EXHIBIT 20.1.10
NEW DEBT COLLATERAL AGENCY AND SECURITY AGREEMENT
This NEW DEBT COLLATERAL AGENCY AND SECURITY AGREEMENT (as it may be
amended, supplemented or otherwise modified from time to time, this "Agreement")
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is dated as of February 19, 2002 and is made by and between Imperial Credit
Industries, Inc. (the "Grantor") in favor of and for the benefit of Wilmington
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Trust Company ("WTC"), acting hereunder not individually but solely as
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collateral agent (in such capacity, the "Collateral Agent") for the benefit of
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the holders of Senior Secured Debt listed on Exhibit A attached hereto
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(collectively, the "Senior Secured Debt Purchasers"). The Senior Secured Debt
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Purchasers, and any successors and assigns thereto, are individually referred to
herein as a "Secured Party" and collectively referred to herein as the "Secured
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Parties").
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PRELIMINARY STATEMENTS
Pursuant to that certain Master Recapitalization Agreement dated as of
March 29, 2001, as amended by that First Amendment to Master Recapitalization
Agreement, dated as of June 27, 2001 (such agreement, as so amended and as it
may hereafter be amended or otherwise modified from time to time, being referred
to herein as the "Recapitalization Agreement"), the Senior Secured Debt
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Purchasers purchased $16,200,000 in aggregate principal amount of Senior Secured
Debt from the Grantor (such debt being referred to herein as the "Series A
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Senior Secured Debt"). Also pursuant to the Recapitalization Agreement, the
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Grantor issued $127,479,000 aggregate principal amount of 12% Senior Secured
Notes due 2005 (the "Exchange Notes") pursuant to an indenture. The Grantor has
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entered into a Standstill, Forbearance and Amendment Agreement, dated as of
February 19, 2002 (the "Standstill Agreement"), with each of the Senior Secured
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Debt Purchasers and a Restructuring Agreement, dated as of February 19, 2002
(the "Restructuring Agreement"), with Southern Pacific Bank and the ▇▇▇▇▇▇▇
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▇▇▇▇▇ Living Trust, as the sole holder of the Convertible Subordinated Debt (the
"▇▇▇▇▇ Trust"). The Standstill Agreement and the Restructuring Agreement are
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intended to resolve certain disagreements between the Grantor and certain of the
Senior Secured Debt Purchasers and between the Grantor and the ▇▇▇▇▇ Trust
regarding the Grantor's debt obligations to such parties. The Restructuring
Agreement requires, among other things, that the Grantor issue to the ▇▇▇▇▇
Trust an additional series of Senior Secured Debt in aggregate principal amount
of $6,382,877 (the "Series B Senior Secured Debt") and $2,000,000 in aggregate
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principal amount of Exchange Notes. The Standstill Agreement requires, among
other things, that the Grantor shall grant to the Senior Secured Debt Purchasers
a valid perfected security interest in collateral having an immediately
realizable cash value of $5 million that is in addition to the collateral
provided for in the Security Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Recapitalization Agreement.
The term "Senior Secured Debt" as used herein means both the Series A
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Senior Secured Debt and the Series B Senior Secured Debt.
The obligations of the Grantor under the Senior Secured Debt and the
Exchange Notes are secured by collateral provided by the Grantor pursuant to
that certain Amended and Restated Collateral Agency and Security Agreement,
dated as of June 28, 2001 (the "Security
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Agreement") entered into between the Grantor and WTC, as Collateral Agent under
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the Security Agreement for the benefit of the holders of the Senior Secured
Debt, the Exchange Notes and other indebtedness of the Grantor referred to
therein as the Convertible Subordinated Debt.
It is a condition precedent to the effectiveness of the Standstill
Agreement and the obligations and releases of the parties to the Restructuring
Agreement that the Grantor and WTC in its capacity as Collateral Agent shall
have entered into this agreement under which Grantor shall have granted the
assignments and security interests and made the pledges and assignments
contemplated thereunder.
The obligations of the Grantor under the Senior Secured Debt are also
to be secured pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Senior Secured Debt Purchasers and the ▇▇▇▇▇ Trust to execute the Standstill
Agreement and the Restructuring Agreement, respectively, the parties hereto
hereby agree as follows:
SECTION 1. Grant of Security. The Grantor hereby pledges and assigns to
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the Collateral Agent as security for the benefit of the Senior Secured Debt
Purchasers, and hereby grants to the Collateral Agent for the benefit of such
Secured Parties a security interest in, all of the Grantor's right, title and
interest, whether now owned or hereafter acquired, in and to the following
(collectively, the "Collateral"): The 1992 ISDA Master Agreement, dated as of
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December 15, 1997, by and between the Grantor and Canadian Imperial Bank of
Commerce (such entity and any successors thereto or assigns thereof under such
agreement being referred to herein as "CIBC"), and any schedules thereto and the
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Confirmation thereof dated August 26, 1998, as amended and restated as of
October 4, 2000 (such Master Agreement, schedules and Confirmation, as the same
may be amended, amended and restated, supplemented or otherwise modified from
time to time, being collectively referred to herein as the "Assigned
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Agreement"), including, without limitation,
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(a) all rights of the Grantor to receive moneys due and to become
due under or pursuant to the Assigned Agreement;
(b) all rights of the Grantor to receive proceeds of any
insurance, indemnity, warranty, guaranty or collateral security with respect to
the Assigned Agreement;
(c) all claims of the Grantor for damages arising out of or for
breach of or default under the Assigned Agreement;
(d) all rights of the Grantor to terminate the Assigned Agreement,
to perform thereunder and to compel performance by CIBC of CIBC's obligations
thereunder and otherwise exercise all rights and remedies thereunder; and
(e) to the extent not included in the foregoing, all proceeds of
any and all of the foregoing collateral.
