Document:

exhibit10_6.htm

 

Exhibit 10.6

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT ("Pledge Agreement") made this 27th day of June, 2012 by and between INTEGRATED BIOPHARMA, INC., a Delaware corporation having an address at 225 Long Avenue, Building 15, P.O. Box 278, Hillside, New Jersey  07025 (the “Pledgor”), and PNC BANK, NATIONAL ASSOCIATION, as Agent for the Lenders, having an office at Two Tower Center Boulevard, East Brunswick, New Jersey 08816 (the “Bank” and “Pledgeholder”):

WHEREAS, to induce the Bank to extend a certain credit facility in the aggregate principal amount of $11,727,000 (as may be increased from time to time, the “Loan”) in favor of the Pledgor and certain other borrowing entities (collectively, the “Borrowers”) as evidenced by a certain Revolving Credit Note dated the date hereof executed by the Borrowers in favor of the Bank in the amount of $8,000,000 (as may be amended, restated, modified, replaced, extended and/or increased from time to time, the “Revolving Note”) and a certain Term Note dated the date hereof executed by the Borrowers in favor of the Bank in the amount of $3,727,000 (as may be amended, restated, modified, replaced, extended and/or increased from time to time, the “Term Note” and collectively with the Revolving Note and all other promissory notes executed from time to time with regard thereto, the “Note”), and in accordance with the terms of a certain Revolving Credit, Term Loan and Security Agreement of even date herewith by and among the Borrowers, the Bank, certain other financial institutions (collectively with the Bank, the “Lenders”) and the Bank as Agent for the Lenders (as may be amended, restated, modified and/or replaced from time to time, the “Loan Agreement”), the Pledgor has agreed to secure the Obligations (as defined in the Loan Agreement) in part by the pledge of certain stock of iBio, Inc., a corporation of the State of Delaware, (as described in Schedule A annexed hereto, the “Stock”) in accordance with the terms hereof, said Stock to be held in trust by the Pledgeholder.

IT IS, THEREFORE, AGREED:

1.  Pledge.  In consideration of the credit facilities granted by the Pledgeholder to the Pledgor and for other good and valuable consideration, receipt of which is acknowledged, the Pledgor, as security for the Loans, hereby grants to the Pledgeholder a security interest in, and assigns and pledges to Pledgeholder, the Stock, as more specifically set forth on Schedule A annexed hereto, whether or not said Stock is represented by certificates.  The stock certificates representing ownership of said Stock have simultaneously been delivered to the Pledgeholder, duly endorsed in blank.  The Pledgor appoints the Pledgeholder its attorney to arrange for the transfer of the Stock to the name of the Pledgeholder.  The Pledgeholder shall hold the pledged Stock as security for the Obligations of the Pledgor for the benefit of the Pledgeholder, and shall not encumber or dispose of the shares except in accordance with the provisions of this Pledge Agreement.

Pledgor covenants and agrees that it will maintain and preserve the lien of the pledge and security interest hereunder as a first lien on the Stock, and will defend the interest of Pledgeholder therein against the claims and demands of all persons who may claim the same.

Pledgeholder acknowledges and agrees that this Pledge Agreement constitutes written notification to Pledgeholder of: (i) the pledge, transfer and assignment to Pledgeholder of, and Pledgeholder’s interest in, the Stock; and (ii) the transfer by Pledgor to Pledgeholder of a security interest in the Stock.

2.  Appointment of Pledgeholder.  The Pledgor hereby designates the Pledgeholder to act as Pledgor's agent and for Pledgor's benefit in accordance with the terms hereof and the Pledgeholder hereby accepts said designation and agrees to act as the Pledgor's agent and for Pledgor's benefit in accordance with the terms hereof.  The Pledgor hereby authorizes the Pledgeholder to:  (a) exercise such powers and perform such duties for the benefit of the Pledgeholder under the provisions of this Pledge Agreement; and (b) exercise all remedies available to the Pledgeholder under this Pledge Agreement including, without limitation, the right to foreclose or otherwise realize upon the Stock.  The Pledgeholder may perform any of its duties hereunder by or through its agents or employees.  This Section 2 is subject to the specific terms and conditions set forth herein, in the Loan Agreement and the Other Documents with regard to the Pledgeholder’s ability to exercise such rights and remedies subject to the occurrence and continuance of a Default and/or an Event of Default.

