt has been indefeasibly repaid
      in
      full in cash, or fully converted into shares of common stock of Airbee, and
      all
      commitments to purchase or lend any additional Senior Debt have terminated
      (the
“Discharge
      of the Senior Debt”),
      the
      Company shall not make, and the Subordinated Creditor shall not demand, accept
      or receive, any Subordinated Debt Payment; provided, that so long as no Default
      or Event of Default with respect to any of the Senior Debt shall have occurred
      and be continuing (and the making of any such payment shall not result in a
      Default with respect thereto), the Company may pay and the Subordinated Creditor
      may receive Subordinated Debt Payments exclusively constituting scheduled
      quarterly payments of interest on the Subordinated Debt at the contract (i.e.,
      non-default) rate set forth in the Subordinated Debenture as and when such
      scheduled quarterly interest payments are due and payable pursuant to the terms
      of the Subordinated Debenture as in effect as of the date of its issuance.
      

     

    ARTICLE
      V

     

    SUBORDINATION
      OF REMEDIES 

     

    Notwithstanding
      any provision herein or in any Subordinated Debt Agreement to the contrary,
      until the Discharge of the Senior Debt has occurred, the following shall apply:
      

     

    5.1
      Senior
      Creditors’ Exercise of Rights as Secured Party.
      The
      Senior Creditors shall be permitted and each of them is hereby authorized to
      take any and all actions and to exercise any and all rights, remedies and
      options which any of them may have under the Senior Debt Agreements and sell
      or
      otherwise realize upon the collateral securing the Senior Debt, in each case
      upon the terms and subject to the conditions set forth therein, without regard
      to the Subordinated Creditor. 

     

    5.2
      Remedies
      of Subordinated Creditor.
      The
      Subordinated Creditor shall not, without the prior written consent of the Senior
      Creditors (which may granted or denied in the exercise of their sole
      discretion), demand payment (other than a scheduled quarterly payment of
      interest which Company is permitted to make and the Subordinated Creditor is
      permitted to receive pursuant to the terms of this Agreement) with respect
      to or
      accelerate the maturity of the Subordinated Debt or commence or maintain any
      Enforcement Action against Company; provided, however, that the Subordinated
      Creditor may accelerate the maturity of the Subordinated Debt (but may not
      make
      any demand for payment of, or take any other collection or enforcement action
      with respect to, the Subordinated Debt) at any time following the acceleration
      by the Senior Creditors of all (but not less than all) of the Senior Debt.
      

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.3
      Management
      of Collateral.
      Notwithstanding anything to the contrary contained in any of the Senior Debt
      Agreements or the Subordinated Debt Agreements: (i) the Senior Creditors
      shall have the exclusive right to manage the Collateral, including the exclusive
      right to perform and enforce the terms of the Senior Debt Agreements with
      respect to the Collateral and to exercise and enforce all privileges and rights
      thereunder according to Senior Creditors’ sole discretion, including, without
      limitation, the exclusive right to enforce or settle insurance claims with
      respect to the Collateral, to pay, compromise, or settle competing claims,
      liens, or security interests affecting the Collateral, to take or retake control
      or possession of the Collateral, and to hold, prepare for sale, sell, lease,
      or
      liquidate the Collateral; (ii) neither Subordinated Creditor nor any party
      acting on its behalf, shall exercise any Secured Party Remedies with respect
      to
      the Collateral or any part thereof; and (iii) any and all proceeds of the
      Collateral which shall come into the possession, control, or custody of the
      Subordinated Creditor will be deemed to have been received for the account
      of
      Senior Creditors and shall be immediately delivered or paid, as applicable,
      over
      to the Senior Creditors. In connection with the provisions of Section
      5.3(i)
      above,
      the Subordinated Creditor waives any and all rights to affect the method or
      challenge the appropriateness of any action by Senior Creditors with respect
      to
      the Collateral, and waives any claims or defenses it may have against the Senior
      Creditors, including any such claims or defenses based on any actions or
      omissions of any such person, in connection with the perfection, maintenance,
      enforcement, foreclosure, sale, liquidation, or release of any lien or security
      interest therein by the Senior Creditors or any of them, or any modification
      or
      waiver of any Senior Debt Agreements. 

     

    5.4
      Sale
      of Collateral.
      Until
      the Discharge of the Senior Debt has occurred: (i) only the Senior Creditors
      shall have the right to restrict or permit, or approve or disapprove, the sale
      or disposition of the Collateral or any portion thereof; and
      (ii) immediately upon the sale or disposition of such Collateral by the
      Company with the consent of the Senior Creditors in connection with the exercise
      of any Secured Creditor Remedies, the Subordinated Creditor’s liens and security
      interest upon the Collateral sold shall be automatically, unconditionally and
      simultaneously released, and the Subordinated Creditor will promptly deliver
      (at
      the Company’s expense) such release, reconveyance, and termination documents as
      the Senior Creditors or the Company may reasonably require in connection
      therewith. 

     

    5.5
      Insurance.
      In the
      event of the occurrence of a fire or other casualty resulting in damage to
      all
      or any portion of any Collateral (collectively, a “Casualty”):
      

     

    (a) The
      Subordinated Creditor hereby waives any right to participate or join in any
      adjustment, compromise, or settlement of any claims resulting from a Casualty
      with respect to any Collateral; 

     

    (b) all
      proceeds received or to be received on account of a Casualty shall be applied
      in
      the manner or manners provided for in the Senior Debt Agreements until the
      Discharge of the Senior Debt and thereafter, the Company may instruct the
      insurer to pay any remaining insurance proceeds from such Casualty to the
      Subordinated Credit to the extent of the outstanding balance of the Subordinated
      Debt; and 

     

    (c) the
      Subordinated Creditor agrees to execute and deliver to the Senior Creditors
      any
      documents, instruments, agreements or further assurances reasonably required
      to
      effectuate any of the foregoing. 

