Exhibit 10.85
SECURITY AGREEMENT
among
MEDALLION FUNDING CHICAGO CORP., as debtor,
and
FLEET NATIONAL BANK (f/k/a, Fleet Noteholder, National Association) as
Collateral Agent and secured party, for the benefit of
THE TRAVELERS INSURANCE COMPANY
FIRST CITICORP LIFE INSURANCE COMPANY
CITICORP LIFE INSURANCE COMPANY
UNITED OF OMAHA LIFE INSURANCE COMPANY
COMPANION LIFE INSURANCE COMPANY
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dated as of April 1, 2002
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SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of April 1, 2002, is between MEDALLION
FUNDING CHICAGO CORP., a Delaware corporation (the "Company"), and FLEET
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NATIONAL BANK (f/k/a Fleet Noteholder, National Association), a national banking
association, as collateral agent (the "Collateral Agent") for the holders of the
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Notes (as hereinafter defined) from time to time outstanding pursuant to the
Note Purchase Agreements (hereinafter defined) (collectively, the "Noteholders"
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and individually, a "Noteholder").
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RECITALS
WHEREAS, the Noteholders have entered into the separate Note Purchase
Agreements, each dated as of June 1, 1999 (as the same may have been amended,
modified, supplemented or restated prior to the effectiveness hereof, the "Note
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Purchase Agreements"), with Medallion Funding Corp., a New York corporation
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("Funding") under and pursuant to which Funding issued and sold to the
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Noteholders its (i) 7.20% Senior Secured Notes, Series A, due June 1, 2004 in
the aggregate principal amount of $22,500,000 (the "Series A Notes") and (ii)
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7.20% Senior Secured Notes, Series B, due September 1, 2004 in the aggregate
principal amount of $22,500,000 (the "Series B Notes", and together with the
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Series A Notes, the "Notes").
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WHEREAS, in connection with the Note Purchase Agreements, Funding
entered into a Security Agreement, dated as of June 1, 1999;
WHEREAS, the Company is a wholly-owned subsidiary of Funding;
WHEREAS, it is a condition to the effectiveness of the Third Amendment
(as defined in the Note Purchase Agreements) that the Company guaranty the
Obligations (as hereinafter defined) and, in order to secure such obligations
pursuant to the Guaranty of even date herewith (the "Guaranty") issued by the
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Company in favor of the Noteholders, execute and deliver to the Collateral
Agent, for the benefit of the Noteholders, a security agreement in substantially
the form hereof.
NOW, THEREFORE, in consideration of the willingness of the Noteholders
to amend the Note Purchase Agreements, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Collateral Agent hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. Capitalized terms defined in the foregoing
caption and recitals shall have the respective meanings ascribed thereto.
Capitalized terms defined in the Note Purchase Agreements and not otherwise
defined in this Agreement shall have the meanings ascribed to those terms in the
Note Purchase
Agreements. In addition, as used herein, the following terms shall have the
following meanings:
"Accounts" shall have the meaning assigned to it in Section 9-102(2)
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of the UCC.
"Books and Records" shall mean all books, records, computer files and
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other Information relating to any of the Collateral.
"Chattel Paper" shall have the meaning assigned to it in Section
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9-102(11) of the UCC.
"Collateral" shall mean all assets, including all of the following
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property and to the extent otherwise not included, all other personal and
fixture property of every kind and nature, now owned or at any time hereafter
acquired by the Company or in which the Company now has or at any time in the
future may acquire any right, title or interest:
(a) all Loans;
(b) all property and rights, including, but not limited to, Underlying
Collateral, which now or hereafter secure any of the Loans;
(c) all Books and Records;
(d) all amounts deposited in any Collateral Account;
(e) all Contracts;
(f) all rights and remedies of the Company with respect to, or in
connection with, any contract, security interest, guaranty or other document,
instrument or agreement relating to or affecting any Loans or any Underlying
Collateral;
(g) all General Intangibles;
(h) all Instruments;
(i) all Chattel Paper;
(j) all Equipment;
(k) all Inventory;
(l) all Investments;
(m) all Investment Property;
(n) all Accounts;
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(o) all Receivables;
(p) all Documents;
(q) all property and rights, including, but not limited to, items
described in clauses (b) through (o) hereof, repossessed, or otherwise acquired
in connection with any Loans or the exercise by the Company of any rights of a
secured party under or with respect to any of the Loans or this Agreement or
arising out of the sale or disposition of any Loans, any other Collateral, or in
connection with the sale of any repossessed property;
(r) all parts, accessions, accessories, goods, appurtenant or related
to any of the foregoing, replacement parts, trade names, closes in action, now
or hereafter affixed thereto, arising therefrom, used in connection therewith,
or related to the use, possession or operation thereof;
(s) all cash and Short-Term Investments;
(t) all Depository Accounts;
(u) rights to the payment of money, insurance refund claims and all
other insurance claims and proceeds, tort claims and rights to the proceeds of
letters of credit;
(v) commercial tort claims (the Collateral Agent acknowledges that the
attachment of its security interest in any commercial tort claim as original
collateral is subject to the Company's compliance with Section 2.4(d) hereof);
and
(w) to the extent not otherwise included, all Proceeds, products,
substitutions and replacements of any and all of the foregoing.
"Collateral Account" shall mean the one or more accounts of the
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Company maintained with the Collateral Agent and containing such reasonable
terms as shall be agreed to by the Collateral Agent.
"Contracts" shall mean all contracts and agreements, including, but
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not limited to, loan agreements, security agreements, guaranties, intercreditor
agreements, office leases, lease agreements for mobile goods (as defined in the
UCC) (whether or not covered by a certificate of title), indemnity agreements,
license agreements, rental agreements and all other contracts and agreements of
every kind and nature whatsoever.
"Depository Accounts" shall mean accounts of the Company containing
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any deposits or other sums credited to the Company, whether in regular or
special depository accounts or otherwise.
"Documents" shall have the meaning assigned to it in Section 9-102(30)
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of the UCC.
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"Equipment" shall mean all machinery, equipment, fixtures, vehicles,
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office equipment, furniture, furnishings, inventories, supplies, computer
equipment and all other equipment whatsoever, wherever located, together with
all attachments, components, parts, equipment and accessories installed therein
or affixed thereto, including, but not limited to, all equipment as defined in
Section 9-102(33) of the UCC and all products, profits, rents and proceeds of
any of the foregoing; all whether now owned or hereafter created or acquired.
