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INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT is entered into as of the 29th day of March,
2001 (this "Agreement"), by and between XXXX XXXXXXXX and XXXX XXXXXXXX
(collectively, the "Blechmans"), and THE CIT GROUP/ BUSINESS CREDIT, INC.
("Lender").
R E C I T A L S
A. Twin Laboratories Inc., a Utah corporation ("TLI"), Advanced
Research Press, Inc., a New York corporation ("ARP"), Changes International,
Inc., a Florida corporation ("CII"), PR Nutrition, Inc., a California
corporation ("PR Nutrition"), Health Factors International, Inc., a Delaware
corporation ("HFI") and Xxxxxxx Laboratories, Inc., a Delaware corporation
("Xxxxxxx", and individually a "Debtor" and collectively with TLI, ARP, CII, PR
Nutrition and HFI, the "Debtors") and Blechmans are parties to a Reimbursement
and Security Agreement, entered into or to be entered into on or about the date
hereof (as amended, supplemented or otherwise modified from time to time, and to
which Twinlab Corporation may be a party, the "Blechmans Security Agreement")
pursuant to which Debtors have granted or will grant a security interest to the
Blechmans to secure payment and performance of the obligations of Debtors under
the Blechmans Security Agreement.
B. In addition, concurrently with the execution of this Agreement,
Lender is providing to Debtors a senior, secured credit facility pursuant to the
Financing Agreement dated of even date herewith (the "Loan Agreement") among
Lender, as Agent thereunder, and Debtors.
C. Lender and Blechmans are each unwilling to enter into their
respective transactions with Debtors unless the other enters into this
Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. In addition to the capitalized terms defined
elsewhere in this Agreement, the following capitalized terms shall have the
following respective meanings (such meanings to be equally applicable to the
singular and the plural forms thereof):
"Affiliate" shall mean, with respect to any specified Person,
(i) any other Person that, directly or indirectly, owns or controls, or has the
right to acquire, five percent (5%) or more of the Capital Stock of such
specified Person, or (ii) any other Person that, directly or indirectly,
controls, is controlled by, is under direct or indirect common control with,
such specified Person or any Affiliate of such specified Person.
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"Blechmans Indebtedness" shall mean all indebtedness,
liabilities and other obligations of Debtors now existing or hereafter arising
under the Blechmans Documents.
"Blechmans Default" shall mean an "Event of Default" as
defined in the Blechmans Security Agreement.
"Blechmans Documents" shall mean the Blechmans Security
Agreement and such other documents, agreements and instruments as are executed
and delivered in connection with the foregoing.
"Collateral" shall mean all assets and property of Debtors or
any of its or their Subsidiaries, whether real or personal, tangible or
intangible, now existing or hereafter acquired, that is or may at any time be or
become subject to a Lien in favor of Lender to secure the Lender Indebtedness.
"Insolvency Proceeding" shall mean any liquidation,
bankruptcy, receivership, assignment for the benefit of creditors, or any other
judicial, equitable, or administrative action or proceeding commenced by or
against any Person or any of its assets or property under federal or state law
and involving the adjustment, restructuring, or liquidation of any or all of the
assets, obligations, business, or property of such Person.
"Lender Documents" shall mean the Loan Agreement and the Loan
Documents as defined under the Loan Agreement (other than Loan Documents to
which the Blechmans are parties).
"Lender Default" shall mean an "Event of Default" as defined
in the Loan Agreement.
"Lender Indebtedness" shall mean all indebtedness, liabilities
and other obligations of Debtors and any Lender Loan Guarantor, now existing or
hereafter arising under the Loan Agreement and the other Lender Documents, as
each may from time to time be amended, supplemented, extended, renewed, modified
or restated in accordance with the terms of this Agreement, whether for
principal, premium, interest, fees, expenses, indemnities or otherwise.
"Lender Loan Guarantor" shall mean any Person which has
guaranteed the Lender Indebtedness (other than the Blechmans or either of them).
"Lien" means, with respect to any assets or property, any
security deed, mortgage, deed to secure debt, deed of trust, lien, pledge,
assignment, charge, security interest, title retention agreement, negative
pledge, levy, execution, seizure, attachment, garnishment, or other encumbrance
of any kind in respect of such property, whether or not xxxxxx, vested, or
perfected.
"Person" shall mean any individual, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, limited liability
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partnership, or governmental (whether federal, state, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof) or other entity.
"Proceeds" shall mean any cash, securities, or other property
received upon the sale, transfer, lease or other disposition or collection of
any of the Collateral, whether pursuant to foreclosure, voluntary disposition,
sale or other disposition or collection in the ordinary course of business, or
otherwise.