3.  Voting Rights.  During the term of this pledge, and so long as no Default or Event of Default exists under the Loan Agreement, this Pledge Agreement or any Other Document, the Pledgor shall have the right to vote the pledged shares on all corporate questions, and the Pledgeholder shall execute due and timely proxies in favor of the Pledgor to this end.

 

 

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4.  Representations.  The Pledgor warrants and represents that (a) the Pledgor owns the Stock, and (b) there are no restrictions upon the transfer of any of the Stock and the Pledgor has the right to transfer such Stock free of any encumbrances other than Permitted Encumbrances and without obtaining the consents of the others except as otherwise specifically set forth on the certificates.

5.  Covenant.  Pledgor shall immediately upon the execution of this Pledge Agreement make appropriate

entries on the books of the companies represented by the Stock to reflect the security interest of the Pledgeholder in the Stock.

6.  Adjustments.  In the event that, during the term of this pledge, any share dividend, reclassification, readjustment, or other change is declared or made in the structure of the companies represented by the Stock, all new, substituted, and additional shares, or other securities, issued by reason of any such change shall be held by the Pledgeholder under the terms of this Pledge Agreement in the same manner as the Stock originally pledged hereunder.

7.  Warrants and Rights.  In the event that during the term of this pledge, subscription warrants or any other rights or options shall be issued in connection with the Stock, such warrants, rights and options shall be immediately assigned by the Pledgeholder to the Pledgor, and if exercised by the Pledgor all new shares or other securities so acquired by the Pledgor shall be immediately assigned to the Pledgeholder to be held under the terms of this Pledge Agreement in the same manner as the Stock originally pledged hereunder.  Notwithstanding anything contained herein, provided no Default and/or Event of Default has occurred and is continuing under the Loan Agreement, this Pledge Agreement or any Other Document, the Pledgor shall be entitled to all cash dividends, interest and other cash distributions made in connection with the securities pledged hereunder.

8.  Payment of Loan.  Upon payment in full of the Obligations, the Pledgeholder shall transfer to the Pledgor all the Stock and all rights received by the Pledgeholder as a result of its record ownership thereof.

9.  Default.  In the event that the Pledgor defaults in the performance of any of the terms of this Pledge Agreement, the Loan Agreement, any Other Document and/or the Obligations, the Pledgeholder shall have the rights and remedies provided in the Loan Agreement, the Other Documents and the Uniform Commercial Code in force in the State of New York and in this connection the Pledgeholder may, without liability for any diminution in price which may have occurred, sell all the Stock in such manner and for such price as the Pledgeholder may reasonably determine.  At any bona fide public sale the Pledgeholder shall be free to purchase all or any part of the pledged shares.  Out of the proceeds of any sale the Pledgeholder may retain an amount equal to the Obligations then due on the Loan, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.

10.  Enforcement of Stock Pledge Agreement.  The Pledgeholder may, in its sole discretion, exercise any right or remedy which the Pledgeholder has under this Pledge Agreement or by law (such rights and remedies being cumulative and not alternative or exclusive) without pursuing or exhausting any right or remedy the Pledgeholder has against the Borrowers or any other person or entity, or which the Pledgeholder has with respect to any collateral for any or all of the Obligations of the Borrowers. The Pledgeholder need not join any Pledgor or the Borrowers or any other person or entity as a party in any action brought to enforce the provisions hereof; and the Pledgeholder may exercise any right or remedy which it has under this Pledge Agreement without regard to any actions or omissions of the Borrowers or any other person or entity.  In the event of a Default and/or an Event of under this Pledge Agreement, the Loan Agreement and/or any Other Document and the continuance thereof, after expiration of any applicable grace period therein provided, the Pledgeholder shall be entitled to immediately enforce the obligations of Pledgor hereunder.

