EXHIBIT 10.3
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (as hereafter amended,
restated or otherwise modified from time to time, this "Agreement") is entered
into effective as of May 29, 2002 (the "Effective Date"), by and among the
"Buyers" ("Mezzanine Creditors" and each, individually a "Mezzanine Creditor")
party to the Securities Purchase Agreement dated the date hereof (the "Purchase
Agreement") among such Buyers and InterVoice-Brite, Inc., a Texas corporation
(the "Company"), Bank of America, National Association, acting in its capacity
as administrative agent for the Senior Creditors (defined below) (in such
capacity, together with its successors in such capacity, hereinafter called the
"Agent") and the Company. Terms defined in Section 1, where used in the Recital
below and elsewhere in this Agreement, shall have the same meanings, where so
used, as are prescribed therein.
RECITAL
The Credit Parties are obligated for payment and performance of the
Senior Debt and have granted the Senior Creditor Liens to secure the Senior
Debt. The Company is obligated for payment and performance of Mezzanine Debt. As
one of the conditions precedent to the agreement of Senior Creditors to continue
to extend credit under the Senior Credit Agreement, the Agent and the Senior
Creditors have required the execution and delivery of this Agreement by the
parties hereto. In order to induce the Senior Creditors to extend credit under
the Senior Credit Agreement, the Company and the Mezzanine Creditors wish to
enter into this Agreement on the terms provided herein.
AGREEMENT
NOW, THEREFORE, in order to induce the Agent and the Senior Creditors
to continue to extend credit under the Senior Credit Agreement, and for value
received, the receipt and sufficiency of which are hereby acknowledged by each
of the undersigned, the parties hereto hereby agree as follows:
1. Definitions. The following terms shall have the following meanings
in this Agreement:
"Agent" has the meaning prescribed for such term in the introductory
paragraph of this Agreement.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended
and from time to time in effect (11 U.S.C. Sections 101, et seq).
"Business Day" means any day that is not Saturday, Sunday, or a day on
which banks in Dallas, Texas or Charlotte, North Carolina are required or
permitted under applicable law to be closed.
"Commitments" means, collectively, all commitments of the Senior
Creditors to extend credit under the Senior Credit Agreement.
"Company" has the meaning prescribed for such term in the introductory
paragraph of this Agreement, and includes the Company as debtor-in-possession in
any Proceeding.
"Credit Parties" means the Company and its Subsidiaries that have
guaranteed or granted a lien upon their assets to secure the Senior Debt, and
"Credit Party" means any of such Persons.
"Equally Senior Securities" means securities of the Company or any
other Person provided for by a plan of reorganization or readjustment the
payment of which is senior with respect to Senior Debt to the payment of all
Mezzanine Debt, at least to the extent provided in the subordination provisions
of this Agreement, including, without limitation, the provisions hereof
requiring the payment or delivery to the holders of Senior Debt of certain
payments or distributions otherwise payable or deliverable in respect of any
Mezzanine Debt, in form and substance reasonably satisfactory to the holders at
the time thereof of all of the Senior Debt.
"Equally Subordinate Securities" means securities of the Company or any
other Person provided for by a plan of reorganization or readjustment the
payment of which is subordinate with respect to Mezzanine Debt to the payment of
all Senior Debt, at least to the extent provided in the subordination provisions
of this Agreement, including, without limitation, the provisions hereof
requiring the payment or delivery to the holders of Senior Debt of certain
payments or distributions otherwise payable or deliverable in respect of any
Mezzanine Debt.
"Mezzanine Creditors" has the meaning prescribed for such term in the
introductory paragraph of this Agreement.
"Mezzanine Debt" means (i) all principal of, and premium, if any, and
all interest on, the Mezzanine Notes (including, without limitation, any
interest accruing thereon at the legal rate after the commencement of any
Proceeding and any additional interest that would have accrued thereon but for
the commencement of such Proceeding), (ii) all other indebtedness, obligations
and liabilities now or hereafter owing to the Mezzanine Creditors by the Company
under the Mezzanine Notes, the Warrants, the Registration Rights Agreement, the
Purchase Agreement or the Transfer Agent Instructions, whether now existing or
hereafter incurred or created, (iii) all obligations arising under any guaranty
executed by the Company for the benefit of the Mezzanine Creditors in respect of
any Mezzanine Debt and (iv) any and all renewals, extensions or rearrangements
thereof.
"Mezzanine Debt Documents" means the Mezzanine Notes, the Warrants, the
Registration Rights Agreement, the Purchase Agreement or the Transfer Agent
Instructions and any and all other agreements, instruments or documents now
existing or hereafter executed and/or delivered by the Company pursuant to which
the Company agrees to pay, guarantees or assures payment and/or performance of
any Mezzanine Debt or grants or purports to grant any liens, security interests
or other interests in any property for the benefit of the Mezzanine Creditors to
secure the Mezzanine Debt, or any part thereof (provided, that the foregoing
reference to liens, security interests or other interests in property shall not
be construed to allow the granting of any liens, security interests or other
interests in property which otherwise are prohibited by the terms of this
Agreement), in each case as the same may be modified, amended, renewed,
extended, restated, supplemented or otherwise modified from time to time.