"General Intangibles" shall have the meaning assigned to it in Section
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9-102(42) of the UCC and shall include, but not be limited to, all interests in
and to Permits and Licenses, Medallion Rights, tax refund claims, patents,
patent applications, rights to sue and recover for past infringement of patents,
trademarks, tradenames, trademark applications, copyrights, copyright
applications, trade secrets, licenses and know-how.
"Information" shall mean books, records, delivery receipts, copies of
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checks and stubs, security documents, division of interest files, bank
reconciliation statements, remittances, revenue accounting records, invoices,
leases, licenses, authorizations for expenditures, contracts and such other
documents, and all other recorded information and data of any kind or nature,
regardless of the medium or recording, including software, writings, plans,
specifications and schematics.
"Instruments" shall have the meaning assigned to it in Section
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9-102(47) of the UCC.
"Inventory" shall mean all inventory, goods, raw materials, components
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and other personal property, wherever located, including, but not limited to,
all inventory as defined in Section 9-102(48) of the UCC.
"Investment" in any Person shall mean any loan, advance, or extension
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of credit to or for the account of; any guaranty, endorsement or other direct or
indirect contingent liability in connection with the obligations, Capital Stock
or dividends of; any ownership, purchase or acquisition of any assets, business,
Capital Stock, obligations or securities of; or any other interest in or capital
contribution to; such Person.
"Investment Property" shall have the meaning assigned to it in Section
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9-102(49) of the UCC, including, without limitation, securities as defined in
the UCC.
"Law" shall mean any law, regulation, guideline, treaty or directive
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or condition or interpretation thereof, including without limitation, any
request, guideline or policy, whether or not having the force of law.
"Loan" shall mean any loan, advance or extension of credit made in the
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ordinary course of business by the Company to or for the account of any client
or customer of the Company. Any loan, advance or extension of credit made at a
different point in time shall be deemed to be a separate and distinct Loan.
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"Medallion" shall mean the plate which displays the license number of
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a licensed Taxicab on the outside of the vehicle and which is issued by the New
York City Taxi and Limousine Commission or by any other Governmental Authority
for a jurisdiction other than New York City with the authority to issue licenses
for the operation of Taxicabs.
"Medallion Rights" shall mean (a) all license, operating and/or
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subscription rights to Taxicab Medallion(s), and all license, operating and/or
subscription rights evidenced by such Medallion(s) and (b) all renewals thereof.
"Note Documents" shall mean and collectively refer to the Note
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Documents (as defined in the Note Purchase Agreements) and all other agreements,
instruments and documents, including, without limitation, notes, guaranties,
mortgages, deeds to secure debt, deeds of trust, chattel mortgages, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, trust account agreements and all other written matters whether
heretofore, now or hereafter executed by or on behalf of either the Borrower or
the Company and/or delivered to the Collateral Agent or the Noteholders, with
respect to this Agreement, or the transactions contemplated by this Agreement.
"Obligations" shall mean all indebtedness, obligations, and
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liabilities of the Company under the Note Documents, including, without
limitation, under or in respect of the Company's guaranty of the Obligations
pursuant to the Guaranty. Without limiting the generality of the foregoing, the
Obligations shall include the liability of Funding or the Company to any
Noteholder for all balances owing to any Noteholder in any account maintained on
such Noteholder's books under the Note Purchase Agreements or under any other
agreement or arrangement now or hereafter entered into between Funding or the
Company and the Collateral Agent or any Noteholder in connection therewith, and,
in connection with this Agreement or the Note Purchase Agreements, (i)
indebtedness owing by Funding or the Company to the Collateral Agent or any
Noteholder, (ii) the liability of Funding or the Company to the Collateral Agent
or any Noteholder as maker or endorser of any promissory note or other
instrument for the payment of money, and (iii) the liability of Funding or the
Company to the Collateral Agent or any Noteholder under any instrument of
guaranty or indemnity, or arising under any guarantee, endorsement, or
undertaking which the Collateral Agent or any Noteholder may make or issue to
others for the account of Funding or the Company, including without limitation,
any accommodation extended to Funding or the Company with respect to letters of
credit, acceptance of drafts, or endorsement of notes or other instruments by
the Collateral Agent or such Noteholder for the account and benefit of Funding
or the Company. The Obligations shall also include interest, premium (if any),
commissions, financing and service charges, and expenses and fees, including but
not limited to the costs and expenses of collection of the Obligations
(including the fees and disbursements of accountants), the costs and expenses of
the Collateral Agent and the costs and expenses of filing, perfecting,
preserving, retaking, holding, and preparing any of the Collateral for sale
chargeable to Funding or the Company and due from Funding or the Company under
this Agreement, the Note Purchase Agreements or under any other
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agreement or arrangement which may be now or hereafter entered into between
Funding or the Company and the Collateral Agent or the Noteholders and shall
also include (i) any obligation or liability in respect of any breach of any
representation or warranty, and (ii) all post-petition interest and funding
losses.
"Other Agreements" shall mean collectively any of the Note Documents
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other than this Agreement.
"Percentage of the Obligations" shall mean with respect to any
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Noteholder the percentage which is equal to the product of (x) 100 times (y) a
fraction, the numerator of which is the total amount of Obligations owing to
such Noteholder, as the case may be, at the time of computation and the
denominator of which is the total amount of the Obligations as of such time.
"Permits and Licenses" shall mean (a) all applicable authorizations,
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consents, certificates, licenses, rights-of-way permits, approvals, waivers,
exemptions, encroachment agreements, variances, franchises, permissions, and
permits of any Governmental Authority or any other Person and all documents and
applications filed in connection therewith, and (b) all renewals thereof.
"Permitted Liens" is defined in the Note Purchase Agreements.
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"Proceeds" shall have the meaning assigned to it in Section 9-102(64)
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of the UCC and shall include, but not be limited to, (a) any and all proceeds of
any insurance, indemnity, warranty or guaranty existing from time to time with
respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority) and (c) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.
"Real Property" shall mean real property of a Person or an ultimate
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beneficial owner of such Person or machinery or Equipment of such Person or
beneficial owner forming a part of, or affixed to, such real property.
"Receivables" shall mean, with respect to any Person, all present and
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future rights to payment for goods sold or leased or for services rendered by
such Person whether or not evidenced by an instrument or chattel paper.