     

    ARTICLE
      VI 

     

    PAYMENT
      OVER TO SENIOR CREDITORS 

     

    In
      the
      event that the Subordinated Creditor receives any Subordinated Debt Payments
      in
      contravention of ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI,
      ARTICLE VII, or ARTICLE X before the Discharge of the Senior Debt has occurred,
      such Subordinated Debt Payments shall be held in trust for the benefit of the
      Senior Creditors and shall be paid over or delivered to the Senior Creditors
      for
      application to the payment in full in cash of all Senior Debt remaining unpaid
      to the extent necessary to give effect to ARTICLE II, ARTICLE III, ARTICLE
      IV,
      ARTICLE V, ARTICLE VI, ARTICLE VII, or ARTICLE X, after giving effect to any
      concurrent payments or distributions to the Senior Creditors in respect of
      the
      Senior Debt. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII 

     

    REORGANIZATION
      OF THE COMPANY 

     

    7.1
      Rights
      regarding the Reorganization of the Company.
      Until
      the Discharge of the Senior Debt, the Subordinated Creditor shall not, without
      the prior written consent of the Senior Creditors, commence or join with any
      other Person in commencing any Reorganization proceeding of or against Company.
      The Senior Creditors shall have the sole right to accept or reject any plan
      proposed in such proceeding and to take any other action which a party filing
      a
      claim is entitled to take. The Subordinated Creditor acknowledges and agrees
      that any interest on the Senior Debt which accrues after the commencement of
      any
      such proceeding (or, if interest on any portion of the Senior Debt ceases to
      accrue by operation of law by reason of the commencement of said proceeding,
      such interest as would have accrued on any such portion of the Senior Debt
      if
      said proceedings had not been commenced) shall be included in the Senior Debt
      because it is the intention of the parties that the Senior Debt should be
      determined without regard to any rule of law or other principle which may
      relieve Company of any portion of such obligations. The Subordinated Creditor
      shall permit any trustee in bankruptcy, receiver, debtor in possession, assignee
      for the benefit of creditors or similar person to pay the Senior Creditors,
      or
      allow the claim of the Senior Creditors in respect of, any such interest
      accruing after the date on which such proceeding is commenced. 

     

    7.2
      Reorganization
      Matters.
      

     

    (a) Enforceability
      and Continuing Priority.
      This
      Agreement shall be applicable both before and after the commencement of any
      Reorganization by or against the Company and all converted or succeeding cases
      in respect thereof. The relative rights of the Senior Creditors and the
      Subordinated Creditor in or to any distributions from or in respect of any
      Collateral or proceeds of Collateral, shall continue after the commencement
      of
      any Reorganization by or against the Company. Accordingly, the provisions of
      this Agreement are intended to be and shall be enforceable as a subordination
      agreement within the meaning of Section 510 of the Bankruptcy Code.

     

    (b) Financing.
      Until
      Discharge of the Senior Debt has occurred, if the Company shall be subject
      to
      any Reorganization and the Senior Creditors consents to the use of cash
      collateral (as such term is defined in Section 363(a) of the Bankruptcy Code;
      herein, “Cash
      Collateral”),
      on
      which any Senior Creditor has a lien or to permit the Company to obtain
      financing provided by Senior Creditor under Section 364 of the Bankruptcy
      Code or any similar Bankruptcy Law (such financing, together with any Cash
      Collateral use, collectively a “DIP
      Financing”),
      then
      the Subordinated Creditor agrees that it will consent to such Cash Collateral
      use and raise no objection to such DIP Financing and to the extent the liens
      securing the Senior Debt are discharged, subordinated to or pari passu
      with
      such DIP Financing, the Subordinated Creditor will subordinate its liens in
      the
      Collateral to the liens securing such DIP Financing. If the Senior Creditors
      or
      any of them offer to provide DIP Financing that meets the requirements set
      forth
      above, the Subordinated Creditor agrees that it shall not, directly or
      indirectly, (x) provide or offer to provide DIP Financing or support any
      DIP Financing secured by a lien senior to or pari passu
      with the
      liens securing the Senior Debt, or (y) request or accept any form of adequate
      protection or any other relief except as provided in Section 7.2(e)(ii).
      In
      connection with any DIP Financing, if any liens on the Collateral held by any
      of
      the Senior Creditors are subject to a surcharge or are subordinated to an
      administrative priority claim, a professional fee “carve out,” or fees owed to
      the United States Trustee, then the liens on the Collateral of the Subordinated
      Creditor shall also be subordinated to such interest or claim and shall remain
      subordinated to the liens on the Collateral of Senior Creditor consistent with
      this Agreement. 

     

    (c) Sales.
      Until
      Discharge of the Senior Debt has occurred, the Subordinated Creditor agrees
      that
      it will consent, and will not object or oppose a motion to Dispose of any
      Collateral free and clear of the liens or the claims that are in favor of the
      Subordinated Creditor under Section 363 of the Bankruptcy Code if the
      Senior Creditors have consented to such Disposition of such assets.

     

    
      
        
        

      

      
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    (d) Relief
      from the Automatic Stay.
      Until
      Discharge of the Senior Debt has occurred, the Subordinated Creditor agrees
      that
      it shall not seek (or support any other person, other than the Senior Creditors,
      seeking) relief from the automatic stay or any other stay in any Reorganization
      in respect of the Collateral, without the prior written consent of the Senior
      Creditors (which may be granted or withheld in the exercise of their sole
      discretion). 

     

    (e)
      Adequate
      Protection.
      

     

    (i) Senior
      Creditors.
      In any
      Reorganization involving the Company, the Subordinated Creditor agrees that
      it
      shall not contest (or support any other person contesting): 

     

    (A) any
      request by the Senior Creditors for adequate protection (whether in the form
      of
      payments, liens, a priority administrative expense claim, or otherwise);

     

    (B) any
      objection by the Senior Creditors to any motion, relief, action, or proceeding
      based on the Senior Creditors claiming a lack of adequate protection (whether
      in
      the form of payments, liens, a priority administrative expense claim, or
      otherwise); 

     

    (C) the
      payment of interest, fees, expenses, or other amounts to Senior Creditor under
      Section 506(b) or 506(c) of the Bankruptcy Code or otherwise. 

     

    (ii) Subordinated
      Creditor.
      In any
      Reorganization involving the Company: 

     

    (A) Replacement
      Liens.
      

     

    (1) Until
      Discharge of the Senior Debt has occurred, if the Senior Creditors are granted
      adequate protection in the form of a replacement lien (on existing or future
      assets of the Company) in connection with any DIP Financing, then the
      Subordinated Creditor shall also be entitled to seek, without objection from
      the
      Senior Creditors, adequate protection in the form of a replacement lien (on
      existing or future assets of the Company), which replacement lien, if obtained,
      shall be subordinate to the liens securing the Senior Debt and the liens
      securing such DIP Financing on the same basis as the other liens securing the
      Subordinated Debt are subordinate to the Senior Debt under this Agreement;
      and

     

    (2) In
      the event that the Subordinated Creditor is granted adequate protection in
      the
      form of a replacement lien (on existing or future assets of the Company), then
      the Subordinated Creditor agrees that the Senior Creditors shall also be
      entitled to seek, without objection from the Subordinated Creditor, a senior
      adequate protection lien on existing or future assets of the Company as security
      for the Senior Debt and for any DIP Financing provided by the Senior Creditors.
      Any adequate protection lien on such existing or future assets securing the
      Subordinated Debt shall be subordinated (i) to the lien on such collateral
      securing the Senior Debt and any such DIP Financing provided by the Senior
      Creditors, and (ii) to any other liens granted to the Senior Creditors as
      adequate protection on the same basis as the other liens securing the
      Subordinated Debt are so subordinated to such Senior Debt under this Agreement.
      

