INTERCREDITOR AGREEMENT
This Intercreditor Agreement (this "Agreement") is made and entered into as of
this 14th day of March, 2006 by and between Professional Traders Fund, LLC
("PTF") and Professional Offshore Opportunity Fund Limited ("POOF").
WITNESSETH:
WHEREAS, pursuant to the PTF Loan Documents (as defined below), PTF has made
certain loans and other financial accommodations to the Company(defined below);
WHEREAS, pursuant to the POOF Loan Documents (as defined below), POOF has made
certain loans and other financial accommodations to the Company; and WHEREAS,
PTF and POOF desire to agree on the relative priority of their respective
security interests in and liens on the Collateral (defined below) and certain
other rights, priorities and interests.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. Definitions.
All capitalized terms used herein shall have the meanings set forth below:
"Collateral" shall mean all property and interests in property of the Company
in which there is both a duly perfected lien or security interest to secure the
PTF Obligations and a duly perfected lien or security interest to secure the
POOF Obligations and shall include any and all shares pledged pursuant to the
Pledge Agreement.
"Company" shall mean CAL-BAY International, Inc., a Nevada corporation, and any
successor or assign of the Company and any other entity which is or is required
to become an obligor on the PTF Obligations or the POOF Obligations.
"Creditors" shall mean PTF and POOF.
"Enforcement" shall mean, collectively or individually, repossessing, selling,
leasing or otherwise disposing of or realizing on all or any part of any
Collateral by any Creditor, or exercising notification or collection rights
with respect to all or any portion thereof, or attempting or agreeing to do so;
commencing the enforcement with respect to any Collateral of any of the default
remedies under any of the PTF Loan Documents, the POOF Loan Documents or any
security or pledge agreement of any kind, the UCC or other applicable laws; or
appropriating, setting off, or applying any part or all of such Collateral in
the possession of, or coming into the possession of, a Creditor or its agent or
bailee, to the PTF Obligations or the POOF Obligations.
"Enforcement Notice" shall mean a written notice delivered by either PTF to
POOF or by POOF to PTF that Enforcement has commenced and specifying any Event
of Default that has occurred and is continuing.
"Enforcement Period" shall mean the period of time following the commencement
of an Enforcement until either (i) the final payment or satisfaction in full in
cash of both the PTF Obligations and the POOF Obligations, or (ii) PTF and POOF
agree in writing to terminate the Enforcement Period.
"Event of Default" shall have the meaning ascribed to such term in the Secured
Notes.
"Guarantor" shall mean any guarantor of payment or collection with respect to
any of the PTF Obligations or POOF Obligations and shall include any pledgor,
including the Pledgor under the Pledge Agreement.
"Mortgages" shall mean the Deeds of Trust dated the date hereof by the Company
in favor of PTF and POOF.
"Pledge Agreement" shall mean the Pledge Agreement dated the date hereof among
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"POOF Collateral Expenses" shall mean all third party, out of pocket costs and
expenses incurred by POOF in connection with any Enforcement.
"POOF Loan Documents" shall mean the Secured Notes, the Registration Rights
Agreement, the Poof Warrants, the Mortgage and the Pledge Agreement.
"POOF Obligations" shall mean all of the indebtedness, liabilities or
obligations of the Company to POOF under any POOF Loan Document.
"POOF Outstanding Principal and Interest" shall mean principal in the amount
of $1,070,972.22, accrued interest, any premium or late charges, and all
protective advances made by or on behalf of POOF under the POOF Loan Documents.
"POOF Warrants" shall mean the Warrants dated the date hereof issued by the
Company to POOF for an aggregate of 1,115,596 shares of the Company's common
stock.
"PTF Collateral Expenses" shall mean all third party, out of pocket costs and
expenses incurred by PTF in connection with any Enforcement.
"PTF Loan Documents" shall mean the Secured Notes, the Registration Rights
Agreement, the PTF Warrant, the Mortgage and the Pledge Agreement.