Subordination and Intercreditor Agreement - Page 2
"Mezzanine Default" means any "Event of Default" as defined by the
Mezzanine Notes or any other occurrence, event or condition which, in and of
itself or with notice or the passage of time, or both, would permit the
Mezzanine Creditors to take action to accelerate the payment of all or any
portion of the Mezzanine Debt.
"Mezzanine Notes" means those certain Convertible Notes dated May 30,
2002, executed by the Company payable to the Mezzanine Creditors in aggregate
face principal amount of $10,000,000, as may be renewed, extended, modified,
amended, supplemented, restated or replaced from time to time.
"Mezzanine Notice" means a written notice from the Mezzanine Creditors
or the Company to the Agent pursuant to which the Agent is notified of the
occurrence of a Mezzanine Default, an event giving the Mezzanine Creditors a
right to cause early redemption of the Mezzanine Notes, a change of control or
notice thereof or a Triggering Event and which provides a reasonably detailed
description thereof.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, governmental authority, or any other entity.
"Plan" means any plan of partial or complete liquidation,
reorganization, readjustment, arrangement, composition or extension, whether in
a Proceeding or otherwise.
"Proceeding" means any (a) insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to any Credit Party, their respective property or their
creditors as such, (b) proceeding for any liquidation, dissolution or other
winding-up of any Credit Party, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings, (c) assignment for the benefit
of creditors of any Credit Party or (d) other marshaling of the assets of any
Credit Party; provided that the term "Proceeding" shall not include a state
corporate law (as compared to a Bankruptcy Code or other debtor relief law)
liquidation of any Person.
"Purchase Agreement" has the meaning prescribed for such term in the
introductory paragraph of this Agreement, as may be renewed, extended, amended,
modified, supplemented or restated from time to time.
"Registration Rights Agreement" has the meaning prescribed for such
term as defined in the Purchase Agreement (which definition is incorporated
herein by reference).
"Senior Credit Agreement" means that certain Credit Agreement dated as
of June 1, 1999 among the Credit Parties, the Agent and the Senior Creditors,
and any successor or replacement credit agreement, including, without
limitation, any replacement credit agreement effected by the Credit Parties, or
any of them, with any other Person in any refinancing of the Senior Debt, as any
Subordination and Intercreditor Agreement - Page 3
of the foregoing may be modified, amended, renewed, extended, restated,
supplemented or otherwise modified from time to time consistent with the
definition of Senior Debt.
"Senior Creditor" means each of the "Lenders" (as defined by the Senior
Credit Agreement) from time to time party to the Senior Credit Agreement, and
also includes any Person that refinances the Senior Debt in any replacement or
refinancing facility that constitutes Senior Debt hereunder.
"Senior Creditor Collateral" means all property of any Credit Party,
now owned or hereafter acquired, in which any Senior Creditor Lien is granted
pursuant to the Senior Debt Documents, and all proceeds thereof.
"Senior Creditor Liens" means any and all liens, security interests,
mortgages or other interests held by the Agent, for the benefit of itself or the
Senior Creditors, now or hereafter existing, in the Senior Creditor Collateral
securing the Senior Debt, and any and all other liens, security interests,
mortgages or other interests, if any, at any time held or claimed by the Agent
in any property of any Credit Party securing or relating to the Senior Debt.
"Senior Debt" means, without duplication, any and all of the following,
now or hereafter existing or arising: (a) all indebtedness and obligations from
time to time included within the "Obligations" as defined by the Senior Credit
Agreement (which definition is incorporated herein by reference), as may be
renewed, refinanced, or increased from time to time (in each case subject to the
proviso below), (b) all principal of, and premium, if any, and interest on, the
Senior Loans (including, without limitation, any interest accruing thereon at
the legal rate after the commencement of any Proceeding and any additional
interest that would have accrued thereon but for the commencement of such
Proceeding), (c) all reimbursement and other obligations under or in connection
with any letter of credit issued by any Senior Creditor or any affiliate of the
Senior Creditor, for the benefit of the Credit Parties, or any of them and
reserved against under the Senior Credit Agreement, (d) all obligations of any
Credit Party under or in respect of any interest rate exchange agreement,
interest rate swap agreement or other similar agreement entered into in respect
of all or any portion of the Senior Debt referred to in clause (a) or (b) above,
(e) all other indebtedness, obligations and liabilities of any Credit Party to
the Agent or any Senior Creditor, the issuer of any letter of credit under the
Senior Credit Agreement or any other holder of any such indebtedness or
obligations, whether now existing or hereafter incurred or created, under or
with respect to any Senior Debt Document, (including, without limitation, claims
for indemnity or damages arising under or with respect to the Senior Debt
Documents), (f) all indebtedness and obligations arising in connection with any
refinancings, replacements or increases of any of the foregoing, whether with
the Senior Creditors, or any of them, or any other Person, and whether in the
same, lesser or greater amount, and (g) any and all renewals, extensions,
increases or rearrangements of any of the foregoing; provided that "Senior Debt"
is limited to a senior secured credit facility limited to a maximum principal
amount plus letter of credit, interest rate exchange, agreement, interest rate
swap agreement or other similar agreement or other bank product liabilities of
$12,000,000 plus obligations accruing with respect to such principal and
liabilities such as interest, fees, expenses and indemnities, including the
Senior Credit Agreement and replacements and refinancings thereof to the extent
of such limitation on amount; provided, further, that any renewal, extension,
increase or rearrangement shall not have a final maturity earlier than May 31,
2003.
