SUBORDINATION AGREEMENT
This Subordination Agreement (the "Agreement") is made and entered into
as of September 2, 2005, by and between Eagle Lake Incorporation, a Utah
corporation, ("Subordinated Creditor"), Xxxxxxx X. Xxxxx, as representative (the
"Lender Representative") for JES Holdings, LLC, Fiserv ISS & Co. Trustee FBO H.
Xxxxxx Xxxxxxxx, XXX and Xxxxx X. Xxxxx, (individually a "Lender" and
collectively the "Lending Group") and hereinafter referred to as (the "Senior
Creditor") and RVision, LLC, a California limited liability company,
("Borrower").
RECITALS
Borrower has entered into that certain Loan and Security Agreement of
even date herewith with Senior Creditor (as amended from time to time, the "Loan
Agreement") pursuant to which Senior Creditor has agreed to lend to Borrower the
principal amount of $300,000 as evidenced by the Senior Secured Promissory Note
of even date herewith (the "Senior Note"). Pursuant to a Secured Promissory Note
and Security Agreement dated as of March 27, 2002 (the "Subordinated Note" and
the "Subordinated Security Agreement"), Subordinated Creditor loaned $300,000 to
Borrower and Borrower granted Subordinated Creditor a security interest in the
Collateral. Senior Creditor, as a condition to extending to Borrower the credit
contemplated by the Loan Agreement and the Senior Note, requires the execution
of this Agreement by Subordinated Creditor in order to subordinate the
indebtedness of Borrower arising under the Subordinated Note and Subordinated
Security Agreement to the indebtedness of Borrower to Senior Creditor arising
under the Loan Agreement and Senior Note. Subordinated Creditor is willing to
enter into this Agreement in consideration of issuance of 6,000 Units of
Debtor's limited liability company interest which shall automatically be
converted into 6,000 fully paid and non assessable shares common stock of Eagle
Lake upon consummation of the Closing and in order to induce Senior Creditor to
make loans or extend credit or any other financial accommodations to or for the
benefit of Borrower.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby expressly acknowledged, Subordinated Creditor hereby agrees
with Senior Creditor as follows:
1. Incorporation of Recitals. The above stated recitals are
incorporated herein and made a part hereof by this reference.
2. Certain Definitions. All capitalized terms used but not defined
herein shall have the meanings given them in the other Loan Documents. The
following terms shall have the following meanings for the purposes of this
Agreement:
"Senior Indebtedness" shall mean all indebtedness, obligations
and liabilities of Borrower (including, without limitation, principal,
interest, fees, costs, expenses and reasonable attorneys' fees), now or
hereafter owed by Borrower to Senior Creditor, including, without
limitation, the principal of, interest on and all other amounts owing
under, the Loan Agreement and Senior Note, and any renewals,
replacements, substitutions, amendments, modifications, refinancings or
refundings thereof.
"Subordinated Indebtedness" shall mean all indebtedness,
obligations and liabilities of Borrower (including, without limitation,
principal, interest, fees, costs, expenses, additional advances and
reasonable attorneys' fees), now or hereafter owed by Borrower to
Subordinated Creditor, including, without limitation, the principal of,
interest on and all other amounts owing under, the Subordinated Note
and Subordinated Security Agreement, and any renewals, replacements,
substitutions, amendments, modifications, refinancings or refundings
thereof.
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"Collateral" shall have the meaning given it in the Loan
Agreement.
