COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT
This COLLATERAL AGENCY AND INTERCREDITOR
AGREEMENT (this “ Agreement
”) dated as of December 30, 2005 is entered into among
THE BANK OF NEW YORK , a company organized under
the laws of the State of New York, as collateral agent (“
Collateral Agent ”) and (i) the undersigned
holders from time to time of the 2003 Senior Notes (as defined
below) (each, together with its successors and assigns, a “
2003 Holder ” and collectively the “
2003 Holders ”) and (ii) the undersigned
holders from time to time of the 2005 Senior Notes (as defined
below) (each, together with its successors and assigns, a “
2005 Holder ,” collectively the “
2005 Holders ” and, together with the 2003
Holders, each a “ Holder ,” and
collectively, the “ Holders ”), and,
for purposes of Section 4.03 hereof only, InSite Vision
Incorporated, a Delaware corporation (the “
Company ”).
R E C I T A L
S
A. The Company has issued to each 2003 Holder a
promissory note, the form of which is attached hereto as Exhibit B
(each such note, as amended, restated, supplemented or modified
from time to time, a “ 2003 Senior Note
” and collectively, the “ 2003 Senior
Notes ”) and has issued to each 2005 Holder a
promissory note due June 30, 2006, as such date may be extended at
the Company’s election in accordance with the terms of such
promissory note, the form of which attached hereto as Exhibit C
(each such note, as amended, restated, supplemented or modified
from time to time, the form of which a “ 2005 Senior
Note ,” collectively, the “ 2005
Senior Notes ” and, collectively with the 2003
Senior Notes, the “ Senior Notes
”).
B. The Company and the Collateral Agent, in its
capacity as collateral agent and representative for the 2003
Holders and in its capacity as collateral agent and representative
for the 2005 Holders, have entered into that certain Amended and
Restated Security Agreement dated as of December 30, 2005 (as the
same may be amended, restated, supplemented or otherwise modified
from time to time, the “ Security Agreement
”) pursuant to which the Company has secured the obligations
of the Company to the Holders under the Senior Notes (the “
Obligations ”).
C. The Security Agreement, among other things,
grants to the Collateral Agent, on behalf of the Holders, security
interests in, and liens on, certain property of the Company and
proceeds thereof as set forth in such agreement and may in the
future grant to the Collateral Agent security interests in, and/or
liens on, additional property of the Company (hereinafter all of
such collateral shall be referred to collectively as the “
Collateral ”).
D. The Collateral Agent and the Holders wish to
enter into this Agreement to, among other things, set forth their
understandings and agreements regarding the Holders’ and the
Collateral Agent’s respective rights, obligations and
priorities with respect to the Collateral and all proceeds
thereof.
NOW, THEREFORE , for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and the
mutual covenants and promises set forth herein, each of the parties
to this Agreement agrees as follows:
SECTION I.
DEFINITIONS;
INTERPRETATION .
1.01
Definitions
.
Unless otherwise indicated in this
Agreement each term set forth in Exhibit A when used in this
Agreement shall have the respective meaning given to that term in
Exhibit A . Initially capitalized terms used in this
Agreement without definition are defined in the Security Agreement
or the Senior Notes unless the context requires
otherwise.
1.02
Headings
.
Headings in this Agreement are for
convenience of reference only and are not part of the substance
hereof or thereof.
1.03
Plural
Terms . All terms defined in this Agreement in the
singular form shall have comparable meanings when used in the
plural form and vice versa.
1.04
Time
.
All references in this Agreement to
a time of day mean New York time, unless otherwise
indicated.
1.05
Construction
.
This Agreement is the result of
negotiations among, and has been reviewed by the Holders, the
Collateral Agent and their respective counsel. Accordingly, this
Agreement shall be deemed to be the product of all parties hereto
and no ambiguity shall be construed in favor of or against any
Holder or the Collateral Agent.
1.06
Conflicts
.
In the event of a conflict between
the terms of this Agreement and the terms of the Security Agreement
or any of the Senior Notes with respect to the matters related to
the Collateral contained herein, as among the Collateral Agent and
the Holders the terms of this Agreement shall control.
