Exhibit 10.5
EXECUTION COPY
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MEDALLION LOAN SALE AND CONTRIBUTION AGREEMENT
Dated as of September 13, 2002
among
MEDALLION FUNDING CORP.,
as Seller
and
TAXI MEDALLION LOAN TRUST I
as Buyer
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TABLE OF CONTENTS
Section Page
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ARTICLE I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms...........................................1
SECTION 1.02. Other Terms.....................................................7
SECTION 1.03. Computation of Time Periods.....................................7
ARTICLE II.
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Purchase Facility...............................................7
SECTION 2.02. Purchases from the Seller.......................................8
SECTION 2.03. No Obligations or Taxes.........................................9
SECTION 2.04. Collections.....................................................9
ARTICLE III.
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase........................9
SECTION 3.02. Conditions Precedent to All Purchases..........................11
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller...................11
ARTICLE V.
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller............................15
SECTION 5.02. Reporting Requirements of the Seller...........................17
SECTION 5.03. Negative Covenants of the Seller...............................17
ARTICLE VI.
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer........................................19
SECTION 6.02. Rights of the Buyer............................................19
SECTION 6.03. Responsibilities of the Seller.................................19
SECTION 6.04. Maintenance of Perfection......................................20
ARTICLE VII.
TERMINATION EVENTS
SECTION 7.01. Termination Events.............................................21
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.01. Indemnities by the Seller......................................22
SECTION 8.02. Substitution and Retransfer of Medallion Loans.................23
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. Amendments and Waivers.........................................24
SECTION 9.02. Notices, Etc...................................................24
SECTION 9.03. No Waiver; Remedies............................................25
SECTION 9.04. Binding Effect; Assignability; Survival........................25
SECTION 9.05. Severability of Provisions.....................................26
SECTION 9.06. Costs, Expenses and Taxes......................................26
SECTION 9.07. Governing Law; Jurisdiction; Consent to Service of
Process; Waiver of Jury Trial..................................26
SECTION 9.08. No Proceedings.................................................28
SECTION 9.09. Further Assurances.............................................28
SECTION 9.10. No Waiver; Cumulative Remedies.................................28
SECTION 9.11. Counterparts...................................................28
SECTION 9.12. Merger and Integration.........................................28
SECTION 9.13. Headings.......................................................28
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EXHIBITS
EXHIBIT A Transfer Agreement
EXHIBIT B Locations Where Records Are Kept; Location of Chief Executive Office
EXHIBIT C Form of Purchase Notice
EXHIBIT D Eligible Medallion Loan Criteria
MEDALLION LOAN SALE AND CONTRIBUTION AGREEMENT
Dated as of September 13, 2002
MEDALLION FUNDING CORP., a New York corporation ("Medallion Funding"),
in its capacity as seller (the "Seller") and TAXI MEDALLION TRUST I, a Delaware
Business Trust (the "Buyer"), agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and
used throughout this Agreement (in addition to those defined above) are defined
in Article I of this Agreement.
(2) The Seller originates Medallion Loans and, in addition,
purchases Medallion Loans and Related Assets from Medallion Financial and other
Affiliates;
(3) The Buyer is a special-purpose entity that is 100% beneficially
owned by the Seller and has been established to purchase and otherwise acquire
Medallion Loans and Related Assets;
(4) The Seller wishes from time to time to offer to sell Medallion
Loans and Related Assets to the Buyer;
(5) The Buyer desires to procure such Medallion Loans and Related
Assets from the Seller; and
(6) The Buyer intends to finance all or a portion of the cost of
purchasing Medallion Loans and Related Assets from the Seller by borrowing money
under a Loan and Security Agreement dated as of September 13, 2002, by and among
the Buyer, the Seller and Merrill Lynch Bank, USA;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise defined in this Agreement, terms defined in the Loan and Security
Agreement are used herein as therein defined.
"Affiliate" shall mean, with reference to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
reference to any specified Person shall mean the power to direct the management
and policies of such specified Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
Schedule 1-1
"Business Day" shall mean any day other than a Saturday or Sunday or
any other day on which national banking associations or state banking
institutions in New York, New York, are authorized or obligated by law,
executive order or governmental decree to be closed.
"Closing Date" shall mean September 13, 2002
"Collection Account" shall mean a segregated account created and
maintained under the Loan and Security Agreement, governed by the Collection
Account Control Agreement, into which Collections of Medallion Loans or Related
Assets are remitted by or on behalf of Obligors.
"Collection Date" shall mean the date on which (i) all Medallion Loans
have been repaid in full, together with interest thereon and other amounts owing
in respect thereof and (ii) all other amounts owing to the Buyer hereunder shall
have been paid in full.
"Collections" shall mean all cash payments by or on behalf of the
Obligors in respect of Medallion Loans or Related Assets in the form of cash,
checks, wire transfers, electronic transfers or any other form of cash payment.
"Custodial Agreement" shall mean the Custodial Agreement, dated as of
the date hereof, among the Borrower, the Custodian, the Servicer and the Lender,
as the same shall be modified and supplemented and in effect from time to time.
"Custodian" shall mean Wells Fargo Bank Minnesota, National
Association, and its successors and permitted assigns, as custodian and trustee
under the Custodial Agreement.
"Debt" of any Person shall mean (i) indebtedness of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) obligations of such Person to pay the
deferred purchase price of property or services, (iv) obligations of such Person
as lessee under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, (v)
obligations of such Person in connection with any letter of credit issued for
the account of such Person, (vi) obligations of such Person under an interest
rate or currency swap, cap or similar agreement, (vii) obligations secured by
any lien or other charge upon property or assets owned by such Person, even
though such Person has not assumed or become liable for the payment of such
obligations, and (viii) obligations of such Person under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(i) through (vii).
"Eligible Medallion Loan" shall mean a Medallion Loan that satisfies
all of the criteria set forth on Exhibit D to this Agreement.
"Financial Medallion Loans" shall mean Medallion Loans (and Related
Assets) conveyed by Medallion Financial to the Seller through the Medallion Loan
Sale and Exchange Agreement.
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"Freshstart" shall mean Freshstart Venture Capital Corp., a New York
corporation.
"Governmental Authority" shall mean any country or nation, any
political subdivision of such country or nation, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government of any country or nation or political subdivision
thereof.
"Ineligible Medallion Loan" shall have the meaning assigned to that
term in Section 8.02 of this Agreement.
"Insolvency Event" shall mean with respect to a specified Person, (a)
the filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, administrator, sequestrator or similar official for such Person or
for any substantial part of its property, or ordering the winding-up or
liquidation of such Person's affairs; (b) the commencement against such Person
of an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or selling appointment of a receiver,
liquidator, assignee, custodian, administrator, sequestrator or similar official
for such Person or for any substantial portion of its property, or ordering the
winding up or liquidation of such Person's affairs, which case shall remain
undismissed for a period of 30 days or more; or (c) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, administrator, sequestrator or similar official
for such Person or for any substantial part of its property, or the making by
such Person of any general assignment for the benefit of creditors, or the
failure by such Person generally to pay its debts as such debts become due or
the admission by such Person in writing (of which a Responsible Officer of the
Custodian shall have written notice) of its inability to pay its debts
generally, or the adoption by the Board of Directors of such Person of a
resolution (of which a Responsible Officer of the Custodian shall have written
notice) which authorizes action by such Person in furtherance of any of the
foregoing.
"Lender" shall mean Merrill Lynch Bank USA and its successors and
permitted assigns for so long as it or they have unpaid advances under, or a
commission to advance under the Loan and Security Agreement.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other), preference, participation
interest, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC or comparable law of any jurisdiction to
evidence any of the foregoing.
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"Loan and Security Agreement" shall mean the Loan and Security
Agreement dated as of September 13, 2002, between the Buyer and the Lender, as
the same may from time to time be hereafter amended, modified or otherwise
supplemented.
"Loan Documents" shall mean, with respect to any Medallion Loan, the
related Obligor Note and any related loan agreement, security agreement,
mortgage, assignment of indemnity, financing statements and other documents,
instruments, certificates or assignments (including amendments or modifications
thereof) executed by the Obligor thereof or by another Person on the Obligor's
behalf in respect of such Medallion Loan and related Obligor Note, including,
without limitation, general or limited guaranties.
"Loan Sale Agreement" shall mean the Loan sale Agreement dated as of
September 13, 2002, between the Freshstart and the Seller, as amended and
supplemented from time to time.
"Loan Sale and Exchange Agreement" shall mean the Loan Sale and
Exchange Agreement dated as of September 13, 2002 between the Seller and
Medallion Financial, governing the terms and conditions upon which the Seller
shall acquire from Medallion Financial certain Medallion Loans and Related
Assets and Medallion Financial shall acquire from Seller certain commercial
loans and related assets.
"Medallion" shall mean a medallion or other license, (a) that was
issued by a municipality in New York, New York, Chicago, Illinois, Boston,
Massachusetts, Cambridge, Massachusetts, Newark, New Jersey, Philadelphia,
Pennsylvania or another location which the Lender has approved in writing; (b)
that gives its owner the right to operate a taxicab in such municipality; (c)
that is perpetually renewable by the issuing municipality; and (d) that is
readily transferable to another person in the secondary market, subject to
applicable rules and regulations.
"Medallion Financial" shall mean Medallion Financial Corp., a Delaware
corporation.
"Medallion Funding" shall mean Medallion Funding Corp., a New York
corporation.
"Medallion Loan" shall mean a loan purported to be sold or contributed
hereunder to Buyer, or substituted pursuant to Section 8.02 hereof, that is a
loan secured by a collateral assignment of a Medallion and evidenced by an
Obligor Note, arising from the extension of credit to an Obligor by an
Originator in the ordinary course of its business and appears on a Medallion
Loan Schedule at any time hereafter submitted to and accepted by the Buyer in
connection with a conveyance pursuant to Section 2.02, and shall include,
without limitation, all monies due or owing and all Collections and other
amounts received from time to time with respect to such loan and all proceeds
(including, without limitation, "proceeds" as defined in the UCC of the
jurisdiction the law of which governs the perfection of the interest on the
Medallion Loans) thereof; provided, however, that any Medallion Loan repurchased
by the Seller pursuant to Section 8.02 of this Agreement shall cease to be a
Medallion Loan as of the date of such repurchase.
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"Monthly Settlement Date" shall mean the 15th Business Day of each
month.
"Multiemployer Plan" shall means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding five
years was, contributed to by the Seller.
"Obligor" shall mean, with respect to any Medallion Loan, the Person
or Persons obligated to make payments with respect to such Medallion Loan,
including any co-signer or guarantor for a Person so obligated.
"Obligor Note" shall mean any promissory note evidencing the
indebtedness of an Obligor under a Medallion Loan, together with any
modifications thereto.
