CONSENT AND RELEASE AGREEMENT
This Consent and Release Agreement
(this “Agreement”) is
entered into as of January 27, 2009, by and among RxElite, Inc., a Delaware
corporation (the “Company”), RxElite Holdings,
Inc., a Delaware corporation (the “Acquired Company”), Castlerigg
Master Investments Ltd., a company organized and existing under the laws of the
British Virgin Islands (the “Lender”), and Piramal Healthcare, Inc., a Delaware
corporation (“Purchaser”). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in that certain Securities Purchase
Agreement, dated as of December 31, 2007, by and between the Company and the
Lender, as amended through the date hereof (the “Securities Purchase
Agreement”).
WHEREAS,
in connection with the Securities Purchase Agreement, the Company issued to the
Lender a senior secured promissory note in the original principal amount of
$10,500,000, dated as of December 31, 2007 (the “Notes”);
WHEREAS,
the Lender currently owns all of the outstanding Notes ;
WHEREAS,
the Company owns 100% of the issued and outstanding capital stock of the
Acquired Company (the “Shares”) which have been
pledged to the Lender as collateral for the Notes pursuant to a Pledge Agreement
dated as of December 31, 2007 (the “Pledge Agreement”); the assets
of the Acquired Company constitute “Collateral” for the Notes as defined in that
certain Security Agreement by and between the Company and Lender dated as of
December 31, 2007 (the “Security Agreement”); and the
Acquired Company is guarantor of the Notes pursuant to that certain Guaranty
dated as of December 31, 2007 by and between the Acquired Company and Lender
(the “Guaranty”);
WHEREAS,
the Company wishes to sell the Shares to Purchaser and the Purchaser wishes to
purchase the Shares (the “Acquisition”) from the Company free
and clear of any and all obligations to Lender, including without limitation
those pursuant to the Securities Purchase Agreement, in order to acquire the
Retained Assets and Retained Liabilities, as each such term is defined
on Exhibit A annexed hereto,
pursuant to the terms of a Stock Purchase Agreement, substantially in the form
of Exhibit B annexed hereto (the “Stock Purchase
Agreement”);
WHEREAS, each of the Company, the
Acquired Company and the Lender desire to facilitate the transactions
contemplated by the Stock Purchase Agreement, and, subject to the terms hereof,
approve the sale of the Acquired Company to Purchaser, terminate the pledge of
the Shares under the Pledge Agreement, release any and all Retained Assets as
collateral under the Notes, terminate the
Guaranty, and along with the Purchaser,
terminate the Intercreditor Agreement;
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
pursuant to the terms of this Agreement, the Lender, the Company and
the Purchaser agree as follows:
1. Representations of Lender.
Lender represents and warrants to Purchaser
that (i) Lender owns all of the outstanding Notes issued under the Securities
Purchase Agreement, and (ii) Lender has full right and authority, without
consent or action of any other person, to take the actions set forth
herein.
2. Payment of Purchase
Price. The Purchaser and the
Company hereby agree that $2,546,069.30 of the Purchase Price (the “Specified Sale Proceeds”) shall be paid at the closing of the Acquisition as
follows: (i) $1,800,000 to the Lender in accordance with the wire
instructions set forth in Section 1 on Exhibit C hereto; (ii) $100,000 to
Xxxxxxx Xxxx & Xxxxx LLP, in payment of legal fees in accordance with the
wire instructions set forth in Section 2 on Exhibit C hereto; and (iii)
$646,069.30 into the blocked account of the Company, in accordance with the wire
instructions set forth in Section 3 on Exhibit C hereto.
