Exhibit 10.80
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Third Amendment Agreement
Dated as of April 1, 2002
to Note Purchase Agreements dated as of June 1, 1999
Re: $22,500,000 7.20% Senior Secured Notes, Series A
due June 1, 2004, as amended
and
Re: $22,500,000 7.20% Senior Secured Notes, Series B
due September 1, 2004, as amended
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Medallion Funding Corp.
Third Amendment Agreement
Re: Note Purchase Agreements
dated as of June 1, 1999, as amended
and
$22,500,000 7.20% Senior Secured Notes, Series A
due June 1, 2004, as amended
and
$22,500,000 7.20% Senior Notes, Series B
due September 1, 2004, as amended
To each of the institutional investors
named on Schedule A
attached hereto (the "Holders")
Ladies and Gentlemen:
Reference is made to the separate Note Purchase Agreements each dated as of
June 1, 1999, as amended by that certain First Amendment Agreement dated March
30, 2001, as further amended by that certain Second Amendment Agreement dated
June 29, 2001 (the "Existing Note Purchase Agreements") between Medallion
Funding Corp., a New York corporation (the "Company") and each of the Purchasers
named on Schedule A attached thereto (the "Purchasers"), respectively, pursuant
to which the Company issued and sold (i) $22,500,000 aggregate principal amount
of its 7.20% Senior Secured Notes, Series A, due June 1, 2004 and (ii)
$22,500,000 aggregate principal amount of its 7.20% Senior Secured Notes, Series
B, due September 1, 2004, all of which, as amended, are currently outstanding
(collectively, the "Outstanding Notes"). The Existing Note Purchase Agreements,
as amended hereby, are hereinafter referred to as the "Note Purchase
Agreements."
Recitals
Whereas, the Company desires to make certain amendments to the Existing
Note Purchase Agreements, as hereinafter provided, and, for good and valuable
consideration, hereby requests that the Holders agree to such amendments.
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth for such terms in the Note Purchase Agreements.
Upon the acceptance of the Required Holders and satisfaction of the
conditions precedent set forth herein, this Amendment shall constitute a
contract between the Company and the Holders, but only in the respects
hereinafter set forth:
Amendments to Existing Note Purchase Agreements.
The Existing Note Purchase Agreements are hereby amended as of the
Effective Date (as defined herein) as follows:
Reletter Sections 7.1(c)-(g); add new Section 7.1(c). Section 7.1 of each of the
Existing Note Purchase Agreements is hereby amended by relettering existing
subsections (c), (d), (e), (f) and
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(g) as subsections (d), (e), (f), (g) and (h), respectively, and adding in the
proper alphabetical order the following:
"(c) Compliance Certificates - concurrently with the delivery of the
financial statements required to be furnished under Section 7.1(a) or
7.1(b) hereof, a certificate signed by a Senior Financial Officer of the
Company and M.R. Weiser, Inc., or such other consultant as may be employed
by the Company to provide services equivalent to those presently provided
by M.R. Weiser, Inc., and promptly upon the occurrence of any Default or
Event of Default, a certificate signed by a Senior Financial Officer of the
Company, or the Independent Public Accountants referred to in Section
7.1(b) hereof if a Default or Event of Default shall have occurred during
the period of their review, in each case stating (i) that a review of the
activities of the Company during such period has been made under his or
their, as the case may be, immediate supervision with a view to determining
whether the Company has observed, performed and fulfilled all of its
obligations under this Agreement, and (ii) that there existed during such
period no Default or Event of Default (provided that, as to a certificate
prepared by the Independent Public Accountants, such period, as it relates
to the compliance by the Company with covenants contained in Section 8.8(d)
and Section 10 hereof, shall apply to the fiscal period covered by their
review) or if any such Default or Event of Default exists, specifying the
nature thereof, the duration thereof and what action the Company proposes
to take, or has taken, with respect thereto; each such certificate to be
accompanied by a schedule setting forth the computations as of the end of
such period of each of the financial ratios, tests or covenants specified
in Sections 8.8(d), 10.4, 10.5, and 10.13 through 10.15.
New Sections 7.1(i) and (j). Section 7 of each of the Existing Note Purchase
Agreements is hereby amended by replacing the period at the end of new
subsection 7.1(h) with a semi-colon and adding in the proper alphabetical order
the following:
"(i) Budget Reporting -
(i) to be delivered on the second to last Business Day of each week, a
Budget for the immediately following 13-week period, with the first such
Budget to be delivered no later than April 2, 2002; and
(ii) to be delivered on the second to last Business Day of each week,
a Variance Report for the immediately prior week, with the first such
Variance Report to be delivered no later than April 4, 2002; and
(j) Other Reporting -
(i) to be delivered promptly after receipt, all non-confidential
proposals, indication letters, commitments or other documents provided by
potential refinancing sources for the Company or the Parent, provided that
the Company shall use its reasonable best efforts to have any such
confidentiality
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restrictions not prohibit the provision of such proposals, indication
letters, commitments or other documents to the Holders;
(ii) to be delivered contemporaneously with delivery to the Funding
Banks, all reports and deliveries to be made pursuant to Sections 6.1(f),
(h), (j) and (k) of the Bank Loan Agreement;
(iii) to be delivered contemporaneously with delivery to the Funding
Banks or the Financial Banks, (a) all borrowing base or compliance
certificates prepared by or on behalf of the Company (in addition to those
required by subsection 7.1(h) hereof) or the Parent and (b) any reports,
analyses or other documents prepared by M.R. Weiser, Inc., or the Carl
Marks Group;
(iv) weekly reports on the status of the Company's efforts to achieve
the asset sales required pursuant to Section 9.13 hereof;
(v) weekly reports on the status of the Company's efforts to achieve
the refinancing contemplated by Section 9.14 hereof;
(vi) to be delivered no later than the second to last Business Day of
every week, a listing of Loans underwritten or rewritten in the prior week
in form acceptable to Nightingale & Associates LLC; and
(vii) to be delivered no later than the 10th Business Day of every
month, an intercompany receivable report for the prior month and an
accounts receivable reconciliation report for the prior month.
New Section 7.2. Section 7 of each of the Existing Note Purchase Agreements is
hereby amended by deleting Section 7.2 in its entirety and replacing it with the
following:
"Section 7.2. Intentionally Omitted."
New Section 7.3(c). Section 7 of each of the Existing Note Purchase Agreements
is hereby amended by replacing the period at the end of subsection 7.3(b) with
the word "; and" and adding in proper alphabetical order the following:
"(c) On-going Review, Monitoring - At any time, at the expense of the
Company, permit authorized employees of Nightingale & Associates LLC to
continue reviewing and monitoring, inter alia, the assets, financial
condition, operations and financial planning of the Company and its
Affiliates, in connection with which, the Company shall provide such access
to its books, records and personnel as may be required and otherwise
cooperate with the reasonable requests of Nightingale & Associates LLC."
Amendment to Section 8.1. Section 8.1 of each of the Existing Note Purchase
Agreements is hereby deleted in its entirety and replaced with the following:
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"Section 8.1. Prepayment Certificate. Each prepayment made pursuant to
this Section 8 shall be accompanied by a certificate signed by a Senior
Financial Officer setting forth the date and amount of such prepayment and
the details of the computation thereof, including but not limited to
computation of such accrued interest and Make-Whole Amount as may be due
with respect to such prepayment."
Amendment to Section 8.2. Section 8.2 of each of the Existing Note Purchase
Agreements is hereby deleted in its entirety and replaced with the following:
"Section 8.2 Optional Prepayments. The Company may, at its option,
prepay at any time all, or from time to time any part of, the Notes of each
series, in an amount not less than $1,000,000 in the case of a partial
prepayment, provided any such prepayment is made as set forth in Section
8.8(h) hereof."
Amendment to Section 8.7. Section 8.7 of each of the Existing Note Purchase
Agreements is hereby amended (a) in the definition of "Called Principal," by
inserting the words "or 8.8" after "Section 8.2", (b) in the definition of
"Remaining Scheduled Payments," (i) inserting the words ", as calculated using
the original coupon rate of 7.20%" after "interest thereon" and (ii) inserting
the words ", 8.8" after "Section 8.2", and (c) .in the definition of "Settlement
Date," inserting the words ", 8.8" after "Section 8.2".
Amended and Restated Section 8.8. Section 8.8 of each of the Existing Note
Purchase Agreements is hereby amended and restated in its entirety as follows:
"Section 8.8. Mandatory Prepayments.