11.  Stock Pledge Agreement Not Affected. Subject to any rights of Borrowers under the Loan Agreement and the Other Documents (including, without limitation, any rights to agree or consent to any changes, amendments or modifications to any of the Obligations, the Loan Agreement, any Other Document or any other agreement executed in connection therewith), the Pledgor hereby consents and agrees that, at any time, and from time to time, without notice to the Pledgor:

(i)            the time, manner, place and/or terms of payment of any of the Obligations may be extended or modified;

(ii)            any collateral, or any other pledge agreement, for any of the Obligations may be exchanged, released, surrendered, or otherwise disposed of;

(iii)           any action may be taken under or in respect of any agreements, notes or documents pursuant to which any of the Obligations arise, in the exercise of any remedy, power or privilege therein contained or otherwise with respect thereto, or such remedy, power or privilege may be waived, omitted, or not enforced;

(iv)           the time for the Borrowers’ performance of or compliance with any term, covenant or agreement on its part to be performed or observed under any agreements, notes or documents pursuant to which any of the Obligations arise may be extended, or such performance or compliance may be waived, or failure in or departure from such performance or compliance may be consented to;

(v)            the Loan Agreement and/or any Other Document, or any term thereof, may be amended or modified in any respect (including, without limitation the interest rate);

(vi)            the liability of the Borrowers, or any Pledgor hereunder may be released, settled or compromised; and

(vii)         monies received from the Borrowers or others, or from collateral held for the Obligations, may be applied by the Pledgeholder against other indebtedness owed by the Borrowers to the Bank, as the Pledgeholder in its sole discretion determines; all in such manner and upon such terms as the Pledgeholder deems proper, without notice to or further assents from the Pledgor, and all without affecting this Pledge Agreement or the obligations of the Pledgor hereunder, which shall continue in full force and effect until the Obligations and all obligations of the Pledgor hereunder shall have been fully paid and performed.

 

 

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12.  Notice of Acceptance.  Pledgor hereby waives notice of acceptance of this Pledge Agreement, presentment and demand for payment, notice of dishonor, protest and notice of protest or non-compliance with the terms and provisions of the Note, the Loan Agreement and/or any Other Document.  No act or omission of any kind in the premises shall in any way affect or impair this Pledge Agreement.

13.  Marshalling of Assets.  Pledgor hereby waives any right or claim of right to cause a marshalling of the Borrower's assets or to cause Pledgeholder to proceed against any of the security held by the Pledgeholder before proceeding against any Pledgor, or to proceed against any Pledgor in any particular order, and Pledgor hereby waives any requirement that Pledgeholder shall institute any action or proceedings at law or in equity against Borrower, or anyone else, with respect to the Note, the Loan Agreement and/or any Other Document or with respect to any other security held by Pledgeholder, as a condition precedent to bringing an action against the Pledgor upon this Pledge Agreement.

14.  Subordination and Subrogation.  Subject to the terms and conditions of the Loan Agreement and the Other Documents (including but not limited to Section 7.5 of the Loan Agreement), in the event any Borrower or any successor thereto subsequent shall hereafter become indebted to the Pledgor, the amount of each sum and of such indebtedness shall at all times be subordinate as to lien, time of payment, and in all other respects, to the amounts owing to the Pledgeholder under the Note, the Loan Agreement and/or any Other Document, and Pledgor shall not be entitled to enforce or receive payment thereof until all Obligations have been paid. Nothing herein contained is intended or shall be construed to give to Pledgor any right of subrogation in or under the Note, the Loan Agreement and/or any Other Document or any right to participate in any way therein, or in the right, title or interest of Pledgeholder in any collateral, notwithstanding any payments made by Pledgor under this Pledge Agreement, all rights of subrogation and participation being hereby expressly waived and released until all Obligations have been paid in full.

