Exhibit 10.1
AMENDMENT NO. 5 TO SECOND AMENDED AND
RESTATED LOAN AGREEMENT, LIMITED WAIVER AND CONSENT
AMENDMENT NO. 5 TO SECOND AMENDED AND RESTATED LOAN AGREEMENT AND LIMITED
WAIVER dated as of September 11, 2002 (this "Amendment"), by and among MEDALLION
FINANCIAL CORP., a Delaware corporation ("MFC"), MEDALLION BUSINESS CREDIT, LLC,
a Delaware limited liability company ("MBC"; MBC and MFC are sometimes
hereinafter referred to individually as a "Borrower" and together as the
"Borrowers"), the lending institutions that are listed on the signature pages
hereto, FLEET NATIONAL BANK (f/k/a Fleet Bank, National Association), as a Bank
("Fleet"), as Swing Line Lender (the "Swing Line Lender"), as Arranger and as
Agent for the Banks (including any successor, the "Agent"), amending the Loan
Agreement (as defined below).
WHEREAS, the Borrowers, the banks and other lending institutions that from
time to time are signatories thereto (including Assignees, collectively, the
"Banks" and individually, a "Bank"), the Agent and the Swing Line Lender are
parties to a Second Amended and Restated Loan Agreement dated as of September
22, 2000 (as amended, the "Loan Agreement", capitalized terms defined therein
having the same meanings herein as therein), pursuant to which the Banks have
extended credit to the Borrowers on the terms and subject to the conditions set
forth therein;
WHEREAS, the Borrowers have requested certain amendments of the Loan
Agreement and waivers of certain provisions of the Loan Agreement, and, subject
to the terms and conditions set forth herein, the Borrowers, the Banks, the
Agent and the Swing Line Lender have agreed to amend the Loan Agreement and
waive certain provisions thereof; and
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree to amend the Loan Agreement as follows:
1. Amendments to Definitions. Section 1.1 of the Loan Agreement is hereby
amended by:
(a) deleting the definition "Term Loan Commitment" in its entirety.
(b) deleting the following definitions in their entirety, and substituting
in lieu thereof the following new definitions:
"Applicable Prime Rate Margin" shall mean one half of one percent
(0.5%).
"Maturity" shall mean August 31, 2003 with respect to all Loans.
"MBC Borrowing Base" shall mean, as determined pursuant to the most
recently required Borrowing Base Certificate:
(i) (a) cash of up to $5,000,000 maintained by MBC in one or more
deposit accounts in which the Agent for the benefit of the Agent, the CP
Holders and the Banks has a first priority, perfected security interest,
plus (b) cash pledged to the Agent, for the ratable benefit of the Banks,
pursuant to a cash collateral security agreement in form and substance
satisfactory to the Agent plus (c) Short Term Investments in which the
Agent for the benefit of the Agent, the CP Holders and the Banks has a
first priority, perfected security interest shown on MBC's balance sheet as
of such date, plus
(ii) 83.3% of the aggregate outstanding principal balances of, plus
accrued interest on, all of MBC's Eligible Medallion Loans from time to
time outstanding that are Retained Loans, plus
(iii) 80% of the aggregate outstanding principal balances of, plus
accrued interest on, all of MBC's Eligible Commercial Loans from time to
time outstanding that are Retained Loans;
provided, that, if all or any part of any Medallion Loan or Commercial Loan
would be excluded as an Eligible Commercial Loan or Eligible Medallion Loan
under any of the provisions of this Agreement, then the entire outstanding
principal amount of, plus accrued interest on, such Medallion Loan or
Commercial Loan shall be excluded.
"MFC Borrowing Base" shall mean, as determined pursuant to the most
recently required Borrowing Base Certificate:
(i) (a) cash of up to $5,000,000 maintained by MFC in one or more
deposit accounts in which the Agent for the benefit of the Agent, the CP
Holders and the Banks has a first priority, perfected security interest,
plus (b) cash pledged to the Agent, for the ratable benefit of the Banks,
pursuant to a cash collateral security agreement in form and substance
satisfactory to the Agent plus (c) Short Term Investments in which the
Agent for the benefit of the Agent, the CP Holders and the Banks has a
first priority, perfected security interest shown on MFC's balance sheet as
of such date, plus
(ii) 83.3% of the aggregate outstanding principal balances of, plus
accrued interest on, all of MFC's Eligible Medallion Loans from time to
time outstanding that are Retained Loans, plus
(iii) 75% of the aggregate outstanding principal balances of, plus
accrued interest on, all of MFC's Eligible Commercial Loans other than
Section 7a Loans from time to time outstanding that are Retained Loans;
plus
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(iv) 75% of the aggregate outstanding principal balances of, plus
accrued interest on, all of MFC's Eligible Section 7a Loans purchased from
Business Lenders, LLC from time to time outstanding that are Retained
Loans; minus
(v) 100% of the Borrowing Base Holdback;
provided, that, if all or any part of any Medallion Loan or Commercial Loan
would be excluded, whether as an Eligible Commercial Loan, Eligible
Medallion Loan or Eligible Section 7a Loan, under any of the provisions of
this Agreement, then the entire outstanding principal amount of, plus
accrued interest on, such Medallion Loan or Commercial Loan shall be
excluded.
"Notes" or "Term Notes" shall mean the promissory notes of the Borrowers
referred to in Section 2.1(b) hereof and shall include any replacements
therefor issued pursuant to Section 10.18 or 12.1 hereof.
"Percentage" of each Bank shall mean, at any particular time, the
percentage designated as such for such Bank on Exhibit A hereto, as
adjusted from time to time pursuant to Section 12.1(e) or otherwise in
accordance with the terms hereof.
"Term-Out Date" shall mean the Amendment No. 5 Effective Date.
"Term Loan" or "Term Loans" shall mean the Revolving Credit Loans
converted to Term Loans on the Amendment No. 5 Effective Date.
(c) inserting the following new definitions in proper alphabetical order
therein:
"Amendment No. 5" shall mean Amendment No. 5 to Second Amended and
Restated Loan Agreement, Limited Waiver and Consent dated as of September
11, 2002, among the Borrowers, the Agent, the Swing Line Lender and the
Banks.
"Amendment No. 5 Effective Date" shall mean the date on which the
Borrowers have satisfied, to the Agent's satisfaction, each of the
conditions listed in Section 33(a) to Amendment No. 5, as evidenced by the
notice given pursuant to Section 33(c) therein.
"Citizens Priority Return" shall mean the sum of $1,232,606.06 to be
paid to the Agent for the account of Citizens Bank on or prior to the
Amendment No. 5 Effective Date.
"Documentation Punch List Letter" shall mean that certain letter
agreement dated on or before the Amendment No. 5 Effective Date, among the
Borrowers and the Agent, which sets forth those items that are required to
be completed by the Borrowers within the applicable required periods
following the Amendment No. 5 Effective Date.
"Merrill Lynch" shall mean Merrill Lynch Bank USA or an affiliate
thereof, including any permitted assignee under the Merrill Lynch Facility.
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"Merrill Lynch Facility" shall mean the financing transaction to close
on or about the Amendment No. 5 Effective Date, pursuant to which the Taxi
Medallion Loan Trust I, a special purpose, bankruptcy remote, Delaware
business trust, established by Medallion Funding will from time to time
borrow money from Merrill Lynch and will from time to time use the proceeds
to purchase Medallion Loans from Medallion Funding.
"pro rata" shall mean, when reference is made to principal payments, pro
rata after giving effect to Citizens Priority Return.
2. Interest; Removal of LIBO Rate Pricing. As of the Amendment No. 5
Effective Date, all Bank Loans shall bear interest at an annual rate equal to
the Prime Rate plus the Applicable Prime Rate Margin, except as provided in
Section 2.6 of the Loan Agreement. As of the Amendment No. 5 Effective Date,
LIBOR Rate pricing shall no longer be available under the Loan Agreement.