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The parties hereto have agreed, and by their execution hereof acknowledge, that
until the occurrence of an Event of Default (as defined in Section 6(a)(v)), the
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Grantor shall have the right to sell or dispose of any or all of the Collateral
and the Collateral Agent is authorized to release from the security interest
hereof any such Collateral held by it hereunder; provided, however, that prior
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to any such sale or disposition that is proposed to occur at any time when the
Senior Secured Debt remains issued and outstanding, the Grantor shall (i)
deliver evidence reasonably satisfactory to the Required Noteholders that the
immediately realizable cash value of the remaining Collateral is not less than
$5 million and the Collateral Agent shall have received written evidence thereof
from the Required Noteholders, or (ii) make appropriate arrangements approved in
advance in writing by the Required Noteholders in their sole reasonable
discretion to deposit $5 million of cash sale proceeds or $5 million of other
cash collateral with the Collateral Agent as Collateral pursuant to this
Agreement and the Collateral Agent shall have received written evidence thereof
from the Required Noteholders.
SECTION 2. Security for Obligations. This Agreement secures, and the
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Collateral is collateral security for, the prompt payment and performance in
full when due, whether on a specified payment date, at stated maturity, by
acceleration or otherwise (including, without limitation, the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code or any similar law) of all obligations of the
Grantor under the Senior Secured Debt, including interest (including, without
limitation, interest that, but for the filing of a petition in bankruptcy would
accrue on such obligations) or any fees or other expenses related thereto (any
and all such obligations being referred to herein as the "Secured Obligations").
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SECTION 3. Grantor Remains Liable; Transfer of Collateral to Collateral
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Agent. Notwithstanding anything herein to the contrary,
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(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed;
(b) the exercise by the Collateral Agent of any of its
rights hereunder shall not release the Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral;
(c) the Collateral Agent shall not have any obligation or
liability under any such contracts or agreements included in the Collateral by
reason of this Agreement, nor shall the Collateral Agent be obligated to perform
any of the obligations or duties of the Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder; and
(d) the Collateral Agent shall have the right after the
occurrence and during the continuance of an Event of Default beyond any grace
period applicable thereto, to transfer into the name of the Collateral Agent or
any of its nominees the Assigned Agreement.
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SECTION 4. Representations and Warranties. The Grantor hereby
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represents and warrants as follows:
(a) The chief place of business and chief executive office of the
Grantor is located at the address specified for the Grantor on Schedule
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I. The Grantor's federal tax identification number is as set forth on
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Schedule I.
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(b) The Assigned Agreement, a true and complete copy of which is
attached hereto as Exhibit B, has been duly authorized, executed and
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delivered by the parties thereto, has not been amended or otherwise
modified except as set forth in Section 1, and is in full force and
effect and is binding upon and enforceable against the parties thereto
in accordance with its terms. The Grantor has fully performed all of
its obligations under the Assigned Agreement and the other party to the
Assigned Agreement has no defense, setoff or counterclaim arising under
the Assigned Agreement. There exists no default under the Assigned
Agreement by either party thereto.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of any lien except for the security interest
created by this Agreement. No effective financing statement or other
instrument similar in effect covering all or any part the Collateral is
on file in any recording office, except such as may have been filed
relating to this Agreement.
(d) This Agreement creates a valid first priority security
interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable
to perfect and protect such security interest have been duly taken.
(e) The execution and delivery of this Agreement and the
performance by the Grantor of its obligations hereunder are within the
Grantor's corporate power, have been duly authorized by all necessary
corporate action and do not and will not contravene or conflict with
any provision of law or of the organizational documents of the Grantor
or of any agreement, indenture, instrument or other document, or any
judgment, order or decree, which is binding upon the Grantor.
(f) This Agreement is a legal, valid and binding obligation of the
Grantor, enforceable in accordance with its terms, except that the
enforceability of this Agreement may be limited by bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law) and creates a valid and, after all appropriate financing
statements are filed, first priority security interest in the
Collateral and such security interest is entitled to all rights,
priorities and benefits afforded by the Uniform Commercial Code in
effect in the State of California (the "Uniform Commercial Code").
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SECTION 5. Further Assurances; Other Covenants.
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(a) The Grantor agrees from time to time that, at the expense of
the Grantor, the Grantor will promptly execute and deliver all further
instruments and documents, and take all further action required, or
that the Collateral Agent may reasonably request, in order to perfect,
protect and maintain the priority of any assignment or security
interest granted or purported to be granted hereunder or to enable the
Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral.
