EXHIBIT 10.4
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT ("Agreement"), dated as of October 27, 2003, is
made and entered into on the terms and conditions hereinafter set forth, by and
among ABLE LABORATORIES, INC., with principal offices at 0 Xxxxxxxxx Xxxxx,
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Able"), STEEL CITY PHARMACEUTICALS LLC,
having an address of 00000 Xxxxxx Xxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx 00000
("Steel City") (collectively Able and Steel City may be referred to herein as
"Subordinated Lenders"), and THE CIT GROUP/BUSINESS CREDIT, INC., with a
principal office at 1211 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("CIT").
RECITALS
A. Pursuant to a First Amended and Restated Loan Agreement dated as of
February 23, 2001, by and among Finova Mezzanine Capital, Inc. ("Finova"),
Argosy Investment Partners, L.P. ("Argosy"), XxXxxxxx.xxx, Inc., a Delaware
corporation and now known as RxBazaar, Inc. ("RxBazaar"), DynaGen, Inc., a
Delaware corporation and now known as Able Laboratories, Inc. ("Able", as
above), and Superior Pharmaceutical Company, an Ohio corporation and now known
as FPP Distribution, Inc. ("FPP") (together with any amendments thereto and/or
modifications thereof, the "Subordinated Loan Agreement"), Finova and Argosy
amended and restated two (2) prior and existing term loans in the aggregate
principal amount of $2,250,000.00 (collectively, the "Subordinated Loan"), on
the terms and conditions set forth in the Subordinated Loan Agreement.
B. The Subordinated Loan is evidenced by, among other documents,
instruments, and agreements, (i) a First Amended and Restated Secured Promissory
Note dated February 23, 2001 made and executed by RxBazaar in the original
principal amount of $1.5 million, and (ii) a First Amended and Restated Secured
Promissory Note dated February 23, 2001 made and executed by RxBazaar in the
original principal amount of $750,000.00 (collectively, together with any
amendments, extensions and/or renewals thereof, the "Subordinated Notes").
C. The Subordinated Loan is secured by, among other things, (i) a Security
Agreement dated February 23, 2001, by and between RxBazaar and Finova as
Collateral Agent, assigning to and granting to Collateral Agent, a security
interest in, among other things, RxBazaar's equipment, inventory, accounts,
contract rights, chattel paper and general intangibles (together with any
amendments thereto and/or modifications thereof, (the "RxBazaar Security
Agreement"), (ii) a Security Agreement dated June 18, 1997, by and between FPP
and Collateral Agent assigning to and granting to Collateral Agent a security
interest in, among other things, FPP's equipment, inventory, accounts, contract
rights, chattel paper and general intangibles (together with any amendments
thereto and/or modifications thereof, the "FPP Security Agreement"), (iii) a
Guaranty Agreement dated June 18, 1997 executed by FPP (the "FPP Guaranty"), and
(iv) a Pledge and Security Agreement dated February 23, 2001 executed by
RxBazaar (the "RxBazaar Stock Pledge"). The Subordinated Loan Agreement, the
Subordinated Notes, the RxBazaar Security Agreement, the FPP Security Agreement,
the FPP Guaranty and the RxBazaar Stock Pledge, together with all other
instruments, documents and agreements now or hereafter executed by RxBazaar or
FPP evidencing the Subordinated Loan or security therefor (but specifically
excluding any and all guaranties and other security documents for the
Subordinated Loan previously provided by Able and its predecessors in interest,
affiliates or subsidiaries, or by any third party other than RxBazaar or FPP)
are sometimes referred to herein individually and collectively, as the
"Subordinated Loan Documents."