Subordination and Intercreditor Agreement - Page 4
"Senior Debt Documents" means, collectively, the Senior Credit
Agreement, and any and all agreements, instruments or documents now existing or
hereafter executed in connection with the Senior Debt, pursuant to which the
person executing same agrees to pay, guarantees or assures payment and/or
performance of any Senior Debt or grants or purports to grant any liens,
security interests or other interests in any property to the Agent, or otherwise
for the benefit of the Senior Creditors, to secure the Senior Debt, or any part
thereof, and all other documents and instruments evidencing or pertaining to all
or any portion of the Senior Debt, in each case as the same may be modified,
amended, renewed, extended, restated, supplemented, refinanced or otherwise
modified from time to time. Without limiting the extent and generality of the
forgoing, "Senior Debt Documents" includes all "Loan Documents" as defined by
the Senior Credit Agreement (which definition is incorporated herein by
reference). "Senior Debt Documents" includes any agreements, instruments or
documents executed or entered into by the Credit Parties, or any of them, after
the commencement of a Proceeding.
"Senior Event of Default" means any "Event of Default" as defined by
the Senior Credit Agreement (which definition is incorporated herein by
reference) or any event of default (howsoever defined) under any replacement or
refinancing facility.
"Senior Loans" means all "Loans" as defined by the Senior Credit
Agreement (which definition is incorporated herein by reference), outstanding
from time to time, and any loans constituting Senior Debt made in any
replacement or refinancing facility, whether with the Senior Creditors, or any
of them, or with any other Person, and whether in the same, lesser or greater
amount as such Loans.
"Senior Payment Event of Default" means any Senior Event of Default
arising from default in the payment of any Senior Debt when the same becomes due
and payable at final maturity or by acceleration.
"Subsidiary" has the meaning prescribed for such term as defined by the
Senior Credit Agreement (which definition is incorporated herein by reference).
"Triggering Event" has the meaning prescribed for such term in the
Mezzanine Notes (which term is incorporated herein by reference).
"Warrants" has the meaning prescribed for such term as defined in the
Purchase Agreement (which definition is incorporated herein by reference).
2. Mezzanine Debt Subordination. Until all Senior Debt shall first be
paid in full and the Commitments terminated, each Mezzanine Creditor agrees, for
itself and each holder of the Mezzanine Debt, and their respective successors
and assigns, that the Mezzanine Debt hereby is expressly subordinated and junior
in right of payment and claim to the prior payment of all Senior Debt in the
manner and to the extent set forth in this Agreement; provided, that the Company
may pay, and the holders of the Mezzanine Debt may take, receive and retain in
cash all payments of Mezzanine Debt except to the extent otherwise provided in
Sections 2(a), 2(b) and 2(c) below as
Subordination and Intercreditor Agreement - Page 5
scheduled or otherwise provided by the Mezzanine Debt Documents on the Effective
Date; and provided, further, that the Company may pay, and the holders of the
Mezzanine Debt may take, receive and retain, (i) payments of obligation under
the Mezzanine Notes made in shares of the common stock of the Company as
provided in the Mezzanine Notes as in effect on the Effective Date, and (ii)
payment of cash damages provided for under Section 2(d)(v) of the Mezzanine
Notes, 2(d) of the Warrants, 2(f) of the Registration Rights Agreement or 4(o)
of the Purchase Agreement, closing expenses under Section 4(h) of the Purchase
Agreement and expenses under Section 5 of the Registration Rights Agreement, in
each case as in effect on the Effective Date (items referred to in (i) and (ii)
are collectively referred to herein as the "Excluded Payments").
(a) Upon the occurrence of a Senior Payment Event of Default
then, unless and until such Senior Payment Event of Default shall have
been remedied or waived or shall have ceased to exist, no direct or
indirect payment (in cash, property or debt securities or by set-off or
otherwise), including any payment to the holder of any Mezzanine Debt
by reason of the subordination of any indebtedness or other obligation
to, or any guarantee of, such Mezzanine Debt, shall be paid by any
Credit Party or taken, received or retained by any Mezzanine Creditors,
on account of any Mezzanine Debt, or as a sinking fund for any
Mezzanine Debt, or in respect of any redemption, retirement, purchase
or other acquisition of any of the Mezzanine Debt (other than Excluded
Payments); provided, that upon cancellation of acceleration of the
Senior Debt and payment of all sums then owing thereon (prior to such
acceleration) and provided that neither Sections 2(b) or 2(c) are then
applicable, the holders of Mezzanine Debt shall be entitled to receive
only such payments in respect of the Mezzanine Notes that as of and
from and after such time would otherwise be allowed to be paid under
this Agreement (including payments that became payable during such
period or otherwise were missed due to the operation of this Section
2(a)).