Accordingly, all references in the Loan Agreement to "LIBOR Rate Loans",
"Adjusted LIBOR Rate", "Applicable LIBOR Margin" and "LIBOR Base Rate" are
hereby deleted.
3. Removal of Revolving Credit Loans and Swing Line Loans; Term Loans
Only. As of the Amendment No. 5 Effective Date, the Term-Out Date shall have
occurred and all Revolving Credit Loans and Swing Line Loans outstanding shall
be converted to Term Loans. All references on or after the Amendment No. 5
Effective Date to Bank Loans and Loans shall refer solely to Term Loans.
Notwithstanding any term to the contrary in the Loan Agreement or the other Loan
Documents, including Section 2.3(c) thereof, on and after the Amendment No. 5
Effective Date, (i) no Term Loan may be converted to any other loan type and
(ii) no further Loans shall be made as Revolving Credit Loans or Swing Line
Loans under the Loan Agreement. All references in the Loan Agreement and the
other Loan Documents to the terms "Aggregate Revolving Credit Commitments",
"Revolving Credit Commitment", "Revolving Credit Commitment Period", "Revolving
Credit Exposure", "Revolving Credit Loan", "Revolving Credit Loans", "Revolving
Credit Obligations", "Scheduled Swing Line Commitment Termination Date", "Swing
Line Commitment", "Swing Line Commitment Amount", "Swing Line Commitment
Period", "Swing Line Commitment Termination Date", "Swing Line Exposure", "Swing
Line Interest Period", "Swing Line Loan", "Swing Line Loans", "Swing Line
Maturity Date" and "Swing Line Participation Amount" shall be deleted. In
addition, all provisions of the Loan Agreement and the other Loan Documents
relating or otherwise having an effect with respect to any of the defined terms
identified in the preceding sentence are hereby deleted to the extent of such
relation or effect.
4. Amendment of Section 2.1 of the Loan Agreement. Section 2.1 of the
Loan Agreement is hereby amended by deleting Section 2.1(b) in its entirety and
substituting the following new Section 2.1(b) in lieu thereof:
"(b) Term Loans. On the Amendment No. 5 Effective Date, all outstanding
Revolving Credit Loans shall be converted to Term Loans. At the request of
any Bank, the Borrowers shall deliver to such Bank a separate promissory
note of such Borrowers, in substantially the form of Annex A attached
hereto, dated as of the
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Amendment No. 5 Effective Date and completed in favor of such Bank in the
amount of such Bank's Percentage of the outstanding Loans and otherwise
with appropriate insertions."
5. Amendment of Section 2.2 of the Loan Agreement. Section 2.2 of the
Loan Agreement is hereby amended by:
(a) deleting Section 2.2(b) in its entirety and substituting the following
new Section 2.2(b) in lieu thereof:
"(b) [Intentionally omitted]."; and
(b) deleting Section 2.2(c)(iii) in its entirety and substituting the
following new Section 2.2(c)(iii) in lieu thereof:
"(c)(iii) Interest Rate on the Term Loans. Each Term Loan shall bear
interest, subject to the provisions of Sections 2.6 and 10.14 hereof,
until its Maturity on the principal amount thereof from time to time
outstanding at an annual rate equal to the Prime Rate plus the Applicable
Prime Rate Margin. The rate of interest of each Term Loan shall be
computed on the basis of a 360-day year for the actual number of days
elapsed."
6. Amendment of Section 2.5 of the Loan Agreement. Section 2.5 of the Loan
Agreement is hereby amended by:
(a) deleting Section 2.5(b) in its entirety and substituting in lieu
thereof the following new Section 2.5(b):
"(b) Mandatory Repayment of Term Loans. Principal on each Term Loan
shall be repaid by the Borrowers to the Agent in accordance with the
amortization schedule set forth below. Such payments (each a "Principal
Payment" and collectively, the "Principal Payments") shall be paid on or
before the dates specified below and shall be applied to permanently
reduce outstanding principal of the Term Loans. Any prepayments of
principal on the Term Loans made on or after August 1, 2002 pursuant to
Sections 2.5(a) and (c) and Article 2B hereof shall be applied against
the monthly Principal Payments in chronological order of the dates on
which such Principal Payments are to be made.
======================================================================
Date of Principal Payment Amount of Principal Payment
======================================================================
Amendment No. 5 Effective Date $1,500,000
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September 30, 2002 $500,000
----------------------------------------------------------------------
October 31, 2002 $1,250,000
----------------------------------------------------------------------
November 30, 2002 $1,250,000
----------------------------------------------------------------------
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----------------------------------------------------------------------
December 31, 2002 $1,500,000
----------------------------------------------------------------------
January 31, 2003 $1,500,000
----------------------------------------------------------------------
February 28, 2003 $23,500,000
----------------------------------------------------------------------
March 31, 2003 $1,000,000
----------------------------------------------------------------------
April 30, 2003 $18,000,000
----------------------------------------------------------------------
May 31, 2003 $1,000,000
----------------------------------------------------------------------
June 30, 2003 $1,000,000
----------------------------------------------------------------------
July 31, 2003 $1,000,000
----------------------------------------------------------------------
All amounts outstanding
August 31, 2003 under the Term Loans
----------------------------------------------------------------------
(b) deleting Sections 2.5(d) and (e) in their entirety and substituting the
following new Section 2.5(d) in proper alphabetical and numerical order in lieu
thereof:
"(d) Application of Payments. With respect to all payments pursuant to
subsections (a), (b) and (c) above, upon receipt of any notice of payment
and/or any such payment, the Agent shall promptly notify each Bank thereof
and, with respect to Term Loans, each such prepayment shall be effected pro
rata amongst all the Banks in proportion to each Bank's then outstanding
Term Loans."
7. Amendment of Article 2B of the Loan Agreement. Article 2B of the Loan
Agreement is hereby amended by deleting Sections 2B(c), (d) and (e) in their
entirety and substituting the following new Sections 2B(c), (d) and (e) in lieu
thereof:
"(c) Other than sales permitted pursuant to Section 8.3(g)(v) herein,
promptly following the occurrence of any sale, transfer or disposition of
Loans or other assets of either Borrower or any of their Subsidiaries
(other than of the Capital Stock of the Guarantor and following the
obtaining of any necessary consents or approvals hereunder or under any
other applicable agreements, for such sale, transfer or disposition), the
Borrowers shall repay (i) outstanding Bank Loans and (ii) outstanding
Indebtedness of the Borrowers permitted pursuant to Sections 8.2(i)(i)(A)
and 8.2(i)(ii) hereof, in an amount equal to one hundred percent (100%) of
the Net Cash Proceeds of such sale, transfer or disposition, with such Net
Cash Proceeds being allocated among the Banks, the Agent, the CP Holders
and the holders of the Indebtedness described in clause (ii) of this
paragraph (c) on a pro rata basis in accordance with the percentage
interest that each Person holds of the sum of the outstanding Term Loans
plus the outstanding principal amount of the CP Debt plus the outstanding
principal amount of Indebtedness of the Borrowers permitted pursuant to
Sections 8.2(i)(i)(A) and 8.2(i)(ii) hereof.
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(d) [Intentionally Omitted].
(e) Each payment pursuant to this Article 2B shall be applied pro rata
among the Banks in proportion to their Percentages."
8. Amendment of Article 2C.1 of the Loan Agreement. Article 2C.1 of the
Loan Agreement is hereby amended by deleting Article 2C.1 in its entirety and
substituting the following new Article 2C.1in lieu thereof:
"ARTICLE 2C.1 ALLOCATION OF FUNDS IN THE FLEET CONCENTRATION ACCOUNT.
SECTION 2C.1.1. Credit for Funds Received in Concentration Account.
