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EXHIBIT 10.8
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT
This Intercreditor and Collateral Sharing Agreement (the "Agreement")
is dated as of February 29, 2000 and is entered into by and among ALTIVA
FINANCIAL CORPORATION, a Delaware corporation (the "Borrower"), Value Partners,
Ltd. ("Value Partners"), as the initial holder of the Convertible Notes, as
that term is defined below, the Replacement QIB Noteholders, the Replacement
Non-QIB Noteholders, as both such terms are defined below, and United States
Trust Company of New York (the "Collateral Agent"), in its capacity as
collateral agent for the Convertible Noteholders, the Replacement Non-QIB
Noteholders and the Replacement QIB Noteholders. Certain capitalized terms in
the Recitals below are defined in Section 1 hereof. Exhibits attached hereto
are by this reference incorporated herein.
RECITALS
1. Pursuant to the Purchase Agreement, Value Partners, Ltd. has
purchased $14,000,000.00 in the aggregate of 12% Secured Convertible Notes Due
2006 (the "Convertible Notes"). Value Partners is presently the sole Convertible
Noteholder.
2. To secure repayment of the Convertible Notes, the Borrower
executed the Convertible Pledge Agreement, a copy of which is attached hereto as
Exhibit "A", pursuant to which the Borrower granted to the Convertible
Noteholders a lien and security interest in all the Collateral (which is a first
priority lien except with respect to the Collateral consisting of Pledged
Shares) and a lien in the Pledged Shares, subject only to the security interest
granted the Replacement Non-QIB Noteholders as described in paragraph 5 of these
Recitals and elsewhere herein. A schedule of the Collateral being initially
delivered to the Collateral Agent is set forth on Exhibit "B".
3. The Borrower, the Replacement QIB Noteholders and the
Replacement Non-QIB Noteholders have entered into the Exchange Agreement,
pursuant to which the Replacement QIB Notes and the Replacement Non-QIB Notes
(collectively, the "Exchange Notes") were issued in accordance with the terms
thereof and the Indenture.
4. Repayment of the Replacement QIB Notes is secured, on a pari
passu basis with the Convertible Notes, by the Collateral pledged to the
Convertible Noteholders. To evidence this pledge, the Borrower and Replacement
QIB Noteholders executed the Replacement QIB Pledge Agreement, a copy of which
is attached as Exhibit "C".
5. The Replacement Non-QIB Notes are secured by a first lien and
security interest in the Pledged Shares pursuant to the Stock Pledge Agreement,
a copy of which is attached as
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 1
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Exhibit "D". However, upon the occurrence of a Default or an Event of Default,
the recovery of the Replacement Non-QIB Noteholders from the proceeds relating
to the liquidation of the Pledged Shares shall be adjusted so that the
Replacement Non-QIB Noteholders recover the same percentage of their outstanding
indebtedness as do the Replacement QIB Noteholders and the Convertible
Noteholders. Because the Replacement Non-QIB Noteholders are not QIB's, they
cannot share in proceeds from the Collateral in which the Convertible
Noteholders and Replacement QIB Noteholders hold a first lien. Thus, in the
event recovery from the Pledged Shares is inadequate to permit a pro rata
recovery in favor of the Replacement Non-QIB Noteholders, their recovery may be
less than that of the Convertible Noteholders and Replacement QIB Noteholders.
6. Because each of the Replacement QIB Noteholders, Replacement
Non-QIB Noteholders and Convertible Noteholders has a security interest in the
Collateral as their interests may appear in the Security Documents and herein,
each such Noteholder has agreed that it is appropriate to enter into this
Agreement, both for purposes of the perfection of the security interest of each
Noteholder in the Collateral which may be perfected by possession of the
Collateral (or the continuation of existing perfection) and to permit the
orderly liquidation of all Collateral (including Collateral perfected by means
other than possession) by the Collateral Agent in the event of an occurrence a
Default or an Event of Default under the Security Documents and the orderly
distribution of the proceeds of such liquidation by the Collateral Agent.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Borrower, the Collateral Agent and the Noteholders hereby
agree as follows:
1. Defined Terms. As used herein, the following terms shall have
the following meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing; provided, however, for purposes of this definition, neither Value
Partners, X. Xxxx Price Recovery Fund nor Lutheran Brotherhood High Yield Fund
shall be deemed to be Affiliates of the Borrower.
"Beneficial Owner" means with respect to any Notes which are
registered in book-entry with a securities depositary, the beneficial owners of
such Notes on the registry thereof
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 2
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maintained by the Trustee pursuant to Section 3.6 of the Indenture or by the
Company pursuant to Section 2.3 of the Convertible Notes, as the case may be,
and means with respect to Notes which are not so registered in book-entry, the
Registered Owner of the Note or the beneficial owner of a Note registered in the
name of a nominee.
"Borrower" shall have the meaning specified in the introductory
paragraph hereof.
"Business Day" means any day other than Saturday, Sunday or other day
on which banking institutions in Atlanta, Georgia or Dallas, Texas or New York,
New York are authorized or required by law or executive order to be closed.
"Certificates" means any security, chattel paper, certificated
security or instrument, as from time to time amended, modified or supplemented,
including the following: any Residual Interest Instrument, any Interest Only
Instrument, the Senior Trust Certificate, the Pledged Shares and a Certificated
Security as defined in Section 8-102 of the UCC.
"Collateral" means the assets described collectively in Section 2.1 of
the Convertible Pledge Agreement, Section 2.1 of the Replacement QIB Pledge
Agreement and Section 2 of the Stock Pledge Agreement, as such documents are
amended, modified or restated.
"Collateral Agent" means United States Trust Company of New York, as
Collateral Agent.
"Convertible Notes" has the meaning specified in Recital paragraph 1.
"Convertible Noteholders" means the holders of the Convertible Notes
and their respective heirs, devisees, beneficiaries, legatees, personal
representatives, successors or assigns.
"Convertible Pledge Agreement" means that certain Amended and Restated
Pledge and Security Agreement, dated as of February 29, 2000, together with any
amendments, supplements modifications or restatements thereof.
"Default" has the meaning set forth in the Convertible Notes and/or the
Indenture.
"Delivery" means the delivery of the Certificates representing the
Collateral in accordance with the provisions of the terms hereof and the
Security Documents.
"Event of Default" means an Event of Default as defined in the
Convertible Notes and/or the Indenture.
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"Exchange Pledge Agreements" means the Replacement QIB Pledge Agreement
and the Stock Pledge Agreement.
"Existing Subordinated Notes" means the outstanding 12 1/2%
Subordinated Notes Due 2001 issued by the Borrower.
"Grantor Trust Right" means all rights of the Borrower, including the
right to payments to the Borrower, in the Sale Agreement executed in relation to
Mego Mortgage Home Loan Trust 1996-3, including, without limitation, the rights
set forth in Section 4.05(b)(xvii) of such Sale Agreement.
"Indenture" means the Trust Indenture date as of February 29, 0000,
xxxxxxx xxx Xxxxxxxx xxx Xxxxxx Xxxxxx Trust Company of New York, as Trustee, as
amended or supplemented.
"Interest Only Instrument(s)" shall, as to that particular Certificate,
have the meaning ascribed to the term "Class S Certificate", "Class IS
Certificate, "Class IIS Certificate" or a similar phrase describing an interest
only security in the respective Sale Agreement arising from the Securitization
pursuant to which such security is issued, which security represents the
undivided interest of the Borrower in all or a portion of the interest payments
due on certain loans securitized in that Securitization.
"Loan Documents" means collectively, the Indenture and the Convertible
Notes.
"Non-QIB Collateral" means the Collateral pledged to the Replacement
Non-QIB Noteholders pursuant to the Stock Pledge Agreement.
"Notes" means the Convertible Notes, the Replacement QIB Notes and the
Replacement Non-QIB Notes.
