Exhibit 4.4
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INTERCREDITOR, SUBORDINATION
AND
STANDSTILL AGREEMENT
This INTERCREDITOR, SUBORDINATION AND STANDSTILL AGREEMENT is made as
of the 3rd day of May, 2002, by and among OptiMark Innovations Inc., f/k/a OTSH,
Inc., a Delaware corporation ("OII"), RGC International Investors, LDC, a Cayman
Islands limited duration company ("RGC" and, together with OII, the
"Creditors"), The Ashton Technology Group, Inc., a Delaware corporation (the
"Borrower") and Universal Trading Technologies Corporation, a Delaware
corporation and majority owned subsidiary of the Borrower ("UTTC" and, together
with Borrower, the "Grantors"). OII, RGC, the Borrower and UTTC are sometimes
hereinafter referred to individually as a "Party" and collectively as the
"Parties".
W I T N E S S E T H:
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WHEREAS, OII is contemporaneously herewith making a loan in the
original principal amount of $2,727,273 to the Borrower pursuant to a certain
Senior Secured Convertible Promissory Note dated as of even date herewith (the
"OII Note");
WHEREAS, RGC is contemporaneously herewith making a loan in the
original principal amount of $4,751,875.66 to the Borrower pursuant to the 7.50%
Senior Secured Promissory Note dated as of even date herewith (the "RGC Note");
WHEREAS, the Grantors have granted to OII a security interest in the
Collateral (hereinafter defined), pursuant to the terms of a certain Pledge and
Security Agreement dated as of even date herewith (the "OII Security
Agreement");
WHEREAS, the Grantors have granted to RGC a security interest in the
Collateral (hereinafter defined), pursuant to the terms of that certain Security
Agreement, those certain Collateral Pledge Agreements and those certain
Collateral Assignment Agreements, all dated as of even date herewith
(collectively, the "RGC Security Agreement"); and
WHEREAS, OII and RGC desire to memorialize in writing their agreements
as to the priority of payment and security with respect to the obligations
arising under the OII Note and the RGC Note, respectively, and the rights and
remedies of OII and RGC with respect to such obligations;
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I. DEFINITIONS
Section 1.1. As used herein, the following terms shall have the
following meanings:
(a) "AGREEMENT" means this Intercreditor, Subordination and
Standstill Agreement, dated as of the date set forth above, among the Borrower,
UTTC, OII
and RGC, as amended, restated, supplemented or modified from time to time and
including all exhibits and schedules hereto.
(b) "BORROWER" has the meaning set forth in the preamble to this
Agreement.
(c) "BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which banks in the City of New York are required or authorized to
be closed.
(d) "COLLATERAL" means all personal and fixture property of every
kind and nature whether now existing or hereinafter acquired or arising, and
wherever located, including without limitation all furniture, fixtures,
equipment, raw materials, inventory, or other goods, accounts, contract rights,
rights to the payment of money, insurance refund claims and all other insurance
claims and proceeds, tort claims, chattel paper, documents, instruments,
securities and other investment property, deposit accounts, rights to proceeds
of letters of credit and all general intangibles including, without limitation,
all tax refund claims, license fees, IP Collateral, including the IP Assets,
rights to ▇▇▇ and recover for past infringement of Patents, Trademarks and
Copyrights, service marks, customer lists, goodwill, and all licenses
(including, without limitation, Licenses), permits, agreements of any kind or
nature pursuant to which the Grantor possesses, uses or has authority to possess
or use property (whether tangible or intangible) of others or others possess,
use or have authority to possess or use property (whether tangible or
intangible) of the Grantor, and all recorded data of any kind or nature,
regardless of the medium of recording including, without limitation, all books
and records, Software, writings, plans, specifications and schematics; and all
proceeds and products of each of the foregoing.
(e) "COLLATERAL AGENT" means RGC, for purposes of Sections 2.6 and
3.7 of this Agreement.
(f) "COPYRIGHT LICENSE" means any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned or held by or behalf of any Grantor or which any Grantor
otherwise has the right to license, or granting any right to any Grantor under
any Copyright now or hereafter owned by any third party, and all rights of any
Grantor under any such agreement, including each agreement described in Schedule
3.6 hereto or to the applicable Supplement.
(g) "COPYRIGHTS" means all of the following: (i) all copyright rights
in any work subject to the copyright laws of the United States or any other
country, whether as author, assignee, transferee or otherwise, and (ii) all
registrations and applications for registration of any such copyright in the
United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office or any similar offices in the United States or
any other country, including those described in Schedule 3.6 hereto or to the
applicable Supplement.
(h) "CREDIT DOCUMENTS" means the OII Credit Documents and the RGC
Credit Documents.
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(i) "CREDITORS" means, collectively, OII and RGC.
(j) "CREDIT PROCEEDING" means any dissolution, winding up,
liquidation, or Insolvency Proceeding, or other event resulting in Distributions
(other than Distributions in the ordinary course).
(k) "DECLARED DEFAULT NOTICE" has the meaning set forth in Section
2.4(a) of this Agreement.
(l) "DISTRIBUTION" means any payment or distribution of any kind
(whether in cash, property, securities or otherwise), including, without
limitation, by exercise of set-off rights by a Creditor, of all or any of the
assets of the Grantors (or either Grantor) to the Creditors, other than pursuant
to the last sentence of Section 2.3.
