EXHIBIT 20.1.4
COLLATERAL AGENCY AND SECURITY AGREEMENT
This COLLATERAL AGENCY AND SECURITY AGREEMENT (as it may be amended,
supplemented or otherwise modified from time to time, this "Agreement") is dated
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as of March 29, 2001 and is made by and between Imperial Credit Industries, Inc.
(the "Grantor") in favor of and for the benefit of Wilmington Trust Company
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("WTC"), acting hereunder not individually but solely as collateral agent (in
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such capacity, the "Collateral Agent") for the benefit of (i) the Senior Secured
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Debt Purchasers and (ii), from and after the Debt Exchange Closing Date, Chase
Manhattan Bank and Trust Company, N.A. ("Indenture Trustee"), not individually
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but solely as trustee for the holders of the Exchange Notes (the Senior Secured
Debt Purchasers and the Indenture Trustee, together with any successors and
assigns, are individually referred to herein as a "Secured Party" and
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collectively referred to herein as the "Secured Parties").
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PRELIMINARY STATEMENTS
Pursuant to that certain Master Recapitalization Agreement dated as of
March 29, 2001 (said agreement, as it may hereafter be amended or otherwise
modified from time to time, being the "Recapitalization Agreement"), the Senior
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Secured Debt Purchasers have agreed to loan $16,200,000 to the Grantor and the
Signatory Debtholders have agreed to tender their Old Notes to the Grantor in
exchange for Exchange Notes and certain other consideration pursuant to the Debt
Exchange. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Recapitalization Agreement.
It is a condition precedent to the closing of the transactions contemplated
by the Recapitalization Agreement that the parties hereto shall have entered
into this Agreement and that the Grantor shall have granted the assignments and
security interests and made the pledges and assignments contemplated by this
Agreement.
The obligations of the Grantor under the Senior Secured Debt and, from and
after the Debt Exchange Closing Date, the Exchange Notes are to be secured
pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Senior Secured Debt Purchasers to make loans under the Recapitalization
Agreement and to induce the Holders of the Old Notes to accept the Exchange
Notes and other consideration in exchange therefor, the parties hereto hereby
agree as follows:
SECTION 1. Grant of Security. The Grantor hereby assigns and pledges to the
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Collateral Agent (i) for the benefit of the Senior Secured Debt Purchasers, and
(ii) from and after the Debt Exchange Closing Date, for the benefit of (x) the
Senior Secured Debt Purchasers and the Indenture Trustee as trustee for the
holders of the Exchange Notes for so long as the Senior Secured Debt is issued
and outstanding and (y) from and after the payment in full or exchange of the
Senior Secured Debt, the Indenture Trustee as trustee for the holders of the
Exchange Notes, 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"):
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(a) all of the following:
(i) the indebtedness (the "Pledged Debt") described on Schedule
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I and owing to the Grantor by the issuers named therein and the
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instruments evidencing the Pledged Debt, and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Debt;
(ii) all additional indebtedness from time to time owed to the
Grantor by any obligor of the Pledged Debt or any other Person and
the instruments evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
(iii) the shares of capital stock described on Schedule II (the
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"Pledged Securities"), together with any other shares, stock
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certificates, options or warrants of any issuer listed in Schedule II
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that may be issued or granted to, or held by, the Grantor while this
Agreement is in effect; and
(b) all proceeds of any and all of the foregoing Collateral.
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 (i) the Senior Secured Debt, and (ii) from and after the Debt
Exchange Closing Date, (x) the Senior Secured Debt and the Exchange Notes for so
long as the Senior Secured Debt is issued and outstanding and (y) from and after
the payment in full or exchange of the Senior Secured Debt, the Exchange Notes,
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 the
"Secured Obligations").
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SECTION 3. Delivery of Collateral. All certificates or instruments
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representing or evidencing Collateral shall be delivered to and held by or on
behalf of the Collateral Agent on behalf of the Secured Parties entitled to the
benefit thereof pursuant to the terms hereof and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Secured Parties entitled to the benefit thereof pursuant to the terms hereof.
The Collateral Agent shall have the right after the occurrence and during the
continuance of an Event of Default (as defined in Section 6(a)(v)) beyond any
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grace period applicable thereto to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, 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 exchange instruments representing or evidencing the Collateral, for
instruments of smaller or larger denominations.