(b) The Grantor hereby authorizes the Collateral Agent on behalf
of the Secured Parties entitled to the benefit thereof pursuant to the
terms hereof to file one or more financing or continuation statements,
and amendments thereto, relating to all or any part of the Collateral
without the signature of the Grantor where permitted by law. A
photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) The Grantor covenants and agrees that, so long as any portion
of the Secured Obligations shall remain unpaid, the Grantor will,
unless the Collateral Agent shall otherwise consent in writing, perform
and observe all the terms and provisions of the Assigned Agreement to
be performed or observed by it, maintain the Assigned Agreement in full
force and effect until the Termination Date (as defined in the Assigned
Agreement), enforce the Assigned Agreement in accordance with its
terms, and take all such action to such end as may be from time to time
reasonably requested by the Collateral Agent to the extent any such
action is not otherwise inconsistent with any other provision of this
Agreement.
SECTION 6. Economic Rights; Payments, Covenants; Limits of Security
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Interest; etc.
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(a) Until the occurrence of an Event of Default and the
continuance thereof beyond any grace period applicable thereto:
(i) The Grantor shall be entitled to exercise any and all
consensual or contractual rights relating or pertaining to the
Collateral for any purpose to the extent that any such exercise is
not inconsistent with the other provisions of this Agreement;
(ii) Subject to the limitations on the sale or disposition of
the Collateral set forth in Section 1 hereof and the limitations
set forth in Section 8 hereof, the Grantor shall be entitled to
receive and retain any and all payments made or proceeds received
with respect to the Collateral.
(iii) The Collateral Agent shall execute and deliver, or cause
to be executed and delivered, to the Grantor, all such powers of
attorney and other instruments as the Grantor may request in
writing (upon which the Collateral Agent may fully rely) for the
purpose of enabling the Grantor to exercise the rights and powers
which it is entitled to exercise pursuant to subclause (i) above
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and to receive the payments which it is authorized to retain pursuant
to subclause (ii) above.
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(iv) The Grantor shall be entitled to enforce and prosecute all
rights and remedies available under any of the Collateral.
(v) For all purposes under this Agreement, "Event of Default"
means an Event of Default as defined in the Senior Secured Debt, but
not including any of the Alleged Existing Defaults (as defined in the
Standstill Agreement).
(b) The Grantor hereby irrevocably appoints the Collateral Agent the
Grantor's attorney-in-fact, with full authority in the place and stead of
the Grantor and in the name of the Grantor or otherwise, to, after the
occurrence of an Event of Default and the continuance thereof beyond any
grace period applicable thereto, exercise all rights and powers which the
Grantor is otherwise entitled to exercise pursuant to Section 6(a)(i) and
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Section 6(a)(iv) hereof and to receive and retain all payments otherwise
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payable to the Grantor under Section 6(a)(ii) hereof, and all such rights
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and powers shall thereupon become vested in the Collateral Agent which
shall have, during the continuance of such Event of Default, the sole and
exclusive authority to exercise such rights and powers and to receive such
payments. Any and all money and other property paid over to or received by
the Collateral Agent pursuant to this clause (b) shall be retained by the
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Collateral Agent as additional Collateral hereunder and applied in
accordance with the provisions hereof.
(c) Notwithstanding any provision herein to the contrary, the rights
of the Collateral Agent to receive any payments or proceeds with respect to
to the Collateral (including, without limitation, any net proceeds
resulting from any sale or transfer of the Collateral or as a result of any
other remedy permitted hereunder) shall be limited to a maximum of $5
million, and any payments or proceeds received by the Collateral Agent in
excess of such maximum limits shall be promptly returned to the Grantor.
SECTION 7. Place of Perfection; Records. The Grantor shall keep its chief
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place of business and chief executive office and the office where it keeps its
records concerning the Collateral, at the location therefor specified on
Schedule I or, upon prior written notice to the Collateral Agent, at such other
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locations in a jurisdiction where all actions required by Section 5 shall have
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been taken with respect to the Collateral.
SECTION 8. Transfers and Other Liens. Except as otherwise permitted
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hereunder, the Grantor shall not (a) sell, assign (by operation of law or
otherwise) or otherwise dispose of any of the Collateral, or (b) create or
suffer to exist any Lien upon or with respect to any of the Collateral.
SECTION 9.
(a) Appointment and Authorization of Collateral Agent. By execution
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of the Standstill Agreement, each Secured Party hereby irrevocably
designates and appoints WTC as the Collateral Agent of such Secured Party
under this Agreement and each Secured Party hereby irrevocably authorizes
the Collateral Agent to execute this
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Agreement and (i) to take action on its behalf and exercise such powers and
use such discretion as are expressly permitted hereunder and all
instruments relating hereto and thereto and (ii) to exercise such powers
and perform such duties as are, in each case, expressly delegated to the
Collateral Agent by terms hereof and thereof together with such other
powers and discretion as are reasonably incidental hereto and thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
the Collateral Agent shall not have any duties or responsibilities except
those expressly set forth herein or therein or any fiduciary relationship
with any Secured Party and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into
this Agreement or otherwise exist against the Collateral Agent.