"PTF Obligations" shall mean all of the indebtedness, liabilities and
obligations of the Company to PTF under any PTF Loan Document.
"PTF Outstanding Principal and Interest" shall mean principal in the amount of
$555,486.11, accrued interest, any premium or late charges, and all protective
advances made by or on behalf of PTF under the PTF Loan Documents.
"PTF Warrants" shall mean the Warrants dated the date hereof issued by the
Company to PTF for an aggregate of 578,632 shares of the Company's common
stock.
"Registration Rights Agreement" shall mean the Registration Rights Agreement
dated the date hereof among the Company and the Creditors.
"Secured Notes" shall mean the Senior Secured Convertible Promissory Notes in
the aggregate principal amount of $1,626,458.33 dated the date hereof issued
by the Company to the Creditors.
"UCC" shall mean the Uniform Commercial Code of any applicable jurisdiction,
asin effect from time to time.
SECTION 2. Priority of Liens.
The parties hereto agree that notwithstanding (a) the date, manner or order of
perfection of the security interests and liens in the Collateral granted in
favor of Creditors, (b) the provisions of any UCC or any other applicable laws
or decisions, (c) the provisions of any of the PTF Loan Documents, any POOF
Loan Document or any other contract in effect between either Creditor, on the
one hand, and the Company or Guarantor or any affiliate thereof, on the other,
and (d) whether either Creditor or any agent or bailee thereof holds possession
of any part or all of the Collateral, the liens and security interests in the
Collateral securing the PTF Obligations and the POOF Obligations shall be pari
passu,notwithstanding the order in which such liens and security interests
shall have been granted,created or perfected.
SECTION 3. Distribution of Proceeds of Collateral During Enforcement Period.
(a) During any Enforcement Period, all proceeds of Collateral shall be
distributed as follows:
(1) First, to pay the PTF Outstanding Principal and Interest and the POOF
Outstanding Principal and Interest, pro rata in proportion to the unpaid amounts
thereof;
(2) Next, to the extent proceeds remain, to pay the PTF Collateral Expenses
and the POOF Collateral Expenses, pro rata in proportion to the unpaid amounts
thereof; and
(3) Next, to the extent proceeds remain, to pay any remaining PTF
Obligations and POOF Obligations, pro rata in proportion to the unpaid amounts
thereof. After all of the foregoing have been finally paid in full in cash, the
balance of proceeds of Collateral, if any, shall be paid to the Company or as
otherwise required by applicable law.
(b) For the purposes of the foregoing allocation of priorities, any claim of a
right of setoff shall be treated in all respects as a security interest, and no
claimed right of setoff shall be asserted to defeat or diminish the rights or
priorities provided for herein. The priorities set forth herein are solely for
the purpose of establishing the relative rights of the Creditors and there are
no other persons or entities who are intended to be benefited in any way by this
Agreement. The distribution provisions of this Section 3 are for the purpose of
determining the relative amounts of proceeds of the Collateral to be distributed
to each Creditor and not for the purpose of creating an agreement as to the
manner in which any such proceeds are actually to be applied to pay the PTF
Obligations or the POOF Obligations. Each Creditor shall be free, each in its
own discretion,to apply any such proceeds to the PTF Obligations or the POOF
Obligations, as the case may be, held by each in such order as it may determine.
SECTION 4. Enforcement Actions.
PTF agrees that it will use its reasonable efforts to give POOF an Enforcement
Notice prior to commencing any Enforcement. POOF agrees that it will use its
reasonable efforts to give PTF an Enforcement Notice prior to commencing an
Enforcement. Failure to give any of the foregoing Enforcement Notices shall not
create a cause of action against the party failing to give such notice or create
any claim or right on behalf of any third party. The parties agree that during
an Enforcement Period, if any Creditor has any security interest in or lien on
any of the Collateralas security for payment of any indebtedness of the Company,
other than the PTF Obligations or the POOF Obligations, then PTF or POOF, as the
case may be, may not apply the proceeds of any of the Collateral to satisfy such
other indebtedness until all the POOF Obligations and the PTF Obligations are
finally paid in full in cash.