D. Pursuant to that certain Financing and Security Agreement dated
February 23, 2001 (the "CIT Loan Agreement") by and among CIT as Lender and FPP
as Borrower and RxBazaar as Guarantor (FPP and RxBazaar are sometimes singularly
referred to as a "Co-Obligor" and collectively referred to as "Co-Obligors") (i)
CIT has established a senior secured revolving line of credit facility in favor
of FPP in a principal amount not exceeding $12,500,000.00 (the "CIT Loan"), on
the terms and conditions set forth in the CIT Loan Agreement and (ii) as
security for FPP's and RxBazaar's respective obligations for principal, interest
and expenses arising under the CIT Loan Agreement (the "Obligations"), FPP and
RxBazaar have granted to CIT a first priority lien and security interest in all
assets of FPP and RxBazaar and their present and future subsidiaries now owned
or hereafter acquired (including accounts, inventory, furniture, fixtures,
equipment, general intangibles, intellectual property, licenses, leaseholds,
real estate and capital stock of all their subsidiaries) (as more particularly
described in the CIT Loan Agreement, the "Collateral").
E. In addition to the CIT Loan Agreement, the CIT Loan is evidenced by,
among other documents, instruments and agreements, that certain Revolving Line
of Credit Note made and executed by FPP payable to the order of CIT in the
aggregate amount of the CIT Loan (the "CIT Note"). Hereinafter, the CIT Loan
Agreement, the CIT Note, together with all other instruments, documents and
agreements now or hereafter evidencing the CIT Loan or security therefor are
sometimes referred to herein individually and collectively, as the "CIT Loan
Documents".
F. On or about June 13, 2002, Able purchased and acquired the Subordinated
Notes and the Subordinated Loan Documents and as a result thereof assumed the
position of Collateral Agent from Finova.
G. As of October 27, 2003, Steel City and RxBazaar entered into a
Management Services Agreement ("MSA") pursuant to which Steel City may purchase
up to $4,000,000 of spot inventory for subsequent purchase and resale by
RxBazaar in connection with which RxBazaar will grant to Steel City a security
interest in the accounts receivable of RxBazaar.
H. The Subordinated Notes and the obligations of RxBazaar under the Steel
City MSA are collectively referred to herein as the "Subordinated Debt".
I. As a condition to CIT continuing the CIT Loan and approving the grant of
the security interest by RxBazaar to Steel City under the MSA, CIT requires,
among other things, that the Subordinated Lenders enter into this Agreement with
CIT.
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K. The collateral pledged to the Subordinated Lenders pursuant to any of
the Subordinated Loan Documents or the MSA is sometimes referred to herein as
the "Subordinated Collateral".
AGREEMENT
NOW, THEREFORE, for good and valuable consideration which is hereby
acknowledged, the parties hereto agree as follows:
1. Unless and until this Agreement is terminated by written notice from CIT
to the Subordinated Lenders, and notwithstanding the date, manner or order of
perfection of the security interests granted to CIT or the Subordinated Lenders,
and notwithstanding any provisions of applicable law, the Subordinated Lenders
agree with CIT, that the CIT Loan and the CIT Loan Documents, and all rights,
remedies, powers, privileges and discretions of CIT in and to the Collateral,
are and shall be, senior and superior to the Subordinated Debt and the
Subordinated Loan Documents and the MSA and all rights, remedies, powers,
privileges and discretions of the Subordinated Lenders in and to the
Subordinated Collateral, to the extent and in the manner provided for in this
Agreement; provided, however, the principal amount of the Obligations covered by
this Agreement shall not in any event exceed $13,750,000.00 unless the
Subordinated Lenders approve such increase in writing. Except as expressly
provided herein or as approved in writing by CIT, the Obligations shall be paid
in full before any part of the Subordinated Debt is paid to Subordinated
Lenders. Until the Obligations have been finally paid in full in cash, the
Subordinated Lenders shall not have any right of subrogation, reimbursement or
indemnity whatsoever from any assets of either Co-Obligor or any guarantor of or
provider of collateral security of the Obligations.