3. Subordination. Subordinated Creditor agrees that payment of the
Subordinated Indebtedness is expressly subordinated to the prior payment in full
of all Senior Indebtedness and that any security interest it may have in the
Collateral shall be and is hereby made inferior and subordinate in priority to
the security interest of Senior Creditor. Unless and until the Senior
Indebtedness shall have been fully paid and satisfied and all financing
arrangements between Borrower and Senior Creditor pursuant to the Loan Agreement
have been terminated, Subordinated Creditor will not, without the prior written
consent of Senior Creditor (i) accelerate, ask, demand, xxx for, take or receive
from or on behalf of Borrower, by set-off or in any other manner, the whole or
any part of any monies which may now or hereafter be owing to Subordinate
Creditor on the Subordinated Indebtedness, (ii) initiate or participate with
others in any suit, action or proceeding against Borrower to collect the whole
or any part of the Subordinated Indebtedness, or (iii) ask, demand, take or
receive any security for any of the Subordinated Indebtedness. This
subordination provision shall apply with respect to all of the Senior
Indebtedness, regardless of the amount of the Senior Indebtedness or how or in
what manner the Senior Indebtedness is incurred, or whether the Senior
Indebtedness has already been incurred or may be incurred in the future by
future advances or other financial accommodations made or extended by Senior
Creditor, or whether such future advances or other financial accommodations are
made at the discretion of Senior Creditor or pursuant to commitment or
otherwise. If Subordinate Creditor, in violation of this Agreement, shall
commence, prosecute or participate in any suit, action or proceeding against
Borrower or shall attempt to enforce, foreclose or realize upon any security for
the Subordinated Indebtedness, Borrower or Senior Creditor may interpose as a
defense or plea the making of this Agreement and Senior Creditor or any Lender
individually may intervene and interpose such defense in its name or in the name
of Borrower, and Borrower or Senior Creditor may by virtue of this Agreement
restrain the enforcement thereof in the name of Borrower or Senior Creditor.
4. Issuance of Shares of Borrower. As soon as practical after the
execution of this Agreement and the funding of the loan proceeds under the Loan
Agreement, the Borrower shall issue and deliver to Subordinated Creditor a
certificate for 6,000 Units of Debtor's limited liability company interest which
shall automatically be converted into 6,000 fully paid and non assessable shares
of common stock of Eagle Lake upon consummation of the Closing.
5. Enforcement. Subordinated Creditor, prior to the payment in full of
the Senior Indebtedness and the termination of all financing arrangements under
the Loan Agreement, shall not have any right to enforce payment of any of the
Subordinated Indebtedness or to otherwise take any action against Borrower or
its property without Senior Creditor's prior written consent.
6. Subordinated Indebtedness Owed Only to Subordinated Creditor.
Subordinated Creditor warrants and represents to Senior Creditor that
Subordinated Creditor has not previously assigned any interest in the
Subordinated Indebtedness to any party, that no party owns an interest in the
Subordinated Indebtedness other than Subordinated Creditor (whether as joint
holder of the Subordinated Indebtedness, participants or otherwise), that the
entire Subordinated Indebtedness is owing to Subordinated Creditor, and
Subordinated Creditor covenants that the Subordinated Indebtedness shall
continue to be owing only to Subordinated Creditor, unless assigned, transferred
or disposed of in accordance with the terms of this Agreement as provided in
Section 12 hereof.
7. Priority on Distribution. In the event of any distribution, division
or application, partial or complete, voluntary or involuntary, by operation of
law or otherwise, of all or any part of the assets of Borrower or the proceeds
thereof to the creditors of Borrower or of any readjustment of the obligations
and indebtedness of Borrower, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
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action or proceeding involving the readjustment of all or any of Borrower's
indebtedness, or the application of the assets of Borrower to the payment or
liquidation thereof, or the dissolution or winding up of Borrower's business, or
of the sale of all or substantially all of Borrower's assets, then, and in any
such event, Senior Creditor shall be entitled to receive payment in full of all
Senior Indebtedness prior to the payment of all or any part of the Subordinated
Indebtedness.
8. Payments Received by Subordinated Creditor. Should any payment or
distribution be received by Subordinated Creditor upon or with respect to the
Subordinated Indebtedness prior to the satisfaction of all Senior Indebtedness
and the termination of all financing arrangements between Borrower and Senior
Creditor under the Loan Agreement, Subordinated Creditor shall receive and hold
the same in trust, as trustee, for the benefit of Senior Creditor and shall
forthwith deliver the same to Senior Creditor in precisely the same form
received (except for the endorsement or assignment of Subordinated Creditor
where necessary) for application on the Senior Indebtedness, due or not due, and
until so delivered, the same shall be held in trust by Subordinated Creditor as
the property of Senior Creditor.