--------------------------------------------------
(a) All funds and cash proceeds in the form of money, checks and
like items received in the Fleet Concentration Account as contemplated
by Section 6.23 hereof shall be credited, on the same Business Day on
which the Agent determines that good collected funds have been received,
and, prior to the receipt of good collected funds, on a provisional
basis until final receipt of good collected funds, and applied as
contemplated by Section 2C.1.2 hereof, (b) all funds and cash proceeds
in the form of a wire transfer received in the Fleet Concentration
Account as contemplated by Section 6.23 hereof shall be credited on the
same Business Day as the Agent's receipt of such amounts (or on such
later date as the Agent determines that good collected funds have been
received), and transferred as contemplated by Section 2C.1.2 hereof, and
(c) all funds and cash proceeds in the form of an automated clearing
house transfer received in the Fleet Concentration Account as
contemplated by Section 6.23 hereof shall be credited, on the next
Business Day following the Agent's receipt of such amounts (or on such
later date as the Agent determines that good collected funds have been
received), and transferred as contemplated by Section 2C.1.2 hereof. For
purposes of the foregoing provisions of this Section 2C.1.1, the Agent
shall not be deemed to have received any such funds or cash proceeds on
any day unless received by the Agent before 2:30 p.m. (Boston time) on
such day. Each of the Borrowers further acknowledges and agrees that any
such provisional credits or credits in respect of wire or automatic
clearing house funds transfers shall be subject to reversal if final
collection in good funds of the related item is not received by, or
final settlement of the funds transfer is not made in favor of, the
Agent in accordance with the Agent's customary procedures and practices
for collecting provisional items or receiving settlement of funds
transfers.
SECTION 2C.1.2. Transfer to Operating Account Prior to Event of
Default. Amounts received in the Fleet Concentration Account which are
determined by the Agent in its sole discretion to be good collected
funds shall be transferred to the Operating Account on a daily basis, so
long as an Event of Default has not occurred of which the account
officers of the Agent active
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on the Borrowers' accounts have knowledge. The Borrowers shall be
permitted to invest funds transferred to the Operating Account pursuant
to this Section 2C.1.2 in Cash Equivalents.
SECTION 2C.2. Repayments of Revolving Credit Loans After Event of
Default.
(a) Following the occurrence and during the continuance of an Event
of Default of which the account officers of the Agent active on the
Borrowers' accounts have knowledge but prior to the Agent's election to
exercise its right to accelerate pursuant to Section 9.1 herein, funds
transferred to the Fleet Concentration Account and for which the
Borrowers have received credits in an amount equal to such amounts due
and payable under the Senior Debt shall be applied to outstanding Senior
Debt and allocated among the Banks, the Agent, the CP Holders and the
holders of the outstanding Indebtedness permitted pursuant to Sections
8.2(i)(i)(A) and 8.2(i)(ii) hereof, in accordance with Section 9.5
hereof, and all remaining funds shall be transferred to the Operating
Account.
(b) Following the occurrence and during the continuance of an Event
of Default of which the account officers of the Agent active on the
Borrowers' accounts have knowledge and upon the Agent's exercise of its
right to accelerate pursuant to Section 9.1 herein, all funds
transferred to the Fleet Concentration Account and for which the
Borrowers have received credits shall be applied to the outstanding
Senior Debt and allocated among the Banks, the Agent, the Senior Note
Holders, the CP Holders and the holders of the outstanding Indebtedness
permitted pursuant to Sections 8.2(i)(i)(A) and 8.2(i)(ii) hereof, in
accordance with Section 9.5 hereof.
9. Amendment of Section 3.1 of the Loan Agreement. Section 3.1 of the
Loan Agreement is hereby amended by deleting Sections 3.1(e) and (f) in their
entirety and substituting the following new Sections 3.1(e), (f) and (g) in
proper alphabetical and numerical order in lieu thereof:
"(e) Amendment No. 5 Amendment Fee. The Borrowers agree to pay to the
Agent, for the pro rata account of each Bank (based on each Bank's
Percentage), on the Amendment No. 5 Effective Date, an amendment fee equal,
in the aggregate, to 0.25% of the principal amount of Term Loans
outstanding immediately prior to payment of the Principal Payment due on
the Amendment No. 5 Effective Date.
(f) Amendment No. 5 Deferred Fee. In the event that all Term Loans have
not been paid in full on or before August 31, 2003, the Borrowers agree to
pay to the Agent, for the pro rata account of each Bank (based on each
Bank's Percentage), a deferred fee in the amount of $150,000 for the pro
rata accounts of the Banks.
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(g) Nature of Fees. All fees hereunder shall, except for the deferred
fee described in Section 3.1(f) hereof, be fully earned as of the Amendment
No. 5 Effective Date, and shall in any case be non-refundable when paid.
The deferred fee described in Section 3.1(f) hereof and all other fees
payable hereunder shall be fully earned on the due date therefor."
10. Amendment of Section 4.18 of the Loan Agreement. Section 4.18 of the
Loan Agreement is hereby amended by (a) deleting the text "fiscal years ended
December 31, 1998 and December 31, 1999" in the first sentence thereof and
substituting the text "fiscal year ended December 31, 2001" in lieu thereof and
(b) deleting the text "December 31, 1999" in the second sentence thereof and
substituting the text "December 31, 2001" in lieu thereof.
11. Amendment of Section 5.2 of the Loan Agreement. Section 5.2 of the Loan
Agreement is hereby amended by deleting Section 5.2 in its entirety and
substituting the following new Section 5.2 in lieu thereof:
"Section 5.2. [Intentionally omitted]."
---------------------
12. Amendment of Section 6.1 of the Loan Agreement. Section 6.1 of the Loan
Agreement is hereby amended by deleting Section 6.1(c) in its entirety and
substituting the following new Section 6.1(c) in proper alphabetical order in
lieu thereof:
"(c) on the Amendment No. 5 Effective Date (based upon July 31,
2002 information adjusted to give effect to (a) the repayment of Bank
Loans and (b) the transactions contemplated by Sections 8.3(g)(v)) and
every calendar month thereafter or at any other time upon the Agent's
request, a Borrowing Base Certificate, signed by each of the chief
financial officer of the Borrowers and M.R. Weiser, Inc., or another
consultant satisfactory to the Borrowers and the Agent, covering the
period commencing with the first day following the last day of the
period covered by the preceding Borrowing Base Certificate; "
13. Amendment of Section 6.15 of the Loan Agreement. Section 6.15 of
the Loan Agreement is hereby by amended by deleting Section 6.15 in its entirety
and substituting the following new Section 6.15 in lieu thereof:
"Section 6.15. [Intentionally omitted]."
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14. Amendment of Section 6.19 of the Loan Agreement. Section 6.19 of the
Loan Agreement is hereby by amended by deleting Section 6.19 in its entirety and
inserting the following new Section 6.19 in lieu thereof:
"Section 6.19. Post-Closing Matters. The Borrowers shall complete each of
the post-closing matters specified in the Documentation Punch List Letter within
the applicable required periods following the Amendment No. 5 Effective Date
provided for therein."
15. Amendment of Section 6.23 of the Loan Agreement. Section 6.23 of the
Loan Agreement is hereby amended by deleting the text "Excess Dividend Payments"
in the second sentence thereof.
