Exhibit 10.3

 

FORM OF SUBORDINATION AGREEMENT

 

This Subordination Agreement (this “Agreement”) is entered into as of the 13th
day of February 2006, by and among the Missouri State Bank and its affiliates
(collectively, the “Subordinated Lenders” and each, a “Subordinated Lender”),
and Laurus Master Fund, Ltd. (the “Senior Lender”). Unless otherwise defined
herein, capitalized terms used herein shall have the meaning provided such terms
in the Securities Purchase Agreement and the Security Agreement (as applicable)
referred to below.

 

BACKGROUND

 

WHEREAS, it is a condition to the Senior Lender’s maintenance of its investment
in Accentia Biopharmaceuticals, a Florida corporation (the “Parent”) pursuant
to, and in accordance with, (i) that certain Securities Purchase Agreement dated
as of the date hereof by and between the Parent and Laurus (as amended, modified
or supplemented from time to time, the “Securities Purchase Agreement”) and
(ii) the Related Agreements referred to in the Securities Purchase Agreement,
(iii) that certain Security Agreement dated as of the date hereof by and between
the Parent, The Analytica Group, Inc., a Florida corporation (“Analytica” and,
together with the Parent, collectively, the “Company”) and Laurus (as amended,
modified or supplemented from time to time, the “Security Agreement”) and
(iv) the Ancillary Agreements referred to in the Security Agreement.

 

WHEREAS, the Subordinated Lenders have made a $3,000,000 revloving credit
facility available to Parent, which facility is (x) guaranteed by TEAMM
Pharmaceuticals, Inc. (“TEAMM”) and has a maturity date of January 15, 2007 and
(y) intended to fund the acquisition and licensing of pharmaceutical products
and medical devices.

 

NOW, THEREFORE, each Subordinated Lender and the Senior Lender agree as follows:

 

TERMS

 

1. All obligations of each the Company and/or any of its Subsidiaries to the
Senior Lender, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent or now or hereafter existing, or due or to
become due are referred to as “Senior Liabilities”. Any and all loans made by
the Subordinated Lenders to the Company and/or any of its Subsidiaries, together
with all other obligations of the Company and/or any of its Subsidiaries to any
Subordinated Lender (in each case, including any interest, fees or penalties
related thereto), howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent or now or hereafter existing, or due or to
become due are referred to as “Junior Liabilities”. It is expressly understood
and agreed that the term “Senior Liabilities”, as used in this Agreement, shall
include, without limitation, any and all interest, fees and penalties accruing
on any of the Senior Liabilities after the commencement of any proceedings
referred to in paragraph 4 of this Agreement, notwithstanding any provision or
rule of law which might restrict the rights of the Senior Lender, as against the
Company, its Subsidiaries or anyone else, to collect such interest, fees or
penalties, as the case may be.

 

Subordination Agreement

    

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2. Except as expressly otherwise provided in this Agreement or as the Senior
Lender may otherwise expressly consent in writing, the payment of the Junior
Liabilities shall be postponed and subordinated in right of payment and priority
to the payment in full of all Senior Liabilities. Furthermore, whether directly
or indirectly, no payments or other distributions whatsoever in respect of any
Junior Liabilities shall be made (whether at stated maturity, by acceleration or
otherwise), nor shall any property or assets of the Company or any of its
Subsidiaries be applied to the purchase or other acquisition or retirement of
any Junior Liability. Notwithstanding anything to the contrary contained in this
paragraph 2 or elsewhere in this Agreement, the Company and its Subsidiaries may
make principal and interest payments, as the case may be, to the Subordinated
Lenders with respect to the Junior Liabilities, so long as (i) no Event of
Default (as defined in the Note) has occurred and is continuing at the time of
any such payment, (ii) no such payment shall be made with Common Stock of the
Parent and (iii) the rate of interest with respect to the Junior Liabilities is
not increased from that in effect on the date hereof.

 

3. Each Subordinated Lender hereby subordinates all claims and security
interests (if any) it may have against, or with respect to, any of the assets of
the Company and/or any of its Subsidiaries, to the security interests granted by
the Company and/or any of its Subsidiaries to the Senior Lender in respect of
the Senior Liabilities.

 

4. In the event of any dissolution, winding up, liquidation, readjustment,
reorganization or other similar proceedings relating to the Company and/or any
of its Subsidiaries or to its creditors, as such, or to its property (whether
voluntary or involuntary, partial or complete, and whether in bankruptcy,
insolvency or receivership, or upon an assignment for the benefit of creditors,
or any other marshalling of the assets and liabilities of the Company and/or any
of its Subsidiaries, or any sale of all or substantially all of the assets of
the Company and/or any of its Subsidiaries, or otherwise), the Senior
Liabilities shall first be paid in full before any Subordinated Lender shall be
entitled to receive and to retain any payment or distribution in respect of any
Junior Liability.

