AGENCY AND INTERCREDITOR AGREEMENT
This Agency and Intercreditor Agreement ("AGREEMENT") is made by and
among Xxxxxxxxx X. Xxxxxxx, Xxx X. Xxxxxxx, Xxxx X. Xxxxx and Xxxxxxx X.
XxXxxxx (individually a "NOTEHOLDER" and collectively the "NOTEHOLDERS").
R E C I T A L S:
A. Each of the Noteholders is making a loan to Jalate, Ltd., a
California corporation (the "COMPANY"), and will be issued a promissory note
(individually a "NOTE" and collectively the "NOTES"). Such Notes are listed
on SCHEDULE 1 hereto.
B. The Company will execute a Security and Pledge Agreement of even
date with the Notes ("SECURITY AGREEMENT") pursuant to which the Company will
grant to Xxxxxxx X. XxXxxxx ("Agent"), as agent for all Noteholders, a
security interest in certain collateral as more particularly described in the
Security Agreement ("COLLATERAL") as security for the repayment of the
Company's obligations under the Notes.
C. The Noteholders desire to enter into this Agreement to appoint
Agent to act on behalf of the Noteholders, and to set forth the Noteholders'
agreements respecting enforcement of their rights and remedies under the
Notes and the Security Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants
and promises herein contained, the parties hereto agree as follows:
1. NOTEHOLDERS' AGENT
1.1 APPOINTMENT. Each Noteholder hereby appoints Xxxxxxx X.
XxXxxxx as agent to act on behalf of all Noteholders in the enforcement of
their rights and remedies under the Notes and to act as the secured party
under the Security Agreement.
1.2 AUTHORITY OF AGENT. Agent shall take such action and do such
things from time to time as may be requested by an affirmative vote of the
Noteholders in the manner described in Section 3 of this Agreement.
1.3 RESIGNATION AND REMOVAL OF AGENT. Agent may resign and may be
removed, with or without cause, at any time by the Noteholders. Upon the
resignation or removal of the Agent, the Noteholders shall appoint a
successor agent and the Noteholders shall execute such additional documents
as may be reasonably required to reflect and effect such change. Upon such
appointment and execution of any documents necessary to effectuate such
appointment, the successor agent shall thereafter become the Agent hereunder.
1.4 EXPENSES. Each Noteholder shall pay its pro rata share (as
defined herein) of any out-of-pocket expenses incurred by Agent in connection
with any collection efforts related to the indebtedness evidenced by the
Notes and the enforcement of rights and remedies under the Security
Agreement. Agent may request that the Noteholders advance funds to cover
expenses yet to be incurred. Any amounts so advanced by Noteholders shall be
returned to them pro rata to the extent such amounts are not expended or are
later recovered upon any required sale of the Collateral, from the Company or
otherwise.
1.5 DELEGATION OF DUTIES. Agent may carry out any of its duties
hereunder by and through its employees, attorneys or agents, and shall be
entitled to reasonably rely upon (and shall be protected in relying upon)
advice of counsel concerning all matters pertaining to its duties hereunder.
1.6 RELIANCE. Agent shall be entitled to reasonably rely on and
shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, statement or other document believed
by it to be genuine.
1.7 RIGHTS AS NOTEHOLDER. Each Noteholder acknowledges that with
respect to any Note held directly or indirectly by Agent (it being
acknowledged that the initial Agent, Xxxxxxx X. XxXxxxx, holds a Note), Agent
shall have the same rights as any other Noteholder and may exercise such
rights as though it were not the Agent hereunder.
2. PRO RATA SHARE. Each Noteholder's pro rata share shall be equal at
any time to the outstanding principal balance of that Noteholder's Note
divided by the aggregate outstanding principal balance of all of the Notes.
Notwithstanding anything to the contrary herein, subject to the rights of
Agent to reimbursement of expenses, each Noteholder shall share in the
proceeds of the Collateral and any other collections received from the
Company in payment of the indebtedness represented by the Notes in accordance
with such Noteholder's pro rata share. Each Noteholder shall share
collection costs and expenses in accordance with its pro rata share.
3. DECISION MAKING. The following provisions shall govern voting and
decision making by the Noteholders with respect to actions to be taken under
this Agreement:
(a) The following actions shall require the affirmative vote of
all of the Noteholders:
(i) Reductions in the principal amount of or accrued
interest on any of the Notes, extensions of the maturity date of the Notes,
or any waiver of any default in the payment of any principal amount of the
Notes; and
(ii) Any amendment, modification or termination of this
Agreement, and any change in the percentage interest of Noteholders required
to consent to the amendment, modification or termination of this Agreement.
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(b) The following actions shall require the affirmative vote of
Noteholders holding in excess of 50% of the aggregate outstanding principal
balance of the Notes:
(i) Agent's obligation to exercise the rights described in
the Notes and the Security Agreement and any other agreements or documents
now or hereafter executed to secure the Notes;
(ii) Waiver of any default or any event of default, except a
default in the payment of any principal amount of the Notes when due;
(iii) Removal of Agent and the appointment of a successor
agent; and
(iv) Other actions relating to the Notes or the Security
Agreement not specifically set forth in this Section 3.