     

    (B) No
      Distributions.
      In any
      Reorganization involving the Company, the Subordinated Creditor shall not seek
      (a) adequate protection in the form of Distributions in respect of the
      Subordinated Debt, nor (b) adequate protection in the form of Distributions
      with respect to their rights to the Collateral. 

     

    (iii) Allowance
      of Postpetition Accrual.
      The
      Subordinated Creditor shall not object to, oppose, or challenge any claim by
      Senior Creditor for allowance in any Reorganization of Senior Debt consisting
      of
      post-petition interest, fees, or expenses. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (f) Section 1111(b)
      of the Bankruptcy Code.
      The
      Subordinated Creditor shall not object to, oppose, support any objection, or
      take any other action to impede, the right of the Senior Creditors to make
      an
      election under Section 1111(b)(2) of the Bankruptcy Code. The Subordinated
      Creditor waives any claim it may hereafter have against each Senior Creditor
      arising out of the election by any or all Senior Creditors of the application
      of
      Section 1111(b)(2) of the Bankruptcy Code. 

     

    (g) No
      Waiver.
      Nothing
      contained herein shall prohibit or in any way limit the Senior Creditors from
      objecting in any Reorganization involving the Company to any action taken by
      the
      Subordinated Creditor, including the seeking by the Subordinated Creditor of
      adequate protection or the assertion by the Subordinated Creditor of any of
      its
      rights and remedies under the Subordinated Debt Agreements. 

     

    (h) Avoidance
      Issues.
      If
      Senior Creditor is required in any Reorganization or otherwise to turn over,
      disgorge or otherwise pay to the estate of the Company any amount paid in
      respect of the Senior Debt (a “Senior
      Creditor Recovery”),
      then
      Senior Creditor shall be entitled to a reinstatement of Senior Debt with respect
      to all such recovered amounts, and all rights, interests, priorities and
      privileges recognized in this agreement shall apply with respect to any such
      Senior Creditor Recovery. If this Agreement shall have been terminated prior
      to
      such Senior Creditor Recovery, this Agreement shall be reinstated in full force
      and effect, and such prior termination shall not diminish, release, discharge,
      impair, or otherwise affect the obligations of the parties hereto from such
      date
      of reinstatement. 

     

    (i) Plan
      of Reorganization.
      

     

    (a) If
      in any Reorganization involving the Company, debt obligations of the reorganized
      debtor, whether or not secured by liens upon any property of the reorganized
      debtor, are distributed pursuant to a plan of reorganization or similar
      dispositive restructuring plan, (a) on account of Senior Debt, or
      (b) on account of the Subordinated Debt, or (c) all on account of the
      Senior Debt and the Subordinated Debt, then the Subordinated Creditor shall
      have
      the right to receive such debt obligations so long as the provisions of this
      Agreement (x) survive the distribution of such debt obligations pursuant to
      such plan and (y) apply with like effect to such debt obligations and the
      liens securing such debt obligations, and 

     

    (b) The
      Subordinated Creditor shall not propose or support any plan of reorganization
      that is inconsistent with the priorities or other provisions of this Agreement.
      

     

    (j)
      Prohibition
      of Payments of Subordinated Debt on Acceleration or in
      Reorganization.
      

     

    (a) Upon
      (i) any acceleration of the principal amount due on any Subordinated Debt
      which has not been rescinded or revoked, or (ii) any payment or
      distribution of assets of the Company, of any kind or character, whether in
      cash, property or securities, following commencement of an Reorganization by
      or
      against the Company, there shall be a Discharge of the Senior Debt, before
      any
      Distribution is made on account of any of the Subordinated Debt; and following
      commencement of a Reorganization, any Distribution in respect of the
      Subordinated Debt to which the Subordinated Creditor would be entitled, except
      for the provisions hereof, shall be paid by the Company or any other Person
      making such Distribution, or by the Subordinated Creditor if received by it,
      directly to the Senior Creditors, to the extent necessary to result in the
      Discharge of the Senior Debt, before any Distribution is made to the
      Subordinated Creditor. 

     

    (b) In
      any Reorganization by or against the Company, 

     

    (A) The
      Senior Creditors may, and are hereby irrevocably authorized and empowered (in
      their own names or in the name of the Subordinated Creditor or otherwise),
      but
      shall have no obligation to (A) demand, sue for, collect and receive every
      payment or distribution referred to in this ARTICLE
      VII
      and give
      acquittance therefor and (B) file claims and proofs of claim in respect of
      the Subordinated Debt,
      provided
      that the
      Senior Creditors may only file claims and proofs of claims in respect of the
      Subordinated Debt if (1) the Subordinated Creditor has failed to file such
      claims and proofs of claim and (2) there shall remain not more than
      20 days before such action is barred, prohibited or otherwise cannot be
      taken; and 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (B) The
      Subordinated Creditor will duly and promptly take such action as the Senior
      Creditors may reasonably request (A) to collect the Subordinated Debt for
      the account of the Senior Creditors and to file appropriate claims or proofs
      of
      claim with respect thereto, (B) to execute and deliver to the Senior
      Creditors such powers of attorney, assignments or other instruments as the
      Senior Creditors may request in order to enable it to enforce any and all claims
      with respect to, and any security interests and other liens securing payment
      of,
      the Subordinated Debt, and (C) to collect and receive for the account of
      the Senior Creditors any and all Distributions which may be payable or
      deliverable upon or with respect to the Subordinated Debt; provided that any
      reasonable and documented costs incurred in complying with any provision of
      this
      paragraph, including reasonable attorneys’ fees, shall be paid by the Senior
      Creditors to the extent they are not paid by the Company or otherwise recovered
      by the Subordinated Creditor. 

     

    (k) Payments
      Held in Trust/Turnover.
      In the
      event that, notwithstanding the foregoing provisions of this ARTICLE
      VII,
      any
      Distribution or Subordinated Debt Payment prohibited by this Agreement shall
      be
      received by the Subordinated Creditor before there has been a Discharge of
      the
      Senior Debt, such Distribution or Subordinated Debt Payment shall be held in
      trust for the benefit of and shall be paid over to or delivered to Senior
      Creditor, until there has been a Discharge of the Senior Debt. 