(m) "EVENT OF DEFAULT" means either a OII Event of Default or a RGC
Event of Default.
(n) "GRANTORS" means, collectively, the Borrower and UTTC.
(o) "INSOLVENCY PROCEEDING" means any arrangement, reorganization,
adjustment, protection, relief or composition of Grantors (or either Grantor) or
its/their debts, whether in any bankruptcy, insolvency, arrangement,
reorganization, receivership, relief or similar proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of Grantors (or either Grantor).
(p) "IP ASSETS" means all IP Collateral set forth on Exhibit A
hereto, contributed to the Borrower by OII pursuant to a certain ▇▇▇▇ of Sale
and Assignment dated as of the date hereof between OII and the Borrower, and all
additions, improvements and accessions to, and books and records describing or
used in connection with, any of the foregoing and all proceeds and products of
any of the foregoing, in whatever form received.
(q) "IP COLLATERAL" means all intellectual and similar property of
any Grantor of every kind and nature, including the IP Assets, whether now owned
or hereinafter acquired or arising and wherever located, including, without
limitation, inventions, designs, Patents, Copyrights, Trademarks, Licenses,
domain names, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, Software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing and all proceeds and products of any of the foregoing, in whatever
form received.
(r) "LICENSE" means any Copyright License, Patent License, Trademark
License or other license or sublicense to which any Grantor is a party.
(s) "OBLIGATIONS" means, collectively, RGC Obligations and OII
Obligations.
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(t) "OII" has the meaning set forth in the preamble to this
Agreement.
(u) "OII CREDIT DOCUMENTS" means the OII Note, the OII Security
Agreement, and all written instruments, agreements, and assignments by which OII
Obligations and any security interest or assignment for the payment thereof is
evidenced or created, in each case relating to the OII Note.
(v) "OII EVENT OF DEFAULT" means an event of default under the OII
Note.
(w) "OII NOTE" has the meaning set forth in the recitals to this
Agreement, as amended, restated, supplemented or modified from time to time and
including all exhibits and schedules thereto.
(x) "OII OBLIGATIONS" means all indebtedness, liabilities,
obligations, covenants and duties of the Borrower and/or UTTC to OII of every
kind, nature and description, direct or indirect, absolute or contingent, due or
not due, contractual or tortious, liquidated or unliquidated, arising by
operation of law or otherwise, now existing of hereafter arising, under the OII
Credit Documents.
(y) "OII RIGHTS" means any rights or remedies OII may have to
accelerate the OII Obligations or other obligations of the Borrower and/or UTTC
to OII, or any other default rights or remedies with respect to the Borrower
and/or UTTC or any assets of the Borrower and/or UTTC (whether or not arising in
connection with the OII Note), whether under OII Credit Documents, at law, at
equity or otherwise.
(z) "OII SECURITY AGREEMENT" has the meaning set forth in the
recitals to this Agreement, as amended, restated, supplemented or modified from
time to time and including all exhibits and schedules thereto.
(aa) "OTHER LOANS" has the meaning set forth in Section 4.1 of this
Agreement.
(bb) "PARI PASSU" means apportionment whereby each Creditor's right
to Distributions shall be deemed equal in scope and priority with the other
Creditor's right thereof limited to a pro-rata share equal to the relative
amount of the Obligations owing to such Creditor as of the date of such
Distribution. For example, if the outstanding amount of the RGC Obligations is
$1,000,000, and the outstanding amount of the OII Obligations is $3,000,000,
then RGC shall receive 25% and OII shall receive 75% of Distributions until the
Obligations of the Creditors are satisfied.
(cc) "PARI PASSU OBLIGATIONS" means thirty percent (30%) of the
original principal amount of the RGC Note calculated as of the date of this
Agreement, or $1,425,562.70, plus accrued but unpaid interest on the RGC
Obligations.
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(dd) "PARTY" or "Parties" have the meanings set forth in the preamble
to this Agreement.
(ee) "PATENT LICENSE" means any written agreement, now or hereafter
in effect, granting to any third party any right to make, use or sell any
invention on which a Patent, now or hereafter owned or held by or on behalf of
any Grantor or which any Grantor otherwise has the right to license, is in
existence, or granting to any Grantor any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any third party, is in
existence, and all rights of any Grantor under any such agreement, including
each agreement described in Schedule 3.6 hereto or to the applicable Supplement.
(ff) "PATENTS" means all of the following: (i) all letters patent of
the United States or any other country, all registrations and recordings thereof
and all applications for letters patent of the United States or any other
country, including registrations, recordings and pending applications in the
United States Patent and Trademark Office or any similar offices in the United
States or any other country, including those described in Schedule 3.6 hereto or
to the applicable Supplement, and (ii) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
(gg) "RGC" has the meaning set forth in the preamble to this
Agreement.
(hh) "RGC CREDIT DOCUMENTS" means the RGC Note, the RGC Security
Agreement and all written instruments, agreements, and assignments by which RGC
Obligations and any security interest or assignment for the payment thereof is
evidenced or created, in each case relating to the RGC Note.
(ii) "RGC EVENT OF DEFAULT" means an event of default under the RGC
Credit Documents.
