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EXHIBIT 10.3
INTERCREDITOR AND SUBORDINATION
AGREEMENT
THIS
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of May 30,
2008 (this “
Agreement ”)
by and among NPIL Pharma Inc., a Delaware corporation (together
with any successor or assigns thereof or any subsequent holder of
the Subordinated Obligations referred to below ,
the “
Subordinated Lender ”),
RXELITE,
INC., a Delaware corporation (the “
Company ”),
each subsidiary of the Company listed on the signature pages hereto
(each a "
Guarantor "
and collectively, the "
Guarantors ";
together with the Company and their respective successors and
assigns (including any trustee or debtor-in-possession for or of
any such Person), being collectively, the “
Obligors ”
and each an “
Obligor ”),
and
CASTLERIGG MASTER INVESTMENTS LTD., a British Virgin Islands
company, in its capacity as collateral agent (in such capacity,
together with any successors or assigns, the “
Senior Agent ”)
for the Senior Creditors under the Senior Transaction Documents (as
such terms are defined below).
The
parties hereto hereby agree as follows:
1.
Definitions .
Unless otherwise defined herein, terms defined in the Senior Notes
or the Securities Purchase Agreement (each as defined below) and
used herein shall have the meanings given to them in the Senior
Notes and the Securities Purchase Agreement. The words
“hereof,” “herein” and
“hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section references
are to this Agreement unless otherwise specified. The meanings
given to terms defined herein shall be equally applicable to both
the singular and plural forms of such terms. In addition, the
following terms shall have the following meanings:
“
Bankruptcy Code ”:
United States Bankruptcy Code (11 U.S.C. § 101
et seq .),
as amended from time to time.
“
Collateral ”:
collectively, any and all property from time to time subject to
security interests or liens to secure payment or performance of the
Senior Obligations or the Subordinated Obligations.
“
Company ”:
has the meaning set forth in the preamble to this Agreement.
“
Insolvency Event ”:
(a) any Obligor or any of its Subsidiaries commencing any case,
proceeding or other action (i) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors,
seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (ii) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all
or any substantial part of its assets, or any Obligor or any of its
Subsidiaries making a general assignment for the benefit of its
creditors; or (b) there being commenced against any Obligor or any
of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (a) above; or (c) there being
commenced against any Obligor or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or
any substantial part of its assets; or (d) any Obligor or any of
its Subsidiaries taking any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (a), (b) or (c) above; or (e) any Obligor or
any of its Subsidiaries is generally not paying, or being unable to
pay, or admitting in writing its inability to pay, its debts as
they become due.
“
Insolvency Proceeding ”
: any case, proceeding or other action of the type described in the
definition of Insolvency Event.
“
Obligor ”
and “
Obligors ”:
have the respective meanings set forth in the preamble to this
Agreement.
“
Postpetition Interest ”:
any interest or entitlement to fees or expenses that accrues after
the commencement of any Insolvency Proceeding, whether or not such
interest or fees are allowed or allowable as a claim in such
proceeding.
“
Securities Purchase Agreement ”:
that certain Securities Purchase Agreement, dated as of December
31, 2007 by and among the Company and the Buyers, as the same may
be amended, restated, replaced, modified or supplemented from time
to time, including, without limitation, amendments, modifications,
supplements, restatements and/or replacements thereof giving effect
to increases, renewals, extensions, refundings, deferrals,
restructurings, replacements or refinancings of, or additions to,
the arrangements provided in any such Securities Purchase Agreement
(whether provided by the original Senior Creditor, successors to
the Senior Creditors or any other buyers). Reference herein to the
Securities Purchase Agreement shall be deemed to mean and include
any and all documentation executed and/or delivered in connection
with any refinancings or reconstitutions of the Securities Purchase
Agreement.
“
Senior Agent ”
has the meaning set forth in the preamble to this
Agreement.