(b) Upon the happening of a Senior Event of Default (other
than under circumstances when the terms of Sections 2(a) or 2(c) are
applicable), then, unless and until such Senior Event of Default shall
have been remedied or waived in writing by the Agent or shall have
ceased to exist, no direct or indirect payment (in cash, property or
debt securities or by set-off or otherwise), including any payment to
the holder of any Mezzanine Debt by reason of the subordination of any
indebtedness or other obligation to, or any guarantee of, such
Mezzanine Debt, shall be paid by any Credit Party or taken, received or
retained by any Mezzanine Creditors, on account of any Mezzanine Debt,
or as a sinking fund for any Mezzanine Debt, or in respect of any
redemption, retirement, purchase or other acquisition of any Mezzanine
Debt (other than Excluded Payments), during the period, if any, of 10
days after written notice (a "Block Notice") of such Senior Event of
Default shall have been given by the Agent to the Company and to the
Mezzanine Creditors, provided, that upon expiration of such 10 day
period and provided that neither Sections 2(a) or 2(c) are then
applicable, the holders of Mezzanine Debt shall be entitled to receive
only such payments in respect of the Mezzanine Notes that as of and
from and after such time would otherwise be allowed to be paid under
this Agreement (including payments that became payable during such
period or otherwise were missed due to the operation of this Section
2(b)); provided, that no more than one Block Notice may be given during
any period of 45 consecutive days and one specific
Subordination and Intercreditor Agreement - Page 6
event or specific occurrence may not be used for more than one Block
Notice (although a comparable event or occurrence, e.g., a later
violation of the same covenant, may be).
(c) In the event of any Proceeding:
(i) All Senior Debt shall first be paid in full and the
Commitments terminated before any payment (including any payment
which may be payable to the holder of any Mezzanine Debt by reason
of the subordination of any indebtedness or other obligation to, or
any guarantee of, such Mezzanine Debt but excluding Equally
Subordinate Securities) or distribution, whether in cash, securities
or other property, shall be made to any holder of any Mezzanine Debt
on account of such Mezzanine Debt (other than Excluded Payments).
(ii) Until all Senior Debt shall first be paid in full and
the Commitments terminated, any payment (including any payment which
may be payable to the holder of any Mezzanine Debt by reason of the
subordination of any indebtedness or other obligation to, or
guarantee of, such Mezzanine Debt) or distribution of any kind or
character, whether in cash, securities or other property (excluding
Equally Subordinate Securities and Excluded Payments), which would
otherwise (but for these subordination provisions) be payable or
deliverable in respect of any Mezzanine Debt shall be paid or
delivered directly to the holders of Senior Debt for application in
payment of the Senior Debt in accordance with the priorities then
existing among such holders until all Senior Debt shall have been
paid in full and the Commitments terminated.
(iii) Each holder of Mezzanine Debt shall retain the right
to vote and otherwise act in any Proceeding (including, without
limitation, the right to vote to accept or reject any Plan proposed
in any Proceeding), provided, that no such holder shall vote with
respect to any such Plan or take any other action in any way so as
to contest (i) the validity of any liens or security interests
granted to, or for the benefit of, the holders of any Senior Debt,
(ii) the relative rights and duties of the holders of Senior Debt
established in the Senior Debt Documents with respect to such liens
and security interests, or (iii) the enforceability of any Senior
Debt Document or these subordination provisions.
(iv) If the holder of any Mezzanine Debt does not file a
proper claim, proof of debt, amendment of proof of debt, petition or
other document as shall be necessary in order to have such Mezzanine
Debt allowed in any such Proceeding and in the form required in any
such Proceeding prior to fifteen (15) Business Days before the
expiration of the time to file such claim, proof of debt, amendment
of proof of debt, petition or other document, then the Agent is
hereby irrevocably authorized to have the nonexclusive right (but
not the obligation) to file, and is hereby authorized to file, an
appropriate claim, proof of debt, amendment for and on behalf of
such holder of Mezzanine Debt.
Subordination and Intercreditor Agreement - Page 7
3. Lien Priorities.
(a) The Senior Creditor Liens and all rights of any holder of
the Senior Creditor Liens in and to the Senior Creditor Collateral are
and shall be first, senior and prior to any liens, security interests
or other rights at any time claimed by the Mezzanine Creditors in any
property of any Credit Party.
(b) Until the Senior Debt is paid in full and the Commitments
terminated, the Mezzanine Creditors hereby expressly disclaim any
interest in any property of any Credit Party and hereby expressly
subordinates to the Agent and the Senior Creditors all of its right,
title and interest which it may hereafter have or acquire from any
Credit Party in and to any Senior Creditor Collateral (provided that
the foregoing shall not be construed to authorize any Credit Party to
grant to the Mezzanine Creditors, or for the Mezzanine Creditors to
acquire or obtain, any security interest, lien or other interest in any
Senior Creditor Collateral).