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SECTION 4. Representations and Warranties. The Grantor hereby represents
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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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III. The Grantor's federal tax identification number is as set forth on
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Schedule III.
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(b) The Grantor is the legal and beneficial owner of the Collateral
free and clear of any lien. 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.
(c) Assuming continuous possession by the Collateral Agent on behalf
of the Secured Parties entitled to the benefit thereof pursuant to the
terms hereof, the pledge of each of the Pledged Debt and Pledged Securities
pursuant to this Agreement creates a valid and first priority perfected
security interest in the Pledged Debt and Pledged Securities, respectively.
(d) All shares of capital stock described on Schedule II are duly
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authorized, validly issued, fully paid and non-assessable.
(e) The Pledged Debt described on Schedule I constitutes 100% of the
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outstanding indebtedness of the Bank to the Grantor and its Affiliates
(excluding any indebtedness arising from deposit accounts or bank accounts
maintained by the Grantor and its Affiliates with the Bank) and the Pledged
Securities described on Schedule II represent 100% of the total issued and
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outstanding shares of capital stock of the Bank.
(f) 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.
(g) 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, except for Permitted Liens, 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.
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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 pledge, 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.
SECTION 6. Voting Rights; Dividends; Payments; 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 voting
or consensual rights and powers and stock purchase or subscription
rights relating or pertaining to the Pledged Securities for any
purpose;
(ii) The Grantor shall be entitled to receive and retain any and
all lawful dividends payable in respect of the Pledged Securities
which are paid in cash by any issuer, but all dividends and
distributions in respect of such Collateral or any part thereof made
in shares of stock or other property or representing any return of
capital, whether resulting from a subdivision, combination or
reclassification of such Collateral or any part thereof or received in
exchange for such Pledged Securities or any part thereof or as a
result of any merger, consolidation, acquisition or other exchange of
assets to which any issuer of Pledged Securities may be a party or
otherwise or as a result of any exercise of any stock purchase or
subscription right, shall be and become part of the Collateral
hereunder and, if received by the Grantor, shall be forthwith
delivered to the Collateral Agent on behalf of the Secured Parties in
due form for transfer (i.e., endorsed in blank or accompanied by stock
or bond powers executed in b lank) to be held for the purposes of this
Agreement.
(iii) The Collateral Agent shall execute and deliver, or cause
to be executed and delivered, to the Grantor, all such proxies, powers
of attorney, dividend orders 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
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subclause (i) above and to receive the dividends which it is
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authorized to retain pursuant to subclause (ii) above.
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(iv) The Grantor shall be entitled to (A) collect all regular
payments made or proceeds received with respect to the Pledged Debt
and (B) enforce and prosecute all rights and remedies available under
any of the Pledged Debt.
(v) For all purposes under this Agreement, "Event of Default"
means (A) prior to the Debt Exchange Closing Date, an Event of Default
as defined in the Senior Secured Debt, (B) from and after the Debt
Exchange Closing Date and so long as any Senior Secured Debt shall
remain outstanding, an Event of Default as defined in the Exchange
Notes Indenture or in the Senior Secured Debt and (C) after the Senior
Secured Debt has been paid in full, an Event of Default as defined in
the Exchange Notes Indenture.
(b) After the occurrence of an Event of Default and the continuance
thereof beyond any grace period applicable thereto, all rights and powers
which the Grantor is entitled to exercise pursuant to Section 6(a)(i)
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hereof, and all rights of the Grantor to receive and retain dividends
pursuant to Section 6(a)(ii) hereof, and all rights of the Grantor to
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receive payments pursuant to Section 6(a)(iv) hereof, shall forthwith
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cease, and all such rights 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 dividends and 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 Collateral Agent as additional
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Collateral hereunder and applied in accordance with the provisions hereof.
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 III or, upon prior written notice to the Collateral Agent, at such
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other locations in a jurisdiction where all actions required by Section 5 shall
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have been taken with respect to the Collateral.