"Noteholders" means the Convertible Noteholders, the Replacement QIB
Noteholders and the Replacement Non-QIB Noteholders, together with any heirs,
devisees, beneficiaries, legatees, personal representatives, successors or
assigns of each.
"Obligations" means all obligations, liabilities and indebtedness of
the Borrower to the Noteholders arising under or related to the Exchange
Agreement, the Purchase Agreement, the Security Documents, the Notes, the
Indenture and any documents executed pursuant to the terms of any of the above
or in relation to any of the above and for the discharge of all other
obligations or undertakings now are hereafter made for the benefit of the
Noteholders thereunder.
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"Officer's Certificate" means a certificate signed by the President or
a Vice President, and by the Secretary or Assistant Secretary of the Borrower
and delivered to the Collateral Agent.
"Outstanding" means with respect to the Replacement QIB Notes and
Replacement Non-QIB Notes, all such Notes that have been duly authenticated and
delivered by the Trustee under the Indenture on the date of determination,
except:
(a) Replacement QIB Notes and Replacement Non-QIB Notes
theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Replacement QIB Notes and Replacement Non-QIB Notes
the payment or redemption of which the necessary amounts have
been deposited with the Trustee in trust for the Noteholders
thereof; provided that if such Notes are to be redeemed prior
to the maturity thereof, notice of such redemption shall have
been given or arrangements satisfactory to the Trustee have
been made therefor, or waiver of such notice satisfactory in
form to the Trustee has been filed with the Trustee; and
(c) Replacement QIB Notes and Replacement Non-QIB Notes
in lieu of which other such Notes have been authenticated
under the Indenture.
(d) Notes which are registered in the name of or
beneficially owned by the Borrower or any other obligor on the
Notes or by any Affiliate of the Borrower or any other obligor
on the Notes. The Collateral Agent shall not be required to
recognize the beneficial ownership of the Notes of a Person,
or whether the Notes are registered in the name of an
Affiliate of the Borrower or other obligor on the Notes,
unless it is given written notice thereof by the Borrower or
any Noteholder.
"Outstanding" with respect to the Convertible Notes means all such
Notes that have been executed and delivered by the Borrower pursuant to the
terms of the Purchase Agreement and the Convertible Notes, except such Notes
that have been canceled by the Borrower or delivered to the Borrower for
cancellation and such Notes in exchange or in lieu of which other such Notes
have been executed and delivered by the Borrower pursuant to the terms of the
Convertible Notes, and such Convertible Notes which are registered in the name
of or beneficially owned by the Borrower or any other obligor on the Notes or
by any Affiliate of the Borrower or any other obligor on the Notes. The
Collateral Agent shall not be required to recognize the beneficial ownership of
the Notes of a Person, or whether the Notes are registered in the name of an
Affiliate of the Borrower or other obligor on the Notes, unless it is given
written notice thereof
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 5
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by the Borrower or any Noteholder.
"Person" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, or governmental entity (or any department, agency
or political subdivision thereof), or any other entity.
"Pledged Shares" means any and all shares of stock or other evidence
of equity or ownership interest of the Borrower in The Money Centre, Inc.
(either as record owner or beneficially), including but not limited to those
shares set forth on Exhibit "E" hereto, including any such interests which may
be acquired after the date hereof and the certificates or stock representing
all such items. This shall include all of the issued and outstanding shares of
capital stock of The Money Centre, Inc. in existence until termination of the
Security Documents.
"Purchase Agreement" means that certain Amended and Restated Secured
Senior Convertible Note Purchase Agreement by and between the Borrower and
Value Partners, Ltd., dated as of February 29, 2000, together with any
amendments, modifications, supplements or restatements thereof.
"QIB" means Qualified Institutional Buyer as that term is defined in
Rule 144A promulgated by the Securities and Exchange Commission under the
Securities Act, as such Rule or definition is now in effect or as amended from
time.
"QIB Collateral" shall mean that Collateral pledged to the Convertible
Noteholders and the Replacement QIB Noteholders, on a pari passu basis,
pursuant to the Convertible Pledge Agreement and the Replacement QIB Pledge
Agreement, respectively.
"QIB Notes" means the Convertible Notes and the Replacement QIB Notes.
"QIB Noteholders" means the holders of the QIB Notes.
"Registered Owner" means the person or persons in whose name or names
a particular Note is registered (i) with respect to the Replacement QIB Notes
and the Replacement Non-QIB Notes, on the register by maintained by the Trustee
for that purpose pursuant to Section 3.6 of the Indenture; and (ii) with
respect to the Convertible Notes, on the register maintained by the Company for
that purpose pursuant to Section 2.3 of the Convertible Notes.
"Replacement QIB Notes" means those notes issued pursuant to the
Indenture to the holders of Existing Subordinated Notes pursuant to the
Exchange Agreement which are QIB's.
"Replacement Non-QIB Notes" means those notes issued to those holders
of Existing
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Subordinated Notes pursuant to the Exchange Agreement which are not QIB's.
"Replacement Non-QIB Noteholders" means those holders of Replacement
QIB Notes as set forth on Exhibit "F", attached hereto and by this reference
incorporated herein, together with any successors, heirs, devisees,
beneficiaries, legatees, personal representatives, successors or assigns.
"Replacement QIB Noteholders" means those holders of Replacement QIB
Notes as set forth on Exhibit "G", attached hereto and by this reference
incorporated herein, together with any successors, heirs, devisees,
beneficiaries, legatees, personal representatives, successors or assigns.
"Replacement QIB Pledge Agreement" means that certain Pledge and
Security Agreement dated as of March 9, 2000, by and between the Borrower and
the Replacement QIB Noteholders, together with any amendments, modifications,
supplements or restatements thereof.
"Requisite Percentage" means the record holders, voting as a single
class, representing in aggregate at least fifty percent (50%) of the sum at
such time of the aggregate principal amount of the Notes Outstanding, except to
the extent that a different percentage is otherwise expressly required in the
Convertible Notes and/or in the Indenture.
"Residual Interest Instrument(s)" shall, as to that particular
Certificate, have the meaning ascribed to the term "Class R Certificate",
"Residual Interest Instrument", "Residual Certificate", "Residual Instrument"
or a similar phrase describing a certificated residual interest in the Sale
Agreement arising from the Securitization pursuant to which such security is
issued, which security represents the undivided residual interest of the
holder, including in all or a portion of the interest and principal payments
due on certain loans securitized in that Securitization. Neither the Grantor
Trust Right nor the Senior Trust Certificate are Residual Interest Instruments.
"Responsible Officer" means an officer or officers of the Collateral
Agent assigned by the Collateral Agent to administer the matters pertaining to
it in this Agreement.
"Sale Agreement" means the respective Pooling and Servicing Agreement,
Sale and Servicing Agreement or similar agreement, together with related
agreements, including trust agreements and indentures, which create and grant
rights in Certificates and the Grantor Trust Right, entered into or otherwise
issued in relation to a particular Securitization.
"Securities Act" means the Securities Act of 1933, as now in effect
and as hereafter amended from time to time.
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"Securitization" means the respective securitization as set forth on
Exhibit "H" hereto and by this reference incorporated herein.
"Security Documents" means the Convertible Pledge Agreement, the
Replacement QIB Pledge Agreement and the Stock Pledge Agreement.
"Senior Trust Certificate" means that certain 125 Home Loan Owner Trust
1998-1, Senior Trust Certificate.
"Stock Pledge Agreement" means that certain Stock Pledge Agreement
dated March 9, 2000 by and between the Borrower and the Replacement Non-QIB
Noteholders, together with any amendments, modifications, supplements or
restatements thereof.
"UCC" means the Uniform Commercial Code as in effect in the State of
Maryland; provided, that if by mandatory provisions of law, the perfection or
effect of perfection or non-perfection of the security interest in any
Collateral to which this Pledge Agreement relates is governed by the Uniform
Commercial Code as in effect on or after the date hereof in any other
jurisdiction, UCC means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or the effect of perfection or non-perfection.