"Stock" shall mean the shares of Capital Stock owned by the Company
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and any additional shares of Capital Stock of any Person or any securities
exchangeable for or convertible into shares of such capital stock or other
equity interests of any class acquired by the Company, by purchase, stock
dividend, distribution of capital or otherwise, but shall not include any shares
of Capital Stock or any other securities, the pledge of which is subject to the
receipt of consents (including lender consents) as may
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be required under the Note Documents unless and until such consents are
obtained; provided that the Company shall have used its best efforts to obtain
such consents.
"Taxicab" shall mean a motor vehicle carrying passengers for hire,
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duly licensed as a taxicab by the New York City Taxi and Limousine Commission,
or any other Governmental Authority for a jurisdiction other than New York City,
and permitted to accept hails from passengers in the street.
"UCC" shall mean, with respect to any jurisdiction, the Uniform
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Commercial Code as then in effect in that jurisdiction. Unless the context
otherwise requires, references to the UCC contained herein shall mean the
Uniform Commercial Code as then in effect in the State of New York.
"Underlying Collateral" shall mean all of the Company's rights with
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respect to, or interest in, any and all present and future Medallion Rights,
Equipment, Real Property, machinery, Inventory, Receivables, Accounts, future
accounts, accounts receivable, contracts, contract rights, General Intangibles,
books, desks, notes, bills, drafts, acceptances, choses in action, Chattel
Paper, Instruments, Documents and other forms of obligations, and property,
real, personal or mixed, tangible or intangible, at any time owing to or owned
by any Person to whom the Company has made a Loan, or any guarantor of such
Person.
SECTION 1.2. Accounting Terms. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP.
SECTION 1.3. Rules of Construction. (a) Words of the masculine gender
shall mean and include correlative words of the feminine and neuter genders, and
words importing the singular number shall mean and include the plural number and
vice versa.
(a) The terms "hereby," "hereto," "hereof," "herein," and "hereunder"
and any similar words refer to this Agreement as a whole and not to any
particular provisions of this Agreement. The term "hereafter" shall mean after,
and the term "heretofore" shall mean before, the date of this Agreement, and
"Article," "Section," "Schedule," "Exhibit" and like references are to this
Agreement unless otherwise specified.
(b) Any defined term that relates to a document shall include within
its definition any amendments, modifications, renewals, restatements,
extensions, supplements, or substitutions which may have been heretofore or may
be hereafter executed in accordance with the terms thereof.
(c) References in this Agreement to particular sections of the UCC or
to any other legislation shall be deemed to refer also to any successor sections
thereof or
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other redesignations for codification purposes. Unless otherwise indicated,
references in this Agreement to the UCC shall mean the UCC as in effect in the
State of New York.
(d) All terms used in this Agreement that are not capitalized shall
have the meanings provided by the UCC as in effect in the State of New York to
the extent the same are used or defined therein.
ARTICLE II
CREATION OF SECURITY INTEREST
SECTION 2.1. Grant of Security Interest to Collateral Agent. To induce
the Noteholders to amend the Note Documents and, as security for any and all
Obligations of Funding, the Company hereby grants, pledges and assigns to the
Collateral Agent for the ratable benefit of the Noteholders a continuing lien on
and security interest in the Collateral, which shall be a first priority lien
(except for the Permitted Liens entitled to priority under applicable law) and,
in furtherance of such grant, the Company hereby assigns for security all of the
Collateral to the Collateral Agent for the ratable benefit of the Noteholders.
SECTION 2.2. Intercreditor Agreement. The Collateral Agent, on behalf
of the Noteholders, acknowledges and agrees that the Collateral granted to the
Collateral Agent for the benefit of the Noteholders pursuant to this Agreement,
shall constitute "Collateral" as defined in the Intercreditor Agreement and
shall be subject to the provisions of the Intercreditor Agreement for so long as
the Intercreditor Agreement may be in effect.
SECTION 2.3. Perfection. At any time or times the Company shall
execute and deliver to the Collateral Agent, at the Collateral Agent's request,
all assignments, certificates of title, conveyances, assignment statements,
financing statements, renewal financing statements, security agreements,
affidavits, mortgages, mortgage assignments, trust deeds, notices and all other
agreements, instruments and documents that the Collateral Agent reasonably may
request, in form satisfactory to the Collateral Agent, and shall take any and
all other steps reasonably requested by the Collateral Agent, in order to
perfect and maintain the security interests and liens granted herein, and to
consummate fully all of the transactions contemplated under this Agreement and
any Other Agreements.
SECTION 2.4. Recording, Registering, Filing, Etc. At any time or times
when the Collateral Agent reasonably deems it necessary, the Company will
perform, or will cause to be performed, each of the following:
(a) Record, register and file such notices, certificates of title,
financing statements, mortgage assignments, trust deeds and other documents or
instruments as may, from time to time, be requested by the Collateral Agent to
carry out fully the intent of this Agreement, with such administrations or
governmental agencies as may be necessary or advisable in order to perfect,
establish, confirm, and maintain the security
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interests and liens created hereunder, as legal, valid, and binding security
interests and liens upon the Collateral;
(b) Furnish to the Collateral Agent evidence of every such recording,
registration and filing;
(c) Execute and deliver or perform, or cause to be executed and
delivered or performed, such further and other instruments or acts as the
Collateral Agent reasonably determines are necessary or desirable to carry out
fully the intent and purpose of this Agreement or to subject the Collateral to
the security interest and lien created hereunder, including, without limitation,
defending the title of the Company to the Collateral by means of negotiation
with and, if necessary, appropriate legal proceedings against, each party
claiming an interest therein contrary or adverse to the Company's title to same;
(d) If the Company shall, now or at any time hereafter, hold or
acquire a commercial tort claim, the Company shall immediately notify the
Collateral Agent in a writing signed by the Company of the particulars thereof
and grant to the Collateral Agent, for the benefit of the Noteholders, in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to the Collateral Agent; and
(e) In case of certain revisions to Article 9 of the UCC described in
Section 6.16 hereof, comply with all of the requirements of and its agreements
contained within such Section 6.16.