"Operative Documents" shall mean this Agreement, the Loan and Security
Agreement, the Loan Sale and Exchange Agreement, the Servicing Agreement, the
Custodial Agreement and the other agreements and instruments related to any of
the foregoing.
"Opinion of Counsel" shall mean a written opinion of counsel, who,
except as otherwise provided herein, may be counsel for, or an employee of, the
Person providing the opinion and who shall be reasonably acceptable to the
Buyer.
"Originator" shall mean an originator of Medallion Loans in its
capacity as such.
"Outstanding Balance" of any Medallion Loan at any time shall mean the
then outstanding principal balance thereof.
"Payment Date" shall mean the date on which the Loan and Security
Agreement shall have terminated and all amounts owing to all parties providing
financing, liquidity support, credit enhancement or other financial
accommodations to the Buyer thereunder shall have been paid in full.
"Permitted Participation Interest" shall mean a participation interest
in a Medallion Loan that is (i) subordinated to the rights of the Buyer therein,
as the case may be, on terms acceptable to the Buyer and pursuant to an
agreement in form and substance acceptable to the Buyer, in each case in its
sole and absolute discretion, and (ii) in the case of a Person that is not an
Affiliate of the Buyer, held by a holder that is acceptable to the Buyer in its
sole and absolute discretion.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or any other entity of similar nature.
"Purchase" shall mean a purchase by the Buyer of a Medallion Loan and
the Related Assets with respect thereto from the Seller pursuant to Article II.
"Purchase Price" has the meaning assigned to that term in Section
2.02(b).
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"Records" shall mean all contracts and other documents, books, records
and other information (including without limitation, computer programs, tapes,
discs, punch cards, data processing software and Related Assets and rights),
including, without limitation, all Loan Documents, maintained with respect to
Medallion Loans and the related Obligors.
"Related Assets" shall mean with respect to any Medallion Loan: (a) if
the Medallion Loan was transferred by Medallion Financial to Seller under the
Loan Sale and Exchange Agreement, all of the Seller's rights, remedies, powers
and privileges under the Loan Sale and Exchange Agreement with respect to such
Medallion Loan, (b) if the Medallion Loan or participation interest therein was
transferred by Freshstart to Seller under the Loan Sale Agreement, all of the
Debtor's rights, remedies, powers and privileges under the Loan Sale Agreement
with respect to such Medallion Loan or participation interest therein, (c) all
security interests or liens and property subject thereto from time to time
purporting to secure payment of such Medallion Loan, whether pursuant to the
Obligor Note related to such Medallion Loan, any other Loan Document or
otherwise, including, without limitation, the applicable Medallion, (d) all UCC
financing statements covering any collateral securing payment of such Medallion
Loan, (e) all guarantees, indemnities, warranties, insurance policies and
proceeds and premium refunds thereof and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Medallion Loan whether pursuant to the Obligor Note related to such Medallion
Loan or otherwise, (f) all Records and all other instruments and rights relating
to such Medallion Loan and (g) if such Medallion Loan is subject to a Permitted
Participation Interest, all rights remedies, powers and privileges of Seller
under the related participation agreement.
"Requirements of Law" shall mean any law, treaty, rule or regulation,
or final determination of an arbitrator or Governmental Authority, and, when
used with respect to any Person, the certificate of incorporation and by-laws or
other organizational or governing documents of such Person.
"Seller" has the meaning assigned to that term in the preamble hereto.
"Servicer" shall mean Medallion Funding Corp. in its capacity as
servicer under the Servicing Agreement, or such successor Servicer appointed
pursuant to the terms of the Servicing Agreement.
"Subsidiary" shall mean, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are at the time directly or indirectly owned by such Person.
"Termination Date" shall mean the earlier of (i) the date of the
declaration or automatic occurrence of the Termination Date pursuant to Section
7.01 and (ii) the date specified by the Seller or the Buyer in a written notice
to the other party given at least 30 days prior to such specified date.
"Termination Event" has the meaning assigned to that term in Section
7.01.
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"Transfer Agreement" shall mean an agreement in the form of the
agreement included herein as Exhibit A.
"Transfer Date" shall mean any day on which Medallion Loans are to be
transferred from Seller to Buyer hereunder, whether by sale or contribution of
capital.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
ARTICLE II.
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Purchase Facility. (a) From time to time the Seller may
make available to the Buyer its inventory of loans that could be eligible to be
Medallion Loans for the purpose of the Buyer's considering whether it wishes to
purchase any such loans. On the terms and conditions hereinafter set forth, the
Buyer may in its sole discretion purchase Medallion Loans and Related Assets
with respect thereto from the Seller from time to time during the period from
the date the conditions precedent to the initial Purchase in Section 3.01 are
satisfied to the Termination Date. Nothing in this Agreement shall be deemed to
be or construed as a commitment by the Buyer to purchase any Medallion Loans or
any Related Assets at any time.
(b) It is the intention of the parties hereto that each Purchase of
Medallion Loans and Related Assets made hereunder shall constitute a sale of
such assets, which sale is absolute and irrevocable and provides the Buyer with
the full benefits of ownership of the Medallion Loans and the Related Assets.
Neither the Seller nor the Buyer intends the transactions contemplated hereunder
to be, or for any purpose to be characterized as, loans from the Buyer to the
Seller secured by such assets. The sale of any Medallion Loans hereto shall be
sold, and purchased, "servicer release."
(c) In the event that, notwithstanding the intent of the parties, the
Medallion Loans are held to be the property of the Seller, or if for any other
reason this Agreement is held or deemed to create a security interest in the
Medallion Loans, then this Agreement shall be deemed to be a security agreement,
the conveyance provided for in Section 2.01(a) shall be deemed to be a grant by
the Seller to the Buyer of a security interest in all of the Seller's right,
title, and interest, whether now owned or hereafter acquired, in and to (i) all
accounts, contract rights, general intangibles, chattel paper, instruments,
documents, money, deposit accounts,
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certificates of deposit, goods, letters of credit, advices of credit and
uncertificated securities consisting of, arising from or relating to any of (A)
the Medallion Loans, (B) the Related Assets relating to such Medallion Loans,
including the Obligor Notes, related security agreements, and all other Loan
Documents, (C) all Collections, including all cash collections and other cash
proceeds of Medallion Loans, with respect to, and other proceeds of, such
Medallion Loans and (D) all monies from time to time on deposit in, and all
securities, instruments and other investments purchased from time to time with
monies on deposit in, any Lock-Box Account or the Collection Account (whether or
not allocated to any sub-account thereof); and (ii) all cash and non-cash
proceeds of any of the foregoing.
(d) In view of the intention of the parties hereto that the Purchases
of Medallion Loans made hereunder shall constitute sales of such Medallion Loans
rather than a loan secured by such Medallion Loans, the Seller agrees to note on
its financial statements that the Medallion Loans and the Related Assets have
been sold to the Buyer.
(e) In furtherance of each Purchase of Medallion Loan, the Seller
shall execute and deliver to Buyer a fully executed Transfer Agreement in the
form included herein as Exhibit A in which the Medallion Loans being transferred
by Seller to Buyer by such Purchase shall be identified.
SECTION 2.02. Purchases from the Seller.
(a) The initial Purchase shall be made on the Closing Date, provided
that a notice requesting such Purchase (such notice to be in substantially the
form of Exhibit C hereto) is received by the Buyer on or before the date of such
initial Purchase. Each subsequent Purchase shall be made on a Thursday, or the
next Business Day if such day is not a Business Day, including the Monthly
Settlement Date, provided, that a notice requesting such Purchase (such notice
to be in substantially the form of Exhibit C hereto) is received by the Buyer,
with a copy sent to the Lender, at least three (3) Business Days before such
subsequent purchase date. The Buyer shall promptly after the receipt of such
notice notify the Seller whether the Buyer has determined to make such Purchase.
(b) The purchase price (the "Purchase Price") for Medallion Loans
(together with the Related Assets) shall be the Outstanding Balance of such
Medallion Loans on the Transfer Date (after giving effect to the scheduled
payments due (whether or not received) on such Medallion Loans on or before the
Transfer Date) plus accrued interest to but not including the Transfer Date,
except that the Seller may treat a portion of the Outstanding Balance of
Medallion Loans as a contribution to the capital of the Buyer in accordance with
Section 2.02(d), in which case the Purchase Price with respect to the Medallion
Loans sold to the Buyer on the applicable Monthly Settlement Date will be
reduced as contemplated in Section 2.02(d). No offset of any kind by the Buyer
with respect to any purchase shall be permitted against the Purchase Price.
(c) The Buyer shall pay the Purchase Price for the Medallion Loans
(together with the Related Assets) sold by the Seller under this Agreement after
the Closing Date on the Transfer Date on which such Medallion Loans are
purchased, such payment to be made in cash, subject to Section 2.02(d). On the
date of each Purchase, the Buyer shall, upon satisfaction of
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the applicable conditions set forth in Article III, make available to the Seller
the Purchase Price in same day funds.
(d) Notwithstanding any provision herein to the contrary, if the Buyer
is unable or unwilling to pay the Purchase Price of all Medallion Loans to be
transferred to the Buyer on any Transfer Date, or if the Seller and the Buyer so
elect, on any such Transfer Date the Seller may designate in writing pursuant to
the Form of Purchase notice attached hereto as Exhibit C, all or a portion of
the Medallion Loans (but not a portion of any individual Medallion Loan)
proposed to be transferred to the Buyer on such Transfer Date as a capital
contribution to the Buyer. In such event, the Purchase Price payable with
respect to such Purchase shall be reduced by the aggregate amount of the
Purchase Price that would be attributable to the contributed Medallion Loans if
such Medallion Loans were sold, rather than contributed, to the Buyer hereunder;
provided, however, that Medallion Loans contributed to the Buyer as capital
shall otherwise constitute Medallion Loans for purposes of this Agreement. The
Seller and the Buyer herby agree to note any such capital contribution on their
respective financial statements.
SECTION 2.03. No Obligations or Taxes. Seller represents and warrants
that (i) there will be no obligations of the Seller under the Medallion Loans
conveyed to Buyer hereunder after the Closing Date remaining to be performed
(and the exercise by the Buyer of any of its rights thereunder or hereunder
shall not relieve the Seller of such obligations if they do exist) and (ii)
there will not be payable any taxes, including without limitation, sales, excise
and personal property taxes, in connection with the Medallion Loans conveyed to
Buyer hereunder after the Closing Date, except for income and similar taxes in
connection with the Medallion Loans payable by the Seller for periods on and
prior to the Closing Date and payable by the Buyer for periods after the Closing
Date.
SECTION 2.04. Collections.
(a) Any Collections of Medallion Loans received (or deemed to have
been received) by the Seller after the applicable Transfer Date shall not be
commingled with other funds and shall be remitted directly to the Buyer by
depositing such Collections in the Collection Account within one Business Day of
the Seller's receipt thereof.