(b) Promptly following the occurrence of any Equity Offering or Debt
Offering of the Company or any of its Subsidiaries (following the obtaining
of any necessary consents or approvals hereunder or under any other
applicable agreements), the Company shall prepay or cause any of its
applicable Subsidiaries to prepay the Notes in an amount equal to the
Holders' Pro Rata Share (as defined in the Intercreditor Agreement) of one
hundred percent (100%) of the Net Cash Proceeds thereof, in accordance with
Section 5 of the Intercreditor Agreement;
(c) Promptly following the occurrence of any sale, transfer or
disposition of the Guarantor's Capital Stock by the Parent (following the
obtaining of any necessary consents or approvals hereunder or under any
other applicable agreements for such sale, transfer or disposition) the
Company shall prepay or cause any of its applicable Subsidiaries to prepay
the Notes in an amount equal to the Holders' Pro Rata Share (as defined in
the Intercreditor Agreement) of one hundred percent (100%) of the Net Cash
Proceeds thereof, in accordance with Section 5 of the Intercreditor
Agreement;
(d) Promptly following the occurrence of any sale, transfer or
disposition of Loans or other assets of the Company or any of its
Subsidiaries (following the obtaining of any necessary consents or
approvals hereunder or
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under any other applicable agreements for such sale, transfer or
disposition), including but not limited to any sale pursuant to Section
9.13 hereof but excluding for purposes hereof the Permitted Commercial Sale
and any sale, transfer or other disposition permitted by Section
10.3(b)(ii)(x) hereof, the Company shall prepay or cause any of its
applicable Subsidiaries to prepay the Notes in an amount equal to the
Holders' Pro Rata Share (as defined in the Intercreditor Agreement) of one
hundred percent (100%) of the Net Cash Proceeds thereof, in accordance with
Section 5 of the Intercreditor Agreement, provided that the foregoing shall
not apply to up to seventy-five percent (75%) of the Net Cash Proceeds from
Monthly Permitted Asset Sales completed in any calendar month in the period
commencing on June 1, 2002 and ending on January 31, 2003, to the extent
such Net Cash Proceeds are applied to make the Principal Payment (as
defined in the Bank Loan Agreement) due in the immediately following
calendar month and a concurrent prepayment to the Holders in an amount
equal to the Holders' Pro Rata Share (as defined in the Intercreditor
Agreement) of any such Principal Payment.
(e) In the event that, with respect to any fiscal quarter or fiscal
year, as applicable, ending on or after December 31, 2001, the Company
seeks to pay Dividends (following the obtaining of any necessary consents
or approvals hereunder or under any other applicable agreements for such
sale, transfer or disposition) in excess of ninety percent (90%) of the
Adjusted Net Investment Income of the Company for such fiscal quarter or
such fiscal year (the amount of such excess Dividends is hereafter referred
to as the "Excess Dividends"), the Company shall give 14 days prior written
notice to the Holders of such intention and, concurrently with the payment
of such Excess Dividends, shall prepay the Notes in an amount equal to the
Holders' Pro Rata Share (as defined in the Intercreditor Agreement) of the
greater of Payment Amount One or Payment Amount Two, in accordance with
Section 5 of the Intercreditor Agreement and deliver to the Holders a
certificate signed by a Senior Financial Officer demonstrating compliance
with the calculations required hereby;
(f) Commencing on September 15, 2002, the Holders and the Company
shall negotiate a periodic cash sweep (with the frequency of the sweep to
be mutually acceptable to the Required Holders and the Company), to be
implemented on or before November 1, 2002, which cash sweep shall cause
"excess cash" (the definition of such term to be mutually acceptable to the
Required Holders and the Company) to be paid to the Intercreditor
Collateral Agent for the ratable benefit of the Holders and the Funding
Banks and to be applied, in accordance with Section 5 of the Intercreditor
Agreement, as a prepayment by the Holders and a permanent repayment and
commitment reduction by the Funding Banks;
(g) On or before May 15, 2002, the Company shall prepay the Notes in
an amount equal to the Holders' Pro Rata Share (as defined in the
Intercreditor Agreement) of the sum of the aggregate principal amount of
Total Intercompany Receivables as of the Effective Date less Yellow Cab
Loans of an aggregate
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principal amount of not more than $8,951,000 transferred by the Company to
MFCC prior to the Effective Date;
(h) Without duplication of any of the payments required by Sections
8.8(a) through (f) hereof, upon (i) the making of any Bank Debt Prepayment
in favor of a Person other than the Holders or (ii) the occurrence of any
other event which results in a permanent reduction to availability under
the Bank Loan Agreement, the Company shall concurrently prepay or cause any
of its applicable Subsidiaries to prepay the Notes in an amount equal to
the Holders' Pro Rata Share (as defined in the Intercreditor Agreement) of
such Bank Debt Prepayment or reduction, in accordance with Section 5 of the
Intercreditor Agreement; and
(i) Prepayment of the Notes pursuant to this Section 8.8 shall be at
100% of the principal amount of such Notes, together with interest on such
Notes accrued to the date of prepayment. Payment of the Make-Whole Amount
due with respect to such prepayment shall be deferred until the earlier of
(x) the Maturity Date and (y) the payment in full of all amounts due and
payable under the Notes, provided that any amounts so deferred shall accrue
interest at the same rate as the Notes during such deferral period. Any and
all prepayments made pursuant to this Section 8.8 shall be allocated among
all Notes of each series at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment."
Amendment to Section 9.5. Section 9.5 of each of the Existing Note Purchase
Agreements is hereby amended by deleting the second sentence thereof.
New Section 9.12. Section 9 of each of the Existing Note Purchase Agreements is
hereby amended by adding the following:
"Section 9.12. Audit. Within one Business Day after the Effective
Date, the Company shall provide the Holders with a copy of an
unconditional, unqualified audit report for fiscal year 2001, together with
any management letters issued therewith, provided by Arthur Andersen LLP,
subject to extension based solely upon the current circumstances of Arthur
Andersen LLP."
New Sections 9.13 and 9.14. Section 9 of each of the Existing Note Purchase
Agreements is hereby amended by adding the following:
"Section 9.13 Required Asset Sales.
(j) The Company shall use best efforts to sell, on or before May 31,
2002, all Commercial Loans to dry-cleaning operations or laundromats that
are less than ninety (90) days delinquent for a price not less than 100% of
the aggregate outstanding principal balance of such Commercial Loans; and
(k) on and after August 1, 2002, the Company shall use its best
efforts to sell all participations held by the Company in Medallion Loans
made to
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YellowOne LLC or YellowTwo LLC on or before November 1, 2002, on terms
mutually acceptable to the Company and the Required Holders.
Section 9.14 Refinancing. The Company shall endeavor to refinance the
Notes, the terms of which refinancing must be approved in advance by the
Holders."
Amended and Restated Section 10. Section 10 of each of the Existing Note
Purchase Agreements shall be and is hereby amended and restated in its entirety
to read as follows:
"SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
Section 10.1. Transactions with Affiliates. Without the prior written
consent of the Required Holders, the Company will not, and will not permit
any Subsidiary to,
(l) enter into, or cause, suffer, or permit to exist, any transactions
with any Affiliate (including without limitation the transactions permitted
by subsections (b) and (c) but excluding for purposes hereof the Permitted
Commercial Sale) and any other purchase, sale, lease or exchange of any
property or the rendering of any service to or with any Affiliate, except
in the ordinary course, pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than those that would
be obtainable at the time in a comparable arm's length transaction with any
Person who is not an Affiliate;
(m) (i) sell, discount or otherwise dispose of Loans or any Collateral
to any Affiliate, other than as permitted by Section 10.3(b)(i) hereof; or
(ii) sell, discount or otherwise dispose of other Receivables or
obligations owing to the Company or any of its Subsidiaries to any
Affiliate, with or without recourse, other than as permitted by Section
10.3(b)(ii)(x) hereof; and
(n) transfer any assets or cash to any Affiliate, excluding for
purposes hereof (i) the payment to an Affiliate of such amounts as may be
received on account of Loans serviced by Funding on such Affiliate's
behalf, after deduction of management fees provided under the respective
sale, transfer or participation agreement, and (ii) salary and other usual
and customary intercompany charges.
Section 10.2. Merger, Consolidation, etc. Excluding for purposes
hereof the Permitted Sales or the merger of the Company and MFCC provided
that the Company is the surviving entity and there is no Default or Event
of Default after giving effect to such a merger, the Company shall not, and
shall not permit any of its Subsidiaries to, consolidate with or merge with
any other corporation or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any one or more
Persons, without the express written consent of the Required Holders, and
no such conveyance, transfer or lease shall
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have the effect of releasing the Company or any Successor Corporation from
its liability under this Agreement, the Notes or the other Note Documents.
Section 10.3. Sale of Assets. Without the prior written consent of the
Required Holders, the Company will not, and will not permit any of its
Subsidiaries to:
(a) sell, discount or otherwise dispose of Loans or any Collateral if
a Default or Event of Default has occurred and is continuing or if the
effect of such sale, discount or disposal would be to put the Company in
violation of any of the covenants and agreements in this Agreement;
(b) (i) sell, discount or otherwise dispose of Loans or any
Collateral, other than (x) the Permitted Sales, (y) the sale of Loans to an
Affiliate for a cash price not less than the sum of the outstanding
principal amount thereof, plus any accrued interest and without discount
thereon, and (z) the sale of Loans to any Person who is not an Affiliate
for a cash price not less than the fair market value thereof, provided such
sale is an arm's length transaction made pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and provided
further that, in each case, Holders receive the mandatory prepayment
required by Section 8.8(c) with respect thereto; or
(ii) sell, discount or otherwise dispose of other Receivables or
obligations owing to the Company or any of its Subsidiaries, with or
without recourse, other than (x) in connection with the grant of any
participation in accordance with and to the extent permitted by Section
2.14 of the Bank Loan Agreement (without regard for any amendments to
Section 2.14 thereof entered into after the Effective Date) and consistent
in any event with past practices, (y) to a non-Affiliate for collection in
the ordinary course of business, and (z) to the Intercreditor Collateral
Agent for the ratable benefit of the Holders and the Funding Banks (to be
applied in accordance with the Intercreditor Agreement).
Section 10.4. Minimum Tangible Net Worth. The Company will not suffer
or permit Tangible Net Worth of the Company and its Subsidiaries to be less
than $65,000,000 at any time.
