EXHIBIT 10.3(D)
THE The CIT Group/
CIT Credit Finance
GROUP 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
April 1, 1999
ICC Industries Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 100 19
Re: Pharmaceutical Formulations, Inc., successor by merger to Private
Formulaitons, Inc. (THE "BORROWER")
Gentlemen:
Reference is made to that certain letter Re: Private Formulations, Inc.
(the "Intercreditor Agreement") between us dated March 25, 1992 (a copy of which
is attached hereto as "Exhibit A"). This letter will confirm our agreement to
amend the Intercreditor Agreement as follows (capitalized terms appearing below
shall have the meanings given in the Intercreditor Agreement, unless otherwise
indicated):
1. The name of the Borrower set forth in the Intercreditor Agreement hereby
be amended to the name set forth above.
2. CIT's address set forth in the Intercreditor Agreement shall hereby be
amended to read in its entirety as follows:
The CIT Group/Credit Finance, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
3. The definition of "ICC Agreements" in the Intercreditor Agreement shall
hereby be amended to include the promissory note in the principal amount of
$3,000,000, made by Borrower in favor of ICC, dated April 1, 1999.
4. The paragraph immediately preceding paragraph I of the Intercreditor
Agreement shall be deleted in its entirety, and the following substituted in
lieu thereof.
"This letter sets forth our agreement concerning (i) the respective
interests of CIT and ICC in property of Borrower and Pharmacontrol Corp.
(collectively, "Obligors") and (ii) the subordination of payment of all
obligations of Borrower to ICC to the payment of all obligations of
Borrower to CIT."
5. The last sentence of paragraph 3 of the Intercreditor Agreement s
deleted in its entirety.
6. Paragraph 4 of the Intercreditor Agreement shall be deleted in its
entirety, and the following substituted in lieu thereof-
"4. SUBORDINATION.
(a) ICC hereby subordinates its rights to payment and satisfaction of
any and all ICC Obligations of Borrower to ICC (the "Junior Debt") to the
prior indefeasible payment and satisfaction in full of the $1,500,000
overadvance facility granted by CIT to Borrower pursuant to an amendment to
the CIT Loan Agreement dated April T , 1999.
(b) Borrower and ICC agree in favor of CIT that until all CIT
Obligations of Borrower to CIT (the "Senior Debt") is indefeasibly paid and
satisfied in full:
(i) Borrower shall not, directly or indirectly, make, and ICC
shall not, directly or indirectly, accept or receive, any payment of
principal or interest or any prepayment or non-mandatory payment or
any payment pursuant to acceleration or claims of breach or to acquire
Junior Debt or otherwise in respect of any Junior Debt;
(ii) ICC shall not seek to collect against Borrower any Junior
Debt or otherwise enforce any of its rights against Borrower upon a
default by Borrower under the ICC Agreements;
(iii) Borrower shall not grant to ICC and ICC shall not acquire
any additional collateral or guarantees for any Junior Debt, unless
the same are (x) consented to in writing by CIT and (y) subordinate to
CIT in all respects to CIT's satisfaction;
(iv) Borrower and ICC shall not amend, modify, alter or change
the terms of any of the ICC Agreements or any other arrangements
related to the Junior Debt without the prior written consent of CIT;
(v) Borrower shall not directly or indirectly, make, and ICC
shall not, directly or indirectly, accept or receive from Borrower,
any loan, gift or distribution of assets to ICC;
(vi) ICC shall furnish to CIT copies of all notices or demands
sent to Borrower under the ICC Agreements simultaneously with the
sending or delivery of same to Borrower; and
(vii) ICC and Borrower shall, at any time or times upon request
by CIT, promptly furnish to CIT a true, correct and complete statement
of the outstanding Junior Debt.
(c) (i) A legend shall be written by ICC on any instrument at any
time evidencing the Junior Debt to the effect that it is subordinate
in right of payment to the Senior Debt and subject to the terms and
conditions of this Agreement, and there shall be endorsed and
delivered to CIT upon its request after a default or event of default
under the CIT Agreements, all original notes, guarantees or other
instruments at any time evidencing Junior Debt. All hereafter arising
Junior Debt shall be and is subject to the same terms and conditions
of this Agreement as the existing Junior Debt and is included in the
term "Junior Debt" as defined herein.
(ii) In the event any legend or endorsement is omitted, CIT is
hereby irrevocably authorized on behalf of ICC to make the same.
However, no specific legend, further assignment or endorsement or
delivery of notes, guarantees or instruments shall be necessary to
subject any Junior Debt to the subordination thereof contained in this
Agreement.