SECTION 8. Transfers and Other Liens; Additional Shares. Except as
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otherwise permitted under the Recapitalization Agreement, the Grantor shall not
(a) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, 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 acceptance
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of the Senior Secured Debt or Exchange Notes, as the case may be, 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 Agreement and (i) to take action on its behalf and exercise such
powers and use such d iscretion as are expressly permitted hereunder and
all
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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 powers
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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 of
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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, Exchange Notes, 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
Exchange Notes, or for the due execution, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of the Senior
Secured Debt, Exchange Notes 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, Exchange Notes 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 be
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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 or Exchange Note 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 or Exchange Note. Notwithstanding anything to the contrary
contained
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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
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indemnified to its reasonable satisfaction by the Secured Parties 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
holders of at least 51% of the outstanding principal amount of all Senior
Secured Debt, until such time as no Senior Secured Debt shall be
outstanding, at which time "Required Noteholders" shall mean the Indenture
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Trustee acting pursuant to the Exchange Notes Indenture. 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 with written instructions and any
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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 and Exchange Notes.
(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) prior to the Debt Exchange Closing Date, a Default as defined in the
Senior Secured Debt, (B) from and after the Debt Exchange Closing Date and
so long as any Senior Secured Debt shall remain outstanding, a Default as
defined in the Exchange Notes Indenture or the Senior Secured Notes and (C)
after the Senior Secured Debt has been paid in full, a Default as defined
in the Exchange Notes Indenture.
(f) Non-Reliance on Collateral Agent and Other Secured Parties. By
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acceptance of the Senior Secured Debt or the Exchange Notes, as the case
may be, 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.
By acceptance of the Senior Secured Debt or the Exchange Notes, as the case
may be, each Secured Party represents that it has, independently and
without reliance on the Collateral Agent or any other Secured Party, and
based on such documents and information as it has deemed appropriate, made
its own appraisal of investigation into the business, operation,
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property, financial and other condition and credit-worthiness of the
Grantor and made its own decision to enter into this Agreement. By
acceptance of the Senior Secured Debt or the Exchange Notes, as the case
may be, each Secured Party also represents that it will, independently, and
without reliance upon the Collateral Agent or any other Secured Party, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under the Recapitalization Agreement, the
Related Agreements and this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and credit-worthiness of the Grantor. 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, 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 or the Related Agreements 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)
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hereof, including without limitation, costs incurred in performance of its
duties under Section 9(a), provided that the Grantor shall not be liable
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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) shall survive
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the payment of the Secured Obligations and the termination of this
Agreement.
(h) Collateral Agent in its Individual Capacity. The Collateral Agent
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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
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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
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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). The Secured
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Parties hereby consent to such petition and appointment so long as
such criteria are met.
(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
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
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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 notified
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in a writing conforming to the requirements of Sections 9 (d) and (e) by
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any Secured Party or Grantor that a Default or an Event of 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 a copy of such written notice (a "Default Notice"). The failure of
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any Secured Party having 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
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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
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given prior instructions to the Collateral Agent, the Collateral Agent
shall take the actions requested by the Required Noteholders and the
Default Notice shall inform the other Secured Parties of such actions.
(c) Exercise of Remedies. Except as otherwise provided in Section
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10(e) and Section 21, 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, it
may refrain, and shall be fully protected in so refraining, 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
instructions, and shall be fully protected in so delaying, or (2) take such
actions as it is entitled under Section 10(e).
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(d) Instructions from Secured Parties. If any Secured Party does not
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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 Secured Obligations held by such Secured Party 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 Secured Party or the Secured Parties under this Section 10(d) shall
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nevertheless be binding on such Secured Party or Secured Parties.
(e) Emergency Actions. If the Collateral Agent has asked the Secured
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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 21 hereof, with regard to a
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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.