SECTION 2.5. Delivery of Documents. (a) As promptly as practicable
after the date hereof (but in no event later than 10 Business Days after the
date hereof), the Company shall deliver to the Collateral Agent all instruments
evidencing all Loans (collectively, the "Collateral Notes") of the Company then
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outstanding and if any such Loan is secured by Real Property, a Mortgage
Assignment with respect to each such Loan. In addition, each time the Company
shall make a new Loan, the Company shall immediately deliver to the Collateral
Agent the Collateral Note evidencing such Loan and if such Loan is secured by
Real Property, a Mortgage Assignment with respect to each Loan. The Collateral
Agent shall keep all Collateral Notes and Mortgage Assignments at its office in
Farmington, Connecticut in a vault or other place of similar security. The
Company and its authorized agents and representatives, which shall include its
Independent Public Accountants, shall at all times, during normal business
hours, have full access to examine, but not to remove, without the prior consent
of the Collateral Agent, the Collateral Notes and Mortgage Assignments;
provided, however, that (i) the Company and/or its authorized agent shall have
given the Collateral Agent at least one (1) Business Day's prior notice, or such
other notice as may be required by applicable provisions of the Investment
Company Act of 1940, as amended, before seeking access to the Collateral Notes
and Mortgage Assignments and (ii) the Collateral Agent shall, in its sole
discretion, be entitled to have one of its
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employees, agents or representatives present at all times or from time to time
during any such period of access.
(b) Upon the Collateral Agent's request, the Company shall immediately
deliver to the Collateral Agent or its designee, at the Company's expense,
copies of all Documents, Chattel Paper, security agreements, guarantees and
other writings evidencing any Loan or its related Underlying Collateral.
(c) Upon the Collateral Agent's request, the Company shall immediately
endorse and deliver to the Collateral Agent or its designee all Documents,
Instruments, Chattel Paper, security agreements, guarantees and other writings
so requested by the Collateral Agent evidencing any Collateral of the Company,
such Documents, Instruments, Chattel Paper, security agreements, guarantees and
other writings to be held as Collateral under the terms of this Agreement.
(d) The Collateral Agent shall have no obligation to inspect or
examine any of the Collateral Notes, Mortgage Assignments or other documents
delivered to it by the Company hereunder, and shall be entitled to assume, and
shall be fully protected in assuming, without inspection or examination, that
the Company has complied in full with its delivery obligations hereunder.
(e) Pursuant to the terms hereof, the Company has assigned and
delivered to the Collateral Agent all certificates representing the certificated
securities pledged by the Company hereunder, together with instruments of
transfer or assignment duly executed in blank as the Collateral Agent may have
specified. In the event that the Company shall, after the date of this
Agreement, acquire any other certificated securities to be pledged by it
hereunder, the Company shall forthwith assign and deliver certificates
representing such certificated securities to the Collateral Agent, accompanied
by such instruments of transfer or assignment duly executed in blank as the
Collateral Agent may from time to time specify. To the extent that any
securities are uncertificated (or in the case of uncertificated securities
hereafter acquired by the Company), at the request of the Collateral Agent, the
Company shall (i) make appropriate book-entry transfers reflecting the pledge of
such securities created hereby for the account of the Collateral Agent or one or
more nominees of the Collateral Agent with the issuer of such securities or
other appropriate book-entry facility or financial intermediary, with the
Collateral Agent having at all times the right to obtain definitive certificates
(in the Collateral Agent's name or in the name of one or more nominees of the
Collateral Agent) where the issuer customarily or otherwise issues certificates,
all to be held as Collateral hereunder or (ii) take such other action to
establish "control" (as such term is defined in the UCC) by the Collateral Agent
over such uncertificated securities. The Company agrees that the Collateral
Agent from time to time may attach hereto an updated Schedule A. The Company
hereby acknowledges that the Collateral Agent may, in its discretion, appoint
one or more financial institutions to act as the Collateral Agent's agent in
holding in custodial account instruments or other financial assets in which the
Collateral Agent is granted a security interest hereunder, including, without
limitation, certificates of deposit and other instruments evidencing short term
obligations.
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SECTION 2.6. Further Assurances. (a) At any time or times, upon
request by the Collateral Agent, in addition to the acts specifically required
to be performed by the Company elsewhere under this Agreement, the Company shall
do all other things and sign and deliver all other documents and instruments
reasonably requested by the Collateral Agent to perfect, protect, maintain and
enforce the security interests and liens of the Collateral Agent in the
Collateral, and the first priority of such security interests and liens, and
other rights granted hereunder or under any other present or future agreement
between or among the Company and the Collateral Agent, including, without
limitation, the Note Documents. Such acts shall include but not be limited to
the marking of the Company's Books and Records, Chattel Paper and Instruments to
show the Collateral Agent's security interests and liens and the recording of
Mortgage Assignments and/or the filing of financing, renewal and/or continuation
statements under the UCC or other documents evidencing the Collateral Agent's
liens under applicable law and the delivery of any Collateral the physical
possession of which is necessary or desirable in order for the Collateral Agent
to perfect its liens. The Company authorizes the Collateral Agent to execute,
file and/or record, any financing, renewal and/or continuation statement, any
Mortgage Assignment or any other document or instrument which the Collateral
Agent may require to perfect, protect, continue or enforce in accordance
herewith any security interest, lien or other right hereunder or under any of
the other Note Documents and authorizes the Collateral Agent to sign the
Company's name on the same. Upon payment in full by the Company of all the
Obligations in accordance with the terms thereof, the security interests and
liens granted by the Company hereunder shall terminate, except that if, at any
time, all or part of the payment of the monetary Obligations theretofore made by
the Company or any other Person is rescinded or otherwise must be returned by
the Collateral Agent or any Noteholder for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy or reorganization of the Company
or such other Person), the security interests and liens granted hereunder or
under any other present or future agreement between or among the Company and the
Collateral Agent, and all rights of the Collateral Agent and all Obligations
shall be reinstated as to monetary Obligations which were satisfied by the
payment to be rescinded or returned, all as though such payment had not been
made, and the Company shall sign and deliver to the Collateral Agent all
documents and things necessary to perfect all terminated liens subject to the
intervening liens, if any, granted by the Company to any Person.
(b) A carbon, photographic, or other reproduction of this Agreement
shall be sufficient as a UCC financing statement and may be filed at any time in
any appropriate office in lieu thereof.
(c) To the extent requested by the Collateral Agent, the Company will
use its best efforts to cause each mortgagee of any and all real estate under
any lease included in any Underlying Collateral and each landlord under any
lease included in any Underlying Collateral to execute and deliver to the
Collateral Agent assignments, in form and substance satisfactory to the
Collateral Agent, by which such mortgagee or landlord waives its rights, if any,
to the Collateral.
