SUBORDINATION AGREEMENT

 

This SUBORDINATION AGREEMENT (this “Agreement”) is made and entered into as of
April 11, 2005 by and among URBAN CASAVANT AS THE TRUSTEE OF THE UAJC 2002
IRREVOCABLE TRUST (the “Trust”), CMKXTREME, Inc., a Nevada corporation,
(“CMKX”), KEVIN T. RYAN, an individual (“Ryan”), and JOHN S. WOODWARD, an
individual (“Woodward”).

 

Preliminary Statements

A.        CRYSTALIX GROUP INTERNATIONAL, INC., a Nevada corporation (“Borrower”)
has entered into a certain Security Agreement of even date herewith (the “Trust
Security Agreement”) granting to the Trust a security interest in Borrower’s
fifty-one percent (51%) membership interest in Laser Design International, LLC,
a California limited liability company (the “Collateral”) securing a certain
Convertible Promissory Note payable to the Trust in the amount of One Million
Dollars ($1,000,000.00) (the “Trust Note”).

B.         Borrower has entered into a certain Security Agreement of even date
herewith (the “CMKX Security Agreement”) granting to CMKX a security interest in
certain property of Borrower described therein, which includes but is not
limited to the Collateral, securing a certain Convertible Promissory Note, dated
September 23, 2004 in the amount of Two Million Dollars ($2,000,00.00), as
amended and restated by a certain Amended and Restated Convertible Promissory
Note of even date herewith (the “CMKX Note”).

D.        Borrower has entered into a certain Security Agreement with Ryan,
dated December 23, 2002 (the “Ryan Security Agreement”), granting to Ryan a
security interest in certain property of Borrower described therein, which
includes but is not limited to the Collateral, securing a certain Amended and
Restated Convertible Promissory Note payable to Ryan, dated July 21, 2004 in the
amount of Five Million Three Hundred Ninety-Six Thousand Seven Hundred
Sixty-Four Dollars ($5,396,764.00) (the “Ryan Note”).

E.         Borrower has entered into a certain security agreement with Woodward,
dated December 22, 2002 (the “Woodward Security Agreement”), granting to
Woodward a security interest in certain property of Borrower described therein,
securing a certain Amended and Restated Convertible Promissory Note payable to
Woodward, dated July 21, 2004, in the amount of One Million Eight Hundred
Twenty-Four Thousand Dollars ($1,824,000.00) (the “Woodward Note”).

F.         CMKX, Ryan and Woodward desire to subordinate any liens and security
interest which they may have in the Collateral to the liens and security
interest of the Trust in the Collateral.

 

1

45931.0004\YOKENS\LAS\82781.1

 

 

 

Agreement

NOW, THEREFORE, in consideration of the Trust agreeing to advance to Borrower
the loan evidenced by the Trust Note:

1.             Definition of Obligations. The term “Obligations” is used in this
Agreement in its broadest and most comprehensive sense and shall mean all
present and future indebtedness of Borrower which may be, from time to time,
directly or indirectly, incurred by Borrower, including interest (including any
interest which, but for the application of the provisions of the Federal
Bankruptcy Code, would have accrued on such amounts), principal, costs and other
charges, and all claims, rights, causes of action, judgments, decrees, remedies,
security interests or other obligations of any kind whatsoever and howsoever
arising, whether voluntary, involuntary, absolute, contingent or by operation of
law.

The term “Trust Obligation” is used in this Agreement to refer to those
Obligations of Borrower owing to the Trust under the Trust Note and limited to a
maximum principal amount of One Million Dollars ($1,000,000.00) (plus interest
thereon and fees and costs in connection therewith), reduced upon the sale or
disposition of any Collateral subject to a Trust Lien (as defined below) by the
amount of the net proceeds of such sale or disposition that are received by the
Trust.

2.             Subordination of Creditor Liens and Security Interests. All liens
and security interests presently existing or hereafter obtained by the CMKX,
Ryan and Woodward (“Creditor Liens”) in any of the Collateral to secure any
Obligations now or hereafter owed by Borrower to CMKX, Ryan and Woodward
(“Creditor Obligations”) are hereby subordinated to any and all liens and
security interests now or hereafter obtained by the Trust (“Trust Liens”) in the
Collateral to secure the Trust Obligations. The priority established by this
Agreement shall be binding upon the Trust and CMKX, Ryan and Woodward
notwithstanding the time of attachment or perfection of the priority of, or the
avoidance of either the Trust Liens or the Creditor Liens.

3.             Limitations on CMKX, Ryan and Woodward’s Actions. As long as any
of the Trust Obligations remains unpaid, in whole or in part, and as long as the
Trust is obligated to make loans and advances to Borrower pursuant to the Trust
Note, CMKX, Ryan and Woodward each respectively agrees to provide to the Trust,
by Certified Mail, a copy of any notice to Borrower of any default by Borrower
in the payment of any of the Creditor Obligations owed to each of them,
respectively (a “Payment Default”). CMKX, Ryan and Woodward agree that they will
not enforce or apply any of the Creditor Liens, notify any of Borrower’s account
debtors of the Creditor Liens or attempt to collect on any accounts or general
intangibles, or in any other manner interfere with the Trust Liens
(collectively, “Creditor Lien Enforcement”) prior to the thirtieth (30th) day
following the Trust’s receipt of notice of a Payment Default or, if prior to
such date the Trust shall have commenced to exercise and has continued
diligently to pursue its contractual, judicial, equitable or other remedies with
respect to the Collateral, then CMKX, Ryan and Woodward agree not to initiate
any Creditor Lien Enforcement until such actions by the Trust have been
completed or the Trust Obligations have been repaid in full.

