Exhibit
10.4


 


This SUBORDINATION AGREEMENT, dated as of October 22,
2010 is between CHARLES S. BRAND (“Creditor”), and BRIDGE BANK, NATIONAL
ASSOCIATION, (“Lender”).


 


R E C I T A L S


 


A.    CXR
LARUS CORPORATION (“Borrower”) has requested and/or obtained certain credit
accommodations from Lender which are or may be from time to time secured by
assets and property of Borrower.


 


B.    Creditor
has extended loans or other credit accommodations to certain companies
affiliated with the Borrower and has received in exchange, among other things,
a lien on the assets of Borrower. The loan documents executed in connection
with the extension of credit by the Creditor as aforesaid are collectively
referred to as the “Creditor Loan Documents.”


 


C.    In
order to induce Lender to extend credit to Borrower and, at any time or from
time to time, at Lender’s option, to make such further loans, extensions of
credit, or other accommodations to or for the account of Borrower, or to extend
credit upon any instrument or writing in respect of which Borrower may be
liable in any capacity, or to grant such renewals or extension of any such
loan, extension of credit, or other accommodation as Lender may deem advisable,
Creditor is willing to subordinate: (i) all of Borrower’s indebtedness and
obligations to Creditor, whether presently existing or arising in the future
(the “Subordinated Debt”) to all of Borrower’s indebtedness and obligations to
Lender; and (ii) all of Creditor’s security interests, if any, to all of
Lender’s security interests in the property of Borrower.


 


NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:


 


1.     Creditor
subordinates to Lender any security interest or lien that Creditor may have in
any property of Borrower. Notwithstanding the respective dates of attachment or
perfection of the security interest of Creditor and the security interest of
Lender, the security interest of Lender in the accounts, including health care
receivables, chattel paper, general intangibles, inventory, equipment,
instruments, including promissory notes, deposit accounts, investment property,
documents, letter of credit rights, any commercial tort claim of Borrower which
is now or hereafter identified by Borrower or Lender, and other property of the
Borrower (the “Collateral”) shall at all times be prior to the security
interest of Creditor.


 


2.     All
Subordinated Debt is subordinated in right of payment to all obligations of
Borrower to Lender now existing or hereafter arising, together with all costs
of collecting such obligations (including attorneys’ fees), including, without
limitation, all interest accruing after the commencement by or against Borrower
of any bankruptcy, reorganization or similar proceeding (the “Senior Debt”).  Lender agrees that the Senior Debt, together
with any other Senior Indebtedness as that term is defined in the Creditor Loan
Documents, shall at no time exceed the aggregate amount of Fifteen Million
Dollars ($15,000,000.00) without the prior written approval of Creditor and in
no event shall exceed Twenty Million Dollars ($20,000,000.00).


 


3.     Creditor
will not demand or receive from Borrower (and Borrower will not pay to
Creditor) all or any part of the Subordinated Debt, by way of payment,
prepayment, setoff, lawsuit or otherwise, nor will Creditor exercise any remedy
with respect to the Collateral, nor will Creditor accelerate the Subordinated
Debt, or commence, or cause to commence, prosecute or participate in any
administrative, legal or equitable action against Borrower, until such time as
all the Senior Debt is fully paid in cash. Nothing in the foregoing paragraph
shall prohibit Creditor from converting all or any part of the Subordinated
Debt into equity securities of Borrower. 
Notwithstanding the foregoing, Creditor may accept and retain scheduled
payments of principal and interest required to be paid on the Subordinated Debt
so long as no payment default has occurred on the Senior Debt and so long as
such payments are made by any party other than Borrower.


 


4.     Creditor
shall promptly deliver to Lender in the form received (except for endorsement
or assignment by Creditor where received by Lender) for application to the
Senior Debt, any payment, distribution, security or proceeds received by
Creditor from Borrower or through the sale of collateral pledged by Borrower on
account of the Subordinated Debt, other than in accordance with the terms of
this Agreement. The foregoing shall not, however, limit the Creditor’s right to
receive payment from the affiliates of the Borrower or any other entity
obligated to Creditor pursuant to the terms of the Subordinated Debt or through
the sale of any collateral which is not pledged to Lender in connection with
the Senior Debt.


 


5.     In the event
of Borrower’s insolvency, reorganization or any case or proceeding under any
bankruptcy or


 


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insolvency law or laws relating to the relief of
debtors, these provisions shall remain in full force and effect, and Lender’s
claims against Borrower and the estate of Borrower shall be paid in full before
any payment is made to Creditor.