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16. Amendment of Section 6.24 of the Loan Agreement. Section 6.24 of the
Loan Agreement is hereby amended by deleting Section 6.24 in its entirety and
inserting the following new Section 6.24 in lieu thereof:
"Section 6.24. Independent Firm, etc. The Banks and the Agent shall have
access to M.R. Weiser at all times for, among other things, updates on the
status of M.R. Weiser's work and questions about the scope and substance
thereof. Bingham McCutchen LLP on behalf of the Banks and the Agent shall have
the right to hire Argus Management Corporation (or a similar consulting firm) as
their own consulting firm (with the expenses of such consulting firm to be for
the account of the Borrowers), and such consulting firm shall have, upon prior
notice to the Borrowers of the date and purpose of their inquiry, access at all
times to the officers, employees, records and other information of the Borrowers
and their Subsidiaries and shall be permitted to review all calculations
performed in connection with the preparation of each Borrowing Base Certificate
to be delivered pursuant to Section 6.1(c) hereof; provided, however, that
absent a Default or an Event of Default, such fees and expenses shall not
exceed, in the aggregate, $25,000 per month (it being understood that such
amount shall be pro rated for any partial calendar months). However, the
foregoing fee limitation shall not be imposed in the event the Borrowers fail to
provide to the Agent (i) on the Amendment No. 5 Effective Date and on Thursday
of each calendar week thereafter, a 13-week statement of cash flows in the form
currently being provided to the Agent and the Senior Note Holders, (ii) on the
Amendment No. 5 Effective Date and on the 10th and 25th of each calendar month
thereafter, monitoring reports (including without limitation the form of
monitoring report attached hereto as Annex B), in form and substance
satisfactory to the Agent, concerning the various actions proposed by the
Borrowers to comply with the schedule of Principal Payments set forth in Section
2.5(b) hereof, (iii) daily reports regarding cash balances of the Borrowers and
their Affiliates, which reports shall be in a form reasonably acceptable to the
Agent and (iv) evidence, in form and substance to the Agent, that each of the
items set forth in the Documentation Punch List Letter to be completed after the
Amendment No. 5 Effective Date has been completed in a manner satisfactory to
the Agent on or before November 15, 2002."
17. Amendment of Section 6.26 of the Loan Agreement. Section 6.26 of the
Loan Agreement is hereby amended by deleting Section 6.26 in its entirety and
inserting the following new Section 6.26 in lieu thereof:
"Section 6.26. Replacement of Servicer.
-----------------------
(a) In the event that Merrill Lynch, at any time under the Merrill
Lynch Facility, has exercised its right or has given notice that it will
exercise its right to terminate the rights and obligations of Medallion
Funding (or any permitted successor or assignee of Medallion Funding) as
servicer under the Merrill Lynch Facility and such notice has not been
rescinded within seven (7) Business Days after the Borrowers' receipt
thereof, the Borrowers shall promptly notify the Agent of such termination
or notice to terminate, and the Agent shall have the right to replace
either Borrower as servicer with respect to the Collateral granted pursuant
to the Loan Agreement. The Agent may exercise such right by giving written
notice to such Borrower.
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(b) In the event of such replacement of Medallion Funding as servicer
of the Collateral, each Borrower covenants (i) to safeguard the servicing
records and (ii) that all funds and loan documents relating to the
Collateral (collectively, the "Medallion Loan Records") shall, at the
option of the Agent, promptly upon receipt of notice of the Agent's intent
to appoint a new servicer for the Collateral, be submitted to the control
of the Agent or its designee and that, on the date such notice is received,
they will be transferred to the Agent or its designee, without prejudice to
the rights, if any, of either party against the other.
(c) Prior to the replacement of either Borrower as servicer of the
Collateral, the Agent may arrange for the collateral agent appointed
pursuant to the Collateral Agency Agreement (the "Collateral Agent") to
establish with the Agent a segregated account on behalf of such Borrower
(the "Alternate Collection Account"). The Agent shall notify the Borrowers
of the establishment of the Alternate Collection Account, specifying the
account number for such account. From and after receipt of such notice, all
collections arising with respect to the Collateral shall, whether credited
to the Fleet Concentration Account or otherwise received by either
Borrower, the Collateral Agent, the Agent, any replacement servicer
appointed by the Agent or any other Person, be deposited in the Alternate
Collection Account. The Collateral Agent shall distribute the funds on
deposit in the Alternate Collection Account in accordance with Article 2B
hereof on each date a Principal Payment is required under Section 2.5(b)
hereof and each date interest is payable under this Agreement. Each
Borrower hereby pledges to the Collateral Agent, for itself, the Agent, the
Banks and the Senior Note Holders, and grants the Collateral Agent a
security interest in the Alternate Collection Account and all funds that
may be on deposit there from time to time. Each Borrower further covenants
and agrees (i) to provide notification to the obligors in respect of any
Medallion Loan, Commercial Loan or other Collateral to make all payments in
respect of such Collateral directly to the Alternate Collection Account and
(ii) to otherwise cooperate with the Agent in ensuring that such payments
are made directly to the Alternate Collection Account.
(d) Notwithstanding any appointment of a new servicer hereunder,
neither Borrower shall be relieved of liability for all amounts due, or
responsibilities owed the Agent or the Banks hereunder. Each Borrower
forthwith upon receipt of notice of the Agent's appointment of a new
servicer for the Collateral shall (i) pay over to the Agent or its designee
all amounts held by it or subsequently received by it with respect to the
affected Collateral or the proceeds thereof, (ii) deliver to the Agent a
full accounting in respect of the affected Collateral, including a
statement showing the monthly payments and other amounts collected by or
with respect to such Collateral and a statement of moneys held in trust by
or on behalf of it for the payment of taxes, insurance premiums or other
charges with respect to the affected Collateral, (iii) otherwise use its
best efforts to effect the orderly and efficient transfer of servicing of
the affected Collateral to the designee selected by the Agent, and (iv)
arrange for the physical transfer and delivery to designee selected by the
Agent of all Collateral and copies thereof in its possession, and all
Medallion Loan Records."
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18. Amendment of Article 7 of the Loan Agreement. Article 7 of the Loan
Agreement is hereby amended by deleting Article 7 in its entirety and
substituting the following new Article 7 in lieu thereof:
"ARTICLE 7. FINANCIAL COVENANTS.
Each Borrower covenants and agrees that, until the Notes, together
with interest and all other Indebtedness of the Borrowers to the Agent
or the Banks under this Agreement and the other Loan Documents, are
paid in full, the Borrowers shall not, without the prior written
consent of the Agent and the Required Banks:
Section 7.1. [Intentionally Omitted].
---------------------
Section 7.2. [Intentionally Omitted].
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Section 7.3. Borrowing Base. Suffer or permit at any time the aggregate
unpaid balance of all Senior Debt to exceed the MFC Borrowing Base plus the
MBC Borrowing Base.
Section 7.4. [Intentionally Omitted].
---------------------
Section 7.5. [Intentionally Omitted].
---------------------
Section 7.6. [Intentionally Omitted].
---------------------
Section 7.7. [Intentionally Omitted]."