(c) The priorities agreed to and established by this Section 3
are applicable irrespective of the manner or order of creation,
attachment or perfection, the time or order of filing of any financing
statement or the time of giving or failure to give any notice, or of
any other priority that might otherwise exist under applicable law
exclusive of this Agreement.
4. Limitation on Actions, Remedies. The Mezzanine Creditors agree, and
each other holder of any Mezzanine Debt, by their acceptance of any instrument
evidencing any Mezzanine Debt, agrees that:
(a) Until the Senior Debt is paid in full and the Commitments
terminated it will not, without the prior written consent of the
holders of all of the Senior Debt at any time when any Block Notice (as
defined in Section 2(b)) shall be effective under Section 2(b),
commence, prosecute or participate in (other than continued prosecution
of an action commenced when no such Block Notice or circumstance was
effective or in existence) any administrative, legal or equitable
action against any Credit Party to collect or enforce any Mezzanine
Debt (an "Enforcement Action"), provided, that notwithstanding the
foregoing but otherwise at all times subject to the terms of this
Agreement, this Section 4(a) shall not prohibit the Mezzanine Creditors
from commencing, prosecuting or participating in any action or taking
any other Enforcement Action (i) to seek delivery of shares of common
stock as contemplated by the Mezzanine Notes or Warrants or to seek
cash damages provided for under Section 2(d)(v) of the Mezzanine Notes,
2(d) of the Warrants, 2(f) of the Registration Rights Agreement or 4(o)
of the Purchase Agreement, closing expenses under Section 4(h) of the
Purchase Agreement and expenses under Section 5 of the Registration
Rights Agreement, in each case as in effect on the Effective Date, or
(ii) at any time after any Senior Creditor has accelerated the maturity
of the Senior Debt or (iii) at any time after a Proceeding has been
commenced.
(b) Until the Senior Debt is paid in full and the Commitments
terminated, each of the Credit Parties agrees that it will not grant or
convey to the Mezzanine Creditors, and the
Subordination and Intercreditor Agreement - Page 8
Mezzanine Creditors agree that they will not acquire or obtain from any
Credit Party or any other Person, any lien, security interest or other
interest in any property of any Credit Party.
(c) If, in violation of the provisions herein set forth, the
Mezzanine Creditors shall commence, prosecute or participate in any
suit, action, case or Proceeding against or with respect to the Credit
Parties, the Credit Parties may interpose as a defense or plea the
provisions set forth herein, and any holder of any Senior Debt may
intervene and interpose such defense or plea in its own name or in the
name of any Credit Party and shall, in any event, be entitled to
restrain the enforcement of the payment provisions of the Mezzanine
Debt, or of remedies in respect of property of the Credit Parties
included in the Senior Creditor Collateral in its own name or in the
name of any Credit Party in the same suit, action, case or Proceeding
or in any independent suit, action, case or Proceeding, to the extent
any such enforcement would be in violation of this Agreement.
5. Prepayments. Until the Senior Debt is paid in full and the
Commitments terminated, each Credit Party agrees that it will not make, and the
Mezzanine Creditors agree that they will not request, demand or accept and
retain, any voluntary cash prepayment of the Mezzanine Debt, or any portion
thereof (whether of principal, interest or otherwise) without the prior written
consent of the Agent.
6. Turnover of Improper Payments. If any payment or distribution of any
character, whether in cash, securities or other property shall be received by
any holder of any Mezzanine Debt in contravention of any of the terms hereof and
before all the Senior Debt shall have been paid in full and the Commitments
terminated, such payment or distribution or security shall be received in trust
for the benefit of, and shall be paid over or delivered and transferred to, the
Agent for the benefit of the holders of the Senior Debt at the time outstanding,
for application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all such Senior Debt in full. In the event of the
failure of any holder of any Mezzanine Debt to endorse or assign any such
payment, distribution or security, the Agent is hereby irrevocably authorized to
endorse or assign the same.
7. No Prejudice or Impairment.
(a) The rights of the Agent, the Senior Creditors and any other holders
of any Senior Debt as against the holders of any Mezzanine Debt, and the rights
and obligations of the Mezzanine Creditors, in each case as provided by the
terms of this Agreement, shall remain in full force and effect without regard
to, and shall not be impaired by any circumstance, including without limitation:
(i) any act or failure to act on the part of any Credit Party;
or
(ii) any extension or indulgence in respect of any payment or
prepayment of any Senior Debt or any part thereof or in respect of any
other amount payable to any holder of any Senior Debt; or
(iii) any amendment, modification, increase (subject to the
limitation in the term Senior Debt), refinancing or waiver of, or
addition or supplement to, or deletion from, or
Subordination and Intercreditor Agreement - Page 9
compromise, release, consent or other action in respect of, any of the
terms of any Senior Debt, any Senior Debt Document or any other
agreement which may be made relating to any Senior Debt; or
(iv) any exercise or non-exercise by the holder of any Senior
Debt of any right, power, privilege or remedy under or in respect of
such Senior Debt (other than notices required under the terms of this
Agreement), the Senior Debt Documents or any waiver of any such right,
power, privilege or remedy or of any default in respect of such Senior
Debt, the Senior Debt Documents or this Agreement, or any receipt by
the holder of any Senior Debt of any security, or any failure by such
holder to perfect a security interest in, or any release by such holder
of, any security for the payment of such Senior Debt; or
(v) any merger or consolidation of any Credit Party or any of
their respective Subsidiaries into or with any other Person, or any
sale, lease or transfer of any or all of the assets of any Credit Party
or any of their respective Subsidiaries to any other Person; or
(vi) consent to any use of cash collateral by, or to the
extension of credit to, the Credit Parties, or any of them, in any
Proceeding; or
(vii) absence of any notice to, or knowledge by, any holder of
any Mezzanine Debt of the existence or occurrence of any of the matters
or events set forth in the foregoing subdivisions (i) through (vi).