(jj) "RGC NOTE" has the meaning set forth in the recitals to this
Agreement, as amended, restated, supplemented or modified from time to time and
including all exhibits and schedules thereto.
(kk) "RGC OBLIGATIONS" means all indebtedness, liabilities,
obligations, covenants and duties of the Borrower and/or UTTC to RGC of every
kind, nature and description, direct or indirect, absolute or contingent, due or
not due, contractual or tortious, liquidated or unliquidated, arising by
operation of law or otherwise, now existing of hereafter arising, under the RGC
Credit Documents.
(ll) "RGC RIGHTS" means any rights or remedies RGC may from time to
time have to accelerate the RGC Obligations or other obligations of the Borrower
and/or UTTC to RGC, or any other default rights or remedies with respect to the
Borrower and/or UTTC or any assets of the Borrower and/or UTTC (whether or not
arising in
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connection with the RGC Note), whether under RGC Credit Documents, at law, at
equity or otherwise.
(mm) "RGC SECURITY AGREEMENT" has the meaning set forth in the
recitals to this Agreement, as amended, restated, supplemented or modified from
time to time and including all exhibits and schedules thereto.
(nn) "SOFTWARE" means all "software" as defined inss.9-102(a)(75) of
the Uniform Commercial Code.
(oo) "STANDSTILL PERIOD" has the meaning set forth in Section 2.4(b)
of this Agreement.
(pp) "SUBJECT ASSETS" has the meaning set forth in Section 6.1 of
this Agreement.
(qq) "TRADEMARK LICENSE" means any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned or held by or on behalf of any Grantor or which such
Grantor otherwise has the right to license, or granting to any Grantor any right
to use any Trademark now or hereafter owned by any third party, and all rights
of any Grantor under any such agreement, including each agreement described in
Schedule 3.6 hereto or to the applicable Supplement.
(rr) "TRADEMARKS" means all of the following: (i) all trademarks,
service marks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office or any similar offices in the United States
or any other country, and all extensions or renewals thereof, including those
described in Schedule 3.6 hereto or to the applicable Supplement, (ii) all
goodwill associated therewith or symbolized by any of the foregoing and (iii)
all other assets, rights and interests that uniquely reflect or embody such
goodwill.
(ss) "UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code from
time to time in effect in the State of New York.
(tt) "UTTC" has the meaning set forth in the preamble to this
Agreement.
ARTICLE II. INTERCREDITOR RELATIONSHIP; SUBORDINATION; STANDSTILL
Section 2.1. INTERCREDITOR RELATIONSHIP; SUBORDINATION. RGC, OII and
the Grantors agree that the RGC Obligations and the OII Obligations are subject
to the payment
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and security priorities established by this Agreement, and to the extent
inconsistent with such priorities, each of RGC and OII subordinates and makes
junior, the payment and security priorities governing such payment and security
priorities as set forth in the Credit Documents to the extent necessary to
achieve the intent of this Agreement.
Section 2.2. PRIORITY. Notwithstanding anything to the contrary
contained in the rules for determining priority under the Uniform Commercial
Code or any other law governing the relative priority of security interests of
secured creditors, the time, order or method of attachment and perfection of the
security interests created by the Credit Documents or the time or order of
filing or recording of financing statements or other documents filed or recorded
to perfect security interests in any Collateral of the Borrower or UTTC pursuant
to the Credit Documents, each of RGC and OII, for itself and for each future
holder of the Obligations owing to RGC and OII, respectively, agree that (i) the
security interests created by the RGC Credit Documents shall be in all respects
and for all purposes first, prior, senior and continuing liens in and to the
Collateral, except the IP Assets, and the liens of OII in and to the Collateral,
except the IP Assets, are and shall be fully subject and subordinate to RGC's
liens on the Collateral; (ii) subject to the succeeding sentence below, the
security interests created by the OII Credit Documents shall be in all respects
and for all purposes first, prior, senior and continuing liens in and to the IP
Assets and the liens of RGC in and to the IP Assets are and shall be fully
subject and subordinate to OII's liens on the IP Assets; and (iii) except as
otherwise expressly provided in this Section 2.2, the security interests created
by the RGC Credit Documents and the OII Credit Documents shall be in all
respects and for all purposes prior, senior and continuing liens in and to the
Collateral and the liens of any third party (i.e., not a party to this
Agreement) in and to the Collateral are and shall be fully subject and
subordinate to RGC's and OII's liens on the Collateral. Notwithstanding sub-part
(ii) of the preceding sentence, for so long as the Pari Passu Obligations remain
outstanding, the security interests created by the OII Credit Documents shall be
in all respects and for all purposes Pari Passu and of equal priority with the
security interests created by the RGC Credit Documents in and to the IP Assets.
Section 2.3. RESTRICTIONS ON PAYMENT OF OBLIGATIONS. Except in
compliance with Section 2.4 and 2.5 hereof, from the date hereof until the last
day of the Standstill Period (hereinafter defined), RGC and OII each agrees not
to ask, demand, take or receive from Borrower and/or UTTC, directly or
indirectly, in cash or other property or by setoff or in any other manner
(including, without limitation, from or by way of collateral), payment of all or
any portion of the Obligations. Notwithstanding the foregoing, prior to the
commencement of a Standstill Period (hereinafter defined) Borrower and/or UTTC
may (i) pay to RGC and RGC may receive from Borrower and/or UTTC principal and
interest amounts permitted under Sections 2.2 and 2.3 of the RGC Note and (ii)
pay to OII and OII may receive from Borrower and/or UTTC, principal amounts
pursuant to Section 5 of the OII Note and payments of interest semi-annually and
on the Maturity Date (as defined in the OII Note) pursuant to Section 6 of the
OII Note. Payments to RGC or OII of principal or interest other than as provided
in the preceding sentence shall be prohibited except in compliance with Section
2.4 and 2.5 hereof.