(b) If, after the Transfer Date with respect to a Medallion Loan, the
Buyer receives any amounts in respect of a scheduled payment due on or before
the Transfer Date of such Medallion Loan, the Buyer shall remit such amounts to
the Seller within on Business Day of Buyer's receipt thereof.
ARTICLE III.
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The initial
Purchase hereunder is subject to the condition precedent that the Buyer shall
have received on or before the date of such Purchase the following, each (unless
otherwise indicated) dated such date, in form and substance satisfactory to the
Buyer:
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(a) a copy of the resolutions of the Board of Directors of the Seller
approving this Agreement and the other Operative Documents to be delivered by it
hereunder and the transactions contemplated hereby, certified by its Secretary
or Assistant Secretary;
(b) a certificate of the Secretary or Assistant Secretary of the
Seller certifying (i) the names and true signatures of the officers authorized
on its behalf to sign this Agreement and the other documents to be delivered by
it hereunder (on which certificate the Buyer may conclusively rely until such
time as the Buyer shall receive from the Seller a revised certificate meeting
the requirements of this subsection (b)), (ii) a copy of the Certificate of
Incorporation of the Seller and (iii) a copy of the Seller's by-laws;
(c) duly executed Financing Statements (Form UCC-1), in proper form
for filing, naming Medallion Financial as the debtor/seller/assignor of the
Financial Medallion Loans and Related Assets and the Seller as secured
party/purchaser/assignor and the Buyer as assignee or other documents, as may be
necessary or, in the opinion of the Buyer, desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect Medallion Funding's,
and therefore, the Buyer's, interests in the Financial Medallion Loans;
(d) duly executed Financing Statements (Form UCC-1), in proper form
for filing, naming the Seller as the debtor/seller of the Medallion Loans and
Related Assets and the Buyer as secured party/purchaser/assignor and the
Custodian as assignee thereof, or other documents, as may be necessary or, in
the opinion of the Buyer, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the Buyer's, interests in the
Medallion Loans and Related Assets;
(e) receipt-stamped copies of proper Financing Statements (Form
UCC-3), if any, necessary to release all security interests and other rights of
any Person in the Medallion Loans and Related Assets previously granted by the
Seller or Medallion Financial;
(f) certified copies of requests for information or copies (Form
UCC-11) (or a similar search report certified by a party acceptable to the
Buyer), dated a date reasonably near to the date of the initial Purchase,
listing all effective financing statements which name the Medallion Financial or
the Seller (under its present name and any previous name) as debtor and which
are filed in the jurisdictions in which filings were made pursuant to subsection
(d) above, together with copies of such financing statements (none of which
shall cover any Medallion Loans, related Loan Documents and/or Related Assets,
except (x) those filed pursuant to this Agreement, the Loan Sale and Exchange
Agreement or the Loan and Security Agreement, (y) those as to which Forms UCC-3
have been filed as provided in clause (e) above, and (z) as otherwise agreed by
the Buyer);
(g) an opinion of Willkie Farr & Gallagher, counsel to the Seller,
Buyer and Medallion Financial, regarding the characterization of the Financial
Medallion Loans sold by Medallion Financial to Medallion Funding pursuant to the
Loan Sale and Exchange Agreement and the Medallion Loans sold by Medallion
Funding to the Trust pursuant to the Medallion Loan Sale and Contribution
Agreement as true sales or contributions of, and not loans secured by, the
Financial Medallion Loans and the Medallion Loans, as applicable, and as to the
substantive
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nonconsolidation of the Seller and Medallion Financial with the Buyer in a
bankruptcy of the Seller and/or the Buyer; and
(h) an opinion of Willkie Farr & Gallagher, counsel to the Seller, as
to perfection, priority, certain corporate matters and such other matters as the
Buyer may reasonably request.
SECTION 3.02. Conditions Precedent to All Purchases. Each Purchase
(including the initial Purchase) from the Seller by the Buyer shall be subject
to the further conditions precedent that:
(a) on the date of such Purchase the following statements shall be
true and the Seller by accepting the amount of such Purchase shall be deemed to
have certified that:
(i) The representations and warranties contained in Section 4.01
are correct on and as of such day as though made on and as of such date;
(ii) No event has occurred and is continuing, or would result
from such Purchase, which constitutes a Termination Event or would constitute a
Termination Event but for the requirement that notice be given or time elapse or
both; and
(iii) the Custodian shall have received (i) each Obligor Note
with respect to each Medallion Loan purchased by the Buyer, together with each
other "instrument" (as defined in the UCC of the jurisdiction the law of which
governs the perfection of the interest in such Medallion Loan created hereunder)
evidencing such Medallion Loan, duly endorsed in blank, (ii) executed originals
of each of the other Loan Documents related to the Medallion Loans included in
such Purchase and (iii) all Records related to such Medallion Loans.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The Seller
represents and warrants as follows as of the Closing Date and the date of each
Purchase:
(a) As of the date on which a Medallion Loan is sold hereunder, such
Medallion Loan is an Eligible Medallion Loan
(b) Existence; Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has full power and authority to own its properties and conduct its
business as presently owned or conducted, to execute, deliver and perform its
obligations under this Agreement and the other Operative Documents. The Seller
is duly qualified to do business and is in good standing as a foreign
corporation, and has obtained all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals could have a material adverse effect on the Seller's ability to
perform its obligations under the Operative Documents.
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(c) Authority and Authorization; Enforceability; Approvals; Absence of
Adverse Notice. The Seller has the power, authority and legal right to make,
deliver and perform this Agreement and each of the Operative Documents to which
it is a party and all of the transactions contemplated hereby and thereby, and
has taken all necessary action to authorize the execution, delivery and
performance of each of the Operative Documents to which it is a party,. This
Agreement and each of the Operative Documents to which the Seller is a party
constitutes the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with their respective terms except as the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization and other similar laws of general application
affecting creditors' rights generally and by general principles of equity
(whether such enforceability is considered in a proceeding in equity or at law).
No consent of any other party and no consent, license, approval or authorization
of, or registration or declaration with, any governmental authority, bureau or
agency (including, without limitation, any Taxi Commission) is required in
connection with the execution, delivery or performance by the Seller any
Operative Document to which it is a party, or the validity or enforceability of
any Operative Document or the Medallion Loans, other than such as have been met
or obtained. The Seller has not received any notice, nor does the Seller have
any knowledge or reason to believe, that any Taxi Commission or other
Governmental Authority intends to seek the cancellation, termination or
modification of any of its licenses or permits, or that valid grounds for such
cancellation, termination or modification exist.
(d) No Breach. The execution, delivery and performance of this
Agreement and all other agreements and instruments executed and delivered or to
be executed and delivered pursuant hereto will not (i) create any Adverse Claim
on the Medallion Loans and Related Assets other than as contemplated in the Loan
Agreement or (ii) violate any provision of any existing law or regulation or any
order or decree of any court, regulatory body or administrative agency or the
certificate of formation or by-laws of the Seller or any mortgage, indenture,
contract or other agreement to which the Seller is a party or by which the
Seller or any property or assets of the Seller may be bound.
(e) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is presently pending or, to the
knowledge of the Seller, threatened against the Seller or any properties of the
Seller or with respect to this Agreement which, if adversely determined, could
have a material effect on the business, assets or financial condition of the
Seller or which would draw into question the validity of this Agreement, any
Operative Document to which the Seller is a party, or any of the other
applicable documents forming part of the Medallion Loans and Related Assets.
(f) No Adverse Selection. In selecting the Medallion Loans to be sold
pursuant to this Agreement, no selection procedures were employed which are
intended to be, of had the effect of being, adverse to the interests of the
Buyer.
(g) Bulk Transfer. The sale of the Medallion Loans by the Seller to
the Buyer pursuant to this Agreement is in the ordinary course of business for
the Seller and is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
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(h) Adverse Orders. No injunction, writ, restraining order or other
order of any nature adversely affects the Seller's performance of its
obligations under this Agreement or any Operative Document to which the Seller
is a party.
(i) Chief Executive Office; Jurisdiction of Organization. On the
Effective Date, the Seller's chief executive office is (and the location of the
Seller's records regarding the Medallion Loans), and during the four months
immediately preceding July 1, 2001 such office has been, located at 437 Madison
Avenue, New York, New York 10022. On the Effective Date, the Seller's
jurisdiction of organization is the State of New York.
(j) Legal Name. The Seller's legal name is as set forth in this
Agreement; the Seller has not changed its name since its formation; the Seller
does not have trade names, fictitious names, assumed names or "doing business
as" names.
(k) Valid Interest. No transfer of any Medallion Loan or any other
Related Asset by the Seller to the Buyer constitutes a fraudulent transfer or
fraudulent conveyance under the United States Bankruptcy Code or applicable
state bankruptcy or insolvency laws or is otherwise void or voidable or subject
to subordination under similar laws or principles or for any other reason. The
transfer of Medallion Loans and other Related Assets by Medallion Financial to
the Seller under the Loan Sale and Exchange Agreement constitutes a true and
valid assignment and transfer for consideration of such Medallion Loans and
other Related Assets under applicable state law (and not merely a pledge of such
Medallion Loans and other Related Assets for security purposes), enforceable
against the creditors of Medallion Financial, and any Medallion Loans and other
Related Assets so purchased will not constitute property of Medallion Financial.
(l) Solvency. The Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated hereby; the Seller is
paying its debts as they become due; and the Seller, after giving effect to the
transactions contemplated hereby, will have adequate capital to conduct its
business.
(m) Consideration. Taking into account the capital contribution
herein, the Seller has received fair consideration and reasonably equivalent
value in exchange for the sale of the Medallion Loans by Seller, hereunder.
(n) Adverse Agreements. There are no agreements in effect adversely
affecting the rights of the Buyer to make, or cause to be made, the grant of the
security interest in the Medallion Loans and Related Assets contemplated by the
Loan Agreement.
(o) No Default. No Default or Event of Default has occurred and is
continuing.
(p) Lock-Box Accounts. Seller has not established, and there do not
currently exist for the benefit of Seller or any of Seller's creditors any
lock-box accounts for the receipt of payments from Obligors in respect of
Medallion Loans. All Obligors of the Medallion Loans transferred by Seller to
Buyer hereunder have been, or upon transfer hereunder will be, instructed by
invoice to make payments only to the Buyer or its Order and such instructions
are or will be in full force and effect at the time of transfer hereunder.
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(q) Separate Corporate Existence. The Seller is entering into the
transactions contemplated by this Agreement in reliance on the Buyer's identity
as a separate legal entity from the Seller and each of its Affiliates other than
the Buyer, and acknowledges that the Buyer and the other parties to the
Operative Documents are similarly entering into the transactions contemplated by
the other Operative Documents in reliance on the Buyer's identity as a separate
legal entity from the Seller and each such other Affiliate.