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(d) The Company further agrees at the request of the Collateral Agent
to do or cause to be done all such other acts and things as may be necessary or
advisable to make any sales of any portion or all of the Stock pursuant to
Section 5.2(g) valid and binding and in compliance with any and all applicable
laws (including the Securities Act, the rules and regulations of the Securities
and Exchange Commission applicable thereto and all applicable state securities
or "Blue Sky" laws), regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales, all at the
Company's expense.
SECTION 2.7. Appointment of Collateral Agent as Attorney-in-Fact. The
Company does hereby irrevocably make, constitute and appoint the Collateral
Agent and any of its officers, employees or Collateral Agents as the true and
lawful attorneys of the Company with power to:
(a) sign the name of the Company on any financing statement, renewal
financing statement, notice or other similar document that in the Collateral
Agent's opinion must be filed in order to perfect or continue perfected the
security interests granted in this Agreement or any Other Agreements and to
effect such filing;
(b) receive, endorse, assign and deliver, in the Company's name or in
the name of the Collateral Agent, all checks, notes, drafts and other
instruments relating to any Collateral, including receiving, opening and
properly disposing of all mail addressed to the Company concerning the
Collateral and, during the existence of an Event of Default (as hereinafter
defined), to notify postal authorities to change the address for delivery of
mail to such address as the Collateral Agent may designate;
(c) sign the Company's name on any notices to any of the Company's
clients or customers; and
(d) upon the occurrence and during the continuance of an Event of
Default, take or bring at the Company's cost, in the Company's name or in the
name of the Collateral Agent, all steps, actions and suits deemed by the
Collateral Agent necessary or desirable to effect collections in connection with
any Notes, to enforce payment in connection with any Notes, to settle,
compromise or release in whole or in part, any amounts owing in connection with
any Notes, to prosecute any action or proceeding with respect to any Notes, to
extend the time of payment in connection with any Notes, to make allowances and
adjustments with respect thereto, to secure credit in the name of the Collateral
Agent, and to do all other things necessary or desirable to realize upon the
Collateral, including but not limited to the Underlying Collateral, and to carry
out this Agreement and all Other Agreements.
Neither the Collateral Agent nor its agents or attorneys will be
liable for any act or omission nor for any error of judgment or mistake of fact
unless such act, omission, error or mistake shall occur as a result of their
gross negligence or willful
12
misconduct. This power, being coupled with an interest, is irrevocable so long
as the Obligations remain unpaid.
SECTION 2.8. Indemnity. In addition to all of the Collateral Agent's
and Noteholders' other rights and remedies under the Note Documents, the Company
will hold the Noteholders and the Collateral Agent harmless from and indemnify
the Noteholders and the Collateral Agent or other designee of the Collateral
Agent against all losses, damages, costs and expenses (including, without
limitation, attorneys' fees, costs and expenses) incurred by any of them,
whether prior to or from and after the date hereof, whether direct, indirect or
consequential, as a result of or arising from or relating to any suit,
investigation, action or proceeding by any Person, whether threatened or
initiated, asserting a claim for any legal or equitable remedy against any
Person under any statute or regulation, including without limitation, any
Federal or state antitrust laws, or under any common law or equitable cause or
otherwise, all to the extent arising from or in connection with this Agreement
or the other Note Documents or the enforcement of the rights of the Collateral
Agent hereunder, other than losses, damages, costs and expenses resulting from,
but only to the extent resulting from, the willful misconduct or gross
negligence of the Person seeking indemnification.
Each of the Noteholders severally agree (i) to reimburse the
Collateral Agent, on demand, in the amount of its pro rata share, for any
--- ----
expenses referred to in this Section 2.8 which shall not have been reimbursed or
paid by the Company or paid from the proceeds of Collateral as provided herein
and (ii) to indemnify and hold harmless the Collateral Agent and its directors,
officers, employees and agents, on demand, in the amount of such pro rata share,
--- ----
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements referred
to in this Section 2.8, to the extent the same shall not have been reimbursed by
the Company or paid from the proceeds of Collateral as provided herein; provided
--------
that no Noteholder shall be liable to the Collateral Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the gross
negligence or willful misconduct of the Collateral Agent or any of its
directors, officers, employees or Collateral Agents as determined by a final
non-appealable order of a court of competent jurisdiction. For the purposes of
this Section 2.8, pro rata shares at any time shall be determined based upon the
--- ----
aggregate Exposures at the time such expenses were incurred.
SECTION 2.9. Company Remains Liable. Anything herein to the contrary
notwithstanding, (i) the Company shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (ii) the exercise by the Collateral Agent or
the Noteholders of any rights under this Agreement or any of the other Note
Documents shall not release the Company from any of its duties or obligations
under the contracts and agreements included in the Collateral, and (iii) neither
the Collateral Agent nor the Noteholders shall have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement or any of the other Note Documents nor shall the Collateral
13
Agent or any Noteholder be obligated to perform any of the obligations or duties
of the Company thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 2.10. Collateral Agent May Perform; Actions of Collateral
Agent. If the Company fails to perform any agreement contained herein, the
Collateral Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be jointly and severally payable by the
Company, together with interest thereon at the rate specified in the Note
Purchase Agreements, and until so paid shall be deemed part of the Obligations.
The Collateral Agent shall not be obligated to take any action under this
Agreement except for the performance of such duties as are specifically set
forth herein. Subject to the other provisions of this Agreement, the Collateral
Agent shall take any action under or with respect to this Agreement which is
requested by the Required Holders and which is not inconsistent with or contrary
to the provisions of this Agreement or the Note Documents. The Collateral Agent
shall have the right to decline to follow any such direction if the Collateral
Agent, being advised by counsel, determines that the directed action is not
permitted by the terms of this Agreement or the other Note Documents, may not
lawfully be taken or would involve it in personal liability, and the Collateral
Agent shall not be required to take any such action unless any indemnity which
is required hereunder in respect of such action has been provided. Subject to
the other requirements of this Agreement, the Collateral Agent may rely on any
such direction given to it by the Required Holders and shall be fully protected,
and shall under no circumstances (absent the gross negligence and willful
misconduct of the Collateral Agent) be liable to the Company, any Noteholder, or
any other Person for taking or refraining from taking action in accordance
therewith. The Collateral Agent may consult with counsel and shall be fully
protected in taking any action hereunder in accordance with any advice of such
counsel. The Collateral Agent shall have the right but not the obligation at any
time to seek instructions concerning the administration of this Agreement, the
duties created hereunder, or any of the Collateral from any court of competent
jurisdiction.