“
Senior Creditor ”
any "Buyer" (as such term is defined in the Securities Purchase
Agreement) or any other holder of the Senior Notes, the Senior
Agent, and/or any other provider of any other financial
accommodations under the Senior Transaction Documents, in each
case, together with any successors or assigns thereof, and
“
Senior Creditors ”
shall mean all such institutions collectively; provided, that
references herein to Senior Creditors shall mean and include any
replacement agents, holders of the Senior Notes or other providers
of other financial accommodations in connection with any
refinancing or reconstitution of the Senior
Obligations.
“
Senior Default ”:
any default or event of default which would result in the Senior
Obligations becoming, or permit the holders of any of the Senior
Obligations to declare the Senior Obligations (or any of them) to
be, due and payable prior to their stated maturity date or require
the Obligors or any Subsidiary thereof to repurchase such Senior
Obligations prior to their stated maturity date, or any event or
condition which with the giving of notice or passage of time would
become any such default or event of default.
“
Senior Notes ”:
means the "Notes" as such term is defined in the Securities
Purchase Agreement and any other note from time to time made by the
Company in favor of the Senior Creditors evidencing the Senior
Obligations, in each case, as the same may be amended, restated or
otherwise modified in accordance with the terms hereof (together
with any extensions, reissuances, increases or renewals thereto or
thereof). Reference herein to Senior Notes shall be deemed to mean
and include any promissory notes or similar documents executed
and/or delivered in connection with any refinancings or
reconstitutions of the Senior Transaction Documents.
“
Senior Obligations ”:
all obligations (including, without limitation, the due performance
and observance by each Obligor of all of its other obligations from
time to time existing in respect of any of the Transaction
Documents) and liabilities of whatever kind or nature owing by any
of the Obligors and/or their Subsidiaries to the Senior Agent or
any of the other Senior Creditors under or pursuant to
this
Agreement and any of the Senior Transaction Documents (including,
without limitation, in respect of interest accruing at any default
rate and any Postpetition Interest), whether
direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, whether arising under, out
of, or in connection with, the Securities Purchase Agreement, the
Senior Notes, this Agreement, the other Senior Transaction
Documents or any other document made, delivered or given by any
Obligor, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and
disbursements of counsel to the Senior Agent and Senior Creditors
that are required to be paid by the Obligors pursuant to the terms
of the Securities Purchase Agreement, this Agreement or any other
Senior Transaction Document, and all professionals fees in
connection with the administration of any Insolvency Proceeding
involving any Obligor, whether or not allowed or allowable as a
claim in any such proceeding).
“
Senior Security Documents ”:
all documents and instruments (including, any guarantees made in
favor of the Senior Agent), now existing or hereafter arising,
which create or purport to create a security interest in property
to secure payment or performance of the Senior Obligations, in each
case, as amended, restated or otherwise modified from time to time,
together with any similar agreements executed in connection with
any refinancing of the Senior Obligations. Reference herein to
Senior Security Documents shall be deemed to mean and include any
and all such documentation executed and/or delivered in connection
with any refinancings or reconstitutions of the Senior Transaction
Documents.
“
Senior Termination Date ”:
the date on which all Senior Transaction Documents and all
obligations of the Senior Agent and the other Senior Creditors to
make any financial accommodations under any and all Senior
Transaction Documents are irrevocably terminated and all of the
Senior Obligations are paid in full in cash.
“
Senior Transaction Documents ”:
the Securities Purchase Agreement, the Senior Notes, the Senior
Security Documents and all other instruments, documents and
agreements that from time to time evidence the Senior Obligations
and/or are executed and/or delivered by the Obligors or any of
their Subsidiaries in connection therewith, in each case, as the
same may be amended, modified or supplemented from time to time,
including, without limitation, amendments, modifications,
supplements and restatements thereof giving effect to increases,
renewals, extensions, refundings, deferrals, restructurings,
replacements or refinancings of, or additions to, the arrangements
provided in such Senior Transaction Documents (whether provided by
the original Senior Creditors, successors to the Senior Creditors
or other lenders). Reference herein to Senior Transaction Documents
shall be deemed to mean and include any and all documentation
executed and/or delivered in connection with any refinancings or
reconstitutions of the Senior Transaction Documents.