     

    ARTICLE
      VIII 

     

    AMENDMENTS
      TO SENIOR DEBT; AMENDMENTS TO SUBORDINATED DEBT 

     

    8.1
      Amendments
      to Senior Debt.
      At any
      time and from time to time, without notice to or the consent of the Subordinated
      Creditor, without incurring responsibility to the Subordinated Creditor and
      without impairing or releasing, the subordination provided for herein or
      otherwise impairing the rights of the Senior Creditors hereunder:
      (i) additional Senior Debt may be incurred, (ii) the time for the
      Company’s performance of or compliance with any of its agreements contained in
      the Senior Debt Agreements may be extended or such performance or compliance
      may
      be waived by the Senior Creditors; (iii) the agreements of the Senior
      Creditors and the Company with respect to the Senior Debt Agreements may from
      time to time be modified by the Company and the Senior Creditors for the purpose
      of adding any requirements thereto, or changing in any manner the rights and
      obligations of the Company and the Senior Creditors thereunder; (iv) the
      manner, place or terms for payment of Senior Debt or any portion thereof may
      be
      altered or the terms for payment extended, or the Senior Debt may be renewed
      in
      whole or in part; (v) the maturity of the Senior Debt may be accelerated in
      accordance with the terms of any present or future agreement among the Company
      and the Senior Creditors; (vi) any Collateral may be sold, exchanged,
      released or substituted and any Lien in favor of the Senior Creditors may be
      terminated, subordinated or fail to be perfected or become unperfected;
      (vii) any Person liable in any manner for Senior Debt may be discharged,
      released or substituted; and (viii) all other rights against the Company,
      any other Person or with respect to any collateral may be exercised (or the
      Senior Creditors may waive or refrain from exercising such rights).

     

    8.2
      Amendments
      to Subordinated Debt.
      Neither
      the Company nor the Subordinated Creditor shall, without the prior written
      consent of the Senior Creditors granted or withheld in their sole discretion,
      agree to or permit any amendment, modification or waiver of any provisions
      of
      any of the Subordinated Debt Agreements (including any amendment, modification
      or waiver pursuant to an exchange of other securities or instruments for
      outstanding Subordinated Debt) if the effect of such amendment, modification
      or
      waiver is to: (i) increase the interest rate on the Subordinated Debt or
      change (to earlier dates) the dates upon which principal and interest are due
      thereon; (ii) alter the redemption, prepayment, conversion, or
      subordination provisions thereof; (iii) alter the covenants and events of
      default in a manner which would make such provisions more onerous or restrictive
      to Company; or (iv) otherwise increase the obligations of the Company in
      respect of the Subordinated Debt or confer additional rights upon the
      Subordinated Creditor which individually or in the aggregate would be adverse
      in
      any respect to the Company or the Senior Creditors and each of them.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IX 

     

    CERTAIN
      AGREEMENTS OF THE SUBORDINATED CREDITOR 

     

    9.1
      No
      Interference.
      The
      Subordinated Creditor acknowledges that Company has granted the Senior Creditors
      a security interest in certain of the Company’s assets, including all of the
      Company’s assets that are part of the collateral securing the Subordinated Debt,
      and shall not interfere with or in any manner oppose a disposition of any such
      collateral by the Senior Creditors in accordance with applicable law.

     

    9.2
      Acquisition
      of Liens or Guaranties.
      The
      Subordinated Creditor shall not, without the prior written consent of the Senior
      Creditors, acquire any right or interest in or to any property of the Company
      or
      accept any guaranties of the Subordinated Debt from the Company or any Person.
      

     

    9.3
      Rights
      of Senior Creditors Not to Be Impaired.
      No
      right of the Senior Creditors to enforce the subordination provided for herein
      or to exercise its other rights hereunder shall at any time in any way be
      prejudiced or impaired by any act or failure to act by Company, the Senior
      Creditors or any of them hereunder or under or in connection with the Senior
      Debt Agreements or by any noncompliance by Company with the terms of this
      Agreement or the Senior Debt Agreements, regardless of any knowledge thereof
      the
      Senior Creditors or any of them may have or otherwise be charged with.

     

    9.4
      Financial
      Condition of the Company.
      The
      Subordinated Creditor shall not have any right to require the Senior Creditors
      or any of them to obtain or disclose any information with respect to:
      (i) the financial condition or character of the Company or the ability of
      the Company to pay and perform the Senior Debt or the Subordinated Debt;
      (ii) the Senior Debt; (iii) the collateral or any other security for
      any or all of the Senior Debt; (iv) the existence or nonexistence of any
      guarantees of, or any other subordination agreements with respect to, all or
      any
      part of the Senior Debt; (v) except as required hereunder, any action or
      inaction on the part of the Senior Creditors or any Lender or any other Person;
      or (vi) any other matter, fact or occurrence whatsoever. 

     

    9.5
      Waivers
      by Subordinated Creditor.
      

     

    (a) Senior
      Debt. 

     

    (i) All
      Senior Debt at any time incurred by the Company shall be deemed to have been
      incurred, and all Senior Debt held by any Senior Creditor shall be deemed to
      have been extended, acquired or obtained, as applicable, in reliance upon this
      Agreement, and the Subordinated Creditor hereby waives (i) notice of
      acceptance, or proof of reliance, by each Senior Creditor of this Agreement,
      and
      (ii) notice of the existence, renewal, extension, accrual, creation, or
      non-payment of all or any part of the Senior Debt. Nothing contained in this
      Agreement shall preclude Senior Creditor from discontinuing the extension of
      credit to the Company (whether under the Senior Debt Agreements or otherwise)
      or
      from taking (without notice to Subordinated Creditor, the Company, or any other
      Person) any other action in respect of the Senior Debt or the Collateral which
      such Senior Creditor is otherwise entitled to take with respect to the Senior
      Debt or the Collateral. 

     

    (ii) Neither
      Senior Creditors nor or any of their respective affiliates, partners, directors,
      officers, employees, or agents (collectively, the “Senior
      Creditor Parties”)
      shall
      be liable for failure to demand, collect, or realize upon any of the Collateral
      or any proceeds or for any delay in doing so or shall be under any obligation
      to
      sell or otherwise Dispose of any Collateral or proceeds thereof or to take
      any
      other action whatsoever with regard to the Collateral or any part or proceeds
      thereof. If any Senior Creditor honors (or fails to honor) a request by the
      Company for an extension of credit pursuant to any of the Senior Debt
      Agreements, whether such Senior Creditor has knowledge that the honoring of
      (or
      failure to honor) any such request would constitute a default under the terms
      of
      the Subordinated Debt Agreements or an act, condition, or event that, with
      the
      giving of notice or the passage of time, or both, would constitute such a
      default, or if such Senior Creditor otherwise should exercise any of its
      contractual rights or remedies under the Senior Debt Agreements (subject to
      the
      express terms and conditions hereof), the Senior Creditor Parties shall not
      have
      any liability whatsoever to the Subordinated Creditor as a result of such
      action, omission, or exercise. The Senior Creditor Parties will be entitled
      to
      manage and supervise their loans and extensions of credit under the Senior
      Debt
      Agreements as the Senior Creditors may, in their sole discretion, deem
      appropriate, and the Senior Creditors may manage their loans and extensions
      of
      credit without regard to any rights or interests that the Subordinated Creditor
      may have in the Collateral or otherwise except as otherwise expressly set forth
      in this Agreement. The Subordinated Creditor agrees that the Senior Creditor
      Parties shall not incur any liability as a result of a sale, lease, license,
      application or other Disposition of all or any portion of the Collateral or
      any
      part or proceeds thereof. The Senior Creditor Parties may, from time to time,
      enter into agreements and settlements with the Company as they may determine
      in
      their sole discretion without impairing any of the subordinations, priorities,
      rights or obligations of the parties under this Agreement, including, without
      limitation, substituting Collateral, releasing any lien and releasing the
      Company. The Subordinated Creditor waives any and all rights it may have to
      require the Senior Creditor Parties to marshal assets, to exercise rights or
      remedies in a particular manner, or to forbear from exercising such rights
      and
      remedies in any particular manner or order. 