Section 10.5. Maximum Liability Ratio. The Company will not suffer or
permit the ratio of Total Liabilities to Tangible Net Worth to be more than
4.00:1 at any time.
Section 10.6. Intentionally Omitted.
Section 10.7. Intentionally Omitted.
Section 10.8. Limitation on Loans and Investments. The Company will
not, and will not permit any Subsidiary to,
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(a) make, or obligate itself to make, any Loan or advance or
Investment that is not a Domestic Loan or a Domestic Investment;
(b) make, or obligate itself to make, any Loan or Investment that is
not in compliance with the rules and regulations promulgated by any
Governmental Authority to which it is subject, including, without
limitation, the SBI Act and the SBA Regulations promulgated thereunder and
the 1940 Act;
(c) make, or obligate itself to make, any Loan if, after giving effect
to such Loan, the aggregate outstanding principal amount of all Loans made
to any one Person together with its Affiliates would exceed 20% of the
Company's Tangible Net Worth plus Subordinated Debt;
(d) make, or commit to make, or acquire or commit to acquire, any
Commercial Loan to or from any Person if, as a result of such Loan, the
Company's Commercial Loan concentration in any given industry (determined
in accordance with the Standard Industrial Classification promulgated by
the Office of Management and Budget) would exceed in principal amount 25%
of the Company's total Loans outstanding;
(e) make any Investment (including by way of the acquisition of any
Person) in any Subsidiary or Affiliate, or any Person that after taking
into account such Investment would become a Subsidiary or Affiliate, other
than (i) Investments in the Parent existing as of the Effective Date in an
amount not to exceed $8,598,828, (ii) Investments in MFCC existing as of
the Effective Date in an amount not to exceed $8,951,000, provided that
such transfers were made subject to the Holders' Liens, and (iii)
Investments in Medallion Business Credit, LLC existing as of the Effective
Date in an amount not to exceed $7,274;
(f) make, or commit to make, or acquire or commit to acquire, any Loan
unless, with respect to such Loan, the Company reasonably believes it
constitutes or upon funding or acquisition will constitute an Eligible
Loan, provided that it shall not be a breach of this covenant if any Loan
that would otherwise cause the breach is not in a material amount and is
not included in the Net Finance Assets; or
(g) fail to file upon making or acquiring a Loan, all required Company
Financing Statements and Mortgage Assignments, deliver to the Collateral
Agent for the benefit of the Holders and, for so long as the Intercreditor
Agreement and Collateral Agency Agreement are in effect, the Collateral
Agent for the benefit of the Funding Banks, all instruments and chattel
paper with respect to such Loans, or take such other actions as may be
required in order to assure that the Collateral Agent for the benefit of
the Holders receives a first priority perfected security interest or
mortgage interest therein, provided that it shall not be a breach of this
covenant if any Loan that would otherwise cause a breach hereof is not in a
material amount and is not included in the Net Finance Assets.
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Section 10.9. Restricted Payments. The Company will not, and will not
permit any Subsidiary to, make, or obligate itself to make, any Restricted
Payment.
Section 10.10. Portfolio Purchases and Acquisitions. Without the prior
written consent of the Required Holders, the Company will not make or
obligate itself to make any (a) Portfolio Purchase, (b) acquisition of
stock or other equity interests or (c) other asset acquisition, excluding
for purposes hereof the acquisition of assets (other than Loans) provided
that such acquisitions are made in the ordinary course of business and are
consistent with past practices.
Section 10.11. Amendments of Agreements. The Company will not, and
will not permit any Subsidiary to, consent to any amendment, supplement,
waiver or other modification of any of the terms (including acceleration,
covenant, default, subordination, sinking fund, repayment, interest rate or
redemption provisions) contained in, or applicable to, or any security for,
any Permitted Debt or other instrument evidencing or applicable to
Permitted Debt if such amendment, supplement, or other modification would
have a materially adverse effect on the interests of the Holders.
Section 10.12. Capital Expenditures. The Company will not, and will
not permit any Subsidiary to, expend or commit to expend for itself more
than an aggregate of $500,000 in any fiscal year for capital expenditures,
for the acquisition of Equipment or for leasehold improvements.
Section 10.13. Net Finance Assets. The Company shall not suffer or
permit the aggregate unpaid balance of Senior Debt to exceed Net Finance
Assets.
Section 10.14. Minimum EBIT to Interest Expense Ratio. The Company
shall not suffer or permit the ratio, at the end of (a) each fiscal quarter
of the Company ending during the period commencing October 1, 2001 and
ending on June 30, 2002, of (i) EBIT of the Company for such fiscal quarter
to (ii) Interest Expense of the Company for such fiscal quarter to be less
than 1.20:1, and (b) any fiscal quarter of the Company ending after July 1,
2002, of (i) EBIT of the Company for such fiscal quarter to (ii) Interest
Expense of the Company for such fiscal quarter to be less than 1.30:1. For
purposes of calculating this covenant with respect to all fiscal quarters
commencing on or after January 1, 2002, (x) the professional fees listed on
Schedule V to the Bank Loan Agreement (as in effect on the Effective Date),
to the extent that they were expensed in any such quarter and were deducted
from EBIT for such quarter, shall be added to EBIT otherwise determined in
accordance with this Agreement for such quarter, and (y) each of the
following shall be deducted from Interest Expense otherwise determined in
accordance with this Agreement for any such quarter to the extent they were
included in Interest Expense for such quarter: (i) all amendment fees
payable in connection with this Third Amendment or Amendment No. 6 or
Amendment No. 7 to the Bank Loan Agreement, to the extent such fees were
expensed in such quarter, (ii) all Make-Whole Amounts payable hereunder, to
the extent such
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amounts were expensed in such quarter, (iii) all interest accrued hereunder
for such quarter with respect to the incremental increases of 100 basis
points as of the Effective Date and the incremental increases of 50 basis
points on each of June 1, 2002, September 1, 2002, December 1, 2002, March
1, 2003 and June 1, 2003, and (iv) all interest accrued under the Bank Loan
Agreement for such quarter with respect to the incremental increases of 20
basis points as of the Amendment No. 7 Effective Date, and the incremental
increases of 50 basis points on each of June 1, 2002, September 1, 2002,
December 1, 2002, March 1, 2003 and June 1, 2003; provided that in each
case, the aggregate amount of such professional fees, the aggregate amount
of such amendment fees, the aggregate amount of such make-whole premiums,
the aggregate amount of such excess interest due the Holders and the
aggregate amount of such excess interest due the Funding Banks shall not
exceed the respective aggregate amounts set forth for each such category on
Schedule V to the Bank Loan Agreement (as in effect on the Effective Date).
Section 10.15. Intercompany Receivables. The Company shall not suffer
or permit the aggregate principal amount of Total Intercompany Receivables
to exceed (a) from the Effective Date through May 14, 2002, $17,548,828
(comprised of the sum of $8,598,828 plus Yellow Cab Loans of an aggregate
principal amount of not more than $8,951,000 transferred by the Company to
MFCC prior to the Effective Date) at any time, and (b) on and after May 15,
2002, $8,951,000 (which shall be comprised solely of Yellow Cab Loans of an
aggregate principal amount of not more than $8,951,000 transferred by the
Company to MFCC prior to the Effective Date).
Section 10.16. CFO. The Company shall at all times employ a chief
financial officer or interim chief financial officer or a firm performing
such function.
Section 10.17. Effectiveness of Note Documents. The Company shall
ensure that each of the Note Documents, including the Guaranty and the MFCC
Guaranty, shall be in full force and effect, and not canceled, terminated,
revoked or rescinded, in each case otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the holders of the Notes, and shall further ensure that neither
the Company nor any of its Subsidiaries or respective stockholders shall
commence any action at law, suit or in equity or other legal proceedings to
cancel, revoke or rescind any of the Note Documents.
Section 10.18. Additional Indebtedness. The Company shall not, and
shall not permit any Subsidiary, to incur additional Indebtedness without
the prior written consent of the Required Holders, excluding for purposes
hereof (a) Indebtedness arising under the Note Documents, (b) Indebtedness
arising under the Bank Loan Agreement, subject to the terms and conditions
of the Intercreditor Agreement, and (c) unsecured current liabilities
incurred in the ordinary course and paid within ninety (90) days after the
due date thereof (unless diligently contested in good faith by appropriate
proceedings and, if required by the
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Holders, reserved against in conformity with GAAP) other than liabilities
for money borrowed or evidenced by bonds, debentures, notes or similar
instruments.