---------------------
19. Amendment of Section 8.3 of the Loan Agreement. Section 8.3 of the Loan
Agreement is hereby amended by deleting Sections 8.3(e) and (g) in their
entirety and substituting the following new Sections 8.3(e) and (g) in proper
numerical and alphabetical order in lieu thereof:
"(e) Make or maintain any Investment in any Subsidiary or Affiliate
(including by way of the acquisition of any Person that after taking into
account such Investment would become a Subsidiary or Affiliate), other than
(i) Investments of MFC in MBC or of MBC in MFC, and (ii) Investments
existing on the Amendment No. 3 Effective Date in the particular
Subsidiaries, and in the amounts with respect to each such Subsidiary,
listed on Schedule III hereto. In addition to the amounts on Schedule III
hereto, MFC may make an additional Investment in Freshstart Venture Capital
Corp. on or about the Amendment No. 5 Effective Date, which Investment
shall not exceed $5,000,000 in an aggregate amount, but neither Borrower
may make, nor shall either Borrower permit any of its Subsidiaries to make,
any Investments in the Guarantor, BL or any other Subsidiary following the
Amendment No. 3 Effective Date, except as provided in the remainder of this
paragraph. Investments consisting of intercompany receivables listed on
Schedule III hereto (the "Repaid Receivables") may be repaid and the
Borrowers may subsequently reinvest the proceeds of the Repaid Receivables
in the Subsidiary which repaid the Repaid Receivables; provided that at no
time shall the aggregate amount of the Borrowers' Investments in any
12
particular Subsidiary (other than MBC) exceed the amount with respect to
such Subsidiary listed on Schedule III hereto; and provided further that
until such time as (i) the Guarantor shall have repaid to MFC an aggregate
amount equal to at least $3,646,158 with respect to MFC's Investments made
on or prior to December 31, 2001 in the Guarantor, the Borrowers may not
reinvest the proceeds of Repaid Receivables in the Guarantor, (ii) BL shall
have repaid to MFC an aggregate amount equal to at least $2,345,111 with
respect to MFC's Investments made on or prior to December 31, 2001 in BL,
the Borrowers may not reinvest the proceeds of Repaid Receivables in BL,
and (iii) Medallion Funding shall have repaid to MFC an aggregate amount
equal to at least $5,090,378 with respect to MFC's Investments made on or
prior to December 31, 2001 in Medallion Funding, the Borrowers may not
reinvest the proceeds of Repaid Receivables in Medallion Funding. For
purposes of complying with the limitations contained in this Section
8.3(e), Investments by either Borrower or the Guarantor in Subsidiaries of
either Borrower on any day of any calendar month other than the last
Business Day of such calendar month shall be determined without regard to
allocable corporate overhead and salaries of MFC (to the extent that the
same is allocated in reasonable amounts consistent with past practices),
and without regard to the interest component of Investments consisting of
loans or advances from either Borrower to a Subsidiary of MFC or
intercompany receivables owed by Subsidiaries of either Borrower or the
Guarantor to either Borrower or the Guarantor (so long as such interest has
accrued at commercially reasonable "market" rates, consistent with past
practices) (such allocable corporate overhead and salaries and interest
amounts hereinafter referred to as "Allocated Investments"); provided
further that, as of the last Business Day of each month, Investments by
either Borrower or the Guarantor in Subsidiaries of either Borrower (other
than MBC), including Allocated Investment amounts, shall meet the
limitations set forth on Schedule III hereto; and provided further that if
as of the last Business Day of any month, Investments by either Borrower or
the Guarantor in Subsidiaries of either Borrower do exceed the limitations
set forth on Schedule III hereto, the Borrowers shall repay, or cause to be
repaid, Allocated Investment amounts in order to comply with the
limitations set forth on Schedule III hereto within fifteen (15) Business
Days following the last Business Day of such month and shall deliver to the
Agent and the Banks within fifteen (15) Business Days following the last
Business Day of such month a certificate demonstrating such compliance; and
provided further that in each such case referred to in this Section 8.3(e),
no Default or Event of Default shall have occurred or be continuing, or
would result therefrom.
(g) Sell, discount or otherwise dispose of Loans or any Collateral or
sell, discount or otherwise dispose of other Receivables or obligations
owing to a Borrower or any of its Subsidiaries, with or without recourse,
other than (i) in connection with the grant of any participation in
accordance with and to the extent permitted by Section 2.14 hereof, and
consistent in any event with past practices, (ii) for collection in the
ordinary course of business consistent with any past practices (with the
parties hereby agreeing that no securitization or like transaction
described in Section 8.4 hereof shall be deemed to be in the ordinary
course of business), (iii) to the Agent for the benefit of the Banks and,
with respect to the pledged shares of
13
the Guarantor and for so long as the Collateral Agency Agreement is in
effect, the Collateral Agent, for the benefit of the Banks, the Senior Note
Holders and the CP Holders, (iv) Loans disposed of to Affiliates in
compliance with Section 8.6 hereof and for cash for a price at least equal
to the outstanding principal amount thereof (without discount thereon)
(with the parties agreeing that no securitization or like transaction
described in Section 8.4 hereof shall be deemed permitted by this
subsection (iv)), (v) on or prior to the Amendment No. 5 Effective Date,
Medallion Loans in an aggregate principal amount not to exceed $10,000,000
including any accrued and unpaid interest and without discount thereon to
Medallion Funding in exchange for Commercials Loans of equivalent value
(which determination of equivalency shall take into account any cash
payment from Medallion Funding, in such amount as approved by the Agent,
but in no event to exceed $200,000, to achieve such equivalency and shall
be satisfactory to the Agent), all pursuant to documentation reasonably
acceptable to the Agent and (vi) with respect to the sales of Loans by
Borrowers to their Affiliates made prior to the Amendment No. 3 Effective
Date and described on Schedule 8.3(g) hereto, provided that in each such
case referred to in this Section 8.3(g), no Default or Event of Default
shall have occurred or be continuing, or would result therefrom."
20. Amendment of Section 8.5 of the Loan Agreement. Section 8.5 of the
Loan Agreement is hereby amended by deleting Section 8.5 in its entirety and
substituting the following new Section 8.5 in lieu thereof:
"Section 8.5. Restricted Payments. Make, or obligate itself to make,
any Restricted Payment, provided that after the Amendment No. 5 Effective
Date, MFC may make quarterly payments of the sum of (a) the minimum amount
of Dividends required to be paid by MFC to retain its status as regulated
investment company pursuant to Section 851(a) of the Code, plus (b) the
payment of Dividends required to be paid in order to avoid the imposition
of excise taxes pursuant to the Code, as determined by the Borrowers'
independent accountants on the basis of good faith estimates provided by
the Borrowers, provided that any such amount to be paid under this Section
8.5(b) shall be quantified by the Borrowers and in connection therewith,
each Borrower authorizes the Agent to communicate directly with the
Borrowers' independent accountants and authorizes such accountants to
disclose to Agent any and all financial statements and other supporting
financial documents and schedules including copies of any management letter
with respect to the business, financial condition and other affairs of such
Borrower and its Subsidiaries and, provided further that five (5) days
prior to any such payment, the Borrowers shall deliver a certificate
demonstrating pro forma compliance with Section 7.3 hereof."
21. Amendment of Section 8.6 of the Loan Agreement. Section 8.6 of the
Loan Agreement is hereby amended by deleting Sections 8.6(b) and (d) in their
entirety and substituting the following new Sections 8.6(b) and (d) in lieu
thereof:
"(b) Other than pursuant to the transaction permitted by Section
8.3(g)(v), sell or otherwise dispose of an amount of Loans unless,
immediately upon such sale or disposition, the Borrowers make, in
accordance with the provisions of Article 2B(c)
14
hereof, a mandatory prepayment of the outstanding Term Loans in an amount
equal to the aggregate principal amount, plus accrued interest, of the
Loans so sold or disposed of;
(d) Sell, discount or otherwise dispose of, to any Subsidiary or
Affiliate of either Borrower, any Medallion Loan originated by such
Borrower, except that MFC may make such transfers to MBC, provided that no
Default or Event of Default shall have occurred or be continuing, or would
result therefrom; or"
22. Amendment of Section 8.11 of the Loan Agreement. Section 8.11 of
the Loan Agreement is hereby amended by deleting Section 8.11 in its entirety
and substituting the following new Section 8.11 in lieu thereof:
"Section 8.11. Transactions with Affiliates.