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Section 2.4. DEFAULT NOTICES; STANDSTILL; SHARING OF PAYMENTS.
(a) NOTICES. RGC and OII, respectively, shall provide each other
prompt written notice of any Event of Default. In the event that, on or after
the occurrence of a RGC Event of Default, RGC desires to exercise any RGC Right,
RGC shall provide OII written notice thereof and, in the event that, on or after
the occurrence of a OII Event of Default, OII desires to exercise any OII Right,
OII shall provide RGC written notice thereof (either such notice, a "Declared
Default Notice").
(b) STANDSTILL PERIOD. For a period commencing on the date any
Declared Default Notice is furnished by either Party to the other Party and for
thirty (30) days after OII's or RGC's receipt of the subject Declared Default
Notice (such period, the "Standstill Period"), RGC shall not have the right to
exercise any RGC Right with respect to IP Assets and OII shall not have the
right to exercise any OII Right with respect to any Collateral, including IP
Assets, except as otherwise agreed in writing between OII and RGC. During a
Standstill Period, (i) each of OII and RGC shall cooperate with the other Party,
(ii) RGC shall permit OII to cure any RGC Event of Default within the Standstill
Period and to the extent any Grantor can cure such Event of Default and (iii)
OII shall permit RGC to cure any OII Event of Default within the Standstill
Period and to the extent any Grantor can cure such Event of Default. In the
event Borrower, RGC or OII shall cure such Event of Default during the
Standstill Period and, in the case of any cure by Borrower or OII, such Event of
Default is cured prior to the exercise by RGC of any RGC Right with respect to
any and all Collateral, other than IP Assets, the Creditors shall be returned to
the status quo ante and all rights under this Section shall be reinstated.
(c) EXERCISE OF RIGHTS DURING STANDSTILL PERIOD; CONCLUSION OF
STANDSTILL. Notwithstanding anything to the contrary contained herein, before or
during a Standstill Period RGC shall be entitled to exercise any RGC Right with
respect to any and all Collateral, other than IP Assets. At the conclusion of a
Standstill Period, RGC may exercise any RGC Rights with respect to all
Collateral, including IP Assets, and OII may exercise any OII Rights with
respect to all Collateral, including IP Assets, subject however, to the other
terms and conditions of this Agreement.
Section 2.5. SHARING OF DISTRIBUTIONS.
(a) Except as provided in Section 2.3, until the OII or RGC
Obligations are paid in full, in the event OII or RGC receives any Distribution
which otherwise would be payable or deliverable upon or with respect to the RGC
Obligations or OII Obligations, respectively, such Distribution shall be
received and held in trust for the benefit of OII or RGC, respectively, shall be
segregated from other funds and property held by RGC or OII, respectively, and
shall be forthwith paid over to OII or RGC, respectively, in the same form as so
received (with any necessary endorsement) to be applied (in the case of cash) to
or held as collateral (in the case of noncash property or securities) for the
payment or prepayment of the Obligations in accordance with Section 2.5(b).
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(b) All Distributions received by OII or RGC with respect to the OII
Obligations and the RGC Obligations shall be applied as follows:
(i) In the event that the Distribution is of Collateral other
than IP Assets:
(1) First, Pari Passu between OII and RGC in reimbursement
of the out-of-pocket costs and expenses of each incurred in connection with the
enforcement of the rights and remedies of each against the Borrower and/or UTTC
and, if applicable, OII or RGC in connection with such Distribution;
(2) Second, 100% to RGC, unless and until the RGC
Obligations are fully paid;
(3) Third, 100% to OII, unless and until the OII Obligations
are fully paid; and
(4) Lastly, to the Borrower and/or UTTC or such other person
or entity as shall be entitled thereto.
(ii) In the event that the Distribution is of IP Assets:
(1) First, Pari Passu between OII and RGC in reimbursement
of the out-of-pocket costs and expenses of each incurred in connection with the
enforcement of the rights and remedies of each against the Borrower and/or UTTC
and, if applicable, OII or RGC in connection with such Distribution;
(2) Second, Pari Passu between RGC and OII unless and until
the Pari Passu Obligations are fully paid to RGC;
(3) Third, 100% to OII, unless and until the OII Obligations
are fully paid;
(4) Fourth, 100% to RGC, unless and until the RGC
Obligations are fully paid; and
(5) Lastly, to the Borrower and/or UTTC or such other person
or entity as shall be entitled thereto.
(c) Each Creditor shall pay over to the other Creditor the full
amount due such other Creditor under this Section 2.5 within three (3) Business
Days after such receipt.