(d) Borrower and ICC warrant to CIT that (i) ICC is and will be the
exclusive legal and beneficial owner of all Junior Debt and related
collateral and guarantees, and (11) none of the Junior Debt or collateral
or guarantees is or will be subject to any lien, security interest,
financing statement, subordination, assignment or other claim, except in
favor of CIT or as otherwise consented to in writing by CIT or as expressly
permitted hereunder.
(e) In the event of any insolvency or bankruptcy case or any
receivership, liquidation, reorganization or similar proceedings in
connection therewith relative to Borrower or its property or in the event
of any cases for voluntary liquidation, dissolution or other winding up of
Borrower or in the event of any assignment for the benefit of creditors
("Insolvency Case"), CIT shall first be entitled to receive indefeasible
payment in full of all Senior Debt before ICC shall be entitled to receive
and retain any payment on account of the Junior Debt, and, as between CIT
and ICC, CIT shall be entitled to receive for application in payment of the
Senior Debt any payment or distribution of any kind or character, whether
in cash, property or securities, which may be payable or deliverable in any
such Insolvency Case in respect of the Junior Debt. In any Insolvency Case,
CIT is irrevocably authorized by ICC to take any action which ICC might
otherwise be entitled to take.
(f) Should any payment of or distribution on account of any Junior
Debt be received or collected by ICC, such payment shall be held in trust
by ICC for the benefit of CIT and shall be delivered forthwith to CIT for
application to Senior Debt, in the form received with any necessary
endorsement or assignment.
(g) ICC shall not be subrogated to, or be entitled to any assignment
of any Senior Debt or Junior Debt, or of any collateral for or guarantees
or evidence of any Senior Debt or Junior Debt, until all Senior Debt is
indefeasibly paid in full to CIT.
(h) Borrower and ICC waive notice of acceptance hereof by CIT, and
waive notice of and consent to the creation of any Senior Debt, extensions
granted or other action taken by CIT in reliance hereon, the acquisition or
release of collateral for or guarantors of the payment of Senior Debt, the
releasing of any other subordinating creditor, if applicable. Borrower and
ICC waive demand, presentment, protest, notice of protest and of default
and any and all other notices (except as expressly provided for herein) to
which any of them might otherwise be entitled."
Except as hereinabove specifically provided, the Intercreditor Agreement
shall remain UNMODIFIED and in full force and effect in accordance with its
terms and is hereby ratified and confirmed in all respects by the parties
thereto.
If you are in agreement with the foregoing, please so indicate by signing
arid returning to us the enclosed copy of this letter.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /S/
----------------------------
Title: VICE PRESIDENT
AGREED TO:
ICC INDUSTRIES INC.
By: /S/ XXXX X. XXXX
------------------------
Title: PRESIDENT
In consideration of the continued financing arrangements between The CIT
Group/Credit Finance, Inc. and ICC Industries Inc., Borrower and Pharmacontrol
Corp. hereby acknowledge and consent to the terms and conditions of the
Intercreditor Agreement as amended hereby and agree to be bound thereby to the
extent any obligations are required of them. The undersigned further acknowledge
and agree that (i) although the undersigned may sign this amendment to the
Intercreditor Agreement, the undersigned are not parties thereto and do not and
will not receive any right, benefit, priority or interest under or because of
the existence of the Intercreditor Agreement and (ii) the undersigned will take
such action and execute and deliver such additional documents as may be
necessary or desirable in the opinion of CIT or ICC to effectuate the provisions
and purposes of the Intercreditor Agreement as amended hereby.
PHARMACEUTICAL FORMULATIONS, INC. successor
by merger to Private Formulations, Inc.
By: /S/ XXXXXXX X. XX XXXX
-----------------------------
Title: PRESIDENT & CEO
PHARMACONTROL CORP.
By: /S/ XXXXXXX X. XX XXXX
-------------------------------
Title: PRESIDENT & CEO
THE The CIT Group/
CIT Credit Finance
GROUP 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
EXHIBIT A
March 25, 1992
ICC Industries Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 100 19
Re: PRIVATE FORMULATIONS, INC. ("BORROWER")
Gentlemen:
Reference is made to certain financing arrangements entered into between
Borrower and The CIT Group/Credit Finance, Inc. ("CIT") pursuant to certain
agreements including, without limitation, the Loan and Security Agreement by and
between Borrower and CIT (hereinafter the "CIT Loan Agreement"), the Promissory
Note in the original Amount of $1,600,000.00 by Borrower in favor of CIT, the
Guaranty executed by Pharmacontrol Corp. in favor of CIT, each dated August 4,
1989, and other agreements creating or evidencing indebtedness or granting
collateral security and guarantees with respect thereto (all of the foregoing,
together with all agreements and instruments related thereto or delivered in
connection therewith, as the same may have heretofore. been or may hereafter be
amended, supplemented, extended, replaced or renewed, are hereinafter
collectively referred to as the "CIT Agreements").