3. Approval and Acceptance;
Covenants
Related to Challenge of Transactions. The Lender, on its own
behalf and as a Collateral Agent under the Transaction Documents, has fully reviewed the Stock Purchase Agreement, the
Xxxx of Sale and Assignment by and between the Company and the Acquired Company,
dated as of the date hereof, Assignment and Assumption of Assigned Contracts
Agreement, by and between the Company and the Acquired Company, dated
as of the date hereof, and all related documents and agreements (collectively,
the “Stock Purchase
Documents”), and hereby approves,
accepts and consents to the sale of the Acquired Company and the transfer of the Retained Assets and Retained
Liabilities pursuant to the terms of the Stock Purchase Documents. Lender has
determined that the purchase price set forth in the Stock Purchase Documents
(the “Purchase
Price”), giving due consideration to the
assumption of certain liabilities by Purchaser and other non-cash consideration,
is reasonably equivalent value and represents fair consideration for the
purchase of the Shares of the Acquired Company and all assets being purchased
thereby (including without limitation the Retained Assets) net of all Retained
Liabilities. Lender hereby covenants, now and forever, to refrain
from challenging or contesting in any manner, in any forum, including without
limitation a bankruptcy proceeding, that the Purchase Price is reasonably
equivalent value and represents fair consideration for the purchase of the
Shares and all assets being purchased thereby (including without limitation the
Retained Assets) net of all Retained Liabilities.
4. Release of Obligations and Collateral;
Delivery of Possessory Collateral. Upon (i) satisfaction of
all closing conditions by the Company and the Purchaser under the Stock Purchase
Agreement, including without limitation, the receipt by the Company of the
Purchase Price and (ii) the receipt of the Specified Sale Proceeds in accordance
with the terms hereof; automatically and without
any further action by the parties to this Agreement, Lender agrees that: (x) all
obligations of the Acquired Company under the Securities Purchase Agreement, the
Notes, the Guaranty and the other Transaction Documents and (y) all
security interests and other liens, rights of set
off against, and pledges in favor of, granted to or held by Lender in or against the Acquired Company, including without
limitation the Retained Assets (but excluding any lien of the Lender in the
proceeds received by the Company as consideration for the sale of the Shares and
the Retained Assets), the Shares, including without limitation, under the
Securities Purchase Agreement, the Guaranty, the Notes, the Pledge Agreement,
the Security Agreement or the other Transaction Documents shall each be
deemed forever satisfied, automatically terminated
and released. The Lender agrees in furtherance thereof, at the
expense of the Company, to deliver to Purchaser any certificates evidencing the
Shares previously delivered to the Lender and such other possessory collateral
that Lender or its agents may have in its possession related to the assets of
the Acquired Company (including without limitation the Retained Assets) and the
Shares and shall be relieved of all responsibility for any such possessory
collateral upon surrender thereof. Lender hereby authorizes the
Company and the Purchaser to prepare and file any and all releases and
terminations necessary to terminate any and all UCC financing statements or
other documents filed against the Acquired Company (including without limitation
the Retained Assets) by or on behalf of the Lender. For the
avoidance of doubt, Lender shall continue to have a valid and enforceable lien
on and security interest in all proceeds received by the Company in connection
with the Acquisition, including without limitation, the Specified Sale Proceeds,
in accordance with the Security Agreement and the Pledge
Agreement. The Company acknowledges that Lender's liens on and
security interests in all such proceeds
continue to be valid and enforceable.
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5. Acknowledgement of Security
Agreement, Security Interest and Liens. Except as
otherwise expressly provided herein, Company hereby confirms and agrees
that:
(i) the Security Agreement is, and
shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects;
(ii) to the extent that the Security
Agreement purports to assign or pledge to the Lender, or to grant to the Lender,
a security interest in or lien on, any collateral other than the Shares or the
assets of the Acquired Company (including without limitation the Retained
Assets), as security for the Obligations (as defined therein), such pledge,
assignment and/or grant of a security interest or lien is hereby ratified and
confirmed in all respects as security for all Obligations, whether now existing
or hereafter arising;
(iii) this Agreement does not and shall
not affect any Obligations of the Company, all of which Obligations shall remain
in full force and effect; and
(iv) the execution, delivery and
effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of the Lender under any Transaction Document (as defined in the
Security Agreement), nor constitute a waiver of any provision of any Transaction
Document, other than as specifically set forth herein.
6. Indemnity. Company
hereby agrees:
(i) to indemnify and hold harmless the
Lender and its respective officers, directors, employees, attorneys, consultants
and agents (each, an “Indemnified Person”) from and
against any and all claims, damages, liabilities and expenses, including,
without limitation, attorneys’ fees and disbursements, which may be incurred by
or asserted against any Indemnified Person in any investigation, litigation,
suit or action arising out of or relating to the release pursuant hereto of any
security interest, lien, encumbrance or other charge granted to the
Lender;
(ii) to pay all reasonable costs and
expenses in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, and the performance of any other acts
and the execution of any other documents required to effect the release of any
security pursuant hereto, including, without limitation, the fees and
disbursements of counsel to the Lender; and
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(iii) to pay any and all stamp and
other transfer or filing taxes and fees payable or determined to be payable in
connection with the execution and delivery hereof or any release document
pursuant hereto, and to hold each Indemnified Person harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes or fees.