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (b) Notice
      of Acceptance and Other Waivers.
      To the
      fullest extent permitted by applicable law, the Subordinated Creditor hereby
      waives: (i) notice of acceptance hereof; (ii) notice of any loans or other
      financial accommodations made or extended under any of the Senior Debt
      Agreements, or the creation or existence of any Senior Debt; (iii) notice
      of the amount of the Senior Debt; (iv) notice of any adverse change in the
      financial condition of the Company or of any other fact that might increase
      Subordinated Creditor’s risk hereunder; (v) notice of presentment for
      payment, demand, protest, and notice thereof as to any instrument among the
      Senior Debt Agreements; (vi) notice of any Default or Event of Default
      under the Senior Debt Agreements or otherwise relating to the Senior Debt;
      (vii) all other notices (except if such notice is specifically required to
      be given by the Company to the Subordinated Creditor under the Settlement
      Agreement) and demands to which the Subordinated Creditor might otherwise be
      entitled. 

     

    (c) Lawsuits;
      Defenses; Setoff.
      To the
      fullest extent permitted by applicable law, the Subordinated Creditor
      (i) waives the right by statute or otherwise to require the Senior
      Creditors to institute suit against the Company or to exhaust any rights and
      remedies which the Senior Creditors or any of them has or may have against
      the
      Company; (ii) waives any defense arising by reason of any disability or
      other defense (other than the defense that the Discharge of the Senior Debt
      has
      occurred) of the Company or by reason of the cessation from any cause whatsoever
      of the liability of the Company in respect thereof, (iii) waives any rights
      to assert against any Senior Creditor Party any defense (legal or equitable),
      set-off, counterclaim, or claim which the Subordinated Creditor may now or
      at
      any time hereafter have against the Company or any other party liable to any
      Senior Creditor Party or the Subordinated Creditor, (iv) waives any
      defense, set-off, counterclaim, or claim, of any kind or nature, arising
      directly or indirectly from the present or future lack of perfection,
      sufficiency, validity, or enforceability of any Senior Debt, any Subordinated
      Debt or any security for either; (v) waives any defense arising by reason
      of any claim or defense based upon an election of remedies by any Senior
      Creditor; and (vi) waives the benefit of any statute of limitations affecting
      Subordinated Creditor’s obligations hereunder or the enforcement thereof, and
      any act which shall defer or delay the operation of any statute of limitations
      applicable to the Senior Debt shall similarly operate to defer or delay the
      operation of such statute of limitations applicable to such Subordinated
      Creditor’s obligations hereunder. 

     

    ARTICLE
      X

     

    SUBROGATION 

     

    10.1
      Subrogation.
      Until
      the Discharge of the Senior Debt, the Subordinated Creditor shall not have,
      and
      shall not directly or indirectly exercise, any rights that it may acquire by
      way
      of subrogation under this Agreement by any payment or distribution to the Senior
      Creditors hereunder or otherwise. Upon the Discharge of the Senior Debt, the
      Subordinated Creditor shall be subrogated to the rights of the Senior Creditors
      to receive payments or distributions applicable to the Senior Debt until the
      Subordinated Debt is paid in full. For purposes of the foregoing subrogation,
      no
      payments or distributions to the Senior Creditors of any cash, property or
      securities to which the Subordinated Creditor would be entitled but for the
      provisions of ARTICLE II, ARTICLE III, ARTICLE IV, ARTICLE V, ARTICLE VI,
      ARTICLE VII, or ARTICLE X shall, as among Company, its creditors (other than
      the
      Senior Creditors and each of them) and the Subordinated Creditor, be deemed
      to
      be a payment by Company to or on account of the Senior Debt. 

     

    10.2
      Payments
      Over.
      If any
      payment or distribution to which the Subordinated Creditor would otherwise
      have
      been entitled but for the provisions of ARTICLE II, ARTICLE III, ARTICLE IV,
      ARTICLE V, ARTICLE VI, ARTICLE VII, or Article X shall have been applied
      pursuant to such Sections to the payment of amounts payable under the Senior
      Debt, the Subordinated Creditor shall be entitled to receive from the Senior
      Creditors any payments or distributions received by the Senior Creditors in
      excess of the amount sufficient to pay in full in cash all amounts payable
      under
      or in respect of the Senior Debt. If any such excess payment is made to the
      Senior Creditors, upon written demand the Senior Creditors shall promptly remit
      such excess to the Subordinated Creditor and until so remitted the Senior
      Creditors shall hold such excess payment for the benefit of the Subordinated
      Creditor. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XI 

     

    CONTINUING
      AGREEMENT; REINSTATEMENT 

     

    11.1
      Continuing
      Agreement.
      This
      Agreement is a continuing agreement of subordination and shall continue in
      effect and be binding upon the Subordinated Creditor until the Discharge of
      the
      Senior Debt. The subordinations, agreements and priorities set forth herein
      shall remain in full force and effect regardless of whether any party hereto
      in
      the future seeks to rescind, amend, terminate or reform, by litigation or
      otherwise, its respective agreements with the Company. 

     

    11.2
      Reinstatement.
      This
      Agreement shall continue to be effective or shall be reinstated, as the case
      may
      be, if, for any reason, any payment of the Senior Debt by or on behalf of the
      Company shall be rescinded or must otherwise be restored by the Senior Creditors
      or any of them, whether as a result of an insolvency event or otherwise.

     

    ARTICLE
      XII 

     

    NO
      FIDUCIARY DUTY 

     

    The
      Senior Creditors and the Subordinated Creditor acknowledge and agree that none
      of them has any fiduciary duty to the other(s) hereunder (and, additionally,
      the
      Subordinated Creditor acknowledges and agrees that none of the Secured Creditor
      Parties has any fiduciary or other duty towards him, except for the duty of
      the
      Senior Creditors to perform or observe their express obligations to pay over
      excess monies actually held by them (following the Discharge of the Senior
      Debt)
      to the Subordinated Creditor as expressly provided under the terms of this
      Agreement), and that in approving or disapproving any matter or proposed action
      hereunder, each may act in its sole and absolute discretion and in the manner
      which it considers to be in its own best interests, except as may be
      specifically provided otherwise herein. Further, the Senior Creditors and the
      Subordinated Creditor acknowledge that none of them has made any warranties,
      express or implied, to the other nor does either (nor any Secured Creditor
      Party) assume any liabilities or duties to the other with respect to Company’s
      financial condition or otherwise except as expressly provided otherwise herein.
      