(r) Underwriting and Servicing. Each of the Medallion Loans was
underwritten in accordance with the Underwriting Guidelines and is being
serviced in conformance with the applicable Seller's standard underwriting,
credit, collection, operating and reporting procedures and systems and otherwise
in accordance with Accepted Servicing Practices and the Credit and Collection
Policy.
(s) The Seller has not assigned, pledged, or otherwise conveyed or
encumbered any Medallion Loan or other Related Assets to any other Person, and
immediately prior to the sale of such Medallion Loan or any other Related Assets
to the Buyer, the Seller was the sole owner of such Medallion Loan and such
other Related Assets and had good and marketable title thereto, free and clear
of all Liens other than those created hereunder and those in favor of the
applicable Buyer, except for Permitted Participation Interests and Liens to be
released simultaneously with sale hereunder.
(t) Operative Documents; Seller Title. The Seller has delivered to the
Buyer true and correct copies of all material agreements between each Obligor,
on the one hand, and the applicable Originator, and any assignee thereof, on the
other. Neither the Seller nor any Affiliate (excluding for this purpose the
Buyer and Medallion Financial) party thereto is in default of any of its
obligations under any Operative Document in any material respect. At the time of
transfer of each Medallion Loan by the Seller to the Buyer, the Seller shall be
the lawful owner of, and have good title to, such Medallion Loan and the Related
Assets, free and clear of any Liens (except for Permitted Participation
Interests and Liens created hereunder and under the Loan Sale and Exchange
Agreement or otherwise contemplated by the Operative Documents). All such
Medallion Loans and Related Assets are transferred to the Buyer without recourse
to the Seller except as described herein which, in any event, shall not include
any recourse to the Seller on account of a credit default under a Medallion
Loan. The Obligor is not in default of any of its obligations under any
Medallion Document in any material respects.
(u) Taxes. The Seller has filed or caused to be filed all federal,
state and local tax returns which are required to be filed by it, and has paid
or caused to be paid all taxes shown to be due and payable on such returns or on
any assessments received by it, other than any taxes or assessments, the
validity of which are being contested in good faith by appropriate proceedings
and with respect to which the Seller has set aside adequate reserves on its
books in accordance with generally accepted accounting principles and which have
not given rise to any Liens.
(v) Loan Documents. The Seller has heretofore caused all original
copies of all Obligor Notes related to the Medallion Loans conveyed in the
initial Purchase to be delivered to the Custodian, as assignee of the Buyer.
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ARTICLE V.
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller. From the date
hereof until the later of the Termination Date or the Collection Date, the
Seller will, unless the Buyer shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to its business
and properties or the Medallion Loans.
(b) Preservation of Corporate Existence. Observe all corporate
procedures required by its charter and By-Laws and preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals could have a material adverse effect on (i) the interests of the Buyer
hereunder or in the Medallion Loans, (ii) the collectibility of any Medallion
Loan or (iii) the ability of the Seller to perform its obligations hereunder or
under any other Operative Document.
(c) Inspection of Books and Records. Grant the Buyer and independent
accountants appointed by, or other agents of, either of the foregoing, the
right, no more frequently than two times during any period of twelve consecutive
months or at any time if a Termination Event, or an event that with the giving
of notice, the lapse of time or both would constitute a Termination Event, has
occurred and is continuing, upon reasonable prior written notice to the Seller,
to visit the Seller, to discuss the affairs, finances and accounts of the Seller
with, and to be advised as to the same by, its officers, and to examine the
books of account and records of the Seller, and to make or be provided with
copies and extracts therefrom, and, upon reasonable notice, to discuss the
affairs, finances and accounts of the Seller with, and to be advised as to the
same by, the independent accountants of the Seller (and by this provision Seller
authorizes such accountants to discuss such affairs, finances and accounts,
whether or not a representative of the Seller is present, it being understood
that nothing contained in this Section 5.01(c) is intended to confer any right
to exclude any such representative from such discussions), all at such
reasonable times and intervals and to such reasonable extent during regular
business hours as the Buyer (or designated representative thereof) or such
accountants or agents appointed by any of the foregoing, as applicable, may
desire.
(d) Keeping of Records and Books of Account. Keep proper books of
record and account, which shall be maintained or caused to be maintained by the
Seller (by itself or through its agents) and shall be separate and apart from
those of any Affiliate of the Seller, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Seller in
accordance with generally accepted accounting principles consistently applied.
(e) Location of Records. Keep its principal place of business and
chief executive office, and the office where it keeps the books, records and
documents regarding the Medallion Loans and Related Assets, at the address of
the Seller referred to in Section 9.01 and
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listed upon Exhibit B or, upon 30 days prior written notice to the Buyer, at any
other location within the United States with respect to which all applicable
action required by Section 6.04 shall have been taken and completed.
(f) Credit and Collection Policies. Comply in all material respects
with the Credit and Collection Policy in regard to each Medallion Loan and the
Related Assets.
(g) Collections. Instruct all Obligors to cause all Collections to be
forwarded to the Buyer or to its order and if the Seller shall receive any
Collections, the Seller shall hold such Collections in trust and remit such
Collections to the Buyer or to its order as soon as practicable, but in no event
later than one Business Day after receipt thereof.
(h) Segregation of Collections. Take all necessary actions to prevent
the deposit of any funds other than Collections in respect of Medallion Loans
into the account in which Seller holds any Collections it may receive.
(i) Loan Sale and Exchange Agreement. At its expense timely perform
and comply in all material respects with all provisions, covenants and other
promises required to be observed by it under the Loan Sale and Exchange
Agreement, maintain the Loan Sale and Exchange Agreement in full force and
effect, enforce the Loan Sale and Exchange Agreement in accordance with its
terms, and make to any party to the Loan Sale and Exchange Agreement such
reasonable demands and requests for information and reports or for action as the
Seller is entitled to make thereunder.
(j) Computer Services. Take such action as may be necessary and
commercially reasonable (including, without limitation, obtaining any necessary
consents from licensors or other Persons) to provide the Servicer and the
Custodian with such licenses, sublicenses and/or assignments of contracts as the
Servicer or the Custodian shall from time to time require with regard to all
services and computer hardware or software that relate to the servicing of the
Medallion Loans or the other Related Assets.
(k) Separate Corporate Existence. Take all actions required and within
its corporate power and consistent with all applicable rules and laws regarding
governance to maintain the Buyer's status as a separate legal entity, including,
without limitation, (i) not holding the Buyer out to third parties as other than
an entity with assets and liabilities distinct from the Seller; (ii) not holding
itself out to be responsible for the debts of the Buyer or, other than by reason
of owning capital stock of the Buyer, if any, for any decisions or actions
relating to the business and affairs of the Buyer; (iii) causing any financial
statements consolidated with those of the Buyer to state that the Buyer is a
separate corporate entity with its own separate creditors who, in any
liquidation of the Buyer, will be entitled to be satisfied out of the Buyer's
assets prior to any value in the Buyer becoming available to the Buyer's equity
holders; (iv) taking such other actions as are necessary on its part to ensure
that all corporate procedures required by its charter and the Buyer's governing
documents are duly and validly taken; (v) keeping, with respect to the Seller,
correct and complete records and books of account and corporate minutes; and
(vi) not acting in any other matter that could foreseeably mislead others with
respect to the Buyer's separate identity.
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(l) The Seller is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments arising in
the ordinary course of business) to the Pension Benefit Guaranty Corporation (or
any successor thereto) under ERISA.
(m) There is not now, nor will there be at any time in the future, any
agreement or understanding between Medallion Funding and the Buyer (other than
as expressly set forth in the Loan Documents) providing for the allocation or
sharing of obligations to make payments or otherwise in respect of any taxes,
fees, assessments or other governmental charges.
SECTION 5.02. Reporting Requirements of the Seller. From the date
hereof until the later of the Termination Date or the Collection Date, the
Seller will, unless the Buyer shall otherwise consent in writing, furnish to the
Buyer:
(a) Notice of Termination Events. Immediately upon the Seller's
becoming aware (i) of the occurrence of a Termination Event or an event which,
with the giving of notice or lapse of time or both, would constitute a
Termination Event, the statement of the chief financial officer or chief
accounting officer of the Seller setting forth details of such event and the
action which the Seller proposes to take with respect thereto, and (B) as soon
as possible and in any event within five Business Days after the occurrence
thereof, notice of any other event, development or information which is
reasonably likely to materially adversely affect the condition (financial or
otherwise), business, operations, property or prospects of the Seller or the
ability of the Seller to perform its obligations under this Agreement or any
other Operative Document.
(b) Loan Sale and Exchange Agreement. Promptly and in any event within
one Business Day after the Seller's receipt thereof, copies of all notices,
requests, and other documents (excluding regular monthly reports) delivered or
received by the Seller under or in connection with the Loan Sale and Exchange
Agreement.
(c) Other Information. Promptly, from time to time, such other
information, documents, records or reports respecting the Medallion Loans or the
conditions or operations, financial or otherwise, of the Seller (including,
without limitation, reports and notices relating to the Seller's actions under
and compliance with ERISA) as the Buyer may from time to time request in order
to perform its obligations hereunder or under any other Operative Document or to
protect the interests of the Buyer under or as contemplated by this Agreement
and the other Operative Documents.
SECTION 5.03. Negative Covenants of the Seller. From the date hereof
until the later of the Termination Date or the Collection Date, the Seller will
not without the written consent of the Buyer:
(a) No Liens. Other than Permitted Participation Interests or pursuant
to a conveyance hereunder or as otherwise contemplated herein or any other
Operative Document, sell, pledge, assign or transfer to any Person, or grant,
create, incur, assume or suffer to exist any Lien on, any Medallion Loan or
Related Asset, whether now existing or hereafter created, or any interest
therein, and the Seller shall defend the right, title and interest of the Buyer
in and to the
17
Medallion Loans and Related Assets, whether now existing or hereafter created,
against all claims of third parties claiming through or under the Seller.
(b) Extension or Amendment of Medallion Loans. Attempt to extend,
amend or otherwise modify (or consent or fail to object to any such extension,
amendment or modification by any Originator or the Servicer) the terms of any
Medallion Loan, or amend, modify or waive (or consent or fail to object to any
such amendment, modification or waiver by any Originator or the Servicer) any
payment term or condition of any invoice related thereto if the effect of such
amendment, modification or waiver could reasonably be expected to impair the
collectibility or delay the payment of any then existing Medallion Loan. The
Seller will not attempt to rescind or cancel, or permit the rescission or
cancellation of, any Medallion Loan except as ordered by a court of competent
jurisdiction or other Governmental Authority.
(c) Instructions to Obligors. The Seller will not instruct any Obligor
to remit Collections to any Person, address or account other than the Servicer
or the Collection Account.