"Trustee" means United States Trust Company of New York, as Trustee
under the Indenture, and any successor trustee under the Indenture.
"Value Partners" has the meaning assigned to such term in the preamble.
"Voting Action" has the meaning assigned to such term in Section 3(b)
hereof.
Section 2. Appointment of Agent; Delivery of Collateral.
(a) The Collateral Agent is appointed by the Noteholders, on their
behalf and on behalf of their respective successors and assigns, agent of the
Noteholders to possess, as agent and on behalf of the Noteholders, all of the
Collateral for which the security interests of the Noteholders of which may be
perfected by such Noteholders' possession or by filing and control thereof under
the UCC and to act as agent on behalf of the Noteholders (and if necessary, in
the name of a Noteholder or Noteholders) to exercise all rights and remedies on
the Noteholders behalf, as set forth in this Agreement and the Security
Documents, as to all Collateral, whether or not perfected by filing or
possession and control of the Collateral. Each Noteholder by accepting and
holding a Note confirms the appointment of the Collateral Agent as provided by
this
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 8
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Agreement. The Borrower represents and warrants that the Grantor Trust Right is
the only existing Collateral which may not be perfected by possession. The
Borrower shall deliver to the Collateral Agent, promptly upon execution and
delivery hereof, executed counterparts of all Security Documents and all
amendments and supplements thereto. Value Partners, the initial Convertible
Noteholder, shall deliver to the Collateral Agent, promptly upon execution and
delivery thereof, all the Collateral which the Borrower has previously delivered
to it, and upon such delivery, the Collateral Agent shall be deemed to have
possession of such Collateral as agent on behalf of the existing and future
Convertible Noteholders and the other Noteholders as permitted Section
8.301(a)(2) of the UCC and as their respective interests may appear herein and
in the Security Documents. The Collateral Agent is further appointed as the
agent of each Noteholder to act on behalf of each Noteholder in the enforcement
of rights and remedies granted each in the Security Documents. This shall
include, but is not limited to, the declaration of a Default or Event of Default
and the sale or other disposition of all or a portion of the Collateral in
accordance with the terms hereof and the Security Documents. The Requisite
Percentage shall have the right to direct the transfer of possession of the
Collateral to another person who has agreed to possess the Collateral for the
benefit of all Noteholders. Such transfer shall be to Value Partners, Ltd. so
long as it is a Noteholder, unless it agrees to the contrary.
(b) Value Partners, as of the date of execution of this Agreement,
has possession and control of that Collateral set forth on Exhibit "B" which is
identified as currently in the possession thereof. Certain of that Collateral
was registered in the name of Value Partners for purposes of perfection and
shall remain registered in the name of Value Partners subsequent to delivery to
the Collateral Agent. Value Partners agrees that it will cooperate with the
Collateral Agent to ensure an orderly transfer of such Collateral to a purchaser
thereof upon any exercise of remedies (i.e., foreclosure and sale, etc.) by the
Collateral Agent on behalf of the Noteholders. Should Value Partners dispose of
all of its Notes, Value Partners shall deliver to the Collateral Agent
endorsements in blank as to each such Certificate registered in Value Partners'
name, together with any other document necessary under the applicable UCC to
ensure the continued perfection of the security interests of the remaining
Noteholders in such Certificates.
Section 3. Enforcement of Collateral by Collateral
Agent.
(a) The Collateral Agent, on behalf of and for
the benefit of the Noteholders, shall from time to time, upon being given
written instructions as provided herein and indemnified as provided herein, take
such action for the protection and enforcement of the rights of the Noteholders
under this Agreement and the Security Documents, as may be so instructed to do
as provided herein, provided that:
(i) unless and until the Collateral
Agent is notified in writing as provided in Subsection (ii)
hereof that an Event of Default shall have occurred
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and be continuing or has actual knowledge thereof as provided
in clause (ii) of this Section 3(a), the Collateral Agent
shall not be obligated to take any action under this Agreement
or the Security Documents except for the performance of such
duties as are specifically set forth herein (but under all
circumstances shall be required to retain possession of
Collateral for purposes of perfection) and except as may be
instructed from time to time in writing by the Requisite
Percentage, and no implied covenants or obligations shall be
read into this Agreement against the Collateral Agent;
(ii) the Collateral Agent shall not be
deemed to have knowledge of the existence of any condition or
event which constitutes a Default or an Event of Default and
may act as if no such Default or Event of Default exists,
unless (A) notified in writing by any Noteholder or by the
Borrower, which notice shall expressly indicate that the
specified condition or event is a "Default" or "Event of
Default," as the case may be, or (B) a Responsible Officer of
the Collateral Agent has actual knowledge that a Default or
Event of Default has occurred and is continuing ("actual
knowledge" meaning the fact of knowing without a duty to
investigate); and
(iii) if and so long as a Default or
Event of Default shall have occurred and be continuing and the
Collateral Agent shall have been notified in writing thereof,
the Collateral Agent shall, subject to being indemnified as
provided herein, exercise such rights, powers and remedies
(whether vested in it by this Agreement or any Security
Document or by law or in equity or by statute or otherwise)
for the protection and enforcement of the Noteholders' rights
under this Agreement and the Security Documents as the
Collateral Agent may be directed in writing by the Requisite
Percentage. In exercising any rights or remedies hereunder,
the Collateral Agent shall use the same degree of care and
skill in such exercise as a ordinary collateral agent would
use under similar circumstances.
(b) Whenever any action is required or proposed
to be taken hereunder by the Collateral Agent at the direction, or subject to
the approval or consent, of the Requisite Percentage, including, without
limitation, the exercise of any of the rights or remedies of the Collateral
Agent on behalf of the Noteholders under the Security Documents or the approval
of any amendments to this Agreement or the Security Documents or the other
matters set forth in Sections 8 or 19 hereof (the "Voting Actions"), the
Collateral Agent shall promptly notify each Noteholder at its address on the
records of Noteholders maintained pursuant to Section 6 hereof of such required
or proposed action, shall collect written instructions from the Noteholders
regarding such required or proposed action and shall notify the Noteholders of
the results
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thereof. If such Voting Action is approved by the Requisite Percentage, such
Voting Action shall constitute a "Direction Notice". A Direction Notice may also
be received by the Collateral Agent by written consent of the Requisite
Percentage and in such an event, the Collateral Agent shall not be obligated to
notify the remaining Noteholders as provided above or collect additional written
instructions, except that the Collateral Agent shall notify the remaining
Noteholders of the content of the Direction Notice that it has received from the
Requisite Percentage.
Whenever in this Agreement or under the Security Documents an
action or nonaction by the Collateral Agent is conditioned upon there not being
and continuing a Default or an Event of Default, the Collateral Agent may
conclusively presume that no such default has occurred unless it shall be
deemed to have knowledge of the existence thereof pursuant to subsection
(a)(ii) above.
(c) Notwithstanding any provisions to the
contrary contained in any Loan Document or Security Document, the Noteholders
and the Borrower agree that a Default or an Event of Default under a Loan
Document or Security Document shall be deemed to constitute a Default or Event
of Default in each Loan Document or Security Document. Further, notwithstanding
anything to the contrary contained in any Loan Document or Security Document,
each Noteholder acknowledges and agrees that the right and power to exercise
remedies as to the Collateral may be exercised only upon written direction of
the Requisite Percentage of the Noteholders, acting as a single class of
Noteholders, as set forth in the applicable section of the Indenture and
Convertible Notes, respectively. The Noteholders further agree that the right
and power to exercise remedies with respect to the Collateral is exclusively
vested in the Collateral Agent. Nothing contained in this Agreement, however,
shall be construed to permit the extension of the fixed maturity of a Note, or
the reduction of the rate or extension of the time of payment of interest
thereon, or a reduction of the principal amount thereof or premium, if any,
thereon, or a reduction of any amount payable on redemption thereof, or to
impair the right of any such holder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided therein, or change the obligation
of the Borrower to repurchase any Note upon the occurrence of a Repurchase Event
(as defined in the Convertible Notes and in the Indenture) in a manner adverse
to such holder, or impair the right to convert the Convertible Notes into Common
Stock in any material respect, without the written consent of the holder of a
Note affected thereby.
