Exhibit 10.6

 

EXECUTION COPY

 

SUBORDINATION AGREEMENT

 

SUBORDINATION AGREEMENT, dated as of April 26, 2006 (as amended, supplemented or
otherwise modified from time to time, this “Agreement”), by and among the
Subordinated Lenders (as hereinafter defined), MEDICOR LTD., a Delaware
corporation (the “Company”), and SILVER OAK CAPITAL, L.L.C., a Delaware limited
liability company, in its capacity as collateral agent (in such capacity, the
“Collateral Agent”) for the holders from time to time of the Senior Notes (as
hereinafter defined) issued pursuant to the Securities Purchase Agreement (as
hereinafter defined).

 

RECITALS

 

WHEREAS, the Company has agreed to issue, and the Purchasers (as defined in the
Securities Purchase Agreement) have agreed to purchase, Senior Notes in the
aggregate principal amount of $50,000,000 pursuant to the Securities Purchase
Agreement, dated as of April 26, 2006 (as amended, supplemented or otherwise
modified from time to time, the “Securities Purchase Agreement”) by and among
the Company and the Purchasers from time to time party thereto;

 

WHEREAS, it is a condition to the obligation of the Purchasers to purchase the
Senior Notes that the Subordinated Lenders agree to subordinate the Subordinated
Obligations (as hereinafter defined) to the Senior Obligations (as hereinafter
defined) on the terms set forth herein; and

 

WHEREAS, the Subordinated Lenders will receive substantial direct and indirect
benefits from the issuance of the Senior Notes.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and to induce the Purchasers
to purchase the Senior Notes, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Subordinated
Lenders agree with the Collateral Agent for the benefit of the holders of the
Senior Obligations as follows:

 

1.                                       DEFINITIONS.  IN ADDITION TO THOSE
TERMS DEFINED ELSEWHERE IN THIS AGREEMENT, AS USED IN THIS AGREEMENT, THE
FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

“Collateral” means the collective reference to any and all property from time to
time subject to security interests to secure payment or performance of the
Senior Obligations.

 

“Common Stock” means (a) the Company’s common stock, par value $0.001 per share,
and (b) any capital stock resulting from a reclassification of such common
stock.

 

“Enforcement Action” means any action by a Subordinated Lender to collect or
receive payments or distributions, exercise a remedy, foreclose on collateral,
if any, commence a legal proceeding or undertake any other enforcement action
with respect to the Subordinated Obligations.

 

--------------------------------------------------------------------------------

 

“Guarantee and Collateral Agreement” means the Guarantee and Collateral
Agreement, dated as of April 26, 2006 (as amended, supplemented or otherwise
modified from time to time), by and among the Company and the Guarantors in
favor of the Collateral Agent.

 

“Guarantors” shall have the meaning given to such term in the Guarantee and
Collateral Agreement.

 

“Insolvency Event” means (a) the Company or any of its Subsidiaries commencing
any case, proceeding or other action (i) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (ii) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part
of its assets, or the Company or any of its Subsidiaries making a general
assignment for the benefit of its creditors, (b) there being commenced against
the Company or any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (a) above which (i) results in the entry of an
order for relief or any such adjudication or appointment or (ii) remains
undismissed, undischarged or unbonded for a period of 30 days, (c) there being
commenced against the Company, or any of its Subsidiaries, any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 30 days from
the entry thereof, (d) the Company, or any of its Subsidiaries, taking any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (a), (b), or (c) above, or
(e) the Company or any of its Subsidiaries generally not paying, or being unable
to pay, or admitting in writing its inability to pay, its debts as they become
due.

 

“Integrated Amended and Restated Promissory Note” means the Amended and Restated
Promissory Note, dated as of the date hereof, by and among the Company and
Integrated LLC (as amended, supplemented or otherwise modified from time to
time).

 

“Integrated LLC” means International Integrated Incorporated, LLC, a Nevada
limited liability company.

 

“Principal Market” means, with respect to the Common Stock or any other
security, the principal securities exchange or trading market for the Common
Stock or such other security.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated
as of April 26, 2006 (as amended, supplemented or otherwise modified from time
to time), among the Company and the initial holders of the Senior Notes relating
to the filing of registration statements covering, among other things, the
resale of the Registrable Securities (as defined therein).

 

“Senior Debt Documents” means the collective reference to the Securities
Purchase Agreement, the Senior Notes, the Senior Security Documents and all
other documents or

 

2

--------------------------------------------------------------------------------

 

instruments that from time to time evidence the Senior Obligations or secure or
support payment or performance thereof.

 

“Senior Lenders” means the holders from time to time of the Senior Notes.

 

“Senior Notes” means the senior secured convertible notes of the Company issued
and outstanding to the Senior Lenders from time to time, pursuant to the
Securities Purchase Agreement.

 

“Senior Obligations” means the collective reference to the unpaid principal of,
and interest on, the Senior Notes and all other obligations and liabilities of
the Company to the Collateral Agent and the Senior Lenders (including, without
limitation, interest accruing at the then applicable rate provided in the
Securities Purchase Agreement and the Senior Notes after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Company, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Securities Purchase Agreement, the Senior Notes, this Agreement, the other
Senior Debt Documents, any other Transaction Document (as such term is defined
in the Securities Purchase Agreement) or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Collateral Agent or to the Senior Lenders that are required to be paid by
the Company pursuant to the terms of the Securities Purchase Agreement, this
Agreement or any other Senior Debt Document).

 

“Senior Security Documents” means the Guarantee and Collateral Agreement, any
other applicable Transaction Document and all other documents and instruments,
now existing or hereafter arising, which create or perfect, or purport to create
or perfect, a security interest in property to secure payment or performance of
the Senior Obligations.

 

“Sirius LLC” means Sirius Capital, LLC, a Delaware limited liability company.

 

“Sirius Promissory Note” means the Promissory Note, dated as of April 26, 2006
by and among the Company and Sirius LLC (as amended, supplemented or otherwise
modified from time to time).

 

“Subordinated Debt Documents” means any applicable securities purchase
agreement, the Subordinated Notes and all other documents or instruments that
from time to time evidence of the Subordinated Obligations.

 

“Subordinated Lenders” means Integrated LLC and Sirius LLC, and their respective
subsidiaries, if any, and, as applicable, any other holder of the Subordinated
Obligations from time to time party to any subordinated securities purchase
agreement.