Section 10.19. Liens. The Company shall not, and shall not permit any
Subsidiary, to create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired, provided that
the foregoing restriction shall not apply to the following liens (the
"Permitted Liens"):
(a) Liens created under the Company Security Agreement, MFCC Security
Agreement and any other Liens in favor of the Holders (including but not
limited to any Liens in favor of the Holders on the Yellow Cab Loans
permitted to be transferred to MFCC in an amount not more than $8,951,000,
provided that such transfers were made subject to the Holders' Liens;
(b) Liens existing on property at the time acquired by the Company
after the date of the financial statements referred to in Section 7.1(b)
hereof, provided that any such Lien was not incurred, directly or
indirectly, in anticipation or contemplation of such acquisition;
(c) Liens constituting renewals, extensions or refundings of Liens
permitted by clause (b) above, provided that the principal amount of the
Indebtedness secured by any such new Lien does not exceed the principal
amount of the Indebtedness being renewed, extended or refunded at the time
of renewal, extension or refunding thereof and that such new Lien attaches
only to the same property theretofore subject to such earlier Lien;
(d) Liens securing taxes, assessments or governmental charges or
levies, or the claims or demands of materialmen, mechanics, carriers,
workmen, repairmen, warehousemen, landlords and other like Persons, not yet
delinquent or which are being actively contested in good faith by
appropriate proceedings and in respect of which adequate reserves in
conformity with GAAP have been provided on the books of the Company;
(e) other Liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, and
which do not in the aggregate materially detract from the value of its
property or assets, or materially impair the use thereof in the operation
of its business;
(f) attachment, judgment and other similar Liens arising in connection
with court proceedings, provided that execution or other enforcement of
such Liens is effectively stayed, the claims secured thereby are being
actively contested in good faith by appropriate proceedings and adequate
reserves in conformity with GAAP have been provided on the books of the
Company;
(g) Liens arising in connection with, and securing the cost of, the
acquisition of Equipment, provided that such Lien attaches to such
Equipment concurrently with or within 90 days after the acquisition thereof
(by purchase,
13
construction or otherwise), and provided further that the aggregate amount
of Indebtedness securing all such Liens shall not at any time exceed
$1,000,000; and
(h) Liens securing the Company's obligations under the Bank Loan
Agreement, subject to the terms and conditions of the Intercreditor
Agreement.
Section 10.20. Securitizations. The Company shall not enter into any
securitization or similar transaction (i.e., any transfer of its assets in
connection with any sale, assignment or other transfer of any receivables,
including accounts receivable, loan receivables, lease receivables or other
payment obligations or any interest in any of the foregoing, which may in
each case include any collections and other proceeds thereof, any
collection or deposit accounts related thereto, or any collateral,
guarantees or other property or claims supporting or securing payment by
the obligor thereon of, or otherwise related to, any such receivables)
without the prior written consent of the Required Holders or as otherwise
permitted by Section 10.3(b) hereof.
Section 10.21. Dividends. The Company shall not make payments of any
dividend on or any distribution in respect of any Capital Stock of the
Company and its Subsidiaries other than the payment of the sum of (a) the
minimum amount of Dividends required to be paid for the Company to retain
its status as a regulated investment company pursuant to Section 851(a) of
the Code, plus (b) the payment of Dividends required to be paid in order to
avoid the imposition of income taxes pursuant to the Code. Subject to the
foregoing, dividends may be declared at any time but the Company shall not
make payments of Dividends prior to July 1, 2002, the Company shall not
make payments of Dividends in excess of $2,000,000 between July 1, 2002 and
September 12, 2002, and for any Dividend paid after September 12, 2002, the
Company shall deliver to the Holders, not less than five days prior to such
payment, a certificate demonstrating pro forma compliance after such
payment with respect to any amortization payments to be made with respect
to Senior Debtor for the remainder of 2002.
Section 10.22. Subsidiaries. The Company will not at any time form,
create, own, acquire or allow to exist any Subsidiary, other than MFCC.
Amendment to Section 11(c)(i). Section 11(c)(i) of each of the Existing Note
Purchase Agreements shall be and is hereby amended in its entirety to read as
follows:
"(i) the Company defaults in the performance of or compliance with any
term in Sections 7.1(d), 8.8, 9.6, 9.8, 9.10, 9.12 or Section 10 hereof,
provided that if, within five (5) days of a default under Section 10.13
hereof, the Company cures such default, no such default shall have occurred
for purposes hereof; or"
Amendment to Section 11(f). Section 11(f) of each of the Existing Note Purchase
Agreements is hereby amended by replacing the figure "$1,000,000" in the three
places where it appears therein with the figure "$250,000".
14
New Section 11(l). Section 11 of each of the Existing Note Purchase Agreements
is hereby amended by (a) replacing the words "; or" at the end of subsection (j)
with a period, (b) replacing the period at the end of subsection (k) with the
word "; or" and (c) adding in the proper alphabetical order the following:
"(l) there exists an Event of Default under the Bank Loan Agreement."
New Section 22.8. Section 22 of each of the Existing Note Purchase Agreements is
hereby amended by adding the following:
"Section 22.8. Indemnification. The Company and its Subsidiaries
further agree to indemnify and save harmless each Holder and each of their
respective officers, directors, employees, agents and Affiliates (each an
"Indemnified Party" and collectively the "Indemnified Parties") from and
against any and all actions, causes of action, suits, losses, liabilities
and damages and expenses (including, without limitation, reasonable
attorneys' fees actually incurred) in connection therewith (herein called
the "Indemnified Liabilities") incurred by any Indemnified Party as a
result of, or arising out of or relating to: (i) any of the transactions
contemplated hereby or by the other Note Documents, (ii) any Indemnified
Party's providing payroll and other cash management services to the Company
or any of its Subsidiaries, or (iii) the use of any proceeds of the Notes
or any of the other Note Documents, except for any Indemnified Liabilities
arising on account of the gross negligence or willful misconduct of the
Indemnified Party seeking indemnity under this Section 22.8; provided
however, that, if and to the extent such agreement to indemnify may be
unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which shall be permissible under applicable law. The parties
hereto further hereby agree that such indemnification obligation provided
in this Section 22.8 shall be Company Obligations under the Note Documents.
The agreements in this Section 22.8 shall survive the payment of the Notes
and related obligations and the termination of the Note Purchase
Agreement."
Amendments to Definitions. The following definitions set forth in Schedule B to
each of the Existing Note Purchase Agreements shall be and are hereby amended by
deleting and restating in their entirety the following definitions:
"Default Rate" shall refer to the rate per annum set forth in clause
(b) of the first paragraph of each of the Notes.
"Dividends" shall mean for both the most recently completed fiscal
quarter of the Company and the most recently completed four fiscal quarters
of the Company, the sum of all (a) paid cash dividends on Capital Stock of
the Company plus (b) accrued and unpaid cash dividends on Capital Stock of
the Company and its Subsidiaries.
"Excess Dividends" shall have the meaning specified in Section 8.8(d).
15
"EBIT" shall mean, with respect to the Company and its Subsidiaries
for any period, the sum of (i) Adjusted Net Investment Income, plus (ii)
Interest Expense, plus (iii) federal, state and local income taxes, if any,
of the Company and its Subsidiaries for such period, computed in accordance
with GAAP.
"Eligible Commercial Loan" shall mean (i) the Permitted Commercial
Loan and (ii) any other Commercial Loan which, as of March 3, 2002,
qualified for inclusion in the Net Finance Assets, provided that, in each
case, (w) the Loan satisfies the Eligibility Requirements, (x) the Loan is
secured by Eligible Real Estate, Eligible Equipment, Eligible Inventory or
Eligible Receivables, (y) the Loan is made to a Person that is operating as
a going concern at all times and (z) the monetary terms, payment terms,
financial covenants, negative covenants and any other material terms
governing the Loan are not amended, modified or waived after March 3, 2002
on account of the Person to whom such Loan was made being unable to comply
(for whatever reason) with such terms.
"Eligibility Requirements" with respect to any Loan, shall mean the
following requirements:
(i) such Loan is made to, and is a recourse obligation of, the Person
to whom such Loan is made,
(j) such Loan is a Medallion Loan or an Eligible Commercial Loan,
(k) such Loan is in compliance with the SBI Act and all SBA
Regulations promulgated thereunder and, after giving effect to such Loan,
the Company and its business and operations taken as a whole, is in
compliance with the SBI Act and all SBA Regulations promulgated thereunder,
(l) such Loan is pledged in accordance with Section 2.1 of the Company
Security Agreement,
(m) the representations, warranties and covenants contained in Section
4.1 of the Company Security Agreement are true and correct, and have been
complied with, with respect to such Loan,
(n) the Collateral Agent, on behalf of the Holders, has a perfected,
first priority security interest in such Loan, subject to the terms of the
Intercreditor Agreement;
(o) the monetary terms, payment terms, financial covenants, negative
covenants and any other material terms governing such Loan have not been
amended, modified or waived more than once in any 12-month period on
account of the Person to whom such Loan was made being unable to comply
(for whatever reason) with such terms, and
(p) such Loan, if a Medallion Loan originated after March 21, 2002, is
in accordance with the written and approved loan policies of Funding in
effect as
16
of the Effective Date hereof, provided that the Holders hereby consent to
the amending of such policies to reflect a change in the maximum loan to
value ratio on primary Medallion collateral, excluding any third-party side
collateral or cross-collateralization, from seventy-five percent (75%) to
eighty percent (80%).
"Indebtedness" shall mean as to any Person and whether recourse is
secured by or is otherwise available against all or only a portion of the
assets of such Person and whether or not contingent, but without
duplication, all items which, in accordance with GAAP, would be included in
determining total liabilities as shown on the liability side of a balance
sheet as at the date Indebtedness of such Person is to be determined (other
than dividends on Capital Stock declared but not paid to the extent such
dividends are not Restricted Payments), and including:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses,
(c) every reimbursement obligation (contingent or otherwise) of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account, or upon the application, of such Person,
(d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities
arising in the ordinary course of business which are not overdue or which
are being contested in good faith),
(e) every obligation of such Person under any Capital Lease,
(f) every obligation of such Person under any Synthetic Lease,
(g) all sales by such Person of (i) accounts or general intangibles
for money due or to become due, (ii) chattel paper, instruments or
documents creating or evidencing a right to payment of money or (iii) other
receivables (collectively "receivables"), whether pursuant to a purchase
facility or otherwise, other than in connection with the disposition of the
business operations of such Person relating thereto or a disposition of
defaulted receivables for collection and not as a financing arrangement,
and together with any obligation of such Person to pay any discount,
interest, fees, indemnities, penalties, recourse, expenses or other amounts
in connection therewith,
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock issued by such Person or any rights measured by the
value of such Capital Stock,
17
(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps (for which payment has not at the time
been made in its entirety), floors, collars and similar agreements), the
value of which is dependent upon interest rates, currency exchange rates,
commodities or other indices (a "derivative contract"),
(j) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to
the extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law,
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clause
(a) through (j) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (i) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (ii) to purchase property, securities
or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation, and
(l) all indebtedness for borrowed money secured by any Lien upon
property owned by such Person (whether or not the holder of such
indebtedness has any recourse against such Person).