15.  No Waiver; Delay.  No delay on the part of the Pledgeholder in exercising any of its rights, powers or privileges or partial or single exercise thereof under this Pledge Agreement, the Loan Agreement and/or any Other Document shall operate as a waiver of any such privileges, powers or rights. No waiver of any of its rights hereunder, and no modification or amendment of this Pledge Agreement, shall be deemed to be made by Pledgeholder unless the same shall be in writing, duly signed on behalf of Pledgeholder by a duly authorized officer, and each such waiver, if any, shall apply only with respect to the specific instance involved, and shall in no way impair the rights of Pledgeholder or the obligations of the Pledgor to Pledgeholder in any other respect at any other time.

16.  Definitions.  The terms used herein and not otherwise defined or modified herein shall have the meanings ascribed to them in the Loan Agreement.  The terms used herein and not otherwise defined or modified herein or defined in the Loan Agreement shall have the meanings ascribed to them by the Uniform Commercial Code as enacted in New York.

 

 

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17.  Governing Law.  The Pledgor and Pledgeholder elect that the laws of New York shall govern the construction of this Pledge Agreement and the rights, remedies, warranties, representations, covenants, and provisions hereof without regard to the principles of conflict of laws other than Section 5-1401 of the New York General Obligations Law.

IN WITNESS WHEREOF, the parties have hereunto executed this Pledge Agreement the day and year first above mentioned.

 

 

 

	
ATTEST:

	
INTEGRATED BIOPHARMA, INC.

	  	  
	
By:

	/s/ Dina L. Masi	  	
By:

	/s/ E. Gerald Kay	  
	
Name:  DINA L. MASI

	
Name:  E. GERALD KAY

	
Title:  Secretary

	
Title:  President and Chief Executive Officer

 

 

  

 

 

	  	
PNC BANK, NATIONAL ASSOCIATION,

	  	
As Agent for Lenders

	  	  
	  	  	  	
By:

	/s/ Brian Conway	  
	  	
Name:  BRIAN CONWAY

	  	
Title:  Vice President

	  	  
	  	 
	  	 
	  	  
	  	 

 

 

 

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Schedule A

PLEDGED STOCK

	
Name of Company

	
Pledgor

	
Certificate No.

	
No. of Shares

	
Voting         Non-Voting

	
iBio, Inc.

	
Pledgor

	
2198

	
323,820

	
0

	
iBio, Inc.

	
Pledgor

	
2199

	
942,886

	
0

 

5exhibit10_7.htm

 

Exhibit 10.7

INTERCREDITOR AND SUBORDINATION AGREEMENT

THIS INTERCREDITOR AND SUBORDINATION AGREEMENT (this “Subordination Agreement”) is made as of the 27th day of June, 2012 by and between PNC BANK, NATIONAL ASSOCIATION, as Agent for Lenders (the "Bank”) and CD Financial, LLC, a Florida limited liability company having its principal place of business at 3299 NW Second Avenue, Boca Raton, Florida 33431 (the “Junior Creditor”), and is acknowledged by Integrated BioPharma, Inc., a Delaware corporation, InB:Manhattan Drug Company, Inc., a New York corporation, AgroLabs, Inc., a New Jersey corporation, IHT Health Products, Inc., a Delaware corporation, Vitamin Factory, Inc., a Delaware corporation, and IHT Properties Corp., a Delaware corporation (collectively, the “Borrower”).

WHEREAS, Junior Creditor has extended credit to Integrated BioPharma, Inc. under the Subordinated Loan Documentation, as such term is defined in the Loan Agreement (as hereinafter defined), and in conjunction therewith have obtained a security interest in and lien on all of the assets of the Borrower; and

WHEREAS, the Bank and the Lenders are entering into that certain Revolving Credit, Term Loan and Security Agreement dated June 26, 2012 with the Borrower, under which Bank and other lenders have made, and may make revolving loans and advances, a term loan, or other financial accommodations to Borrower and in conjunction therewith the Bank as Agent for Lenders will obtain a security interest in and lien upon all of the assets of Borrower; and

WHEREAS, it is a condition precedent to the Bank and other lenders extending financial accommodations to Borrower that the Junior Creditor enter into this Intercreditor and Subordination Agreement so as to set forth the priorities of their respective liens on the assets of Borrower and the indebtedness of Borrower to the Junior Creditor and the Bank.