 

“Subordinated Notes” means the subordinated unsecured notes of the Company
issued and outstanding from time to time to Integrated LLC, with a principal
amount outstanding of $31,039,186.11 as of the date hereof, pursuant to the
Integrated Amended and Restated

 

3

--------------------------------------------------------------------------------

 

Promissory Note and the subordinated unsecured convertible notes of the Company
issued and outstanding to Sirius LLC, with a principal amount outstanding of
$37,500,000 as of the date hereof, pursuant to the Sirius Promissory Note.

 

“Subordinated Obligations” means the collective reference to the unpaid
principal of and interest on the Subordinated Notes and all other obligations
and liabilities of the Company to the Subordinated Lenders (including, without
limitation, interest accruing at the then applicable rate provided in the
applicable Subordinated Debt Documents after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Subordinated Notes, this Agreement, any other Subordinated Debt Document or any
other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Subordinated Lenders that are required
to be paid by the Company pursuant to the terms of any applicable subordinated
purchase agreement, this Agreement or any other Subordinated Debt Document).

 

“Subsidiary” means any entity in which the Company, directly or indirectly, owns
(5%) or more of the outstanding capital stock, equity or similar interests or
voting power of such entity at the time of this Agreement or at any time
hereafter.

 

“Warrants” means the warrants issued to the original buyers of the Senior Notes
pursuant to the Securities Purchase Agreement and all warrants issued in
exchange or substitution therefor or replacement thereof.

 

“Weighted Average Price” means, as of any date, the dollar volume-weighted
average price for the such security on its Principal Market during the period
beginning at 9:30 a.m. New York City time (or such other time as its Principal
Market publicly announces is the official open of trading) and ending at
4:00 p.m. New York City time (or such other time as its Principal Market
publicly announces is the official close of trading) as reported by Bloomberg
through its “Volume at Price” functions, or if the foregoing does not apply, the
dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period
beginning at 9:30 a.m. New York City time (or such other time as such
over-the-counter market publicly announces is the official open of trading), and
ending at 4:00 p.m. New York City time (or such other time as such
over-the-counter market publicly announces is the official close of trading) as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by the National
Quotation Bureau, Inc.

 

2.                                       SUBORDINATION.  (A)  THE COMPANY AND
EACH OF THE SUBORDINATED LENDERS PARTY HERETO AGREE, FOR ITSELF AND EACH FUTURE
HOLDER OF THE SUBORDINATED OBLIGATIONS, THAT THE SUBORDINATED OBLIGATIONS ARE
EXPRESSLY “SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT” (AS THAT PHRASE IS
DEFINED IMMEDIATELY BELOW) TO ALL SENIOR OBLIGATIONS.

 

4

--------------------------------------------------------------------------------

 

(B)                                 “SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT”
MEANS THAT:

 

(I)                                     NO PART OF THE SUBORDINATED OBLIGATIONS
SHALL HAVE ANY CLAIM TO THE ASSETS OF THE COMPANY ON A PARITY WITH OR PRIOR TO
THE CLAIM OF THE SENIOR OBLIGATIONS; AND

 

(II)                                  UNTIL AT LEAST 90 DAYS AFTER THE SENIOR
NOTES HAVE BEEN PAID IN FULL DURING TIME WHICH NO INSOLVENCY EVENT SHALL HAVE
OCCURRED, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE COLLATERAL AGENT AND
THE HOLDERS OF AT LEAST A MAJORITY OF THE AGGREGATE PRINCIPAL AMOUNT OF THE
SENIOR NOTES THEN OUTSTANDING, (A) NO SUBORDINATED LENDER WILL TAKE, DEMAND OR
RECEIVE FROM THE COMPANY, AND THE COMPANY WILL NOT MAKE, GIVE OR PERMIT,
DIRECTLY OR INDIRECTLY, BY SET-OFF, REDEMPTION, PURCHASE OR IN ANY OTHER MANNER,
ANY PAYMENT OF OR SECURITY FOR THE WHOLE OR ANY PART OF THE SUBORDINATED
OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY LETTER OF CREDIT OR SIMILAR
CREDIT SUPPORT FACILITY TO SUPPORT PAYMENT OF THE SUBORDINATED OBLIGATIONS AND
(B) NO SUBORDINATED LENDER WILL ACCELERATE FOR ANY REASON THE SCHEDULED
MATURITIES OF ANY AMOUNT OWING UNDER THE SUBORDINATED NOTES OR TAKE ANY
ENFORCEMENT ACTION; PROVIDED, HOWEVER, THAT UPON THE OCCURRENCE OF AN INSOLVENCY
EVENT THE SUBORDINATED LENDERS MAY ACCELERATE THE SCHEDULED MATURITIES OF THE
SUBORDINATED NOTES.

 

(C)                                  THE EXPRESSIONS “PRIOR PAYMENT IN FULL,”
“PAYMENT IN FULL,” “PAID IN FULL” AND ANY OTHER SIMILAR TERMS OR PHRASES WHEN
USED IN THIS AGREEMENT WITH RESPECT TO THE SENIOR OBLIGATIONS SHALL MEAN THE
INDEFEASIBLE PAYMENT IN FULL, IN IMMEDIATELY AVAILABLE FUNDS, OF ALL OF THE
SENIOR OBLIGATIONS.

 

3.                                       ADDITIONAL PROVISIONS CONCERNING
SUBORDINATION.  (A)  THE SUBORDINATED LENDERS AND THE COMPANY AGREE THAT UPON
THE OCCURRENCE OF ANY INSOLVENCY EVENT:

 

(I)                                     ALL SENIOR OBLIGATIONS SHALL BE PAID IN
FULL BEFORE ANY PAYMENT OR DISTRIBUTION IS MADE WITH RESPECT TO THE SUBORDINATED
OBLIGATIONS; AND

 

(II)                                  ANY PAYMENT OR DISTRIBUTION OF ASSETS OF
THE COMPANY, WHETHER IN CASH, PROPERTY OR SECURITIES, TO WHICH ANY SUBORDINATED
LENDER WOULD BE ENTITLED EXCEPT FOR THE PROVISIONS HEREOF, SHALL BE PAID OR
DELIVERED BY THE COMPANY, OR ANY RECEIVER, TRUSTEE IN BANKRUPTCY, LIQUIDATING
TRUSTEE, DISBURSING COLLATERAL AGENT OR OTHER PERSON MAKING SUCH PAYMENT OR
DISTRIBUTION, DIRECTLY TO THE COLLATERAL AGENT, FOR THE ACCOUNT OF THE
COLLATERAL AGENT AND SENIOR LENDERS, TO THE EXTENT NECESSARY TO PAY IN FULL ALL
SENIOR OBLIGATIONS, BEFORE ANY PAYMENT OR DISTRIBUTION SHALL BE MADE TO ANY
SUBORDINATED LENDER.