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (s) any letter of credit shall mean its face
amount (excluding any reimbursement obligations with respect to any drawing
under such a letter of credit which have been paid), (t) any Indebtedness,
issued at a price that is less than the principal amount at maturity
thereof, shall be the amount of the liability in respect thereof determined
in accordance with GAAP, (u) any Capital Lease shall be the principal
component of the aggregate of the rentals obligation under such Capital
Lease payable over the term thereof that is not subject to termination by
the lessee, (v) any sale of receivables shall be the amount of unrecovered
capital or principal investment of the purchaser (other than Borrower or
any of its wholly-owned Subsidiaries) thereof, excluding amounts
representative of yield or interest earned on such investment, (w) any
Synthetic Lease shall be the stipulated loss value, termination value or
other equivalent amount, (x) any derivative contract shall be determined by
the Agent in a manner consistent with its ordinary practices for valuing
derivative contracts, (y) any equity related purchase obligation shall be
the maximum fixed redemption or purchase price thereof inclusive of any
accrued and unpaid dividends to be
18
comprised in such redemption or purchase price and (z) any guaranty or
other contingent liability referred to in clause (k) shall be an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such guaranty or other contingent obligations is made or,
if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder)
as determined by such Person in good faith.
"Note Documents" shall mean this Agreement, the Other Agreements, the
Notes, the Security Documents, any Mortgage Assignment, the Intercreditor
Agreement, the Company Financing Statements, the Guaranty, the Parent
Pledge Agreement, the Collateral Agency Agreement, the MFCC Guaranty, the
MFCC Pledge Agreement, the MFCC Pledge Agreement and all other documents,
instruments, certificates and notices at any time delivered in connection
with the foregoing, in each case as amended modified or restated from time
to time.
"Restricted Payment" shall mean, with respect to the Company and its
Subsidiaries, any of the following: (i) any defeasance, redemption,
repurchase or other acquisition or retirement for value prior to the
scheduled maturity of any Indebtedness ranked pari passu or subordinate in
right of payment to the Notes or of any Indebtedness having a maturity date
prior to the maturity of the Notes (other than Permitted Debt); (ii) when
paid (or when the proceeds of which are paid) to any Person during the
continuance of any Default or Event of Default, any defeasance, redemption,
repurchase or other acquisition or retirement for value prior to the
scheduled maturity of any Indebtedness permitted by Section 10.18 hereof;
(iii) the redemption, repurchase, retirement or other acquisition of any
Capital Stock of the Company or its Subsidiaries or of any warrants, rights
or options to purchase or acquire any Capital Stock of the Company or its
Subsidiaries (other than pursuant to and in accordance with stock option
plans and other benefit plans for management or employees of the Company
and its Subsidiaries, in an aggregate amount not in excess of $500,000
during any 12 month period, provided that any such redemption, repurchase,
retirement or other acquisition of any Capital Stock of the Company or its
Subsidiaries or of any warrants, rights or options to purchase or acquire
any Capital Stock of the Company or its Subsidiaries otherwise permitted
this parenthetical clause shall not be permitted following the occurrence
and during the continuance of any Default or Event of Default); (iv) any
expenditure or the incurrence of any liability to make any expenditure for
any Investment not permitted by Section 10.8 hereof; (v) when incurred
during the continuance of a Default or Event of Default any expenditure or
the incurrence of any liability to make any expenditure for any Investment
permitted by Section 8.3 hereof (other than Loans made in the ordinary
course of business); (vi) the payment of any principal of, interest on, or
any amounts due in respect of, any Indebtedness not permitted by Section
10.18 hereof; (vii) the payment of any principal of, or interest on, or any
other amounts due in respect of, any Subordinated Debt; and (viii) the
setting aside of any amount or other property for payment of Indebtedness
described above, by means of a sinking fund, defeasance or otherwise.
19
Addition of Definitions. The following definitions of terms shall be and are
hereby added to Schedule B to each of the Existing Note Purchase Agreements in
proper alphabetical order to read as follows:
"Budget" shall mean an itemized 13-week cash flow forecast in form
satisfactory to Nightingale & Associates LLC.
"Company Obligations" shall mean, all of the indebtedness, obligations
and liabilities of the Company under any of the Note Documents whether
direct or indirect, joint or several, fixed, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, now
existing or hereafter arising, created, assumed, incurred or acquired
including (A) any obligation or liability in respect of any breach of any
representation or warranty, and (B) all post-petition interest and funding
loss.
"Financial Banks" shall mean the lending institutions that from time
to time are signatories to the Financial Agreement.
"Funding Banks" shall mean the lending institutions that from time to
time are signatories to the Bank Loan Agreement.
"Intercreditor Collateral Agent" shall mean the Collateral Agent, as
defined in the Intercreditor Agreement.
"Maturity Date" shall mean the earlier of (i) June 30, 2003 and (ii)
the date that all the Notes shall become due and payable pursuant to
Section 12.
"MFCC" shall mean Medallion Funding Chicago Corp., a Delaware
corporation.
"MFCC Guaranty" shall mean the Guaranty dated as of the date hereof,
by MFCC to the Holders, in form and substance satisfactory to the Holders,
as the same may be amended, restated, modified or supplemented form time to
time.
"MFCC Pledge Agreement" shall mean the Pledge Agreement dated as of
the date hereof, between the Company and the Collateral Agent, for the
benefit of the Holders, in form and substance satisfactory to the Holders,
as the same may be amended, restated, modified or supplemented from time to
time.
"MFCC Security Agreement" shall mean the Security Agreement dated as
the date hereof, between MFCC and the Collateral Agent, for the benefit of
the Holders, in form and substance satisfactory to the Holders, as the same
may be amended, restated, modified or supplemented form time to time.
"Monthly Permitted Asset Sales" shall mean, for each calendar month
for the period commencing on July 1, 2002 and ending on January 31, 2003,
sales of assets otherwise permitted under this Agreement in an aggregate
principal amount
20
equal to the amount necessary to result in Net Cash Proceeds of not more
than $10,667,000 for any such calendar month.
"Permitted Commercial Loan" shall mean the Commercial Loan made by the
Company to Route 110 Service Corp. and 516 Realty Corp. with an outstanding
principal amount of no greater than $450,000 as of the Effective Date.
"Permitted Commercial Sale" shall mean the sale by the Company of
Commercial Loans of an aggregate outstanding principal amount of $3,000,000
to Freshstart Capital Corp. for a price payable in cash in an amount equal
to 100% of the aggregate outstanding principal amount of such Commercial
Loans, plus any interest, fees or costs accrued and unpaid with respect to
such Commercial Loans.
"Permitted Sales" shall mean (i) the Permitted Commercial Sale and
(ii) any sales permitted by Section 9.13 hereof.
"Synthetic Lease" shall mean any lease of goods or other property,
whether real or personal, which is treated as an operating lease under GAAP
and as a loan or financing for U.S. income tax purposes.
"Third Amendment" shall mean this Third Amendment Agreement among the
Company, MFCC, the Guarantor and the Holders.
"Variance Report" shall mean the weekly variance from the Budget
delivered with respect to the prior week in form satisfactory to
Nightingale & Associates LLC.
Amendment of Notes. The Outstanding Series A Notes and Exhibit 1(a) to the
Existing Note Purchase Agreements shall be and are hereby amended to be in the
form of Exhibit E hereto. The Outstanding Series B Notes and Exhibit 1(b) to the
Existing Note Purchase Agreements shall be and are hereby amended to be in the
form of Exhibit F hereto.
Waivers.
Events of Default. Each Holder hereby waives the Company's compliance with
certain covenants on the terms and conditions and as more fully set forth on
Schedule B hereto.
Consents.
Permitted Commercial Sale. On the Effective Date, the Holders consent to the
Permitted Commercial Sale.
Make-Whole Amounts. The Holders consent to the deferral of payment of the
Make-Whole Amounts due and payable, or that may become due and payable, with
respect to (i) the prepayment of $1,000,000 received by the Holders on February
11, 2002, (ii) the prepayment of $11,086,000 to be received on or before the
Effective Date pursuant to Section 6.7 herein, and (iii) any further prepayments
received after the Effective Date, until the earlier of (x) the Maturity Date
and (y) the payment in full of all amounts due and payable under the Notes,
21
provided that any amounts so deferred shall accrue interest at the same rate as
the Notes during such deferral period.
Consent to Amendment of Bank Loan Agreement, Etc.