9. Grant of Authority to Senior Creditor. In order to enable Senior
Creditor to enforce its rights hereunder: (a) Senior Creditor is hereby
irrevocably authorized and empowered, in its discretion, to make and present for
and on behalf of Subordinated Creditor such proofs of claim against Borrower on
account of the Subordinated Indebtedness as Senior Creditor may deem expedient
or proper, to vote such proofs of claim in any such proceeding and to receive
and collect any and all dividends or other payments or disbursements made
thereon in whatever form the same may be paid or issued and to apply the same on
account of any of the Senior Indebtedness; (b) Subordinated Creditor irrevocably
authorizes and empowers Senior Creditor to demand, xxx for, collect and receive
every such payment or distribution and give acquittance therefor and to file
claims and to take such other actions, in Senior Creditor's own name or in the
name of Subordinated Creditor or otherwise, as Senior Creditor may deem
necessary or advisable for the enforcement of this Agreement; and (c)
Subordinated Creditor shall execute and deliver to Senior Creditor such powers
of attorney, assignments, UCC-2 Financing Statement Amendments or other
instruments or documents, as may be requested by Senior Creditor, to be recorded
and filed as necessary to provide legal notice to and evidence the Subordination
of Subordinated Creditor's interest to that of the Senior Credit and in order to
enable Senior Creditor to enforce any and all claims upon or with respect to any
or all of the Subordinated Indebtedness and to collect and receive any and all
payments or distributions which may be payable or deliverable at any time upon
or with respect to the Subordinated Indebtedness, all for Senior Creditor's own
benefit.
10. Instrument Legend. The Subordinated Note, and any other instruments
evidencing any of the Subordinated Indebtedness, will, on the date hereof or
promptly hereafter, be inscribed with a legend conspicuously indicating that
payment thereof is subordinated to the claims of Senior Creditor pursuant to the
terms of this Agreement and a copy thereof will be delivered to Senior Creditor
promptly hereafter.
11. Subrogation. After all of the Senior Indebtedness has been paid in
full and until the Subordinated Indebtedness has been paid in full, Subordinated
Creditor shall be subrogated to the rights of Senior Creditor to receive
payments and distributions of assets with respect to the Senior Indebtedness, to
the extent that distributions otherwise payable to Subordinated Creditor have
been applied to the payment of Senior Indebtedness in accordance with the
provisions of this Agreement. As between Borrower and Subordinated Creditor, a
distribution applied to the payment of the Senior Indebtedness in accordance
with the provisions of this Agreement which otherwise would have been made to
Subordinated Creditor shall not be deemed a payment by Borrower on the
Subordinated Indebtedness, it being understood that the subordination provisions
of this Agreement are and are intended solely for the purpose of defining the
relative rights of Subordinated Creditor, on the one hand, and Senior Creditor,
on the other hand, and nothing contained in this Agreement shall impair the
obligations of Borrower, which are absolute and unconditional, to pay to
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Subordinated Creditor the Subordinated Indebtedness as and when the same shall
become due and payable in accordance with its terms, except as such obligation
is modified by the rights confirmed hereunder in favor of Senior Creditor, or
affect the relative rights of Subordinated Creditor and the creditors of
Borrower other than Senior Creditor.
12. Assignment of Subordinated Indebtedness. Subordinated Creditor
agrees that until the Senior Indebtedness has been paid in full and satisfied
and all financing arrangements between Borrower and Senior Creditor have been
terminated in writing, Subordinated Creditor will not assign, transfer or
otherwise dispose of the Subordinated Indebtedness or any portion thereof unless
such assignment, transfer or other disposition is made expressly subject to this
Agreement.
13. Term. This Agreement shall constitute a continuing agreement
between Subordinated Creditor and Senior Creditor, and Senior Creditor may
continue, without notice to Subordinated Creditor, to lend monies, extend credit
and make other accommodations to or for the account of Borrower. This Agreement
shall be irrevocable by Subordinated Creditor until all of the Senior
Indebtedness shall have been paid and fully satisfied and all financing
arrangements between Borrower and Senior Creditor have been terminated in
writing, or until the Subordinated Indebtedness shall have been paid and fully
satisfied, whichever first occurs.