 

(B)                                 UPON THE OCCURRENCE OF ANY EVENT OR
PROCEEDING DESCRIBED IN CLAUSE (A)(I) OR (B) OF THE DEFINITION OF “INSOLVENCY
EVENT” IN SECTION 1 OF THIS AGREEMENT COMMENCED BY OR AGAINST THE COMPANY:

 

(I)                                     EACH SUBORDINATED LENDER IRREVOCABLY
AUTHORIZES AND EMPOWERS THE COLLATERAL AGENT (A) TO DEMAND, SUE FOR, COLLECT AND
RECEIVE EVERY PAYMENT OR DISTRIBUTION ON ACCOUNT OF THE SUBORDINATED OBLIGATIONS
PAYABLE OR DELIVERABLE IN CONNECTION WITH SUCH EVENT OR PROCEEDING AND GIVE
ACQUITTANCE THEREFOR, (B) TO FILE CLAIMS AND PROOFS OF CLAIM IN ANY STATUTORY OR
NON-STATUTORY PROCEEDING AND TAKE SUCH OTHER ACTIONS, IN ITS OWN NAME AS
COLLATERAL AGENT, OR IN THE NAME OF THE SUBORDINATED LENDERS

 

5

--------------------------------------------------------------------------------

 

OR OTHERWISE, AS THE COLLATERAL AGENT MAY DEEM NECESSARY OR ADVISABLE FOR THE
ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND (C) TO VOTE ANY OF THE
CLAIMS OF ANY SUBORDINATED LENDER IN CONNECTION WITH ANY SUCH INSOLVENCY EVENT;
PROVIDED, HOWEVER, THAT THE FOREGOING AUTHORIZATION AND EMPOWERMENT IMPOSES NO
OBLIGATION ON THE COLLATERAL AGENT TO TAKE ANY SUCH ACTION;

 

(II)                                  EACH SUBORDINATED LENDER SHALL TAKE SUCH
ACTION, DULY AND PROMPTLY, AS THE COLLATERAL AGENT MAY REQUEST FROM TIME TO TIME
(A) TO COLLECT THE SUBORDINATED OBLIGATIONS FOR THE ACCOUNT OF THE SENIOR
LENDERS AND (B) TO FILE APPROPRIATE PROOFS OF CLAIM IN RESPECT OF THE
SUBORDINATED OBLIGATIONS; AND

 

(III)                               EACH SUBORDINATED LENDER SHALL EXECUTE AND
DELIVER SUCH POWERS OF ATTORNEY, ASSIGNMENTS OR PROOFS OF CLAIM OR OTHER
INSTRUMENTS AS THE COLLATERAL AGENT MAY REQUEST TO ENABLE THE COLLATERAL AGENT
TO ENFORCE ANY AND ALL CLAIMS IN RESPECT OF THE SUBORDINATED OBLIGATIONS AND TO
COLLECT AND RECEIVE ANY AND ALL PAYMENTS AND DISTRIBUTIONS WHICH MAY BE PAYABLE
OR DELIVERABLE AT ANY TIME UPON OR IN RESPECT OF THE SUBORDINATED OBLIGATIONS.

 

(C)                                  IF ANY PAYMENT OR DISTRIBUTION, WHETHER
CONSISTING OF MONEY, PROPERTY OR SECURITIES, WHETHER OCCURRING BEFORE OR AFTER
THE OCCURRENCE OF ANY EVENT OF DEFAULT (AS SUCH TERM IS DEFINED IN THE
SECURITIES PURCHASE AGREEMENT), BE COLLECTED OR RECEIVED BY ANY SUBORDINATED
LENDER IN RESPECT OF THE SUBORDINATED OBLIGATIONS, SUCH SUBORDINATED LENDER
FORTHWITH SHALL DELIVER THE SAME TO THE COLLATERAL AGENT FOR THE ACCOUNT OF THE
SENIOR LENDERS, IN THE FORM RECEIVED, DULY INDORSED TO THE COLLATERAL AGENT, IF
REQUIRED, TO BE APPLIED TO THE PAYMENT OR PREPAYMENT OF THE SENIOR OBLIGATIONS
UNTIL THE SENIOR OBLIGATIONS ARE PAID IN FULL.  UNTIL SO DELIVERED, SUCH PAYMENT
OR DISTRIBUTION SHALL BE HELD IN TRUST BY SUCH SUBORDINATED LENDER AS THE
PROPERTY OF THE SENIOR LENDERS, SEGREGATED FROM OTHER FUNDS AND PROPERTY HELD BY
SUCH SUBORDINATED LENDER.

 

4.                                       SUBROGATION.  SUBJECT TO THE PAYMENT IN
FULL OF THE SENIOR OBLIGATIONS, THE SUBORDINATED LENDERS SHALL BE SUBROGATED TO
THE RIGHTS OF THE SENIOR LENDERS TO RECEIVE PAYMENTS OR DISTRIBUTIONS OF ASSETS
OF THE COMPANY IN RESPECT OF THE SENIOR OBLIGATIONS UNTIL THE SENIOR OBLIGATIONS
SHALL BE PAID IN FULL.  FOR THE PURPOSES OF SUCH SUBROGATION, PAYMENTS OR
DISTRIBUTIONS TO THE COLLATERAL AGENT, FOR THE ACCOUNT OF THE SENIOR LENDERS, OF
ANY MONEY, PROPERTY OR SECURITIES TO WHICH ANY SUBORDINATED LENDER WOULD BE
ENTITLED EXCEPT FOR THE PROVISIONS OF THIS AGREEMENT SHALL BE DEEMED, AS BETWEEN
THE COMPANY AND ITS CREDITORS OTHER THAN THE SENIOR LENDERS AND SUCH
SUBORDINATED LENDER, TO BE A PAYMENT BY THE COMPANY TO OR ON ACCOUNT OF
SUBORDINATED OBLIGATIONS, IT BEING UNDERSTOOD THAT THE PROVISIONS OF THIS
AGREEMENT ARE, AND ARE INTENDED SOLELY, FOR THE PURPOSE OF DEFINING THE
RESPECTIVE RIGHTS, PRIORITIES AND INTERESTS OF THE COLLATERAL AGENT,
SUBORDINATED LENDERS AND THE SENIOR LENDERS.