“
Subordinated Credit Agreement ”:
that certain Loan and Security Agreement dated as of May 30, 2008
by and between the Company and the Subordinated Lender, as the same
may be amended, restated, replaced, modified or supplemented from
time to time in accordance with the terms hereof. Reference herein
to the Subordinated Credit Agreement shall be deemed to mean and
include any and all documentation executed and/or delivered in
connection with any refinancings or reconstitutions of the
Subordinated Credit Agreement.
“
Subordinated Guaranty ”:
any guaranty, keep well agreement, hypothecation or pledge
agreement or other agreement to guaranty, pledge assets or
otherwise ensure payment of the Subordinated Obligations issued or
made by and/or binding upon any of the Obligors or any of their
properties and “
Subordinated Guaranties ”
means all such agreements, collectively. References herein to the
Subordinated Guaranties shall be deemed to mean and include any and
all other guaranties or similar documentation executed and/or
delivered in connection with any refinancings or reconstitutions of
the Subordinated Loan Documents.
“
Subordinated Lender ”:
has the meaning set forth in the preamble to this
Agreement.
“
Subordinated Loan ”:
the loans made by the Subordinated Lender to the Company from time
to time pursuant to the Subordinated Loan Documents.
“
Subordinated Loan Documents ”:
collectively,
the
Subordinated Credit Agreement, the Subordinated Note, the
Subordinated Security Documents, the Subordinated Guaranties and
any other documents or instruments executed or binding upon the
Obligors or their properties that from time to time evidence the
Subordinated Obligations or secure or support payment or
performance thereof, in each case, as amended, restated or
otherwise modified in accordance with the terms hereof. References
herein to the Subordinated Loan Documents shall be deemed to mean
and include any and all documentation executed and/or delivered in
connection with any refinancings or reconstitutions of the
Subordinated Loan Documents.
“
Subordinated Note ”:
that certain Secured Promissory Note dated May 30, 2008 executed by
the Company in favor of the Subordinated Lender in the original
principal amount of $3,000,000, and any other promissory note from
time to time made by any Obligor in favor of the Subordinated
Lender evidencing the Subordinated Obligations, in each case, as
the same may be amended, restated or otherwise modified in
accordance with the terms hereof. Reference herein to Subordinated
Note shall be deemed to mean and include any and all similar
documentation executed and/or delivered in connection with any
refinancings or reconstitutions of the Subordinated
Note.
“
Subordinated Obligations ”:
all obligations and liabilities of whatever kind or nature owing by
any of the Obligors and/or their Subsidiaries to the Subordinated
Lender under or pursuant to any of the Subordinated Loan Documents
(including, without limitation, interest accruing at the then
applicable rate provided in the Subordinated Credit Agreement after
the maturity of the Subordinated Loans and interest accruing at the
then applicable rate provided in the Subordinated Note after the
filing of any petition in bankruptcy, or the commencement of any
Insolvency Proceeding relating to any Obligor or any Subsidiary
thereof, whether or not a claim for Postpetition Interest is
allowed in such proceeding), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Subordinated Note, this Agreement, or any other Subordinated Loan
Document, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and
disbursements of counsel to the Subordinated Lender that are
required to be paid by any Obligor pursuant to the terms of the
Subordinated Note, this Agreement or any other Subordinated Loan
Document).
“
Subordinated Security Documents ”:
collectively, (a) the Subordinated Credit Agreement and (b) any
other documents executed by any Obligor or any Subsidiary thereof
with the prior written consent of the Senior Agent that from time
to time secure payment or performance of the Subordinated
Obligations, in each case, as the same may be amended, restated or
otherwise modified in accordance with the terms hereof. References
herein to the Subordinated Security Documents shall be deemed to
mean and include any and all such similar documentation executed
and/or delivered in connection with any refinancings or
reconstitutions of the Subordinated Loan Documents.
2.
Subordination .