Section 2.6. TURNOVER OF COLLATERAL. If any Creditor acquires custody,
control or possession of any Collateral or any Distribution other than pursuant
to the terms of this Agreement, such Creditor shall promptly cause such
Collateral or the proceeds of such Distribution to be delivered to or put in the
custody, possession or control of the Collateral
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Agent for disposition and distribution in accordance with the provisions of
Section 2.5 of this Agreement. Until such time as such Creditor shall have
complied with the provisions of the immediately preceding sentence, such
Creditor shall be deemed to hold such Collateral and the proceeds thereof in
trust for the Party or Parties entitled thereto under this Agreement.
Section 2.7. RECOVERY OF PREFERENTIAL PAYMENT. Notwithstanding anything
to the contrary contained in this Agreement, RGC and OII each agree that if,
subsequent to the purported payment in full of the Obligations outstanding to
RGC and OII, respectively, or subsequent to any purported termination of this
Agreement by mutual consent of the Creditors, any payment received by OII or
RGC, respectively, from or for the account of the Grantors (or either Grantor)
with respect to the RGC Obligations or the OII Obligations is repaid by OII or
RGC, respectively, to the Borrower or to any trustee or custodian of Grantors
(or such Grantor) because of any claim of preference, fraudulent transfer or the
like, this Agreement shall automatically be reinstated, effective as of the date
of the purported termination or the purported payment in full of the OII
Obligations or RGC Obligations, respectively, and this Agreement shall apply to
any and all payments received by RGC and OII, respectively, on or after the date
of the purported termination or purported payment in full of the OII Obligations
and RGC Obligations, respectively.
ARTICLE III. COVENANTS AND FURTHER ASSURANCES
Section 3.1. CERTAIN COVENANTS OF RGC AND OII. Each of RGC and OII
agrees that if any Credit Proceeding shall exist with respect to Borrower and/or
UTTC, it shall duly and promptly take such action as OII or RGC, respectively,
may request to collect the RGC Obligations or OII Obligations, respectively, for
account of OII or RGC, respectively, and to file appropriate claims or proofs of
claim in respect of such Obligations.
Section 3.2. NO COMMENCEMENT OF ANY PROCEEDING. RGC and OII each agrees
that, prior to the expiration of the Standstill Period, it will not commence, or
join with any creditor other than OII or RGC, respectively, in an Insolvency
Proceeding.
Section 3.3. RIGHTS OF SUBROGATION. Each Party agrees that no
Distribution to OII or RGC, respectively, pursuant to the provisions of this
Agreement shall entitle RGC or OII, respectively, to exercise any rights of
subrogation in respect thereof until the OII Obligations and RGC Obligations,
respectively, shall have been paid in full.
Section 3.4. INSOLVENCY. This Agreement shall be applicable both before
and after the commencement of any Insolvency Proceeding and all converted and
succeeding cases in respect thereof. The relative rights, as provided for in
this Agreement, shall continue after the commencement of any such case on the
same basis as prior to the date of the commencement of any such Insolvency
Proceeding, as provided in this Agreement, subject to any court order approving
the financing of or use of cash collateral by Borrower and/or UTTC, as
debtor-in-possession.
Section 3.5. SUBORDINATION LEGEND; FURTHER ASSURANCES.
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(a) RGC, the Borrower and/or UTTC will cause each instrument
evidencing the RGC Obligations to be endorsed with the following legend:
"The rights of RGC International Investors, LDC hereunder are subject
to certain interests of OptiMark Innovations Inc. pursuant to a certain
Intercreditor, Subordination and Standstill Agreement dated May 3, 2002, by and
among RGC International Investors, LDC, OptiMark Innovations Inc., The Ashton
Technology Group, Inc. and Universal Trading Technologies Corporation."
(b) OII, the Borrower and/or UTTC will cause each instrument
evidencing the OII Obligations to be endorsed with the following legend:
"The rights of OptiMark Innovations Inc. hereunder are subject to
certain interests of RGC International Investors, LDC pursuant to a certain
Intercreditor, Subordination and Standstill Agreement dated May 3, 2002, by and
among RGC International Investors, LDC, OptiMark Innovations Inc., The Ashton
Technology Group, Inc. and Universal Trading Technologies Corporation."
(c) RGC, OII, the Borrower and UTTC each will further ▇▇▇▇ its books
of account in such a manner as shall be effective to give proper notice of the
effect of this Agreement and will, in the case of any Obligation which is not
evidenced by any instrument, upon OII's or RGC's request cause such Obligation
to be evidenced by an appropriate instrument or instruments endorsed with the
above legend. RGC, OII, the Borrower and UTTC each will, at its expense and at
any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that OII or RGC, respectively, may request, in order to protect
any right or interest granted or purported to be granted hereby or to enable OII
or RGC, respectively, to exercise and enforce its rights and remedies hereunder.
Section 3.6. NO CHANGE IN OR DISPOSITION OF RGC OBLIGATIONS. Neither
RGC nor OII shall:
(a) Cancel or otherwise discharge any of the Obligations owing to
such Party (except upon payment in full thereof) or subordinate any of such
Obligations to any indebtedness of the Borrower and/or UTTC other than as
subordinated hereby;
(b) Release or terminate any security interest covering any
Collateral;
(c) Sell, assign, pledge, encumber or otherwise dispose of any of the
Obligations or of any document or instrument evidencing the Obligations unless
such sale, assignment, pledge, encumbrance or disposition is made expressly
subject to this Agreement; or
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(d) Permit any change in the terms of any of the Obligations owing to
such Party or the terms of the RGC Credit Documents with respect to RGC without
the prior written consent of OII or the OII Credit Documents with respect to OII
without the prior written consent of RGC.