 

5.                                       CONSENT OF SUBORDINATED LENDERS.  (A) 
EACH SUBORDINATED LENDER CONSENTS THAT, WITHOUT THE NECESSITY OF ANY RESERVATION
OF RIGHTS AGAINST ANY SUBORDINATED LENDER, AND WITHOUT NOTICE TO OR FURTHER
ASSENT BY ANY SUBORDINATED LENDER:

 

(I)                                     ANY DEMAND FOR PAYMENT OF ANY SENIOR
OBLIGATIONS MADE BY THE COLLATERAL AGENT OR ANY SENIOR LENDER MAY BE RESCINDED
IN WHOLE OR IN PART BY THE COLLATERAL AGENT

 

6

--------------------------------------------------------------------------------

 

OR ANY SUCH SENIOR LENDER, AND ANY SENIOR OBLIGATION MAY BE CONTINUED, AND THE
SENIOR OBLIGATIONS, OR THE LIABILITY OF THE COMPANY OR ANY GUARANTOR OR ANY
OTHER PARTY UPON OR FOR ANY PART THEREOF, OR ANY COLLATERAL SECURITY OR
GUARANTEE THEREFOR OR RIGHT OF OFFSET WITH RESPECT THERETO, OR ANY OBLIGATION OR
LIABILITY OF THE COMPANY OR ANY OTHER PARTY UNDER THE SECURITIES PURCHASE
AGREEMENT OR ANY OTHER AGREEMENT, MAY, FROM TIME TO TIME, IN WHOLE OR IN PART,
BE RENEWED, EXTENDED, MODIFIED, ACCELERATED, COMPROMISED, WAIVED, SURRENDERED,
OR RELEASED BY THE COLLATERAL AGENT OR ANY SENIOR LENDER EACH IN ITS SOLE
DISCRETION; AND

 

(II)                                  THE SECURITIES PURCHASE AGREEMENT, THE
SENIOR NOTES AND ANY OTHER SENIOR DEBT DOCUMENT MAY BE AMENDED, SUPPLEMENTED,
MODIFIED OR TERMINATED, IN WHOLE OR IN PART, AS THE COLLATERAL AGENT OR ANY
SENIOR LENDER MAY DEEM ADVISABLE EACH IN ITS SOLE DISCRETION FROM TIME TO TIME,
AND ANY COLLATERAL SECURITY AT ANY TIME HELD BY THE COLLATERAL AGENT OR ANY
SENIOR LENDER FOR THE PAYMENT OF ANY OF THE SENIOR OBLIGATIONS MAY BE SOLD,
EXCHANGED, WAIVED, SURRENDERED OR RELEASED;

 

in each case all without notice to or further assent by any Subordinated Lender,
which will remain bound under this Agreement, and all without impairing,
abridging, releasing or affecting the subordination provided for herein.

 

(B)                                 EACH SUBORDINATED LENDER WAIVES ANY AND ALL
NOTICE OF THE CREATION, RENEWAL, EXTENSION OR ACCRUAL OF ANY OF THE SENIOR
OBLIGATIONS AND NOTICE OF OR PROOF OF RELIANCE BY THE SENIOR LENDERS UPON THIS
AGREEMENT.  THE SENIOR OBLIGATIONS, AND ANY OF THEM, SHALL BE DEEMED
CONCLUSIVELY TO HAVE BEEN CREATED, CONTRACTED OR INCURRED IN RELIANCE UPON THIS
AGREEMENT, AND ALL DEALINGS BETWEEN THE COMPANY AND THE SENIOR LENDERS SHALL BE
DEEMED TO HAVE BEEN CONSUMMATED IN RELIANCE UPON THIS AGREEMENT.  EACH
SUBORDINATED LENDER ACKNOWLEDGES AND AGREES THAT THE SENIOR LENDERS HAVE RELIED
UPON THE SUBORDINATION PROVIDED FOR HEREIN IN ACQUIRING ITS SENIOR NOTES.  EACH
SUBORDINATED LENDER WAIVES ANY NOTICE OF OR PROOF OF RELIANCE ON THIS AGREEMENT
AND ANY PROTEST, DEMAND FOR PAYMENT AND NOTICE OF DEFAULT.

 

6.                                       NEGATIVE COVENANTS OF THE SUBORDINATED
LENDERS.  SO LONG AS ANY OF THE SENIOR OBLIGATIONS SHALL REMAIN OUTSTANDING, NO
SUBORDINATED LENDER SHALL:

 

(A)                                  WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMPANY GIVEN IN ACCORDANCE WITH THE TERMS OF THE SENIOR NOTES, SELL, ASSIGN, OR
OTHERWISE TRANSFER, IN WHOLE OR IN PART, THE SUBORDINATED OBLIGATIONS OR ANY
INTEREST THEREIN TO ANY OTHER PERSON (A “TRANSFEREE”) OR CREATE, INCUR OR SUFFER
TO EXIST ANY SECURITY INTEREST, LIEN, CHARGE OR OTHER ENCUMBRANCE WHATSOEVER
(COLLECTIVELY, A “TRANSFER”) UPON THE SUBORDINATED OBLIGATIONS IN FAVOR OF ANY
TRANSFEREE.  UPON ANY SUCH TRANSFER (1) SUCH ACTION SHALL BE MADE EXPRESSLY
SUBJECT TO THIS AGREEMENT AND (2) THE TRANSFEREE SHALL EXPRESSLY ACKNOWLEDGE TO
THE COLLATERAL AGENT, BY A WRITING SUBSTANTIALLY IN THE FORM OF EXHIBIT A
ATTACHED HERETO, THE SUBORDINATION PROVIDED FOR HEREIN AND AGREES TO BE BOUND BY
ALL OF THE TERMS HEREOF.  ANY PURPORTED TRANSFER IN VIOLATION OF THIS
SECTION 6(A) SHALL BE NULL AND VOID;

 

(B)                                 WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COLLATERAL AGENT, PERMIT ANY OF THE SUBORDINATED DEBT DOCUMENTS TO BE AMENDED,
MODIFIED OR OTHERWISE SUPPLEMENTED;

 

7

--------------------------------------------------------------------------------

 

(C)                                  WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COLLATERAL AGENT, COMMENCE OR JOIN WITH ANY CREDITORS OTHER THAN THE SENIOR
LENDERS IN COMMENCING, ANY PROCEEDING REFERRED TO IN CLAUSE (B) OR (C) OF THE
DEFINITION OF “INSOLVENCY EVENT”; OR