(a)
Except
as otherwise expressly permitted pursuant to
Section 3(a) hereof,
each Obligor and the Subordinated Lender hereby agrees, for itself
and each future holder of the Subordinated Obligations, that (i)
other than with respect to the accrual and capitalization of
interest on the Subordinated Obligations, and (y) the funding by
the Subordinated Lender of any Loans permitted pursuant to the
terms of the Subordinated Credit Agreements as in effect in the
date hereof, no Obligor shall request or accept and the
Subordinated Lender shall not make or extend, any additional loans,
advances, letters of credit, bankers acceptance or any other
extension of credit to or for the benefit of any Obligor at any
time from and after the date of this Agreement, and (ii) all
Subordinated Obligations are expressly “subordinate and
junior in right of payment” (as that phrase is defined
in
Section 2(b) hereof)
to all Senior Obligations. This Agreement shall be deemed to
constitute a “subordination agreement” under and within
the meaning of Section 510 of the Bankruptcy Code.
(b)
“
Subordinate and Junior in Right of Payment ”
means that (i) no part of the Subordinated Obligations shall have
any claim to the assets of any Obligor or any of its Subsidiaries
(including, without limitation, assets purchased with the proceeds
of the Subordinated Loan) on a parity with or prior to the claim of
the Senior Obligations regardless of how any such claim arises,
whether by grant, statute, operation of law, subrogation or
otherwise, and (ii) unless and until the Senior Termination Date
shall have occurred, without the express prior written consent of
the Senior Agent: (A) no Subordinated Lender will take, demand or
receive from any Obligor or any Subsidiary of any Obligor, and no
Obligor shall or shall permit any of its Subsidiaries to, make,
give or permit, directly or indirectly, by set-off, redemption,
purchase or in any other manner, any payment of (of whatever kind
or nature, whether in cash, property, securities or otherwise) or
give any security for (except such security as granted under the
Subordinated Credit Agreement as of the date hereof) the whole or
any part of the Subordinated Obligations, including, without
limitation, any letter of credit or similar credit support facility
to support payment of the Subordinated Obligations; (B) no
Subordinated Lender will accelerate for any reason the scheduled
maturities of any amount owing under the Subordinated Obligations;
it being agreed however that the Subordinated Lender may accelerate
the Subordinate Obligations if and to the extent the Senior
Creditors shall have accelerated the Senior Obligations; or (C)
exercise any rights with respect to the Collateral securing the
Subordinated Obligations or any other assets or properties of any
Obligor, commence or prosecute any enforcement of any rights or
remedies under the Subordinated Loan Documents, including the
rights of set-off or recoupment, or exercise any rights or remedies
of a secured creditor under the Uniform Commercial Code of any
applicable jurisdiction or the Bankruptcy Code.
(c)
The
expressions “prior payment in full,”
“payment in full,” “paid in full” and
any other similar terms or phrases when used in this Agreement
with respect to the Senior Obligations shall mean the
termination of all commitments of the Senior Creditors to
extend credit to the Obligors thereunder and the payment in
full, in immediately available funds, of all of the Senior
Obligations.
3.
Permitted Payments .
(a)
The
Subordinated Lender shall not accept from Obligors any
payments of principal, interest, fees on the Subordinated
Obligations or any other amount owed by any Obligor to the
Subordinated Lender, but may accrue and capitalize interest,
fees and expenses on the Subordinated Obligations in
accordance with the provisions of the Subordinated Credit
Agreement as in effect on the date hereof, provided that upon
the payment in full of all the Senior Obligations, the
Obligors may make regularly scheduled interest payments in
cash to the Subordinated Lender. Other than as expressly set
forth immediately above in this
Section 3(a) ,
no payments, proceeds or distributions shall be made by any Obligor
or any Subsidiary thereof or accepted by the Subordinated Lender on
the Subordinated Obligations until after the date that is 181 days
after the Senior Termination Date, and any payment, proceeds or
distributions made by an Obligor or received (including by set-off,
recoupment, as the proceeds of any Collateral or any other manner)
by the Subordinated Lender other than as expressly permitted above
shall be deemed the property of the Senior Agent and the other
Senior Creditors, shall be segregated by the Subordinated Lender
and be deemed to have been received by and held by the Subordinated
Lender in trust for the Senior Agent and the other Senior
Creditors, and shall be turned over by the Subordinated Lender as
soon as practical to the Senior Agent in the identical form
received (with any necessary endorsements) for distribution to the
Senior Creditors in accordance with the Senior Transaction
Documents.