(d) Change in Corporate Name. (i) Make any change to its corporate
name or principal place of business or use any tradenames, fictitious names,
assumed names or "doing business as" names unless, at least 30 days prior to the
effective date of any such name change, change in principal place of business,
or use, the Seller delivers to the Buyer and the Custodian such financing
statements (Forms UCC-1 and UCC-3) executed by the Seller which the Buyer or the
Custodian may reasonably request to reflect such name change or use, together
with such other documents and instruments that the Buyer or the Custodian may
reasonably request in connection therewith or (ii) change its jurisdiction of
incorporation unless the Buyer and the Custodian shall have received from the
Seller (A) written notice of such change at least 30 days prior to the effective
date thereof, and (B) prior to the effective date thereof if the Buyer shall so
request, an Opinion of Counsel, in form and substance reasonably satisfactory to
the Buyer, as to such incorporation and the Seller's valid existence and good
standing and as to the matters referred to in the first sentence of Section
4.01(g).
(e) Accounting of Purchases. Prepare any financial statements or other
statements which shall account for the transactions contemplated hereby in any
manner other than the sale and/or contribution, as set forth in Section 2.02 of
this Agreement, of the Medallion Loans by the Seller to the Buyer.
(f) Deposits to Lock-Box Accounts. Deposit or otherwise credit, or
cause to be so deposited or credited, or consent or fail to object to any such
deposit or credit, to any account in which it holds Collections cash proceeds
other than Collections of Medallion Loans.
(g) Loan Sale and Exchange Agreement. (i) Cancel or terminate the Loan
Sale and Exchange Agreement or consent to or accept any cancellation or
termination thereof, (ii) amend or otherwise modify any term or condition of the
Loan Sale and Exchange Agreement or give any consent, waiver or approval
thereunder, (iii) waive any default under or breach of the Loan Sale and
Exchange Agreement or (iv) take any other action under the Loan Sale and
Exchange Agreement not required by the terms thereof to the extent that it would
impair the value of any Medallion Loan or Related Asset or the rights or
interests of the Seller thereunder.
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(h) Change in State of Organization. The Seller will not change its
jurisdiction of organization from New York unless it shall have provided the
Buyer 30 days' prior written notice of such change.
ARTICLE VI.
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer. Consistent with the Buyer's
ownership of the Medallion Loans and the other Related Assets, the Seller agrees
that the Buyer shall have the sole right to service, administer and collect the
Medallion Loans, to assign such right and to delegate such right to any other
Person to the extent permitted under the Loan and Security Agreement. The Seller
hereby acknowledges that the Buyer has appointed the Seller to be the Servicer
with respect to the Medallion Loans and the Seller, in its capacity as Servicer,
has accepted such appointment. The Seller shall deliver all Records to the
Custodian, with copies to the Servicer, as agent for the Buyer, and the
Custodian shall hold all such Records in trust for the Buyer in accordance with
its interests.
SECTION 6.02. Rights of the Buyer. (a) At any time:
(i) the Buyer may notify the Obligors of Medallion Loans, or any of
them, of the Buyer's ownership interest in Medallion Loans and direct such
Obligors, or any of them, that payment of all amounts payable under any
Medallion Loans be made directly to the Servicer, the Collection Account or
otherwise as the Buyer shall elect;
(ii) the Seller shall, at the Servicer's, the Buyer's or the
Custodian's request and at the Seller's expense, give notice of the Buyer's
interest in Medallion Loans to each Obligor and direct that payments be made
directly to the Servicer, the Collection Account or otherwise as the Buyer shall
elect; and
(iii) the Seller shall, at the Servicer's, the Buyer's or the
Custodian's request, assemble all Records which the Buyer reasonably believes
are necessary or appropriate for the administration and enforcement of the
Medallion Loans, and shall make the same available to the Buyer at a place
selected by the Buyer or its designee.
(b) The Seller hereby authorizes the Buyer and the Servicer at any
time to take any and all steps in the Seller's name and on behalf of the Seller
necessary or desirable, in the determination of the Buyer and/or the Servicer,
to collect all amounts due under any and all Medallion Loans, including, without
limitation, endorsing the Seller's name on checks and other instruments
representing Collections and enforcing such Medallion Loans.
SECTION 6.03. Responsibilities of the Seller. Anything herein to the
contrary notwithstanding, the Seller represents that none of its obligations
under the Loan Documents related to the Medallion Loans remains unperformed and
in any event the exercise by the Buyer of its rights hereunder shall not relieve
the Seller from such obligations if they do exist.
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SECTION 6.04. Maintenance of Perfection. (a) The Seller agrees to take
all actions, including conducting lien searches and filing UCC continuation
statements, necessary or desirable to ensure that the Liens arising pursuant to
the Loan Documents and securing repayment of any Obligor's indebtedness
evidenced by an Obligor Note, at the time of conveyance of the related Medallion
Loan to the Buyer hereunder, will be perfected (with the first level of
priority) security interests (except as otherwise approved by Buyer) in all
applicable jurisdictions. To the extent that any Obligor Note with respect to a
Medallion Loan or any other "instrument" (as defined in the UCC of the
jurisdiction the law of which governs the perfection of the interest in such
Medallion Loan created hereunder) evidencing such Medallion Loan comes into the
possession of the Seller, the Seller agrees that it will promptly deliver such
item to the Custodian, duly endorsed in favor of Buyer or in blank at Buyer's
direction on or before the Purchase of the applicable Medallion Loan hereunder.
(b) The Seller agrees from time to time, at the Seller's expense,
promptly to execute and deliver, or cause to be executed and delivered, all
further instruments and documents, and take all further action (including the
making, or causing to be made, of notations on the records of the Seller or the
Servicer) necessary or desirable or that the Buyer, the Servicer, the Lender or
the Custodian may reasonably request in order to perfect, maintain perfected,
protect or more fully evidence the Purchase of Medallion Loans by the Buyer
hereunder, or to enable the Buyer, the Custodian or the Lender to exercise or
enforce any of their respective rights hereunder or under any other Operative
Document.
(c) To the fullest extent permitted by applicable law, the Seller
hereby grants to the Servicer, the Custodian and the Buyer, an irrevocable power
of attorney, with full power of substitution, coupled with an interest, to sign
and file in the name of the Seller, or in its own name, such financing
statements and continuation statements and amendments thereto or assignments
thereof as the Buyer deems necessary to protect or perfect the Buyer's rights in
the Medallion Loans.
(d) Without limiting the generality of the foregoing, the Seller will
upon the request of the Servicer, the Custodian or the Buyer: (i) execute and
file, or cause the applicable Originator to execute and file, such financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate or as the
Servicer, the Custodian or the Buyer may request and (ii) mark, or seek to cause
the applicable Originator to mark, its master data processing records evidencing
such Medallion Loans and related Loan Documents, as the Servicer, the Custodian
or the Buyer may request. The Seller, for itself and on behalf of the
Originators, hereby authorizes the Servicer, the Custodian or the Buyer to file
one or more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Medallion Loans and the
Related Assets now existing or hereafter arising without the signature of the
Seller or any Originator, as applicable, where permitted by law. A carbon,
photographic or other reproduction of this Agreement or the Loan Sale and
Exchange Agreement, as applicable, or of any financing statement covering the
Medallion Loans or any part thereof, shall be sufficient as a financing
statement.
(e) If the Seller fails to perform any of its agreements or
obligations under this Agreement, the Buyer, the Custodian or the Servicer may
(but shall not be required to) itself
20
perform, or cause performance of, such agreement or obligation, and the expenses
of the Buyer, the Custodian or the Servicer incurred in connection therewith
shall be payable by the Seller upon the Buyer's, the Custodian's or the
Servicer's demand therefor.
(f) At the expense of the Seller, the Buyer shall take, in respect of
any Ineligible Medallion Loan reacquired by the Seller pursuant to Section 8.02
hereof, all such actions reasonably requested by the Seller that are otherwise
to be performed by the Seller pursuant to Section 6.04(a) through (d).
ARTICLE VII.
TERMINATION EVENTS
SECTION 7.01. Termination Events. If any of the following events
(each, a "Termination Event") shall occur:
(a) The Seller shall fail to make any payment, transfer or deposit to
be made by it hereunder when due; or
(b) Any representation or warranty made or deemed to be made by the
Seller (or any of its officers) under or in connection with this Agreement or
other information or certificate delivered pursuant to this Agreement or any
other Operative Document shall prove to have been false or incorrect in any
material respect when made or deemed to have been made, unless the affected
Medallion Loans are repurchased by the Seller or the Servicer pursuant to
Section 8.02 of this Agreement; or
(c) The Seller shall fail to perform or duly observe any other term,
covenant or agreement contained in this Agreement or any other Operative
Document to which it is a party, which failure continues unremedied for 15
Business Days after the earlier of (i) the date on which the Seller knew or
should have known of such failure and (ii) the date on which written notice of
such failure shall have been given to the Seller; or
(d) Any Purchase by the Buyer of Medallion Loans shall for any reason
cease to create a valid sale, transfer and assignment of all of the Seller's
right, title and interest in and to such Medallion Loan and Related Assets, or
cease to create a valid and perfected first priority "security interest" (as
defined in the UCC of the jurisdiction the law of which governs the perfection
of the interest in Medallion Loans purchased hereunder) in each Medallion Loan
and the Related Assets with respect thereto; provided, however, if any such
failure relates to a Loan which is retransferred to the Seller pursuant to
Section 8.02 hereof, then such failure shall not give rise to an Event of
Termination under this subsection (e); or
(e) There shall have occurred any event which materially adversely
affects the collectibility of the Medallion Loans or there shall have occurred
any other event which materially adversely affects the ability of the Buyer to
collect Medallion Loans or the ability of the Seller to perform its obligations
hereunder;
then, and in any such event, the Buyer may immediately, by notice to the Seller
declare the Termination Date to have occurred. Upon any such declaration, the
Buyer shall have, in addition
21
to all other rights and remedies under this Agreement or otherwise, all other
rights and remedies provided under the UCC of all applicable jurisdictions and
other applicable laws, which rights shall be cumulative.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.01. Indemnities by the Seller. Without limiting any other
rights which the Buyer or the Lender may have hereunder or under applicable law,
the Seller hereby agrees to indemnify the Buyer and, from and after the time of
any advances by the Lender to the Buyer and a pledge or assignment hereof by the
Buyer to the Lender under the Loan and Security Agreement, the Lender (each, an
"Indemnified Party") from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by an Indemnified Party
arising out of or as a result of the following, excluding, however, (i)
Indemnified Amounts to the extent resulting from gross negligence, bad faith,
willful misconduct (including breach of covenant or representation) or the
reckless disregard of its own duties on the part of the Buyer or the Lender, as
the case may be, or (ii) recourse for uncollectible Medallion Loans:
(i) reliance on any representation or warranty made or deemed made by
the Seller or any of its Affiliates (or any of their respective officers) under
or in connection with this Agreement or any other Operative Document or any
other information or report delivered by the Seller pursuant this Agreement or
any other Operative Document (including, without limitation, any representation
with respect to a Loan's classification by the Seller as an Eligible Medallion
Loan), which shall have been false or incorrect in any material respect when
made or deemed made or delivered;
(ii) the failure by the Seller to comply with any term, provision or
covenant contained in this Agreement, or with any applicable law, rule or
regulation (including tax laws, rules or regulations) with respect to any
Medallion Loan or the related Loan Documents or the Loan Sale and Exchange
Agreement, with which compliance is required of the Seller; or the nonconformity
of any Medallion Loan or the related Loan Documents or the Loan Sale and
Exchange Agreement with any such applicable law, rule or regulation;
(iii) the failure to vest and maintain vested in the Buyer or to
transfer to the Buyer, legal and equitable title to and ownership of, or
security interest in, the Medallion Loans together with all Related Assets, free
and clear of any Lien (except for Permitted Participation Interests and as
permitted hereunder) whether existing at the time of the Purchase of such
Medallion Loan or at any time thereafter;
(iv) the failure to file, or any delay in filing, financing
statements, continuation statements or other similar instruments or documents
under the UCC of all applicable jurisdictions or other applicable laws or the
failure to make other filings with respect to any Medallion Loans, whether at
the time of any Purchase or at any subsequent time, but in all events as may be
required of the Seller hereunder;
22
(v) the failure of the Seller or any of its agents and representatives
to remit to the Servicer or the Collection Account Collections of Medallion
Loans remitted to the Seller or such agent or representative;
(vi) the failure by the Seller to be duly qualified to do business, to
be in good standing or to have filed appropriate fictitious or assumed name
registration documents in any jurisdiction, where such qualification may be
required by applicable law; and
(vii) the commingling by Seller of Collections of Medallion Loans at
any time with other funds.