(b) Each holder of any Mezzanine Debt unconditionally waives (solely
for the benefit of any holder of Senior Debt and subject to Section 26) (i)
notice of any of the matters referred to in Section 7(a), (ii) all notices which
may be required, whether by statute, rule of law or otherwise, to preserve
intact any rights of any holder of any Senior Debt against the Credit Parties,
including, without limitation, any demand, presentment and protest, proof of
notice of nonpayment under any Senior Debt or the Senior Debt Documents, and
notice of any failure on the part of the Credit Parties to perform and comply
with any covenant, agreement, term or condition of the Senior Debt or the Senior
Debt Documents, excluding, however, notices expressly required hereunder, (iii)
any right to the enforcement, assertion or exercise by any holder of any Senior
Debt of any right, power, privilege or remedy conferred in such Senior Debt or
the Senior Debt Documents, or otherwise, (iv) any requirement of diligence on
the part of the Agent or any holder of any of the Senior Debt, (v) any
requirement on the part of the Agent or any holder of any Senior Debt to
mitigate damages resulting from any default under such Senior Debt or the Senior
Debt Documents, and (vi) any notice of any sale, transfer or other disposition
of any Senior Debt or Senior Lien by any holder thereof.
(c) The obligations of the holders of Mezzanine Debt under this
Agreement shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of any Senior Debt, or any other payment
to any holder of any Senior Debt in its capacity as such, is rescinded or must
otherwise be restored or returned by the holder of such Senior Debt upon the
occurrence of any Proceeding, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, any
Credit Party or any substantial part of such Credit Party's property, or
otherwise, all as though such payment had not been made.
Subordination and Intercreditor Agreement - Page 10
8. Credit Parties' Obligations Absolute. Nothing contained herein shall
impair, as between the Credit Parties and the holder of any Mezzanine Debt, the
obligations evidenced by the Mezzanine Debt, subject to the rights of the
holders of the Senior Debt as set forth in this Agreement.
9. Subrogation. No holder of any Mezzanine Debt shall have any
subrogation or other rights as a holder of any Senior Debt or Senior Liens, and
each holder of any Mezzanine Debt hereby waives all such rights of subrogation
and all rights of reimbursement or indemnity whatsoever (except as provided in
the Mezzanine Debt Documents as in effect on the Effective Date) and all rights
of recourse to any security for any Senior Debt, until such time as all the
Senior Debt shall be paid in full and the Commitments terminated and all of the
obligations of the Credit Parties under the Senior Debt and the Senior Debt
Documents shall have been duly performed. From and after the time at which all
Senior Debt have been paid in full and the Commitments terminated, the holders
of the Mezzanine Debt shall be subrogated to all rights of any holders of Senior
Debt to receive any further payments or distributions applicable to the Senior
Debt until the Mezzanine Debt shall have been paid in full or such payment shall
have been provided for in a manner satisfactory to all of the holders of
Mezzanine Debt, and for the purposes of such subrogation, no payment or
distribution received by the holders of Senior Debt of cash, securities or other
property to which the holders of the Mezzanine Debt would have been entitled
except for these subordination provisions shall, as between the Credit Parties
and their respective creditors other than the holders of Senior Debt, on the one
hand, and the holders of the Mezzanine Debt, on the other, be deemed to be a
payment or distribution by the Credit Parties to or on account of the Senior
Debt.
10. Legend on Mezzanine Debt. The Credit Parties and the Mezzanine
Creditors shall cause the Mezzanine Notes, and each other instrument at any time
evidencing any Mezzanine Debt, to contain the following legend conspicuously
noted on the face thereof:
"THIS SUBORDINATED CONVERTIBLE NOTE IS SUBJECT TO THE SUBORDINATION
PROVISIONS SET FORTH IN THAT CERTAIN SUBORDINATION AND INTERCREDITOR
AGREEMENT DATED MAY 29, 2002, AMONG EACH OF HFTP INVESTMENT L.L.C.,
GAIA OFFSHORE MASTERFUND, LTD., CAERUS FUND LTD., BANK OF AMERICA,
NATIONAL ASSOCIATION, AS THE AGENT, AND CERTAIN OTHER PERSONS SIGNATORY
THERETO (INCLUDING EACH SUCH PARTY'S SUCCESSORS AND ASSIGNS). A COPY OF
THAT AGREEMENT IS ON FILE AT THE OFFICE OF THE ISSUER HEREOF AND IS
AVAILABLE FOR INSPECTION AT SUCH OFFICE."