Section 4. Application of Moneys by Collateral Agent. All moneys
received by the Collateral Agent in respect of the Collateral or in connection
with, shall, promptly upon receipt, be applied as follows:
(a)
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(i) Moneys, including proceeds or avails of any
sale or other disposition of the Collateral or any part
thereof pursuant to this Section 4 or otherwise collected by
the Collateral Agent from the QIB Collateral shall be paid to
and applied by the Collateral Agent in the following priority
and on a pari passu basis among the QIB Noteholders:
First: the reasonable fees, costs and expenses, including,
without limitation, those of the Collateral Agent (including,
without limitation, attorneys' fees and expenses), of the
sale and of any receiver of the QIB Collateral or any part
thereof appointed pursuant to a Security Document and all
other amounts due the Collateral Agent under Section 10
hereof;
Second: all amounts of principal, premium, if any, and
interest at the time due and payable on the QIB Notes at the
time Outstanding (subject to Section 5) (whether at stated
maturity or as an installment or by prepayment, declaration
or otherwise), including interest (to the extent permitted
under applicable law) on any overdue principal, premium, if
any, or interest on the QIB Notes at the rate provided
therefor in the respective QIB Notes; and in case such monies
shall be insufficient to pay in full the amounts so due and
unpaid on all the QIB Notes, then first, all amounts of
interest at the time due and payable on the QIB Notes, and
second, all amounts of principal and premium at the time due
and payable on the QIB Notes, and all such payments shall be
made pro-rata to the QIB Noteholders entitled thereto, with
each QIB Noteholder receiving that fraction of the total of
all such amounts paid to the QIB Noteholders as the aggregate
principal amount and interest of each such holder's QIB Notes
bears to the sum of the aggregate principal amounts and
interest of all QIB Notes at the time Outstanding;
Third: any Obligations secured by any Security Document and
at the time due and owing to a QIB Noteholder, other than the
amounts referred to in subdivisions First and Second,
inclusive, above; and in case such monies shall be
insufficient to pay in full the amounts so due and unpaid,
all such payments shall be made pro-rata to the Persons
entitled thereto, each Person receiving that fraction of the
total of all such amounts paid to all such Persons as the
amount due to such Person bears to the sum of the amounts due
to all such Persons; and
Fourth: the balance, if any, to the Borrower or as it may
direct in writing if all conditions to the termination of
this Agreement specified in Section 17 shall have been
fulfilled, but if any such condition shall not have been
fulfilled, to be held by
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the Collateral Agent and thereafter applied to any other
payments required to be made in accordance with subdivisions
First through Third, inclusive, above.
(ii) Moneys, including proceeds or avails of any sale or
other disposition of the Non-QIB Collateral or any part
thereof pursuant to this Section 4 or otherwise collected by
the Collateral Agent from the Non-QIB Collateral shall be
paid to and applied by the Collateral Agent in the following
priority and, except as provided in Section 5 hereof, on a
pari passu basis among the Replacement Non-QIB Noteholders:
First: the reasonable fees, costs and expenses, including,
without limitation, those of the Collateral Agent (including,
without limitation, attorneys' fees and expenses), of the
sale and of any receiver of the Non-QIB Collateral or any
part thereof appointed pursuant to a Security Document and
all other amounts due the Collateral Agent under Section 10
hereof;
Second: all amounts of principal, premium, if any, and
interest at the time due and payable on the Notes at the time
Outstanding secured by such Non-QIB Collateral (subject to
Section 5) (whether at stated maturity or as an installment
or by prepayment, declaration or otherwise), including
interest (to the extent permitted under applicable law) on
any overdue principal, premium, if any, or interest on the
Replacement Non-QIB Notes at the rate provided therefor in
the respective Replacement Non-QIB Notes; and in case such
monies shall be insufficient to pay in full the amounts so
due and unpaid on all the Replacement Non-QIB Notes, then
first, all amounts of interest at the time due and payable on
the Replacement Non-QIB Notes, and second, all amounts of
principal and premium at the time due and payable on the
Replacement Non-QIB Notes, and all such payments shall be
made pro-rata to the Replacement Non-QIB Noteholders entitled
thereto, with each Replacement Non-QIB Noteholder receiving
that fraction of the total of all such amounts paid to the
Replacement Non-QIB Noteholders as the aggregate principal
amount and interest of each such holder's Replacement Non-QIB
Notes bears to the sum of the aggregate principal amounts and
interest of all Replacement Non-QIB Notes at the time
Outstanding;
Third: any Obligations secured by any Security Document and
at the time due and owing to any Replacement Non-QIB
Noteholder, other than the amounts referred to in
subdivisions First and Second, inclusive, above; and in case
such monies shall be insufficient to pay in full the amounts
so due and unpaid, all such payments shall be made pro-rata
to the Persons entitled thereto, each Person receiving that
fraction of the total of all such amounts paid to all such
Persons as
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 13
14
the amount due to such Person bears to the sum of the amounts
due to all such Persons; and
Fourth: the balance, if any, to the Borrower or as it may
direct in writing if all conditions to the termination of
this Agreement specified in Section 17 shall have been
fulfilled, but if any such condition shall not have been
fulfilled, to be held by the Collateral Agent and thereafter
applied to any other payments required to be made in
accordance with subdivisions First through Third, inclusive,
above.
(b) Pending application in accordance with subsections
(a) of this Section 4, all monies received by the Collateral Agent hereunder
shall be held in an interest-bearing segregated bank account, which may be an
account with the commercial banking department of the Collateral Agent (whether
or not a Default or an Event of Default shall have occurred and be continuing).
(c) Each Noteholder: (i) acknowledges the existence and
validity of the Obligations as evidenced by the Loan Documents and the Security
Documents of the Borrower to each of the other Noteholders, and (ii) agrees to
refrain from making or asserting any claim that any such Obligations or the
instruments governing the terms thereof are invalid or unenforceable in
accordance with its or their terms as a result of any claims under the
fraudulent transfer, preference or similar avoidance provisions of applicable
bankruptcy, insolvency or other laws affecting the rights of creditors
generally. The Collateral Agent and each Noteholder hereby further agree that
the liens and security interests granted to each Noteholder under the respective
Security Documents shall be treated, as among the Noteholders, as having equal
priority (with the liens of the QIB Noteholders being pari passu liens in the
QIB Collateral and the liens of the Replacement Non-QIB Noteholders limited to a
first lien on the Non-QIB Collateral) and shall at all times be shared by the
Noteholders as provided herein regardless of any claim or defense (including,
without limitation, any claims under the fraudulent transfer, preference or
similar avoidance provisions of applicable bankruptcy, insolvency or other laws
affecting the rights of creditors generally) or any additional rights to which
any Noteholder may be entitled or subject. For purposes of clarification, each
Noteholder shall be entitled to a pro rata recovery of net sums received by the
Collateral Agent (or by any Noteholder in preference of other Noteholders) from
the Collateral of any Noteholder, even if certain of the Noteholder's liens are
determined to be invalid, unenforceable, voidable or unperfected for any reason.