An Indemnified Party shall promptly notify the Seller of any claim as to which
it seeks indemnification. If any suit, action, claim or proceeding which might
result in indemnification under this Section 8.01 is brought against an
Indemnified Party, the Indemnified Party shall, if a claim in respect thereof is
to be made against the Seller hereunder, notify the Seller in writing of the
commencement thereof. The Seller may participate in and assume the defense of
any such suit, action, claim, proceeding or investigation at its expense, and no
settlement thereof shall be made without the approval of the Seller and the
Indemnified Party. The approval of the Seller and the Indemnified Party will not
be unreasonably withheld or delayed; provided, however, that (i) the Seller
shall agree that any judgment, settlement or other amounts payable as a result
of such suit, action, claim, or proceeding shall be subject to indemnification
by the Seller pursuant to this Section 8.01; (ii) the Seller must keep the
Indemnified Party apprised of the progress of any such suit, action, claim or
proceeding; and (iii) if the Indemnified Party reasonably believes that its
failure to participate will adversely affect its interests or that there is a
conflict of interest which makes it inadvisable for the Seller's attorney to
represent such party, it shall notify the Seller of such conclusion in writing
and may, at its election, participate in such suit, action, claim or proceeding
(the legal fees incurred by the Indemnified Party as a result of such
participation to be reimbursed by the Seller). Any amounts subject to the
indemnification provisions of this Section 8.01 shall be paid by the Seller to
the Indemnified Party within two Business Days following the Indemnified Party's
demand.
The agreement contained in this Section 8.01 shall survive the
collection of all Medallion Loans, the termination of this Agreement and the
payment of all amounts otherwise payable thereunder and hereunder.
SECTION 8.02. Substitution and Retransfer of Medallion Loans. The
following rights are in addition to and not in limitation of any other rights or
remedies that the Buyer may have hereunder.
(a) If, with respect to any Medallion Loan, (i) such Loan did not
constitute an Eligible Medallion Loan on the date of transfer to the Buyer
hereunder or (ii) the Seller shall have breached any of the representations and
warranties contained in Section 4.01(a) (a Medallion Loan described in either of
clauses (i) or (ii) above being referred to as an "Ineligible Medallion Loan"),
then the Seller shall on the next succeeding Monthly Settlement Date, upon the
Buyer's demand, at the Seller's option either substitute for such Ineligible
Medallion Loan a new Medallion Loan in the manner specified in subsection (b) of
this Section 8.02 or accept a retransfer of such Ineligible Medallion Loan for
the retransfer price specified in subsection (c) of
23
this Section 8.02; provided, however, that following the Termination Date, the
Seller shall not have the option to substitute for Ineligible Medallion Loans,
but must accept retransfers of such Ineligible Medallion Loans.
(b) If the Seller substitutes a new Medallion Loan for an Ineligible
Medallion Loan pursuant to this Section 8.02, such new Medallion Loan shall (i)
on the date of substitution, be an Eligible Medallion Loan, and shall be
certified as such by the Seller and (ii) have an Outstanding Balance at least
equal to the Outstanding Balance of the Medallion Loan for which it is being
substituted. On the date of such substitution, such new Eligible Medallion Loan
shall become a Medallion Loan that has been purchased by the Buyer and the
Ineligible Medallion Loan so replaced shall cease to be a Medallion Loan
purchased by the Buyer. In the event the fair market value of the new Medallion
Loan is greater than the fair market value of the related Ineligible Medallion
Loan, the excess of such value will be treated as a capital contribution of
Seller to Buyer.
(c) In the case of a retransfer by the Buyer to the Seller of a
Medallion Loan pursuant to this Section 8.02, the Seller shall, on the Monthly
Settlement Date coinciding with such retransfer pay to the Buyer an amount equal
to the Outstanding Balance of such Medallion Loan as of such Monthly Settlement
Date plus accrued but unpaid interest thereon. The proceeds of any such
retransfer or purchase shall be deemed to be Collections of such Loan received
by the Seller. Any such retransfer shall be made without recourse or warranty,
express or implied.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. Amendments and Waivers. Notwithstanding anything to the
contrary in the Agreement, no term or condition of this Agreement shall be
amended, modified, waived or terminated without the prior written consent of the
Buyer, the Seller and the Lender.
SECTION 9.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and mailed, transmitted or delivered, as to
each party hereto, at its address set forth under its name below or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. All such notices and communications shall be effective,
upon receipt, or in the case of delivery by mail, three Business Days after
being deposited in the mails, postage prepaid, or in the case of notice by
facsimile copy, when verbal confirmation of receipt is obtained, in each case
addressed as aforesaid.
The Buyer:
----------
Taxi Medallion Loan Trust I
11-49 44th Drive
Long Island City, New York 11101
Attention: President / Chief Operating Officer
24
Telecopier No.: (212)328-3654
Telephone No.: (212) 328-3654
The Seller:
----------
Medallion Funding Corp.
437 Madison Avenue
New York, New York 10022
Attention: President / Chief Operating Officer
Telecopier No.: 212-328-2121
Telephone No.: 212-328-2101
The Servicer:
------------
Medallion Funding Corp.
437 Madison Avenue
New York, New York 10022
Attention: President / Chief Operating Officer
Telecopier No.: 212-328-2121
Telephone No.: 212-328-2101
The Lender:
----------
Merrill Lynch Bank USA
15 W. South Temple
Suite 300
Salt Lake City, Utah 84101
Attention: Louise Alder
Telecopier No.: 801-531-7470
Telephone No.: 801-526-8324
With a copy to:
Merrill Lynch Global Asset Based Finance
4 World Financial Center
New York, New York 10080
Attention: Joshua Green
Telecopier No.: 212-449-6673
Telephone No.: 212-449-7330
SECTION 9.03. No Waiver; Remedies. No failure on the part of the Buyer
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.04. Binding Effect; Assignability; Survival.
25
(a) This Agreement shall be binding upon the Seller, the Buyer and
their respective successors and permitted assigns and shall inure to the benefit
of the Seller, the Buyer, and their respective successors and permitted assigns.
Except as provided in Section 9.04(b), neither the Seller nor the Buyer may
assign any of its rights and obligations hereunder or any interest herein
without the prior written consent of the other party hereto and of the Lender.
The Seller further agrees to send to the Custodian copies of all notices and
reports required to be delivered to the Buyer hereunder. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Collection Date; provided, however, that the indemnification and payment
provisions of Article VIII and Section 9.06 shall be continuing and shall
survive any termination or assignment of this Agreement.
(b) The Seller acknowledges that the Buyer will assign to the Lender
(pursuant to the Loan and Security Agreement) all of its rights, remedies,
powers and privileges hereunder (including, without limitation, Section 8.01
hereof) and under the Loan Sale and Exchange Agreement. The Seller agrees that
the Lender, as the assignee of the Buyer, shall, subject to the terms of the
Loan and Security Agreement and the other Operative Documents, have the right to
enforce this Agreement and the Loan Sale and Exchange Agreement and to exercise
directly all of the Buyer's rights and remedies under this Agreement and the
Loan Sale and Exchange Agreement, and the Seller agrees to cooperate fully with
the Lender in the exercise of such rights and remedies.
SECTION 9.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be hold invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
SECTION 9.06. Costs, Expenses and Taxes. (a) Each party hereto agrees
to pay its own (i) costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing by the Buyer
or its agents or representatives) of this Agreement, the Loan and Security
Agreement and the other Operative Documents, including, without limitation, the
reasonable fees and reasonable out-of-pocket expenses of counsel, and (ii) all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other Operative
Documents.
(b) The Seller shall pay any and all stamp, sales, excise and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the Medallion Loans
or the other agreements and documents to be delivered hereunder; provided,
however, that the Seller shall not be responsible for any such payments for
which Medallion Financial is responsible under the Loan Sale and Exchange
Agreement.
SECTION 9.07. Governing Law; Jurisdiction; Consent to Service of
Process; Waiver of Jury Trial.
26
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
(b) Jurisdiction. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT LOCATED WITHIN THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. WITH RESPECT TO THE FOREGOING CONSENT TO
JURISDICTION, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT.
(c) Consent to Service of Process. EACH OF THE PARTIES HERETO WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO SUCH PERSON AT THE
ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE
U.S. MAILS, POSTAGE PREPAID.
(d) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES HERETO ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
NOTHING IN THIS SECTION 9.07 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY
PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST ANY PARTY HERETO OR ITS
RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
27
SECTION 9.08. No Proceedings. The Seller hereby agrees that it will
not institute any proceeding of the type referred to in clause (ii) of
definition of Insolvency Event (a) against the Buyer so long as any indebtedness
issued by the Buyer shall be outstanding or there shall not have elapsed one
year plus one day after the last day on which any such indebtedness of the Buyer
shall have been outstanding.
SECTION 9.09. Further Assurances. The Seller agrees to do and perform,
from time to time, any and all acts and to execute any and all further
instruments and documents required or reasonably requested by the Buyer more
fully to effect the purposes of this Agreement, including, without limitation,
the execution of any appropriate financing statements or continuation statements
relating to the Medallion Loans for filing under the provisions of the UCC of
any applicable jurisdiction.