 

(D)                                 WITH RESPECT TO SIRIUS LLC, EFFECT A SALE OR
OTHER DISPOSITION OF ANY SHARES OF COMMON STOCK ISSUED TO IT PURSUANT TO
SECTIONS 4 OR 8 OF THE SIRIUS PROMISSORY NOTE (THE “CONVERSION SHARES”) OR
(II) OFFER TO SELL, CONTRACT TO SELL, GRANT ANY OPTION TO PURCHASE OR ENTER INTO
ANY SIMILAR TRANSACTION WITH REGARD TO THE CONVERSION SHARES OR ANY SECURITY
CONVERTIBLE INTO OR EXCHANGEABLE FOR THE CONVERSION SHARES WHICH HAS THE SAME
ECONOMIC EFFECT AS A SALE OR OTHER DISPOSITION OF THE CONVERSION SHARES UNLESS
(X) A REGISTRATION STATEMENT (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT)
SHALL HAVE BEEN EFFECTIVE FOR AT LEAST 45 DAYS PRIOR TO SUCH DATE AND SHALL
CONTINUE TO BE EFFECTIVE AND AVAILABLE FOR THE SALE OF NOT LESS THAN 150% OF THE
REGISTRABLE SECURITIES ISSUABLE UPON CONVERSION OF ALL OF THE OUTSTANDING SENIOR
NOTES AND EXERCISE OF ALL OF THE OUTSTANDING WARRANTS, IN ACCORDANCE WITH THE
REGISTRATION RIGHTS AGREEMENT, AND NO GRACE PERIOD (AS DEFINED IN THE
REGISTRATION RIGHTS AGREEMENT) APPLICABLE TO SUCH REGISTRATION STATEMENT SHALL
BE IN EFFECT NOR SHALL THERE HAVE BEEN ANY GRACE PERIOD WHICH IS NOT AN
ALLOWABLE GRACE PERIOD (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT)
APPLICABLE TO SUCH REGISTRATION STATEMENT AND (Y) THE WEIGHTED AVERAGE PRICE OF
THE COMMON STOCK SHALL HAVE BEEN AT LEAST $6.00 (SUBJECT TO ADJUSTMENTS FOR
STOCK SPLITS, STOCK DIVIDENDS COMBINATIONS, RECLASSIFICATIONS AND OTHER EVENTS)
FOR AT LEAST 20 OUT OF 30 OF THE TRADING DAYS IMMEDIATELY PRECEDING THE DATE ON
WHICH SIRIUS LLC PROPOSES TO EFFECT SUCH SALE OR OTHER DISPOSITION.

 

7.                                       SENIOR OBLIGATIONS UNCONDITIONAL.  ALL
RIGHTS AND INTERESTS OF THE SENIOR LENDERS HEREUNDER, AND ALL AGREEMENTS AND
OBLIGATIONS OF THE SUBORDINATED LENDERS AND THE COMPANY HEREUNDER, SHALL REMAIN
IN FULL FORCE AND EFFECT IRRESPECTIVE OF:

 

(A)                                  ANY LACK OF VALIDITY OR ENFORCEABILITY OF
ANY SENIOR SECURITY DOCUMENTS OR ANY OTHER SENIOR DEBT DOCUMENTS;

 

(B)                                 ANY CHANGE IN THE TIME, MANNER OR PLACE OF
PAYMENT OF, OR IN ANY OTHER TERM OF, ALL OR ANY OF THE SENIOR OBLIGATIONS, OR
ANY AMENDMENT OR WAIVER OR OTHER MODIFICATION, WHETHER BY COURSE OF CONDUCT OR
OTHERWISE, OF THE TERMS OF THE SECURITIES PURCHASE AGREEMENT OR ANY OTHER SENIOR
SECURITY DOCUMENT;

 

(C)                                  ANY EXCHANGE, RELEASE OR NONPERFECTION OF
ANY SECURITY INTEREST IN ANY COLLATERAL, OR ANY RELEASE, AMENDMENT, WAIVER OR
OTHER MODIFICATION, WHETHER IN WRITING OR BY COURSE OF CONDUCT OR OTHERWISE, OF
ALL OR ANY OF THE SENIOR OBLIGATIONS OR ANY GUARANTEE THEREOF; OR

 

(D)                                 ANY OTHER CIRCUMSTANCES WHICH OTHERWISE
MIGHT CONSTITUTE A DEFENSE AVAILABLE TO, OR A DISCHARGE OF, THE COMPANY IN
RESPECT OF THE SENIOR OBLIGATIONS, OR OF EITHER ANY SUBORDINATED LENDER OR THE
COMPANY IN RESPECT OF THIS AGREEMENT.

 

8.                                       REPRESENTATIONS AND WARRANTIES.  EACH
SUBORDINATED LENDER REPRESENTS AND WARRANTS TO THE COLLATERAL AGENT AND THE
SENIOR LENDERS THAT:

 

(A)                                  ITS SUBORDINATED NOTES (I) HAVE BEEN ISSUED
TO IT FOR GOOD AND VALUABLE CONSIDERATION (II) ARE OWNED BY SUCH SUBORDINATED
LENDER FREE AND CLEAR OF ANY SECURITY INTERESTS, LIENS, CHARGES OR ENCUMBRANCES
WHATSOEVER ARISING FROM, THROUGH OR UNDER SUCH SUBORDINATED

 

8

--------------------------------------------------------------------------------

 

Lender, other than the interest of the Senior Lenders under this Agreement,
(iii) are payable solely and exclusively to such Subordinated Lender and to no
other person and are payable without deduction for any defense, offset or
counterclaim and (iv) constitute the only evidence of the obligations evidenced
thereby;

 

(B)                                 SUCH SUBORDINATED LENDER HAS THE CORPORATE
POWER AND AUTHORITY AND THE LEGAL RIGHT TO EXECUTE AND DELIVER AND TO PERFORM
ITS OBLIGATIONS UNDER THIS AGREEMENT AND HAS TAKEN ALL NECESSARY CORPORATE
ACTION TO AUTHORIZE ITS EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT;

 

(C)                                  THIS AGREEMENT CONSTITUTES A LEGAL, VALID
AND BINDING OBLIGATION OF SUCH SUBORDINATED LENDER;

 