For purposes of Section 2 of the Intercreditor Agreement and Section 10.11
hereof, each of the Holders hereby consents to (a) Amendment No. 3 and Amendment
No. 4 to the Financial Agreement in the forms attached hereto as Exhibit A and
Exhibit B, respectively, and (b) Amendment No. 6 and Amendment No. 7 to the Bank
Loan Agreement in the forms attached hereto as Exhibit C and Exhibit D,
respectively.
Representations and Warranties
The Company represents and warrants to the Holders as of the date hereof,
and as of any date on which the conditions set forth in Section 6 below are met,
that:
Organization; Power and Authority. The Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the corporate power
and the corporate authority to own or hold under lease the Properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, and to execute, deliver and perform this Amendment and the
Note Documents.
Authorization, Etc. The execution and delivery by the Company of this Amendment
and all other instruments and agreements required to be executed and delivered
by the Company in connection with the transactions contemplated hereby or
referred to herein (collectively, the "Amendment Documents"), and the
performance by the Company of any of its obligations and agreements under the
Amendment Documents and the Note Purchase Agreements and the other Note
Documents, as amended hereby, have been duly authorized by all necessary
corporate action on the part of the Company, each of the Amendment Documents has
been duly executed and delivered by the Company. Each of the Amendment
Documents, the Existing Note Purchase Agreements and the other Note Documents,
as amended hereby, constitutes the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Compliance with Laws, Other Instruments, Etc. The execution, delivery and
performance by the Company of this Amendment and the other Note Documents do not
and will not (a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Subsidiary may be bound or affected, (b)
conflict with
22
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority known to be applicable to the Company or any Subsidiary.
No Default or Event of Default. After giving effect to this Amendment, no
Default or Event of Default shall have occurred and be continuing.
Compliance. The Company has performed and complied in all material respects with
all terms and conditions herein required to be performed or complied with by it
prior to or at the time hereof.
No Consents. No approval or consent of, or filing with, any Governmental
Authority is required to make valid and legally binding the execution, delivery
or performance by the Company of this Amendment or the Note Purchase Agreements
or other Note Documents, as amended hereby, or the consummation by the Company
of the transactions among the parties contemplated hereby and thereby or
referred to herein, other than filings which have been made.
Representations in Note Purchase Agreements. The representations and warranties
contained in Section 5 of the Note Purchase Agreements were true and correct at
and as of the date made. Except (i) to the extent of changes resulting from
transactions contemplated or permitted by the Note Purchase Agreements and the
other Note Documents, changes occurring in the ordinary course of business
(which changes, either singly or in the aggregate, have not been materially
adverse), (ii) to the extent that such representations and warranties relate
expressly to an earlier date, and (iii) after giving effect to the provisions
hereof, such representations and warranties, after giving effect to this
Amendment, also are correct at and as of the date hereof. The Company
acknowledges and agrees that the representations and warranties contained in
this Amendment shall constitute representations and warranties referred to in
Section 5 of the Note Purchase Agreements, a breach of which shall constitute an
Event of Default.
Priority; Continued Effectiveness. Except as otherwise permitted under the Note
Purchase Agreements, the Collateral Agent, for the ratable benefit of the
Holders, has a valid and perfected first priority security interest (subject to
the terms of the Intercreditor Agreement and the Collateral Agency Agreement) in
and to all Collateral, enforceable against the Company and all third parties in
all relevant jurisdictions and securing the payment of the Notes and all other
sums payable under or in connection with the Note Documents. Each of the Company
Security Agreement, the Parent Pledge Agreement and the MFCC Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Holders, a valid and perfected first priority security interest (subject to
the terms of the Intercreditor Agreement and the Collateral Agency Agreement and
except as otherwise permitted hereunder) in and to the Collateral described
therein securing the payment of the Notes and all other sums payable under or in
connection with the Note Documents, whether incurred prior to or after the
Effective Date. No additional Company Financing Statements are required to be
filed in order to maintain the perfection and priority of the security interests
created pursuant to the Company Security Agreement, the Parent Pledge Agreement
and the MFCC Pledge Agreement.
23
Investment Company Act. The Company is a closed-end management investment
company registered under the 1940 Act. The Company is an "investment company,"
as such term is defined in the 1940 Act. The Company is not a "business
development company," as such term is defined in the 1940 Act. The purchase of
the Notes by the holders, the application of the proceeds and repayment thereof
by the Company and the performance of the transactions contemplated by this
Agreement and the other Note Documents did not and will not violate any
provision of said Act, or any rule, regulation or order issued by the SEC
thereunder.
Conditions Precedent.
This Third Amendment Agreement shall be effective when each of the
following conditions shall have been satisfied (the "Effective Date"):
Execution. Each of the Holders shall have received this Amendment, duly executed
by the Company. The Holders shall have consented to this Amendment as evidenced
by their execution thereof.
Representations and Warranties. The representations and warranties of the
Company set forth in Section 5 hereof are true and correct as of the Effective
Date.
Related Transactions.
(a) Kaye Scholer LLP on behalf of the Holders shall have received
executed copies of Amendment No. 3 and Amendment No. 4 to the Financial
Agreement in the forms attached hereto as Exhibit A and Exhibit B,
respectively.
(b) Kaye Scholer LLP on behalf of the Holders shall have received
executed copies of Amendment No. 6 and Amendment No. 7 to the Bank Loan
Agreement in the forms attached hereto as Exhibit C and Exhibit D,
respectively.
Amendment Fee. The Holders shall have received by wire transfer to each Holder's
account specified in Schedule A to the Existing Note Purchase Agreements their
pro rata portion of the first installment of the Amendment Fee set forth in
section 7.5 hereof.
Payment of Fees. The Company shall have paid those fees and disbursements of the
Holders' special counsel, Kaye Scholer LLP, and Kaye Scholer LLP's financial
advisor, Nightingale & Associates LLC, incurred in connection with the
negotiation, preparation, execution and delivery of this Amendment, as evidenced
by invoices submitted at or prior to closing.
Replacement Notes. The Holders shall each have received amended and restated
replacement Notes executed by the Company issued pursuant to Section 13.2 of the
Existing Note Purchase Agreements, with such Notes to mature upon the earlier of
(a) June 30, 2003, and (ii) acceleration of the Notes upon an Event of Default
pursuant to Section 12 of the Existing Note Purchase Agreements.
Principal Repayment. The Holders shall have received a cash payment of
$11,086,000, which shall be applied in full to reduce the outstanding principal
of the Notes.
24
MFCC Documents. The Holders shall have received the MFCC Guaranty executed by
MFCC in favor of the Holders, the MFCC Security Agreement, executed by MFCC in
favor of the Collateral Agent for the benefit of the Holders, and the MFCC
Pledge Agreement, executed by the Company in favor of the Collateral Agent for
the benefit of the Holders.
Opinion. Kaye Scholer LLP on behalf of the Holders shall have received a
favorable opinion of Willkie Farr & Gallagher, counsel for the Company, in form
and substance reasonably satisfactory to the Holders.
Consent of Banks. The Company shall have received the required consents of the
Funding Banks and the Financial Banks to all the transactions contemplated
hereunder.
Refinancing Proposals. Kaye Scholer LLP on behalf of the Holders shall have
received all proposals, indication letters or commitments provided by potential
refinancing sources for the Company or the Parent received on or before the date
hereof.
Upon receipt of all of the foregoing, this Amendment shall become effective.
Miscellaneous.
GOVERNING LAW. This amendment shall be governed by, and construed in accordance
with, the law of the State of New York (without giving effect to the conflicts
of laws principles thereof).
Counterparts. This Amendment may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
Amendment.
Captions. The descriptive headings of the various Sections or parts of this
Amendment are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
References to Existing Note Purchase Agreements or Security Agreement. Any and
all notices, requests, certificates and other instruments executed and delivered
concurrently with or after the effectiveness of this Amendment may refer to the
Existing Note Purchase Agreements and the Outstanding Notes or the Security
Agreement without making specific reference to this Amendment but nevertheless
all such references shall be deemed to include this Amendment unless the context
shall otherwise require.
Amendment Fee. The Company shall pay to the Holders an amendment fee (the
"Amendment Fee"), calculated and payable as follows: (i) a fee equal to 0.20% of
the outstanding principal balance of the Notes as of March 1, 2002 , which fee
shall be paid on or before the Effective Date and shall be fully earned and
non-refundable as of the Effective Date; and (ii) an additional fee equal to
0.20% of the outstanding principal balance of the Notes on the Term-Out Date (as
defined in the Bank Loan Agreement on the date hereof), which fee shall be paid
on such Term-Out Date and shall be fully earned and non-refundable as of such
Term-Out Date.
Expenses. Whether or not the transactions herein contemplated shall be
consummated, the Company agrees to pay and to remain current in the payment of
any and all expenses relating to
25
the subject matter of this Amendment incurred by the Holders, including but not
limited to the reasonable out-of-pocket expenses of the Holders and the
reasonable fees and expenses of Kaye Scholer LLP, special counsel for the
Holders, and Kaye Scholer LLP's financial advisor, Nightingale & Associates LLC.
Ratification. Except to the extent hereby modified or amended, the Existing Note
Purchase Agreements, the Security Agreement as amended hereby and the other Note
Documents are in all respects hereby ratified, confirmed and approved by the
parties hereto.
Release.