Reference is also made to certain financing arrangements entered into
between Borrower and ICC Industries Inc. ("ICC") pursuant to certain agreements
including, without limitation, the Agreement by and among ICC, Borrower and
Pharmacontrol Corp. dated September 6, 1991 regarding assistance by ICC to
Borrower in connection with a number of matters, including inventory financing,
raw materials purchases by ICC from third parties which raw materials are
located or to be located at Borrower's premises and a credit line to be granted
to Borrower, the Credit Line Agreement by and among ICC, Borrower and
Pharmacontrol Corp. dated September 6, 1991, and the Toll Conversion Agreement
by and between Borrower and ICC, dated August 12, 1991, various other toll
conversion agreements between Borrower and ICC and other agreements creating or
evidencing indebtedness or granting collateral security and guarantees with
respect thereto (all of the foregoing together with all agreements and
instruments related thereto or delivered in connection therewith as the same may
have heretofore been or may hereafter be amended, supplemented, extended,
replaced or renewed, are hereinafter collectively referred to as the "ICC
Agreements").
This letter sets forth our agreement concerning (i) the respective
interests of CIT and ICC in property of Borrower and Pharmacontrol Corp.
(collectively, "Obligors") and (ii) certain property of ICC located or to be
located at Borrower's p . remises, notwithstanding the terms and provisions of
any agreements or arrangements heretofore, now or hereafter entered into by CIT
or ICC with Obligors or either of them and irrespective of any rule of law.
1. SECURITY INTERESTS IN PROPERTY OF OBLIGORS
(a) ICC hereby acknowledges that CIT, pursuant to the CIT
Agreements, hag been granted by Obligors a security interest in and
lien upon all of the present and future personal property of the
Obligors (collectively, the "Collateral") including, without
limitation, all Obligors' present and future Accounts, Contract
Rights, Chattel Paper, General Intangibles, Documents, Instruments,
Inventory, Equipment, Fixtures, and Products and Proceeds, to secure
all present and future obligations of Obligors to CIT (hereinafter,
the, "CIT Obligations").
(b) CIT hereby acknowledges that pursuant to the ICC Agreements,
ICC has been or may be granted or otherwise holds a security interest
and lien upon the Collateral to secure the now existing or hereafter
incurred obligations of Obligors to ICC under the ICC Agreements
(hereinafter, the "ICC Obligations").
2. PRIORITIES
Notwithstanding any provision to the contrary contained in the CIT
Agreements or the ICC Agreements and notwithstanding the time, date, order or
method of attachment or perfection of the security interest granted hereby, and
notwithstanding anything contained in any filing or agreement to which CIT or
ICC may now or hereafter be a party, and notwithstanding any provisions of the
Uniform Commercial Code or other applicable law, all security interests and
liens of CIT in and upon the Collateral are and shall be prior in right and
interest to the security interests and liens of ICC in and upon the Collateral
and the security interests and the liens of ICC in and upon the Collateral are
and shall be subject and subordinate to the security interests and liens of CIT
in and upon the Collateral.
3. STANDSTILL AND RELEASES
ICC agrees that unless and until all of the CIT Obligations have been
fully. and indefeasibly paid and satisfied, ICC shall not, without the prior
written consent of CIT, exercise any rights or assert any claim with respect to
any Collateral, nor seek to enforce any security interest it may have therein,
nor take any action, directly or indirectly, that would interfere with the
rights of CIT with respect to the Collateral or any other property of obligors
or either of them now or hereafter constituting collateral security for the CIT
Obligations. ICC agrees to release or otherwise terminate any security interest
any and all Collateral which may otherwise disposed of either by CIT, its
agents, or either Obligor with CIT's consent, whether in the ordinary course of
business or after the declaration of an event of default pursuant to the CIT
Agreements, immediately upon CIT's request, and to immediately deliver Uniform
Commercial Code financing or termination statements and such other documents as
CIT may require in connection therewith. Nothing contained in this Paragraph 3
shall preclude ICC from exercising its right in respect of ICC Inventory, but
only in respect of ICC Inventory, or with respect to the item of equipment
described as a Xxxxxxx High-Speed Double Tablet Press Model No. RX55 AST, Serial
Number 705764 which is leased by ICC to Borrower and or any other equipment
which ICC may acquire in the future for lease to Borrower.
4. ICC PROPERTY LOCATED AT BORROWER'S PREMISES
(a) CIT hereby acknowledges that ICC is and will be the owner of
certain raw materials purchased or to be purchased by ICC (the "ICC raw
materials") which are utilized by Borrower in the manufacture of certain
products pursuant to toll conversion agreements between ICC and Borrower.