 

5. Each Subordinated Lender will mark his books and records so as to clearly
indicate that their respective Junior Liabilities are subordinated in accordance
with the terms of this Agreement. Each Subordinated Lender will execute such
further documents or instruments and take such further action as the Senior
Lender may reasonably request from time to time request to carry out the intent
of this Agreement.

 

6. Each Subordinated Lender hereby waives all diligence in collection or
protection of or realization upon the Senior Liabilities or any security for the
Senior Liabilities.

 

7. No Subordinated Lender will without the prior written consent of the Senior
Lender: (a) attempt to enforce or collect any Junior Liability or any rights in
respect of any Junior Liability; or (b) commence, or join with any other
creditor in commencing, any bankruptcy, reorganization or insolvency proceedings
with respect to the Company and/or any of its Subsidiaries.

 

Subordination Agreement

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8. The Senior Lender may, from time to time, at its sole discretion and without
notice to any Subordinated Lender, take any or all of the following actions:
(a) retain or obtain a security interest in any property to secure any of the
Senior Liabilities; (b) retain or obtain the primary or secondary obligation of
any other obligor or obligors with respect to any of the Senior Liabilities;
(c) extend or renew for one or more periods (whether or not longer than the
original period), alter, increase or exchange any of the Senior Liabilities, or
release or compromise any obligation of any nature of any obligor with respect
to any of the Senior Liabilities; and (d) release their security interest in, or
surrender, release or permit any substitution or exchange for, all or any part
of any property securing any of the Senior Liabilities, or extend or renew for
one or more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such property.

 

9. The Senior Lender may, from time to time, whether before or after any
discontinuance of this Agreement, without notice to any Subordinated Lender,
assign or transfer any or all of the Senior Liabilities or any interest in the
Senior Liabilities; and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer of the Senior Liabilities, such Senior
Liabilities shall be and remain Senior Liabilities for the purposes of this
Agreement, and every immediate and successive assignee or transferee of any of
the Senior Liabilities or of any interest in the Senior Liabilities shall, to
the extent of the interest of such assignee or transferee in the Senior
Liabilities, be entitled to the benefits of this Agreement to the same extent as
if such assignee or transferee were the Senior Lender, as applicable; provided,
however, that, unless the Senior Lender shall otherwise consent in writing, the
Senior Lender shall have an unimpaired right, prior and superior to that of any
such assignee or transferee, to enforce this Agreement, for the benefit of the
Senior Lender, as to those of the Senior Liabilities which the Senior Lender has
not assigned or transferred.

 

10. The Senior Lender shall not be prejudiced in its rights under this Agreement
by any act or failure to act of any Subordinated Lender, or any noncompliance of
any Subordinated Lender with any agreement or obligation, regardless of any
knowledge thereof which the Senior Lender may have or with which the Senior
Lender may be charged; and no action of the Senior Lender permitted under this
Agreement shall in any way affect or impair the rights of the Senior Lender and
the obligations of any Subordinated Lender under this Agreement.

 

11. No delay on the part of the Senior Lender in the exercise of any right or
remedy shall operate as a waiver of such right or remedy, and no single or
partial exercise by the Senior Lender of any right or remedy shall preclude
other or further exercise of such right or remedy or the exercise of any other
right or remedy; nor shall any modification or waiver of any of the provisions
of this Agreement be binding upon the Senior Lender except as expressly set
forth in a writing duly signed and delivered on behalf of the Senior Lender. For
the purposes of this Agreement, Senior Liabilities shall have the meaning set
forth in Section 1 above, notwithstanding any right or power of any Subordinated
Lender or anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense shall
affect or impair the agreements and obligations of any Subordinated Lender under
this Agreement.

 

Subordination Agreement

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12. This Agreement shall be binding upon each Subordinated Lender and upon the
heirs, legal representatives, successors and assigns of each Subordinated Lender
and the successors and assigns of any Subordinated Lender.

 

13. This Agreement shall be construed in accordance with and governed by the
laws of New York without regard to conflict of laws provisions. Wherever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

 

[signature page follows]

 

Subordination Agreement

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IN WITNESS WHEREOF, this Agreement has been made and delivered this 13th day of
February 2006.

 

         MISSOURI STATE BANK          By:   

 

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         Name:               Title:               LAURUS MASTER FUND, LTD.      
   By:   

 

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         Name:               Title:      Acknowledged and Agreed to by:        
  ACCENTCIA BIOPHARMACEUTICALS, INC.           By:  

 

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          Name:               Title:               THE ANALYTICA GROUP, INC.   
       By:  

 

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          Name:               Title:              

 

Subordination Agreement

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