"Senior Indebtedness" shall mean the Blechmans Indebtedness,
the Lender Indebtedness or both, as applicable.
"Senior Lender" shall mean Blechmans, Lender or both, as
applicable.
"Senior Loan Documents" shall mean the Blechmans Documents or
the Lender Documents, as applicable.
2. No Subordination of Indebtedness. The Lender Indebtedness and
the Blechmans Indebtedness shall rank pari passu in right to payment with one
another and neither shall be subordinate in right of payment to the other;
provided, however, in no event shall such pari passu right to payment affect the
priority of Lender as against Blechmans with respect to the Collateral and the
Proceeds, and enforcement of rights with respect thereto, as hereinafter set
forth.
3. Priority of Security Interests and of Rights to Proceeds;
Release of Liens; Insurance Proceeds.
(a) Notwithstanding the timing, order or manner of the grant
or perfection of any of their respective Liens, the Liens now or hereafter held
by Lender in any Collateral and Proceeds to secure the Lender Indebtedness shall
be senior and prior to any Liens now or hereafter held by or for the benefit of
Blechmans in or to any of the Collateral and Proceeds. The priorities set forth
in this Agreement shall be effective notwithstanding anything to the contrary
contained in the Lender Documents, the Blechmans Documents, or any plan of
reorganization or similar document filed by or on behalf of any Debtor or any
Affiliate of any Debtor under any Insolvency Proceeding of any Debtor, including
any prior perfection of a Lien under the provisions of the Uniform Commercial
Code or any other applicable laws of any jurisdiction, or the existence of any
present or future filing of financing statements under the Uniform Commercial
Code or other applicable laws of any jurisdiction in which such filing has been
made, or any other recordation or filing of any document.
(b) In connection with: (i) any sale or other disposition of
assets other than all or a substantial portion of the assets of a Debtor
(collectively, a "Non-Material Asset Sale"); or (ii) the sale or other
disposition of all or a substantial portion of the assets of a Debtor (a
"Material Asset Sale") occurring after the declaration by Lender of a Lender
Default and during the continuance thereof, then, if Lender releases any of its
Liens on any part of the Collateral in connection with any such sale or other
disposition, Blechmans agree that they shall unconditionally and simultaneously
release their liens thereon and Blechmans shall execute and
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deliver to Lender or the Debtors, as applicable, such termination statements,
releases and other documents as Lender or the Debtors may reasonably request to
effectuate such release.
(c) Unless and until the Lender Indebtedness is paid in full,
in cash, Lender shall have the sole and exclusive right, subject to the rights
of the Debtors under the Lender Documents, to adjust settlement of claims under
any insurance policy covering the Collateral in the event of any loss thereunder
and to approve any award granted in any condemnation or similar proceeding
affecting the Collateral, and all payments of claims and awards are Proceeds
hereunder.
4. No Enforcement of Liens. Unless and until the Lender
Indebtedness shall have been paid in full, in cash, Blechmans shall have no
right to enforce any Liens in, foreclose, levy or execute upon, or attach any
Collateral, whether by private or judicial action or otherwise.
5. Consent to Liens. Lender hereby consents to the grant or
creation of Liens on the Collateral and any other assets of Debtors in favor of
Blechmans under the Blechmans Documents and agrees that the grant, perfection,
maintenance or existence of such Liens does not and shall not constitute a
Lender Default. In addition, Blechmans hereby consent to the grant or creation
of Liens on the Collateral in favor of Lender under the Lender Documents, and
agree that the grant or existence of such Liens does not and shall not
constitute a Blechmans Default.
6. Amendment of Documents.
(a) The Lender Documents may be amended in any respect
without the prior consent of Blechmans.
(b) The Blechmans Documents shall not be amended without the
prior written consent of Lender.
7. Senior Indebtedness Owed Only to Senior Lenders. Each Senior
Lender represents and warrants that it has not previously assigned any interest
in its Senior Indebtedness or Senior Loan Documents, that no other Person owns
an interest in any of such Senior Indebtedness or Senior Loan Documents (whether
as joint holders, participants or otherwise), and that such entire Senior
Indebtedness is owing only to such Senior Lender.
8. Reinstatement. The provisions of this Agreement shall continue
to be effective or be reinstated, and the Lender Indebtedness shall not be
deemed to be paid in full, in cash, as the case may be, if at any time any
payment of Lender Indebtedness is rescinded or avoided, or must otherwise be
returned by Lender pursuant to any Insolvency Proceeding or otherwise, all as
though such payment had not been made.