Section 3.7. AGREEMENT BY THE CREDITORS.
(a) In accordance with Sections 2.1 and 2.2 of this Agreement, OII
shall not perfect any security interest in any asset of the Borrower or UTTC
except to the extent that it has confirmed that RGC has a perfected prior lien.
RGC shall not perfect any security interest in any asset of the Borrower or UTTC
unless and until it has confirmed that contemporaneously OII is perfecting a
security interest in such asset.
(b) The Collateral Agent shall take all actions necessary or
desirable to perfect the security interest in any asset of the Borrower or UTTC
not otherwise perfected by the filing of Uniform Commercial Code financing
statements, including, without limitation, (i) the filing of Patent and
Trademark assignments with the United States Patent and Trademark Office, (ii)
the filing of Copyright assignments with the United States Copyright Office and
(iii) possession of instruments and certificates evidencing investment property
(including possession of instruments and powers of transfer duly endorsed in
blank).
Section 3.8. AGREEMENT BY THE GRANTORS. Each of the Borrower and UTTC
agrees that it will not make any payment of any of the Obligations, or take any
other action, in contravention of the provisions of this Agreement.
Section 3.9. SUPERVISION OF OBLIGATIONS. Except to the extent otherwise
expressly provided herein, each Creditor shall be entitled to manage and
supervise the obligations of the Grantors to it in accordance with applicable
law and such Creditor's practices in effect from time to time without regard to
the existence of any other Creditor.
Section 3.10. LIMITATION RELATIVE TO OTHER AGREEMENTS. Except to the
extent otherwise expressly provided herein, nothing contained in this Agreement
is intended to impair, as between any Creditor and any Grantor, the rights of
such Creditor and the obligations of such Grantor under (i) the OII Credit
Documents, in the case of OII and any Grantor, or (ii) the RGC Credit Documents,
in the case of RGC and any Grantor.
Section 3.11. OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and
interests of OII and RGC, respectively, hereunder, and all agreements and
obligations of RGC, OII, UTTC and the Borrower under this Agreement, shall
remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of the any OII Credit
Document or RGC Credit Documents;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any
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consent to departure from the OII Credit Documents or RGC Credit Documents
(provided that the inclusion of this subsection in this agreement shall not be
deemed to limit, expand or otherwise affect the terms of Section 3.6(c) hereof);
(c) any exchange, release or non-perfection of a security interest
covering any Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations (provided no
consent thereto in violation hereof is made by the inclusion of this
subsection); or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, either Grantor or RGC or OII.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned to the Borrower and/or UTTC upon the insolvency,
bankruptcy or reorganization of Borrower and/or UTTC or otherwise, all as though
such payment had not been made.
ARTICLE IV. OTHER LOANS
Section 4.1. NO OTHER LOANS EXCEPT IF SUBORDINATE. Each of RGC and OII
represents that it has made no other loan to the Borrower and/or UTTC, except
pursuant to the RGC Credit Documents and the OII Credit Documents respectively.
If, in the future, either Creditor elects to make any other loan other than the
OII Obligations or the RGC Obligations to Grantors (or either Grantor or their
respective affiliates) (any such loan or advance of any kind being hereinafter
referred to collectively as "Other Loans"), all such Other Loans shall be
subject and subordinate in payment (including without limitation regularly
scheduled payment of principal and interest) and security to the Obligations
pursuant to the OII Credit Documents and the RGC Credit Documents and any lien
given or granted by Grantors (or either Grantor) to secure any Other Loan (other
than a purchase money security interest) shall be subject and subordinate to the
liens given by the Grantors to secure the Obligations. In extension of the
foregoing, any and all payments received by either Creditor from the Grantors
(or either Grantor) shall be applied in the order prescribed by this Agreement.
The Grantors shall not accept and neither RGC nor OII shall make available to
the Grantors or their respective affiliates any Other Loan, unless the documents
and instruments evidencing such Other Loan are expressly so subordinate. Each
Grantor covenants that it shall neither make nor agree to make any payment or
other Distribution (including without limitation regularly scheduled principal
and interest payments) on any Other Loan unless and until the Obligations are
fully and irrevocably paid. As use in the sentence, the term "Other Loans" shall
also include (i) any increase in the principal amount of the OII Obligations or
the RGC Obligations to the extent of such increase and/or (ii) any change in the
amortization schedule of the OII Obligations or the RGC Obligations which
results in any scheduled payment being greater than those required under the OII
Credit Documents or the RGC Credit Documents on the date hereof to the extent of
such payment differential, provided nothing in this paragraph shall be deemed to
limit, expand or otherwise affect the terms of Section 3.6(c) hereof.
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ARTICLE V. REPRESENTATIONS AND WARRANTIES
Section 5.1. RGC OBLIGATIONS. RGC and each Grantor each hereby
represents and warrants as follows:
(a) The RGC Obligations now outstanding are evidenced by the RGC
Credit Documents and true and complete copies of documents relating thereto have
been furnished to OII, have been duly authorized by the Borrower and UTTC, have
not been amended or otherwise modified, and constitute the legal, valid and
binding obligation of the Borrower and UTTC enforceable against the Borrower and
UTTC in accordance with its terms. There exists no default in respect of any of
the RGC Obligations.
