FIFTH FORBEARANCE AGREEMENT
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THIS FIFTH FORBEARANCE AGREEMENT (the "Fifth Forbearance Agreement") is
made as of August 5, 1998 by and between OAKMONT PHARMACEUTICALS, INC., a
Delaware corporation ("Oakmont"), and REXALL SUNDOWN, INC., a Florida
corporation ("Rexall Sundown"), as assignee of RSL Holdings, Inc. (formerly
known as Pennex Laboratories, Inc. and, before that, RS Acquisition, Inc.), a
Pennsylvania corporation ("RSL"), for the purpose of amending the payment terms
under the following agreements by and between Oakmont and Rexall Sundown: that
certain Forbearance Agreement dated April 29, 1996 (the "First Forbearance
Agreement"), that certain Second Forbearance Agreement dated September 23, 1996
(the "Second Forbearance Agreement"), that certain Third Forbearance Agreement
dated April 1, 1997 (the "Third Forbearance Agreement"), and that certain Fourth
Forbearance Agreement dated September 1, 1997 (the "Fourth Forbearance
Agreement").
Pursuant to an Agreement of Purchase and Sale dated as of December 29,
1995, by and between RSL as Seller and Oakmont as Buyer (the "Purchase
Agreement"), RSL sold to Oakmont various assets formerly used in RSL's
pharmaceutical manufacturing business (collectively, the "Assets"), including
(i) certain real estate in Plum Borough, Allegheny County, Pennsylvania (the
"Real Property"), wherein RSL conducted its pharmaceutical manufacturing
operations, and (ii) various items of personal property (collectively, the
"Personal Property") including equipment used by RSL in the conduct of its
operations conducted at the Real Property and inventory located at the Real
Property. RSL retained a mortgage lien on the Real Property and a security
interest in the Personal Property to secure Oakmont's payment of the unpaid
balance of the purchase price of the Assets and various other obligations owed
by Oakmont to RSL (collectively, the "Obligations") pursuant to a promissory
note dated January 31, 1996 (the "Note") and a mortgage dated February 1, 1996
and a security agreement dated January 31, 1996 (such mortgage and security
agreement are together hereinafter referred to as the "Security Documents").
Thereafter, RSL transferred all of its rights in respect of the Obligations and
in and under the Note and Security Documents to Rexall Sundown.
Oakmont defaulted in the timely payment of the Obligations. Thereafter,
Rexall Sundown and Oakmont entered into the First Forbearance Agreement, the
Second Forbearance Agreement, the Third Forbearance Agreement and the Fourth
Forbearance Agreement, whereby Rexall Sundown agreed to forbear from the
enforcement of its right to payment on the outstanding balance of the
Obligations on the terms and conditions set forth therein.
Simultaneously with the execution and delivery of the First Forbearance
Agreement, Oakmont delivered to Kirkpatrick & Lockhart LLP ("K&L"), counsel to
Rexall Sundown, at its office at 1500 Oliver Building, Pittsburgh, PA 15222, the
following items: (i) an executed and acknowledged Deed of Conveyance, conveying
the Real Property to a person or persons to be designated by Rexall Sundown; and
(ii) an executed Bill of Sale, conveying the Personal Property to a person or
persons to be designated by Rexall Sundown (the Deed and the Bill of Sale are
hereinafter collectively referred to as the "Transfer Documents"). K&L has been
holding the Transfer Documents in escrow pursuant to the terms of the First
Forbearance Agreement.
Oakmont has also defaulted in the timely payment of the amounts due
under the First Forbearance Agreement, the Second Forbearance Agreement, the
Third Forbearance Agreement and the Fourth Forbearance Agreement (the "Modified
Obligations"). Rexall Sundown is willing to forbear from the enforcement of its
rights and remedies in respect of such default, on the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the foregoing recitals and the
mutual promises herein contained, Oakmont and Rexall Sundown, each intending to
be legally bound, hereby, agree as follows:
1. Rexall Sundown waives any right to accelerate the maturity of the
outstanding balance of the Modified Obligations or to exercise any other right
or remedy under the Purchase Agreement, the Note, the Security Documents, or the
First Forbearance Agreement, the Second Forbearance Agreement, the Third
Forbearance or the Fourth Forbearance Agreement available by reason of any
payment default thereunder occurring prior to the date of this Fifth Forbearance
Agreement, and if such acceleration shall be deemed to have occurred prior to
the date hereof by reason of any such default, such acceleration shall be deemed
nullified and rescinded. Rexall Sundown further agrees not to accelerate the
maturity of the Modified Obligations or take any other action to enforce payment
of the
Modified Obligations unless an Event of Default (as defined below in paragraph 5
below) shall have occurred and be continuing.