2. (a) So long as no Default or Event of Default (each as defined in the
CIT Loan Agreement) has occurred and is continuing and CIT has not given Able
notice of any such Default or Event of Default, RxBazaar may make scheduled
payments of interest only to Able on the remaining portion of the principal
balance of the Subordinated Notes (which has not been converted to equity
securities as permitted pursuant to the Subordinated Loan Documents) at the rate
of thirteen and one half percent (13.5%) per annum (computed on the basis of 360
day year). Furthermore, RxBazaar is simultaneously with the execution and
delivery of this Agreement making a payment of $16,000 to Able, which Able shall
apply to payment of interest. Able may retain all such interest payments
received by it prior to its receipt of the required written notice of a Default
or Event of Default from CIT. RxBazaar may not make, and Able may not receive,
any principal payments on account of either of the Subordinated Notes, unless
approved in writing by CIT.
(b) So long as no Default or Event of Default (each as defined in the
CIT Loan Agreement) has occurred and is continuing and CIT has not given Steel
City notice of any Default or Event of Default, RxBazaar may make payments to
Steel City in accordance with the terms of the MSA.
(c) Upon the occurrence of any Default or Event of Default, CIT may,
by written notice to RxBazaar and the Subordinated Lenders, postpone all
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payments with respect to the Subordinated Debt for a period of 180 days (the
"Payment Blockage Period"); provided that CIT may take such action only once in
any twelve month period. During any Payment Blockage Period and during any
Enforcement Period (defined below), the Subordinated Lenders shall have no right
to receive any payments with respect to the Subordinated Debt. As used herein,
"Enforcement Period" shall mean the period beginning with the acceleration of
the Obligations by CIT and ending upon the earlier of the date of all such
Obligations have been paid in full in cash or such acceleration has been
rescinded by CIT.
(d) Upon the occurrence of any Default or Event of Default under the
Subordinated Loan Documents or under the MSA, the Subordinated Lenders shall
notify CIT and each other in writing of such occurrence (the "Subordinated
Lenders' Notice"). The Subordinated Lenders shall not accelerate the time for
payment of the Subordinated Debt for a period of 180 days (the "Standstill
Period") beginning on the earlier of (i) the date of CIT's issuance of a notice
commencing a Payment Blockage Period, or (ii) CIT's receipt of the Subordinated
Lenders' Notice. The Subordinated Lenders shall, during such Standstill Period,
accept any cure of the Default or Event of Default proffered by the Co-Obligors
or CIT and the Subordinated Lenders shall further have no right to accelerate
the payments of the Subordinated Debt or to commence any action to enforce or
collect any of the Subordinated Loan or obligation under the MSA or exercise any
rights or remedies available to them (including, without limitation, joining as
a petitioning creditor in an involuntary proceeding under the Bankruptcy Code or
exercising any rights against the Collateral). In the event that, upon the
expiration of such Standstill Period, the Default or Event of Default has not
been cured, or if any payments originally scheduled for payment during the
Standstill Period but which were blocked by the operation of this Agreement
remain unpaid, the Subordinated Lenders may accelerate the payment of the
Subordinated Debt but shall not commence any action to enforce or collect any of
the Subordinated Debt by the exercise of any rights or remedies available to
them upon acceleration unless and until CIT has terminated this Agreement by
written notice to the Subordinated Lenders or this Agreement has terminated upon
the payment of the Senior Loan and the termination of any outstanding commitment
by CIT to extend credit to the Co-Obligors pursuant to Section 8.
(e) In the event any payment should be made by the Co-Obligors on the
Subordinated Debt in violation of this Agreement, the Subordinated Lender
receiving such payment will hold same in trust for CIT and will forthwith pay
the same over to CIT, in the form received, with appropriate endorsements, for
credit upon the indebtedness of Co-Obligors to CIT.
(f) Notwithstanding anything to the contrary contained herein, in the
event that CIT, at any time, commences liquidation activities as permitted to it
upon the occurrence of a Default or Event of Default under the CIT Loan
Agreement, such CIT actions shall take precedence over any such actions
previously initiated by any Subordinated Lender, and the Subordinated Lenders
will immediately cease and desist from any further action. To the extent that
any prior such action of a Subordinated Lender would impair CIT's liquidation
activities, such Subordinated Lender agrees to take such steps as are reasonably
requested by CIT to eliminate such impairment.
