Exhibit 99.5
COMMERCIAL BANK
Of California
SUBORDINATION AGREEMENT
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Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials
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$200,000.00 02-20-2007 09-01-2008 0100000250 04A/03 111
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References in the shaded area are for Lender's use only and do not limit the applicability
of this document to any particular loan or item. Any item above containing "***" has
been omitted due to text length limitations.
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Borrower: BIOMERICA, INC. Lender: COMMERCIAL BANK OF CALIFORNIA
0000 XXXXXXXX XXXXXX 000 XXXX XXXXXX XXXXX, XXXXX 000
XXXXXXX XXXXX, XX 00000 XXXXX XXXX, XX 00000
Creditor: XXXXX XXXXX, Trustee of THE XXXXX XXXXX
TRUST DATED AUGUST 21, 1998
XXXXX XXXXX, Individual
0000 XXXXXXXX XXXXXX
XXXXXXX XXXXX, XX 00000
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THIS SUBORDINATION AGREEMENT dated February 20, 2007, is made and executed among
BIOMEIRICA, INC.; 0000 XXXXXXXX XXXXXX; XXXXXXX XXXXX, XX 00000 ("Borrower");
XXXXX XXXXX, Trustee of THE XXXXX XXXXX TRUST DATED AUGUST 21, 1998 under the
provisions of a trust agreement dated August 21, 1998; and XXXXX XXXXX,
Individually; 0000 XXXXXXXX XXXXXX; XXXXXXX XXXXX, XX 00000 ("Creditor"); and
COMMERCIAL BANK OF CALIFORNIA, 000 XXXX XXXXXX XXXXX, XXXXX 000, XXXXX XXXX, XX
00000 ("Lender").
REQUESTED FINANCIAL ACCOMMODATIONS. Creditor and Borrower each want Lender to
provide financial accommodations to Borrower in the form of (A) new credit or
loan advances, (B) an extension of time to pay or other compromises regarding
all or part of Borrower's present indebtedness to Lender, or (C) other benefits
to Borrower. Borrower and Creditor each represent and acknowledge to Lender that
Creditor will benefit as a result of these financial accommodations from Lender
to Borrower, and Creditor acknowledges receipt of valuable consideration for
entering into this Agreement. Based on the representations and acknowledgments
contained in this Agreement, Borrower and Creditor agree with Lender as follows:
SUBORDINATED INDEBTEDNESS. The words "Subordinated Indebtedness" as used in this
Agreement mean the following specific indebtedness from Borrower to Creditor,
including all renewals, extensions, modifications and substitutions for the
indebtedness, including principal, interest, and all costs and attorneys' fees,
relating to the indebtedness: $234,426.00.
SUPERIOR INDEBTEDNESS. The words "Superior Indebtedness" as used in this
Agreement mean and include all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be now or
hereafter owing from Borrower to Lender. The term "Superior Indebtedness" is
used in its broadest sense and includes without limitation all principal, all
interest, all costs, attorneys' fees, all sums paid for the purpose of
protecting Lender's rights in security (such as paying for insurance on
collateral if the owner fails to do so), all contingent obligations of Borrower
(such as a guaranty), all obligations arising by reason of Borrower's accounts
with Lender (such as an overdraft on a checking account), and all other
obligations of Borrower to Lender, secured or unsecured, of any nature
whatsoever.
SUBORDINATION. All Subordinated Indebtedness of Borrower to Creditor is and
shall be subordinated in all respects to all Superior Indebtedness of Borrower
to Lender. If Creditor holds one or more Security Interests, whether now
existing or hereafter acquired, in any of Borrower's real property or personal
property, Creditor also subordinates all Creditor's Security Interests to all
Security Interests held by Lender, whether now existing or hereafter acquired.
PAYMENTS TO CREDITOR. Borrower will not make and Creditor will not accept, at
any time while any Superior Indebtedness is owing to Lender, (A) any payment
upon any Subordinated Indebtedness, (B) any advance, transfer, or assignment of
assets to Creditor in any form whatsoever that would reduce at any time or in
any way the amount of Subordinated Indebtedness, or (C) any transfer of any
assets as security for the Subordinated Indebtedness, except upon Lender's prior
written consent.
