EXHIBIT 10.2
INTERCREDITOR AGREEMENT AND AMENDMENT
This INTERCREDITOR AGREEMENT, dated as of March 19, 2003 (this
"Agreement"), is among Xxxxxxx X. Xxxxxxx, III (the "Subordinating Creditor"),
The 3DO Company, a California corporation (the "Debtor"), and IIG Capital LLC,
as agent for the IIG Trade Opportunities Fund, N.V. (the "Senior Creditor").
RECITALS
A The Senior Creditor has or expects to acquire a security interest in
assets of the Debtor in which the Subordinating Creditor has an interest,
including but not limited to the Senior Creditor Collateral.
B The Debtor and Subordinating Creditor are parties to the Subordinating
Creditor Agreements. The Creditors are executing this Agreement to set forth
their lien priorities with respect to the Senior Creditor Collateral.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the Creditors hereby agree as follows:
AGREEMENT
1. Definitions. The following terms used herein shall have the following
meaning. All capitalized terms not herein defined shall have the meaning set
forth in the Uniform Commercial Code:
1.1. "Bankruptcy Code" - Title 11 of the United States Code.
1.2. "Chosen State" - New York.
1.3. "Creditors" -The Subordinating Creditor and the Senior Creditor.
1.4. "Debtor" - See preamble.
1.5. "Interest Payments" - Regularly scheduled interest payments
pursuant to the Subordinating Creditor Agreements.
1.6. "Party" - Each of the Subordinating Creditor, the Debtor, and the
Senior Creditor.
1.7. "Permitted Payments" - (i) Interest Payments, and (ii) $5,000,000
of the Subordinating Creditor Obligations.
1.8. "Secondary Collateral" - Collateral of a Creditor holding a
security interest which is inferior to the priority of the other Creditor.
1.9. "Senior Creditor" - See preamble.
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1.10. "Senior Creditor Collateral" - All Debtor's present and future
Accounts, Instruments, Documents, Chattel Paper, General Intangibles, Inventory,
Equipment, Letter of Credit Rights, and Investment Property and the direct and
indirect proceeds thereof.
1.11. "Senior Creditor Obligations" - Obligations of the Debtor to the
Senior Creditor secured by the Senior Creditor Collateral.
1.12. "Subordinating Creditor" - See Preamble.
1.13. "Subordinating Creditor Agreements" - The Note and Warrant
Purchase Agreement, dated December 27, 2002, between Debtor and Subordinating
Creditor, and related documents thereto.
1.14. "Subordinating Creditor Obligations" - Indebtedness owed by the
Debtor to the Subordinating Creditor secured by Senior Creditor Collateral.
2. Priority. Notwithstanding the terms or provisions of any agreement or
arrangement which either Creditor may now or hereafter have with the Debtor or
any rule of law, and irrespective of the time, order, or method of attachment or
perfection of any security interest or the recordation or other filing in any
public record of any financing statement, any security interests in the Senior
Creditor Collateral held by the Senior Creditor, whether or not perfected, are
and shall remain senior to any lien now or hereafter held by the Subordinating
Creditor and, any present and future guaranties relating to the Senior Creditor
Obligations.
3. Permitted Payments.
3.1. Notwithstanding anything to the contrary contained herein, Debtor
may make and Subordinating Creditor may retain Permitted Payments; provided,
that with respect to any Permitted Payments other than Interest Payments (a)
Subordinating Creditor shall provide Senior Creditor with 30 days' written
notice prior to such payment, and (b) such notice is not given prior to May 1,
2003.
3.2. Any payments received by Subordinating Creditor on account of the
Subordinating Creditor Obligations, other than Permitted Payments, shall be held
by Subordinating Creditor in trust for the benefit of Senior Creditor, and shall
be delivered to Senior Creditor in kind, immediately upon receipt by
Subordinating Creditor to be held by Senior Creditor as cash collateral securing
the Senior Creditor Obligations.
3.3. Subordinating Creditor may request and receive payment of the
remaining Subordinating Creditor Obligations with the prior written consent of
Senior Creditor, which consent shall not be unreasonably withheld or delayed, so
long as such repayment does not cause Subordinating Creditor (as Chief Executive
Officer and director) to breach his fiduciary duties to the Debtor and its
shareholders.