     

    ARTICLE
      XIII 

     

    NO
      TRANSFER OF SUBORDINATED DEBT 

     

    The
      Subordinated Creditor may not assign or transfer its rights and obligations
      under the Subordinated Credit Agreements, or any of them, or with respect to
      any
      interest in the Subordinated Debt without the prior written consent of the
      Senior Creditors, and any such permitted transferee or assignee, as a condition
      to acquiring such rights and obligations under the Subordinated Debt Agreements,
      or with respect to any interest in the Subordinated Debt, shall agree to be
      bound hereby in an agreement in form and substance satisfactory to the Senior
      Creditors. Any purported assignment or transfer of any of the Subordinated
      Creditor’s rights or interests in, to or with respect to the Subordinated Credit
      Documents or the Subordinated Debt shall be void ab initio. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XIV 

     

    OBLIGATIONS
      OF THE COMPANY NOT AFFECTED 

     

    The
      provisions of this Agreement are intended solely for the purpose of defining
      the
      relative rights against Company of the Subordinated Creditor, on the one hand,
      and the Senior Creditors, on the other hand. Nothing contained in this Agreement
      shall (i) impair, as between Company and the Subordinated Creditor, the
      obligation of the Company to pay the principal of or interest on the
      Subordinated Debenture and its other obligations with respect to the
      Subordinated Debt as and when the same shall become due and payable in
      accordance with the terms thereof, or (ii) otherwise affect the rights
      against Company of the Subordinated Creditor, on the one hand, and the creditors
      of the Company (other than the Senior Creditors), on the other hand.

     

    ARTICLE
      XV 

     

    REPRESENTATIONS
      AND WARRANTIES 

     

    15.1
      Representations
      and Warranties of The Subordinated Creditor.
      The
      Subordinated Creditor represents and warrants to the Senior Creditors that:
      

     

    (a) Powers.
      The
      Subordinated Creditor is an individual who has all the requisite power and
      authority to execute, deliver and perform its obligations under this Agreement.
      

     

    (b) No
      Conflict.
      The
      execution, delivery and performance by the Subordinated Creditor of this
      Agreement does not and will not result in a breach of or constitute a default
      under any indenture or loan or credit agreement or any other agreement, lease
      or
      instrument to which the Subordinated Creditor is a party or by which it or
      its
      properties may be bound or affected or violate any provision of any law, rule,
      regulation, order, writ, judgment, injunction, decree or the like binding on
      or
      affecting the Subordinated Creditor. 

     

    (c) Binding
      Obligation.
      This
      Agreement constitutes the legal, valid and binding obligation of the
      Subordinated Creditor, enforceable against the Subordinated Creditor in
      accordance with its terms. 

     

    (d) Governmental
      Consents.
      No
      authorization, consent, approval, license, exemption of, or filing or
      registration with, any Governmental Person is required for the due execution,
      delivery or performance by the Subordinated Creditor of this Agreement.

     

    (e) No
      Prior Assignment.
      The
      Subordinated Creditor has not previously assigned any interest in the
      Subordinated Debt; no Person other than the Subordinated Creditor owns an
      interest in the Subordinated Debt (whether as joint holders of the Subordinated
      Debt, participants or otherwise); and the entire Subordinated Debt is owing
      only
      to Subordinated Creditor. 

     

    (f) Independent
      Investigation.
      The
      Subordinated Creditor has undertaken its own independent investigation of the
      financial condition of the Company and all other matters pertaining to this
      Agreement and is not relying in any manner upon any representation or statement
      of the Senior Creditors or any of them with respect thereto. The Subordinated
      Creditor is aware of the terms of the Senior Debt Agreements and is in a
      position to obtain, and it hereby assumes full responsibility for obtaining,
      any
      additional information concerning the financial condition of the Company and
      any
      other matters pertinent hereto that the Subordinated Creditor may desire. The
      Subordinated Creditor is not relying upon or expecting the Senior Creditors
      or
      any of them to furnish to it any information now or hereafter in any Senior
      Creditor’s possession concerning the financial condition of the Company or any
      other matter. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    15.2
      Representations
      and Warranties of the Senior Creditors.
      The
      Senior Creditors represent and warrant to the Subordinated Creditor that, to
      the
      Senior Creditors’ actual knowledge: 

     

    (a) Powers.
      The
      Senior Creditors possess all the requisite power and authority to execute,
      deliver and perform their obligations under this Agreement. 

     

    (b) No
      Conflict.
      The
      execution, delivery and performance by the Senior Creditors of this Agreement
      does not and will not result in a breach of or constitute a default under any
      indenture or loan or credit agreement or any other agreement, lease or
      instrument to which the Senior Creditors are a party or by which they or their
      properties may be bound or affected or violate any provision of any law, rule,
      regulation, order, writ, judgment, injunction, decree or the like binding on
      or
      affecting the Senior Creditors. 

     

    (c) Binding
      Obligation.
      This
      Agreement constitutes the legal, valid and binding obligation of the Senior
      Creditors, enforceable against the Senior Creditors in accordance with its
      terms. 

     

    (d) Governmental
      Consents.
      No
      authorization, consent, approval, license, exemption of, or filing or
      registration with, any Governmental Person is required for the due execution,
      delivery or performance by the Senior Creditors of this Agreement. 

     

    (e) No
      Prior Assignment.
      The
      Senior Creditors have not previously assigned any interest in the Subordinated
      Debt; no Person other than the Senior Creditors owns an interest in the Senior
      Debt (whether as joint holders of the Senior Debt, participants or otherwise);
      and the entire Senior Debt is owing only to Senior Creditors. 

     

    (f) Independent
      Investigation.
      The
      Senior Creditors have undertaken their own independent investigation of the
      financial condition of the Company and all other matters pertaining to this
      Agreement and are not relying in any manner upon any representation or statement
      of the Subordinated Creditor with respect thereto. The Senior Creditors are
      aware of the terms of the Subordinate Debt Agreements and are in a position
      to
      obtain, and they hereby assume full responsibility for obtaining, any additional
      information concerning the financial condition of the Company and any other
      matters pertinent hereto that the Senior Creditors may desire. The Senior
      Creditors are not relying upon or expecting the Subordinate Creditor to furnish
      to them any information now or hereafter in the Subordinate Creditor’s
      possession concerning the financial condition of the Company or any other
      matter. 