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5. Collateral Agent, as of February 23, 2001, subordinated its security
interest in the shares of stock of FPP granted to it pursuant to the RxBazaar
Stock Pledge (which has been assigned to and is now held by Able) to the
security interest in such shares granted to CIT under the CIT Loan Documents and
delivered to CIT all original stock certificates and stock powers evidencing the
pledged shares.
6. Nothing contained herein shall be deemed to restrict or prohibit the
conversion of any of the Subordinated Loans into equity securities of RxBazaar
or the acceptance of the resulting securities free of any restriction under this
Agreement.
7. Unless and until this Agreement is terminated by written notice from
CIT to the Subordinated Lenders, neither of the Subordinated Lenders shall:
(a) subject to the above provisions of this Agreement, demand, accept
or receive from any Co-Obligor any payment or other value on account of the
Subordinated Debt; or
(b) set off, contra or otherwise apply, all or any part of the
Subordinated Debt towards satisfaction of any obligation of any
Subordinated Lender to any Co-Obligor; or
(c) except as provided above in this Agreement, exercise any of the
Subordinated Lenders' rights, remedies, powers, privileges and discretions
with respect to the Subordinated Debt and/or the Subordinated Collateral or
the collateral security interest granted to Steel City, including, without
limitation, the acceleration of the time for payment of the Subordinated
Debt whether or not a Default or Event of Default exists under the
Subordinated Loan Documents or the MSA or the commencement of any
foreclosure action against any of the Subordinated Collateral or the
collateral security interest granted to Steel City or any other effort to
realize upon any of the Subordinated Collateral or the collateral security
interest granted to Steel City or the commencement of any action against
any of the Co-Obligors to enforce the terms and conditions of the
Subordinated Loan Documents or the MSA. Without limiting the generality of
the foregoing, in the event of bankruptcy, insolvency, receivership or
other similar proceedings (collectively, a "Bankruptcy") commenced by or
against any of the Co-Obligors, the Subordinated Lenders shall not without
CIT's prior written consent exercise any rights which a secured (as opposed
to an unsecured) creditor may have, such as, without limitation, any right
to adequate protection in a Bankruptcy, to seek relief from the automatic
stay in a Bankruptcy, to consent to the sale of the assets of any of the
Co-Obligors or any portion thereof, or to be treated as a class of secured
creditors for purposes of a plan of reorganization in a Bankruptcy. In
regard to such a Bankruptcy, in the event that any consent or approval or
waiver by a secured creditor is necessary in connection with the sale, use,
refinancing, encumbrance, transfer or other disposition of any of the
assets or with respect to any plan of reorganization in a Bankruptcy, CIT
shall have the sole and exclusive right, as against each Subordinated
Lender, to grant such consent, approval or waiver and each Subordinated
Lender shall execute all such documents which CIT may request in connection
therewith (including, without limitation, a release of its lien or security
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interest in order that any such assets may be sold, conveyed or refinanced
free and clear of the Subordinated Lenders' lien); or
(d) demand, accept or receive any additional collateral for the
Subordinated Debt from the Co-Obligors, other than the Subordinated
Collateral or the collateral security interest granted to Steel City; or
(e) modify or amend any of the terms or conditions of the Subordinated
Documents or MSA to increase any charges thereunder, to shorten any
maturity, to create additional Events of Defaults or to otherwise increase
the burden or restrictions thereof against the Co-Obligors.
If any Subordinated Lender, in contravention of the terms of this
Agreement, shall commence, prosecute or participate in any suit, action or
proceeding against any Co-Obligor, then CIT may intervene and interpose such
defense or plea in its name or in the name of such Co-Obligor. If such
Subordinated Lender, in contravention of the terms of this Agreement, shall
attempt to collect any of the Subordinated Loan or enforce any of Subordinated
Loan Documents or the MSA, then CIT may, by virtue of this Agreement, restrain
the enforcement thereof in the name of CIT or in the name of such Co-Obligor. If
the Subordinated Lenders, in contravention of the terms of this Agreement,
obtain any cash or other assets of any Co-Obligor as a result of any
administrative, legal or equitable actions, or otherwise, the Subordinated
Lenders agree forthwith to pay, deliver and assign to CIT, with appropriate
endorsements, any such cash for application to the Obligations and any such
other assets as collateral for the Obligations.
