AMENDED AND RESTATED SUBORDINATION AGREEMENT (Biozone Laboratories, Inc.)

Transcription

1 AMENDED AND RESTATED SUBORDINATION AGREEMENT (Biozone Laboratories, Inc.) This SUBORDINATION AGREEMENT (the "Agreement") is entered into as of, 2008 (the "Effective Date"), by and between the Redevelopment Agency of the City of Pittsburg, a public body, corporate and politic ("Senior Creditor") and Bridge Bank, N.A., a national banking association ("Junior Creditor") with reference to the following facts: RECITALS A. The Senior Creditor and the Junior Creditor previously entered into that certain Subordination Agreement dated as of June 8, 2007 (the "Original Agreement"). The parties desire to amend and restate, in its entirety, the Original Agreement. Following the execution of this Agreement, the Original Agreement shall be of no further force or effect. B. Biozone Laboratories, Inc., a California corporation ("Debtor"), and Senior Creditor have entered into a Loan Agreement, Security Agreement and Promissory Note dated as of September 30, 2006, as amended by that certain First Amendment dated as of, 2008, and certain related documents pursuant to which the Debtor shall obtain a loan in the amount of Four Hundred Thousand Dollars ($400,000) for the purchase of certain capital equipment (the "Senior Creditor Documents"). C. The obligations under the Senior Creditor Documents are secured by the personal property of Debtor as more particularly set forth in Exhibit A (the "Senior Creditor Collateral"). D. Debtor and Junior Creditor have previously entered into certain loan documents and certain related documents (the "Junior Creditor Documents"). E. Pursuant to the Junior Creditor Documents, the obligations under the Junior Creditor Loan Documents are secured by substantially all of the personal property of Debtor (the "Junior Creditor Collateral"). F. Junior Creditor and Senior Creditor desire to confirm, as between themselves, their agreement and understanding with respect to the extent and priority of their respective liens on and security interests in the Senior Creditor Collateral, and as to certain other rights and matters as between Junior Creditor and Senior Creditor. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained in this agreement, and for other good and valuable 1

2 consideration, the receipt of which is hereby acknowledged, Junior Creditor and Senior Creditor agree as follows: Section 1. Definitions. The following terms, as used in this Agreement, have the following meanings: (a) "Agreement" means this Subordination Agreement and any amendments, modifications, exhibits, and schedules to it. Recital E. Recital D. (b) (c) "Junior Creditor Collateral" has the meaning set forth in "Junior Creditor Documents" has the meaning set forth in (d) "Junior Creditor Indebtedness" means and refers to any presently existing or hereafter arising indebtedness, claims, debts, liabilities, or obligations of Debtor owing to Junior Creditor, whether direct or indirect, contingent or of any other nature, character, or description, arising under or in connection with the Junior Creditor Documents. (e) "Payment Default" means a "Default" or an "Event of Default" for the failure to make a payment when due (including any applicable grace period) under the Senior Creditor Documents. Recital C. Recital B. (f) (g) "Senior Creditor Collateral" has the meaning set forth in "Senior Creditor Documents" has the meaning set forth in (h) "Senior Creditor Indebtedness" means any and all presently existing or hereafter arising indebtedness, claims, debts, liabilities, or obligations of Debtor owing to Senior Creditor, whether direct or indirect, contingent or of any other nature, character, or description, including interest and fees accruing after the commencement of a bankruptcy case by or against the Debtor, whether or not the claim for such interest or fees is allowed or allowable in the bankruptcy case, arising under or in connection with the Senior Creditor Documents outstanding at any time. Section 2. Priority of Liens. Notwithstanding the time, order, or manner of the grant of their respective liens or security interests (including the time or order of execution, filing, or recording of any security agreements, financing statements, fixture filings, 2