14. Additional Agreements between Senior Creditor and Borrower. Senior
Creditor, at any time and from time to time, may enter into such agreement or
agreements with Borrower as Senior Creditor may deem proper, extending the time
of payment of or renewing or otherwise altering the terms of all or any of the
Senior Indebtedness or affecting the security underlying any or all of the
Senior Indebtedness, and may exchange, sell, release, surrender or otherwise
deal with any such security without in any way impairing or affecting this
Agreement.
15. Waivers of Subordinated Creditor. All of the Senior Indebtedness
shall be deemed to have been made or incurred in reliance upon this Agreement,
and Subordinated Creditor expressly waives all notice of the acceptance by
Senior Creditor of the subordination and other provisions of this Agreement,
notice of the incurring of Senior Indebtedness from time to time under the Loan
Agreement and all other notices not specifically required pursuant to the terms
of this Agreement or by law, and Subordinated Creditor expressly waives reliance
by Senior Creditor upon the subordination and other agreements as herein
provided.
14. Miscellaneous.
(a) Amendments and Waivers. Any term of this Agreement may be
amended with the written consent of the parties or their respective successors
and assigns. Any amendment or waiver effected in accordance with this Section
14(a) shall be binding upon the parties and their respective successors and
assigns.
(b) Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties and
their successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. The term "Borrower" as used herein shall also refer to the
successors and assigns of Borrower, including, without limitation, a receiver,
trustee, custodian or debtor-in-possession.
(c) Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.
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(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(e) Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) Notices. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon receipt, when
delivered personally or by a nationally-recognized delivery service (such as
Federal Express or UPS) or confirmed facsimile, or forty-eight (48) hours after
being deposited in the U.S. mail as certified or registered mail with postage
prepaid, if such notice is addressed to the party to be notified at such party's
address or facsimile number as set forth below or as subsequently modified by
written notice.
(g) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.
(h) Entire Agreement. This Agreement and the documents
referred to herein are the product of both of the parties hereto, constitute the
entire agreement between such parties pertaining to the subject matter hereof
and thereof, and merge all prior negotiations and drafts of the parties with
regard to the transactions contemplated herein and therein. Any and all other
written or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
(i) Advice of Legal Counsel. Each party acknowledges and
represents that, in executing this Agreement, it has had the opportunity to seek
advice as to its legal rights from legal counsel and that the person signing on
its behalf has read and understood all of the terms and provisions of this
Agreement. This Agreement shall not be construed against any party by reason of
the drafting or preparation thereof.
This Agreement has been duly executed under seal by the parties hereto
as of the day and year first above written.
SUBORDINATED CREDITOR:
Eagle Lake Incorporated
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, President
Address: 00 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
SENIOR CREDITOR:
Xxxxxxx X. Xxxxx, as Lender Representative
for the Lending Group
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Address: 00 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
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BORROWER:
RVision, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, President
Address: 0000 X Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
ACKNOWLEDGMENT AND AGREEMENT
The undersigned, RVision, LLC, a California limited liability company,
the Borrower named in the foregoing Subordination Agreement, does hereby accept,
and acknowledge receipt of a copy of, the foregoing Subordination Agreement, and
agrees that (a) it will not pay any of the Subordinated Indebtedness except as
the foregoing Agreement provides, (b) it will issue the a certificate for 6,000
Units of the Borrower to Subordinated Creditor in accordance with Section 4 of
the foregoing Agreement, and (c) it will be bound by the subrogation provisions
of Section 11 of the foregoing Agreement. In the event of a breach by the
undersigned of any of the provisions herein, all of the Senior Indebtedness
shall, without presentment, demand, protest or notice of any kind except as
otherwise required by the Loan Agreement with Senior Creditor, become
immediately due and payable unless Senior Creditor shall otherwise elect in
writing.
All capitalized terms used in this Acknowledgment and Agreement without
definition shall have the same meanings as set forth in the foregoing
Subordination Agreement.
The undersigned has caused this Acknowledgment and Agreement to be duly
executed as of the day and year first above written.
BORROWER:
RVision, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxx, President
Address: 0000 X Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
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