In such event, net sums (after deducting fees and expenses incurred by such
Noteholder in collecting such sums) recovered in the name of Noteholders whose
liens are valid and enforceable shall be adjusted so that all Noteholders
receive a pro rata recovery on their Notes. The preceding sentence shall be
subject to the following: in no event shall a Replacement Non-QIB Noteholder
receive proceeds from collateral pledged to a QIB Noteholder, even if the
inability to disburse such proceeds results in Replacement Non-QIB Noteholders
receiving a
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 14
15
lesser pro rata recovery than QIB Noteholders. A Noteholder who is a QIB
Noteholder as of the date QIB collateral was pledged to such QIB Noteholder
shall be treated for purposes of this Agreement as a QIB at all times, even in
the event such holder is no longer a QIB at a later date, and shall be entitled
to proceeds of the Collateral pledged to QIBs. Should any Noteholder be required
to pay or repay a preference, fraudulent transfer or similar payment as a result
of the Collateral, such sum shall be borne ratably by all Noteholders, but not
to exceed the value of collateral allocable to each Noteholder. Nothing herein
shall be construed as either a transfer of the liens held by one Noteholder to
other Noteholders or transfer of control over those liens. All decisions
regarding the resolution of claims, including actual or threatened litigation,
related to a particular Noteholders' liens, shall belong to the particular
Noteholders holding those liens.
(d) If any Noteholder exercises any right of set off or
similar right with respect to any assets (whether or not such assets constitute
Collateral) of the Borrower for payment of any Obligations (as opposed, for
example, to the use of such set off amounts for the payment of other obligations
owing to any Noteholder which are not related to the Obligations) at any time
that a Default or an Event of Default has occurred and is continuing, the
amounts so set off shall constitute Collateral for purposes of this Agreement,
and such Noteholder shall promptly cause such amounts to be delivered to or put
in the custody, possession or control of the Collateral Agent for disposition or
distribution in accordance this Agreement. Until such time as the provisions of
the immediately preceding sentence have been complied with, such Noteholder
shall be deemed to hold such Collateral in trust for the parties entitled
thereto hereunder.
Section 5. Recovery Pro Rata. To the extent the Replacement
Non-QIB Noteholders would otherwise receive a greater pro rata recovery under
Section 4 than the QIB Noteholders, proceeds from the Pledged Shares shall be
allocated such that all Noteholders receive the same pro rata recovery upon the
liquidation of all Collateral and the distribution of proceeds thereof in
accordance with Section 4. To the extent that any Noteholder receives a payment
required to be shared under Sections 4.3(c) or 5 hereof, the Noteholder who
received such payment shall pay the applicable payment or portion of such
payment to the Collateral Agent for redistribution to the appropriate
Noteholders promptly upon proper request therefore by the Collateral Agent or
any Noteholder.
Section 6. Noteholder Records. The Collateral Agent agrees that
the registries of record and beneficial owners of Replacement QIB Notes and
Replacement Non-QIB Notes maintained by the Trustee pursuant to Section 3.6 of
the Indenture and the registries of record and beneficial owners maintained by
the Company pursuant to Section 2.3 of the Convertible Notes, copies of each of
which shall be made available to the Collateral Agent by the Trustee and the
Company, respectively, and the procedures set forth in such sections of the
Indenture and the Convertible Notes, respectively, shall govern which
Noteholders are entitled to notices hereunder
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 15
16
and which Noteholders may give any consent, request, direction, approval, waiver
or other action required or permitted hereunder. The Collateral Agent may
conclusively presume that the Persons reflected on the registries maintained
pursuant to the Indenture and the Convertible Notes are the record and
beneficial owners of the Notes, unless it receives written notification to the
contrary from a Noteholder. Without limiting the foregoing, the Borrower agrees
to provide the Collateral Agent with such evidence that it may reasonably
request in order to permit it to communicate with the Noteholders as required or
permitted herein. The Borrower agrees to inform the Collateral Agent from time
to time upon request by means of an Officer's Certificate of the principal
amount of Notes that are Outstanding with respect to each of the Convertible
Notes, the Replacement Non-QIB Notes and the Replacement QIB Notes.
The Collateral Agent agrees to preserve the names and addresses of the
Noteholders as provided to it in accordance with this Section 6. The rights of
the Noteholders to communicate with other Noteholders with respect to their
rights under this Agreement, and the corresponding rights and privileges of the
Collateral Agent, shall be governed by the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Each Noteholder agrees with the Borrower
and the Collateral Agent that neither the Borrower nor the Collateral Agent or
any agent of either of them shall be held accountable by reason of disclosure
of information as to names and addresses made pursuant to the Trust Indenture
Act.
Section 7. Notices Under Security Documents. The Collateral
Agent shall deliver, at the expense of the Borrower, to each Noteholder who has
requested such items, promptly upon receipt thereof, duplicates or copies of all
notices, requests and other instruments received by the Collateral Agent under
or pursuant to the Security Documents or this Agreement, to the extent that the
same are not required by such document or agreement to have been furnished
pursuant thereto directly to such holder.
Section 8. Amendments. Notwithstanding any provision to the
contrary in a Loan Document or the Security Documents, this Agreement and each
of the Security Documents may be amended, modified or supplemented, or a
provision thereof waived, upon the written consent of the Requisite Percentage,
except, any such action which results in a release or modification of any lien
or the continued perfection thereof, or which has a material adverse effect on
the existence or enforceability of such lien (as opposed to the value of the
Collateral or lien) must be consented to in writing by each Noteholder granted a
lien in such Collateral. The Collateral Agent shall not be required to enter
into any amendment, modification or supplement, which, in its judgment,
adversely effects its rights hereunder. The consent of the Borrower shall not be
necessary as to any amendment, modification, supplement or waiver which is
unrelated to a specific obligation of the Borrower in this Agreement. So long as
Value Partners, Ltd. is a Noteholder, no amendment may be entered into which
deprives Value Partners, Ltd. of control over the Collateral under Section 8-106
of the UCC (or any successor section), without Value
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 16
17
Partners, Ltd.'s written consent.
Section 9. Concerning the Collateral Agent.
(a) The Collateral Agent is hereby appointed as
collateral agent for, and hereby accepts such appointment for the benefit of the
Noteholders from time to time, but only upon the terms herein set forth,
including the following:
(i) notwithstanding anything herein contained to
the contrary and whether or not a Default or an Event of Default shall
have occurred and be continuing, the Collateral Agent shall not be
obligated to take any action hereunder or under the Security Documents
which might in its judgment involve it in any expense or liability
unless furnished with indemnity satisfactory to the Collateral Agent;
(ii) the Collateral Agent shall be under no
liability with respect to any action taken or omitted to be taken in
accordance with the direction of the Requisite Percentage relating to
the time, method, and place of conducting any proceeding for any remedy
available to the Collateral Agent acting on behalf of the Noteholders
hereunder, or exercising any remedy or power conferred upon the
Collateral Agent hereunder;
(iii) in making any payment or in taking any other
action hereunder in respect of any Note, the Collateral Agent may rely
upon the Officers' Certificate covering such Note delivered to it
pursuant to Section 6, unless a Responsible Offer of the Collateral
Agent shall have actual knowledge of any transfer of such Note or that
a Note has ceased to be Outstanding, and the Collateral Agent shall be
protected in making any payment in respect of any Note believed by the
Collateral Agent to be genuine;
(iv) whenever in the administration of its duties
hereunder or the Security Documents the Collateral Agent deems it
necessary for a matter to be proved or established prior to taking any
action hereunder, the Collateral Agent may request and the Borrower
shall, if requested, promptly provide certification regarding such
matter, upon which the Collateral Agent shall be protected in relying
in good faith.
(v) the Collateral Agent may act through agents,
attorneys or consultants and may rely on the advice and direction of
such agents, attorneys or consultants duly appointed by the Collateral
Agent and shall not be responsible for the misconduct or negligence of
any such agents or consultants appointed with due care hereunder;
(vi) the Collateral Agent shall not be liable for
any error of judgment
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 17
18
made in good faith unless it is proved that the Collateral Agent was
negligent in ascertaining the pertinent facts;
(vii) money held by the Collateral Agent need not
be segregated from other funds held by the Collateral Agent, except to
the extent required by law or the terms of this Agreement;
(vii) the Collateral Agent shall not be liable for
any action it takes or omits to take in good faith which it believes to
be authorized or within its rights or powers;
(ix) the Collateral Agent may consult with
counsel of its selection, and the advice or opinion of counsel with
respect to legal matters relating to this Agreement or any Security
Document shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel;
(x) the Collateral Agent shall be under no
obligation to exercise any of the rights or powers given to it in this
Agreement at the request or direction of the persons designated herein
or in the Security Documents, unless such persons shall have given to
the Collateral Agent reasonable security or reasonable indemnity
against the costs, expenses and liabilities which might be incurred by
in it in compliance with such request or direction.
