Intercreditor And Collateral Sharing Agreement

EXHIBIT 10.8


INTERCREDITOR AND COLLATERAL SHARING AGREEMENT


This Intercreditor and Collateral Sharing Agreement (the "Agreement") is dated as of February 29, 2000 and is entered into by and among ALTIVA FINANCIAL CORPORATION, a Delaware corporation (the "Borrower"), Value Partners, Ltd. ("Value Partners"), as the initial holder of the Convertible Notes, as that term is defined below, the Replacement QIB Noteholders, the Replacement Non-QIB Noteholders, as both such terms are defined below, and United States Trust Company of New York (the "Collateral Agent"), in its capacity as collateral agent for the Convertible Noteholders, the Replacement Non-QIB Noteholders and the Replacement QIB Noteholders. Certain capitalized terms in the Recitals below are defined in Section 1 hereof. Exhibits attached hereto are by this reference incorporated herein.


RECITALS


1. Pursuant to the Purchase Agreement, Value Partners, Ltd. has purchased $14,000,000.00 in the aggregate of 12% Secured Convertible Notes Due 2006 (the "Convertible Notes"). Value Partners is presently the sole Convertible Noteholder.


2. To secure repayment of the Convertible Notes, the Borrower executed the Convertible Pledge Agreement, a copy of which is attached hereto as Exhibit "A", pursuant to which the Borrower granted to the Convertible Noteholders a lien and security interest in all the Collateral (which is a first priority lien except with respect to the Collateral consisting of Pledged Shares) and a lien in the Pledged Shares, subject only to the security interest granted the Replacement Non-QIB Noteholders as described in paragraph 5 of these Recitals and elsewhere herein. A schedule of the Collateral being initially delivered to the Collateral Agent is set forth on Exhibit "B".


3. The Borrower, the Replacement QIB Noteholders and the Replacement Non-QIB Noteholders have entered into the Exchange Agreement, pursuant to which the Replacement QIB Notes and the Replacement Non-QIB Notes (collectively, the "Exchange Notes") were issued in accordance with the terms thereof and the Indenture.


4. Repayment of the Replacement QIB Notes is secured, on a pari passu basis with the Convertible Notes, by the Collateral pledged to the Convertible Noteholders. To evidence this pledge, the Borrower and Replacement QIB Noteholders executed the Replacement QIB Pledge Agreement, a copy of which is attached as Exhibit "C".


5. The Replacement Non-QIB Notes are secured by a first lien and security interest in the Pledged Shares pursuant to the Stock Pledge Agreement, a copy of which is attached as


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Exhibit "D". However, upon the occurrence of a Default or an Event of Default, the recovery of the Replacement Non-QIB Noteholders from the proceeds relating to the liquidation of the Pledged Shares shall be adjusted so that the Replacement Non-QIB Noteholders recover the same percentage of their outstanding indebtedness as do the Replacement QIB Noteholders and the Convertible Noteholders. Because the Replacement Non-QIB Noteholders are not QIB's, they cannot share in proceeds from the Collateral in which the Convertible Noteholders and Replacement QIB Noteholders hold a first lien. Thus, in the event recovery from the Pledged Shares is inadequate to permit a pro rata recovery in favor of the Replacement Non-QIB Noteholders, their recovery may be less than that of the Convertible Noteholders and Replacement QIB Noteholders.


6. Because each of the Replacement QIB Noteholders, Replacement Non-QIB Noteholders and Convertible Noteholders has a security interest in the Collateral as their interests may appear in the Security Documents and herein, each such Noteholder has agreed that it is appropriate to enter into this Agreement, both for purposes of the perfection of the security interest of each Noteholder in the Collateral which may be perfected by possession of the Collateral (or the continuation of existing perfection) and to permit the orderly liquidation of all Collateral (including Collateral perfected by means other than possession) by the Collateral Agent in the event of an occurrence a Default or an Event of Default under the Security Documents and the orderly distribution of the proceeds of such liquidation by the Collateral Agent.


NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower, the Collateral Agent and the Noteholders hereby agree as follows:


1. Defined Terms. As used herein, the following terms shall have the following meanings:


"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing; provided, however, for purposes of this definition, neither Value Partners, T. Rowe Price Recovery Fund nor Lutheran Brotherhood High Yield Fund shall be deemed to be Affiliates of the Borrower.