3.4. The provision set forth in Section 3.1 above permitting Permitted
Payments shall terminate and be of no further force and effect upon the
occurrence and during the continuance of a default in the performance of the
Senior Creditor Obligations.
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4. Enforcement of Security Interest.
4.1. The Subordinating Creditor shall have no right to take any action
with respect to the Senior Creditor Collateral, whether by judicial or
non-judicial foreclosure, notification to the Debtor's account debtors, the
seeking of the appointment of a receiver for any portion of the Debtor's assets,
setoff, or otherwise, unless and until the Senior Creditor has received payment
of all Senior Creditor Obligations in immediately available funds.
4.2. If the Subordinating Creditor, in contravention of the terms of
this Agreement, shall commence, prosecute, or participate in any suit, action,
or proceeding against the Debtor or initiate any foreclosure sale or proceeding
or any other action to enforce its lien on any of the Senior Creditor
Collateral, then the Debtor may interpose as a defense or plead the making of
this Agreement, and the Senior Creditor may intervene and interpose such defense
or plea in its name or in the name of the Debtor. If the Subordinating Creditor,
in contravention of the terms of this Agreement, shall attempt to enforce any
remedies prohibited by this Agreement, then the Senior Creditor or the Debtor
may, by virtue of this Agreement, restrain the enforcement thereof in the name
of the Senior Creditor or in the name of the Debtor.
5. Proceeds of Collateral.
5.1. Any proceeds of Secondary Collateral, or proceeds of proceeds,
received by a Creditor shall be, immediately upon discovery, paid to the other
Creditor.
5.2. Any such sums not paid when due shall accrue a late charge at the
rate of 24% per annum.
6. Subordinating Creditor Covenants and Warranties. The Subordinating
Creditor warrants covenants and represents that it:
6.1. Is the owner of the Subordinating Creditor Obligations, free and
clear of the claims of any other entity;
6.2. Is the secured party named in each financing statement listed on
the attached Exhibit entitled "Subordinating Creditor Financing Statements".
6.3. Will indemnify Senior Creditor and hold it harmless against any
direct or indirect loss (including attorneys fees and expenses) arising from the
assertion by any holder of the Subordinating Creditor Obligations that the
provisions of this Agreement do not bind such holder.
6.4. Will, at the request of Senior Creditor in connection with the
proper enforcement of its security interest, promptly release any lien and
security interest it has on any Senior Creditor Collateral to facilitate its
transfer or sale so long as the proceeds thereof are applied against the Senior
Creditor Obligations and any excess is paid to the Subordinating Creditor to be
applied against the Subordinating Creditor Obligations.
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6.5. Waives any rights it may have to claim that the enforceability of
this Agreement may be affected by any subsequent modification, release,
extension, or other change, material or otherwise, in the Senior Creditor
Obligations or the Senior Creditor Collateral.
6.6. Will reasonably cooperate with Senior Creditor in notifying the
Debtor's Account Debtors that proceeds of Accounts should be paid to Senior
Creditor and not to Subordinating Creditor.
7. Remedy for Breach.
Any breach hereof is likely to cause irreparable damage to the
aggrieved party. Therefore, the relief to which such party shall be entitled in
such event shall include, but not be limited to: (a) a mandatory injunction for
specific performance, (b) judicial relief to prevent a violation of any of the
provisions of this Agreement, (c) damages, and (d) any other relief to which it
may be entitled at law or in equity.
8. Amendment of Subordinating Creditor Agreements.
8.1. This Agreement shall be deemed an amendment to the Subordinating
Creditor Agreements, which cannot be further amended to adversely affect the
rights of Senior Creditor hereunder.
8.2. The signature of Senior Creditor shall not be required for any
further amendment of the Subordinating Creditor Agreements.
9. Effect of Bankruptcy. This Agreement shall remain in full force and
effect notwithstanding the filing of a petition for relief by or against the
Debtor under the Bankruptcy Code and shall apply with full force and effect with
respect to all Senior Creditor Collateral acquired by the Debtor, and
obligations incurred by the Debtor to the Subordinating Creditor, subsequent to
the date of any such petition.