1.07
Other Interpretive
Provisions . References in this Agreement to
“Recitals,” “Sections,”
“Exhibits” and “Schedules” are to recitals,
sections, exhibits and schedules herein and hereto unless otherwise
indicated. References in this Agreement to any document, instrument
or agreement shall (a) include all exhibits, schedules and other
attachments thereto, (b) include all documents, instruments or
agreements issued or executed in replacement thereof, and (c) mean
such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified and supplemented from
time to time and in effect at any given time. The words
“hereof,” “herein” and
“hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The words
“include” and “including” and words of
similar import when used in this Agreement shall not be construed
to be limiting or exclusive.
SECTION II.
COLLATERAL AND
REMEDIES .
2.01
Priority of
Liens . The Collateral Agent, the 2003 Holders and the
2005 Holders hereby agree that the security interests and liens
granted to the Collateral Agent under the Security Agreement shall
be treated, as among the 2003 Holders and the 2005 Holders, as
having equal priority and shall, except to the extent otherwise
provided in Section 3.02, at all times be shared by the 2003
Holders and the 2005 Holders as provided herein regardless of any
claim or defense (including any claims under the fraudulent
transfer, preference or similar avoidance provisions of applicable
bankruptcy, insolvency or other applicable Governmental Rules
affecting the rights of creditors generally) to which the
Collateral Agent or any Holder may be entitled or subject, and
notwithstanding the relative timing of the filing of any financing
statements by any party hereto with respect to the
Collateral.
2.02
Custody of
Collateral .
From and after the occurrence and during the continuance of an
Event of Default, if any Holder acquires custody, control or
possession of any Collateral other than any proceeds thereof
distributed to such Holder pursuant to the terms of the Security
Agreement or this Agreement, then such Holder shall promptly cause
such Collateral to be delivered to, or put in the custody,
possession or control of, the Collateral Agent for disposition or
distribution in accordance with the provisions of this Agreement.
From and after the occurrence and during the continuance of an
Event of Default and until such time as the provisions of the
immediately preceding sentence have been complied with, such Holder
shall be deemed to hold such Collateral in trust for the parties
entitled thereto under this Agreement.
2.03
Additional Collateral or
Guaranties . None of the Holders shall accept a security
interest in, or a Lien on, any collateral for the Obligations other
than such Holder’s beneficial interest in the security
interest in, and Lien on, the Collateral granted to the Collateral
Agent under the Security Agreement; provided, however, that nothing
contained in the foregoing shall be construed as prohibiting the
opening and maintenance of deposit accounts for the account of the
Company or its subsidiaries in the ordinary course of business. No
Holder shall accept any guaranty of its Obligations from any Person
unless such Person has previously or simultaneously guaranteed the
Obligations held by each of the other Holders.
2.04
Enforcement of
Remedies . Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent shall, subject to the
other provisions of this Agreement, take such action with respect
to such Event of Default as shall be reasonably directed by the
Required Holders (a “Direction Notice”
); provided , however , that, in the absence of a
Direction Notice, the Collateral Agent may (but shall not be
obligated to) take such action, or refrain from taking such action,
with respect to such Event of Default as it shall deem advisable in
the best interests of the Holders (other than the exercise of
foreclosure remedies). Upon receipt by the Collateral Agent of a
Direction Notice, the Collateral Agent shall seek to enforce the
Security Agreement and to realize upon the Collateral in accordance
with such Direction Notice; provided , however , that
the Collateral Agent shall not be obligated to follow any Direction
Notice if the Collateral Agent reasonably determines that such
Direction Notice is in conflict with any provisions of any
applicable Governmental Rule, this Agreement or the Security
Agreement, or would in its reasonable determination otherwise
subject it to liability and the Collateral Agent shall not, under
any circumstances, be liable to any Holder, the Company or any
other Person for following a Direction Notice.
2.05
Remedies of the
Holders . Unless otherwise consented to in writing by the
Required Holders, no Holder, individually or together with any
other Holder, shall have the right to, nor shall it, exercise or
enforce any of the rights, powers or remedies which the Collateral
Agent is authorized to exercise or enforce under this Agreement or
the Security Agreement.
2.06
Holder
Information . If the Collateral Agent proceeds to foreclose
upon, collect, sell or otherwise dispose of or take any other
action with respect to any or all of the Collateral or to enforce
any provisions of the Security Agreement or takes any other action
pursuant to this Agreement or any provision of the Security
Agreement or requests directions from the Holders as provided
herein, upon the request of the Collateral Agent, each of the
Holders (or any agent of or representative for such Holder) shall
promptly deliver a written notice to the Collateral Agent and each
of the other Holders setting forth (a) the aggregate amount of
principal, interest, fees, and other Obligations owing to such
Holder under the applicable Senior Notes as of the date specified
by the Collateral Agent in such request and (b) such other
information as the Collateral Agent may reasonably
request.