"Beneficial Owner" means with respect to any Notes which are registered in book-entry with a securities depositary, the beneficial owners of such Notes on the registry thereof


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maintained by the Trustee pursuant to Section 3.6 of the Indenture or by the Company pursuant to Section 2.3 of the Convertible Notes, as the case may be, and means with respect to Notes which are not so registered in book-entry, the Registered Owner of the Note or the beneficial owner of a Note registered in the name of a nominee.


"Borrower" shall have the meaning specified in the introductory paragraph hereof.


"Business Day" means any day other than Saturday, Sunday or other day on which banking institutions in Atlanta, Georgia or Dallas, Texas or New York, New York are authorized or required by law or executive order to be closed.


"Certificates" means any security, chattel paper, certificated security or instrument, as from time to time amended, modified or supplemented, including the following: any Residual Interest Instrument, any Interest Only Instrument, the Senior Trust Certificate, the Pledged Shares and a Certificated Security as defined in Section 8-102 of the UCC.


"Collateral" means the assets described collectively in Section 2.1 of the Convertible Pledge Agreement, Section 2.1 of the Replacement QIB Pledge Agreement and Section 2 of the Stock Pledge Agreement, as such documents are amended, modified or restated.


"Collateral Agent" means United States Trust Company of New York, as Collateral Agent.


"Convertible Notes" has the meaning specified in Recital paragraph 1.


"Convertible Noteholders" means the holders of the Convertible Notes and their respective heirs, devisees, beneficiaries, legatees, personal representatives, successors or assigns.


"Convertible Pledge Agreement" means that certain Amended and Restated Pledge and Security Agreement, dated as of February 29, 2000, together with any amendments, supplements modifications or restatements thereof.


"Default" has the meaning set forth in the Convertible Notes and/or the Indenture.


"Delivery" means the delivery of the Certificates representing the Collateral in accordance with the provisions of the terms hereof and the Security Documents.


"Event of Default" means an Event of Default as defined in the Convertible Notes and/or the Indenture.


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"Exchange Pledge Agreements" means the Replacement QIB Pledge Agreement and the Stock Pledge Agreement.


"Existing Subordinated Notes" means the outstanding 12 1/2% Subordinated Notes Due 2001 issued by the Borrower.


"Grantor Trust Right" means all rights of the Borrower, including the right to payments to the Borrower, in the Sale Agreement executed in relation to Mego Mortgage Home Loan Trust 1996-3, including, without limitation, the rights set forth in Section 4.05(b)(xvii) of such Sale Agreement.


"Indenture" means the Trust Indenture date as of February 29, 2000, between the Borrower and United States Trust Company of New York, as Trustee, as amended or supplemented.


"Interest Only Instrument(s)" shall, as to that particular Certificate, have the meaning ascribed to the term "Class S Certificate", "Class IS Certificate, "Class IIS Certificate" or a similar phrase describing an interest only security in the respective Sale Agreement arising from the Securitization pursuant to which such security is issued, which security represents the undivided interest of the Borrower in all or a portion of the interest payments due on certain loans securitized in that Securitization.


"Loan Documents" means collectively, the Indenture and the Convertible Notes.


"Non-QIB Collateral" means the Collateral pledged to the Replacement Non-QIB Noteholders pursuant to the Stock Pledge Agreement.


"Notes" means the Convertible Notes, the Replacement QIB Notes and the Replacement Non-QIB Notes.


"Noteholders" means the Convertible Noteholders, the Replacement QIB Noteholders and the Replacement Non-QIB Noteholders, together with any heirs, devisees, beneficiaries, legatees, personal representatives, successors or assigns of each.


"Obligations" means all obligations, liabilities and indebtedness of the Borrower to the Noteholders arising under or related to the Exchange Agreement, the Purchase Agreement, the Security Documents, the Notes, the Indenture and any documents executed pursuant to the terms of any of the above or in relation to any of the above and for the discharge of all other obligations or undertakings now are hereafter made for the benefit of the Noteholders thereunder.


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"Officer's Certificate" means a certificate signed by the President or a Vice President, and by the Secretary or Assistant Secretary of the Borrower and delivered to the Collateral Agent.