10. No Duty to Provide Financial Accommodations. Nothing contained herein
or in any prior agreement or understanding shall be deemed to create any duty on
the part of either party to extend or continue to extend financial
accommodations to the Debtor.
11. Waiver of Marshaling. The Subordinating Creditor irrevocably waives any
right to compel the Senior Creditor to marshal assets of the Debtor.
12. Cross Default. Notwithstanding anything to the contrary contained in
any agreement between Debtor and Senior Creditor, default by Debtor in the
performance of its obligations to the Subordinating Creditor shall constitute a
default by Debtor in the performance of the Senior Creditor Obligations.
13. Choice of Law. This Agreement and all transactions contemplated
hereunder and/or evidenced hereby shall be governed by, construed under, and
enforced in accordance with the internal laws of the Chosen State.
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14. Amendment and Waiver. Only a writing signed by all parties hereto may
amend this Agreement. No failure or delay in exercising any right hereunder
shall impair any such right that Senior Creditor may have, nor shall any waiver
by Senior Creditor hereunder be deemed a waiver of any default or breach
subsequently occurring. Senior Creditor's rights and remedies herein are
cumulative and not exclusive of each other or of any rights or remedies that
Senior Creditor would otherwise have.
15. Construction. This Agreement and all agreements relating to the subject
matter hereof is the product of negotiation and preparation by and among each
party and its respective attorneys.
16. Benefits Of This Agreement. This Agreement is solely for the benefit of
and shall bind the Creditors and their respective successors and assigns and no
other entity shall have any right, benefit, priority, or interest hereunder.
17. Term. This Agreement shall continue only so long as the Senior Creditor
and Subordinating Creditor each hold a security interest in any portion of the
Senior Creditor Collateral.
18. Enforcement. In the event that any party finds it necessary to retain
counsel in connection with the interpretation, defense, or enforcement of this
Agreement, the prevailing party shall recover its reasonable attorney's fees and
expenses from the unsuccessful party. It shall be presumed (subject to rebuttal
only by the introduction of competent evidence to the contrary) that the amount
recoverable is the amount billed to the prevailing party by its counsel and that
such amount will be reasonable if based on the billing rates charged to the
prevailing party by its counsel in similar matters.
19. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. Delivery of an executed counterpart of
the signature page to this Agreement by facsimile shall be effective as delivery
of a manually executed counterpart of this Agreement, and any party delivering
such an executed counterpart of the signature page to this Agreement by
facsimile to any other party shall thereafter also promptly deliver a manually
executed counterpart of this Agreement to such other party, provided that the
failure to deliver such manually executed counterpart shall not affect the
validity, enforceability, or binding effect of this Agreement.
20. Notice. All notices required to be given to either party hereunder
shall be deemed given upon the first to occur of: (a) three (3) business days
after deposit thereof, with postage prepaid, in a receptacle under the control
of the United States Postal Service; (b) the first business day following
transmittal by facsimile or e-mail to the party to whom notice is being given;
or (c) actual receipt by the party to whom notice is being given, or an employee
or agent of thereof.
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Subordinating Creditor
Address: 000 Xxxxxxxx Xxx
Xxxxxxx Xxxx XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax number: 000-000-0000
Debtor
Address: 000 Xxxxxxxx Xxx
Xxxxxxx Xxxx XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax number: 000-000-0000
Senior Creditor
Address: 00 Xxxxx Xxxxxx
Xxx Xxxx XX 00000
Attention: Xx. Xxxx Xxxxx
Fax number: 000-000-0000
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
Subordinating Creditor: /s/ Xxxxxxx X. Xxxxxxx, III
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Xxxxxxx X. Xxxxxxx, III, individually
Debtor: The 3DO Company
By: /s/ Xxxxxxx X. Xxxxxxx, III
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Name: Xxxxxxx X. Xxxxxxx, III
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Title: Chief Executive Officer
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Senior Creditor: IIG Capital LLC, as agent for the
IIG Trade Opportunities Fund, N.V.
By: /s/ Xxxxxx Silver
----------------------------------------
Name: Xxxxxx Silver
--------------------------------------
Title: Managing Partner
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SUBORDINATING CREDITOR FINANCING STATEMENTS
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FILING DATE FILING NUMBER FILING OFFICE JURISDICTION
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10/1/02 0227560421 California
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