 

2

45931.0004\YOKENS\LAS\82781.1

 

 

 

4.             CMKX, Ryan and Woodward’s Waivers. CMKX, Ryan and Woodward agree
that the Trust shall have absolute power and discretion, without notice to CMKX,
Ryan and Woodward, to deal in any manner with the Trust Obligations, the Trust
Liens and the Collateral including, but not by way of limitation, release,
surrender, extension, renewals, acceleration, compromise or substitution. CMKX,
Ryan and Woodward hereby waive and agree not to assert against the Trust any
rights which a guarantor or surety could exercise, but nothing in this Agreement
shall constitute CMKX, Ryan and Woodward a guarantor or surety. CMKX, Ryan and
Woodward hereby waive the right, if any, to require the Trust to marshal or
otherwise require the Trust to proceed to dispose of or foreclose upon the
Collateral in any manner or order.

5.             Continuing Nature of this Agreement. If, at any time hereafter,
the Trust shall, in its own judgment, determine to discontinue the extension of
credit to or on behalf of Borrower, the Trust may do so (subject to any
agreements then existing between the Trust and Borrower). This Agreement, the
obligations of CMKX, Ryan and Woodward owing to the Trust and the Trust’s rights
and privileges hereunder shall continue in full force and effect and it shall
not be cancelled or otherwise rendered ineffective until payment in full of all
of the Trust obligations, notwithstanding any action or inaction by the Trust
with respect thereto or with respect to any collateral therefor or any
guaranties thereof. Subject to the terms of Paragraph 1 above, all rights,
powers and remedies hereunder shall apply to all past, present and future Trust
Obligations, including under successive transactions which may continue, renew,
increase, decrease or from time to time create new Trust Obligations.

6.             CMKX, Ryan and Woodward to Receive Payments, etc. in Trust.
Except as otherwise expressly agreed to herein, if CMKX, Ryan and Woodward shall
receive any collections on any accounts or general intangibles or proceeds from
the disposition of any Collateral during the “standstill” period set forth in
Paragraph 3 of this Agreement, such payment or property shall be received by
CMKX, Ryan and Woodward in trust for the Trust and shall immediately be
delivered and transferred to the Trust.

7.             Financial Condition of Borrower. CMKX, Ryan and Woodward
represent and warrant to the Trust that CMKX, Ryan and Woodward are currently
informed of the financial condition of Borrower and of all other circumstances
which a diligent inquiry would reveal and which bear upon the risk of
non-payment of the Trust Obligations. CMKX, Ryan and Woodward further represent
and warrant to the Trust that CMKX, Ryan and Woodward have read and understand
the terms and conditions of the Trust Note and the Security Agreement. CMKX,
Ryan and Woodward hereby agree that any failure on their part to continue to
keep informed of Borrower’s financial condition and of all other circumstances
which bear upon the risk of non-payment or non-performance of the Trust
Obligations shall not constitute a defense to CMKX, Ryan and Woodward’s
obligations hereunder, and CMKX, Ryan and Woodward waive any requirement on the
part of the Trust to keep CMKX, Ryan and Woodward informed of any such
circumstances.

8.             Assignees, etc. This Agreement shall be binding upon the
successors and assigns of CMKX, Ryan and Woodward and shall inure to the benefit
of the Trust’s successors and assigns.

 

3

45931.0004\YOKENS\LAS\82781.1

 

 

 

9.             Choice of Law. The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by and construed in accordance with the laws of
the State of Nevada.

10.           Collection Costs; Attorneys’ Fees. In the event it becomes
necessary for any party to commence any proceedings or actions to enforce the
provisions of this Agreement, the court or body before which the same shall be
tried shall award to the prevailing party, or parties, all costs and expenses
thereof including, but not limited to, reasonable attorneys’ fees, the usual and
customary and lawfully recoverable court costs and all other expenses in
connection therewith.

11.              Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
CMKX, RYAN AND WOODWARD EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE DEALINGS OF CMKX, RYAN AND WOODWARD AND THE TRUST WITH RESPECT
TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, CMKX, RYAN AND WOODWARD
HEREBY AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING
SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT THE TRUST MAY FILE AN
ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN
EVIDENCE OF THE CONSENT OF CMKX, RYAN AND WOODWARD TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

12.           Counterparts. This Agreement may be simultaneously executed in
several counterparts, each of which shall be the original and all of which shall
constitute one instrument.

(signature page follows below)

 

4

45931.0004\YOKENS\LAS\82781.1

 

 

 

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

 

 

 

 

 

Urban Casavant as the Trustee of the UAJC 2002 Irrevocable Trust

 

 

CMKXTREME, Inc.,

a Nevada corporation

 

By:

Urban Casavant, President

 

 

 

 

 

Kevin T. Ryan

 

 

 

 

John S. Woodward

 

 

 

 

5

45931.0004\YOKENS\LAS\82781.1