(b) Delegation of Duties. The Collateral Agent may exercise its
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powers and execute any of its duties under this Agreement by or through
employees, agents or attorneys-in-fact and shall be entitled to take and to
rely on advice of counsel concerning all matters pertaining to such powers
and duties. The Collateral Agent may use the services of such persons as
the Collateral Agent in its sole discretion may determine and all
reasonable fees and expenses of such persons shall be borne by the Grantor.
(c) Exculpatory Provisions. Neither the Collateral Agent nor any
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of its officers, partners, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action taken or omitted to be
taken by it or such Person under or in connection with this Agreement or
any Collateral (except for its or such person's own gross negligence or
willful misconduct), or (ii) responsible in any manner to any of the
Secured Parties for any recitals, statements, representations or warranties
made by the Grantor or any officer thereof contained in, or made or deemed
to be made in connection with any Senior Secured Debt or this Agreement or
in any certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in connection
with, this Agreement or any Senior Secured Debt, or for the due execution,
legality, validity, effectiveness, genuineness, enforceability or
sufficiency of the Senior Secured Debt or this Agreement or any other
document or instrument furnished pursuant thereto or for any failure of the
Grantor to perform its obligations thereunder. The Collateral Agent shall
be under no obligation to the Secured Parties to ascertain or to inquire as
to the observance or performance of any of the agreements contained in,
statements made in, or conditions of the Senior Secured Debt or this
Agreement or to inspect the property, including the books and records, of
the Grantor.
(d) Reliance by the Collateral Agent. The Collateral Agent shall
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be entitled to rely, and shall be fully protected and shall incur no
liability in acting and relying, upon any writing, resolution, notice,
consent, certificate, affidavit, telegram, telecopy, telex or teletype
message, statement, order or other document or telephone conversation
reasonably believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or persons and upon advice and
statements of legal counsel, including without limitation counsel to the
Grantor, independent accountants and other experts selected by the
Collateral Agent. Without limiting the generality of the foregoing, the
Collateral Agent may treat the payee of any Senior Secured Debt as the
registered holder thereof until it receives notice or otherwise has actual
knowledge that such payee is no longer the registered holder of such Senior
Secured Debt.
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Notwithstanding anything to the contrary contained herein, the Collateral
Agent shall be fully justified in failing or refusing to take action under
this Agreement, including without limitation the exercise of any rights or
remedies under, or the entering into of any agreement amending, modifying,
supplementing, waiving any provision of, or the giving of consent pursuant
to, any provision of this Agreement, unless it shall first receive
instructions of the Required Noteholders (as defined below) as contemplated
by Section 10 hereof and it shall first be indemnified to its reasonable
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satisfaction by the Senior Secured Debt Purchasers against any and all
liability and expense that may be incurred by it by reason of taking,
continuing to take or refraining from taking any such action. For the
purpose hereof, the "Required Noteholders" shall mean, at any time, the
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holders of at least 51% of the aggregate outstanding principal amount of
the Senior Secured Debt. The Collateral Agent shall in all such cases be
fully protected in acting or in refraining from acting under this Agreement
in accordance with the provisions of Section 10(e) hereof and in accordance
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with written instructions and any action taken or any failure to act
pursuant thereto shall be binding upon all the Secured Parties and all
other holders from time to time of the Senior Secured Debt.
(e) Knowledge or Notice of Default and Event of Default. The
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Collateral Agent shall not be deemed to have actual, constructive, direct
or indirect knowledge or notice of the occurrence of any Default or Event
of Default unless and until the Collateral Agent has received written
notice from a Secured Party or the Grantor describing such Default (as
defined below) or Event of Default, setting forth in reasonable detail the
facts and circumstances thereof and stating that the Collateral Agent may
rely on such notice without further inquiry. The Collateral Agent shall
have no obligation or duty prior to or after receiving any such notice to
inquire whether a Default or Event of Default has in fact occurred and
shall be entitled to rely, and shall be fully protected in so relying, on
any such notice furnished to it. For the purpose hereof, "Default" means a
Default as defined in the Senior Secured Notes, but not including any of
the Alleged Existing Defaults.
(f) Non-Reliance on Collateral Agent and Other Secured Parties.