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(f) Other Actions. The Collateral Agent shall have the right to take
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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, including actions the Collateral Agent
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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 pledge, 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 acceptance of
the Senior Secured Debt or the Exchange Notes, as the case may be, such
Secured Party agrees to take such action and cooperate with the Collateral
Agent to ensure that the rights, powers and remedies of all Noteholders 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 acceptance of the Senior Secured Debt or the
Exchange Notes, as the case may be, the Secured Parties agree that the
proceeds thereof shall be applied, (i) first, to the amounts owing to the
Collateral Agent by the Grantor solely in its capacity as Collateral Agent
hereunder pursuant to this Agreement, (ii) second, ratably to the payment
of all amounts of interest outstanding that constitute the Senior Secured
Debt according to the aggregate amounts of such interest then owing to each
Senior Secured Debt Purchaser, (iii) third, ratably to all amounts of
principal outstanding under the Senior Secured Debt according to the
aggregate amounts of such principal then owing to each Senior Secured Debt
Purchaser, (iv) fourth, ratably to all other amounts then due to the Senior
Secured Debt Purchasers, including fees and expenses, (v) fifth, ratably to
the payment of all amounts of interest outstanding that constitute the
Exchange Notes according to the aggregate amounts of such interest then
owing to each Exchanging Debt Holder, (vi) sixth, ratably to all amounts of
principal outstanding under the Exchange Notes according to the aggregate
amounts of principal then owing to each Exchanging Debt Holder, (vii)
seventh, ratably to all other amounts then due to the Exchanging Debt
Holders, including fees and expenses, and (viii) eighth, the balance, if
any, 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 (vii) above that each such Secured
11
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 IV).
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 acceptance of the Senior
Secured Debt or the Exchange Notes, as the case may be, 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 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).
-------------
SECTION 11. Priority of Notes. From and after the Debt Exchange Closing
-----------------
Date until all Senior Secured Debt shall have been paid in full, exchanged for
Exchange Notes or otherwise retired, in the event of:
(a) the occurrence of an Event of Default (as such term is defined in
the Senior Secured Debt) and continuance thereof beyond any grace period
provided in the Senior Secured Debt;
(b) any acceleration of the maturity of any other indebtedness of the
Grantor, or
(c) the institution of any liquidation, dissolution, bankruptcy,
insolvency or similar proceeding relating to the Grantor, its property, or
its creditors as such,
the Exchanging Debt Holders, if any, shall not be entitled to receive and, by
acceptance of the Exchange Notes, the holders of the Exchange Notes agree not to
accept, any payment of principal or interest until all amounts owing in respect
of the Senior Secured Debt shall have been paid in full; and from and after the
happening of any event described in clause (c) of this Section 11, all payments
----------
and distributions of any kind or character (whether in cash, securities or
property) which, except for the provisions hereof, would have been payable or
distributable to the Exchanging Debt Holders, shall be made to and for the
benefit of the Senior Secured Debt Purchasers (who shall be entitled to make all
necessary claims therefore) in accordance with the priorities of payment set
forth herein until all Senior Secured Debt shall have been paid in full. In the
event that any payment or distribution is made with respect to the Exchange
Notes in violation of the terms hereof, any Secured Party hereof receiving such
payment or distribution shall (and, by acceptance of the Exchange Notes, agrees
to) hold it in trust for the benefit of, and shall remit it to, the Senior
Secured Debt Purchasers in accordance with the priorities of payment set forth
herein.
12
SECTION 12. Status of Security Interests. From and after the Debt Exchange
----------------------------
Closing Date until all Senior Secured Debt shall have been paid in full,
exchanged for Exchange Notes or otherwise retired:
(a) The Collateral Agent, the Indenture Trustee and, by acceptance of
the Senior Secured Debt or the Exchange Notes, as the case may be, the Senior
Secured Debt Purchasers and the Exchanging Debt Holders hereby agree that (i)
all of the Senior Secured Debt Purchasers' security interests, liens, and other
collateral interests in the Collateral and all of the Senior Secured Debt
Purchasers' rights and remedies, under law, agreement, or otherwise, exercisable
pursuant thereto (all of which interests and rights are herein called the
"Senior Rights") shall be senior and superior to (ii) all of the Exchanging Debt
- --------------
Holders' and the Indenture Trustee's security interests, liens and other
collateral interests in the Collateral and all of the Exchanging Debt Holders'
and the Indenture Trustee's rights and remedies, under law, agreement or
otherwise, exercisable pursuant thereto (all of which interests and rights are
herein called the "Junior Rights").