SECTION 5. Amendments, Modifications and Increases.
Each Creditor may enter into new agreements with the Company without in any way
affecting the rights and obligations of the Creditors under this Agreement.
Should either or both Creditors cease extending further credit to the Company,
this Agreement nevertheless shall continue in effect as to the outstanding PTF
Obligations or POOF Obligations, as applicable.
SECTION 6. Accounting.
Each Creditor agrees to render an accounting to the other upon the reasonable
request from the other as soon as reasonably practicable after such request,
giving effect to the application of the proceeds of Collateral as hereinbefore
provided.
SECTION 7. Notices of Defaults.
PTF and POOF agree touse their reasonable efforts to give to the other(a) copies
of any notice of the occurrence or existence of an Event of Default sent to the
Company or any Guarantor simultaneously with the sending of such notice to such
Company or Guarantor, and (b) notice of any acceleration of any of the PTF
Obligations or any of the POOF Obligations, promptly after such acceleration,
but the failure to give any such copy or notice shall not affect the validity of
any such notice of Event of Default or such acceleration or create a cause of
action against the party failing to give such copy or notice or create any claim
or right on behalf of any third party. The sending of any such copy of such
notice of Event of Default shall not give the recipient the obligation to cure
such Event of Default.
SECTION 8. Agency For Perfection.
PTF hereby appoints POOF as PTF's bailee for purposes of perfecting PTF's
security interests in any Collateral in the possession of POOF. POOF hereby
appoints PTF as POOF's bailee for purposes of perfecting POOF's security
interestsin any Collateral in the possession of PTF.Each Creditor acknowledges
and agrees that the other Creditor is not acting as an agent,representative or
other fiduciary with respect to the Collateral and that such other Creditor's
only duty hereunder with respect to the Collateral is to apply the proceeds
thereof as provided in Section 3 hereof. Neither Creditor shall incur any
liability to the other Creditor by virtue of acting as the other's agent
hereunder, and either Creditor may relinquish possession of Collateral in its
possession without the consent of the other Creditor, and without incurring
liability to the other Creditor, unless there is an express written agreement
to the contrary in effect between the Creditors.
SECTION 9. Actions Upon Repayment of PTF Obligations or POOF Obligations.
If either the PTF Obligations or the POOF Obligations are indefeasibly paid in
full in cash as a result of an Enforcement hereunder, but not both, then the
party whose Obligations are thus fully paid shall transfer any Collateral or
proceeds therefrom held by it to the other party, unless otherwise required to
remit the proceeds according to law,and shall assign its security interest and
all of its rights under financing statements to the other party, unless
otherwise agreed to in writing by the other party.
SECTION 10. UCC Notices.
In the event that either Creditor shall be required by any UCC or any other
applicable law to give notice to the other of intended disposition of
Collateral,such notice shall be given in accordance with Section 11 hereof and
ten (10) days'notice shall be deemed to be commercially reasonable.
SECTION 11. Notices.
Except as otherwise expressly provided herein, any notice required or desired
to be served, given or delivered hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered three (3) business days
after deposit in the United States mails, with proper postage prepaid, or upon
delivery by courier or upon transmission by telex, telecopy or similar
electronic medium to the following addresses:
(i) If to PTF, at:
Professional Traders Fund, LLC
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Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
(ii) If to POOF, at:
Professional Offshore Opportunity Fund Limited
Professional Traders Management, LLC
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Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
or to such other address as any party designates to the others in the manner
herein prescribed.
SECTION 12. Contesting Liens or Security Interests.