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By execution of the Standstill Agreement, each Secured Party expressly
acknowledges that, except as expressly set forth in this Agreement, neither
the Collateral Agent nor any of the Collateral Agent's partners, officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Collateral Agent
hereinafter taken, including any review of the affairs of the Grantor,
shall be deemed to constitute any representation or warranty by the
Collateral Agent to any Secured Party. Except for notices, reports and
other documents expressly required to be furnished by the Collateral Agent
hereunder, the Collateral Agent shall not have any duty or responsibility
to provide the Secured Parties with any credit or other information
concerning the business, operations, property, financial and other
condition and credit-worthiness of the Grantor that may come into the
possession of the Collateral Agent or any of its partners, officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
(g) Indemnification. The Grantor agrees to indemnify WTC from and
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against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time, including,
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without limitation, at any time following the payment of the Secured
Obligations, be imposed on, incurred by or asserted against the Collateral
Agent in any way relating to or arising out of its capacity as Collateral
Agent or the Recapitalization Agreement, the Related Agreements, the
Standstill Agreement or the Restructuring Agreement or actions or omissions
of the Collateral Agent specifically required or permitted by this
Agreement or by written instructions of the Required Noteholders pursuant
to Section 10(c) hereof, including without limitation, costs incurred in
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performance of its duties under Section 9(a), provided that the Grantor
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shall not be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Collateral Agent's
gross negligence of willful misconduct. The agreements in this Section 9(g)
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shall survive the payment of the Secured Obligations and the termination of
this Agreement.
(h) Collateral Agent in its Individual Capacity. The Collateral
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Agent and its Affiliates may generally engage in any kind of business with
the Grantor as though such person was not the Collateral Agent hereunder
and without any duty to account therefore to the Secured Parties.
(i) Successor Collateral Agent.
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(i) The Collateral Agent may resign at any time upon 60
days notice to the Secured Parties and Grantor and may be removed
at any time, with or without cause, by the Required Noteholders
by written notice delivered to the Grantor, the Collateral Agent
and the Secured Parties. After any resignation or removal
hereunder of the Collateral Agent, the provisions of this Section
9(i) shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it in connection with its agency
hereunder while it was the Collateral Agent under this Agreement
and it shall be entitled to be paid promptly when due any amounts
owing to it pursuant to Section 9.6.
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(ii) Upon receiving notice of any such resignation or
removal, a successor Collateral Agent shall be appointed by the
Required Noteholders, provided, however, that such successor
Collateral Agent shall be (A) a Person having a combined capital
and surplus of at least $50 million and (B) authorized under
bylaw to assume the functions of the Collateral Agent. If the
appointment of such successor shall not have become effective, as
provided below, within such 60-day period after the Collateral
Agent's resignation or upon removal of the Collateral Agent, then
the Collateral Agent may petition a court of competent
jurisdiction for the appointment of a Collateral Agent. Such
court shall, after such notice as it may deem proper, appoint a
successor Collateral Agent meeting the qualifications specified
in this Section 9(i)(ii).
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(iii) The resignation or removal of a Collateral Agent shall
become effective upon the execution and delivery of such
documents or instruments as are necessary to transfer the rights
and obligations of the Collateral Agent under this Agreement,
including without limitation, the delivery and recordation of all
amendments, instruments, financing statements, continuation
statements and other
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documents necessary to maintain the perfection of the security
interests held by the Collateral Agent under this Agreement.
Copies of each such document or instrument shall be delivered to
all Secured Parties. The appointment of a successor Collateral
Agent pursuant to this Section 9(i) shall become effective upon
the acceptance of the appointment as Collateral Agent hereunder
by a successor Collateral Agent. Upon such effective appointment,
the successor Collateral Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Collateral Agent and the retiring Collateral Agent shall
be discharged from its rights, powers, privileges and duties
under this Agreement, but shall remain liable for its actions
prior to and including such date of discharge.
SECTION 10. Actions by the Collateral Agent.
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(a) Duties and Obligations. The duties and obligations of the
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Collateral Agent are only those set forth in this Agreement.
(b) Notification of Default. If the Collateral Agent has been
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notified in a writing conforming to the requirements of Sections 9 (d)
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and (e) by any Secured Party or Grantor that a Default or an Event of
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Default has occurred, the Collateral Agent shall promptly furnish, and
in any event no later than three Business Days after receipt of such
notice, to the Secured Parties and the Grantor a copy of such written
notice (a "Default Notice"). The failure of any Secured Party having
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knowledge of the occurrence of a Default or an Event of Default to
notify the Collateral Agent or any Secured Party of such occurrence,
however, does not constitute a waiver of such Default or Event of
Default by the Secured Parties. If the Required Noteholders have not
given prior instructions to the Collateral Agent, the Default Notice
may contain a recommendation of actions to be taken by the Secured
Parties and/or request instructions from the Secured Parties and shall
specify the date on which responses are due in order to be timely
within Section 10(d) hereof. If the Required Noteholders have given
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prior instructions to the Collateral Agent, the Collateral Agent shall
promptly provide the Grantor with a copy of such instructions and take
the actions requested by the Required Noteholders and the Default
Notice shall inform the other Secured Parties and the Grantor of such
actions.
(c) Exercise of Remedies. Except as otherwise provided in
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Section 10(e) and Section 19 and subject to the limitations set forth
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in Section 6(c), the Collateral Agent shall take only such actions and
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exercise only such remedies under this Agreement as are approved in
written instructions delivered to the Collateral Agent and signed by
the Required Noteholders. If the Collateral Agent shall determine in
good faith that taking the actions specified in such instructions is
contrary to law or would violate the limitations set forth in Section
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6(c), it may refrain, and shall be fully protected in so refraining,
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from taking such action and shall immediately give notice of such fact
to each of the Secured Parties. If instructions received by the
Collateral Agent are in its good faith judgment ambiguous or conflict
with other instructions received by the Collateral Agent, the
Collateral Agent (a) shall promptly notify the Secured Parties of such
ambiguity or conflict and request clarifying instructions, and (b) may
either (1) delay in taking any such action or exercising any such
remedy pending receipt of such clarifying
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instructions, and shall be fully protected in so delaying, or (2) take such
actions as it is entitled under Section 10(e).
