EXHIBIT 4.8
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 and security priorities established by this Agreement,
and to the extent inconsistent with such
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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).
(b) All Distributions received by OII or RGC with respect
to the OII Obligations and the RGC Obligations shall be applied as follows:
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(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 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
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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.
(a) RGC, the Borrower and/or UTTC will cause each
instrument evidencing the RGC Obligations to be endorsed with the following
legend:
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"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
(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.
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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 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
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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.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Section 5.1. RGC Obligations. RGC and each Grantor each hereby
represents and warrants as follows:
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(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 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.
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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 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.
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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 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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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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: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
Address for Notices:
c/o ▇▇▇▇ ▇▇▇▇ Capital Management, L.P.
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
OPTIMARK INNOVATIONS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
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.