8. Unless and until the within Agreement is terminated by written notice
from CIT to the Subordinated Lenders and it shall be so terminated immediately
upon the payment in full in cash of the Senior Loan and the termination of any
outstanding commitment by CIT to extend credit to the Co-Obligors, the
Co-Obligors shall not
(a) subject to the above provisions of this Agreement, make any
payment or give any value to any Subordinated Creditor on account of the
Subordinated Debt; or
(b) set off, contra or otherwise apply, all or any part of any
obligation of any Subordinated Lender to any of the Co-Obligors towards
satisfaction of the Subordinated Debt; or
(c) execute, give or deliver any collateral for the Subordinated Debt,
other than the Subordinated Collateral or the collateral security interest
granted to Steel City; or
(d) modify or amend any of the terms of the Subordinated Loan
Documents or the MSA to increase any charges thereunder, to shorten any
maturity, to create additional Events of Defaults or to otherwise increase
the burden or restrictions thereof against the Co-Obligors.
9. (a) Upon any payment or distribution of assets or securities of any of
the Co-Obligors of any kind or character, whether in cash, property or
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securities, upon any dissolution or winding up or total or partial liquidation
or reorganization of any of the Co-Obligors whether voluntary or involuntary or
in Bankruptcy, all Obligations shall first be paid in cash, before any of the
Subordinated Lenders shall be entitled to receive any assets or securities
(other than shares of stock of either of the Co-Obligors, as reorganized or
securities of any of the Co-Obligors or any other corporation provided for by a
plan of reorganization in such proceedings, which stock or securities are junior
to or the payment of which is subordinated at least to the extent provided in
this Agreement to, the payment of all Obligations or any securities issued in
respect thereof under any such plan of reorganization); and upon any such
dissolution or winding up or liquidation or reorganization, any payment or
distribution of assets or securities of any of the Co-Obligors, of any kind or
character, whether in cash, property or securities (other than as aforesaid), to
which either of the Subordinated Lenders would be entitled except for the
provisions of this Agreement, shall be made by the respective Co-Obligor or by
any receiver, trustee in bankruptcy, liquidating trustee, lender or other person
making such payment or distribution, directly to CIT to the extent necessary to
pay all Obligations, after giving effect to any concurrent payment or
distribution to or for CIT. No such payment or distribution to CIT shall reduce
or otherwise affect or modify any liability of any of the Co-Obligors to the
Subordinated Lenders on account of the Subordinated Loan Documents.
(b) In case cash, securities or other property otherwise payable or
deliverable to either of the Subordinated Lenders shall have been applied to
payment of the Obligations in accordance with the provisions of Paragraph 9(a),
after payment in full of the Obligations, such Subordinated Lender shall be
subrogated to any rights of CIT to receive any further payments or distributions
applicable to the Obligations until the Subordinated Debt shall have been paid
in full.
(c) The Subordinated Lenders shall timely file a proof of claim with
respect to the Subordinated Debt on the form required in any such Bankruptcy or
other proceeding prior to the last date such claims or proofs of claim may be
filed.
10. The Subordinated Lenders each hereby (i) consent to the CIT Loan and
to the lien, security interests and/or encumbrances evidenced by the CIT Loan
Documents, and (ii) acknowledge and agree that the lien, security interests and
encumbrances evidenced by the CIT Loan Documents do not constitute an Event of
Default under the Subordinated Loan Documents or the MSA. The Subordinated
Lenders agree, with respect to the Obligations and any and all collateral
therefor or guaranties thereof, that the Co-Obligors and CIT may agree to
increase the amount of the Obligations within the limit on the amount of
principal indebtedness set forth in Section 1 above or otherwise modify the
terms of any of the Obligations, and CIT may grant extensions of the time of
payment or performance to and make compromises, including releases of collateral
or guaranties, and settlements with the Co-Obligors and all other persons, in
each case without the consent of the Subordinated Lenders or the Co-Obligors and
without affecting the agreements of the Subordinated Lenders or the Co-Obligors
contained in this Agreement; provided, however, that nothing contained in this
Paragraph 10 shall constitute a waiver of the right of the Co-Obligors
themselves to agree or consent to a settlement or compromise of a claim which
CIT may have against any of the Co-Obligors.