"Outstanding" means with respect to the Replacement QIB Notes and Replacement Non-QIB Notes, all such Notes that have been duly authenticated and delivered by the Trustee under the Indenture on the date of determination, except:


(a) Replacement QIB Notes and Replacement Non-QIB Notes
theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;


(b) Replacement QIB Notes and Replacement Non-QIB Notes
the payment or redemption of which the necessary amounts have
been deposited with the Trustee in trust for the Noteholders
thereof; provided that if such Notes are to be redeemed prior
to the maturity thereof, notice of such redemption shall have
been given or arrangements satisfactory to the Trustee have
been made therefor, or waiver of such notice satisfactory in
form to the Trustee has been filed with the Trustee; and


(c) Replacement QIB Notes and Replacement Non-QIB Notes
in lieu of which other such Notes have been authenticated
under the Indenture.


(d) Notes which are registered in the name of or
beneficially owned by the Borrower or any other obligor on the
Notes or by any Affiliate of the Borrower or any other obligor
on the Notes. The Collateral Agent shall not be required to
recognize the beneficial ownership of the Notes of a Person,
or whether the Notes are registered in the name of an
Affiliate of the Borrower or other obligor on the Notes,
unless it is given written notice thereof by the Borrower or
any Noteholder.


"Outstanding" with respect to the Convertible Notes means all such Notes that have been executed and delivered by the Borrower pursuant to the terms of the Purchase Agreement and the Convertible Notes, except such Notes that have been canceled by the Borrower or delivered to the Borrower for cancellation and such Notes in exchange or in lieu of which other such Notes have been executed and delivered by the Borrower pursuant to the terms of the Convertible Notes, and such Convertible Notes which are registered in the name of or beneficially owned by the Borrower or any other obligor on the Notes or by any Affiliate of the Borrower or any other obligor on the Notes. The Collateral Agent shall not be required to recognize the beneficial ownership of the Notes of a Person, or whether the Notes are registered in the name of an Affiliate of the Borrower or other obligor on the Notes, unless it is given written notice thereof


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by the Borrower or any Noteholder.


"Person" means any individual, partnership, corporation, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, or governmental entity (or any department, agency or political subdivision thereof), or any other entity.


"Pledged Shares" means any and all shares of stock or other evidence of equity or ownership interest of the Borrower in The Money Centre, Inc. (either as record owner or beneficially), including but not limited to those shares set forth on Exhibit "E" hereto, including any such interests which may be acquired after the date hereof and the certificates or stock representing all such items. This shall include all of the issued and outstanding shares of capital stock of The Money Centre, Inc. in existence until termination of the Security Documents.


"Purchase Agreement" means that certain Amended and Restated Secured Senior Convertible Note Purchase Agreement by and between the Borrower and Value Partners, Ltd., dated as of February 29, 2000, together with any amendments, modifications, supplements or restatements thereof.


"QIB" means Qualified Institutional Buyer as that term is defined in Rule 144A promulgated by the Securities and Exchange Commission under the Securities Act, as such Rule or definition is now in effect or as amended from time.


"QIB Collateral" shall mean that Collateral pledged to the Convertible Noteholders and the Replacement QIB Noteholders, on a pari passu basis, pursuant to the Convertible Pledge Agreement and the Replacement QIB Pledge Agreement, respectively.


"QIB Notes" means the Convertible Notes and the Replacement QIB Notes.


"QIB Noteholders" means the holders of the QIB Notes.


"Registered Owner" means the person or persons in whose name or names a particular Note is registered (i) with respect to the Replacement QIB Notes and the Replacement Non-QIB Notes, on the register by maintained by the Trustee for that purpose pursuant to Section 3.6 of the Indenture; and (ii) with respect to the Convertible Notes, on the register maintained by the Company for that purpose pursuant to Section 2.3 of the Convertible Notes.


"Replacement QIB Notes" means those notes issued pursuant to the Indenture to the holders of Existing Subordinated Notes pursuant to the Exchange Agreement which are QIB's.


"Replacement Non-QIB Notes" means those notes issued to those holders of Existing


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Subordinated Notes pursuant to the Exchange Agreement which are not QIB's.