NOW THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and in consideration of the loans, advances, discounts, renewals or extensions of credit now or hereafter made by the Bank to or for the account of the Borrower, the Junior Creditor and the Bank agree as follows:

1. The term “Subordinated Indebtedness” shall mean all indebtedness, obligations and liabilities of every nature of the Borrower and of Borrower’s subsidiaries to the Junior Creditor arising under the Subordinated Loan Documentation (including, but not limited to, the Subordinated Liquidity Note, the Subordinated Securities Note and the Subordinated Subsidiary Guarantee, as such terms are defined in the Loan Agreement), whether now existing or hereafter arising or incurred, absolute or contingent, direct or indirect, secured or unsecured, liquidated or unliquidated, due or not due, joint or several, and however arising, whether created directly or acquired by assignment or incurred by the Borrower as principal, maker, surety, endorser, guarantor or otherwise, together with all extensions, renewals or modifications thereof and any attorneys’ fees incurred in connection therewith.  The Junior Creditor represents and warrants that the Subordinated Indebtedness is the sum of $7,064,000 evidenced by the Subordinated Liquidity Note and the Subordinated Securities Note.  The Junior Creditor shall not amend or modify the Subordinated Liquidity Note and/or the Subordinated Securities Note without the prior written consent of the Bank.  The Junior Creditor covenants that it shall not enter into, or be the beneficiary of, any other arrangements or agreements regarding any additional Subordinated Indebtedness.  The term “Collateral” shall mean all real and personal property and other tangible and intangible and other assets of Borrower in which either the Junior Creditor or the Bank has a security interest or lien.  “Security Agreement” means the security agreement or other security instrument by the Borrower in favor of the Junior Creditor and the Bank.

2. The term "Senior Indebtedness" shall mean all Obligations (as such term is defined in the Loan Agreement) of every kind, nature and description of the Borrower to or with the Bank and/or the Lenders (as such term is defined in the Loan Agreement), or with an affiliate of the Bank or Lenders, whether or not arising out of or under that certain Revolving Credit, Term Loan and Security Agreement dated June 26, 2012 (as it has been, is being and may further be amended, modified, extended, supplemented, replaced or restated from time to time, the "Loan Agreement") by and among the Borrower, the Bank, the other Lenders, and the Bank as Agent for the Lenders, including, without limitation, principal, interest, charges, expenses, attorneys' fees, and whether secured or unsecured, direct or indirect, absolute or contingent, joint and/or several, due or to become due, liquidated or unliquidated, now existing or hereafter contracted (including, without limitation any participation or interest of the Bank, or any affiliate of the Bank in any obligation of the Borrower to others) acquired outright, conditionally or as collateral security from another, and whether incurred by the Borrower as principal, surety, endorser, guarantor, accommodation party or otherwise, together with any extensions, renewals or modifications thereof.

 

 