9. Nonimpairment. No right of either party enforce the provisions
hereof shall at any time in any way be prejudiced or impaired by any act or
failure to act by the other party or Debtors or any guarantor, or any
noncompliance by Debtors or by the other Person with the terms and provisions
and covenants herein contained, regardless of any knowledge thereof that the
party may have or with which the party may otherwise be charged.
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10. Additional Remedies. If either party violates any of the terms
of this Agreement, in addition to any remedies in law, at equity or otherwise,
the other party may restrain such violation in any court of law or equity and
may interpose this Agreement as a defense in any action by the violating party.
11. Certain Waivers.
(a) All Senior Indebtedness shall be deemed to have been
made or incurred in reliance upon the terms and other provisions of this
Agreement. Each Senior Lender waives all notice of the acceptance by the other
Senior Lender of the provisions of this Agreement and agrees that the other
Senior Lender has made no representations or warranties with respect to the
legality, validity, enforceability, collectability or perfection of any Senior
Indebtedness or any liens held by it in connection therewith.
(b) Each Senior Lender shall be entitled to manage and
supervise its loans or other financial accommodations to Debtors in accordance
with applicable laws and its normal business practices, modified from time to
time as it deems appropriate under the circumstances, without regard to the
existence of any rights that the other Senior Lender may now or hereafter have
in or to any Collateral, except that each Senior Lender shall comply with the
terms of this Agreement.
(c) No Senior Lender shall have any liability to the other
Senior Lender as a result of any and all lawful actions not in breach of this
Agreement that such Senior Lender takes or omits to take (including actions with
respect to the creation, perfection or continuation of its liens, actions with
respect to the occurrence of a default or event of default under its Senior Loan
Documents, actions with respect to the foreclosure, sale, release or failure to
realize upon, any Collateral. Without limiting the generality of the foregoing,
Blechmans waive any otherwise valid legal or equitable right (i) to require
Lender to marshal any portion of the Collateral or otherwise to seek
satisfaction from any particular property of a Debtor or from any other Person,
(ii) to oppose any motion or application by Lender or a Debtor to allow use of
cash collateral, provide adequate protection of Lender's interest in the
Collateral, or grant relief from automatic stay to permit Lender to enforce its
rights and remedies with respect to the Collateral, or (iii) otherwise to
prohibit, delay, control, or limit in any manner the sale or other disposition
by Lender of any portion of the Collateral.
12. Other Waivers. No waiver shall be deemed to be made by Lender
or Blechmans of any of their respective rights hereunder unless it is in writing
signed by the waiving party. Each such waiver shall be a waiver only with
respect to the specific instance involved and shall in no way impair the rights
of the waiving party or the obligations of the other party to the waiving party
in any other respect at any other time.
13. Information Concerning Financial Condition. Except as
otherwise expressly provided for in this Agreement, each Senior Lender
acknowledges that the other Senior Lender has no obligation to keep it informed
of the financial condition of Debtors or of other circumstances bearing upon the
risk of nonpayment of the Lender Indebtedness or Blechmans
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Indebtedness. Each of Lender and Blechmans hereby agree that the other shall
have no duty to advise it of information known to it regarding such condition or
any such circumstances. In the event Lender or Blechmans (the "providing
party"), in its sole discretion, undertakes, at any time or from time to time,
to provide any such information to the other (the "receiving party"), the
providing party shall be under no obligation to (a) provide any such information
to the receiving party on any subsequent occasion, (b) undertake any
investigation not a part of its regular business routine, or (c) disclose any
information that, pursuant to its commercial finance practices, the providing
party wishes to maintain as confidential.
14. Third-Party Beneficiaries; Termination.
(a) This Agreement is solely for the benefit of Lender,
Blechmans and their respective successors and permitted assigns, and no Debtor
or any other Person is intended to be a third-party beneficiary hereunder or to
have any right, benefit, priority or interest under, or because of the existence
of, or to have any right to enforce, this Agreement. This Agreement is intended
solely for the purpose of defining the relative rights of Lender and Blechmans
and is not intended to or will impair, as between any Debtor, any Lender Loan
Guarantor and their respective creditors other than Lender and Blechmans, the
respective obligations, which are absolute and unconditional, of Debtors, the
Lender Loan Guarantors to Lender or Blechmans.
(b) Lender and Blechmans shall have the right to modify or
terminate this Agreement at any time without notice to or approval of Debtor or
any other Person upon the written consent of Blechmans and Lender. In addition,
Blechmans may terminate this Agreement upon the full payment and satisfaction of
the Lender Indebtedness and termination of the Lender Documents.