----------------------------
(i) (a) Enter into, or cause, suffer, or permit to exist, any
transactions, including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service, with any
Affiliate on fair and reasonable terms that are less favorable to such
Borrower than those that would be obtainable at the time in a comparable
arm's-length transaction from any Person who is not an Affiliate; (b)
become an Affiliated Person of any Bank or any Affiliated Person of any
Bank known to the Borrowers; and the Borrowers shall use their best efforts
to ensure that none of its Affiliated Persons is or becomes an Affiliated
Person of any Bank or an Affiliated Person of any Bank known to the
Borrowers; (c) sell, discount or otherwise dispose of Loans or any
Collateral to any Affiliate, other than any sale permitted by Sections
8.3(g)(v) hereof; (d) sell, discount or otherwise dispose of other
Receivables or obligations owing to the Borrower or any of its Subsidiaries
to any Affiliate, with or without recourse, other than any transaction
permitted by Sections 8.3(g)(v) hereof; or (e) transfer any assets or cash
to any Affiliate, excluding for purposes hereof (1) the payment to an
Affiliate of such amounts as may be received on account of Loans serviced
by the Borrower on such Affiliate's behalf, after deduction of management
fees provided under the respective sale, transfer or participation
agreement, (2) salary and other usual and customary intercompany charges,
(3) on or prior to the Amendment No. 5 Effective Date, the transfer of a
capital contribution in the amount of $5,000,000 to Freshstart Venture
Capital Corp. and (4) transfers of Medallion Loans pursuant to Section
8.3(g)(v) hereof; provided, that in each such case referred to in this
Section 8.11(i), no Default or Event of Default has occurred or is
continuing, or would result therefrom.
(ii) After the Amendment No. 5 Effective Date, all intercompany
transactions concerning loans serviced by either Borrower for any Affiliate
or by any Affiliate for either Borrower, including, without limitation,
sales, payoffs, prepayments, amortization and interest, shall be paid by
the Borrower, and to the extent the Borrower has the right to do so, shall
be caused by the Borrower to be paid by any such Affiliate, in cash on a
monthly basis. In the event funds received on account of any such
intercompany transaction exceed $250,000 with respect to any particular
loan, settlement of such transaction shall be made in cash and shall occur
15
no later than five (5) Business Days after such funds are received by
either Borrower, as servicer."
23. Amendment of Section 8.17 of the Loan Agreement. Section 8.17 of the
Loan Agreement is hereby amended by deleting Section 8.17 in its entirety and
inserting the following new Section 8.17 in lieu thereof:
"Section 8.17. Executive Compensation. Directly or indirectly pay any
executive bonuses to, or otherwise increase the compensation in effect on the
Amendment No. 5 Effective Date of, either Alvin Murstein or Andrew Murstein
until payment in full of the Borrower Obligations."
24. Amendment of Section 9.1 of the Loan Agreement. Section 9.1 of the Loan
Agreement is hereby amended by:
(a) deleting the reference to 6.19 in Section 9.1(b);
(b) deleting the text "Section 6.7" in the parenthetical in Section 9.1(c)
and substituting the text "Sections 6.7 and 6.19" in lieu thereof;
(c) deleting the text "7.3(D)" in Section 9.1(b)(i) and replacing it with
the text "7.3";
(d) inserting the following parenthetical immediately before the semicolon
at the end of Section 9.1(d):
"(it being understood by the parties hereto that the provisions of this
Section 9.1(d) shall not apply to the Documentation Punch List Letter)"; and
(e) inserting the following new Section 9.1(o) in proper alphabetical order
therein:
"(o) if MFC shall not have made a capital contribution of $5,000,000 in
Freshstart Venture Capital Corp. upon receipt of a $4,100,000 transfer from
Medallion Funding on or about the Amendment No. 5 Effective Date."
25. Amendment of Section 9.2 of the Loan Agreement. Section 9.2 of the
Loan Agreement is hereby amended by adding the following new sentence at the end
of such Section:
"In addition, in case any one or more Events of Default shall occur and be
continuing, each Bank, if owed any amount with respect to the Loans, may, with
the consent of the Required Banks but not otherwise, proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or any instrument
pursuant to which the Borrower Obligations to such Bank are evidenced, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such Bank."
16
26. Amendment of Section 9.5 of the Loan Agreement. Section 9.5 of the Loan
Agreement is hereby amended by deleting Section 9.5 in its entirety and
substituting the following new Section 9.5 in lieu thereof:
"Section 9.5 Further Payments. In the event that the Term Loans and all
other amounts owing under the Loan Documents shall have been declared due and
payable pursuant to the provisions of this Section or that all outstanding Term
Loans shall not have been paid in full at Maturity, any funds received by the
Agent and the Banks from or on behalf of the Borrowers shall be remitted to, and
applied by, the Agent in the following manner and order: (a) first, to the
payment of interest on, and then the principal portion of, any Term Loans which
the Agent may have advanced on behalf of any Bank for which the Agent has not
then been reimbursed by such Bank or either Borrower; (b) second, to reimburse
the Agent and the Documentation Agent for any expenses due from either Borrower
pursuant to the provisions of Section 10.6, (c) third, to the payment of the
Fees, (d) fourth, to the payment of any other fees, expenses or amounts (other
than the principal of and interest on the Term Loans) payable by the Borrowers
to the Agent, the Documentation Agent or any of the Banks under the Loan
Documents, (e) fifth, to the payment, pro rata according to the Exposure
Percentage of each Bank, of interest due on the Term Loans, (f) sixth, to the
payment, pro rata according to Exposure Percentage of each Bank, of principal on
the Term Loans, of such principal, (g) seventh, any remaining funds shall be
paid to whomsoever shall be entitled thereto or as a court of competent
jurisdiction shall direct."
27. Amendment of Section 10.9 of the Loan Agreement. Section 10.9 of the
Loan Agreement is hereby amended by deleting the period at the end of Section
10.9(b) and inserting the following new text in lieu thereof:
"; provided, however, that the provisions of this Section 10.9(b) shall not
apply to the portion of any payment of principal that constitutes Citizens
Priority Return."
28. Amendment to Exhibits and Schedules to the Loan Agreement. The Exhibits
and Schedules to the Loan Agreement are hereby amended by deleting Exhibit A and
Schedules II and III thereto in their entirety and substituting in lieu thereof
Exhibit A and Schedules II and III attached hereto.
29. Amendment to Section 6.12 of the Security Agreement. Section 6.12 of
the Borrower Security Agreement is hereby amended by adding the following new
paragraph at the end of such section:
"To the extent that any Investment is made, or any Medallion Loan,
Commercial Loan or other asset is sold, transferred or disposed of and the
Investment, sale, transfer or disposition is permitted under the Loan Agreement,
the asset comprising the Investment or the sale, transfer or disposition of the
asset shall be free and clear of the liens created by this Agreement and the
other Loan Documents. However, in the case of any such permitted Investment,
sale, transfer or disposition, the liens created by this Agreement and the other
Loan Documents shall attach to the proceeds of the Investment, sale, transfer of
disposition.
17
In the case of an Investment, sale, transfer or disposition free and clear of
the liens created by this Agreement and the other Loan Documents, the Agent is
authorized to provide to the transferee appropriate evidences of release of the
liens. If the Investment, sale, transfer or disposition is permitted under the
Loan Agreement only in the absence of a Default or Event of Default, the Agent
shall be fully protected in providing such evidence of release so long as the
officers of the Agent active on the Borrowers' account have no actual knowledge
of the existence of a Default or Event of Default. Nothing contained in this
Section 6.12 shall result in a lien on or a security interest in the capital
stock of Freshstart Venture Capital Corp. in favor of the Agent."
30. Waivers.
-------
(a) Subject to the terms and conditions hereof, each of the Banks hereby
waives (i) the Borrowers' compliance with the requirement of Section 8.3(e)(i)
of the Loan Agreement (as in effect prior to the Amendment No. 5 Effective
Date); provided, however, that no Investments other than those listed on
Schedule III attached hereto exist or exceed the amounts listed opposite such
Investments therein and (ii) the Events of Default listed on Annex C attached
hereto.
(b) The Borrowers hereby acknowledge that (i) one or more Events of Default
have occurred under the Loan Agreement since May 15, 2002, (ii) the waivers
contained in this Amendment shall not become effective until the Amendment No. 5
Effective Date and (iii) the Agent has been collecting, and will continue to
collect until the Amendment No. 5 Effective Date, for the ratable benefit of the
Banks, and the Banks shall be entitled to retain, interest on all outstanding
Bank Loans at the rate of interest set forth in Section 2.6 of the Loan
Agreement.