Release. In order to induce the holders of the Notes to enter into this
Amendment, the Company, on behalf of itself and its Subsidiaries, acknowledges
and agrees that: (a) such Person does not have any claim or cause of action
against any holder of Notes (or any of its respective directors, officers,
employees or agents); (b) such Person does not have any offset right,
counterclaim or defense of any kind against any of their respective obligations,
indebtedness or liabilities to any holder; and (c) each of the holders of the
Notes has heretofore properly performed and satisfied in a timely manner all of
its obligations to such Person. The Company, on behalf of itself and its
Subsidiaries, wishes to eliminate any possibility that any past conditions,
acts, omissions, events, circumstances or matters would impair or otherwise
adversely affect any of the holders' rights, interests, contracts, collateral
security or remedies. Therefore, the Company, on behalf of itself and its
Subsidiaries, unconditionally releases, waives and forever discharges (x) any
and all liabilities, obligations, duties, promises or indebtedness of any kind
of any holder of Notes to such Person, except the obligations to be performed by
any holder on or after the date hereof as expressly stated in this Amendment,
the Note Purchase Agreements and the other Note Documents, and (y) all claims,
offsets, causes of action, suits or defenses of any kind whatsoever (if any),
whether arising at law or in equity, whether known or unknown, which such Person
might otherwise have against any holder of Notes or any of its directors,
officers, employees or agents, in either case (x) or (y), on account of any past
or presently existing condition, act, omission, event, contract, liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind.
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26
This Third Amendment is hereby accepted and agreed to as of the date
aforesaid.
Medallion Funding Corp.
By /s/ Alvin Murstein
--------------------------------------
Name: Alvin Murstein
Title: Chief Executive Officer
By /s/ James E. Jack
--------------------------------------
Name: James E. Jack
Title: Chief Financial Officer
This Third Amendment is hereby accepted and agreed to as of the date
aforesaid.
The Travellers Insurance Company
By /s/ Denise T. Duffe
-------------------------------------
Name: Denise T. Duffe
Title: Investment Officer
First Citicorp Life Insurance Company
By Travelers Asset Management International
Company LLC
By /s/ Denise T. Duffe
-------------------------------------
Name: Denise T. Duffe
Title: Investment Officer
Citicorp Life Insurance Company
By Travelers Asset Management International
Company LLC
By /s/ Denise T. Duffe
-------------------------------------
Name: Denise T. Duffe
Title: Investment Officer
United of Omaha Life Insurance Company
By /s/ Curtis R. Caldwell
-------------------------------------
Name: Curtis R. Caldwell
Title: First Vice President
Companion Life Insurance Company
By /s/ Curtis R. Caldwell
-------------------------------------
Name: Curtis R. Caldwell
Title: Authorized Signatory
Each of the undersigned hereby reaffirms and ratifies all of its agreements
and obligations under the Note Documents which such Person is party to, and
confirms that it consents to the amendment of the Existing Note Purchase
Agreements as set forth above.
Medallion Taxi Media, Inc.
By /s/ Alvin Murstein
-------------------------------------------
Name: Alvin Murstein
Title: Chief Executive Officer and Director
By /s/ Michael Leible
-------------------------------------------
Name: Michael Leible
Title: President
Medallion Financial Corp.
By /s/ Alvin Murstein
-------------------------------------------
Name: Alvin Murstein
Title: President and Director
By /s/ James E. Jack
-------------------------------------------
Name: James E. Jack
Title: Chief Financial Officer
Medallion Funding Chicago Corp.
By /s/ Alvin Murstein
-------------------------------------------
Name: Alvin Murstein
Title: Chairman and Chief Executive Officer
By /s/ James E. Jack
-------------------------------------------
Name: James E. Jack
Title: Chief Executive Officer
Schedule A
Name of Holder of Principal Amount and Series Of
Outstanding Notes Outstanding Notes Held as Of
The Effective Date
The Travelers Insurance Company $7,314,222 Series A
$7,314,222 Series B
First Citicorp Life Insurance Company $ 731,422 Series A
$ 731,422 Series B
Citicorp Life Insurance Company $ 731,422 Series A
$ 731,422 Series B
$ 365,711 Series A
$ 365,711 Series B
United of Omaha Life Insurance Company $6,217,089 Series A
$6,217,089 Series B
Companion Life Insurance Company $1,097,133 Series A
$1,097,133 Series B
Schedule B
Waived Events of Default
MFCC/Yellow Cab Loans. Each Holder hereby waives any Default or Event of Default
which may have occurred and may be continuing under Sections 9.5 and 10.2(b) of
the Existing Note Purchase Agreements as a result of the creation or existence
of MFCC or the transfer of Yellow Cab Loans to MFCC prior to the Effective Date
in an aggregate principal amount of not more than $8,951,000, provided such
transfers were and shall remain subject to the Liens of the Holders or the
Collateral Agent for the benefit of the Holders.
Interest Payment Deferral. Each Holder hereby waives any Default or Event of
Default which may have occurred under Section 6.7 of the Existing Note Purchase
Agreements as a result of the Company's failure to pay interest due with respect
to the prepayment of $1,000,000 received by the Holders on February 11, 2002,
provided such payment is made by the Effective Date.
Make-Whole Amount. Each Holder hereby waives, until the earlier of (x) the
Maturity Date and (y) the payment in full of all amounts due and payable under
the Notes, any Default or Event of Default which have occurred or would
otherwise occur as a result of the Company's failure to pay the Make-Whole
Amounts due and payable with respect to (i) the prepayment of $1,000,000
received on February 11, 2002, (ii) the prepayment of $11,086,000 received
pursuant to Section 6.7 herein, and (iii) any further prepayments received by
the Holders after the Effective Date.
Minimum Net Finance Assets. Each Holder hereby waives any Default or Event of
Default which may have occurred under Section 10.6 of the Existing Note Purchase
Agreements for (i) the fiscal quarter ended September 30, 2001 and (ii) the
month ended November 30, 2001, provided that at no time was the ratio less than
0.90:1.0.
Minimum Net Income to Interest Expense Ratio. Each Holder hereby waives any
Default or Event of Default which may have occurred under Section 10.7 of the
Existing Note Purchase Agreements for (i) for the fiscal quarter ended September
30, 2001, and (ii) for the fiscal year ended December 31, 2001, provided that at
no time was the ratio less than 0.70:1.0.
Limitations on Loans and Investments. Each Holder hereby waives any Default or
Event of Default which occurred or would otherwise occur under Section 10.8(e)
hereof solely with respect to: (i) Investments in the Parent existing as of the
Effective Date, provided that as of such date, such Investments did not exceed
$8,598,828; (ii) Investments in MFCC existing as of the Effective Date, provided
that as of such date, such Investments did not exceed $8,951,000, and such
transfers were and shall remain subject to the Liens of the Holders or the
Collateral Agent for the benefit of the Holders; and (iii) Investments in
Medallion Business Credit, LLC existing as of the Effective Date, provided that
as of such date, such Investments did not exceed $7,274.
Portfolio Purchases. Each Holder hereby waives any Default or Event of Default
that may have occurred under Section 10.10 hereof solely as a result of the
Company's purchase, on January 31, 2002, of Loans from the Parent for an
aggregate purchase price of $8,085,294.10.
Net Finance Assets. Each Holder hereby waives any Default or Event of Default
that may have occurred under Section 10.13 of the Existing Note Purchase
Agreements for (i) the fiscal quarter
ended September 30, 2001 and (ii) the month ended November 30, 2001, provided
that the aggregate unpaid balance of all Senior Debt did not exceed Net Finance
Assets (i) by more than $486,684 for the fiscal quarter ended September 30,
2001, and (ii) by more than $600,000 for the month ended November 30, 2001.
Minimum EBIT to Interest Expense Ratio. Each Holder hereby waives any Default or
Event of Default that may have occurred under Section 10.14 of the Existing Note
Purchase Agreements for (i) the fiscal quarter ended September 30, 2001 and (ii)
the month ended November 30, 2001, provided that at no time was the ratio less
than 0.70:1.0.
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2
Exhibit A
Amendment No. 3 to the Financial Agreement
Exhibit B
Amendment No. 4 to the Financial Agreement
Exhibit C
Amendment No. 6 to the Bank Loan Agreement
Exhibit D
Amendment No. 7 to the Bank Loan Agreement
Exhibit E
Form of Series A Notes
Medallion Funding Corp.
8.350% Senior Secured Note, Series A, Due June 30, 2003
No. RA-[___] April [__], 2002
[$_________] PPN 58403# AB 3
FOR VALUE RECEIVED, the undersigned, Medallion Funding Corp. (herein called
the "Company"), a corporation organized and existing under the laws of the State
of New York, hereby promises to pay to [insert name of payee], or registered
assigns, the principal sum of [_______________] Dollars on June 30, 2003, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof, together with any Make-Whole Amount for which
payment has been deferred by agreement of the Company and the holder hereof (as
set forth in the Note Purchase Documents referred to below), at the rate of
8.35% per annum from the date hereof to and including May 31, 2002, at the rate
of 8.85% per annum from June 1, 2002 to and including August 31, 2002, at the
rate of 9.35% per annum from September 1, 2002 to and including November 30,
2002, at the rate of 9.85% per annum from December 1, 2002 to and including
February 28, 2003, at the rate of 10.35% per annum from March 1, 2003 to and
including May 31, 2003, and at the rate of 10.85% per annum from June 1, 2003
and thereafter, payable monthly in arrears, on the first Business Day of each
month, commencing with the first Business Day in the month of April 2002, until
the principal hereof shall have become due and payable, and (b) without
duplication of amounts under clause (a), to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and during the continuance of an Event of Default (as
defined in the Note Purchase Agreements referred to below), payable monthly in
arrears as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i) the
rate otherwise borne hereunder plus 2% or (ii) 2% over the rate of interest
publicly announced by Citibank, N.A. from time to time in New York, New York as
its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.