"Replacement Non-QIB Noteholders" means those holders of Replacement QIB Notes as set forth on Exhibit "F", attached hereto and by this reference incorporated herein, together with any successors, heirs, devisees, beneficiaries, legatees, personal representatives, successors or assigns.


"Replacement QIB Noteholders" means those holders of Replacement QIB Notes as set forth on Exhibit "G", attached hereto and by this reference incorporated herein, together with any successors, heirs, devisees, beneficiaries, legatees, personal representatives, successors or assigns.


"Replacement QIB Pledge Agreement" means that certain Pledge and Security Agreement dated as of March 9, 2000, by and between the Borrower and the Replacement QIB Noteholders, together with any amendments, modifications, supplements or restatements thereof.


"Requisite Percentage" means the record holders, voting as a single class, representing in aggregate at least fifty percent (50%) of the sum at such time of the aggregate principal amount of the Notes Outstanding, except to the extent that a different percentage is otherwise expressly required in the Convertible Notes and/or in the Indenture.


"Residual Interest Instrument(s)" shall, as to that particular Certificate, have the meaning ascribed to the term "Class R Certificate", "Residual Interest Instrument", "Residual Certificate", "Residual Instrument" or a similar phrase describing a certificated residual interest in the Sale Agreement arising from the Securitization pursuant to which such security is issued, which security represents the undivided residual interest of the holder, including in all or a portion of the interest and principal payments due on certain loans securitized in that Securitization. Neither the Grantor Trust Right nor the Senior Trust Certificate are Residual Interest Instruments.


"Responsible Officer" means an officer or officers of the Collateral Agent assigned by the Collateral Agent to administer the matters pertaining to it in this Agreement.


"Sale Agreement" means the respective Pooling and Servicing Agreement, Sale and Servicing Agreement or similar agreement, together with related agreements, including trust agreements and indentures, which create and grant rights in Certificates and the Grantor Trust Right, entered into or otherwise issued in relation to a particular Securitization.


"Securities Act" means the Securities Act of 1933, as now in effect and as hereafter amended from time to time.


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"Securitization" means the respective securitization as set forth on Exhibit "H" hereto and by this reference incorporated herein.


"Security Documents" means the Convertible Pledge Agreement, the Replacement QIB Pledge Agreement and the Stock Pledge Agreement.


"Senior Trust Certificate" means that certain 125 Home Loan Owner Trust 1998-1, Senior Trust Certificate.


"Stock Pledge Agreement" means that certain Stock Pledge Agreement dated March 9, 2000 by and between the Borrower and the Replacement Non-QIB Noteholders, together with any amendments, modifications, supplements or restatements thereof.


"UCC" means the Uniform Commercial Code as in effect in the State of Maryland; provided, that if by mandatory provisions of law, the perfection or effect of perfection or non-perfection of the security interest in any Collateral to which this Pledge Agreement relates is governed by the Uniform Commercial Code as in effect on or after the date hereof in any other jurisdiction, UCC means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or the effect of perfection or non-perfection.


"Trustee" means United States Trust Company of New York, as Trustee under the Indenture, and any successor trustee under the Indenture.


"Value Partners" has the meaning assigned to such term in the preamble.


"Voting Action" has the meaning assigned to such term in Section 3(b) hereof.


Section 2. Appointment of Agent; Delivery of Collateral.


(a) The Collateral Agent is appointed by the Noteholders, on their behalf and on behalf of their respective successors and assigns, agent of the Noteholders to possess, as agent and on behalf of the Noteholders, all of the Collateral for which the security interests of the Noteholders of which may be perfected by such Noteholders' possession or by filing and control thereof under the UCC and to act as agent on behalf of the Noteholders (and if necessary, in the name of a Noteholder or Noteholders) to exercise all rights and remedies on the Noteholders behalf, as set forth in this Agreement and the Security Documents, as to all Collateral, whether or not perfected by filing or possession and control of the Collateral. Each Noteholder by accepting and holding a Note confirms the appointment of the Collateral Agent as provided by this