(b) The Collateral Agent shall not be responsible for any
recital herein or in the Notes or for insuring the Collateral or for the
validity or sufficiency of the Collateral, this Agreement or any Security
Document or of any supplements thereto or instruments of other assurance or for
the sufficiency of the security for the Notes intended to be secured by any
Security Document, or for the value of the Collateral or the title of the
Borrower to the Collateral. Except in regard to the filing of continuation
statements as provided herein, the Collateral Agent makes no representations
regarding and shall not be responsible for the creation or perfection of the
security interests of the Noteholders in the Collateral, but is only taking
possession of the Collateral on their behalf as provided herein. Except as
otherwise expressly provided herein, the Collateral Agent shall not be bound to
ascertain or inquire as to the performance or observance of any covenants,
conditions or agreements on the part of the Borrower under the Security
Documents but the Collateral Agent at the written direction of the Requisite
Percentage may require of the Borrower full performance of any such covenants.
(c) The Collateral Agent shall not be liable or
responsible for any losses incurred or suffered by the Borrower or any other
obligor or by any secured party, or any
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 18
19
decrease in the value of the Collateral, or from any other sale or disposition
of Collateral made in accordance with the terms hereof and the Security
Documents. In no event shall the Collateral Agent be liable for any taxes or any
other governmental charges imposed upon or in respect of the Collateral or upon
the income or other distributions thereon.
(d) The Collateral Agent shall be entitled to rely
exclusively upon, and shall have no duty or obligation to check, verify or
otherwise assess the accuracy of, the information or calculations provided to
the Collateral Agent by (i) the Borrower in any Officers' Certificate delivered
pursuant to Section 6, and (ii) the Noteholders as provided herein. Upon the
written request of the Noteholders owning at least 25% of the Notes Outstanding,
and upon receipt from the Borrower of indemnity or other assurances with respect
to the payment of the costs of the same, the Collateral Agent shall investigate
the accuracy of such information given to it in an Officer's Certificate.
(e) Except as specified in Section 12, paragraph (j) of
this Section, or in the next two following sentences, the Collateral Agent shall
have no responsibility for filing any Security Document or any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to the
Noteholders hereunder, under any Security Document or to prepare and file any
filing, report or registration statement under any federal or state securities
or "blue sky" law or to record this Agreement. Promptly upon the filing of any
financing statement with respect to any Collateral, the Borrower will deliver to
the Collateral Agent an Officers' Certificate, setting forth the date, place of
filing and filing number of each such financing statement. The Collateral Agent
will make timely filings of continuation statements with respect to each
financing statement listed in any such Officers' Certificate.
(f) The Collateral Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Collateral Agent, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Collateral Agent shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Borrower, personally or by agent or attorney at the sole cost of the
Borrower and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation.
(g) The Collateral Agent undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this Agreement against
the Collateral Agent.
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 19
20
(h) In the absence of bad faith on its part, the
Collateral Agent may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Collateral Agent by the Borrower or the Noteholders and
conforming to the requirements of this Agreement; but in the case of any such
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Collateral Agent, the Collateral Agent shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Agreement (but need not confirm or investigate the accuracy
of mathematical calculations or other facts stated therein).
(i) The Borrower agrees to promptly deliver to the
Collateral Agent copies of any amendments, modifications or waivers to any
document related to the Notes. The Collateral Agent shall be entitled to
conclusively presume that those documents are in the form delivered to the
Collateral Agent on the date of the closing of the transactions contemplated
hereby until it has received written notice to the contrary by one of the
parties hereto (and in the event of conflicting notices from more than one party
hereto, as specified by the Requisite Percentage).
(j) In case there shall be pending proceedings relative
to the Borrower or any other obligor upon the Notes under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Borrower or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to the
Borrower or other obligor upon the Notes, or to the creditors or property of the
Borrower or such other obligor, the Collateral Agent, irrespective of whether
the principal of the Notes shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Collateral Agent
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise, but
only upon being given a Direction Notice and upon being indemnified as provided
herein:
(i) to file all pleadings and papers necessary
to the exercise of duties of the Collateral Agent on behalf of the
Noteholders, including a motion or motions for relief from the
automatic stay and any document or pleading necessary to continue the
perfection of the Noteholders' interest in the Collateral; and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims, and to distribute
all amounts received with respect to the claims of the Noteholders and
of the Collateral Agent on their behalf; and any trustee, receiver, or
liquidator, custodian or other similar official is hereby authorized by
each of the Noteholders to make payments to the Collateral Agent, and,
in the event that the Collateral Agent shall consent to the making of
payments directly to the Noteholders, to
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 20
21
pay to the Collateral Agent such amounts as shall be sufficient to
cover reasonable compensation to the Collateral Agent, each predecessor
Collateral Agent and their respective agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all advances made,
by the Collateral Agent and each predecessor Collateral Agent, except
as a result of the negligence or bad faith of any such Agent.
Nothing herein contained shall be deemed to authorize the Collateral
Agent to authorize or consent to or vote for or accept or adopt on behalf of
the Noteholders any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any holder thereof, or to
authorize the Collateral Agent to vote in respect of the claim of any
Noteholder in any such proceeding.
All rights of action and of asserting claims under the Security
Documents may be enforced by the Collateral Agent without the possession of any
of the Notes or the production thereof in any trial or other proceedings
relative thereto, and any such action or proceedings instituted by the
Collateral Agent shall be brought as agent for the Noteholders.
In any proceedings brought by the Collateral Agent (and also any
proceedings involving the interpretation of any provision of this Agreement to
which the Collateral Agent shall be a party) the Collateral Agent shall be held
to represent all the holders of the Notes, and it shall not be necessary to
make any holders of the Notes parties to any such proceedings.
Section 10. Collateral Agent's Compensation, Expenses, etc. The
Borrower, from time to time upon request, will pay the Collateral Agent
compensation for its services hereunder and will pay or reimburse the
Collateral Agent on a current basis for all its reasonable expenses and
disbursements hereunder, including, without limitation, the reasonable fees and
disbursements of its counsel and of its agents not regularly in its employ
including independent consultants retained by the Collateral Agent in good
faith. The Collateral Agent shall have a first lien prior to Noteholders upon
all property and funds collected in order to secure the Collateral Agent's
compensation and indemnity rights hereunder. Notwithstanding the provisions of
any Security Document, the Borrower hereby indemnifies the Collateral Agent and
agrees to hold it harmless against any loss, expense, liability or obligation
arising out of or in connection with the acceptance and the performance of its
duties hereunder and under the Security Documents, including, without
limitation, the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, and the payment, failure to pay or delay in payment of any
stamp or other taxes (including interest and penalties) in respect of the issue
and sale of the Notes, such indemnity and compensation to survive payment of
the Notes and the termination of this Agreement, and any resignation, removal
or replacement of the Collateral Agent, provided that such indemnity shall not
apply to actions or inactions by the Collateral Agent that constitute the
negligence, willful
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 21
22
misconduct or bad faith.
When the Collateral Agent incurs expenses or renders services in
connection with any bankruptcy proceeding involving the Borrower, the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Agreement or the resignation and removal of the Collateral Agent.