     

    ARTICLE
      XVI 

     

    FURTHER
      ASSURANCES AND ADDITIONAL ACTS 

     

    16.1
      Endorsement
      of Subordinated Debt Agreements.
      The
      Subordinated Debt Agreements and all other documents, financing statements,
      and
      instruments evidencing or perfecting any liens securing any of the Subordinated
      Debt shall be endorsed with a legend noting that the Subordinated Debt
      Agreements and such other documents and instruments are subject to this
      Agreement, and the Subordinated Creditor shall promptly deliver to the Senior
      Creditors evidence of the same. 

     

    16.2
      Further
      Assurances and Additional Acts.
      The
      Subordinated Creditor and Company shall each execute, acknowledge, deliver,
      file, notarize and register at its own expense all such further agreements,
      instruments, certificates, financing statements, documents and assurances,
      and
      perform such further acts as the Senior Creditors shall deem necessary or
      appropriate to effectuate the purposes of this Agreement, and promptly provide
      the Senior Creditors with evidence of the foregoing satisfactory in form and
      substance to the Senior Creditors. 

     

    16.3
      Attorney
      in Fact.
      Each
      Senior Creditor is hereby irrevocably constituted and appointed the
      attorney-in-fact of the Subordinated Creditor on the Subordinated Debt and
      to
      take all other action either in any Senior Creditor’s name or in the name of the
      Subordinated Creditor, which in the Senior Creditors’ opinion is necessary or
      desirable to enable the Senior Creditors to obtain all such payments on the
      Subordinated Debt that are to be turned over to the Senior Creditors pursuant
      to
      this Agreement. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XVII 

     

    NOTICES 

     

    All
      notices and other communications provided for herein shall, unless otherwise
      stated herein, be in writing (including by telex or facsimile transmission)
      and
      shall be mailed, sent or delivered at or to the address or telex or facsimile
      number of the respective party or parties set forth on the signature pages
      hereof, or at or to such other address or telex or facsimile number as such
      party or parties shall have designated in a written notice to the other party
      or
      parties. All such notices and communications shall be effective (i) if
      delivered by hand, when delivered; (ii) if sent by mail, upon the earlier of
      the
      date of receipt or five (5) Business Days, after deposit in the mail, first
      class, postage prepaid; (iii) if sent by telex, upon receipt by the sender
      of an appropriate answerback; and (iv) if sent by facsimile transmission,
      when sent. 

     

    ARTICLE
      XVIII 

     

    NO
      WAIVER; CUMULATIVE REMEDIES 

     

    No
      failure on the part of the Senior Creditors to exercise, and no delay in
      exercising, any right, remedy, power or privilege hereunder shall operate as
      a
      waiver thereof nor shall any single or partial exercise of any such right,
      remedy, power or privilege preclude any other or further exercise thereof or
      the
      exercise of any other right, remedy, power or privilege. The rights and remedies
      under this Agreement are cumulative and not exclusive of any rights, remedies,
      powers and privileges that may otherwise be available to the Senior Creditors.
      

     

    ARTICLE
      XIX 

     

    COSTS
      AND EXPENSES 

     

    19.1
      Payments
      by the Company.
      The
      Company shall pay to the Senior Creditors on demand the reasonable out-of-pocket
      costs and expenses of the Senior Creditors, and the reasonable fees and
      disbursements of counsel to the Senior Creditors (including allocated costs
      of
      internal counsel), in connection with the negotiation, preparation, execution,
      delivery and administration of this Agreement and any amendments, modifications
      or waivers of the terms thereof. 

     

    19.2
      Payments
      by Company and The Subordinated Creditor.
      Each of
      the Company and the Subordinated Creditor, jointly and severally, shall pay
      to
      the Senior Creditors on demand all actual costs and expenses of the Senior
      Creditors, and all actual fees and disbursements of counsel (including allocated
      costs of internal counsel), incurred in connection with the enforcement or
      attempted enforcement of, and preservation of rights or interests under, this
      Agreement, including any losses, costs and expenses sustained by the Senior
      Creditors as a result of any failure by the Subordinated Creditor to perform
      or
      observe its obligations contained in this Agreement. In addition, the Senior
      Creditors agree pay to the Subordinated Creditor on demand all reasonable and
      documented costs and expenses of the Subordinated Creditor, including reasonable
      and documented fees and disbursements of counsel, to the extent incurred by
      the
      Subordinated Creditor exclusively and directly due to any failure by the Senior
      Creditors to perform or observe their express obligations to pay over excess
      monies actually held by them (following the Discharge of the Senior Debt) to
      the
      Subordinated Creditor as expressly provided under the terms of this Agreement.
      

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XX 

     

    SURVIVAL 

     

    All
      covenants, agreements, representations and warranties made in this Agreement
      shall, except to the extent otherwise provided herein, survive the execution
      and
      delivery of this Agreement and shall continue in full force and effect for
      so
      long as any Senior Debt remains unpaid or the Commitment remains in effect.
      Without limiting the generality of the foregoing, the obligations of the Company
      and the Subordinated Creditor under ARTICLE XIX shall survive the Discharge
      of
      the Senior Debt. 

     

    ARTICLE
      XXI 

     

    MISCELLANEOUS 

     

    21.1
      Benefits
      of Agreement.
      This
      Agreement is entered into for the sole protection and benefit of the parties
      hereto and their successors and assigns, and no other Person shall be a direct
      or indirect beneficiary of, or shall have any direct or indirect cause of action
      or claim in connection with, this Agreement. 

     

    21.2
      Binding
      Effect.
      Subject
      to the provisions of this ARTICLE this Agreement shall be binding upon, inure
      to
      the benefit of and be enforceable by Company, The Subordinated Creditor and
      the
      Senior Creditors and their respective successors and assigns. 

     

    21.3
      Governing
      Law.
      THIS
      AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
      THE
      STATE OF NEW YORK; INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402
      OF
      NEW YORK STATE’S GENERAL OBLIGATIONS LAW. 

     

    21.4
      Waiver
      Of Jury Trial.
      EACH
      PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
      DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY
      OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
      HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
      DEALINGS OF ANY CREDITOR OR COMPANY OR ANY OF THEM WITH RESPECT TO THIS
      AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR AGREEMENT EXECUTED OR DELIVERED
      BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO,
      IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
      IN
      CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS
      THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
      TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR
      A
      COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO
      THE
      WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 

     

    21.5
      Submission
      to Jurisdiction.
      The
      Subordinated Creditor hereby (i) submits to the non-exclusive jurisdiction
      of the United States District Court for the Southern District of New York and
      of
      any New York state court sitting in New York County for the purposes of all
      legal proceedings arising out of or relating to this Agreement; (ii) waives
      to, the fullest extent permitted by applicable law, any objection which it
      may
      now or hereafter have to the laying of the venue of any proceeding brought
      in
      such a court or any claim that any such proceeding brought in such a court
      has
      been brought in an inconvenient forum; (iii) agrees that service of process
      in any such action or proceeding may be affected by mailing a copy thereof
      by
      registered or certified mail (or any substantially similar form and mail),
      postage prepaid, to the Subordinated Creditor or the Company at its respective
      address set forth below each party’s respective signature hereon, or at such
      other address of which the Senior Creditors shall have been notified pursuant
      hereto; and (iv) agrees that nothing herein shall affect the right to effect
      service of process in any other manner permitted by law or shall limit the
      right
      to sue in any other jurisdiction. 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    21.6
      Entire
      Agreement.
      This
      Agreement constitutes the entire agreement of the Company, the Senior Creditors
      and The Subordinated Creditor with respect to the matters set forth herein
      and
      supersedes any prior agreements, commitments, discussions and understandings,
      oral or written, with respect thereto. There are no conditions to the full
      effectiveness of this Agreement. 