In the event of any distribution, division, or application, whether partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of Borrower's assets, or the proceeds of Borrower's assets, in whatever
form, to creditors of Borrower or upon any indebtedness of Borrower, whether by
reason of the liquidation, dissolution or other winding-up of Borrower, or by
reason of any execution sale, receivership, insolvency, or bankruptcy
proceeding, assignment for the benefit of creditors, proceedings for
reorganization, or readjustment of Borrower or Borrower's properties, then and
in such event, (A) the Superior Indebtedness shall be paid in full before any
payment is made upon the Subordinated Indebtedness, and (B) all payments and
distributions, of any kind or character and whether in cash, property, or
securities, which shall be payable or deliverable upon or in respect of the
Subordinated Indebtedness shall be paid or delivered directly to Lender for
application in payment of the amounts then due on the Superior Indebtedness
until the Superior Indebtedness shall have been paid in full.
In order that Lender may establish its right to prove claims and recover for its
own account dividends based on the Subordinated Indebtedness, Creditor does
hereby assign all its right, title, and interest in such claims to Lender.
Creditor further agrees to supply such information and evidence, provide access
to and copies of such of Creditor's records as may pertain to the Subordinated
Indebtedness, and execute such instruments as may be required by Lender to
enable Lender to enforce all such claims and collect all dividends, payments, or
other disbursements which may be made on account of the Subordinated
Indebtedness. For such purposes, Creditor hereby irrevocably authorizes Lender
in its discretion to make and present for or on behalf of Creditor such proofs
of claims on account of the Subordinated Indebtedness as Lender may deem
expedient and proper and to vote such claims in any such proceeding and to
receive and collect any and all dividends, payments, or other disbursements made
thereon in whatever form the same may be paid or issued and to apply the same on
account of the Superior Indebtedness.
Should any payment, distribution, security, or proceeds thereof be received by
Creditor at any time on the Subordinated Indebtedness contrary to the terms of
this Agreement, Creditor immediately will deliver the same to Lender in
precisely the form received (except for the endorsement or assignment of
Creditor if necessary), for application on or to secure the Superior
Indebtedness, whether it is due or not due, arid until so delivered the same
shall be held in trust by Creditor as property of Lender. In the event Creditor
fails to make any such endorsement or assignment, Lender, or any of its officers
on behalf of Lender, is hereby irrevocably authorized by Creditor to make the
same.
CREDITOR'S NOTES. Creditor agrees to deliver to Lender, at Lender's request, all
notes of Borrower to Creditor, or other evidence of the Subordinated
Indebtedness, now held or hereafter acquired by Creditor, while this Agreement
remains in effect. At Lender's request, Borrower also will execute and deliver
to Creditor a promissory note evidencing any book account or claim now or
hereafter owed by Borrower to Creditor, which note also shall be delivered by
Creditor to Lender. Creditor agrees not to sell, assign, pledge or otherwise
transfer any of such notes except subject to all the terms and conditions of
this Agreement.
CREDITOR'S REPRESENTATIONS AND WARRANTIES. Creditor represents and warrants to
Lender that: (A) no representations or agreements of any kind have been made to
Creditor which would limit or qualify in any way the terms of this Agreement;
(B) this Agreement is executed at Borrower's request and not at the request of
Lender; (C) Lender has made no representation to Creditor as to the
creditworthiness of Borrower; and (D) Creditor has established adequate means of
obtaining from Borrower on a continuing basis information regarding Borrower's
financial condition. Creditor agrees to keep adequately informed from such means
of any facts, events, or circumstances which might in any way affect Creditor's
risks under this Agreement, and Creditor further agrees that Lender shall have
no obligation to disclose to Creditor information or material acquired by Lender
in the course of its relationship with Borrower.