 


6.     Until the
Senior Debt is fully paid, Creditor agrees to file all claims, proofs of claim
or other instruments of similar character necessary to enforce the obligations
of the Borrower in respect of the Subordinated Debt and will hold in trust for
the Lender and promptly pay over to the Lender in the form received (except for
the endorsement by the Creditor where necessary) for application to the
then-existing Senior Debt any and all moneys, dividends, or other assets
received from Borrower (or via liquidation of its assets) in any such
proceedings on account of the Subordinated Debt, unless and until the Lender
has been paid in full.  If Creditor shall
fail to take such action, the Lender, as attorney-in-fact for the Creditor may
take such action on Creditor’s behalf. The Creditor hereby irrevocably appoints
Lender as Creditor’s attorney-in-fact.


 


7.     Lender is
hereby authorized to file a UCC-3 financing statement amendment form
subordinating the UCC-1 financing statement filed in favor of Creditor against
Borrower in the form attached hereto as Exhibit 1.  No amendment of the documents evidencing or
relating to the Subordinated Debt shall directly or indirectly modify the
provisions of this Agreement in any manner which might terminate or impair the
subordination of the Subordinated Debt or the subordination of the security
interest or lien that Creditor may have in any property of Borrower.


 


8.     This
Agreement shall remain effective for so long as Borrower owes any amounts to
Lender. If, at any time after payment in full of the Senior Debt, any payments
of the Senior Debt must be disgorged by Lender for any reason
(including, without limitation, the bankruptcy of Borrower), this Agreement and
the relative rights and priorities set forth herein shall be reinstated as to
all such disgorged payments as though such payments had not been made and
Creditor shall immediately pay over to Lender all payments received with
respect to the Subordinated Debt to the extent that such payments would have
been prohibited hereunder. At any time and from time to time, without notice to
Creditor, Lender may take such actions with respect to the Senior Debt as
Lender, in its sole discretion, may deem appropriate, including, without
limitation, terminating advances to Borrower, increasing the principal amount,
extending the time of payment, increasing applicable interest rates, renewing,
compromising or otherwise amending the terms of any documents affecting the
Senior Debt and any collateral securing the Senior Debt, and enforcing or
failing to enforce any rights against Borrower or any other person. No such
action or inaction shall impair or otherwise affect Lender’s rights hereunder.
Creditor waives the benefits, if any, of California Civil Code Sections 2809,
2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433.


 


9.     This
Agreement shall bind any successors or assignees of Creditor and shall benefit
any successors or assigns of Lender. This Agreement is solely for the benefit
of Creditor and Lender and not for the benefit of Borrower or any other party.
Creditor further agrees that if Borrower is in the process of refinancing a
portion of the Senior Debt with a new lender, and if Lender makes a request of
Creditor, Creditor shall agree to enter into a new subordination agreement with
the new lender on substantially the terms and conditions of this Agreement.


 


10.   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.


 


11.   This
Agreement shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to conflicts of law principles.
Creditor and Lender submit to the exclusive jurisdiction of the state and
federal courts located in Santa Clara County, California. CREDITOR AND LENDER
WAIVE THEIR 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.  If the jury waiver
set forth in this Section is not enforceable, then any dispute,
controversy or claim arising out of or relating to this Subordination
Agreement, or any of the transactions contemplated therein shall be settled by
judicial reference pursuant to Code of Civil Procedure Section 638 et seq.
before a referee sitting without a jury, such referee to be mutually acceptable
to the parties or, if no agreement is reached, by a referee appointed by the
Presiding Judge of the California Superior Court for Santa Clara County. 
This Section shall not restrict a party from exercising remedies under the
Code or from exercising pre-judgment remedies under applicable law.


 


12.   This
Agreement represents the entire agreement with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and commitments.
Creditor is not relying on any representations


 


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by Lender or Borrower in entering into this Agreement,
and Creditor has kept and will continue to keep itself fully apprised of the
financial and other condition of Borrower. This Agreement may be amended only
by written instrument signed by Creditor and Lender.


 


13.   In the event
of any legal action to enforce the rights of a party under this Agreement, the
party prevailing in such action shall be entitled, in addition to such other
relief as may be granted, all reasonable costs and expenses, including
reasonable attorneys’ fees, incurred in such action.


 


IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.


 


	
  CREDITOR:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BRIDGE BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Charles S. Brand

  	
   

  	
  By:

  	
  /s/ Larry La Croix

  
	
  Charles S. Brand

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Larry
  La Croix

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  Attn: Lee Shodiss

  
	
   

  	
   

  	
  55 Almaden Blvd

  
	
   

  	
   

  	
  San Jose, CA 95113

  
	
   

  	
   

  	
  Tel: (408) 556-6502

  
	
   

  	
   

  	
  Fax:(408) 423-8510

  



 


 


The undersigned approves of the terms of this Agreement.


 


BORROWER:


 


 


CXR LARUS CORPORATION


 


 


	
  By:

  	
  /s/
  Larry A. Taillie

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Larry
  A. Taillie

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  



 


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