-------------
(b) For purposes hereof, a party whose security interests are "senior
and superior" (as described in Section 12(a)) shall possess the right, in its
-------------
absolute discretion, (i) to make all decisions on the disposition of any
Collateral in which such party's security interests are "senior and superior"
(including, without limitation, foreclosing on such collateral or refraining
from foreclosing), notwithstanding that any or all of the Grantor's obligations
to the holders of the Junior Rights (as defined for purposes of Section 12(a))
-------------
may be due and owing or the Grantor may be in default in any other manner with
regard to its obligations to the holders of the Junior Rights, (ii) to exercise
or not exercise all rights granted to such secured party with regard to all or
any of such Collateral, (iii) to act on behalf of the holders of the Junior
Rights as their agent, not, however, at the direction of the holders of the
Junior Rights, but with full right and authority to make the judgments and to
take the actions such agent would be permitted to accomplish in its own right
with regard to its own Collateral pursuant to clauses (i) and (ii) of this
sentence and (iv) to apply all proceeds obtained from Collateral on account of
the Senior Rights (as defined for purposes of Section 12(a)), in such order as
-------------
the holder of the Senior Rights shall determine.
SECTION 13. 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 14. 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.
13
SECTION 15. 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 16. Remedies. If any Event of Default shall have occurred and be
--------
continuing beyond any grace period applicable thereto:
(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.
(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 17. Establishing Required Noteholders. In order to establish what
---------------------------------
constitutes the Required Noteholders, the Collateral Agent may request from time
to time, and, by acceptance of the Senior Secured Debt or the Exchange Notes, as
the case may be, the Secured Parties agree to provide, certificates setting
forth the amount of the Secured Obligations held or
14
represented by each Secured Party, which certificates the Collateral Agent shall
be entitled to rely on.
SECTION 18. 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 19. 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 20. Continuing Security Interest; Assignments under the
---------------------------------------------------
Recapitalization Agreement. 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 21. 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.
SECTION 22. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA 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 California 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 23. 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
15
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 24. 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.
16
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: /s/ H. Wayne Snavely
---------------------
Name: H. Wayne Snavely
Title: Chief Executive Officer
Address: 23550 Hawthorne Boulevard
Building 1, Suite 110
Torrance, California 90505
Facsimile: (310) 791-373-9955
WILMINGTON TRUST COMPANY, in its
capacity as Collateral Agent on
behalf of the Secured Parties
By: /s/ Dan Reser
--------------
Name: Dan Reser
Title: Vice President
Address: _________________________
_________________________
Facsimile: _________________________
EFFECTIVE ON THE DEBT EXCHANGE CLOSING DATE:
CHASE MANHATTAN BANK AND TRUST
COMPANY, N.A., as Indenture Trustee
for the holders of Exchange Notes
By:_________________________________
Title:______________________________
Address: _________________________
_________________________
Facsimile: _________________________
Schedule I
Pledged Debt
------------
1. Subordinated Note, dated March 31, 1997, issued to Imperial Credit
Industries, Inc. in the amount of Thirty Five Million Dollars ($35,000,000), due
and payable in full on March 31, 2007.
2. Subordinated Note, dated August 17, 2000, issued to Imperial Credit
Industries, Inc. in the amount of Seven Million Dollars ($7,000,000), due and
payable in full on August 31, 2007.
Schedule II
Pledged Securities
------------------
Class of Certificate Number
-------- ----------- ------
Issuer Capital Stock Number of Shares
------ ------------- ------ ---------
Southern Pacific Bank Series A Preferred Stock PA-1 50,000
Southern Pacific Bank Common Stock 6 75,000
Southern Pacific Bank Common Stock 5 125,000
Southern Pacific Bank Common Stock 4 8,334
Schedule III
Chief Place of Business and Chief Executive Office:
23550 Hawthorne Boulevard
Building 1, Suite 110
Torrance, California 90505
Federal Tax Identification Number:
95-4054791
Schedule IV
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 Moody's Investors Service, Inc. or AA or
higher by Standard & Poor's Rating's Services, a division of The McGraw-
Hill 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 Moody's
Investors Service, Inc. or A1 by S&P.
(d) Open market commercial paper rated P1 by Moody's Investors Service, Inc. or
A1 by S&P.
(e) Bankers' acceptances from banks referred to in paragraph (c) above.