ICC has requested CIT to acknowledge that ICC is the owner of the work in
process into which the ICC raw materials are incorporated (the "ICC work in
process") and the finished goods manufactured from the ICC raw materials
(the "ICC finished goods"), notwithstanding that the ICC work in process
and ICC finished goods may contain Borrower materials which would otherwise
constitute Collateral. CIT acknowledges that ICC is the owner of the ICC
work in process and ICC finished goods which items are therefore excluded
from Collateral as referred to in this Agreement, and, subject to Paragraph
4(b) hereof, agrees that it will assert no interest in or claim against the
ICC work in process or the ICC finished goods upon the condition that, and
so long as, ICC shall hereafter provide to CIT updated lists of ICC raw
materials and ICC finished goods at least once each week, or more
frequently if requested by CIT. The ICC raw materials, ICC work in process
and ICC finished goods are herein referred to collectively as the "ICC
Inventory".
(b) With respect to (i) ICC raw materials mixed or combined with
Borrower materials' I during the manufacturing process and (ii) ICC
finished goods packaged in Borrower packaging, it is agreed that such
Borrower raw materials and packaging shall be deemed to have been sold and
shall be sold by PFI to ICC and that such work in process and finished
products shall, subject to Paragraph 4(c) hereof, be property of ICC. In
the event that Borrower defaults under the CIT Loan Agreement and CIT gives
ICC written notice of such default and of CIT taking action to collect any
of the CIT obligations or realize upon any of the Collateral, then ICC
shall not remove any work in process or finished products from Borrower's
premises unless prior to removal ICC pays to CIT the difference between the
standard cost of such work in process or finished products and the standard
cost of the ICC raw materials contained therein. Standard cost shall be
calculated in conformity with generally accepted accounting principles,
consistently applied.
(c) CIT understands that pursuant to the various toll conversion
agreements between ICC and Borrower, upon completion of manufacturing,
Borrower may have the option to purchase the ICC finished goods. ICC hereby
agrees that upon Borrower's sale and delivery to third parties of finished
products containing or constituting ICC finished goods, Borrower shall be
deemed to have purchased and shall purchase from ICC such ICC finished
goods on the terms agreed upon between Borrower and ICC. ICC acknowledges
that under Borrower's financing agreements with CIT, all of PFI's present
and future Accounts have been. assigned to CIT as collateral security for
the CIT Obligations. ICC further acknowledges that all sales of finished
products by Borrower shall be for Borrower's own account and that all
Accounts arising from such sales shall be Accounts owned by Borrower
subject to the first perfected security interest of CIT.
5. NOTICES
Notice to any party hereunder shall be in writing and shall be sent by
certified mail, return receipt requested, to the parties at the addresses set
forth above and shall be deemed sent upon deposit in the U.S. mail, postage
prepaid.
6. FURTHER ASSURANCES
The parties hereto shall execute and deliver such additional documents
and take such additional action as shall be reasonably necessary to effectuate
the provisions and purposes of this Agreement.
7. SUCCESSORS AND ASSIGNS
All terms, covenants and conditions herein contained shall inure to
the benefit of, and be binding upon, the parties hereto, their successors and
assigns.
8. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof. Neither this Agreement nor any
agreement hereof may be modified, altered, waived, discharged or terminated
orally, but only by an instrument in writing executed by the party to be
charged.
9. UNIFORM COMMERCIAL CODE DEFINITIONS
All capitalized terms used herein which are defined in the Uniform
Commercial Code in effect in the State of New York shall have the meanings set
forth therein unless otherwise defined herein.
10. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
If the foregoing correctly states our understanding and agreement,
please sign a counterpart of this letter in the space provided below.
Very truly yours,
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /S/
--------------------------
Title: VICE PRESIDENT
Agreed to:
ICC INDUSTRIES, INC.
By: /S/ XXXX X. XXXX
----------------------
Title: PRESIDENT
In consideration of the financing arrangements with The CIT Group/Credit
Finance, Inc. and ICC Industries" Inc. Private Formulations, Inc. and
Pharmacontrol Corp. hereby acknowledge and consents to the terms and conditions
of the above agreement (the "Intercreditor Agreement") and agree to be bound
thereby to the extent any obligations are required of them.
The undersigned acknowledge and agree that (i) although the undersigned may sign
the Intercreditor Agreement, the undersigned are not parties thereto and do not
and will not receive any right, benefit, priority or interest under or because
of the existence of the Intercreditor Agreement and (ii) the undersigned will
take such action and execute and deliver such additional documents as may be
necessary or desirable in the opinion of CIT or ICC to effectuate the provisions
and purposes of the Intercreditor Agreement.
PRIVATE FORMULATIONS, INC. PHARMACONTROL CORP.
By: /S/ XXX X. XXXXXX By: /S/ XXX X. XXXXXX
-------------------------- -----------------------------
Title: /S/ PRESIDENT/CFO Title: /S/ PRESIDENT/CFO