3 assignments, or any other similar documents granting, evidencing, or perfecting such liens or security interests under any other applicable law), or any provision of applicable law, any and all valid and perfected security interests, liens, or other interests (consensual, statutory, or otherwise) that Junior Creditor may at any time have or acquire, whether under the Junior Creditor Documents or otherwise, in any of the Senior Creditor Collateral shall be subordinate to the liens and security interests of Senior Creditor in such Senior Creditor Collateral, whether arising under Senior Creditor Documents or under any other instrument, document, or agreement now or hereafter existing, but only to the extent that the Senior Creditor Collateral secures the Senior Creditor Indebtedness. Section 3. Consent to Junior Liens. Provided that the Senior Creditor's liens and security interests in the Senior Creditor Collateral remain at all times superior to the liens and security interest of the Junior Creditor, Senior Creditor hereby consents to the junior liens and security interests in the Senior Creditor Collateral granted by Debtor to Junior Creditor under the Junior Creditor Documents, and Senior Creditor hereby agrees that the grant or existence of such liens and security interests does not constitute a "Default" or "Event of Default" under the Senior Creditor Documents. Section 4. Notices Under Junior Creditor Documents. Junior Creditor shall use commercially reasonable efforts to send Senior Creditor, at the address set forth in Section 14, a written notice that Debtor is in default under the Junior Creditor Documents, and that the Junior Creditor is pursuing its available remedies as set forth in the Junior Creditor Documents. Section 5. Notices Under Senior Creditor Documents. Senior Creditor shall use commercially reasonable efforts to send Junior Creditor, at the address set forth in Section 14, a copy of any written notice sent by Senior Creditor to Debtor of "Default" or an "Event of Default" under the Senior Creditor Documents, which copy will be sent contemporaneously with the sending of such notice to Debtor. Section 6. Restrictions Affecting Junior Creditor. Until the Senior Creditor Indebtedness has been paid and satisfied in full, Junior Creditor shall not: (a) take any action to enforce any of Junior Creditor's liens and security interests in any Senior Creditor Collateral without Senior Creditor's prior written consent; or (b) interfere with the enforcement of Senior Creditor's liens and security interests in any Senior Creditor Collateral. 3

4 Section 7. Exercise of Other Remedies. Except as specifically restricted by Section 6, Junior Creditor and Senior Creditor shall be free to exercise any or all of their respective rights and remedies against Debtor and any collateral securing Debtor's respective obligations other than the Secured Creditor Collateral, including Junior Creditor's right to accelerate the Junior Creditor Indebtedness and to enforce its right to recover the payment of the Junior Creditor Indebtedness. Section 8. Receipt of Proceeds. In the event that Junior Creditor receives any payment or any proceeds from the sale, condemnation, or other disposition of any Senior Creditor Collateral including any bankruptcy proceedings before the Senior Creditor Indebtedness has been paid and satisfied in full, Junior Creditor will be deemed to have received such payment or proceeds for the account of Senior Creditor, and Junior Creditor will promptly deliver such payment or proceeds to Senior Creditor to the extent Senior Creditor is entitled to receive such payment or proceeds. If the Senior Creditor receives any payments from Debtor or any proceeds from the sale, condemnation, or other disposition after the Senior Creditor Indebtedness has been paid in full, Senior Creditor will be deemed to have received such payment or proceeds for the account of Junior Creditor, and Senior Creditor will promptly delivery such payment or proceeds to Junior Creditor to the extent Junior Creditor is entitled to receive such payment or proceeds. Section 9. Waiver of Marshalling and Duties. Junior Creditor and Senior Creditor specifically waive and renounce any rights under any applicable law that any of them may have, whether at law or in equity, to require the other to marshal any of the Junior Creditor Collateral or the Senior Creditor Collateral, as the case may be, or to otherwise seek satisfaction from any particular assets of Debtor or from any third party. Junior Creditor and Senior Creditor acknowledge and confirm that this Agreement shall create no joint venture, agency, or fiduciary relationship. Section 10. Further Assurances. Junior Creditor and Senior Creditor agree to promptly execute and deliver, on the request of the other party to this Agreement, such documents and instruments (appropriate for filing, if requested), and to take such further steps as may be reasonably requested to implement or evidence the understanding and agreements contained in this Agreement. 4