31. Irrevocable Payment Instructions. If the Agent should at any time or
from time to time determine that any invoices for the fees and expenses of
counsel to the Agent or any invoices for the fees and expenses of Argus
Management Corporation or any other financial consultants hired by the Agent or
its counsel have not been reimbursed by the Borrowers to the Agent, the Agent
shall be entitled to debit the Borrowers' Operating Account in an amount equal
to the outstanding fees and expenses and to apply such amount to the
unreimbursed fees and expenses.
32. Representations and Warranties, Etc.
-----------------------------------
(a) Each of the Borrowers and the Guarantor hereby represents and
warrants to the Agent and the Banks as of the date hereof, and as of any
date on which the conditions set forth in Section 33 below are met, as
follows:
(i) The execution and delivery by each of the Borrowers and the
Guarantor of this Amendment, Amendment No. 8 to the Funding Agreement
and all other instruments and agreements required to be executed and
delivered by each of the Borrowers and the Guarantor in connection with
the transactions contemplated hereby or thereby or referred to herein
or therein (collectively, the "Amendment Documents"), and the
performance by each of the Borrowers and
18
the Guarantor of any of their obligations and agreements under the
Amendment Documents and the Loan Agreement and the other Loan
Documents, as amended hereby, are within the corporate or other
authority of each of the Borrowers and the Guarantor, as the case may
be, have been duly authorized by all necessary proceedings on behalf of
each of the Borrowers and the Guarantor, as the case may be, and do not
and will not contravene any provision of law or of any judgment, order
or decree applicable to or binding on the Borrowers (or any of them) or
the Guarantor, or of the Borrowers' or the Guarantor's charter, other
incorporation or organizational papers, or by-laws or any stock
provision or any amendment thereof or of any indenture, agreement,
instrument or undertaking binding upon the Borrowers (or either of
them) or the Guarantor.
(ii) Each of the Amendment Documents and the Loan Agreement and
other Loan Documents, as amended hereby, to which any of the Borrowers
or the Guarantor is a party constitutes a legal, valid and binding
obligation of such Person, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting generally the enforcement of
creditors' rights.
(iii) No approval or consent of, or filing with, any governmental
agency or authority is required to make valid and legally binding the
execution, delivery or performance by each of the Borrowers and the
Guarantor of the Amendment Documents or the Loan Agreement or other
Loan Documents, as amended hereby, or the consummation by each of the
Borrowers and the Guarantor of the transactions among the parties
contemplated hereby and thereby or referred to herein or therein.
(iv) The representations and warranties contained in Article 4 of
the Loan Agreement and in the other Loan Documents were true and
correct at and as of the date made. Except to the extent of changes
resulting from transactions contemplated or permitted by the Loan
Agreement and the other Loan Documents, changes occurring in the
ordinary course of business (which changes, either singly or in the
aggregate, have not been materially adverse to the interests of the
Banks) and to the extent that such representations and warranties
relate expressly to an earlier date and after giving effect to the
provisions hereof, such representations and warranties, after giving
effect to this Amendment, also are correct at and as of the date
hereof.
(v) Each of the Borrowers and the Guarantor has performed and
complied in all material respects with all terms and conditions herein
and in the Loan Documents required to be performed or complied with by
it prior to or at the time hereof, and as of the date hereof, after
giving effect to the provisions of this Amendment and the other
Amendment Documents, there exists no Event of Default or Default.
19
(b) Each of the Borrowers and the Guarantor acknowledges and agrees
that the representations and warranties contained in this Amendment shall
constitute representations and warranties referred to in Article 4 of the
Loan Agreement, a breach of which shall constitute an Event of Default.
33. Effectiveness.
-------------
(a) Except as set forth in Section 32(b) below, this Amendment shall become
effective (the "Amendment No. 5 Effective Date") upon the satisfaction of each
of the following conditions, in each case in a manner satisfactory to, and in
form and substance satisfactory to, the Agent on or before September 13, 2002:
(i) This Amendment shall have been duly executed and delivered by each
of the Borrowers, the Guarantors, the Agent and the requisite Banks and
shall be in full force and effect.
(ii) The Agent shall have received (A) evidence of the effectiveness of
an amendment to the Funding Agreement, in form and substance satisfactory
to the Agent, together with all requisite consents, in form and substance
satisfactory to the Agent, from the Funding Banks, including without
limitation consent for the $4,100,000 transfer to MFC for reimbursement of
allocable overhead and services rendered to Medallion Funding and (B)
evidence of the waiver of any defaults existing immediately prior to the
Amendment No. 5 Effective Date under the Funding Agreement.
(iii) The Agent shall have received (A) evidence of the effectiveness
of an amendment to the Note Purchase Agreements, in form and substance
satisfactory to the Agent, and (B) evidence of the waiver of any defaults
existing immediately prior to the Amendment No. 5 Effective Date under the
Note Purchase Agreements, each in form and substance satisfactory to the
Agent.
(iv) The Agent shall have received from the Borrowers payments of
principal equal to Citizens Priority Return, which together with all other
payments of principal made on or about the Amendment No. 5 Effective Date
shall equal not less than $1,500,000.
(v) The Agent shall have received, for the pro rata account of the
Banks, all accrued and unpaid interest on the principal amount of Loans
outstanding immediately prior to the Amendment No. 5 Effective Date at the
rate set forth in Section 2.6 of the Loan Agreement.
(vi) The Agent shall have received, for the pro rata account of each
Bank, amendment fees equal to, in the case of each Bank, 0.25% multiplied
by such Bank's Percentage of the principal amount of Term Loans outstanding
as of the date hereof (prior to giving effect to the Principal Payment
required on the Amendment No. 5 Effective Date).
(vii) All outstanding Swing Lines Loans shall be paid in full.
20
(viii) All reports, statements, schedules, certificates and other
documents required to be delivered to the Agent and each Bank pursuant to
Section 6.1 of the Loan Agreement, as amended by this Amendment, shall have
been so delivered.
(ix) The Agent shall have received a copy of a fully executed letter
between the Borrowers and a document imaging company, such letter to be in
form and substance reasonably satisfactory to the Agent, which letter sets
forth rates for such document imaging company to produce compact discs
containing imaged copies of all of the promissory notes, security
agreements and financing statements related to the Bank Loans constituting
Collateral, with such descriptive data items attached to each such
promissory note, security agreement and financing statement as may be
requested by the Agent to permit sorting and indexing.
(x) Except as specified in the Documentation Punch List Letter, the
Agent shall have received (A) copies of appropriate assignment documents
for intercompany loan transfers identified by M.R. Weiser as necessary or
desirable including, without limitation, all promissory notes owned by the
Borrowers marked to reflect any chain of assignment thereof to the
Borrowers and (B) satisfactory evidence that all necessary steps to rectify
any material deficiencies noted by M.R. Weiser in its review of the
Collateral have been performed.
(xi) The Agent shall have received from the Secretary of the Borrowers
a copy, certified by such Secretary to be true and complete as of such
date, of the resolutions of its Board of Directors or other management
authorizing, to the extent it is a party thereto, the execution, delivery
and performance of Amendment No. 5.
(xii) The Agent shall have received favorable legal opinions addressed
to the Agent and the Banks, dated as of the date hereof, in form and
substance satisfactory to the Agent, from counsel to the Borrowers and the
Guarantors and Delaware counsel to the Borrowers, concerning corporate or
other applicable entity authority matters and the enforceability of each of
the Amendment Documents, and the Loan Agreement and the other Loan
Documents as amended thereby, and concerning such other matters as the
Agent may request.