(d) Instructions from Senior Secured Debt Purchasers. If any Senior Secured
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Debt Purchaser does not respond in a timely manner to any notice, including
without limitation a Default Notice, from the Collateral Agent or request for
instructions within the time period specified by the Collateral Agent in such
notice or request for instructions, which shall be a minimum of five Business
Days, the Senior Secured Debt held by such Senior Secured Debt Purchaser that
would otherwise be included in a determination of Required Noteholders shall not
be included in the determination of Required Noteholders for purposes of such
notice or request for instructions. Any action taken or not taken without the
vote of a Senior Secured Debt Purchaser under this Section 10(d) shall
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nevertheless be binding on such Senior Secured Debt Purchaser.
(e) Emergency Actions. If the Collateral Agent has asked the Secured
-----------------
Parties for instructions and if the Required Noteholders have not yet responded
to such request, the Collateral Agent shall be authorized to take, but shall not
be required to take and shall in no event have any liability for the taking or
the failure to take, such actions, other than any action described or permitted
under Section 19 hereof, with regard to a Default or Event of Default that the
----------
Collateral Agent, in good faith, believes to be reasonably required to promote
and protect the interests of the Secured Parties and to maximize both the value
of the Collateral and the present value of the recovery by the Secured Parties
on the Secured Obligations and shall give the Secured Parties appropriate notice
of such action, provided that once instructions with respect to such request
have been received by the Collateral Agent from the Required Noteholders, the
actions of the Collateral Agent shall be governed thereby and the Collateral
Agent shall not take any further action that would be contrary thereto.
(f) Other Actions. The Collateral Agent shall have the right to take such
-------------
actions, or omit to take such actions, hereunder and not inconsistent with the
written instructions of the Required Noteholders delivered pursuant to Section
-------
10(c) hereof and the limitations set forth in Section 6(c), including actions
----- ------------
the Collateral Agent deems necessary or appropriate to perfect or continue the
perfection of the liens on the Collateral for the benefit of the Secured
Parties. Except as otherwise provided by the applicable law, the Collateral
Agent shall have no duty as to any Collateral, the perfection, protection or
maintenance of any assignment or security interest in the Collateral, the
collection or protection of the Collateral or any income thereon, including any
duty to ascertain or take action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent has or is deemed to have knowledge of such matters, nor as
to the preservation of rights against prior parties, nor as to the preservation
of rights pertaining to the Collateral beyond the safe custody of any Collateral
in the Collateral Agent's actual possession.
(g) Cooperation. To the extent that the exercise of the rights, powers and
-----------
remedies of the Collateral Agent in accordance with this Agreement requires that
any action be taken by any Secured Party, by execution of the Standstill
Agreement, such
11
Secured Party agrees to take such action and cooperate with the Collateral
Agent to ensure that the rights, powers and remedies of all Secured Parties
are exercised in full.
(h) Distribution of Proceeds. All amounts owing with respect to the Secured
------------------------
Obligations shall be secured by the Collateral without distinction as to whether
some Secured Obligations are then due and payable and other Secured Obligations
are not then due and payable. Upon any realization upon the Collateral, by
execution of the Standstill Agreement, the Secured Parties agree that the
proceeds thereof shall, subject to the limitations set forth in Section 6(c), be
------------
applied (i) first, to the amounts owing by the Grantor to the Collateral Agent
solely in its capacity as Collateral Agent hereunder pursuant to this Agreement,
(ii) second, ratably to the payment of all amounts of interest outstanding on
the Series A Senior Secured Debt according to the aggregate amounts of such
interest then owing to each Senior Secured Debt Purchaser then owning Series A
Senior Secured Debt, (iii) third, ratably to all amounts of principal
outstanding under the Series A Senior Secured Debt according to the aggregate
amounts of such principal then owing to each Senior Secured Debt Purchaser then
owning Series A Senior Secured Debt, (iv) fourth, ratably to the payment of all
amounts of interest outstanding on the Series B Senior Secured Debt according to
the aggregate amounts of such interest then owing to each Senior Secured Debt
Purchaser then owning Series B Senior Secured Debt, (v) fifth, ratably to all
amounts of principal outstanding under the Series B Senior Secured Debt
according to the aggregate amounts of such principal then owing to each Senior
Secured Debt Purchaser then owning Series B Senior Secured Debt, (vi) sixth,
ratably to all other amounts then due to the Senior Secured Debt Purchasers,
including fees and expenses and (vii) seventh, the balance, if any, including
all proceeds exceeding $5 million in the aggregate shall be returned to the
Grantor or such other Persons as are entitled thereto. Upon the request of the
Collateral Agent prior to any distribution under this Section 10(h), each
-------------
Secured Party shall provide to the Collateral Agent certificates, in form and
substance reasonably satisfactory to the Collateral Agent, setting forth the
respective amounts referred to in clauses (ii) through (vi) above that each such
Secured Party believes it is entitled to receive, together with such wire
transfer information or other payment instructions as the Collateral Agent may
reasonably request.