Neither PTF nor POOF shall contest the validity, perfection, priority or
enforceability of any lien or security interest granted to the other by the
Company or any Guarantor,and each of PTF and POOF hereby agrees to cooperate in
the defense of any action contesting the validity, perfection, priority or
enforceability of such liens or security interest. Each of PTF and POOF shall
also use its best efforts to notify the other of any change in the location of
any of the Collateral orthe business operations of the Company or any Guarantor,
or of any change in law which would make it necessary or advisable for the other
party to file additional financing statements in another location as against the
Company or any Guarantor, but the failure to do so shall not create a cause of
action against the party failing to give such notice or create any claim or
right on behalf of any third party. The priorities and distribution provision
set forth in this Agreement with respect to any Collateral are expressly
conditioned upon the non avoidability and perfection of liens or security
interests to secure both the PTF Obligations and the POOF Obligations in such
Collateral. If a lien or security interest is not perfected or is voidable for
any reason in any Collateral with respect to the PTF Obligations or the POOF
Obligations, then the priorities and distribution provisions provided for
herein with respect to such Collateral shall not be effective to the extent of
such nonperfection or avoidability.
SECTION 13. Exercise of Remedies.
Subject only toany express provision of this Agreement that requires a Creditor
to take or refrain from taking an action, each Creditor may exercise its good
faith discretion with respectto exercising or refraining from exercising any of
its rights and remedies or taking any Enforcement Action. PTF agrees that POOF
shall not incur any liability to PTF for taking or refraining from taking or
directing any action (including any Enforcement Action) with respect to the
Collateral so long as POOF complies with the applicable provisions of this
Agreement and exercises its discretion in good faith. POOF agrees that PTF
shall not incur any liability to POOF for taking or refraining from taking or
directing any action with respect to Collateral (including any Enforcement
Action) so longas PTF complies with the applicable provisions of this Agreement
and exercises its discretion in good faith. The Creditors agree that either
Creditor may release or refrain from enforcing its security interest in any
Collateral, or permit the use or consumption of such Collateral by the Company
or any Guarantor free of such Creditor's security interest, without incurring
any liability to the other Creditor.
SECTION 14. No Additional Rights for Company Hereunder.
If either PTF or POOF shall enforce its rights or remedies in violation of the
terms of this Agreement, the Company and each Guarantor agrees that it shall not
use such violation as a defense to the Enforcement by any such party nor assert
such violation as a counterclaim or basis for set off or recoupment against any
such party.
SECTION 15. Independent Credit Investigations.
No Creditor nor any of its directors, officers, agents or employees shall be
responsible to the other Creditor or to any other person or entity for the
Company's or any Guarantor's solvency, creditworthiness, financial condition
or ability to repay any of the PTF Obligations or the POOF Obligations or for
the accuracy of any recitals, statements,representations or warranties of the
Company or any Guarantor, oral or written, or for the validity, sufficiency,
enforceability or perfection of the PTF Obligations, the POOF Obligations, the
PTF Loan Documents or the POOF Loan Documents, or any security interests or
liens granted by the Company or any Guarantor to any Creditor in connection
therewith. Each Creditor has entered into its respective financing agreements
with the Company based upon its own independent investigation, and makes no
warranty or representation to the other Creditor, nor does it rely upon any
representation to the other Creditor, with respect to matters identified or
referred to in this paragraph. Neither Creditor shall have any responsibility
to the other Creditor for monitoring or assuring compliance by the Company or
any Guarantor with any of the Company's or any Guarantor's covenants or
representations made to either Creditor. Without limiting the generality of
the foregoing, either Creditor may perform in accordance with the terms of the
PTF Obligations, the POOF Obligations, the PTF Loan Documents or the POOF Loan
Documents, as applicable, (subject to this Agreement) without regard to whether
the Company's or any Guarantor's performance in accordance with the terms
thereof might or would constitute or result in a breach of covenants or
representations under the other Creditor's documents with the Company or any
Guarantor, and under no circumstances shall any Creditor be liable to the other
for inducing a breach or violation of the other's documents by virtue of
performing in accordance with the terms of its own documents with the Company
or any Guarantor (subject to this Agreement).
SECTION 16. Authority in Bankruptcy Proceedings.
Nothing contained herein shall limit or restrict the independent right of any
Creditor to initiate actions in any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment or debt, dissolution or liquidation or
similar proceeding in its individual capacity and to appear or be heard on any
matter before the bankruptcy or other applicable court in any such proceeding.