(D)                                 THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT WILL NOT VIOLATE ANY PROVISION OF ANY REQUIREMENT OF LAW OR
CONTRACTUAL OBLIGATION OF SUCH SUBORDINATED LENDER AND WILL NOT RESULT IN THE
CREATION OR IMPOSITION OF ANY LIEN ON ANY OF THE PROPERTIES OR REVENUES OF SUCH
SUBORDINATED LENDER PURSUANT TO ANY REQUIREMENT OF LAW OR ANY CONTRACTUAL
OBLIGATION OF SUCH SUBORDINATED LENDER, EXCEPT THE INTEREST OF THE SENIOR
LENDERS UNDER THIS AGREEMENT; AND

 

(E)                                  NO CONSENT OR AUTHORIZATION OF, FILING
WITH, OR OTHER ACT BY OR IN RESPECT OF, ANY ARBITRATOR OR GOVERNMENTAL AUTHORITY
AND NO CONSENT OF ANY OTHER PERSON (INCLUDING, WITHOUT LIMITATION, ANY
STOCKHOLDER OR CREDITOR OF SUCH SUBORDINATED LENDER), IS REQUIRED IN CONNECTION
WITH THE EXECUTION, DELIVERY, PERFORMANCE, VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT.

 

9.                                       NO REPRESENTATION BY COLLATERAL AGENT. 
NEITHER THE COLLATERAL AGENT NOR ANY SENIOR LENDER HAS MADE, AND NONE OF THEM
HEREBY OR OTHERWISE MAKES TO THE SUBORDINATED LENDERS, ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS, OR IMPLIED, NOR DOES THE COLLATERAL AGENT OR ANY SENIOR
LENDER ASSUME ANY LIABILITY TO ANY SUBORDINATED LENDER WITH RESPECT TO (A) THE
FINANCIAL OR OTHER CONDITION OF THE COMPANY UNDER ANY INSTRUMENTS OF GUARANTEE
WITH RESPECT TO THE SENIOR OBLIGATIONS, (B) THE ENFORCEABILITY, VALIDITY, VALUE
OR COLLECTIBILITY OF THE SENIOR OBLIGATIONS OR THE SUBORDINATED OBLIGATIONS, ANY
COLLATERAL THEREFOR, OR ANY GUARANTEE OR SECURITY WHICH MAY HAVE BEEN GRANTED IN
CONNECTION WITH ANY OF THE SENIOR OBLIGATIONS OR THE SUBORDINATED OBLIGATIONS OR
(C) THE COMPANY’S TITLE OR RIGHT TO TRANSFER ANY COLLATERAL OR SECURITY.

 

10.                                 WAIVER OF CLAIMS.  TO THE MAXIMUM EXTENT
PERMITTED BY LAW, EACH SUBORDINATED LENDER WAIVES ANY CLAIM IT MIGHT HAVE
AGAINST THE SENIOR LENDERS WITH RESPECT TO, OR ARISING OUT OF, ANY ACTION OR
FAILURE TO ACT OR ANY ERROR OF JUDGMENT, NEGLIGENCE, OR MISTAKE OR OVERSIGHT
WHATSOEVER ON THE PART OF THE COLLATERAL AGENT, THE SENIOR LENDERS OR THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR COLLATERAL AGENTS WITH RESPECT TO
ANY EXERCISE OF RIGHTS OR REMEDIES UNDER THE SENIOR DEBT DOCUMENTS OR ANY
TRANSACTION RELATING TO THE COLLATERAL.  NEITHER THE COLLATERAL AGENT, ANY
SENIOR LENDER NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR
AGENTS SHALL BE LIABLE FOR FAILURE TO DEMAND, COLLECT OR REALIZE UPON ANY OF THE
COLLATERAL OR FOR ANY DELAY IN DOING SO OR SHALL BE UNDER ANY OBLIGATION TO SELL
OR OTHERWISE DISPOSE OF ANY COLLATERAL UPON THE REQUEST OF THE COMPANY OR ANY
SUBORDINATED LENDER OR ANY OTHER PERSON OR TO TAKE ANY OTHER ACTION WHATSOEVER
WITH REGARD TO THE COLLATERAL OR ANY PART THEREOF.

 

9

--------------------------------------------------------------------------------

 

11.                                 PROVISIONS APPLICABLE AFTER BANKRUPTCY.  THE
PROVISIONS OF THIS AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT
NOTWITHSTANDING THE OCCURRENCE OF ANY EVENT CONTEMPLATED UNDER CLAUSE (A) OR
(B) OF THE DEFINITION OF “INSOLVENCY EVENT” IN SECTION 1 OF THIS AGREEMENT.

 

12.                                 FURTHER ASSURANCES.  THE SUBORDINATED
LENDERS AND THE COMPANY, AT THEIR OWN EXPENSE AND AT ANY TIME FROM TIME TO TIME,
UPON THE WRITTEN REQUEST OF THE COLLATERAL AGENT WILL PROMPTLY AND DULY EXECUTE
AND DELIVER SUCH FURTHER INSTRUMENTS AND DOCUMENTS AND TAKE SUCH FURTHER ACTIONS
AS THE COLLATERAL AGENT REASONABLY MAY REQUEST FOR THE PURPOSES OF OBTAINING OR
PRESERVING THE FULL BENEFITS OF THIS AGREEMENT AND OF THE RIGHTS AND POWERS
HEREIN GRANTED.

 

13.                                 PROVISIONS DEFINE RELATIVE RIGHTS.  THIS
AGREEMENT IS INTENDED SOLELY FOR THE PURPOSE OF DEFINING THE RESPECTIVE RIGHTS,
PRIORITIES AND INTERESTS OF THE COLLATERAL AGENT, THE SENIOR LENDERS AND THE
SUBORDINATED LENDERS ONLY, AND NO OTHER PERSON SHALL HAVE ANY RIGHT, BENEFIT OR
OTHER INTEREST UNDER THIS AGREEMENT.

 

14.                                 LEGEND.  EACH SUBORDINATED LENDER AND THE
COMPANY WILL CAUSE EACH OF THE SUBORDINATED NOTES TO BEAR UPON ITS FACE THE
FOLLOWING LEGEND:

 

ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER INDEBTEDNESS
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE
TERMS OF, THE SUBORDINATION AGREEMENT, DATED APRIL 26, 2006 (AS AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “SUBORDINATION
AGREEMENT”), BY AND AMONG MEDICOR LTD., A DELAWARE CORPORATION, SILVER OAK
CAPITAL, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY, AS COLLATERAL AGENT, AND
THE HOLDERS FROM TIME TO TIME OF THE SUBORDINATED OBLIGATIONS (AS DEFINED
THEREIN), INCLUDING, WITHOUT LIMITATION, THIS NOTE.

