SUBORDINATION AND INTERCREDITOR
AGREEMENT
THIS SUBORDINATION
AND INTECREDITOR AGREEMENT is executed this 31st day of March,
2006, by ROCKFORD CORPORATION, an Arizona corporation
(“Rockford”), ADVANCED INTEGRATION, LLC, an Oklahoma
limited liability company (the “Borrower”) and
STILLWATER NATIONAL BANK AND TRUST COMPANY
(“SNB”).
WHEREAS, the
Borrower, Rockford and Audio Innovations, Inc.
(“Audio”) have entered into that certain Asset Purchase
Agreement (the “Asset Purchase Agreement”) pursuant to
which the Borrower is acquiring all of the business assets of
Audio, except as specifically set forth therein (the “Audio
Assets”); and
WHEREAS, SNB and
the Borrower have entered into a Loan Agreement of even date
herewith (the “SNB Loan Agreement”) pursuant to which
SNB has loaned to the Borrower the sum of $750,000.00 (the
“SNB Loan”) as evidenced by a Promissory Note in the
principal face amount of $750,000.00 dated effective March 31,
2006, signed by the Borrower in favor of SNB (the “SNB
Note”), which is secured by a certain Security Agreement (the
“SNB Security Agreement”) covering all of the business
assets of the Borrower, including but not limited to, the Audio
Assets and any and all other accounts, inventory, equipment and
general intangibles now owned or hereafter acquired by the Borrower
(the “Collateral”); and
WHEREAS, Rockford
has extended credit to the Borrower in the amount of $1,000,000.00
(the “Rockford Loan”) as evidenced by a certain Loan
and Security Agreement between the Borrower and Rockford (the
“Rockford Agreement”), which sum is secured by the
Collateral; and
WHEREAS, this
Agreement is executed and delivered to SNB by Rockford and the
Borrower to induce SNB to make the SNB Loan to the Borrower, and in
satisfaction of a material condition precedent thereto;
WHEREAS, Rockford
has heretofore collected the payments of the accounts and account
receivables of Audio, which accounts and account receivables (the
“Accounts”) constitute a portion of the Collateral;
and
WHEREAS, this
Agreement is executed by SNB and Rockford in order to establish the
relative priorities of the security interests of SNB and Rockford
with respect to the Collateral; and
WHEREAS, this
Agreement is also executed by SNB, Rockford and the Borrower to
establish the terms and conditions surrounding the receipt,
transmittal and disposition of the proceeds of the
Accounts.
1
NOW THEREFORE, in
consideration of the recitals, the making of the SNB Loan to the
Borrower by SNB, and the benefits to be derived by Rockford and the
Borrower therefrom and other good and valuable consideration, it is
agreed as follows:
|
|
1.
|
|
Subordination
. Except as specifically
set forth herein Rockford hereby subordinates any and all liens and
security interests held by Rockford in the Collateral to the terms
of the SNB Security Agreement, and all liens and security interests
granted thereunder by the Borrower in favor of SNB covering the
Collateral. Rockford agrees that except as specifically set forth
herein, any and all liens and security interests of Rockford in the
Collateral will be junior and inferior in priority to the liens and
security interests created of SNB in the Collateral regardless of
the order of filing of financing statements by SNB and Rockford
with respect to the Collateral.
|
|
|
|
|
|
|
|
2.
|
|
Receipt and Transmittal of Account
Proceeds .
The Borrower shall notify each existing account debtor and instruct
each account debtor to send all payments on the Accounts to SNB.
Rockford agrees that upon any receipt by Rockford of any payments
on the Accounts, Rockford will:
|
|
|
a.
|
|
if
the payment is by instrument, mail such instrument and any
accompanying remittance materials to SNB at P.O. Box 819,
Stillwater, Oklahoma 74076, within a reasonable time after receipt
by Rockford, but no later than five (5) business days after
such receipt; or
|
|
|
|
|
|
|
|
b.
|
|
if
the payment is by wire transfer, promptly transmit such funds to
SNB by wire transfer in accordance with wiring instructions to be
provided by SNB, and mail any associated remittance materials to
SNB at P.O. Box 819, Stillwater, Oklahoma 74076, within a
reasonable time thereafter, but no later than five
(5) business days.
|
|
|
3.
|
|
Best Buy Accounts
. Notwithstanding
paragraph 1 above, SNB hereby subordinates any and all liens and
security interests held by SNB in the ac
|
|