This Note is one of a series of Senior Secured Notes, Series A (herein
called the "Notes") issued, together with the Company's 8.35% Senior Secured
Notes, Series B, due June 30, 2003, pursuant to separate Note Purchase
Agreements, dated as of June 1, 1999 (as from time to time amended, the "Note
Purchase Agreements"), between the Company and the respective Purchasers named
therein and is entitled to the benefits thereof. Each holder of this Note will
be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.
This Note is secured by, and this Note and the holder hereof are also
entitled equally and ratably with the holders of all other Notes to the rights
and benefits provided pursuant to the terms and provisions of the Security
Documents (as such term is defined in the Note Purchase Agreements). Reference
is hereby made to each of the foregoing for a statement of the nature and extent
of the benefits afforded thereby and the rights of the holders in respect
thereof.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to prepayment, in whole or from time to time in part,
at the times and on the terms specified in the Note Purchase Agreements.
If an Event of Default, as defined in the Note Purchase Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note amends and restates in its entirety that certain 7.35% Senior
Secured Note, Series A, due June 1, 2004, number RA-[___], in the aggregate
principal amount of [$__________] pursuant to that certain Third Amendment
Agreement dated as of April [__], 2002 to the Note Purchase Agreements dated as
of June 1, 1999.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
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2
Medallion Funding Corp.
By:
--------------------------------
Name: Alvin Murstein
Title: Chief Executive Officer
By:
--------------------------------
Name: James E. Jack
Title: Chief Financial Officer
Exhibit F
Form of Series B Notes
Medallion Funding Corp.
8.350% Senior Secured Note, Series B, Due June 30, 2003
No. RB-[___] April [__], 2002
[$_________] PPN 58403# AD 9
FOR VALUE RECEIVED, the undersigned, Medallion Funding Corp. (herein called
the "Company"), a corporation organized and existing under the laws of the State
of New York, hereby promises to pay to [insert name of payee], or registered
assigns, the principal sum of [_______________] Dollars on June 30, 2003, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof, together with any Make-Whole Amount for which
payment has been deferred by agreement of the Company and the holder hereof (as
set forth in the Note Purchase Agreements referred to below), at the rate of
8.35% per annum from the date hereof to and including May 31, 2002, at the rate
of 8.85% per annum from June 1, 2002 to and including August 31, 2002, at the
rate of 9.35% per annum from September 1, 2002 to and including November 30,
2002, at the rate of 9.85% per annum from December 1, 2002 to and including
February 28, 2003, at the rate of 10.35% per annum from March 1, 2003 to and
including May 31, 2003, and at the rate of 10.85% per annum from June 1, 2003
and thereafter, payable monthly in arrears, on the first Business Day of each
month, commencing with the first Business Day in the month of April 2002, until
the principal hereof shall have become due and payable, and (b) without
duplication of amounts under clause (a), to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and during the continuance of an Event of Default (as
defined in the Note Purchase Agreements referred to below), payable monthly in
arrears as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i) the
rate otherwise borne hereunder plus 2% or (ii) 2% over the rate of interest
publicly announced by Citibank, N.A. from time to time in New York, New York as
its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.
This Note is one of a series of Senior Secured Notes, Series B (herein
called the "Notes") issued, together with the Company's 8.35% Senior Secured
Notes, Series A, due June 30, 2003, pursuant to separate Note Purchase
Agreements, dated as of June 1, 1999 (as from time to time amended, the "Note
Purchase Agreements"), between the Company and the respective Purchasers named
therein and is entitled to the benefits thereof. Each holder of this Note will
be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.
This Note is secured by, and this Note and the holder hereof are also
entitled equally and ratably with the holders of all other Notes to the rights
and benefits provided pursuant to the terms and provisions of the Security
Documents (as such term is defined in the Note Purchase Agreements). Reference
is hereby made to each of the foregoing for a statement of the nature and extent
of the benefits afforded thereby and the rights of the holders in respect
thereof.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to prepayment, in whole or from time to time in part,
at the times and on the terms specified in the Note Purchase Agreements.
If an Event of Default, as defined in the Note Purchase Agreements, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreements.
This Note amends and restates in its entirety that certain 7.35% Senior
Secured Note due September 1, 2004, number RB-[___], in the aggregate principal
amount of [$_________] pursuant to that certain Third Amendment Agreement dated
as of April [__], 2002 to the Note Purchase Agreements dated as of June 1, 1999.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
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2
Medallion Funding Corp.
By:
---------------------------------
Name: Alvin Murstein
Title: Chief Executive Officer
By:
---------------------------------
Name: James E. Jack
Title: Chief Financial Officer
TABLE OF CONTENTS
-----------------
SECTION 1. Amendments to Existing Note Purchase Agreements........................................2
- ---------- -----------------------------------------------
Section 1.1 Reletter Sections 7.1(c)-(g); add new Section 7.1(c)...................................2
----------- ----------------------------------------------------
Section 1.2 New Sections 7.1(i) and (j)............................................................3
----------- ---------------------------
Section 1.3 New Section 7.2........................................................................4
----------- ---------------
Section 1.4 New Section 7.3(c).....................................................................4
----------- ------------------
Section 1.5 Amendment to Section 8.1...............................................................4
----------- ------------------------
Section 1.6 Amendment to Section 8.2...............................................................5
----------- ------------------------
Section 1.7 Amendment to Section 8.7...............................................................5
----------- ------------------------
Section 1.8 Amended and Restated Section 8.8.......................................................5
----------- --------------------------------
Section 1.9 Amendment to Section 9.5...............................................................7
----------- ------------------------
Section 1.10 New Section 9.12.......................................................................7
------------ ----------------
Section 1.11 New Sections 9.13 and 9.14.............................................................7
------------ --------------------------
Section 1.12 Amended and Restated Section 10........................................................8
------------ -------------------------------
Section 1.13 Amendment to Section 11(c)(i).........................................................14
------------ -----------------------------
Section 1.14 Amendment to Section 11(f)............................................................14
------------ --------------------------
Section 1.15 New Section 11(l).....................................................................15
------------ -----------------
Section 1.16 New Section 22.8......................................................................15
------------ ----------------
Section 1.17 Amendments to Definitions.............................................................15
------------ -------------------------
Section 1.18 Addition of Definitions...............................................................20
------------ -----------------------
Section 1.19 Amendment of Notes....................................................................21
------------ ------------------
SECTION 2. Waivers...............................................................................21
- ---------- -------
Section 2.1 Events of Default.....................................................................21
----------- -----------------
SECTION 3. Consents..............................................................................21
- ---------- --------
Section 3.1 Permitted Commercial Sale.............................................................21
----------- -------------------------
Section 3.2 Make-Whole Amounts....................................................................21
----------- ------------------
SECTION 4. Consent to Amendment of Bank Loan Agreement, Etc......................................22
- ---------- -------------------------------------------------
SECTION 5. Representations and Warranties........................................................22
- ---------- ------------------------------
Section 5.1 Organization; Power and Authority.....................................................22
----------- ---------------------------------
Section 5.2 Authorization, Etc....................................................................22
----------- -------------------
Section 5.3 Compliance with Laws, Other Instruments, Etc..........................................22
----------- --------------------------------------------
Section 5.4 No Default or Event of Default........................................................23
----------- ------------------------------
Section 5.5 Compliance............................................................................23
----------- ----------
Section 5.6 No Consents...........................................................................23
----------- -----------
Section 5.7 Representations in Note Purchase Agreements...........................................23
----------- -------------------------------------------
Section 5.8 Priority; Continued Effectiveness.....................................................23
----------- ---------------------------------
Section 5.9 Investment Company Act................................................................24
----------- ----------------------
SECTION 6. Conditions Precedent..................................................................24
- ---------- --------------------
Section 6.1 Execution.............................................................................24
----------- ---------
Section 6.2 Representations and Warranties........................................................24
----------- ------------------------------
Section 6.3 Related Transactions..................................................................24
----------- --------------------
i
Section 6.4 Amendment Fee.........................................................................24
----------- -------------
Section 6.5 Payment of Fees.......................................................................24
----------- ---------------
Section 6.6 Replacement Notes.....................................................................24
----------- -----------------
Section 6.7 Principal Repayment...................................................................24
----------- -------------------
Section 6.8 MFCC Documents........................................................................25
----------- --------------
Section 6.9 Opinion...............................................................................25
----------- -------
Section 6.10 Consent of Banks......................................................................25
------------ ----------------
Section 6.11 Refinancing Proposals.................................................................25
------------ ---------------------
SECTION 7. Miscellaneous.........................................................................25
- ---------- -------------
Section 7.1 Governing Law.........................................................................25
----------- -------------
Section 7.2 Counterparts..........................................................................25
----------- ------------
Section 7.3 Captions..............................................................................25
----------- --------
Section 7.4 References to Existing Note Purchase Agreements or Security Agreement.................25
----------- ---------------------------------------------------------------------
Section 7.5 Amendment Fee.........................................................................25
----------- -------------
Section 7.6 Expenses..............................................................................25
----------- --------
Section 7.7 Ratification..........................................................................26
----------- ------------
SECTION 8. Release...............................................................................26
- ---------- -------
Section 8.1 Release...............................................................................26
----------- -------
ii