11. Other Subordination Agreements. Until all Senior Debt shall have
been paid in full and the Commitments terminated, without the consent of the
holders of all of the Senior Debt, no holder of any Mezzanine Debt shall,
directly or indirectly, voluntarily agree to subordinate such Mezzanine Debt to
any indebtedness, obligations or liabilities other than the Senior Debt.
12. Modifications to Senior Debt or Mezzanine Debt. The Senior Debt
Documents may be modified, amended, supplemented, restated or replaced, and any
indebtedness or obligations
Subordination and Intercreditor Agreement - Page 11
thereunder may be renewed, extended, increased (subject to the limitations in
the term Senior Debt), rearranged or refinanced without the prior consent of the
Mezzanine Creditors. No modification, amendment, supplement, restatement or
replacement of the Mezzanine Debt which (i) increases the principal of the
Mezzanine Notes, (ii) increases the interest rate payable under the Mezzanine
Notes other than pursuant to the terms thereof existing on the Effective Date
(including the imposition of any default rate of interest), or (iii) shortens
the time for payment of any amount payable by any Credit Party under any
Mezzanine Debt Documents.
13. Disgorgement. If at any time a Mezzanine Creditor or any other
Person receives a payment (a "Presumptively Permitted Payment") that it would
otherwise not be entitled to receive but for the fact that the Senior Debt was
at the time of such payment paid in full and thereafter a payment on the Senior
Debt is rescinded or must otherwise be restored or returned by the Agent or any
Senior Creditor as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, then each Person receiving any portion of
such Presumptively Permitted Payment agrees, upon demand, to return the portion
of such Presumptively Permitted Payment it has received to the Person
responsible for restoring or returning such payment on the Senior Debt up to the
amount so required to be restored or returned.
14. Continued Effectiveness of this Agreement. The provisions of this
Agreement are intended to and shall be enforceable at all times, notwithstanding
the commencement or continuation of any Proceeding.
15. No Contest. The Mezzanine Creditors agree that they will not at any
time contest the validity, perfection, priority or enforceability of the Senior
Debt, the Senior Debt Documents or the Senior Creditor Liens.
16. Representations and Warranties.
(a) The Mezzanine Creditors hereby represents and warrants to the Agent
as follows: (i) such Mezzanine Creditor is an organization duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, (ii) such Mezzanine Creditor has the requisite power and authority
to enter into, execute, deliver and carry out the terms of this Agreement, all
of which have been duly authorized by all proper and necessary action and are
not prohibited by its organizational documents, (iii) this Agreement, when
executed and delivered, will constitute the valid and legally binding obligation
of such Mezzanine Creditor, enforceable in accordance with its terms, except as
enforceability may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and general principles of equity, (iv) such Mezzanine Creditor
is the sole owner, beneficially and of record, of its Mezzanine Note and
Mezzanine Debt, (v) to the best of such Mezzanine Creditor's knowledge, after
giving effect to the Mezzanine Notes, no Mezzanine Default is in existence as of
the Effective Date and (vi) there are no Mezzanine Debt Documents other than the
Mezzanine Notes, the Purchase Agreement, the Registration Rights Agreement, the
Warrants and the Transfer Agent Instructions referred to therein.
(b) Each Credit Party hereby represents and warrants to the Agent and
the Mezzanine Creditors as follows: (i) it has the requisite power and authority
to enter into, execute, deliver and
Subordination and Intercreditor Agreement - Page 12
carry out the terms of this Agreement, all of which have been duly authorized by
all proper and necessary action and are not prohibited by its organizational
documents, (ii) this Agreement, when executed and delivered, will constitute the
valid and legally binding obligation of it enforceable in accordance with its
terms, except as enforceability may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of equity, (iii) no Mezzanine
Default is in existence as of the Effective Date and (iv) no Senior Default or
Senior Event of Default is in existence as of the Effective Date.
17. Default Notices. The Mezzanine Creditors and each Credit Party
shall provide the Agent with a Mezzanine Notice with reasonable promptness upon
the occurrence of each Mezzanine Default, event of early redemption, Triggering
Event or a notice of change of control, and the Mezzanine Creditors shall notify
the Agent in the event any such event or condition thereafter is cured, waived
or ceases to exist. The Agent will use its best efforts to send to the Mezzanine
Creditors a copy of any notice of default it sends to the Company and the
Company hereby agrees to the giving of such notice.
18. Cumulative Rights, No Waivers. Each and every right, remedy and
power granted to the Agent hereunder shall be cumulative and in addition to any
other right, remedy or power specifically granted herein, and with respect to
the Senior Creditors as against the Credit Parties, in the Senior Credit
Agreement or the other Senior Debt Documents, or now or hereafter existing in
equity, at law, by virtue of statute or otherwise, and may be exercised by the
Agent, from time to time, concurrently or independently and as often and in such
order as the Agent may deem expedient. Any failure or delay on the part of the
Agent in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect the rights of the Agent thereafter to exercise the same, and
any single or partial exercise of any such right, remedy or power shall not
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power, and no such failure, delay, abandonment or single or
partial exercise of the rights of the Agent hereunder shall be deemed to
establish a custom or course of dealing or performance among the parties hereto.