CREDITOR'S WAIVERS. Creditor waives any right to require Lender: (A) to make,
extend, renew, or modify any loan to I3orrower or to grant any other financial
accommodations to Borrower whatsoever; (B) to make any presentment, protest,
demand, or notice of any kind, including notice of any nonpayment of the
Superior Indebtedness or of any nonpayment related to any Security Interests, or
notice of any action or nonaction on the part of Borrower, Lender, any surety,
endorser, or other guarantor in connection with the Superior Indebtedness, or in
connection with the creation of new or additional Superior Indebtedness; (C) to
resort for payment or to proceed directly or at once against any person,
including Borrower; (D) to proceed directly against or exhaust any Security
Interests held by Lender from Borrower, any other guarantor, or any other
person; (E) to pursue any other remedy within Lender's power; or (F) to commit
any act or omission of any kind, at any time, with respect to any matter
whatsoever.
LENDER'S RIGHTS. Lender may take or omit any and all actions with respect to the
Superior Indebtedness or any Security Interests for the Superior Indebtedness
without affecting whatsoever any of Lender's rights under this Agreement. In
particular, without limitation, Lender may, without notice of any kind to
Creditor, (A) make one or more additional secured or unsecured loans to
Borrower; (B) repeatedly alter, compromise, renew, extend, accelerate, or
otherwise change the time for payment or other terms of the Superior
Indebtedness or any part thereof, including increases and decreases of the rate
of interest on the Superior Indebtedness; extensions may be repeated and may be
for longer than the original loan term; (C)
SUBORDINATION AGREEMENT
Loan No: 0100000250 (Continued) Page 2
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take and hold Security Interests for the payment of the Superior Indebtedness,
and exchange, enforce, waive, and release any such Security Interests, with or
without the substitution of new collateral; (D) release, substitute, 'agree not
to xxx, or deal with any one or more of Borrower's sureties, endorsers, or
guarantors on any terms or manner Lender chooses; (E) determine how, when and
what application of payments and credits, shall be made on the Superior
Indebtedness; (F) apply such security and direct the order or manner of sale
thereof, as Lender in its discretion may determine; and (G) assign this
Agreement in whole or in part.
DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt, this Agreement
shall remain in full force and effect.
DURATION AND TERMINATION. This Agreement will take effect when received by
Lender, without the necessity of any acceptance by Lender, in writing or
otherwise, and will remain in full force and effect until Creditor shall motify
Lender in writing at the address shown above to the contrary. Any such notice
shall not affect the Superior Indebtedness owed Lender by Borrower at the time
of such notice, nor shall such notice affect Superior Indebtedness thereafter
granted in compliance with a commitment made by Lender to Borrower prior to
receipt of such notice, nor shall such notice affect any renewals of or
substitutions for any of the foregoing. Such notice shall affect only
indebtedness of Borrower to Lender arising after receipt of such notice and not
arising from financial assistance granted by Lender to Borrower in compliance
with Lender's obligations under a commitment. Any notes lodged with Lender
pursuant to the section titled "Creditor's Notes" above need not be returned
until this Agreement has no further force or effect.
OTHER TERMS AND CONDITIONS. The following provisions are a part of this
Agreement: Borrower may make payments to Creditor so long as Borrower is not in
default under any agreement between Lender and Borrower.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Arbitration. Borrower and Creditor and Lender agree that all disputes,
claims and controversies between them whether individual, joint, or class
in nature, arising from this Agreement or otherwise, including without
limitation contract and tort disputes, shall be arbitrated pursuant to the
Rules of the American Arbitration Association in effect at the time the
claim is filed, upon request of either party. No act to take or dispose of
any Collateral shall constitute a waiver of this arbitration agreement or
be prohibited by this arbitration agreement. This includes, without
limitation, obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage; obtaining a
writ of attachment or imposition of a receiver; or exercising any rights
relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the
Uniform Commercial Code. Any disputes, claims, or controversies concerning
the lawfulness or reasonableness of any act, or exercise of any right,
concerning any Collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Borrower and Creditor and
Lender agree that in the event of an action for judicial foreclosure
pursuant to California Code of Civil Procedure Section 726, or any similar
provision in any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully
may be referred to arbitration. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. Nothing in this
Agreement shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable
in an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be
deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
Attorneys' Fees; Expenses. Creditor agrees to pay upon demand elf of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Creditor shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Creditor also shall pay all court costs
and such additional fees as may be directed by the court.