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Agreement. The Borrower represents and warrants that the Grantor Trust Right is the only existing Collateral which may not be perfected by possession. The Borrower shall deliver to the Collateral Agent, promptly upon execution and delivery hereof, executed counterparts of all Security Documents and all amendments and supplements thereto. Value Partners, the initial Convertible Noteholder, shall deliver to the Collateral Agent, promptly upon execution and delivery thereof, all the Collateral which the Borrower has previously delivered to it, and upon such delivery, the Collateral Agent shall be deemed to have possession of such Collateral as agent on behalf of the existing and future Convertible Noteholders and the other Noteholders as permitted Section 8.301(a)(2) of the UCC and as their respective interests may appear herein and in the Security Documents. The Collateral Agent is further appointed as the agent of each Noteholder to act on behalf of each Noteholder in the enforcement of rights and remedies granted each in the Security Documents. This shall include, but is not limited to, the declaration of a Default or Event of Default and the sale or other disposition of all or a portion of the Collateral in accordance with the terms hereof and the Security Documents. The Requisite Percentage shall have the right to direct the transfer of possession of the Collateral to another person who has agreed to possess the Collateral for the benefit of all Noteholders. Such transfer shall be to Value Partners, Ltd. so long as it is a Noteholder, unless it agrees to the contrary.


(b) Value Partners, as of the date of execution of this Agreement, has possession and control of that Collateral set forth on Exhibit "B" which is identified as currently in the possession thereof. Certain of that Collateral was registered in the name of Value Partners for purposes of perfection and shall remain registered in the name of Value Partners subsequent to delivery to the Collateral Agent. Value Partners agrees that it will cooperate with the Collateral Agent to ensure an orderly transfer of such Collateral to a purchaser thereof upon any exercise of remedies (i.e., foreclosure and sale, etc.) by the Collateral Agent on behalf of the Noteholders. Should Value Partners dispose of all of its Notes, Value Partners shall deliver to the Collateral Agent endorsements in blank as to each such Certificate registered in Value Partners' name, together with any other document necessary under the applicable UCC to ensure the continued perfection of the security interests of the remaining Noteholders in such Certificates.


Section 3. Enforcement of Collateral by Collateral
Agent.


(a) The Collateral Agent, on behalf of and for the benefit of the Noteholders, shall from time to time, upon being given written instructions as provided herein and indemnified as provided herein, take such action for the protection and enforcement of the rights of the Noteholders under this Agreement and the Security Documents, as may be so instructed to do as provided herein, provided that:


(i) unless and until the Collateral
Agent is notified in writing as provided in Subsection (ii)
hereof that an Event of Default shall have occurred


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and be continuing or has actual knowledge thereof as provided
in clause (ii) of this Section 3(a), the Collateral Agent
shall not be obligated to take any action under this Agreement
or the Security Documents except for the performance of such
duties as are specifically set forth herein (but under all
circumstances shall be required to retain possession of
Collateral for purposes of perfection) and except as may be
instructed from time to time in writing by the Requisite
Percentage, and no implied covenants or obligations shall be
read into this Agreement against the Collateral Agent;


(ii) the Collateral Agent shall not be
deemed to have knowledge of the existence of any condition or
event which constitutes a Default or an Event of Default and
may act as if no such Default or Event of Default exists,
unless (A) notified in writing by any Noteholder or by the
Borrower, which notice shall expressly indicate that the
specified condition or event is a "Default" or "Event of
Default," as the case may be, or (B) a Responsible Officer of
the Collateral Agent has actual knowledge that a Default or
Event of Default has occurred and is continuing ("actual
knowledge" meaning the fact of knowing without a duty to
investigate); and


(iii) if and so long as a Default or
Event of Default shall have occurred and be continuing and the
Collateral Agent shall have been notified in writing thereof,
the Collateral Agent shall, subject to being indemnified as
provided herein, exercise such rights, powers and remedies
(whether vested in it by this Agreement or any Security
Document or by law or in equity or by statute or otherwise)
for the protection and enforcement of the Noteholders' rights
under this Agreement and the Security Documents as the
Collateral Agent may be directed in writing by the Requisite
Percentage. In exercising any rights or remedies hereunder,
the Collateral Agent shall use the same degree of care and
skill in such exercise as a ordinary collateral agent would
use under similar circumstances.


(b) Whenever any action is required or proposed to be taken hereunder by the Collateral Agent at the direction, or subject to the approval or consent, of the Requisite Percentage, including, wi ...