(c) In the event a Noteholder determines that a vote of
Noteholders is necessary, the Noteholder may request a vote and give each
Noteholder two business days' written notice, if practicable, or notice by
telephone if written notice is not practicable, which notice shall set forth
the issue to be decided and shall set forth the time for response or vote and
the place and method of such vote. Notice shall be deemed given when
actually received. Any Noteholder not responding within the time limit shall
be registered as voting no. The vote shall be conducted by Agent and may be
by meeting, telephone conference call or by individual polling of the voters.
Agent shall notify each Noteholder of the results of the vote and proceed to
act as required by the vote.
4. LIMITATION OF LIABILITY. Agent shall not be liable for any action
taken or omitted to be taken by it in accordance with this Agreement if it
acted or failed to act in good faith and reasonably believed it was acting or
withholding action within the discretion or power conferred by this
Agreement, nor shall it be responsible for the consequences of any error in
judgment. Except as provided herein, Agent shall be under no duty to enforce
any rights with respect to the Notes, the Security Agreement or the
Collateral covered thereby. Agent shall not be compelled to do any act
hereunder or to take any action towards the execution or enforcement of the
powers hereby created or to prosecute or defend any suit hereunder unless
indemnified to its reasonable satisfaction against loss, cost, liability and
expense. Agent shall not be responsible in any manner to any of the
Noteholders for the effectiveness, enforceability, genuineness, validity or
due execution of any of the Notes, the Security Agreement, or any other
documents evidencing the obligations of the Company under the Notes or
securing same, or for any representation, warranty, document, certificate,
report or statement made in or furnished under or in connection with any of
the foregoing documents, or be under any obligation to any of the Noteholders
to ascertain or to inquire as to the Company's performance or observation of
any of the terms, covenants or conditions of the Notes or Security Agreement.
The Noteholders agree to indemnify Agent from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and/or disbursements of any kind or nature whatsoever
which may be
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imposed on, asserted against, or incurred by it in any way relating to or
arising out of any document pertaining to the Notes or any action taken or
omitted by it under such documents, except to the extent the same results
from the gross negligence or willful misconduct of Agent.
5. PARITY OF THE NOTEHOLDERS. Each Noteholder acknowledges and agrees
that all liabilities owed to the Noteholder by the Company arising under that
Noteholder's Note shall be PARI PASSU with the liabilities owed to all other
Noteholders arising under their Notes.
6. NOTEHOLDER CREDIT DECISION. Each Noteholder acknowledges that it
has, independently and without reliance on Agent or any other Noteholder and
based upon such documents and information as it has deemed appropriate, made
its own credit analysis and decision to make a loan to the Company and to
enter into this Agreement.
7. BENEFITS OF AGREEMENT. None of the provisions of this Agreement
shall inure to the benefit of the Company or any person other than the
Noteholders. Neither the Company nor any other person shall be entitled to
rely upon or to raise as a defense in any manner whatsoever based on the
failure of any Noteholder to comply with this Agreement.
8. NO PARTNERSHIP. Neither the execution of this Agreement nor any
agreement related to the Collateral securing the Notes is intended to be or
to create, and the foregoing shall not be construed to be, a partnership,
joint venture or other joint enterprise among the Noteholders or any of them,
or as between the Noteholders and Agent.
9. CONTROLLING AGREEMENT; COUNTERPARTS. In the event of any conflict
between the terms of the Notes, the Security Agreement, and this Agreement
relating to the relationships among Noteholders and as between the
Noteholders and Agent, this Agreement shall control. This Agreement may be
executed in any number of counterparts, all of which, when taken together,
shall constitute one agreement.
10. SURVIVAL OF AGREEMENTS. This Agreement shall remain in full force
and effect until payment in full of the Notes and any other obligations
secured under the Security Agreement.
11. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Texas, and each party to the extent it may lawfully do so hereby
consents to service of process and to be sued in the State of Texas and in
the United States District Court for the Southern District of Texas, as well
as to the jurisdiction of all courts from which an appeal may be taken from
such courts, for the purpose of any suit, action or other proceeding arising
out of this Agreement, or with respect to the transactions contemplated
hereby, and expressly waives any and all objections it may have as to venue
in any such courts.
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"NOTEHOLDERS":
/s/ Xxxxxxxxx X. Xxxxxxx
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XXXXXXXXX X. XXXXXXX
Date: January 27, 1998
/s/ Xxx X. Xxxxxxx
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XXX X. XXXXXXX
Date: January 27, 1998
/s/ Xxxx X. Xxxxx
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XXXX X. XXXXX
Date: January 27, 1998
/s/ Xxxxxxx X. XxXxxxx
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XXXXXXX X. XxXXXXX
Date: January 27, 1998
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SCHEDULE 1
NOTES AND HOLDERS
Holder Note Amount Percentage
------ ----------- ----------
Xxx X. Xxxxxxx $237,500 25%
Xxxxxxxxx X. Xxxxxxx $142,500 15%
Xxxx X. Xxxxx $ 95,000 10%
Xxxxxxx X. XxXxxxx $475,000 50%
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TOTAL $950,000 100%
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