(b) RGC owns the RGC Obligations now outstanding free and clear of
any lien, security interest, charge or encumbrance or any rights of others.
(c) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
Section 5.2. OII OBLIGATIONS. OII and each Grantor each hereby
represents and warrants as follows:
(a) The OII Obligations now outstanding are evidenced by the OII
Credit Documents and true and complete copies of documents relating thereto have
been furnished to RGC, have been duly authorized by the Borrower and UTTC, have
not been amended or otherwise modified, and constitute the legal, valid and
binding obligation of the Borrower and UTTC enforceable against the Borrower and
UTTC in accordance with its terms. There exists no default in respect of any of
the OII Obligations.
(b) OII owns the OII Obligations now outstanding free and clear of
any lien, security interest, charge or encumbrance or any rights of others.
(c) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
ARTICLE VI. SECURITY
Section 6.1. ACKNOWLEDGMENT OF SECURITY INTERESTS. OII hereby
acknowledges that to secure all of the RGC Obligations, RGC has been granted or
will be granted, from time to time, a security interest in and a general lien
upon all of the assets of the Borrower and/or UTTC (the "Subject Assets")
pursuant to the terms of the RGC Credit Documents as in effect on the date
hereof. OII waives the application of all provisions, if any, contained in the
OII Credit Documents which would or might otherwise prohibit Borrower and/or
UTTC from entering into or consummating any financing documents and the
transactions contemplated thereunder. RGC hereby acknowledges that to secure all
of the
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OII Obligations, OII has been granted or will be granted, from time to time, a
security interest in and a general lien upon the Subject Assets. RGC waives the
application of all provisions, if any, contained in the RGC Credit Documents
which would or might otherwise prohibit Borrower and/or UTTC from entering into
or consummating any financing documents and the transactions contemplated
thereunder.
Section 6.2. NO RGC OR OII LIENS EXCEPT AS DISCLOSED. Notwithstanding
anything to the contrary contained herein, including without limitation, the
subordination and priority provisions hereof, the RGC Obligations are and shall
at all times be obligations secured only as specifically set forth in the RGC
Credit Documents and the granting of any other lien in any collateral by the
Borrower and/or UTTC or the receipt of any such grant by RGC shall be a
violation of this Agreement. Notwithstanding anything to the contrary contained
herein, including without limitation, the subordination and priority provisions
hereof, the OII Obligations are and shall at all times be obligations secured
only as specifically set forth in the OII Credit Documents and the granting of
any other lien in any collateral by the Borrower and/or UTTC or the receipt of
any such grant by OII shall be a violation of this Agreement.
ARTICLE VII. MISCELLANEOUS
Section 7.1. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure by RGC or OII (or either Grantor)
therefrom shall in any event be effective unless the same shall be in writing
and signed by OII and RGC, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of RGC or OII to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 7.2. FORMALITIES. RGC, OII and each Grantor each hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and this Agreement. RGC and OII each hereby waive any
requirement that OII and RGC, respectively, protect, secure, perfect or insure
any lien on any property subject thereto or exhaust any right or take any action
against Grantors (or either Grantor) or any other person or entity or any
collateral.
Section 7.3. EXPENSES. The Grantors jointly and severally agree to pay,
upon demand, to OII and RGC respectively, the amount of any and all reasonable
expenses, including the reasonable fees and expenses of counsel, which OII and
RGC, respectively, may incur in connection with the exercise or enforcement of
any of its rights or interests hereunder.
Section 7.4. NOTICES. Unless the Party to be notified otherwise
notifies the other Parties in writing as provided in this Section, and except as
otherwise provided in this
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Agreement, notices shall be delivered in person or sent by overnight courier,
facsimile, ordinary mail, cable or telex addressed to such Party at its address
set forth on the signature page of this Agreement. Notices shall be effective:
(a) on the day on which delivered to such Party in person, (b) on the first
Banking Day after the day on which sent to such Party by overnight courier, and
(c) if given by mail, 48 hours after deposit in the mails with first-class
postage prepaid, addressed as aforesaid.
Section 7.5. CONTINUING AGREEMENT. This Agreement is a continuing
agreement and shall (i) remain in full force and effect until the Obligations
shall have been paid in full, (ii) be binding upon and inure to the benefit of
RGC, the Grantors, OII and their respective successors and assigns. Without
limiting the generality of the foregoing clause (ii), OII and RGC may assign or
otherwise transfer all or any portion of its rights or obligations under the OII
Credit Documents and RGC Credit Documents to any other person or entity;
provided that such assignee, as a condition of such assignment, must agree in
writing to be bound by the provisions of this Agreement.
Section 7.6. INTEGRATION. This Agreement sets forth the entire
agreement among the Parties hereto relating to the matters covered herein and
supersede any prior oral or written statements or agreements with respect to
such transactions.
Section 7.7. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York as applied to
agreements among New York residents entered into and to be performed entirely in
New York.
Section 7.8. NO JOINT VENTURE. The execution and delivery of this
Agreement is not intended, nor shall it be construed to constitute, the
formation of a partnership or joint venture between the Creditors.