(xiii) Bingham McCutchen LLP shall have received payment of all fees
and expenses outstanding as of the date hereof, including, but not limited
to, fees and expenses occurred in connection with the preparation of this
Amendment and ancillary documentation and all fees and expenses incurred in
connection with the employment of Argus Management Corporation.
(xiv) The Agent shall have received such other items, documents,
agreements or actions as the Agent may reasonably request in order to
effectuate the transactions contemplated hereby.
(b) The amendments set forth in (i) Section 8.3(g)(v) (sale of up to
$10,000,000 of Medallion Loans to Medallion Funding in exchange for Commercial
Loans of equivalent value) and (ii) Section 8.11(i)(e)(3) (transfer of a
$5,000,000 capital contribution to Freshstart Venture
21
Capital Corp.) shall become effective as of the date hereof. In the event that
either of the transactions described in this Section 33(b) occur on or after the
date hereof and prior to the Amendment No. 5 Effective Date, the requirement
that no Default or Event of Default shall have occurred or be continuing, or
would result therefrom, shall not apply thereto.
(c) The Agent agrees to provide notice to the Borrowers of the occurrence
and date of the Amendment No. 5 Effective Date promptly upon satisfaction of
each of the foregoing conditions. Such notice shall be conclusive and binding on
all parties hereto.
34. Release. In order to induce the Agent and the Banks to enter into this
Amendment, each of the Borrowers, on behalf of itself and its Subsidiaries,
acknowledges and agrees that: (a) such Person does not have any claim or cause
of action against the Agent, the Arranger, the Collateral Agent or any Bank (or
any of its respective directors, officers, employees or agents); (b) such Person
does not have any offset right, counterclaim or defense of any kind against any
of its respective obligations, indebtedness or liabilities to the Agent, the
Arranger, the Collateral Agent or any Bank; and (c) each of the Agent, the
Arranger, the Collateral Agent and the Banks has heretofore properly performed
and satisfied in a timely manner all of its obligations to such Person. Each of
the Borrowers, on behalf of itself and its Subsidiaries, wishes to eliminate any
possibility that any past conditions, acts, omissions, events, circumstances or
matters would impair or otherwise adversely affect any of the Agent's, the
Arranger's, the Collateral Agent's and the Banks' rights, interests, contracts,
collateral security or remedies. Therefore, each of the Borrowers, on behalf of
itself and its Subsidiaries, unconditionally releases, waives and forever
discharges (x) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of the Agent, the Arranger, the Collateral Agent or any
Bank to such Person, except the obligations to be performed by the Agent, the
Arranger, the Collateral Agent or any Bank on or after the date hereof as
expressly stated in this Amendment, the Loan Agreement and the other Loan
Documents, and (y) all claims, offsets, causes of action, suits or defenses of
any kind whatsoever (if any), whether arising at law or in equity, whether known
or unknown, which such Person might otherwise have against the Agent, the
Arranger, the Collateral Agent, any Bank or any of its directors, officers,
employees or agents, in either case (x) or (y), on account of any past or
presently existing condition, act, omission, event, contract, liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind.
35. Miscellaneous Provisions.
------------------------
(a) Each of the Borrowers hereby ratifies and confirms all of its
obligations to the Agent and the Banks under the Loan Agreement and the other
Loan Documents, in each case as amended hereby, including, without limitation,
the Bank Loans, and each of the Borrowers hereby affirms its absolute and
unconditional promise to pay to the Banks and the Agent the Term Loans,
reimbursement obligations and all other amounts due or to become due and payable
to the Banks and the Agent under the Loan Agreement and the other Loan
Documents, as amended hereby. Except as expressly amended hereby, each of the
Loan Agreement and the other Loan Documents shall continue in full force and
effect. This Amendment and the Loan Agreement shall hereafter be read and
construed together as a single document, and all references to the Loan
Agreement in the Loan Agreement, any other Loan Document or any
22
agreement or instrument related to the Loan Agreement shall hereafter refer to
the Loan Agreement as amended by this Amendment.
(b) No consent or waiver herein granted shall extend to or affect any
obligations not expressly herein consented to or waived or shall impair any
right of the Agent or the Banks consequent thereon. No consent or waiver herein
granted shall extend beyond the term expressly set forth herein for such consent
or waiver, nor shall anything contained herein be deemed to imply any
willingness of the Agent or the Banks to agree to, or otherwise prejudice any
rights of the Agent and the Banks with respect to, any similar or dissimilar
consents or waivers that may be requested for any future period.
(c) Without limiting the expense reimbursement requirements set forth in
Section 10.6 of the Loan Agreement, each of the Borrowers agrees to pay on
demand all costs and expenses, including reasonable attorneys' fees, of the
Agent incurred in connection with this Amendment.
(d) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT OF LAWS).
(e) This Amendment may be executed in any number of counterparts, and all
such counterparts shall together constitute but one instrument. In making proof
of this Amendment it shall not be necessary to produce or account for more than
one counterpart signed by each party hereto by and against which enforcement
hereof is sought.
[signature pages immediately follow]
23
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Amendment to be executed on its behalf by its
officer thereunto duly authorized, as of the date first above written.
MEDALLION FINANCIAL CORP.
By:/s/ Alvin Murstein
---------------------------------------
Name: Alvin Murstein
Title: Chief Executive Officer
By:/s/ James Jack
------------------------------------------
Name: James E. Jack
Title: Executive Vice President &
Chief Financial Officer
MEDALLION BUSINESS CREDIT, LLC
By:/s/ Andrew Murstein
---------------------------------------
Name: Andrew Murstein
Title: Chief Executive Officer
By:/s/ James Jack
---------------------------------------
Name: James E. Jack
Title: Executive Vice President &
Chief Financial Officer
FLEET NATIONAL BANK (f/k/a Fleet Bank,
National Association), as Agent, as
Swing Line Lender and as one of the Banks
By:/s/ Mark A. Van Osdol
----------------------------------------
Name: Mark A. Van Osdol
Title: Senior Vice President
HSBC BANK USA
By: /s/ Walter J. Oemcke
---------------------------------------
Name: Walter J. Oemcke
Title: Vice President
CITIZENS BANK
By:/s/ T.D. Opie
----------------------------------------
Name: T.D. Opie
Title: VP
THE BANK OF NEW YORK
By:/s/ George P. Malanga
----------------------------------------
Name: George P. Malanga
Title: Senior Vice President
JPMORGAN CHASE BANK (f/k/a The Chase
Manhattan Bank)
By:/s/ Cynthia Lash
-----------------------------------------
Name: Cynthia Lash
Title: Vice President
ISRAEL DISCOUNT BANK OF NEW YORK
By:/s/ Robert J. Fainelli
-----------------------------------------
Name: Robert J. Fainelli
Title: First Vice President
By:/s/ Howard Weinberg
-----------------------------------------
Name: Howard Weinberg
Title: Senior Vice President
CITIBANK, N.A. (f/k/a European American Bank)
By:/s/ Daniel J. Horan
-----------------------------------------
Name: Daniel J. Horan
Title: Sr. Vice President
BANK LEUMI USA
By:/s/ John Koenigsberg /s/ Paul Tine
-----------------------------------------
Name: John Koenigsberg Paul Tine
Title: FVP VP
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:/s/ Fredrich N. Wilms
-----------------------------------------
Name: F.N. Wilms
Title: Vice President
The undersigned hereby reaffirms and ratifies all of its agreements and
obligations under the Loan Documents which such Person is a party to, and
confirms that it consents to the amendment of the Loan Agreement as set forth
above.
MEDALLION TAXI MEDIA, INC.
By:/s/ Andrew M. Murstein
---------------------------------
Name: Andrew M. Murstein
Title: Chief Executive Officer
By:/s/ Michael Leible
- ------------------------------------
Name: Michael Leible
Title: President