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11. No Default or Event of Default which with the passage of time or the
giving of notice or both would constitute a Default, is presently existing under
the MSA. To Able's knowledge, no Default or Event of Default which with the
passage of time or the giving of notice or both would constitute a Default, is
presently existing under the Subordinated Loan Documents, and the Subordinated
Debt is in good standing in all respects.
12. For purposes of this Agreement, the respective addresses of the
Subordinated Lenders and CIT are:
Able Laboratories, Inc.
0 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopy: (000) 000-0000
Attn: Chief Financial Officer
Steel City Pharmaceuticals LLC
00000 Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Managing Member
Telecopy: (000) 000-0000
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxx
Telecopy: (000) 000-0000
or such address as any party hereto may hereafter duly give to the other parties
hereto.
13. The Subordinated Lenders acknowledge and agree that CIT is relying
upon the contents of this Agreement in making and continuing the CIT Loan, and
in accepting the Collateral as security therefor, and that CIT shall be entitled
in all respects to rely upon the statements and representations made in this
Agreement. The priorities established hereunder apply only as among the
Co-Obligors, CIT and the Subordinated Lenders. The Co-Obligors, CIT and the
Subordinated Lenders each agree that none of them shall challenge, contest or
seek to avoid the claims of the other or liens of the other in their respective
collateral. Each of the Subordinated Lenders waives any right to require the
marshalling of assets of any Co-Obligor, and all suretyship defenses generally.
Neither of the Subordinated Lenders will sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of the Subordinated Loan to any
person other than a person who agrees in writing, satisfactory in form and
substance to CIT in its reasonable discretion, to become a party hereto and to
succeed to the rights and to bound by all of the obligations of the Subordinated
Lenders hereunder. In the case of any such disposition by any Subordinated
Lender, such Subordinated Lender will notify CIT at least ten (10) days prior to
the date of any such intended disposition.
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14. The Subordinated Lenders and the Co-Obligors shall each execute all
such further instruments and do such other and further acts as CIT may
reasonably request in furtherance of CIT's rights hereunder and/or the purposes
of this Agreement. The respective obligations of the Subordinated Lenders and
the Co-Obligors hereunder being unique, are specifically enforceable by CIT.
15. The subordination effected hereby shall not be affected by any
fraudulent, illegal, or improper act by any of the Co-Obligors, the Subordinated
Lenders, or any person liable or obligated to CIT for or on the Obligations, nor
by any release, discharge or invalidation, by operation of law or otherwise, of
the Obligations or by the legal incapacity of any of the Co-Obligors, the
Subordinated Lenders, or any other person liable or obligated to CIT for or on
the Obligations. All interest and reasonable costs of collection with respect to
the Obligations for which the Co-Obligors have agreed to be liable shall
continue to accrue and shall continue to be Obligations for purposes of the
subordination effected hereby notwithstanding any stay to the enforcement
thereof against the Co-Obligors or disallowance thereof against any of the
Co-Obligors (other than as a result of a judicial determination that such costs
of collection were not reasonable).
16. (a) As between the Subordinated Lenders and CIT, the prevailing party
will pay all reasonable attorneys' fees and out of pocket expenses incurred by
the prevailing party attorneys and all reasonable costs incurred by the
prevailing party, including, without limitation, reasonable costs associated
with travel on behalf of the prevailing party, which costs and expenses are
directly or indirectly related to any dispute between the Subordinated Lenders
and CIT arising hereunder or the prevailing party's efforts to preserve,
protect, collect or enforce any of the obligations of the other party and/or any
of the prevailing party's rights and remedies hereunder; provided, however, that
neither party shall be obligated to pay such fees and expenses if and to the
extent that a court of competent jurisdiction finally determines (all appeals
having been exhausted or waived) that such party had not acted in breach of the
terms of this Agreement.