(i) Authorized Investments. Prior to any realization upon the Collateral,
----------------------
any and all funds held by the Collateral Agent in its capacity as Collateral
Agent, whether pursuant to any provision of this Agreement shall, to the extent
feasible, within a reasonable time, be invested by the Collateral Agent in
Permitted Investments (as defined on Schedule II). Prior to making such
investment or to the extent it is not feasible to invest such funds in Permitted
Investments, the Collateral Agent shall hold any such funds in an interest
bearing account. By execution of the Standstill Agreement, each Secured Party
authorizes the Collateral Agent to open such an account. Any interest earned on
such funds shall be retained in such account until there shall be a realization
on the Collateral, at which time such funds shall be disbursed to the Secured
Parties or the Grantor in accordance with Section 10(h). The Collateral Agent
------------
shall have no duty to place funds held and invested pursuant to this Section
-------
10(i) in investments that provide for a maximum return. The Collateral Agent
-----
shall not be responsible for any loss of any funds invested in accordance with
this Section 10(i).
-------------
12
SECTION 11. Agreement Available Only to Parties and Collateral Agent.
--------------------------------------------------------
Notwithstanding anything to the contrary herein, the parties hereto have entered
into this Agreement solely for their own benefit and in order to establish
solely with respect to each other and not with respect to the Grantor their
respective rights to payment of the Secured Obligations, their respective rights
to the proceeds of the Collateral and their respective rights and priorities
with respect to certain other matters, all as more fully set forth herein. No
person or entity other than the parties hereto shall have any rights, whether as
third party beneficiary or otherwise, under this Agreement, and no agreement,
statement or provision of this Agreement shall be deemed to be an admission by
or against any of the parties hereto or be used by any person or entity, except
the parties hereto, for any purpose whatsoever.
SECTION 12. Rights Unaffected. The relative rights of the parties herein in
-----------------
and to the Collateral set out in this Agreement shall be unaffected by any
consent or waiver with respect to, or renewal or extension of, the Secured
Obligations.
SECTION 13. Collateral Agent's Fees, Costs and Expenses. Grantor agrees to
-------------------------------------------
pay such fees to the Collateral Agent as mutually agreed from time to time and
to pay all reasonable out-of-pocket costs and expenses of the Collateral Agent.
SECTION 14. Remedies. If any Event of Default shall have occurred and be
--------
continuing beyond any grace period applicable thereto and subject to the
limitations set forth in Section 6(c):
------------
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it under applicable law, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code (whether or
not the Uniform Commercial Code applies to the affected Collateral) and
also may (i) require the Grantor to, and the Grantor hereby agrees that it
shall at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral Agent
and make it available to the Collateral Agent at a place to be designated
by the Collateral Agent that is reasonably convenient to both parties, and
(ii) without notice, except as specified below, advertisement, hearing or
process of law of any kind, sell the Collateral or any part thereof in one
or more parcels free and clear of all rights and claims of the Grantor at
public or private sale, for cash, on credit or for future delivery, and
upon such other terms as the Collateral Agent may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 Business Days' notice to the Grantor of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification.
(b) All cash proceeds received in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral may be
held by the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any fees and expenses of the
Collateral Agent) in whole or in part against, all or any part of the
Secured Obligations. Any surplus of such cash or cash proceeds remaining
after payment in full of all the Secured Obligations shall be promptly paid
over to the Grantor or to whomsoever may be lawfully entitled to receive
such surplus.
13
(c) The Collateral Agent is hereby authorized to comply with any
limitation or restriction in connection with any sale of Collateral as it
may be advised by counsel is necessary in order to (i) avoid any violation
of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of prospective bidders and purchasers
and/or further restrict such prospective bidders or purchasers to persons
or entities who will represent and agree that they are purchasing for their
own account for investment and not with a view to the distribution or
resale of such Collateral) or (ii) obtain any required approval of the sale
or of the purchase by any governmental regulatory authority or official.
SECTION 15. Establishing Required Noteholders. In order to establish what
---------------------------------
constitutes the Required Noteholders, the Collateral Agent may request from time
to time, and, by execution of the Standstill Agreement, the Senior Secured Debt
Purchasers agree to provide certificates setting forth the amount of the Senior
Secured Debt held or represented by each Senior Secured Debt Purchaser, which
certificates the Collateral Agent shall be entitled to rely on.
SECTION 16. Amendments: Waivers; Etc. No amendment or waiver of any
------------------------
provision of this Agreement, and no consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent and the Grantor, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 17. Addresses for Notices. All notices and other communications
---------------------
provided to the parties hereto shall be in writing or by facsimile and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth below its signature hereto or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when transmitted.