2. Oakmont will pay Rexall Sundown the following amounts and take the
following actions on or before the following dates:
(a) Wire transfer $250,000.00 to an account designated by Rexall
Sundown by no later than August 7, 1998;
(b) Wire transfer by no later than August 15, 1998 the sum of
$50,000.00 to the Plum Borough School District and the Borough of Plum,
Allegheny County, Pennsylvania (collectively, the "Borough") as part of an
installment payment program for the payment by Oakmont of delinquent real estate
taxes pursuant to an agreement between Oakmont and the Borough as evidenced by
the letter agreement dated July 24, 1998 between Frank W. Jones and Oakmont
attached hereto as Exhibit A;
(c) Provide evidence to Rexall Sundown by no later than August 7, 1998
that payment has been sent to the property and casualty carrier to bring the
insurance premiums current;
(d) Wire transfer an additional $250,000.00 to an account designated by
Rexall Sundown by no later than August 31, 1998;
(e) Commencing October 1, 1998 and on the first of each month
thereafter, wire transfer the sum of $60,000.00 per month to an account
designated by Rexall Sundown until the payments described in Section 2(f) and
(g) are made, and thereafter, wire transfer the sum of $50,000 per month until
all other amounts owing to Rexall Sundown are paid;
(f) Wire transfer the sum of $1,250,000 to an account designated by
Rexall Sundown upon the closing of a $5,000,000 taxable bond offering, but in no
event shall such payment be made later than October 30, 1998; and
(g) Wire transfer the sum of $2,000,000 to an account designated by
Rexall Sundown upon the closing of a $6,000,000 equity financing, but in no
event shall such payment be made later than November 30, 1998.
Payments made pursuant to Section 2(a), (d), (e), (f) and (g) shall be applied
first to accrued and unpaid interest on the Modified Obligations, and next to
the unpaid principal balance of the Modified Obligations. Payments made under
Section 2(e) hereof shall not reduce the amounts due under Sections 2(f) and
2(g) hereof.
3. On or before August 31, 1999, Oakmont shall pay Rexall Sundown the
outstanding balance due under the Purchase Agreement, the Note, and the Security
Documents as modified by the First Forbearance Agreement, the Second Forbearance
Agreement, the Third Forbearance Agreement, the Fourth Forbearance Agreement and
the Fifth Forbearance Agreement (collectively, the "Modified Documents"), as
specifically set forth on Exhibit B attached hereto.
4. Any of the following events shall constitute an "Event of Default"
for purposes of the Fifth Forbearance Agreement: (i) Any of the payments
required to be made pursuant to this Fifth Forbearance Agreement shall not be
made in full on or before its respective due date; or (ii) Oakmont shall have
defaulted in the payment or performance of any other duty or obligation under
the Modified Documents (other than any default waived by Rexall Sundown pursuant
to paragraph 1 above) and any applicable grace or cure period shall have
expired.
5. If any Event of Default shall have occurred and be continuing, then,
in any such event, Rexall Sundown may accelerate the maturity of all the
remaining amounts payable hereunder, and, in addition, may do any or all of the
following: (a) cause K&L to deliver the Transfer Documents to Rexall Sundown;
cause such Transfer Documents to be completed by the insertion of the name of
the transferee or transferees of the Real Property and the Personal Property;
and cause any or all of the Transfer Documents to be filed or recorded in the
appropriate public records; (b) cause judgment to be entered in favor of Rexall
Sundown (or its assignee) and against Oakmont for all or any part of the
outstanding balance of such amounts pursuant to the warrant of attorney
hereinafter set forth; and (c) exercise any and all other rights and remedies
provided by law.
6. If, in accordance with this Fifth Forbearance Agreement, Rexall
Sundown elects to cause K&L to deliver to Rexall Sundown the Transfer Documents,
then Oakmont shall be released and discharged from any and all further liability
in respect of the amounts payable hereunder; provided, however, that nothing in
this Fifth Forbearance Agreement shall impair Rexall Sundown's right to enforce
its lien and security interest in the Assets.
7. If all the amounts payable to Rexall Sundown under the Modified
Documents are paid in full, then upon receipt of such payment, Rexall Sundown
shall release its lien and security interest in the Assets and shall cause K&L
to return the Transfer Documents to Oakmont.
8. This Fifth Forbearance Agreement may be executed in multiple
counterparts by different parties on different counterparts, each of which shall
be deemed an original, but all of which shall be deemed one and the same
instrument.
9. OAKMONT HEREBY AUTHORIZES ANY ATTORNEY OF ANY COURT IN THE
COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR OAKMONT AT ANY TIME AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT HEREUNDER, AND CONFESS A JUDGMENT OR JUDGMENTS
AGAINST OAKMONT AND IN FAVOR OF REXALL SUNDOWN OR ITS ASSIGNS, AS MANY TIMES AS
SHALL BE NECESSARY OR EXPEDIENT, FOR ALL OR ANY PART OF THE THEN OUTSTANDING
BALANCE DUE AND PAYABLE HEREUNDER, TOGETHER WITH AN ATTORNEY'S FEE OF 15% OF
SUCH AMOUNT, WITH RELEASE OF ALL ERRORS AND WITHOUT STAY OF EXECUTION.
IN WITNESS WHEREOF, we have hereunto set our hands and seals on or as
of the day and year first above written.
OAKMONT PHARMACEUTICALS, INC.
By: /s/ Arthur Michaels
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Name: Arthur Michaels
Title: Chief Executive Officer
REXALL SUNDOWN, INC.
By: /s/ Richard Werber
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Name: Richard Werber
Title: Vice President