SECTION 2.11. Collateral Agent's Duties. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest and the interests
of the Noteholders in the Collateral and shall not impose any duty upon it to
exercise any such powers except as provided herein. Except for the safe custody
of any Collateral in its possession and the accounting for monies actually
received by it hereunder and performing its other express duties hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Collateral Agent shall not be responsible in
any manner whatsoever for the correctness of any recitals, statements,
representations or warranties contained herein, except for those made by it
herein. The Collateral Agent makes no representation as to the value or
condition of the Collateral or any part thereof, as to the title of the Company
to the Collateral, as to the security afforded by this Agreement or as to the
validity, execution, enforceability, legality or sufficiency of this Agreement,
and the Collateral Agent shall incur no liability or
14
responsibility in respect of any such matters. The Collateral Agent shall not be
responsible for insuring the Collateral, for the payment of taxes, charges,
assessments or liens upon the Collateral or otherwise as to the maintenance of
the Collateral.
The Collateral Agent may execute any of the powers granted under this
Agreement and perform any duty hereunder or thereunder either directly or by or
through agents or attorneys-in-fact, and shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care. In no event will the Collateral Agent or any officer, agent or
representative thereof be responsible for the consequences of any oversight or
error of judgment whatsoever, or personally liable for any action taken or
omitted to be taken, except that such Person may be liable due to its willful
misconduct or gross negligence. Neither the Collateral Agent nor any officer,
agent or representative thereof shall be personally liable for any action taken
by any such Person in accordance with any notice given by the Required Holders
pursuant to the terms of this Agreement even if, at the time such action is
taken by any such Person, the Required Holders are not entitled to give such
notice, except where the account officer of the Collateral Agent active upon the
Company accounts has actual knowledge that such Required Holders are not
entitled to give such notice.
SECTION 2.12. Perfection of Security Interest. All filings,
assignments, pledges and deposits of documents or instruments have been made and
all other actions have been taken that are necessary or advisable, under
applicable law, to establish and perfect the Collateral Agent's security
interest in the Collateral for the benefit of itself, the Administrative
Collateral Agent and the Noteholders. The Collateral and the Collateral Agent's
rights with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses. The Company is the owner of the Collateral free
from any lien, security interest, encumbrance and any other claim or demand,
except for Permitted Liens.
SECTION 2.13. Concerning the Stock. (a) Any sums paid upon or in
respect of any of the Stock upon the liquidation or dissolution of the issuer
thereof (other than in connection with transactions permitted by the Note
Purchase Agreements and pursuant to which the Collateral Agent obtains a first
priority perfected security interest in any non-cash proceeds thereof and any
net-cash proceeds thereof are paid in accordance with the terms thereof) shall
be paid over to the Collateral Agent to be held by it as security for the
Obligations; and, in case any distribution of capital shall be made on or in
respect of any of the Stock, or any property shall be distributed upon or with
respect to any of the Stock pursuant to the recapitalization or reclassification
of the capital of the issuer thereof or pursuant to the reorganization thereof,
the property so distributed shall be delivered to the Collateral Agent to be
held by it as security for the Obligations. All sums of money and property paid
or distributed in respect of the Stock as required by the immediately preceding
sentence upon such a liquidation, dissolution, recapitalization or
reclassification which are received by the Company shall, until paid or
delivered to the Collateral Agent, be held in trust for the Collateral Agent as
security for the Obligations.
15
(b) The Collateral Agent may, at any time after the occurrence and
during the continuance of an Event of Default, at its option, transfer to itself
or any nominee for security purposes the Stock or any other security
constituting Collateral, and, any time after the occurrence and during the
continuance of an Event of Default, receive any income thereon and apply it to
the Obligations. In addition and whether or not Obligations are due, upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may demand, sue for, collect, or make any settlement or compromise it
deems desirable with respect to the Collateral. Regardless of the adequacy of
the Collateral or any other security for the Obligations, any deposits or other
sums at any time credited by or due from the Collateral Agent to the Company
may, upon the occurrence and during the continuance of an Event of Default, at
any time be applied to or set off against any of the Obligations to the extent
permitted by applicable law.
(c) So long as no Event of Default is continuing, the Company shall
(except as otherwise required by Section 2.13(a) hereof) be entitled to receive
all cash dividends paid in respect of the Stock owned by it, to vote such Stock,
and to give consents, waivers, and ratifications in respect of such Stock,
provided that no vote shall be cast, and no consent, waiver, or ratification
given or action taken which would be inconsistent with or violate any provisions
of this Agreement, the Note Purchase Agreements, or the other Note Documents.
All such rights of the Company to receive cash dividends shall cease in case an
Event of Default shall have occurred and be continuing. All such rights of the
Company to vote and give consents, waivers and ratifications with respect to the
Stock shall, at the Collateral Agent's option, as evidenced by the Collateral
Agent's notifying the Company of such election, cease in case an Event of
Default shall have occurred and be continuing.
ARTICLE III
PRIORITY OF SECURITY INTERESTS
SECTION 3.1. Priority of Security Interests. The Company warrants and
represents to the Collateral Agent and the Noteholders that, as to those assets
for which perfection may be accomplished by filing or by possession under the
UCC, the security interests granted to the Collateral Agent hereunder constitute
and will constitute at all times a valid and perfected security interest vested
in the Collateral Agent in and upon the Collateral. The Company further warrants
and represents that the Collateral Agent's security interests in the Collateral
for the benefit of itself and the Noteholders are not and hereinafter shall not
become subordinate or junior to the security interests, liens or claims of any
other Person, firm or corporation, including the United States or any
department, agency or instrumentality thereof, or any state, county or local
governmental agency, except for the Permitted Liens. The Company shall grant
(without the prior written approval of the Required Holders) a security interest
in or permit a lien or encumbrance upon any of the Collateral to anyone except
the Collateral Agent for the benefit of itself and the Noteholders as long as
any of the Obligations remain unpaid or any commitments to lend have not been
terminated, except for the Permitted Liens.
16
ARTICLE IV
COLLATERAL
SECTION 4.1. Representations, Covenants and Warranties. The Company
hereby makes the following representations, warranties and covenants to the
Collateral Agent and the Noteholders, which shall survive the execution and
delivery of the Note Documents and (except to the extent that any of such
representations, and warranties and covenants expressly relate to earlier dates)
shall be deemed repeated and confirmed as of each date on which any Note is
issued by the Company.
