PLEDGE AND SECURITY AGREEMENT
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AGREEMENT dated as of March 31, 1999 among PHOENIXCOR, INC., a Delaware
corporation with its principal place of business at 65 Water Street, South
Norwalk, CT 06854 (referred to herein as "Lender"); CHANCELLOR CORPORATION, a
Massachusetts corporation with its principal place of business at 210 South
Street, 10th Floor, Boston, MA 02111 (referred to herein as "Borrower"); and
CHANCELLOR FLEET CORPORATION, a Massachusetts corporation with its principal
place of business at 210 South Street, 10th Floor, Boston, MA 02111, as trustee
(referred to herein as "Trustee") of the trusts established under the trust
agreements listed on the attached Exhibit A (the "Trusts").
R E C I T A L S
A. Lender has agreed to extend financing to Borrower pursuant to the Loan
and Security Agreement dated as of March 31, 1999 (the "Loan Agreement") among
Lender, Borrower and Trustee to finance, among other things, the purchase by
Borrower from First Union Commercial Corporation of all of the beneficial
interests under the Trusts (the "Trust Interests") on the condition, among other
things, that Borrower pledge all of the Trust Interests to Lender as additional
security for Borrower's obligations under the Loan Agreement.
B. Upon completion of such purchase, Borrower shall be the sole beneficial
interest holder in the Trusts.
C. Borrower has agreed to pledge all of the Trust Interests to Lender as
security for the payment and performance of Borrower's obligations under the
Loan Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
FIRST: To secure the payment and performance of all obligations of
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Borrower and Trustee to Lender under the Loan Agreement and any other
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obligations of Borrower or Trustee to Lender now existing or hereafter arising,
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Borrower hereby sets over, transfers, hypothecates, grants, assigns, pledges and
conveys to Lender, its successors and assigns a pledge and continuing security
interest in and to (i) all of Borrower's right, title and interest in the Trust
Interests and (ii) all proceeds of the Trust Interests (collectively, the
"Collateral"). Upon receipt of all sums secured hereby, Lender shall release
its security interest in the Collateral.
SECOND: Trustee agrees to note and keep noted in its applicable books and
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records that Borrower has pledged and granted to Lender a security interest in
the Trust Interests and that the same may not be transferred without the prior
written consent of Lender. Borrower hereby appoints Lender as its attorney in
fact to execute all documents necessary to perfect and keep perfected the
security interests hereby created. This power of attorney is a special power of
attorney coupled with an interest and shall be irrevocable by Borrower.
THIRD: Trustee and Borrower warrant, represent and agree that upon
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disbursement by Lender to First Union Commercial Corporation of the applicable
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loan proceeds as directed by Borrower, (i) Borrower will be the sole record and
beneficial owner of and have good title to the Trust Interests, free and clear
of liens and encumbrances (other than Lender's) and (ii) there will be no
restrictions upon the transfer hereby to Lender of any of the Collateral
pursuant to the terms and conditions of this Agreement. Borrower and Trustee
agree not to amend the Trusts or execute or consent to any agreement, without
Lender's consent, which would adversely impact on Lender's security interest in
all or some of the Trust Interests.
FOURTH: Upon the occurrence of a default under the Loan Agreement, this
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Agreement or other agreement between Borrower and/or Trustee and Lender, and the
continuation of such default for a period of thirty (30) days, Lender shall have
all of the rights and remedies with respect to the Trust Interests of a secured
party under the Uniform Commercial Code ("UCC") of the laws of the State of
Connecticut, including, without limitation, and without liability for any
diminution in price or value of the Trust Interests which may have occurred,
the right to sell all or any part of the Trust Interests at public or private
sale, by one or more contracts, at the same or at different times. Lender may
buy any part or all of the Trust Interests at any public sale and, to the extent
permitted by the UCC, at any private sale, and may make payment therefor by any
means, including, without limitation, the cancellation of interest, loan
payments or any other amounts owed to Lender under the Loan Agreement or this
Agreement. Out of the proceeds of any sale Lender may retain an amount equal to
all sums owed under the Loan Agreement, as well as any other sums owed to
Lender, plus the amount of the expenses of the sale. In the event that the
proceeds of any sale are insufficient to cover the sums owed under the Loan
Agreement, as well as any other sums owed to Lender, plus expenses of the sale,
Borrower shall remain liable to Lender for any deficiency.
FIFTH: All costs, charges and expenses paid or incurred by Lender in
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connection with (i) enforcing its rights or remedies under this Agreement or
interest in the Collateral, including, without limitation, attorney fees, court
and other legal costs and expenses or (ii) removing any lien or encumbrance on
the Collateral shall be paid by Borrower and shall be secured by the Collateral
pledged pursuant to this Agreement.
SIXTH: Lender may assign or otherwise transfer this Agreement and all of
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its rights hereunder and in and to the Collateral to any person who may succeed
to its rights under the Loan.
SEVENTH: It is agreed by all parties that any breach of this Agreement by
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Trustee or Borrower (individually or collectively) will constitute an additional
event of default under the Loan Agreement.
EIGHTH: All notices required or permitted to be given under the terms and
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provisions of this Agreement by any party to the other(s) shall be in writing
and shall be made by hand delivery, by nationally recognized overnight service
or by registered or certified mail, return receipt requested to the parties as
follows:
If to Lender: Phoenixcor, Inc.
65 Water Street
South Norwalk, CT 06854
Attn: Legal/Default Notices
If to Borrower: Chancellor Corporation
210 South Street, 10th Floor
Boston, MA 02111
Attn: Franklyn Churchill
If to Trustee: Chancellor Fleet Corporation
210 South Street, 10th Floor
Boston, MA 02111
Attn: Jon Ezrin
or to such other address as may hereafter be provided by the parties in writing.
Notices shall be effective upon receipt and if sent by registered or certified
mail shall be deemed received and delivered three (3) days after deposit with
the United States Postal Service.
TENTH: This Agreement may be executed in any number of counterparts and by
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the different parties hereto in separate counterparts, all of which when so
executed and delivered together will constitute one and the same document.
ELEVENTH: This Agreement shall be governed by and construed in accordance
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with the laws of the State of Connecticut. THE PARTIES HERETO WAIVE THE RIGHT
TO JURY TRIAL IN ANY ACTION OR PROCEEDING BASED ON THIS AGREEMENT, TO THE EXTENT
PERMITTED BY LAW.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers to be effective as of
the date first above written.
PHOENIXCOR, INC. CHANCELLOR CORPORATION
BY:_______________________________ BY:________________________________
TITLE:_____________________________ TITLE:______________________________
CHANCELLOR FLEET CORPORATION
BY:________________________________
TITLE:______________________________
REF.g/ajk/docs/3rdParty/Chancellor/Pledge-2
EXHIBIT A - TRUSTS
NAME OF TRUST DATE OF TRUST
1. Chancellor/First Union IV Trust 12/30/88
2. CHANCELLOR/FIRST UNION TRUST IX 9/25/89
3. Chancellor/First Union Trust XV 12/25/89
4. Chancellor/First Union Trust XVII 2/25/89
5. Chancellor/First Union Trust XVIII 12/31/89
6. Chancellor/First Union Trust XX 9/25/89
7. Chancellor/First Union Trust XXVII 9/25/90
8. Chancellor/First Union Trust XXVIII 10/25/90
9. Chancellor/Whirlpool 494J Trust 3/29/91
10. Chancellor/Whirlpool 494K Trust 3/29/91