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3. The Junior Creditor hereby subordinates, to the extent and in the manner set forth herein, all Subordinated Indebtedness howsoever evidenced and whether now existing or hereafter incurred to all Senior Indebtedness until all the Senior Indebtedness (other than the Remaining Obligations) shall be fully paid and satisfied.  The Junior Creditor and the Borrower covenant and agree that the Subordinated Indebtedness shall be junior in right of repayment or payment to the prior repayment in full of all Senior Indebtedness to the extent and in the manner set forth herein.  The Junior Creditor and the Borrower further covenant and agree that until all of the Senior Indebtedness (other than the Remaining Obligations) have been fully paid and satisfied, no payment of principal and/or interest on account of the Subordinated Indebtedness, or guaranty of any nature, shall be made or given, by or on behalf of the Borrower, nor be demanded, accepted, received or applied by the Junior Creditors for or on account of the Subordinated Indebtedness except (A) when (i) no Default and/or Event of Default has occurred and is continuing prior to and after making such payment, (ii) the Borrower provides to the Bank evidence that the Borrower is and will be in pro forma compliance with the Fixed Charge Coverage Ratio (as of the then most recently completed fiscal quarter) set forth in Section 6.5 of the Loan Agreement prior to and immediately after making such payment, and (iii) the Borrower provides to the Bank evidence that the Borrower has and will have Undrawn Availability of not less than $1,000,000 prior to and after making such payment, then the Borrower may pay and the Junior Creditor shall have the right to receive cash interest and any and all accrued and unpaid interest, except to the extent that Borrower is otherwise limited or restricted from making such payments under the Loan Agreement and (B) the Borrower may pay and the Junior Creditor shall have the right to receive payments of principal solely with regard to the Subordinated Liquidity Note upon (i) the repayment or prepayment of the principal amount of the Term Loan in an amount of not less than $1,000,000, (ii) receipt and satisfactory review by the Bank of the Borrower’s annual financial statements deliverable pursuant to Section 9.7 of the Loan Agreement for the fiscal year ending June 30, 2013 which shall reflect, among other things, a calculation of EBITDA of the Borrower of not less than $1,500,000 for such fiscal period, (iii) receipt by the Bank of evidence that no Default and/or Event of Default shall have occurred and be continuing at such time, (iv) receipt by the Bank of evidence that the Borrower has an Undrawn Availability of not less than $1,750,000 prior to and immediately after giving effect to any such payment of principal with regard to the Subordinated Liquidity Note, and (v) receipt by the Bank of evidence that the aggregate amount of any such payment of principal with regard to the Subordinated Liquidity Note, in full or in part, does not exceed an amount equal to fifty percent (50%) of Excess Cash Flow of the Borrower for such fiscal year.

4. Notwithstanding the terms of any Security Agreement heretofore or hereafter entered into between the Junior Creditor or the Bank, and the Borrower, or the date of the filing of any financing statements heretofore or hereafter filed by the Junior Creditor or the Bank against Borrower, or any other action by the Junior Creditor or the Bank with regard to perfection of a security interest or lien, any security interest, lien, claim or right now or hereafter asserted by the Junior Creditor with respect to the Collateral shall be subject, junior and subordinate in all respects to the security interest, lien, claim or right now or hereafter asserted by the Bank with respect thereto.  As between the Bank and the Junior Creditor, the first priority of the Bank’s security interest in the Collateral shall not be affected by any failure to perfect any security interest or any lapse in perfection thereof.

5. The Junior Creditor covenants to the Bank that the Subordinated Indebtedness now existing or hereafter arising shall not be assigned to any other person, firm or corporation unless said person, firm or corporation executes a subordination agreement substantially in the form of this Subordination Agreement.

6. The Junior Creditor covenants to the Bank to not take any action which interferes with the Bank’s exercise of its superior security interest in, or lien on, the Collateral.   The Junior Creditor hereby waives any right to challenge the actions of the Bank in liquidating the Collateral whether such challenge is in the form of attacking manner of liquidation, timing of liquidation or otherwise.  The Junior Creditor and the Bank waive their right to require a marshalling of assets.

7. So long as any Senior Indebtedness shall remain unpaid, the Junior Creditor shall forthwith deliver to the Bank any payment or collateral security or the proceeds thereof received by the Junior Creditor in violation of the terms of this Subordination Agreement, in precisely the form received (except for endorsement by the appropriate Junior Creditor) for application on account of the Senior Indebtedness and, until so delivered, the same shall be held in trust by the Junior Creditor as the property of the Bank.

 

 

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8. In order to carry out the terms and the intent of this Subordination Agreement more effectively, the Junior Creditor and Bank agree to do all reasonable acts and execute all further instruments reasonably necessary or convenient to preserve for the Bank and the Junior Creditor the benefit of this Subordination Agreement.