SECTION 9.10. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of any Person, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
SECTION 9.11. Counterparts. This Agreement may be executed in two or
more counterparts and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
SECTION 9.12. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 9.13. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
28
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SELLER:
MEDALLION FUNDING CORP.
By: /s/ Andrew Murstein
------------------------------
Name: Andrew Murstein
Title: President
By: /s/ Alvin Murstein
------------------------------
Name: Alvin Murstein
Title: Chief Executive Officer
BUYER:
TAXI MEDALLION LOAN TRUST I
By: /s/ Andrew Murstein
------------------------------
Name: Andrew Murstein
Title: President
29
EXHIBIT A
TRANSFER AGREEMENT
This TRANSFER AGREEMENT dated as of September [ ], 2002 (this
"Transfer Agreement"), is made between MEDALLION FUNDING CORP., a New York
corporation ("Medallion Funding") on the one hand and TAXI MEDALLION LOAN TRUST
I, a Delaware business trust ("Medallion Trust") on the other hand.
RECITALS
A. Medallion Funding and Medallion Trust have entered into that
certain Medallion Loan Sale and Contribution Agreement dated as of September 13,
2002 (the "Agreement"). Capitalized terms used herein without definition shall
have the meaning given such terms in the Agreement. Medallion Funding has a
agreed to sell and/or contribute the Medallion Loans (identified on Schedule I -
Loan Schedule attached hereto) and Related Assets (the "Medallion Loans and
Related Assets") to Medallion Trust and Medallion Trust has agreed to purchase
the Medallion Loans and Related Assets from Medallion.
B. Medallion Funding has agreed to transfer title of the Medallion
Loans and Related Assets to Medallion Trust under this Transfer Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Transfer of Medallion Loans and Related Assets. Pursuant to the
Agreement, Medallion Funding hereby assigns, transfers and conveys to Medallion
Trust, absolutely and unconditionally, and not as security, all of Medallion
Funding's right, title and interest in and to the Medallion Loans and Related
Assets, including, without limitation, all of Medallion Funding's rights under
the related Loan Documents, including, without limitation, Medallion Funding's
rights with respect to any Collections paid by any Obligor. Medallion Funding
does not hereby delegate, and Medallion Trust does not hereby assume, any of
Medallion Funding's obligations under any agreement between Medallion Funding
and any other person or entity.
Medallion Trust hereby accepts assignment, transfer and conveyance by
Medallion Funding of all of Medallion Funding's right, title and interest in and
to all of the Medallion Loans and Related Assets, as aforesaid. In consideration
thereof, Medallion Funding hereby acknowledges receipt of the Purchase Price, or
$[ ] and a capital contribution in the form of Medallion Loans and Related
Assets equal to $[ ].
Medallion Funding shall, within twenty (20) days of the date hereof,
mail to each Obligor of a Medallion Loan a notice in the form attached hereto as
Exhibit A.
30
2. Governing Law. This Transfer Agreement is a contract made under,
governed by and construed in all respects in accordance with the laws of the
State of New York without regard to the conflicts of law rules of the State of
New York.
3. Construction and Interpretation. Whenever possible, each provision
of this Transfer Agreement shall be interpreted in such manner as to be
consistent with the terms of the Agreement and if any term of this Transfer
Agreement shall be inconsistent with the terms of the Agreement, the terms of
the Agreement shall control. Each provision of this Transfer Agreement is
intended to be effective and valid under applicable law, but if any provision of
this Transfer Agreement shall be prohibited by or invalid under any law, such
provision shall be ineffective only to the extent and duration of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Transfer Agreement.
4. Notices. Any notice required or given hereunder shall be in writing
and shall be given in accordance with the terms of the Agreement. The
effectiveness of any notice and the delivery of any notice shall be governed by
the terms of the Agreement.
5. Assignment. This Transfer Agreement shall inure to the benefit of,
and shall be binding upon the parties hereto and their respective successors and
assigns. Medallion Funding may assign or transfer its rights and/or obligations
under this Transfer Agreement, in whole or in part, without limitation.
Medallion Trust may assign and/or transfer its rights or obligations under this
Transfer Agreement, in whole or in part, without limitation.
[SIGNATURES ON FOLLOWING PAGE]
31
IN WITNESS WHEREOF, Medallion Funding has caused this Transfer
Agreement to be duly executed and delivered as of the date first above written.
MEDALLION FUNDING CORP.
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
Agreed and accepted:
TAXI MEDALLION LOAN TRUST I
By:
-------------------------
Name:
Title: President
Attachments:
Schedule 1 - Loan Schedule
Schedule 2 - Permitted Participation Interests
Exhibit A - Form of Notice to Obligors
32
SCHEDULE 1
LOAN SCHEDULE
See Attached
33
SCHEDULE 2
PERMITTED PARTICIPATION INTERESTS
See Attached
34
EXHIBIT A
FORM OF NOTICE TO BORROWERS
[Date]
[Name of Borrower]
[Address of Borrower,
as stated in the notice section
of the Medallion Loans]
Re: Transfer of Rights and Interests in the loan(s) set forth below (the
"Medallion Loans"), between MEDALLION FUNDING CORP., a New York
corporation ("Medallion Funding") and TAXI MEDALLION LOAN TRUST I, a
Delaware business trust ("Medallion Trust").
----------------------------------------------------------------------
Dear [Name of Borrower or individual to receive notice]:
This letter is to inform you that all right, title and interest in the Medallion
Loans referenced below and related collateral, has been assigned and transferred
to Medallion Trust. Please make amounts payable Taxi Medallion Loan Trust I and
remit all payments under your Medallion Loans, to Acct. # at .
-------- --------
Please be assured that your obligations under your original loan documentation
otherwise remain unchanged. In connection with the foregoing assignment of
rights to Medallion Trust, Medallion Funding has no further right to enter into
any agreement amending, modifying or terminating the Medallion Loans. We request
your acknowledgment of this assignment by date and signature where indicated.
Please return the signed copy of this letter to Medallion Trust at the following
address:
Taxi Medallion Loan Trust I
c/o Wachovia Trust Company, National Association
One Rodney Square, First Floor
920 King Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
facsimile: (302) 888-7544
35
Thank you for your cooperation in this matter.
Sincerely,
MEDALLION FUNDING CORP.
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
Acknowledged: [Borrower Name]
By:
-------------------------
Title:
-------------------
Date:
--------------------
36
EXHIBIT B
LOCATIONS WHERE RECORDS ARE KEPT;
LOCATION OF CHIEF EXECUTIVE OFFICE
Locations Where Records Are Kept:
- --------------------------------
Medallion Funding Corp.
437 Madison Avenue
New York, New York 10022
Location of Chief Executive Office:
- ----------------------------------
Medallion Funding Corp.
437 Madison Avenue
New York, New York 10022
37
EXHIBIT C
FORM OF PURCHASE NOTICE
Medallion Funding Corp.
437 Madison Avenue
New York, New York 10022
This notice is delivered pursuant to Section 2.02 of the Loan Sale and
Contribution Agreement dated as of September 13, 2002 (the "Loan Sale
Agreement"), by and among Taxi Medallion Loan Trust I, as Buyer, and Medallion
Funding Corp., as Seller. The Seller hereby requests a Purchase of Medallion
Loans and other Related Assets as follows:
A. Proposed Transfer Date for Purchase: September [ ], 2002
B. Purchase Price1
1.(a) Aggregate Outstanding Balance of Loans to be Purchased $
------------
(b) Accrued Interest $
------------
2. Cash Payment $
------------
C. Capital Contribution (if any) $
------------
D. Medallion Loans
The Medallion Loans listed on Schedule I hereto are the Eligible Medallion Loans
which the Seller requests to be purchased on the Transfer Date specified above.
E. Certifications:
In connection with the Purchase requested in this Notice, the Seller hereby
certifies that:
1. The information provided in this Notice and the attached Schedules is true
and correct as of the date hereof.
2. The representations and warranties contained in Section 4.01 of the Loan
Sale Agreement are correct on and as of the date hereof as though made on and
as of the date hereof.
3. No event has occurred and is continuing, or would result from such
Purchase, which constitutes a Termination Event or would constitute a
Termination Event but for the requirement that notice be given or time elapse
or both.
- -----------------------
1 The sum of B.2, B.3, B.4 and C must equal B.1.
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Capitalized terms used herein and not otherwise defined shall have the
meanings given in the Loan Sale and Contribution Agreement.
MEDALLION FUNDING CORP.
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
Date of Notice: ____________________
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EXHIBIT D
ELIGIBLE MEDALLION LOAN CRITERIA
Eligibility Criteria
(a) In the case of Medallion Loans other than Former FSP Medallion
Loans and Specified 90% LTV Medallion Loans, at the time of origination or of
acquisition by the Buyer , the Medallion Loan has a Loan-to-Value Ratio less
than or equal to 80% (for purposes of calculating the Loan-to-Value Ratio, the
maximum Medallion Valuation Amount attributed to any Medallion Loan shall not
exceed $325,000).
(b) In the case of Former FSP Medallion Loans, at the time of
origination or of acquisition by the Buyer, the Former FSP Medallion Loan has a
Loan-to-Value Ratio less than or equal to 92% (for purposes of calculating the
Loan-to-Value Ratio, the maximum Medallion Valuation Amount attributed to any
Former FSP Medallion Loan shall not exceed $325,000).
(c) In the case of Specified 90% LTV Medallion Loans, at the time of
origination or of acquisition by the Buyer, the Specified 90% LTV Medallion Loan
has a Loan-to-Value Ratio less than or equal to 90% but greater than 80% (for
purposes of calculating the Loan-to-Value Ratio, the maximum Medallion Valuation
Amount attributed to any Specified 90% LTV Medallion Loan shall not exceed
$325,000).
(d) The Medallion Loan provides for not less frequently than monthly
payments of interest.
(e) The Medallion Loan and other Medallion Loan Documents have not
been extended, waived, amended or modified except in accordance with the Credit
and Collection Policy. The Buyer shall be notified of any material change to the
Credit and Collection Policy and shall have the right to declare ineligible any
Medallion Loans originated or modified under such revised Credit and Collection
Policy.
(f) The Medallion Loan does not contravene any Requirements of Law
applicable thereto.
(g) All required consents, approvals and authorizations in connection
with the Medallion Loan have been obtained.
(h) The Medallion Loan is in full force and effect, no provision of
which has been modified, waived or amended (in the case of a Medallion Loan
acquired from an Approved Seller, since the date of acquisition of such
Medallion Loan), except in accordance with the Credit and Collection Policy, and
constitutes the legal, valid and binding obligation of the Obligor in accordance
with its terms.
(i) The Medallion Loan is (i) payable in Dollars, (ii) denominated in
Dollars and (iii) originated in the United States.
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(j) Immediately prior to the sale, assignment and transfer thereof,
the Medallion Loan is secured by a valid first perfected security interest in
the related Medallion Collateral in favor of the Seller or the Buyer, as secured
party.