5 Section 11. Effectiveness of Agreement. This Agreement shall remain in full force and effect (a) notwithstanding any subsequent amendment or modification of any party's respective agreements with Debtor, and (b) regardless of whether any party to this Agreement in the future seeks to rescind, amend, terminate, or reform, by litigation or otherwise, its respective agreements with Debtor. Section 12. Complete Agreement. This Agreement is the complete agreement and understanding of Junior Creditor and Senior Creditor and supersedes all prior or contemporaneous oral and written negotiations, agreements, and understandings, express or implied, with respect to its subject matter. There are no other agreements or obligations between the parties not set forth in this Agreement. Section 13. Amendments and Waivers. No amendment or waiver of any provision of this Agreement, nor any consent to any departure therefrom, shall in any event be effective unless it is in writing and signed by the party to be charged, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 14. Notices. Whenever it is provided in this Agreement that any notice, demand, request, consent, approval, declaration, or other communication shall or may be given to or served on any of the parties, or whenever any of the parties desire to give or serve on the other communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration, or other communication shall be in writing and shall be delivered either in person, with receipt acknowledged, or by registered or certified mail, return receipt requested, postage prepaid, or by reputable overnight delivery service, addressed as set forth below: Secured Creditor: Redevelopment Agency of the City of Pittsburg 65 Civic Avenue Pittsburg, CA Attn: Executive Director 5

6 Junior Creditor: Bridge Bank 55 Almaden Blvd. San Jose, CA Attn: Note Department Every notice, demand, request, consent, approval, declaration, or other communication under this Agreement shall be deemed to have been duly given, issued, or delivered on the date on which personally delivered, with receipt acknowledged, or actually received via reputable overnight delivery service, or three (3) days after the same shall have been deposited in the United States mail. Section 15. Severability. Whenever possible, each provision of this Agreement shall be interpreted in a manner so as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Section 16. Successors and Assigns; No Third Party Beneficiaries. This Agreement shall be binding on, and inure to the benefit of, the respective successors and assigns of Junior Creditor and Senior Creditor. All of the understandings, covenants, and agreements contained in this Agreement are solely for the benefit of Junior Creditor and Senior Creditor and their respective successors and assigns, and there are no other parties (including Debtor, its creditors, and its successors or assigns) who are in any way intended to be benefited by, or entitled to enforce, this Agreement. Except as specifically set forth in this Agreement, nothing contained herein is intended to or shall affect or limit, in any way, the respective rights that Junior Creditor or Senior Creditor has with respect to Debtor or any third parties, all of which respective rights are specifically reserved, and nothing contained in this Agreement shall be construed to limit the obligation of Debtor to Junior Creditor and Senior Creditor under (a) the Junior Creditor Documents, and (b) the Senior Creditor Documents, respectively, all of which obligations remain absolute and unconditional. Section 17. Governing 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 California 6

7 Section 18. Section Headings. The Section headings contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties. Section 19. Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall be an original, but all of which shall constitute one and the same agreement. 7

8 IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed as of the date first set forth above. SENIOR CREDITOR: Redevelopment Agency of the City of Pittsburg, a public body, corporate and politic By: Marc S. Grisham Executive Director JUNIOR CREDITOR: Bridge Bank, N.A., a national banking association By: Name: Its: ACKNOWLEDGEMENT BY DEBTOR Biozone Laboratories, Inc., a California corporation, hereby (1) acknowledges that it has received a copy of the above Subordination Agreement, (2) consents to it, (3) agrees to recognize all rights granted thereby to the parties thereto, and (4) agrees not do any act or perform any obligation not in accordance with the agreements set forth in the Subordination Agreement as in effect from time to time. Biozone Laboratories, Inc., a California corporation By: Name: Its: 8