(b) The Co-Obligors will pay on demand all reasonable attorneys' fees
and out of pocket expenses incurred by CIT's attorneys and all costs incurred by
CIT, including, without limitation, costs associated with travel on behalf of
CIT, which costs and expenses are directly or indirectly related to CIT's
efforts to preserve, protect, collect or enforce any of the obligations of the
Co-Obligors or the Subordinated Lenders and/or any of the Rights and Remedies
(as defined in Section 19 below) hereunder (whether or not suit is instituted by
or against CIT) provided, however, that the Co-Obligors shall not be obligated
to pay such fees and expenses of CIT if and to the extent that a court of
competent jurisdiction finally determines (all appeals having been exhausted or
waived) that the Co-Obligors and/or the Subordinated Lenders had not acted in
breach of the terms of this Agreement.
17. The within Agreement incorporates all discussions and negotiations
among and between the Co-Obligors, the Subordinated Lenders and CIT concerning
the subordination effected hereby. No such discussions or negotiations shall
limit, modify or otherwise affect the provisions hereof. No provisions hereby
may be altered, amended, waived, canceled or modified, except by written
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instrument executed and acknowledged by a duly authorized officer of CIT and the
Subordinated Lenders.
18. Until this Agreement is terminated as provided herein, CIT may
continue to rely upon the within Agreement and the subordination effected hereby
with respect to all Obligations which may arise hereafter. The repayment and
satisfaction of all of such Obligations shall not terminate the within Agreement
and the subordination effected hereby as to Obligations which arise thereafter.
19. The rights, remedies, powers, privileges and discretions of CIT
hereunder (hereinafter, the "Rights and Remedies") shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No delay or
omission by CIT in exercising or enforcement of the Rights and Remedies shall
operate as or constitute a waiver thereof. No waiver by CIT of any of the Rights
and Remedies or of any default or remedy under any other agreement with the
Co-Obligors or the Subordinated Lenders shall operate as a waiver of any other
default hereunder or thereunder. No exercise of the Rights and Remedies and no
other agreement or transaction, of whatever nature, entered into among CIT and
the Subordinated Lenders and/or among CIT and the Co-Obligors at any time shall
preclude any other or further exercise of the Rights and Remedies. No waiver by
CIT of any of the Rights and Remedies on any one occasion shall be deemed a
continuing waiver. All of the Rights and Remedies and all of the rights,
remedies, powers, privileges and discretions under any other agreement with the
Subordinated Lenders and/or the Co-Obligors shall be cumulative and not
alternative or exclusive and may be exercised by CIT at such time or times and
in such order of preference as CIT in its sole discretion may determine.
20. It is intended that this Agreement take effect as a sealed instrument
and be governed by the laws of the State of New York. The Subordinated Lenders
and the Co-Obligors each submit to the jurisdiction of the courts of the State
of New York for all purposes in connection with the within Agreement and their
respective relationships with CIT.
21. The Co-Obligors and the Subordinated Lenders will each make the
following waiver knowingly, voluntarily and intentionally and understands that
CIT, in the establishment and maintenance of their relationship with the
Co-Obligors, is relying thereon. THE CO-OBLIGORS, THE SUBORDINATED LENDERS AND
CIT, RESPECTIVELY, TO THE EXTENT ENTITLED THERETO, WAIVE ANY PRESENT OR FUTURE
RIGHT TO A TRIAL BY JURY IN ANY CASE OR CONTROVERSY IN WHICH CIT IS OR BECOMES A
PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST CIT OR IN
WHICH CIT IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT
OF, OR IS IN RESPECT TO, ANY RELATIONSHIP AMONGST OR BETWEEN THE CO-OBLIGORS,
THE SUBORDINATED LENDERS, AND CIT.
22. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, successors-in-title and assigns. The
use of defined terms herein is for convenience of reference only, and shall not
amplify or limit the provisions hereof. When used herein, the singular shall
include the plural, and vice versa, and the use of any gender shall include all
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other genders. If any provision of this Agreement or the application thereof to
any person or circumstance shall be held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provision(s) to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
23. Pursuant to the RxBazaar Stock Pledge and a security instrument in
favor of CIT, RxBazaar has granted to both CIT and Able (by assignment from
Collateral Agent) a security interest in the stock of FPP. CIT has accepted
delivery from RxBazaar of the certificate evidencing this stock (the
"Certificate") and will continue to retain possession thereof to perfect its
senior security interest therein. CIT agrees that it also will hold the
Certificate for the benefit of Able as its Agent for the purpose of perfecting
the security interest therein and CIT further agrees that, if its security
interest in the Certificate is released or terminated, it will deliver the
Certificate to Able rather than release the Certificate to RxBazaar unless it
has received written instructions to the contrary from Able.
24. As between Able and Steel City, it is agreed that, notwithstanding the
date of granting of a security interest or the date of perfection of any
security interest granted or any provision of the New York Uniform Commercial
Code that could be construed to the contrary, (a) Able hereby expressly
subordinates in favor of Steel City all right, title and interest that Able
might at present have or which it might hereafter acquire in any accounts
receivable of RxBazaar, subject to the conditions imposed herein, and (b) Steel
City hereby expressly subordinates in favor of Able all right, title and
interest that Steel City might at present have or which it might hereafter
acquire in any and all Collateral other than accounts receivable of RxBazaar.
25. Without limiting any of CIT's rights hereunder:
(a) CIT may assign this Agreement, and CIT's rights and obligations
hereunder, to any lender (a "Future Senior Lender") to which CIT assigns its
rights and obligations under the CIT Loan Agreement, and upon such an
assignment, such Future Senior Lender will be deemed, for all purposes
hereunder, to have succeeded to the position and priorities of CIT.
(b) If CIT terminates this Agreement by written notice to the Subordinated
Lenders, or if this Agreement is terminated upon the payment of the Senior Loan
and the termination of any outstanding commitment by CIT to extend credit to the
Co-Obligors pursuant to Section 8 above, then upon any such termination the
provisions of this Agreement, including Section 24 above, shall survive, and
shall continue in full force and effect as between Able and Steel City, any Able
shall be deemed to be, and shall have all of the rights of, a "Future Senior
Lender," under this Agreement, subject to Section 24 above.
26. Upon execution and delivery of this Agreement by the parties hereto (a)
this Agreement shall amend, restate and supersede that certain Intercreditor
Agreement, dated as of February 23, 2001, by and among Finova, Argosy, and CIT
(the "2001 Intercreditor Agreement"), (b) the 2001 Intercreditor Agreement shall
terminate and have no further force or effect, and (c) that certain Liquidation
Assistance Agreement dated as of February 23, 2001, by and Xxxxxxxxx X. Xxxxxxx
and CIT shall terminate and have no further force or effect.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by or on
behalf of each Subordinated Lender and CIT as of the date first above written.
SUBORDINATED LENDERS
ABLE LABORATORIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Title: Chief Financial Officer
--------------------------------
STEEL CITY PHARMACEUTICALS LLC
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Title: Managing Member
--------------------------------
CIT
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxx Xxxxx
-----------------------------------
Title: Vice President
--------------------------------
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AGREED TO AND ACKNOWLEDGED BY
As an inducement to cause CIT to continue to extend credit to the
Co-Obligors, the undersigned hereby agree to observe the provisions of the
foregoing Intercreditor Agreement that impose obligations upon them. The
undersigned are not parties to or third-party beneficiaries of the foregoing
Intercreditor Agreement, but any amendments thereto shall be effective against
the undersigned only upon their written acknowledgement thereto.
FPP DISTRIBUTION, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Title: President and COO
--------------------------------
RXBAZAAR, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Title: President and COO
--------------------------------
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