Authority. The person who signs this Agreement as or on behalf of Creditor
represents and warrants that he or she has authority to execute this
Agreement and to subordinate the Subordinated Indebtedness and the
Creditor's security interests in Creditor's property, if any.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Governing Law. This Agreement will be governed by federal law applicable to
Lender and, to the extent not preempted by federal law, the laws of the
State of California without regard to its conflicts of law provisions. This
Agreement has been accepted by Lender in the State of California.
Choice of Venue. If there is a lawsuit, Creditor agrees upon Lender's
request to submit to the jurisdiction of the courts of ORANGE County, State
of California.
Interpretation. In all cases where there is more than one Creditor, then
all words used in this Agreement in the singular shall be deemed to have
been used in the plural where the context and construction so require; and
where there is more than one Creditor named in this Agreement or when this
Agreement is executed by more than one , the words "Creditor" shall mean
all and any one or more of them. Reference to the phrase "Creditor"
includes the heirs, successors, assigns, and transferees of each of them.
Successors and Assigns. This Agreement shall be understood to be for the
benefit of Lender and for such other person or persons as may from time to
time become or be the holder or owner of any of the Indebtedness or any
interest therein, and this Agreement shall be transferable to the same
extent and with the same force and effect as any such Indebtedness may be
transferable.
No Waiver by Lender. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement: No prior waiver by
Lender, nor any course of dealing between Lender and Creditor, shall
constitute a waiver of any of Lender's rights or of any of Creditor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender in
any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word "Agreement" means this Subordination Agreement, as this
Subordination Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Subordination
Agreement from time to time.
Borrower. The word "Borrower" means BIOMERICA, INC. and includes all
co-signers and co-makers signing the Note and all their successors and
assigns.
Creditor. The word "Creditor" means XXXXX XXXXX, Trustee of THE XXXXX XXXXX
TRUST DATED AUGUST 21, 1998 under the provisions of a trust agreement dated
August 21, 1998; and XXXXX XXXXX, Individually.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents.
Lender. The word "Lender" means COMMERCIAL BANK OF CALIFORNIA, its
successors and assigns.
Note. The word "Note" means any and all of Borrower's indebtedness to
Lender and is used in the most comprehensive sense and means and include
any and all of Borrower's liabilities, obligations and debts to Lender, now
existing or hereinafter incurred or created, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitution for the Related Documents.
Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
Security Interest. The words "Security Interest" mean, without limitation,
any and all types of collateral security, present and future, whether in
the form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
trust receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest
whatsoever whether created by law, contract, or otherwise.
SUBORDINATION AGREEMENT
Loan No: 0100000250 (Continued) Page 3
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Subordinated Indebtedness. The words "Subordinated Indebtedness" mean the
indebtedness described in the section of this Agreement titled
"Subordinated Indebtedness".
Superior Indebtedness. The words "Superior Indebtedness" mean the
indebtedness described in the section of this Agreement titled "Superior
Indebtedness".
BORROWER AND CREDITOR EACH ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
SUBORDINATION AGREEMENT, AND BORROWER AND CREDITOR EACH AGREE TO ITS TERMS. THIS
AGREEMENT IS DATED FEBRUARY 20, 2007.
BORROWER:
BORROWER:
BIOMERICA, INC.
By: /s/ Xxxxxxx Xxxxx
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XXXXXXX XXXXX, Chief Executive Officer of
BIOMERICA, INC.
CREDITOR:
/s/ Xxxxx Xxxxx
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XXXXX XXXXX, Trustee of THE XXXXX XXXXX
TRUST DATED AUGUST 21, 1998 under the
provisions of a Trust Agreement dated
August 21, 1998
/s/ Xxxxx Xxxxx
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XXXXX XXXXX, Individually