(a) The Company is now and at all times hereafter shall be the
absolute owner, free and clear of all Liens (other than Permitted Liens) except
security interests and rights of the Collateral Agent and the Noteholders
granted herein, of indefeasible title to all of the Collateral belonging to it
except for that portion of the Company's rights and/or obligations under any
Loan in which the Company has granted a participation to any Person in
accordance with Section 2.14 of the Bank Loan Agreement (as in effect on the
Effective Date of the Note Purchase Agreement);
(b) To the best of the Company's knowledge, each outstanding Loan
does, and each future Loan will, represent a bona fide, valid and legally
enforceable indebtedness according to its terms, and each Loan, at the time of
creation thereof, except with the consent of the Collateral Agent and the
Required Noteholders, will be subject to no offsets, discounts, counterclaims,
contra-accounts or any other defense of any kind or character that materially
adversely affects the value of the Loan;
(c) With respect to each outstanding and future Loan, the Collateral
Agent and the Noteholders may rely on all statements or representations made by
the Company on or with respect to such Loans delivered hereunder or under the
Note Purchase Agreements, and, unless otherwise indicated in writing by the
Company, each outstanding Loan is, and each future Loan will be, genuine and in
all respects what it purports to be, and, to the Company's knowledge, there are
no, and, at the time of creation of each Loan there will not be any, to the
Company's knowledge, facts, events or occurrences that would in any way
materially impair the validity or enforcement thereof;
(d) All of the outstanding Loans have been, and all future Loans will
be, created, and are (or in the case of future Loans, will be) in compliance in
all material respects with, and the form and content of each document related to
all outstanding and future Loans, the security related thereto, and the
transactions from which they arose comply (or, in the case of future Loans, will
comply) in all material respects with, any and all applicable laws, ordinances,
rules and regulations, Federal, state and/or local, with respect to the
extension of credit and charging of interest, including, without limitation, as
applicable, the Federal Consumer Credit Protection Act, the Federal Fair Credit
Reporting Act, the Federal Trade Commission Act, the Federal Equal Credit
Opportunity Act and all Federal, state and local laws related to licensing,
usury, truth in lending, real estate settlement procedures, consumer protection,
equal credit opportunity, fair debt collection, unfair and deceptive trade
practices, rescission rights and disclosures, and with
17
all rules and regulations thereunder, all as amended, and any disclosures
required with respect to any Loan the failure to make which would have a
Material Adverse Effect on the Company were and will continue to be made
properly and in a timely manner;
(e) The original amount and unpaid balance of each Loan shown on the
Company's books and records and on any statement or schedule delivered to the
Collateral Agent are and will be true and correct, and the unpaid balance is and
will be the amount actually owing to the Company;
(f) If requested by the Required Holders at any time or from time to
time, the Company shall cause a Lien search against each Person to whom a Loan
has been made, satisfactory to the Collateral Agent, to be performed and
delivered directly to the Collateral Agent, which Lien search shall indicate the
absence of any Liens against such Person or the property of the Person on which
the Company has a Lien, other than Liens in favor of the Company which have been
assigned to the Collateral Agent or the Noteholders or Liens in favor of the
Collateral Agent or the Noteholders and other than Permitted Liens;
(g) The Company neither has extended nor will extend any credit of any
kind or in any manner to any Person in connection with the transactions from
which the Loans arose or will arise other than as the Company has indicated on
and has had evidenced by, or will indicate or have evidenced by, in the case of
future Loans, the Company's files related to the Loans;
(h) Each security agreement, UCC filing, mortgage, title retention
instrument, and other document and instrument, if any, which is security for the
Loans contains, or will contain, in the case of future Loans, a correct and
sufficient description of the Underlying Collateral covered thereby and each
lien, mortgage or security interest which secures any outstanding Loan is, or
any future Loan will be, valid;
(i) To the best knowledge of the Company, except as disclosed to the
Collateral Agent and the Noteholders, any and all policies of insurance related
to the property securing any obligation of a Person to whom the Company has made
a Loan, or any guarantor of such Loan, in connection with any Loan and any
credit life insurance, credit disability insurance, or credit unemployment
insurance are in full force and effect in accordance with the terms of all
agreements between the Company and such Person or guarantor;
(j) The Company has no knowledge of any fact which would impair in any
material respect the value or validity of any Loan except as disclosed to the
Collateral Agent;
(k) The Company holds no commercial tort claim except as indicated in
writing to the Collateral Agent and the Noteholders; and
(l) The transactions contemplated herein, including the granting of
security interests herein and the enforcement by the Collateral Agent and the
Noteholders
18
of its rights hereunder if a Default or Event of Default occurs, do not and will
not affect the validity of the pledges of the Underlying Collateral and the
Loans secured by the Underlying Collateral are and will still be valid against
the Obligors of such Loans.
SECTION 4.2. Collections. (a) Subject to the provisions of this
Agreement and the other Note Documents, the Company shall service, manage,
enforce, and make Collections in connection with the Loans. "Collections," as
used herein, means the collection of payment of principal and interest on the
Loans, other payments made with respect to Loans, the cash proceeds realized
from the enforcement of Loans and any security therefor, or the collateral,
proceeds of credit or group life insurance, and all proceeds of insurance of any
real or personal property which secures any of the Loans.
(b) With respect to each of the Collections, the Company shall collect
all Collections, receive all payments thereon and immediately deposit the
proceeds thereof into a Depository Account. The Company in whose name such
account is kept may withdraw funds from such account to use in the ordinary
course of its business.
SECTION 4.3. Rights of Collateral Agent Regarding Collateral. Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent shall have the right to, and upon the direction of the Required Holders
shall, at any time and from time to time thereafter, without notice to the
Company, (a) notify, and upon the direction of the Collateral Agent to the
Company, the Company will notify, (i) all Persons to whom the Company has made
Loans that the Collateral Agent has a security interest in such Collateral and
direct all such Persons to make payments to the Collateral Agent or its
designee, and to such banks and accounts (which may be the Collateral Account)
as designated by the Collateral Agent or such designee, of all sums owing by
them to the Company, and (ii) all banks in which the Company has any Depository
Accounts of the occurrence of an Event of Default and direct all such
Noteholders to transfer into the Collateral Account, or to such other account at
such bank as shall be designated by the Collateral Agent or its designee, all
amounts on deposit from time to time in the related Depository Accounts; (b) to
settle, compromise, sell, assign, extend or renew any debt owing by any Persons
to whom the Company has made a Loan; (c) to sell or assign such Collateral upon
such terms as the Collateral Agent may deem advisable; and (d) to discharge and
release in the name of the Company and the Collateral Agent any such debt. Any
and all disbursements for costs and expenses incurred or paid by the Collateral
Agent with respect to the enforcement, collection or protection of its interest
in the Collateral, or against the Company, whether by suit or otherwise,
notification of Persons to whom the Company has made Loans, including reasonable
attorneys' fees actually incurred, court costs and similar expenses, if any,
shall become a part of the Obligations secured by the Collateral, payable on
demand.