(k) No right of rescission, setoff, counterclaim or defense has been
asserted in connection with the Medallion Loan.
(l) The related Obligor is an individual, corporation or partnership.
(m) If the Obligor is an individual, such individual is either a
United States citizen or a resident alien with a "Green Card", has a social
security number, a drivers license, and does not have a criminal record or
otherwise complies with all requirements of the applicable Taxi Commission.
(n) The Seller originated the Medallion Loan for the purpose of
financing an Obligor's Medallion, and the Medallion Loan was made in the
ordinary course of such Seller's business in accordance in all material respects
with the Underwriting Guidelines.
(o) The Medallion Loan Documents were fully and properly executed by
the parties thereto.
(p) The Medallion Loan is not more than 360 days delinquent (without
regard to any applicable grace periods).
(q) The related Obligor (i) is not currently the subject of a judgment
in favor of the Buyer, or the applicable Seller and (ii) did not have its
related Medallion foreclosed (or subject to foreclosure).
(r) There exists a Medallion Loan File with respect to the Medallion
Loan that has been delivered to the Custodian in accordance with the Loan
Documents. The related Medallion Loan File for the Medallion Loan contains the
documents and instruments specified to be included therein in the form specified
in the definition of "Medallion Loan File."
(s) The information with respect to the Medallion Loan and the related
Medallion Loan Documents and Medallion Collateral set forth in the Medallion
Loan Schedule is true, correct and complete in all material respects.
(t) No adverse selection procedures have been utilized in selecting
the Medallion Loan as one meeting the selection criteria contained herein or in
the Loan and Security Agreement.
(u) The origination and servicing of the Medallion Loan, and the sale
of the Medallion Loan hereunder do not contravene in any material respect any
requirements of applicable federal, state and local laws, and regulations
thereunder including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, each
applicable state Motor Vehicle Retail Installment
41
Sales Act, and state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(v) The Medallion Loan is not due from the United States of America or
any state or from any other Governmental Authority.
(w) The Medallion Loan has created a valid, subsisting and enforceable
first priority perfected security interest in the related Medallion Collateral
in favor of the applicable Seller as secured party, and such security interest
is prior to all other liens (other than liens described in the next sentence, as
to which the Buyer has no knowledge) upon and security interests in such
Medallion Collateral that now exist or may hereafter arise or be created. To the
best of the Buyer's knowledge, there are no Liens or claims existing or that
have been filed for work, labor, storage or materials relating to the related
Medallion that are prior to the security interest in the related Medallion
granted by such Medallion Loan. There is no Lien against the Medallion related
to such Medallion Loan for delinquent taxes, except where an adequate escrow for
such taxes has been established and funded.
(x) The Medallion Loan is the legal, valid and binding obligation of
the Obligor thereunder and is enforceable in accordance with its terms, except
only as such enforcement may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally; all parties to
the Medallion Loan had full legal capacity to execute and deliver such Medallion
Loan and all other documents related thereto and to grant the security interest
purported to be granted thereby. The Medallion Loan has not been satisfied,
subordinated or rescinded, nor has any Medallion been released from the lien
granted by such Medallion Loan in whole or in part.
(y) The Medallion Loan has not been modified as a result of
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(z) No right of rescission, setoff, counterclaim, or defense exists
with respect to the Medallion Loan. The operation of the terms of the Medallion
Loan or the exercise of any right thereunder will not render such Medallion Loan
unenforceable in whole or in part or subject to any such right of rescission,
setoff, counterclaim or defense.
(aa) Except for Permitted Delinquencies, no default, breach, violation
or event permitting acceleration under the terms of the Medallion Loan has
occurred; no continuing condition that with notice or the lapse of time would
constitute a default, breach, violation, or event permitting acceleration under
the terms of such Medallion Loan has arisen; the Seller has not waived any of
the foregoing; and the Medallion related to the Medallion Loan has not been
repossessed under the Medallion Loan. To the best of the Seller's knowledge, the
related Obligor is not in default on any other debt obligation owed or owing to
the Seller or any Affiliate of the Seller. "Permitted Delinquency" means a
delinquency of no more than 360 days.
(bb) The Medallion Loan has not been sold, transferred, assigned or
pledged by the applicable Seller to any Person other than the Buyer, and
immediately prior to the sole of the Medallion Loan to the Buyer, such Seller
had good and marketable title to the Medallion Loan, and was sole owner thereof,
free and clear of all Liens, except for Permitted Participation
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Interests. Seller has not taken any action to convey any right to any Person
that would result in such Person having a right to payments received under the
related insurance policies, except in connection with Permitted Junior
Participation Interests or Permitted Joint Participation Interests.
(cc) On the Effective Date and each Funding Documentation Receipt
Date, the Servicer will have each caused the portions of its master computer
records relating to the Medallion Loan to be clearly and unambiguously marked to
show that the Medallion Loans has been pledged to the Lender in accordance with
the terms of this Agreement.
(dd) Each Medallion Loan Schedule made available by the Seller Buyer
was complete and accurate in all material respects.
(ee) The Medallion Loan was not originated in, and is not subject to
the laws of, any jurisdiction under which the pledge, sale, contribution,
transfer and assignment of such Medallion Loan shall be unlawful, void or
voidable, except as set forth in the opinions of local counsel delivered
pursuant to Section 5.01(j)(ii) of the Loan Agreement. The applicable Seller has
not entered into any agreement with any Obligor or other Person that prohibits,
restricts or conditions the pledge, sale, contribution, transfer or assignment
of any portion of such Medallion Loan or the related Collateral or that is
otherwise inconsistent with the terms of such Medallion Loan or this Agreement.
(ff) There is only one original executed copy of the Medallion Note
for the Medallion Loan, including any assumptions, amendments or modifications
thereto.
(gg) The Buyer has a first priority perfected Lien in the Medallion
Collateral. All filings (including, without limitation, Uniform Commercial Code
filings) necessary in any jurisdiction to give the Buyer a first priority
perfected Lien in the Medallion Collateral have been made.
(hh) No further action is required under the Uniform Commercial Code
or any titling statute or act to continue the perfected status of the first
priority security interest of the Buyer in the Medallion against creditors of
and transferees of the Obligor, except for the filing of continuation
statements.
(ii) The Medallion Loan constitutes "chattel paper", an "instrument"
or a "general intangible" under the Uniform Commercial Code.
(jj) Each related Medallion Loan Document contains customary and
enforceable provisions so as to render the rights and remedies of the holder
thereof adequate for the practical realization of the benefits of the security
interests intended to be provided thereby, subject to the limitations described
in the next succeeding sentence. There is no exemption under existing law
available to the related Obligor which would interfere with secured party's
right to foreclose or to realize upon the related Medallion Loan Document, other
than that which may be available under the insolvency laws, other laws of
general application relating to or affecting the enforcement of creditors'
rights generally, applicable debt relief or homestead statutes or general
principles of equity. No representations have been made to the related Obligor
by the applicable Seller or the Buyer that are inconsistent with the Medallion
Loan Documents. The Medallion Loan contains an enforceable provision for the
acceleration of the payment of the principal
43
balance of the Medallion Loan in the event that the Medallion is sold or
transferred without the prior written consent of the Buyer.
(kk) Any applicable intangible taxes and documentary stamp taxes were
paid as to the Medallion Loan and each related Medallion Loan Document.
(ll) The Medallion Loan Documents for the Medallion Loan are in
substantially the form of the Standard Form Medallion Loan Documentation with
the exceptions, if any, listed on the Notice of Borrowing and Pledge and
approved in writing by the Buyer.
(mm) The Buyer has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than an Obligor on such
Medallion Loan, directly or indirectly, for the payment of any amount required
by such Medallion Loan.
(nn) The proceeds of such Medallion Loan have been fully disbursed,
there is no obligation or requirement for future advances thereunder, and all
costs, fees and expenses incurred in making or closing the Medallion Loan have
been paid. The Buyer has duly fulfilled in all material respects all obligations
on its part to be fulfilled under or in connection with the related Medallion
Loan Documents and has done nothing to impair the rights of the applicable
Seller or the Buyer in such Medallion Loan Documents or payments with respect
thereto.
(oo) As of the applicable date of transfer thereunder, no Obligor on
the Medallion Loan is bankrupt, is the debtor in a voluntary or involuntary
bankruptcy proceeding, or is the subject of a comparable receivership or
insolvency proceeding, other than Obligors under the protection of a bankruptcy
court or receivership which has approved payment by any such Obligor of the
Medallion Loan.
(pp) To the best of the Buyer's knowledge, there are no proceedings or
investigations pending or, threatened, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality (a)
asserting the invalidity of the related Medallion Loan Documents, (b) seeking to
prevent payment and performance of such Medallion Loan Documents, or (c) seeking
any determination or ruling that might materially and adversely affect the
validity, enforceability or collectability of the Medallion Loan or the related
Medallion Loan Documents.
(qq) The Seller has no knowledge of any circumstance or condition with
respect to the Medallion Loan, the Medallion Collateral with respect thereto or
the related Obligors' credit standing that could reasonably be expected to cause
the Lender to regard the Medallion Loan as unacceptable security, cause the
Medallion Loan to become delinquent or adversely affect the value or
marketability of such Medallion Loan.
(rr) The Medallion Loan is a Boston Medallion Loan, Chicago Medallion
Loan, New York City Medallion Loan, Cambridge Medallion Loan, Newark Medallion
Loan, Philadelphia Medallion Loan or Other Permitted Medallion Loan. The
Medallion securing such Medallion is valid and subsisting and in full force and
effect.
(ss) The applicable Seller and related Obligor shall have complied in
all material respects with all the requirements of the applicable Taxi
Commission.
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(tt) In the case of a New York Medallion Loan, the underlying
Medallion is either an Individual Medallion or a Corporate Medallion.
(uu) The Medallion Loan and other Medallion Loan Documents have not
been extended, waived, amended or modified except in accordance with the
applicable Seller's written Underwriting Guidelines and the Credit and
Collection Policy.
(vv) The Medallion Loans shall have been originated in a manner which
is consistent with the applicable Seller's Underwriting Guidelines, and in
compliance with applicable federal and state consumer protection laws,
including, without limitation, all laws with respect to unfair or deceptive
practices and all laws relating to predatory lending practices.
(ww) In the case of a Medallion Loan that is subject to a Joint
Participation Interest or a Junior Participation Interest, the applicable
participation agreement is an Approved Joint Participation Agreement or an
Approved Junior Participation Agreement, as applicable, and constitutes the
legal, valid and binding obligation of the applicable Permitted Joint
Participant or Permitted Junior Participant and is enforceable against such
Permitted Joint Participant or Permitted Junior Participant in accordance with
the respective terms and conditions of such participation agreement.
(xx) In the case of a Former FSP Medallion Loan, the participation
formerly held by Fresh Start was sold to Medallion Funding in a "true sale"
transaction.
45