Ex. 10.60
SUBORDINATION AND INTERCREDITOR AGREEMENT
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THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "Agreement")
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made as of the 10th day of October, 2001, by and among CARDIOTECH INTERNATIONAL,
INC., a Massachusetts corporation, having an office at 00-X Xxxxxxx Xxxxxx,
Xxxxxx, XX 00000 (hereinafter referred to as the "Senior Creditor"), and
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Xxxxxxx Xxxxxx, residing at 00 Xxxxxx Xxxxx, Xxxxxxxxxx-xx-xxx-Xxx,
Xxxxxxxxxxxxx 00000 ("Armini"), Xxxx Gadarowksi, residing at 00 Xxxxxxx Xxxx,
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Xxxxxx, Xxx Xxxxxxxxx 00000 ("X. Xxxxxxxxxx"), Xxxxxx Gardarowski, residing at
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00 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("X. Xxxxxxxxxx"), Xxxxxxx
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Xxxxxxxx, residing at 0 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
("Xxxxxxxx"), and Xxxxx Xxxxxxxxxx, residing at 000 Xxxxx 00, Xxxxx, Xxx
Xxxxxxxxx 00000 ("Huntington" and, together with Armini, Gadarowski, D.
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Gardarowski, and Xxxxxxxx, the "Subordinate Creditors").
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WITNESSETH:
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WHEREAS, the Senior Creditor has provided a line of credit facility in
the principal amount of up to FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) (the
"Senior Loan"), to IMPLANT SCIENCES CORPORATION, a Massachusetts corporation
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("Implant"); and
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WHEREAS, Implant is indebted to the Subordinate Creditors in the
amounts set forth in Section 3 herein (collectively, the "Subordinate Loans");
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WHEREAS, the Senior Creditor is unwilling to extend the Senior Loan to
Implant unless the Subordinate Creditors agree to subordinate the Subordinate
Loans to the Senior Loan in the manner hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual premises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the parties hereto, the Subordinate Creditors
and the Senior Creditor hereby agree as follows:
1. The Subordinate Loans, any other document evidencing, securing or
guaranteeing the indebtedness thereunder or otherwise executed in connection
with the Subordinate Loans (collectively, together with any extensions,
modifications, substitutions and consolidations thereof, being hereinafter
collectively referred to as the "Subordinate Loan Documents") and all advances
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made thereunder are hereby, and shall continue to be, subject and subordinate in
lien and in payment to (i) the lien and payment of the Senior Loan and any other
document evidencing, securing or guaranteeing the indebtedness thereunder or
otherwise executed in connection with the Senior Loan (collectively referred to
as the "Senior Loan Documents"), (ii) all advances and disbursements made under
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the Senior Loan or the other Senior Loan Documents without regard to the
application of such proceeds, together with all interest, prepayment premiums
and all other sums due under the Senior Loan, which advances and disbursements
may be made without notice to or the consent of the Subordinate Creditors, and
(iii) any severances, consolidations, extensions, renewals and/or modifications
of the Senior Loan Documents, including modifications increasing or otherwise
relating to the rate of interest payable to the Senior Creditor and other
indebtedness under the Senior Loan, which modifications may be made without
notice to or consent of the Subordinate Creditors. All of the terms, covenants
and conditions of the Subordinate Loans and the Subordinate Loan Documents are
hereby, and shall continue to be, subordinate to all of the terms, covenants and
conditions of the Senior Loan and the Senior Loan Documents. The foregoing shall
apply, notwithstanding the availability of other collateral to the Senior
Creditor or the actual date and time of execution, delivery, recordation, filing
or perfection of any collateral securing the Senior Loan or the Subordinate
Loans, or the lien or priority of payment thereof, and notwithstanding the fact
that the Senior Loan or any claim for the Senior Loan is subordinated, avoided
or disallowed, in whole or in part, under Title 11 of the United States Code
(the "Bankruptcy Code") or other applicable federal or state law. In the event
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of a proceeding, whether voluntary or involuntary, for insolvency, liquidation,
reorganization, dissolution, bankruptcy or other similar proceeding pursuant to
the Bankruptcy Code or other applicable federal or state law, the Senior Loan
shall include all interest accrued on the Senior Loan, in accordance with and at
the rates specified in the Senior Loan Documents, both for periods before and
for periods after the commencement of any of such proceedings, even if the claim
for such interest is not allowed pursuant to applicable law.