7. Termination of Intercreditor and
Subordination Agreement.The Purchaser hereby acknowledges the assignment
of all obligations of the Company to the Acquired Company under that certain
Loan and Security Agreement dated as of May 30, 2008, by and between the Company
and Purchaser (as successor by assignment from
NPIL Pharma Inc.) (as the same may be amended, restated, replaced,
modified or supplemented from time to time the “Subordinated Loan Agreement”),
and any and all documentation executed and/or delivered in connection with the
Subordinated Loan Agreement (such documentation, together with the Subordinated
Loan Document, the “Subordinated Loan Documents”)
pursuant to the terms of Assignment, Assumption
and Release Agreement dated as of the date hereof, by and between the Company,
the Acquired Company and Purchaser (the “Subordinated Loan
Assignment”). The parties hereto each hereby agrees that upon
the effective date of the Subordinated Loan Assignment: (i) without recourse and
without any representation or warranty of any kind, the Purchaser shall fully
release and discharge the Company from any duty, liability or obligation under
the Subordinated Loan Documents, and (ii) that Intercreditor and Subordination
Agreement by and between Lender, Company, Acquired Company and Purchaser, dated
as of May 30, 2008 (the “Intercreditor Agreement”), and
the Guaranty Agreement are hereby terminated and no longer enforceable in any
manner. Each of Lender, Company, Acquired Company, and Purchaser, and each of their respective
affiliates, subsidiaries, officers, directors, employees, shareholders, agents,
attorneys, and representatives as well as their successors and assigns, hereby
release each other from any and all claims, obligations, rights, causes of
action, and liabilities, of whatever kind or nature, whether known or unknown,
whether foreseen or unforeseen, arising on or before the date hereof, which
Lender ever had, now has or hereafter can, shall or may have against any of such
parties, upon or by reason of any matter, cause or thing whatsoever, which are
based upon, arise under or are related to the Intercreditor
Agreement.
8. Further Actions
Necessary. The Lender hereto covenants and agrees, at the
expense of the Company, to execute and deliver, at the request of the Acquired
Party or the Purchaser hereto, such further instruments and to take such other
action as such party may reasonably request to more effectively consummate the
purposes contemplated by this Agreement.
9. No Other
Waivers. Except as expressly set forth herein, the terms of
the Transaction Documents shall remain in full force and effect.
10. Limitation on
Agreements. The terms and conditions set forth herein are
limited precisely as written shall not be deemed: (a) to be a consent under or
waiver of any other term or condition in any of the Transaction Documents; or
(b) to prejudice any right or rights which the Lender now has or may have in the
future under, or in connection with the Transaction Documents, as may be
amended.
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11. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original but all of which when taken together shall constitute but
one agreement. Delivery of an executed counterpart of a signature
page to this Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Agreement.
12. Governing Law; Jurisdiction; Jury
Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by
law. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
[Signature
Page Follows Immediately]
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IN
WITNESS WHEREOF, each party hereto has caused this Consent and Release Agreement
to be executed on its behalf, as of the day and year first above
written.
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COMPANY:
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By:
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/s/ Xxxx Xxxxxxxx
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Name:
Xxxx Xxxxxxxx
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Title:
President and Chief Executive Officer
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ACQUIRED
COMPANY:
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RXELITE
HOLDINGS, INC.
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By:
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/s/ Xxxx Xxxxxxxx
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Name:
Xxxx Xxxxxxxx
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Title:
President and Chief Executive Officer
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LENDER:
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CASTLERIGG
MASTER INVESTMENTS LTD.
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BY:
XXXXXXX ASSET MANAGEMENT CORP.
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By:
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/s/ Xxxxxxx X’Xxxxx
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Name:
Xxxxxxx X’Xxxxx
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Title: Chief
Financial Officer
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PURCHASER:
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PIRAMAL HEALTHCARE, INC.
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By:
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/s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title: Secretary and
Treasurer
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