9. The Junior Creditor agrees that this Subordination Agreement shall constitute a continuing agreement of subordination and no action which the Bank, any other Lender or the Borrower may take or refrain from taking with respect to the Senior Indebtedness, or any note or notes representing the same, or any collateral therefor, including a waiver or release thereof, or any agreement or agreements in connection therewith, shall affect this Subordination Agreement or the obligations of the Junior Creditor hereunder until the complete repayment and satisfaction of the Senior Indebtedness (other than the Remaining Obligations).

10. No waiver shall be deemed to be made by the Bank of any of its rights hereunder unless the same shall be in writing and any waiver granted by the Bank shall be a waiver only with respect to the specific instance involved and it shall in no way impair the Bank’s rights or the Junior Creditor's obligations to the Bank in any other respect or at any other time.

11. The Junior Creditor agrees that the Junior Creditor shall take no steps, directly or indirectly, to enforce or seek to enforce any of its rights with respect to the Subordinated Indebtedness or any collateral security therefor, nor shall the Junior Creditor directly or indirectly take any action that shall interfere in any nature whatsoever with the rights of the Bank with respect to the Bank’s senior interests, whether by virtue of this Subordination Agreement or otherwise, except that the Junior Creditor shall have the right to take action or institute proceedings with respect to the Subordinated Indebtedness or any collateral security at any time after one hundred fifty (150) days (the “Standstill Period”) after the receipt by Bank of a notice from the Junior Creditor setting forth an event of default under the Subordinated Loan Documentation, provided that as of the expiration of the Standstill Period (such date being referred to as the “Collateral Enforcement Date”), such event of default remains uncured and is continuing; and so long as the Senior Indebtedness remains outstanding, the Junior Creditor agrees that any proceeds which it receives with respect to any collateral security shall be held by the Junior Creditor in trust for the Bank, and shall be promptly remitted to the Bank for application to the Senior Indebtedness, and in the event that the Bank institutes any action or proceedings with respect to any collateral security after the commencement by the Junior Creditor of any action or proceeding against the collateral security, the Junior Creditor shall desist from such enforcement efforts against such collateral security promptly upon being advised in writing by the Bank of the commencement of foreclosure or other enforcement efforts by the Bank against such collateral security..

12. The Junior Creditor and the Borrower agree to make proper notations in their respective books, records or other statements which evidence or record any Subordinated Indebtedness, specifically indicating that the Subordinated Indebtedness is subject to this Agreement.

13. The Bank and the Junior Creditor (each a “Secured Creditor”) shall (a) give the other written notice of: (i) sending any written notice to the Borrower of an event of default of the Subordinated Indebtedness or Senior Indebtedness, as applicable, which has not been waived or cured; (ii) any demand of payment of any of the Subordinated Indebtedness or the Senior Indebtedness, as applicable, (iii) any commencement of a foreclosure or other lien enforcement proceeding by the Junior Creditor or the Bank against the Borrower or any collateral security, in each case concurrently with the sending of such notice to the Borrower, and (iv) provide to the other Secured Creditor a copy of any written notice received by such Secured Creditor from a landlord or other third party of a default by Borrower under any lease or other agreement of the Borrower with such third party promptly after the receipt thereof by such Secured Creditor; provided that the failure of either Secured Creditor to send any such notices or provide such copy, as the case may be, shall not create a cause of action against such Secured Creditor or create any claim against it or effect the relative rights, duties or priorities established by this Subordination Agreement.  The failure by either Secured Creditor to send a copy of any such notice to the other shall not affect the validity of such notice as against Borrower. Borrower hereby authorizes and consents to each Secured Creditor sending to the other such notices or any other information with respect thereto.

