SUBORDINATION AGREEMENT
This Subordination Agreement (the "Agreement") is made and entered into
as of November 3, 2005, by and between Eagle Lake Incorporation, a Utah
corporation, and Xxxxxxx X. Xxxxx, as representative ("Subordinated Creditor")
for Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx, 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 $70,000 as evidenced by the Senior Secured Promissory Note
dated November 3, 2005 with a Security Agreement of even date herewith (the
"Senior Note" and the "Senior Security Agreement"). The Subordinated Creditor
has agreed to subordinate their security interests in one particular receivable
held by Borrower known as the Raytheon Receivable (which is hereinafter defined
in detail in Exhibit A attached hereto and by reference herein).
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.
"Collateral" shall have the Raytheon Receivable.
3. Subordination. Subordinated Creditor agrees that payment of the
Subordinated Indebtedness from the Raytheon Receivable 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.
1
4. Payment to Subordinated Creditors. As soon as practical after the
execution of this Agreement and the funding of the loan proceeds under the Loan
Agreement, the Borrower shall pay $500.00 to Xxxxxxx X. Xxxxx and $500.00 to
Eagle Lake Incorporated in consideration of this Subordination.
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 out of the Collateral or to otherwise take any action
against the Collateral without Senior Creditor's prior written consent.
6. Term. 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.
7. 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 Collateral, and may exchange, sell,
release, surrender or otherwise deal with any such security without in any way
impairing or affecting this Agreement.
8. 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
8(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.
(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
2
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 by the parties hereto as of the
day and year first above written.
SENIOR CREDITOR:
Xxxxx X. Xxxxx
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Address: 0000 Xxxxx Xxx., Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
SENIOR CREDITOR:
Xxxxxx X. Xxxxx
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Address: 00 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
3
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
SUBORDINATED 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
BORROWER:
RVision, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, 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 use, spend or hypothecate any of the funds received
by the payment of the Raytheon Receivable until the Senior Creditor has been
paid in full.
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. Xxxxxxxx, President
Address: 0000 X Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
4