SECTION
III.
DISTRIBUTION OF
PROCEEDS .
3.01
Other Collateral Proceeds
Account .
(a) The Collateral Agent shall establish a
collateral proceeds account subject to the Lien created by the
Security Agreement in the name of the Collateral Agent into which
the Proceeds (as defined below) shall be deposited and from which
only the Collateral Agent may effect withdrawals (the
“Other Collateral Proceeds Account” ).
Such amounts shall be held by the Collateral Agent in the Other
Collateral Proceeds Account and shall be distributed from time to
time by the Collateral Agent in accordance with Section
3.02.
(b) Following the occurrence and during the
continuance of an Event of Default, the following proceeds,
payments and amounts (collectively, the
“Proceeds” ) shall be deposited and
held by the Collateral Agent in the Other Collateral Proceeds
Account and shall be distributed from time to time by the
Collateral Agent to the Holders in accordance with Section
3.02:
(i) any proceeds of any collection, recovery,
receipt, appropriation, realization or sale of any or all of the
Collateral through the enforcement of the Security Agreement
received by the Collateral Agent or any Holder (the
“Other Collateral Proceeds” );
and
(ii) any amounts held in the Other Collateral
Proceeds Account at the time an Event of Default occurs.
Each Holder
agrees to deliver any Proceeds to the Collateral Agent within three
(3) Business Days after receipt of such Proceeds, or if later (in
the case of clause (ii)), within three (3) Business Days of being
advised of the occurrence of an Event of Default. Until such time
as the provisions of the immediately preceding sentence have been
complied with, such Holder shall be deemed to hold such Proceeds in
trust for the parties entitled thereto under this
Agreement.
3.02
Distribution of
Proceeds . The Collateral Agent shall immediately and from
time-to-time distribute the Proceeds which are held in the Other
Collateral Proceeds Account in accordance with Section 10(c) of the
Security Agreement, it being understood, however, that the
Collateral Agent may deduct from any distribution the amount of all
Collateral Agent’s fees and expenses that have not been paid
by the Company or the Holders pursuant to Section 4.03 or
otherwise. The Collateral Agent shall make such distributions as
promptly as reasonably practicable after the deposit of any
Proceeds into the Other Collateral Proceeds Account.
3.03
Distributions
Recovered . Notwithstanding anything to the contrary
contained in this Agreement, in each case in which any proceeds (or
the value thereof) or payments are recovered as a preferential or
otherwise voidable payment (whether by a trustee in bankruptcy or
otherwise) from the party which distributed those proceeds to
another party or parties under this Agreement (the
“Distributor” ), each party to whom
any of those proceeds were ultimately distributed (a
“Distributee” ) shall, upon the
Distributor’s notice of the recovery to the Distributee,
return to the Distributor an amount equal to the
Distributee’s ratable share of the amount recovered, together
with a ratable share of interest thereon to the extent the
Distributor is required to pay interest thereon computed on the
amount to be returned from the date of the recovery. For purposes
of this Agreement, “proceeds” means
any payment (whether made voluntarily or involuntary) from any
source, including any offset of any deposit or other indebtedness,
any security (including any guaranty or any collateral) or
otherwise.
SECTION IV.
THE COLLATERAL AGENT AND
RELATIONS AMONG SECURED CREDITORS .
4.01
Appointment, Powers and
Immunities . Each Holder has appointed and authorized the
Collateral Agent to act as its agent hereunder and under the
Security Agreement with such powers as are expressly delegated to
the Collateral Agent by the terms of the Security Agreement and
this Agreement, together with such other powers as are reasonably
incidental thereto. The Collateral Agent shall not have any duties
or responsibilities except those expressly set forth in the
Security Agreement or this Agreement. The Collateral Agent shall
not have any fiduciary relationship with the Holders or any Holder,
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or the
Security Agreement or otherwise exists against Collateral Agent.
Notwithstanding anything to the contrary contained herein, the
Collateral Agent shall not be required to take any action which is
contrary to this Agreement, the Security Agreement or any
applicable Governmental Rule. The Collateral Agent may employ
agents and attorneys-in-fact and shall not be responsible to the
Holders or any Holder for the negligence or misco