Section 7.9. INDEPENDENT INVESTIGATION. Each Creditor represents to the
other Creditor that is has entered into this Agreement on the basis of its own
independent commercial relationship with the Grantors, and that except as set
forth herein, the other Creditor has not made any representations or warranties
to such Creditor and that no specific act, actions or failure to act in any one
or more instances by the other Creditor, including, without limitation any
review of the affairs of Grantors, shall be deemed to constitute a
representation or warranty by either Creditor. Each Creditor represents to the
other that it has independently and without reliance upon the other Creditor,
and based on such documents and information as each has deemed appropriate, made
its own appraisal of and investigation into the financial condition,
credit-worthiness, affairs, status and nature of Grantors and made its own
decision to enter into this Agreement and to make such investigation as it deems
necessary to inform itself as to the status and affairs, financial or otherwise
of Grantors. Neither Creditor shall be required to make any inquiry concerning
the Grantors or any of their obligations to the other Creditor under its loan
documents or any collateral or to inspect the properties or books or records of
the Grantors. Additionally, if requested by either Creditor after notification
that such Creditor has not received the same from such Grantor, either Creditor
will provide the other Creditor with such financial and other statements as
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such Creditor shall have received and which shall have been so requested. Each
Creditor's agreement to provide any of the foregoing shall not in any way
constitute an assumption by such Creditor of any responsibility for the
accuracy, completeness, authenticity, legality, validity or enforceability
thereof.
Section 7.10. COUNTERPARTS. This Agreement may be executed in
counterparts and each Party hereto shall be entitled to rely on each other
Party's signature as if it were an original.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties have duly executed this Intercreditor,
Subordination and Standstill Agreement as of the day and year first written
above.
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: EVP & General Counsel
UNIVERSAL TRADING TECHNOLOGIES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: EVP & General Counsel
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Jenkens & ▇▇▇▇▇▇▇▇▇ Park ▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
RGC INTERNATIONAL INVESTORS, LDC
By: ▇▇▇▇ ▇▇▇▇ Capital Management, L.P.
By: RGC General Partner Corp
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
Address for Notices:
c/o ▇▇▇▇ ▇▇▇▇ Capital Management, L.P.
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Klehr, Harrison, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
OPTIMARK INNOVATIONS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Address for Notices:
c/o OptiMark Holdings, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Office of the General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Exhibit A
---------
IP Assets
---------
PATENT APPLICATION
------------------
1. U.S. Provisional Patent Application No. 60/323,940 entitled "Volume
Weighted Average Price System And Method," filed on September 21,
2001.
TRADE SECRETS, KNOW HOW, AND LICENSES
-------------------------------------
2. Diagrams, presentations, project plans, research, spreadsheets,
discussion documents, and other documents developed specifically for
volume weighted average price "guaranteed price/fill" systems and
technology (hereinafter "VWAP Trading") including, but not limited to,
(a) the documents listed on Attachment 1 hereto and (b) a CD_ROM
containing those documents.
3. All rights, duties, and obligations of OptiMark Innovations Inc.
(f/k/a OTSH, Inc.) under that certain "License Agreement" dated as of
February 21, 2002 by and between OptiMark Innovations Inc. and Marlex
Communication Systems, Inc. ("Marlex") for use in the implementation,
maintenance and/or operation of VWAP trading of U.S. securities
utilizing the Licensed Technology (as defined in such License
Agreement) and as permitted under such License Agreement.
4. All rights, duties, and obligations of OptiMark Innovations Inc. under
that certain "Bilateral Nondisclosure Agreement" dated August 7, 2001
by and between Marlex and OptiMark, Inc. and/or subsidiaries thereof,
including, but not limited to, all rights, duties, and obligations of
OptiMark Innovations Inc. in and to the Proprietary Information and
works derived therefrom pursuant to such Bilateral Nondisclosure
Agreement, and all results and work product generated by OptiMark
Innovations Inc. or its predecessor-in-interest in connection with
evaluative efforts related thereto.
SOFTWARE
--------
5. Software specifically for VWAP Trading including, but not limited to,
(a) the software files listed on Attachment 2 hereto, entitled
"Group1.log, and (b) a CD_ROM containing those files.
6. All rights, duties, and obligations of OptiMark Innovations Inc.
relating to software provided by Marlex in connection with that
certain License Agreement and/or Bilateral Nondisclosure Agreement
referenced in paragraphs 3 and 4 above, and work product generated by
OptiMark Innovations Inc. or its predecessor-in-interest associated
with such software, relating to a "slicing" algorithm for VWAP Trading
including, but not limited to, (a) the software files listed on
Attachment 3 hereto, entitled "Group2.log," and (b) a CD_ROM
containing those files.
7. Software specifically for VWAP Trading for (a) tracking bugs in the
software described in paragraphs 5 and 6 above, and (b) building
source code into executable code for the software described in
paragraphs 5 and 6 above, including, but not limited to, (x) the
software files listed on Attachment 4 hereto, entitled "Group4.log,"
and (y) a CD_ROM containing those files.
8. Software specifically for VWAP Trading for testing the software
described in paragraphs 5 and 6 above, including, but not limited to,
(a) the software files listed on Attachment 5 hereto, entitled
"Group5.log," and (b) a CD_ROM containing those files.