This Agreement shall be and remain enforceable notwithstanding any bankruptcy
or other insolvency proceeding by or against the Company or any Guarantor.
SECTION 17. Effect of Dispositions of Collateral on Security Interests.
Creditors agree that, so long as the proceeds for any sale, dispositions on
collection of the Collateral are applied as required by Section 3 hereof
(a) any UCC collection, sale or other disposition of any Collateral by PTF in
accordance with the terms hereof shall be free and clear of any security
interest, lien, claim or offset of POOF in such Collateral, and (b) any UCC
collection, sale or other disposition of any Collateral by POOF in accordance
with the terms hereof shall be free and clear of the security interest of PTF
in such Collateral. To the extent reasonably requested by either Creditor,
the other Creditor will cooperate in providing any necessary or appropriate
releases to permit a collection, sale or other disposition of Collateral by
the Creditor in accordance with the provisions hereof.
SECTION 18. Amendment.
The Agreement and the provisions hereof may be amended, modified or waived
only by writing signed by the Creditors.
SECTION 19. Marshalling of Assets.
PTF hereby waives any and all rights to have the Collateral, or any part
thereof, marshalled upon any foreclosure of any of the liens securing the PTF
Obligations. POOF hereby waives any and all rights to have the Collateral,
or any part thereof, marshalled upon any foreclosure of any of the liens
securing the POOF Obligations.
SECTION 20. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of each of the parties hereto, including
subsequent holders of the PTF Obligations and the POOF Obligations; provided
that PTF shall not assign or transfer any interest in the PTF Obligations
and POOF shall not assign or transfer any interest in any POOF Obligations,
in each case unless such transfer or assignment is made subject to this
Agreement and such transferee or assignee becomes a signatory to this
Agreement. The term "PTF" shall include any such subsequent holder of any
PTF Obligations and the term "POOF" shall include any such subsequent holder
of any POOF Obligations, whenever the context permits.
SECTION 21. Waivers; Failure or Delay.
No failure or delay on the part of either Creditor in the exercise of any
power, right, remedy, or privilege under this Agreement shall impair such
power, right, remedy, or privilege or shall operate as a waiver thereof;nor
shall any single or partial exercise of any such power, right, or privilege
preclude any other or further exercise of any other power, right, or
privilege. The waiver of any such right, power, remedy, or privilege with
respect to particular facts and circumstances shall not be deemed to be a
waiver with respect to other facts and circumstances.
SECTION 22. Actions under Loan Documents.
Except to the extent expressly contained or controlled by the terms of this
Agreement, each of the Creditors reserves its right to act under its
respective Warrants as it determines in its sole discretion; provided that
the Creditors agree to cooperate and act jointly in accordance with any
actions under the Registration Rights Agreement.
SECTION 23. Headings.
Section headings used in this Agreement are for convenience of reference
only and shall not constitute a part of this Agreement for any purpose or
affect the construction of this Agreement.
SECTION 24. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the
same Agreement. This Agreement shall become effective upon the execution
and delivery of a counterpart hereof by each of the parties hereto.
SECTION 25. Severability of Provisions.
Any provision of this Agreement which is illegal, invalid, prohibited, or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity, prohibition, or
unenforceability without invalidating or impairing the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 26. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED AS TO VALIDITY, INTERPRETATIONS,
ENFORCEMENT AND EFFECT BY THE LAWS OF THE STATE OF NEW YORK (EXCLUDING ANY
CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS AGREEMENT TO BE
CONSTRUED OR ENFORCED IN ACCORDANCE WITH THE LAWS OF ANY OTHER JURISDICTION).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
PROFESSIONAL TRADERS FUND, LLC
By:______________________________
Name:
Title:
PROFESSIONAL OFFSHORE OPPORTUNITY
FUND LIMITED
By:______________________________
Name:
Title:
AGREED:
CAL-BAY INTERNATIONAL, INC.
By: \S\▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Title: President, Cal Bay International, Inc.