14. All notices, requests and other communications pursuant to this Subordination Agreement shall be in writing, either by letter (delivered by hand or sent certified mail, return receipt requested) or facsimile (sending confirmed) or by overnight delivery addressed to the Bank at PNC Business Credit, 340 Madison Avenue, 11th Floor, New York, New York  10173, Attention: Brian Conway, Vice President, or to Borrower at its principal place of business as described in the Loan Agreement, Attention: Chief Executive Officer and Chief Financial Officer, or to the Junior Creditor, Attention: William H. Milmoe at its address stated above, or such other address as any party may give notice to the others as herein provided.  Any notice, request or communication hereunder shall be deemed to have been given two days after being deposited in the mails, postage prepaid, or in the case of hand delivery, when delivered, or in the case of overnight delivery, the next Business Day, or in the case of telegraphic notice, upon delivery to the telegraph company, addressed as aforesaid except where otherwise provided in Subordination Agreement, provided, however, that notice of a change of address, as hereinabove provided, shall be deemed to have been given only when actually received by the party to which it is addressed.

 

 

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15. This Subordination Agreement is solely for the benefit of the Bank, the Lenders and the Junior Creditor and their respective successors, designees or assigns.

16. All capitalized terms not specifically defined herein shall have the meaning ascribed to them in the Loan Agreement.

17. THE BANK, JUNIOR CREDITOR AND THE BORROWER EXPRESSLY WAIVE TO THE EXTENT PERMITTED BY APPLICABLE LAW THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SUBORDINATION AGREEMENT OR THE ACTIONS OF THE BANK OR THE JUNIOR CREDITOR IN THE ENFORCEMENT HEREOF.  THIS WAIVER IS MADE KNOWINGLY AND IN CONSIDERATION OF THE LOANS BEING MADE BY THE BANK TO THE BORROWER.

18. THIS SUBORDINATION AGREEMENT HAS BEEN EXECUTED AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO CONSENT TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN NEW YORK IN CONNECTION WITH THE MATTER ARISING HEREUNDER.

(Next Page is the Signature Page)

 

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          IN WITNESS WHEREOF, the parties hereto have caused this Subordination Agreement to be executed this 27th  day of June, 2012.

 

 

 

	
 

	
CD FINANCIAL, LLC

	  	 As holder of the Subordinated Liquidity Note and the
	 	 Subordinated Securities Note
	 	 
	 	  	  	
By:

	/s/ William H. Milmoe	  
	 	
Name: William H. Milmoe

	 	
Title:  Manager

 

 

	 	
PNC BANK, NATIONAL ASSOCIATION

	  	  
	
 

	  	  	
By:

	/s Brian Conway	  
	 	
Name:  BRIAN CONWAY

	 	
Title:  Vice President 

 

The Borrower acknowledges and agrees to the terms of this Subordination Agreement on this 27th  day of June, 2012.

 

	
 

	
INTEGRATED BIOPHARMA.INC.

	  	  
	 	  	  	
By:

	/s/ E. Gerald Kay	  
	 	
Name:  E. GERALD KAY

	 	
Title:  President and Chief Executive Officer

 

 

	 	
InB:MANHATTAN DRUG COMPANY, INC.

	  	  
	
 

	  	  	
By:

	/s/ Riva Sheppard	  
	 	
Name:  RIVA SHEPPARD

	 	
Title:  President and Chief Executive Officer

 

 

	 	
AGROLABS, INC.

	  	  
	 	  	  	
By:

	/s/ Christina Kay	  
	 	
Name:  CHRISTINA KAY

	 	
Title:  President and Chief Executive Officer

 

 

	 	
IHT HEALTH PRODUCTS, INC.

	  	  
	 	  	  	
By:

	/s/ Christina Kay	  
	 	
Name:  CHRISTINA KAY

	 	
Title:  President and Chief Executive Officer

 

 

	
 

	

VITAMIN FACTORY, INC.

	 	  
	 	  	  	
By:

	/s/ E. Gerald Kay	  
	 	
Name:  E. GERALD KAY

	 	
Title:  President and Chief Executive Officer

 

 

	 	IHT PROPERTIES CORP. 
	  	  
	
 

	  	  	
By:

	/s/ Riva Sheppard	  
	 	

Name:  RIVA SHEPPARD

	 	
Title:  President and Chief Executive Officer

6

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