SECTION 18. Continuing Security Interest. This Agreement shall create a
----------------------------
continuing security interest in the Collateral and shall: (a) remain in full
force and effect until all Secured Obligations have been paid in full, (b) be
binding upon the Grantor, its successors and assigns and (c) inure, together
with the rights and remedies of the Secured Parties hereunder, to the benefit of
the Secured Parties and their respective permitted successors, transferees and
assigns.
SECTION 19. Termination. When all Secured Obligations have been paid in
-----------
full, the security interest granted hereby shall terminate and all rights to the
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof shall revert to the Grantor. Upon the termination of any such
security interest, the Collateral Agent shall promptly return to the Grantor,
upon the Grantor's request and at the Grantor's expense, such of the Collateral
(and, in the case of a release, such of the released Collateral) held by the
Collateral Agent as shall not have been sold or otherwise applied pursuant to
the terms hereof. The Collateral Agent will, at the Grantor's expense, execute
and deliver to the Grantor such other documents as the Grantor shall reasonably
request to evidence such termination or release, as the case may be.
14
SECTION 20. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO CONFLICTS OF LAW PRINCIPLES, except to the extent that the validity or
perfection of the security interest hereunder, or remedies hereunder, in respect
of any particular Collateral are governed by the laws of a jurisdiction other
than the State of New York and except that the rights and duties of WTC shall be
governed by and construed in accordance with the laws of the State of Delaware.
Unless otherwise defined herein or in the Recapitalization Agreement, terms used
in Article 9 of the Uniform Commercial Code are used herein as therein defined.
SECTION 21. Severability of Provisions. Any provision of this Agreement
--------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 22. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be as
effective as delivery of a manually executed counterpart of this Agreement.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
IMPERIAL CREDIT INDUSTRIES, INC.
By:______________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
Address: 23550 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇-▇▇▇▇
WILMINGTON TRUST COMPANY, in its capacity
as Collateral Agent on behalf of the Secured
Parties
By:_______________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signer
Address: ▇▇▇▇▇▇ Square North
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Schedule I
Chief Place of Business and Chief Executive Office:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Building 1, Suite 110
Torrance, California 90505
Federal Tax Identification Number:
▇▇-▇▇▇▇▇▇▇
Schedule II
Permitted Investments
(a) Securities issued or guaranteed by the United States of America or any
subdivision, agency or instrumentality thereof, or money market mutual
funds that invest solely in such obligations.
(b) Securities issued by any state or municipality within the United States
of America rated Aa or higher by ▇▇▇▇▇'▇ Investors Service, Inc. or AA
or higher by Standard & Poor's Rating's Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("S&P").
(c) Deposits in or certificates of deposit issued by a commercial bank
which has combined capital and surplus in excess of $1 billion and
which has, or the holding company of which has, a bond rating of at
least A from ▇▇▇▇▇'▇ Investors Service, Inc. or A1 by S&P.
(d) Open market commercial paper rated P1 by ▇▇▇▇▇'▇ Investors Service,
Inc. or A1 by S&P.
(e) Bankers' acceptances from banks referred to in paragraph (c) above.
EXHIBIT A: LIST OF SENIOR SECURED DEBT PURCHASERS
-------------------------------------------------
Series A Senior Secured Debt
----------------------------
-----------------------------------------------
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ LIVING $ 200,000
TRUST
-----------------------------------------------
AFFINITY BANK $8,000,000
HOLDINGS, INC.
-----------------------------------------------
▇▇▇▇▇ IMPERIAL $ 400,000
LIMITED PARTNERSHIP I
-----------------------------------------------
▇▇▇▇▇ IMPERIAL $ 400,000
LIMITED PARTNERSHIP II
-----------------------------------------------
▇▇▇▇ ▇▇▇▇▇ $ 50,000
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 700,000
-----------------------------------------------
▇▇▇▇ ▇▇▇▇▇ $ 100,000
-----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ $ 100,000
-----------------------------------------------
KMBY, INC. DBA $ 100,000
ADCOMM IV, INC.
-----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ $ 200,000
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 100,000
-----------------------------------------------
K & B ASSOCIATES, INC. $ 100,000
-----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ $ 250,000
-----------------------------------------------
QUARTA, L.P. $ 250,000
-----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇ $ 150,000
-----------------------------------------------
▇▇▇▇▇▇▇, ▇.▇. $1,250,000
-----------------------------------------------
JJZ LIMITED $ 625,000
PARTNERSHIP
-----------------------------------------------
AGI HOLDING CORP. $ 500,000
KEYSOP
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 200,000
-----------------------------------------------
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 100,000
-----------------------------------------------
▇▇▇▇▇, HELPUM & $ 200,000
▇▇▇▇, INC. DEFINED
BENEFIT PLAN
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ $ 100,000
-----------------------------------------------
IMPERIAL CREDIT $ 500,000
CHARITABLE
FOUNDATION
-----------------------------------------------
HARVEST OPPORTUNITY $1,625,000
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
PARTNERS,L.P.
-----------------------------------------------
Series B Senior Secured Debt
----------------------------
Name Amount
---- ------
The ▇▇▇▇▇▇▇ ▇▇▇▇▇ Living Trust $6,382,877