EXH10-4
SUBORDINATION
The undersigned officers and shareholders of AUTOMATED LIGHT
TECHNOLOGIES, INC. having its offices in the Town of Vernon, County of Tolland
and State of Connecticut, (the "Debtor"), in consideration of a loan in the
amount of THREE HUNDRED AND NO/100 DOLLARS ($300,000.00) (the "Loan"), to Debtor
by CONNECTICUT INNOVATIONS INCORPORATED of 845 Brook Street, Rocky Hill,
Connecticut, ("CII"), and to induce CII to make said Loan agree as follows:
1. SUBORDINATION. Until all the indebtedness of the Loan has been fully
paid with interest thereon, the undersigned shall not demand or receive from the
Debtor, any part of the moneys now owing by the Debtor to the undersigned, or
that may hereafter be due and payable to the undersigned by the Debtor, or any
security therefor, exclusive of payments of current salaries of the undersigned;
and the Debtor shall not make payment or give security to the undersigned except
in conformity with this Agreement. The undersigned waives all notice of the
acceptance of this Agreement by CII or of the creation, renewal, extension or
accrual of any obligations of the Debtor to CII or of the reliance of CII upon
this Agreement. The undersigned hereby directs the Debtor to make such prior
payments to CII, except that with the prior written consent of CII which consent
shall be given or withheld in the sole discretion of CII, the Debtor may make
payments to the undersigned to which this Agreement shall not apply. CII
acknowledges and agrees that unless and until Debtor is in default under the
Loan, Debtor may make payments on the interest due on two $100,000.00 existing
loans from City Trust to the undersigned or any subsequent bank loans which
arise from the refinancing of the City Trust loans, to the extent they do not
exceed the existing loans. The principal amount of such loans shall, however, be
subordinate to the Loan and subject to the terms of this Agreement. CII also
acknowledges that the undersigned are owed deferred salary and agrees that six
(6) months from the date hereof it shall review the financial situation of the
Debtor and, provided that Debtor is not in default of the Loan and is generating
gross profits, shall, at that time, agree with the undersigned upon a payment
schedule for such deferred salaries.
2. ASSIGNMENT. Except for the payments specifically referred to in
Paragraph 1 hereinabove, the undersigned hereby assigns to CII, as collateral
security for all such indebtedness of the Debtor to CII, all of the claims and
demands of the undersigned against the Debtor and all interest accrued and that
may hereafter accrue thereon. If at any time while this Agreement is in effect,
any petition for relief is filed by or against the Debtor, a receiver is
appointed for the Debtor or any of its property, an assignment for creditors is
made by the Debtor or the Debtor is involved in any insolvency proceedings, CII
shall have the right to file a claim on behalf of the undersigned in all such
proceedings and to collect and receive all payments that may be declared or
become payable on such claim in any such proceedings and CII i8 hereby
irrevocably appointed attorney for the undersigned with full power to act in the
name of the undersigned in all such proceedings. Any payments so collected shall
be applied against outstanding principal and interest of the Loan. The
undersigned agree that they shall have no right of subrogation whatsoever with
respect to any monies so collected unless and until CII shall have received
payment in full of all sums at any time due on the Loan.
3. CREDITOR'S RECEIPTS. Except as may be specifically permitted herein,
if the Debtor shall make any payments or give any security to the undersigned
without the prior consent of CII, then the undersigned shall forthwith deliver
such payment or security to CII, in precisely the form received, except for the
undersigned's endorsement when necessary, for application on account of such
indebtedness of the Debtor to CII and until so delivered such payment or
security shall be held in trust by the undersigned as the property of CII. In
the event of the failure of the undersigned to endorse any instrument for the
payment of money so received by the undersigned, CII is irrevocably appointed
attorney for the undersigned with full power to make such endorsement and with
full power of substitution.
4. MODIFICATIONS. Without notice to or further assent by the
undersigned, the liability of the Debtor or any other party to CII on any such
indebtedness may from time to time, in whole or in part, be renewed, extended,
modified, compromised or released by CII and any collateral or liens for any
such indebtedness may be exchanged, sold or surrendered by CII, all without
affecting the obligations of the undersigned and the Debtor under this
Agreement.
Dated at Hartford, Connecticut this 2nd day of August, 1990.
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MOHD A. ASLAMI
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CHARLES DeLUCA
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Acknowledged and consented to by Connecticut Innovations Incorporated.
By:
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David C. Driver
Its Executive Director