 

15.                                 POWERS COUPLED WITH AN INTEREST.  ALL
POWERS, AUTHORIZATIONS AND AGENCIES CONTAINED IN THIS AGREEMENT ARE COUPLED WITH
AN INTEREST AND ARE IRREVOCABLE UNTIL THE SENIOR OBLIGATIONS ARE PAID IN FULL.

 

16.                                 AUTHORITY OF COLLATERAL AGENT.  THE COMPANY
AND THE SUBORDINATED LENDERS ACKNOWLEDGE THAT THE RIGHTS AND RESPONSIBILITIES OF
THE COLLATERAL AGENT UNDER THIS AGREEMENT WITH RESPECT TO ANY ACTION TAKEN BY
THE COLLATERAL AGENT OR THE EXERCISE OR NON-EXERCISE BY THE COLLATERAL AGENT OF
ANY OPTION, REQUEST, JUDGMENT OR OTHER RIGHT OR REMEDY PROVIDED FOR HEREIN OR
RESULTING OR ARISING OUT OF THIS AGREEMENT SHALL, AS BETWEEN THE COLLATERAL
AGENT AND THE SENIOR LENDERS, BE GOVERNED BY THE SECURITIES PURCHASE AGREEMENT
AND BY SUCH OTHER AGREEMENTS WITH RESPECT THERETO AS MAY EXIST FROM TIME TO TIME
AMONG THEM, BUT, AS BETWEEN THE COLLATERAL AGENT, THE COMPANY AND THE
SUBORDINATED LENDERS, THE COLLATERAL AGENT SHALL BE CONCLUSIVELY PRESUMED TO BE
ACTING AS COLLATERAL AGENT FOR THE SENIOR LENDERS WITH FULL AND VALID AUTHORITY
SO TO ACT OR REFRAIN FROM ACTING, AND NEITHER THE COMPANY NOR ANY SUBORDINATED
LENDER SHALL BE UNDER ANY OBLIGATION, OR ENTITLEMENT, TO MAKE ANY INQUIRY
RESPECTING SUCH AUTHORITY.

 

10

--------------------------------------------------------------------------------

 

17.                                 NOTICES.  ALL NOTICES OR DEMANDS BY ANY
PARTY HEREUNDER MUST BE IN WRITING AND PERSONALLY DELIVERED OR SENT BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, OR BY
PREPAID FACSIMILE, TELECOPY, TELEGRAM (WITH MESSENGER DELIVERY SPECIFIED), OR
OTHER METHOD OF ELECTRONIC COMMUNICATION AS FOLLOWS:

 

 

Subordinated

 

 

 

Lenders:

INTERNATIONAL INTEGRATED INCORPORATED, LLC

 

 

4560 South Decatur Boulevard, Suite 201

 

 

Las Vegas, Nevada 89103

 

 

Attention:

Donald K. McGhan

 

 

Facsimile:

702-932-4563

 

 

Email:

iowagrad@att.net

 

 

 

 

 

 

SIRIUS CAPITAL, LLC

 

 

4560 South Decatur Boulevard, Suite 201

 

 

Las Vegas, Nevada 89103

 

 

Attention:

Nikki M. Pomeroy

 

 

Facsimile:

702-364-0799

 

 

Email:

mcikkin@aol.com

 

 

 

 

 

 

 

 

 

Collateral Agent:

SILVER OAK CAPITAL, L.L.C.

 

 

c/o Angelo, Gordon & Co., L.P.

 

 

245 Park Avenue

 

 

New York, NY 10167

 

 

Attention:

Gary I. Wolf

 

 

Facsimile:

212-867-6395

 

 

Email:

gwolf@angelogordon.com

 

 

 

 

 

With a copy to:

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP

 

 

1285 Avenue of the Americas

 

 

New York, NY 10019-6064

 

 

Attn:

Eric Goodison

 

 

Facsimile:

212-492-0292

 

 

Email:

egoodison@paulweiss.com

 

The parties may change the address at which they receive notice by giving notice
to each other in the foregoing manner.  Notices or demands sent in accordance
with this Section 17 shall be deemed to be received on the earlier of the date
of actual receipt or five calendar days after deposit in United States mail.

 

18.                                 GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.

 

(I)                                     THE VALIDITY OF THIS AGREEMENT, THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR RELATED HERETO SHALL BE DETERMINED UNDER,

 

11

--------------------------------------------------------------------------------

 

GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(II)                                  THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN AND TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE FEDERAL COURTS FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND ANY APPELLATE COURTS THEREFROM, PROVIDED, HOWEVER, THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE COLLATERAL AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE THE COLLATERAL AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL
OR OTHER PROPERTY MAY BE FOUND.  THE COMPANY WAIVES, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION.

 

(III)                               EACH OF THE PARTIES HERETO HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS.  EACH OF THE PARTIES HERETO REPRESENTS THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

 

19.                                 INTEGRATED AGREEMENT.  THIS AGREEMENT SHALL
CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF, SHALL SUPERSEDE ALL PRIOR AGREEMENTS, REPRESENTATIONS OR
UNDERSTANDINGS BETWEEN THE PARTIES AND MAY NOT BE AMENDED EXCEPT BY A WRITING
SIGNED BY BOTH PARTIES.

 

20.                                 ADDITIONAL REMEDIES.  IF THE COMPANY OR ANY
SUBORDINATED LENDER VIOLATES ANY OF THE TERMS OF THIS AGREEMENT, IN ADDITION TO
ANY REMEDIES IN LAW, EQUITY, OR OTHERWISE, THE COLLATERAL AGENT MAY RESTRAIN
SUCH VIOLATION IN ANY COURT OF LAW AND MAY, IN ITS OWN OR ANY OTHER APPLICABLE
NAME, INTERPOSE THIS AGREEMENT AS A DEFENSE IN ANY ACTION BY THE COMPANY OR ANY
SUBORDINATED LENDER, AS APPLICABLE.

 

21.                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL AND ALL OF
WHICH TOGETHER SHALL CONSTITUTE ONE AGREEMENT.