19. Modification. Any waiver of any provision of this Agreement, or any
consent to any departure by any Senior Creditor or any Mezzanine Creditor
therefrom, shall not be effective in any event unless the same is in writing and
signed by the Agent and the Mezzanine Creditors, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
given. Neither this Agreement, nor any provision hereof, may be amended or
modified except pursuant to an agreement in writing entered into by the Agent
and the Mezzanine Creditors and the Credit Parties. Any notice to or demand on
the Mezzanine Creditors in any event not specifically required of the Agent
hereunder shall not entitle the Mezzanine Creditors to any other or further
notice or demand in the same, similar or other circumstances unless specifically
required hereunder.
20. Additional Documents and Actions. The parties hereto at any time,
and from time to time, after the execution and delivery of this Agreement,
promptly will execute and deliver such further documents and do such further
acts and things as any other party hereto reasonably may request that may be
necessary in order to effect fully the purposes of this Agreement, including,
without limitation, any amendment or restatement of this Agreement.
Subordination and Intercreditor Agreement - Page 13
21. Notices. Except as otherwise provided herein, all notices and
correspondence hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, or by overnight delivery service, with all
charges prepaid, or by facsimile transmission, promptly confirmed in writing
sent by first-class mail to the following addresses:
(a) If to the Mezzanine Creditors:
HFTP Investment L.L.C.
c/o Promethean Asset Management L.L.C.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Gaia Offshore Master Fund, Ltd.
c/o Promethean Asset Management L.L.C.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Kitty
Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Caerus Fund Ltd.
c/o Promethean Asset Management L.L.C.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Kitty
Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to the Agent:
Bank of America, National Association
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Subordination and Intercreditor Agreement - Page 14
or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 21. All such notices and correspondence shall be
deemed given (a) if sent by certified or registered mail, three (3) Business
Days after being postmarked, (b) if sent by overnight delivery service, when
received at the above stated addresses and (c) if sent by facsimile:
transmission, when receipt of such transmission is acknowledged.
22. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
23. Assignment of Mezzanine Debt. Neither the Mezzanine Debt, nor any
portion thereof, may be transferred or assigned to any Person unless such
transferee or assignee agrees in writing, in form and substance reasonably
satisfactory to the Agent, to be bound by this Agreement.
24. Successors and Assigns. This Agreement shall inure to the benefit
of the successors and assigns of the Agent, the Senior Creditors and the
Mezzanine Creditors and shall be binding upon the successors and assigns of the
Agent, the Senior Creditors, the Mezzanine Creditors and the Credit Parties.
25. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be valid as an original.
26. Defines Rights of Creditors. Except as provided in Section 4(c),
the provisions of this Agreement are solely for the purpose of defining the
relative rights of the Mezzanine Creditors, on the one hand, and the Agent and
the Senior Creditors, on the other hand, and shall not be deemed to create any
rights or priorities in favor of any other Person, including, without
limitation, any Credit Party or any debtor-in-possession or trustee in
bankruptcy in any Proceeding.
27. Conflict. In the event of any conflict between any term, covenant
or condition of this Agreement and any term, covenant or condition of any of the
Mezzanine Debt Documents, the provisions of this Agreement shall control and
govern. For purposes of this Section, to the extent that any provisions of any
of the Mezzanine Debt Documents provide rights, remedies and benefits to the
Agent or the Senior Creditors that exceed the rights, remedies and benefits
provided to the Agent or the Senior Creditors under this Agreement, such
provisions of the applicable Mezzanine Debt Documents shall be deemed to
supplement (and not to conflict with) the provisions hereof. Nothing herein
shall be construed to limit the right of the Mezzanine Creditors to declare a
Mezzanine Event of Default or early redemption of the Mezzanine Debt.
28. Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Subordination and Intercreditor Agreement - Page 15
29. Termination. This Agreement shall terminate upon the payment in
full of the Senior Debt which is not subject to avoidance under Section 547 of
the Bankruptcy Code and termination of the Commitments.
30. JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTIONS RELATED HERETO.
31. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS.
32. Execution; Entire Agreement. A telecopy or other electronic
transmission of any executed counterpart of this Agreement shall be deemed valid
as an original.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES
REGARDING THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.
Subordination and Intercreditor Agreement - Page 16
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the Effective Date.
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Agent
By:
-----------------------------------
Xxxx X. Xxxxxxx,
Principal
HFTP INVESTMENT L.L.C.
By: Promethean Asset Management L.L.C.,
Its: Investment Manager
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
GAIA OFFSHORE MASTER FUND, LTD.
By: Promethean Asset Management L.L.C.,
Its: Investment Manager
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
CAERUS FUND LTD.
By: Promethean Asset Management L.L.C.,
Its: Investment Manager
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Subordination and Intercreditor Agreement - Page 17
INTERVOICE - BRITE, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Subordination and Intercreditor Agreement - Page 18