2. In addition, without limiting the foregoing, the Subordinate Creditors
agree that all rights of the Subordinate Creditors under the Subordinate Loan or
under the Subordinate Loan Documents in and to all assets of Implant and the
proceeds thereof shall be expressly subject and subordinate:
(a) to the rights of the Senior Creditor in and to all the assets of Implant
and the proceeds thereof on the terms set forth in the Senior Loan and the
Senior Loan Documents; and
(b) to any and all advances made and other expenses incurred under and as
permitted in the Senior Loan and the Senior Loan Documents.
3. The Subordinate Creditors hereby represent and warrant that: (a) the
principal amounts outstanding under the Subordinate Loans as of the date hereof
are as follows:
Name of Subordinate Creditor Principal Amount Outstanding
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Armini $166,838.00
X. Xxxxxxxxxx $ 14,361.00
X. Xxxxxxxxxx $ 14,361.00
Xxxxxxxx $ 14,361.00
Huntington $ 14,361.00
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; (b) Implant is not in default in the observance and/or performance of any of
the obligations thereunder required to be observed and performed by Implant
under the Subordinate Loans; (c) no event has occurred, which, with the passing
of time or the giving of notice or both would constitute a default thereunder;
and (d) all payments due thereon to and including the date hereof, have been
paid in full.
4. The Senior Creditor and the Subordinate Creditors hereby agree, so long
as any sum shall remain outstanding on the Senior Loan, that:
(a) The Subordinate Creditors shall simultaneously send to the Senior
Creditor due notice of all defaults under the Subordinate Loans as well as
copies of all notices required to be delivered to Implant under the Subordinate
Loans.
(b) The Subordinate Creditors shall have no right to commence any
enforcement action or exercise any remedies in respect of the Subordinate Loans.
5. The Senior Creditor and the Subordinate Creditors shall cooperate fully
with each other in order to promptly and fully carry out the terms and
provisions of this Agreement. Each party hereto shall from time to time execute
and deliver such other agreements, documents or instruments and take such other
actions as may be reasonably necessary or desirable to effectuate the terms of
this Agreement.
6. No failure or delay on the part of any party hereto in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy hereunder.
7. Each party hereto acknowledges that to the extent that no adequate remedy
at law exists for breach of its obligations under this Agreement. In the event
any party fails to comply with its obligations hereunder, the other party shall
have the right to obtain specific performance of the obligations of such
defaulting party, injunctive relief or such other equitable relief as may be
available.
8. Any notice to be given under this Agreement shall be in writing and shall
be deemed to be given when received by the party to whom it is addressed.
Notices shall be in writing and sent by registered mail, hand delivery or by
special courier (in each case, return receipt requested). Notices to the
parties hereto shall be sent to the addresses first set forth herein or such
other address or addresses as shall be designated by a party hereto in a written
notice to the other parties.
9. In the event of any conflict between the provisions of this Agreement and
the provisions of the Subordinate Loan or the Subordinate Loan Documents, the
provisions of this Agreement shall prevail.
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11. No person, including, without limitation, Implant, other than the
parties hereto and their successors and permitted assigns as holders of the
Senior Loan and the Subordinate Loans shall have any rights under this
Agreement.
12. This Agreement may be executed in two or more counterparts each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
13. No amendment, supplement, modification, waiver or termination of this
Agreement shall be effective against a party whom the enforcement of such
amendment, supplement, modification, waiver or termination would be asserted,
unless such amendment, supplement, modification, waiver or termination was made
in a writing signed by such party.
14. In case any or more of the provisions contained in this Agreement, or
any application thereof, shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein, and any other application thereof, shall not in any way be
affected or impaired thereby.
15. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts and all rules and regulations
promulgated thereunder shall apply.
16. This Agreement shall bind and inure to the benefit of the Senior
Creditor and the Subordinate Creditors and their respective successors,
transferees and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
CARDIOTECH INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: CEO
/s/ Xxxxxxx X. Xxxxxx
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