 

22.                                 SEVERABILITY.  ANY PROVISION OF THIS
AGREEMENT WHICH IS PROHIBITED OR UNENFORCEABLE IN ANY JURISDICTION SHALL, AS TO
SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING PROVISIONS HEREOF, AND ANY

 

12

--------------------------------------------------------------------------------

 

such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

23.                                 AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE
REMEDIES.  (A)  NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT MAY BE WAIVED,
AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED EXCEPT BY A WRITTEN INSTRUMENT
EXECUTED BY THE COLLATERAL AGENT IN ACCORDANCE WITH SECTION 10(E) OF THE
SECURITIES PURCHASE AGREEMENT, THE COMPANY AND EACH SUBORDINATED LENDER;
PROVIDED THAT ANY PROVISION OF THIS AGREEMENT MAY BE WAIVED BY THE COLLATERAL
AGENT IN ACCORDANCE WITH SECTION 10(E) OF THE SECURITIES PURCHASE AGREEMENT IN A
LETTER OR AGREEMENT EXECUTED BY THE COLLATERAL AGENT OR BY FACSIMILE TELECOPY,
TELEGRAM OR OTHER METHOD OF ELECTRONIC COMMUNICATION FROM THE COLLATERAL AGENT.

 

(B)                                 NO FAILURE TO EXERCISE, NOR ANY DELAY IN
EXERCISING, ON THE PART OF THE COLLATERAL AGENT, ANY RIGHT, POWER OR PRIVILEGE
HEREUNDER SHALL OPERATE AS A WAIVER THEREOF.  NO SINGLE OR PARTIAL EXERCISE OF
ANY RIGHT, POWER OR PRIVILEGE HEREUNDER SHALL PRECLUDE ANY OTHER OR FURTHER
EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER OR PRIVILEGE.

 

(C)                                  THE RIGHTS AND REMEDIES HEREIN PROVIDED ARE
CUMULATIVE, MAY BE EXERCISED SINGLY OR CONCURRENTLY AND ARE NOT EXCLUSIVE OF ANY
OTHER RIGHTS OR REMEDIES PROVIDED BY LAW.

 

24.                                 SECTION HEADINGS.  THE SECTION HEADINGS USED
IN THIS AGREEMENT ARE FOR CONVENIENCE OF REFERENCE ONLY AND ARE NOT TO AFFECT
THE CONSTRUCTION HEREOF OR BE TAKEN INTO CONSIDERATION IN THE INTERPRETATION
HEREOF.

 

25.                                 SUCCESSORS AND ASSIGNS.  (A)  THIS AGREEMENT
SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF THE COMPANY AND THE
SUBORDINATED LENDERS AND SHALL INURE TO THE BENEFIT OF THE COLLATERAL AGENT AND
THE SENIOR LENDERS AND THEIR SUCCESSORS AND ASSIGNS.

 

(B)                                 UPON A SUCCESSOR COLLATERAL AGENT BECOMING
THE COLLATERAL AGENT UNDER THE SECURITIES PURCHASE AGREEMENT, SUCH SUCCESSOR
COLLATERAL AGENT AUTOMATICALLY SHALL BECOME THE COLLATERAL AGENT HEREUNDER WITH
ALL THE RIGHTS AND POWERS OF THE COLLATERAL AGENT HEREUNDER WITHOUT THE NEED FOR
ANY FURTHER ACTION ON THE PART OF ANY PARTY HERETO.

 

26.                                 PRONOUNS.  ALL PRONOUNS AND ANY VARIATIONS
THEREOF USED HEREIN SHALL BE DEEMED TO REFER TO THE MASCULINE, FEMININE, OR
NEUTER, SINGULAR OR PLURAL, AS THE IDENTITY OF THE PERSON OR PERSONS MAY
REQUIRE.

 

[Signatures follow on next page.]

 

13

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of
the day and year first above written.

 

 

 

SILVER OAK CAPITAL, L.L.C.,

 

a Delaware limited liability company, as
Collateral Agent

 

 

 

 

 

By:

 /s/ Michael L. Gordon

 

 

 

Name:

Michael L. Gordon

 

 

 

Title:

Managing Member

 

 

 

 

 

 

MEDICOR LTD.,

 

a Delaware Corporation

 

 

 

 

 

By:

 /s/ Theodore R. Maloney

 

 

 

Name:

Theodore R. Maloney

 

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

INTERNATIONAL INTEGRATED
INCORPORATED, LLC,

 

a Nevada limited liability company, as
Subordinated Lender

 

 

 

 

 

By:

 /s/ Donald K. McGhan

 

 

 

Name:

Donald K. McGhan

 

 

 

Title:

Managing Member

 

 

 

 

 

 

SIRIUS CAPITAL, LLC,

 

a Delaware limited liability company, as
Subordinated Lender

 

 

 

 

 

By:

 /s/ Donald K. McGhan

 

 

 

Name:

Donald K. McGhan

 

 

 

Title:

Managing Member

 

 

14

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF JOINDER

 

Reference is made to that certain Subordination Agreement, dated as of April 26,
2006 (as amended, supplemented or otherwise modified from time to time, the
“Subordination Agreement”), by and among the Subordinated Lenders (as defined
therein), MediCor Ltd., a Delaware corporation (the “Company”), and Silver Oak
Capital, L.L.C., a Delaware limited liability company, in its capacity as
collateral agent (in such capacity, the “Collateral Agent”) for the holders from
time to time of the Senior Notes (as defined therein) issued pursuant to the
Securities Purchase Agreement (as defined therein).  All capitalized terms used
but not defined herein shall have the respective meanings ascribed to them in
the Subordination Agreement.

 

WHEREAS, the undersigned desires to become a Transferee of the Subordinated
Obligations and, as evidence thereof, a holder of Subordinated Notes; and

 

WHEREAS, Section 6(a) of the Subordination Agreement prohibits such transfer of
the Subordinated Obligations unless the undersigned expressly acknowledges the
subordination provided for in the Subordination Agreement and agrees to be bound
by all the terms thereof.

 

NOW, THEREFORE, in consideration of the foregoing, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby (i) joins the Subordination Agreement as a Subordinated
Lender, (ii) assumes and agrees to be bound to all the terms set forth therein
and (iii) makes all the representations and warranties of a Subordinated Lender
set forth in the Subordination Agreement as if made on the date hereof.

 

[Signatures follow on next page.]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Transferee has executed this Joinder as of           day
of                   , 2006.

 

 

 

[JOINED PARTY]

 

a

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

ACKNOWLEDGED and agreed as of           day of                  , 2006.

 

 

MEDICOR LTD.,

 

a Delaware Corporation

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

SILVER OAK CAPITAL, L.L.C.,

 

a Delaware limited liability company, as
Collateral Agent

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

2

--------------------------------------------------------------------------------