Section 11. Resignation, Removal and Replacement of Collateral
Agent. The Collateral Agent or any successor Collateral Agent may resign at any
time by giving at least 30 days' prior written notice of resignation to the
Borrower and each Noteholder, such resignation to be effective on the later of
(a) the date specified in such notice and (b) the date on which a replacement
collateral agent is appointed to act as Collateral Agent hereunder and the
Collateral has been delivered to such new replacement collateral agent. The
Requisite Percentage may at any time remove the Collateral Agent for or without
cause by an instrument or instruments in writing delivered to the Collateral
Agent and the Borrower. In case the office of Collateral Agent shall become
vacant for any reason, the Requisite Percentage may appoint a successor
Collateral Agent (eligible as provided in Section 13) to fill such vacancy by an
instrument or instruments in writing delivered to such successor Collateral
Agent, the retiring Collateral Agent and the Borrower. Until a new Collateral
Agent shall be so appointed by the Requisite Percentage, the Collateral Agent
shall promptly deliver all Collateral to Value Partners, Ltd. or, if Value
Partners, Ltd. is no longer a Noteholder, to such other party as designated by
the Requisite Percentage, if such party has expressly agreed to hold such
Collateral for the benefit of all Noteholders. Any interim Collateral Agent so
appointed shall immediately and without any further action be superseded by a
successor Collateral Agent appointed by the Requisite Percentage in the manner
provided in this Section 11. If a successor or interim Collateral Agent does not
take office within 30 days after the retiring Collateral Agent resigns or is
removed, the retiring Collateral Agent or any Noteholder may petition any court
of competent jurisdiction for the appointment of a successor Collateral Agent.
Upon the appointment of any successor or interim Collateral Agent pursuant to
this Section 11, such successor or interim Collateral Agent shall immediately
and without any further action succeed to all the rights and obligations of the
retiring Collateral Agent hereunder and under the Security Documents as if
originally named herein and therein and the retiring Collateral Agent, at the
expense of the Borrower, upon being paid any compensation owed to it pursuant to
Section 10 hereof, shall duly assign, transfer and deliver to such successor or
interim Collateral Agent all the rights and moneys at the time held by the
retiring Collateral Agent under the Security Documents and hereunder and shall
execute and deliver such proper instruments as may be reasonably requested to
evidence such
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 22
23
assignment, transfer and delivery. Notwithstanding anything to the contrary in
this or any other document, under no circumstances shall the Borrower be
entitled to replace, terminate or name a replacement for the Collateral Agent.
The Collateral Agent is the agent of and representative of the Noteholders and
not the Borrower. Until the Collateral is delivered to a replacement collateral
agent, the existing Collateral Agent, even if otherwise unable or unqualified to
act as Collateral Agent, shall be deemed to possess the Collateral for the
benefit of the Noteholders.
Section 12. Successor Collateral Agent by Merger, Consolidation,
etc. Any corporation into which the Collateral Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Agent is a party, or any state or national
bank or trust bank in any manner succeeding to all or substantially all of the
corporate trust business of the Collateral Agent, if eligible as provided in
Section 13, shall automatically succeed to all of the rights and duties of the
Collateral Agent hereunder and under the Security Documents without further
action on the part of any of the parties hereto. Such surviving or succeeding
corporation (if other than the Collateral Agent) shall (a) forthwith deliver to
each Noteholder and the Borrower written notice of such succession to the rights
and obligations of the Collateral Agent hereunder and under the Security
Documents and (b) execute, file and record all necessary filings, notices and
documents in each location a filing, notice, or document was filed and recorded
to perfect the lien and security interest granted to the Noteholders pursuant to
the Security Documents (all within any temporal parameters required to continue
the perfection (and priority thereof) of such liens and security interests) and
take all such other actions necessary to maintain a perfected lien and security
interest in the Collateral.
Section 13. Eligibility of Collateral Agent. The Collateral Agent
shall always be a state or national bank or trust company in good standing,
organized under the laws of the United States of America or one of the States
thereof or the District of Columbia having a capital, surplus and undivided
profits (as shown by its latest annual report of condition) aggregating at
least $100,000,000.00 and shall not be a Noteholder or any affiliate thereof,
if there be such a bank or trust company willing and able to accept such trust
upon reasonable and customary terms.
Section 14. Appointment of Separate or Co-Collateral Agent.
(a) The Collateral Agent may and, upon the request of the
Requisite Percentage, shall by an instrument in writing delivered to the
Borrower and to each Noteholder, appoint a bank or trust company or an
individual to act as separate collateral agent or co-collateral agent with
respect to the Notes in a jurisdiction where the Collateral Agent is
disqualified from acting or for any other purpose deemed by the Collateral Agent
or by such holders to be advantageous to their respective interests, such
separate collateral agent or co-collateral agent to exercise only such rights
and to have only such duties as shall be specified in the instrument of
appointment
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 23
24
and shall not be, or be an affiliate of, any Noteholder. The Borrower will pay
the reasonable compensation and expenses of any such separate collateral agent
or co-collateral agent and, if requested by the Collateral Agent, such separate
collateral agent or co-collateral agent or the Requisite Percentage, the
Borrower will enter into an amendment to this Agreement, satisfactory in
substance and form to the Collateral Agent, such separate collateral agent or
co-collateral agent and each such holder, confirming the rights and duties of
such separate collateral agent or co-collateral agent.
(b) Every separate collateral agent and co-collateral
agent shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Collateral Agent shall be conferred or
imposed upon and exercised or performed by the Collateral Agent and
such separate collateral agent or co-collateral agent jointly (it being
understood that such separate collateral agent or co-collateral agent
shall not be authorized to act separately without the Collateral Agent
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Collateral Agent shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Collateral or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate collateral agent or co-collateral
agent, but solely at the direction of the Collateral Agent;
(ii) no collateral agent hereunder shall be
liable by reason of any act or omission of any other collateral agent
hereunder; and
(iii) the Collateral Agent may at any time accept
the resignation of or remove any separate collateral agent or
co-collateral agent.
(c) Any notice, request or other writing given to the
Collateral Agent shall be deemed to have been given to each of the then separate
collateral agents and co-collateral agents, as effectively as if given to each
of them. Every instrument appointing any separate collateral agent or
co-collateral agent shall refer to this Agreement and the conditions of this
Section 14. Each separate collateral agent and co-collateral agent, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Collateral
Agent or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Collateral Agent. Every such instrument shall be filed with the
Collateral Agent.
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 24
25
(d) Any separate collateral agent or co-collateral agent
may at any time constitute the Collateral Agent its agent or attorney-in-fact
with full power and authority, to the extent not prohibited by law, to do any
lawful act under or in respect of this Agreement on its behalf and in its name.
If any separate collateral agent or co-collateral agent shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Collateral
Agent, to the extent permitted by law, without the appointment of a new or
successor Collateral Agent.
(e) Upon the request of the Requisite Percentage, the
Collateral Agent shall promptly remove any separate collateral agent or
co-collateral agent.
Section 15. Obligations Absolute. The obligations of the Borrower
under this Agreement and the Security Documents, to the fullest extent
permitted by applicable law, shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any renewal,
extension, amendment or modification of, or addition or supplement to, or
deletion from, this Agreement, the Purchase Agreement, the Convertible Notes,
the Indenture, the Exchange Agreement or the Security Documents, or any
assignment or transfer of any thereof; (b) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such
instrument or any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of any such instrument; (c) any furnishing of any
additional security to the Collateral Agent or any acceptance thereof or any
release of any security or guaranty by the Collateral Agent; (d) any limitation
on any party's liability or obligations under any such instrument or any
invalidity or unenforceability, in whole or in part, of any such instrument or
any term thereof, or (e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the Borrower or any action taken with respect to this Agreement by
any trustee or receiver, or by any court, in any such proceeding; whether or
not the Borrower shall have notice or knowledge of any of the foregoing.
Section 16. Further Assurances.
(a) The Borrower at its expense will execute, acknowledge
and deliver all such agreements and instruments and take all such action as the
Collateral Agent or the Requisite Percentage from time to time may reasonably
request in order further to effectuate the purposes of this Agreement and to
carry out the terms hereof. The Borrower represents and warrants that its office
set forth in Section 18 is its principal place of business and the office at
which its records with respect to this Agreement and the Security Documents are
kept. The Borrower represents and warrants that its state of incorporation is
Delaware. In the event the Borrower proposes to change its name, the location of
its principal place of business, the location of such
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 25
26
office, or its state of incorporation the Borrower will, concurrently with the
delivery of written notice thereof, deliver to the Collateral Agent written
notice of such proposed change.