     

    21.7
      Amendments
      and Waivers.
      This
      Agreement may not be amended except by a writing signed by Company, The
      Subordinated Creditor and the Senior Creditors. No waiver of any rights of
      the
      Senior Creditors under any provision of this Agreement or consent to any
      departure by the Subordinated Creditor or Company therefrom shall be effective
      unless in writing and signed by the Senior Creditors. Any such amendment, waiver
      or consent shall be effective only in the specific instance and for the specific
      purpose for which given. 

     

    21.8
      Conflicts.
      In case
      of any conflict or inconsistency between any terms of this Agreement, on the
      one
      hand, and Subordinated Debt Agreements or any other document or instrument
      relating to the Subordinated Debt, on the other hand, then the terms of this
      Agreement shall control. 

     

    21.9
      Severability.
      Whenever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under all applicable laws and regulations.
      If, however, any provision of this Agreement shall be prohibited by or invalid
      under any such law or regulation in any jurisdiction, it shall, as to such
      jurisdiction, be deemed modified to conform to the minimum requirements of
      such
      law or regulation, or, if for any reason it is not deemed, so modified, it
      shall
      be ineffective and invalid only to the extent of such prohibition or invalidity
      without affecting the remaining provisions of this Agreement or the validity
      or
      effectiveness of such provision in any other jurisdiction. 

     

    21.10
      Counterparts;
      Electronic Signatures.
      This
      Agreement may be executed in any number of counterparts and by different parties
      hereto in separate counterparts, each of which when so executed shall be deemed
      to be an original and all of which taken together shall constitute but one
      and
      the same agreement. Facsimile, PDF and other electronically transmitted copies
      signatures on this Agreement shall be deemed the equivalent of original
      signatures. 

     

    21.11
      Termination
      of Agreement.
      Upon
      the Discharge of the Senior Debt, this Agreement shall terminate and the Senior
      Creditors shall promptly execute and deliver to the Company and the Subordinated
      Creditor such documents and instruments as shall be necessary to evidence such
      termination; provided, however, that the obligations of the Company and the
      Subordinated Creditor under ARTICLE XX shall survive such termination.

     

    [INTENTIONAL
      END OF PAGE] 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
      the
      date first above written. 

     

     

    SENIOR
      CREDITORS 

     

    
      	
               

            	
               

            	
               

            	
               

            	
               

            
	
              BARTFAM,
                a California limited partnership 

              By:  /s/
                Thomas F. Bartman        

            	
               

            	
              Thomas
                F. Bartman, Managing Trustee of The

            
	
               

            	
               

            	
              William
                S. Bartman Marital Trust

            
	
              Name:
                Thomas F. Bartman

            	
               

            	
                   /s/
                Thomas F. Bartman        

            
	
              Title:
                General Partner

            	
               

            	
               

            	
               

            	
               

            
	
              Judith
                A. Fiskin, Trustee of the Judith A.

            	
               

            	
              Cecile
                Citron Bartman, Trustee of the

            
	
              Fiskin
                Trust dated April 16, 1996

            	
               

            	
              Cecile
                Citron Bartman Trust

            
	
                  /s/
                Judith A. Fiskin, Trustee    

            	
               

            	
                  /s/
                Cecile Citron Bartman    

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
            	
               

            	
            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              David
                A. Bartman

            	
               

            	
              John
                W. Bartman

            
	
                  /s/
                David A. Bartman        

            	
               

            	
              
                    /s/
                  John W. Bartman        

              

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Michael
                T. Bartman

            	
               

            	
               

            	
               

            	
               

            
	
              
                    /s/
                  Michael T. Bartman        

              

            	
               

            	
              Address:

            
	
               

            	
               

            	
              Care
                of:

            
	
               

            	
               

            	
              John
                W. Bartman and Thomas F. Bartman

            
	
               

            	
               

            	
              11777
                San Vicente Blvd Suite 600

            
	
               

            	
               

            	
              Los
                Angeles, California 90049

            
	
               

            	
               

            	
              Facsimile:
                310 826-8477

            
	
               

            	
               

            	
              with
                copies to:

            
	
               

            	
               

            	
              Manatt,
                Phelps & Phillips, LLP

            
	
               

            	
               

            	
              11355
                W. Olympic Blvd.

            
	
               

            	
               

            	
              Los
                Angeles, CA 90064

            
	
               

            	
               

            	
              Attention:
                [_______________], Esq.

            
	
               

            	
               

            	
              Facsimile:
                (310) 312-4224

            

    

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    
      	
               

            	
               

            	
              SUBORDINATED
                CREDITOR:

            

    

     

         /s/
      Richard P. Sommerfeld, Jr.      

     

    
      	
               

            	
               

            	
              Richard
                P. Sommerfeld, Jr

            

    

     

    Address:
      

     

    115
      S.
      Oak Street 

    Falls
      Church, Virginia 22046 

     

    with
      copies to: 

     

    Savit
      & Szymkowicz, LLP 

    7315
      Wisconsin Avenue 

    Suite 601N
      

    Bethesda,
      Maryland 20814 

    Attention:
      Diana M. Savit, Esq. 

    Telephone:
      (301) 951-9191 

     

    COMPANY: 

     

    AIRBEE
      WIRELESS, INC., 

     

    
      	
               

            	
               

            	
               

            
	
              By;
                

            	
               

            	
              /s/
                E. Eugene Sharer     

            
	
               
                

            	
               

            	
               

            
	
              Name:
                

            	
               

            	
              E.
                Eugene Sharer

            
	
               

            	
               

            	
               

            
	
              Title:
                

            	
               

            	
              President

            
	
               
                

            	
               

            	
               

            

    

    

     Address:

     

    9400
      Key West Avenue 

    Rockville,
      Maryland 20850 

    Attention:
      E. Eugene Sharer, President 

    Facsimile:
      (301) 57-1861 

     

    with
      copies to: 

     

    Stradling
      Yocca Carlson & Rauth 

    1600
      Newport Center Drive Suite 1600 

    Newport
      Beach, California 92660 

    Attention:
      Shivbir S. Grewal, Esq.

    Facsimile:
      (949) 725-4100 

    
      
        
        

      

      
        20

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