(b)
No
Senior Default shall be deemed to have been waived for
purposes of this
Section 3 unless
and until the Obligors and the Subordinated Lender shall have
received a written notice of the waiver of such Senior Default from
the Senior Agent.
(c)
If
the Subordinated Lender receives payment pursuant to
clause (a) of
this
Section 3 ,
such payment shall be deemed to constitute a representation by the
Obligors to the Senior Agent and the other Senior Creditors that
each of the conditions set forth in
subclause 3(a) are
satisfied and that such payment is otherwise permitted by
such
clause (a) and
the Senior Transaction Documents.
(d)
The
provisions of
Section 3(a) shall
not be applicable to the extent that the provisions of
Section 4 are
applicable.
4.
Additional Provisions Concerning Subordination
.
The Subordinated Lender and the Obligors further hereby agree that
upon the occurrence of any Insolvency Event:
(i)
all
Senior Obligations shall be paid in full before any payment or
distribution of whatever kind or nature is made by or with the
assets of any of the Obligors with respect to the Subordinated
Obligations; and
(ii)
any
payment or distribution of assets of any Obligor, whether in
cash, property or securities, to which the Subordinated Lender
would be entitled except for the provisions hereof, shall be
paid or delivered by the Obligors, or any receiver, trustee in
bankruptcy, liquidating trustee, disbursing agent or other
Person making such payment or distribution, directly to the
Senior Agent, for its benefit and the benefit of the Senior
Creditors ,
to the extent necessary to pay in full all Senior Obligations,
before any payment or distribution of any kind or nature shall
be made to the Subordinated Lender.
5.
Rights in Collateral .
(a)
Notwithstanding
anything to the contrary contained in the Securities Purchase
Agreement, any Senior Security Document, any other Senior
Transaction Document or the Subordinated Credit Agreement, any
Subordinated Security Document or other Subordinated Loan
Document and irrespective of:
(i)
the
time, order or method of attachment or perfection of the
security interests created by any Senior Security Document or
any Subordinated Security Document,
(ii)
the
time or order of filing or recording of financing statements
or other documents filed or recorded to perfect security
interests in any Collateral,
(iii)
anything
contained in any filing or agreement to which the Senior
Agent, any Senior Creditor or
the Subordinated Lender now or hereafter may be a
party;
(iv)
the
avoidance, subordination, invalidity or lapse of any Liens
granted by any of the Obligors or any of their Subsidiaries in
favor of the Senior Agent or any of the Senior Creditors
pursuant to the Senior Transaction Documents; or
(v)
the
rules for determining perfection or priority under the Uniform
Commercial Code or any other law governing the relative
priorities of secured creditors,
any
security interest in any Collateral pursuant to any Senior
Security Documents has and shall have priority over any
security interest in such Collateral pursuant to any
Subordinated Security Document. Upon the request of the Senior
Agent and at the Company’s expense, the Subordinated
Lender agrees to file amendments to each of its UCC financing
statements and any other publicly filed instruments to
expressly acknowledge that the liens evidenced thereby are
junior and subordinate to those securing the Senior
Obligations, such amendments to be in form and substance
reasonably satisfactory to the Senior Agent.
(b)
The
Subordinated Lender acknowledges and agrees that the Senior
Obligations may be increased or reduced and that the terms of
the Senior Transaction Documents may be modified, extended or
amended from time to time, and that the aggregate amount of
the Senior Obligations may be replaced or refinanced, in each
event, without the consent of or notice to the Subordinated
Lender and without affecting the provisions
hereof.
(c)
So
long as the Senior Termination Date shall not have occurred,
whether or not any Insolvency Event has occurred,
(i)
the
Subordinated Lender will not (A) exercise or seek to exercise
any rights or exercise any remedies with respect to
any
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