(b) Not more than 90 days nor less than 45 days prior to
each date on which the Borrower proposes to take any action contemplated by the
last sentence of Section 16(a), the Borrower shall, at its own cost and expense,
furnish to each Noteholder and the Collateral Agent an opinion of counsel either
(a) stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Agreement, any Security Document, any supplements and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to perfect, maintain and
protect the lien and security interest of the Collateral Agent, on behalf of the
Noteholders, with respect to the Security against all creditors of and
purchasers from the Borrower, as the case may be, to the extent that the same
may be done by filing or recording, and reciting the details of such action, or
(b) stating that, in the opinion of such counsel, no such action is necessary to
maintain such perfected lien and security interest. Such opinion of counsel
shall describe each recording, filing, re-recording and refiling of this
Agreement, or any Security Document, any supplements and any other requisite
statements and continuation statements that will, in the opinion of such
counsel, be required to perfect, maintain and protect the lien and security
interest of the Collateral Agent, on behalf of the Noteholders, with respect to
the Collateral against all creditors of and purchasers from the Borrower for a
period, specified in such opinion, continuing until a date not earlier than
fifteen months from the date of such opinion.
Section 17. Termination.
(a) Upon receipt by the Collateral Agent from the
Noteholders of evidence satisfactory to it of the indefeasible payment (or
prepayment) in full in cash of the principal of and premium, if any, and
interest on all of the Notes, in accordance with the terms thereof and the
indefeasible payment in full in cash of all other sums payable under the
Purchase Agreement, the Exchange Agreement and this Agreement (including,
without limitation, the reasonable compensation, expenses and disbursements of
the Collateral Agent), and upon expiration of any preference period under
Chapter 11 of Title 11 of the United States Code or other applicable law or upon
final resolution of any action brought against a Noteholder within such time
period, this Agreement shall terminate and the Collateral Agent, at the request
and expense of the Borrower, will execute and deliver to the Borrower a proper
instrument or instruments prepared by the Borrower acknowledging the
satisfaction and termination of the Security Documents and of this Agreement,
and will duly assign, transfer and deliver to the Borrower all of the rights and
moneys at the time held by the Collateral Agent under the Security Documents and
hereunder. Notwithstanding the satisfaction and termination of this Agreement or
the Security Documents, the obligation of the Borrower to the Collateral Agent
under Section 10 of this Agreement shall survive.
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 26
27
(b) Prior to executing the instruments referred to in
Section 17(a), the Collateral Agent shall be entitled to receive an opinion of
counsel, at the expense of the Borrower, stating that the conditions to
satisfaction and discharge have been complied with under this Agreement.
Section 18. Notices, etc. All notices, directions, instructions
and other communications under this Agreement shall be in writing and shall be
delivered by hand, by express courier service or by registered or certified
mail, return-receipt requested, postage prepaid, addressed:
(a) If to Borrower:
Altiva Financial Corporation
Sixth Floor
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Office of the Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Driver, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to the Collateral Agent:
United States Trust Company of New York
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Corporate Trust
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With Copy to:
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 27
28
Xxxxxx and Xxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) if to any Noteholder, at the address of such
Noteholder specified in the schedules to this Agreement or at such other address
as such Noteholder shall have furnished to the Borrower and the Collateral Agent
in writing.
Section 19. Treatment of Notices. The Company, the Collateral
Agent and each Noteholder acknowledge and agree that the Convertible Notes, the
Replacement QIB Notes and the Replacement Non-QIB Notes shall be considered as a
single class of pari passu indebtedness of the Borrower and that,
notwithstanding any contrary provision in the Purchase Agreement, the Exchange
Agreement or any of the Security Documents, whenever any provisions of the
Convertible Notes, the Indenture, the Replacement QIB Notes, the Replacement
Non-QIB Notes or any other Security Document refers to actions by the holders of
any such notes, whether upon a Default or an Event of Default, in connection
with any amendment, waiver or other modification of the same or otherwise, the
requisite percentage of holders which is required to effect any such action
shall be determined by reference to an aggregate amount of the Notes
Outstanding, provided that any amendment, waiver or modification of the
provisions of Article VII of the Convertible Notes or any other provision
thereof related to the convertibility of such notes may be made only with the
requisite percentage of the holders of the Convertible Notes, considered as a
separate class of securities for this purpose only.
Section 20. Jurisdiction.
Unless otherwise specified, this agreement shall be construed, and its
performance enforced, under the laws of the state of Maryland.
Section 21. Venue, Service of Process, and Jury Trial.
The Borrower, for itself and its successors and assigns, irrevocably
(a) submits to the nonexclusive jurisdiction of the state and federal courts in
the State of Maryland (b) waives, to the fullest extent lawful, any objection
that it may now or in the future have to the laying of venue of any litigation
arising out of or in connection with this Agreement brought in any such court,
(c) waives any claims that any litigation brought in any of the foregoing
courts has been brought in an inconvenient forum, (d) consents to the service
of process of any of those courts in any litigation by the mailing of copies of
that process by certified mail, return receipt requested,
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 28
29
postage prepaid, by hand delivery, or by delivery by a nationally-recognized
courier service, and service shall be deemed complete upon delivery of the legal
process at its address for purposes of this Agreement, (e) agrees that any legal
proceeding against any party to this Agreement arising out of or in connection
with the this Agreement may be brought in one of the foregoing courts, and (f)
waives to the fullest extent permitted by governmental requirement, its
respective rights to a jury trial of any claim or cause of action based upon or
arising out of this Agreement. The scope of each of the foregoing waivers is
intended to be all encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of the matters contemplated hereby,
including, without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. The Borrower acknowledges
that these waivers are a material inducement to each Noteholder's agreement to
enter into a business relationship, that each Noteholder has already relied on
these waivers in entering into this Agreement, and that each Noteholder will
continue to rely on each of these waivers in related future dealings. The
Borrower further warrants and represents that it has reviewed these waivers with
its legal counsel, and that it knowingly and voluntarily agrees to each waiver
following consultation with legal counsel. The waivers in this paragraph are
irrevocable, meaning that they may not be modified either orally or in writing,
and these waivers apply to any future renewals, extensions, amendments,
modifications, or replacements in respect of this Agreement. In connection with
any litigation, this Agreement may be filed as a written consent to a trial by
the court.
Section 22. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original and all of which, when taken together,
will be deemed to constitute one and the same.
Section 23. Section Headings.
The headings of sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.
Section 24. Waiver.
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 29
30
Section 25. Severability. (a) 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.
(b) Likewise, if any provision of this Agreement shall be rejected
as an executory contract with respect to the Company by a bankruptcy court, the
remaining parties hereto agree that they shall remain bound to all terms and
provisions of this Agreement and that they shall perform all duties and
obligations required of each. The Borrower is executing this Agreement for
purposes of acknowledgement only, except as to specific obligations and duties
of the Borrower herein.
Exhibit A Convertible Pledge Agreement
Exhibit B Schedule of Collateral
Exhibit C Replacement QIB Pledge Agreement
Exhibit D Stock Pledge Agreement
Exhibit E Description Pledged Shares
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 30
31
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
UNITED STATES TRUST COMPANY OF NEW YORK,
As Collateral Agent for the Noteholders
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
ALTIVA FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee, a Attorney-in-Fact for the
Replacement QIB Noteholders
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
UNITED STATES TRUST COMPANY OF NEW
YORK, Trustee, a Attorney-in-Fact
for the Replacement Non-QIB
Noteholders
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
VALUE PARTNERS, LTD.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
Managing Partner of Xxxxx & Partners
General Partner of Value Partners, Ltd.
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT PAGE 31