15. Notices.
(a) Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other parties, or whenever any
of the parties desires to give or serve upon any other parties any communication
with respect to this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and shall be
deemed to have been validly served, given or delivered (a) upon the earlier of
actual receipt and three (3) business days after deposit in the United States
Mail, registered or certified mail, return receipt requested, with proper
postage prepaid, (b) upon transmission, when sent by telecopier or other similar
facsimile transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided in this section), (c) one business day after deposit with a reputable
overnight courier with all charges prepaid, or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number as follows:
If to Blechmans, to:
c/o Twinlab Corporation
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000 Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Lender, to:
The CIT Group/Business Credit, Inc.
000 X. Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Regional Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice.
16. Costs and Attorneys' Fees. If any action, suit or proceeding
is commenced by or between any of the parties in connection with this Agreement,
the prevailing party shall be entitled to recover from the other any costs,
expenses or attorneys' fees incurred in connection therewith.
17. Successors and Assigns. This Agreement shall be binding on,
and shall inure to the benefit of, the parties and their respective successors
and assigns (including, in the case of any Insolvency Proceeding, any receiver,
assignee for the benefit of creditors, trustee or debtor in possession on behalf
of such Person), except as otherwise provided herein. This Agreement is freely
assignable at any time by Lender or Blechmans, provided that any such assignment
is in conjunction with the assignment or refinancing in whole or in part of the
Lender Indebtedness or Blechmans Indebtedness, as the case may be, and that such
assignment is subject to the terms of this Agreement.
18. Integrated Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the matters set forth herein and
may not be modified or amended except in a writing signed by all parties.
19. Interpretation. The captions in this Agreement are for
convenience of reference only, do not constitute a part of this Agreement and
are not to be considered in construing or interpreting this Agreement. All
section, preamble, recital, exhibit, schedule, disclosure schedule, annex,
clause and party references are to this Agreement unless otherwise stated. No
party, nor its counsel, shall be deemed the drafter of this Agreement for
purposes of construing the provisions of this Agreement, and all provisions of
this Agreement shall be construed in accordance with their fair meaning, and not
strictly for or against any party.
20. Authority. Each of the signatories hereto certifies that such
party has all necessary authority to execute this Agreement.
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21. Counterparts. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
22. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT
REGARD TO THE CHOICE OF LAW OR CONFLICT OF LAW PROVISIONS THEREOF) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
23. WAIVER OF JURY TRIAL. EACH OF THE BLECHMANS AND LENDER WAIVES
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION UNDER THIS AGREEMENT OR ANY ACTION OR
ACTIONS ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHICH
PARTY INITIATES SUCH ACTION OR ACTIONS.
24. Indemnity Regarding Preferences. Each of the Blechmans hereby
indemnifies the Lender and holds the Lender harmless from any and all costs,
expenses, claims, liabilities, expenses or otherwise, incurred or imposed on the
Lender by reason of a preferential transfer claim against Lender in any
Insolvency Proceeding of any Debtor based upon the junior secured creditor
status of the Blechmans vis a vis that Debtor, absent the Lender's gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction. The foregoing indemnification shall survive termination of this
Agreement until such time as the Lender Indebtedness has been finally and
indefeasibly paid in full, in cash.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
[BLECHMANS SIGNATURES TO BE NOTARIZED]
"BLECHMANS"
____________________________
XXXX XXXXXXXX
____________________________
XXXX XXXXXXXX
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"LENDER"
THE CIT GROUP/ BUSINESS CREDIT, INC.
By:_______________________________________
Title:____________________________________
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ACKNOWLEDGMENT
Each of the undersigned hereby acknowledges and consents to the
foregoing Intercreditor Agreement and agrees to cooperate with the parties
thereto to insure enforcement of the priorities and other provisions specified
therein.
Dated as of March 29, 2001
"DEBTORS"
TWIN LABORATORIES INC.,
a Utah corporation
By: __________________________
Title:
ADVANCED RESEARCH PRESS, INC.,
a New York corporation
By: __________________________
Title:
CHANGES INTERNATIONAL, INC.,
a Florida corporation
By:_________________________
Title:
PR NUTRITION, INC.,
a California corporation
By:_________________________
Title:
HEALTH FACTORS INTERNATIONAL, INC.,
a Delaware corporation
By:_________________________
Title:
XXXXXXX LABORATORIES, INC.,
a Delaware corporation
By:_________________________
Title:
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