ARTICLE V
DEFAULT
SECTION 5.1. Events of Default. Any one of the following events will
constitute an "Event of Default":
19
(a) failure of the Company to observe, perform or comply with any of
the terms, provisions, conditions or covenants, or, in any material respect, any
warranties or representations, contained in this Agreement other than in Section
4.1 hereof;
(b) failure of the Company to observe, perform or comply with any of
the terms, provisions, conditions, covenants, warranties or representations
contained in Section 4.1 of this Agreement, which failure shall not have been
remedied within 30 days after such failure shall first have become known to any
officer of the Company;
(c) the occurrence of an "Event of Default" as defined in the Note
Purchase Agreements; or
(d) any of the Note Documents shall cease to be in full force and
effect.
SECTION 5.2. Remedies. (a) Upon the occurrence of any Event of
Default, the Collateral Agent shall have, in addition to any other rights and
remedies contained in this Agreement or in any of the Other Agreements, all the
rights and remedies of a secured party under the UCC, and all other rights and
remedies provided by law, all of which shall be cumulative to the extent
permitted by law. Upon the occurrence of any Event of Default and at any time
thereafter if such or any other default shall then be continuing, the Collateral
Agent shall have the right without further notice to the Company to, and upon
the direction of the Required Holders shall, appropriate, take possession and
control of, set off and apply to the payment of any or all of the Obligations,
any or all Collateral, subject to and in the manner set forth in Section 5.3
hereof to enforce payment in connection with the Loans or any other Collateral
to settle, compromise or release, in whole or in part, any amounts owing on the
Collateral, to prosecute any action, suit or proceeding with respect to the
Collateral, to extend the time of payment of any and all Collateral, to make
allowances and adjustment with respect thereto, to issue credits in the name of
the Company or the Collateral Agent, to sell, assign and deliver the Collateral
(or any part thereof), at public or private sale, at broker's board, for cash,
upon credit or otherwise, at the Collateral Agent's sole option and discretion
and the Collateral Agent and any Noteholder or other Person interested in the
Obligations may bid or become purchaser at any such sale, if public, free from
any right of redemption, which is hereby expressly waived. The Company agrees
that the giving of ten days' notice by the Collateral Agent, sent by certified
mail, return receipt requested postage prepaid, to the address set forth below,
designating the place and time of any public sale or of the time after which any
private sale or other intended disposition of the Collateral is to be made,
shall be deemed to be reasonable notice thereof and the Company waives any other
notice with respect thereto. The net cash proceeds resulting from the exercise
of any of the foregoing rights or remedies shall be applied by the Collateral
Agent in accordance with Section 5.3 hereof, and the Company shall remain liable
to the Collateral Agent and the Noteholders for any deficiency, together with
interest thereon at the rate provided in the Note Purchase Agreements with
respect to the Obligations and the cost and expenses of collection of such
deficiency, including (to the
20
extent permitted by law), without limitation, reasonable attorneys' fees
actually incurred, expenses and disbursements.
(b) If at any time or times hereafter the Collateral Agent employs
counsel for advice with respect to this Agreement or any Other Agreements, or to
intervene, file a petition, answer, motion or other pleading in any suit or
proceeding relating to this Agreement or any Other Agreements (including,
without limitation, the interpretation or administration, or the amendment,
waiver or consent with respect to any term, of this Agreement or any Other
Agreements), or relating to any Collateral; or to protect, take possession of,
or liquidate any Collateral, or to attempt to enforce any security interest or
lien in any Collateral, or to represent the Collateral Agent in any pending or
threatened litigation with respect to the affairs of the Company in any way
relating to any of the Collateral or to the Obligations or to enforce any rights
of the Collateral Agent, Noteholder or the Noteholders or liabilities of the
Company, any Person to whom the Company has made a Loan, or any Person which may
be obligated to the Collateral Agent or such Noteholder by virtue of this
Agreement or any Other Agreement, instrument or document now or hereafter
delivered to the Collateral Agent, Noteholder, or the Noteholders by or for the
benefit of the Company, then in any of such events, all of the reasonable
attorneys' fees actually incurred arising from such services, and any expenses,
costs and charges relating thereto, shall be Obligations secured by the
Collateral.
(c) Upon the occurrence of an Event of Default, the Collateral Agent
shall have the right to require the Company to assemble all Collateral not
already in the Collateral Agent's possession and make it reasonably available to
the Collateral Agent at one or more places to be designated by the Collateral
Agent which are reasonably convenient to both parties, and to take possession of
such Collateral and to enter and remain upon the various premises of the Company
without cost or charge to the Collateral Agent, and to use the same, together
with materials, supplies, books and records of the Company for the purpose of
collecting such Collateral or liquidating such Collateral (plus any Collateral
already in the Collateral Agent's possession), whether by foreclosure, auction
or otherwise. In addition, the Collateral Agent may remove from such premises
such Collateral, and any records with respect thereto, to the premises of the
Collateral Agent or any Custodian for such time as the Collateral Agent may
desire, in order to effectively collect or liquidate such Collateral.
(d) Upon the occurrence of an Event of Default, the Collateral Agent
shall have the right to, and upon the direction of the Required Holders shall,
require the Company to establish and maintain a lockbox service (which may be
the Collateral Account) with such Noteholder or Noteholders as may be acceptable
to the Collateral Agent. In the event the Company (or any of its Affiliates,
subsidiaries, stockholders, directors, officers, employees or agents) shall
receive any monies, checks, notes, drafts or any other items of payment relating
to, or proceeds of, the Loans, the Company agrees with the Collateral Agent as
follows:
21
(i) the Company shall hold all such items of payment in trust for
the Collateral Agent and the Noteholders and as the property of
Collateral Agent and the Noteholders, separate from the funds of the
Company, and the Company shall immediately forward, or cause to be
forwarded, the same to the lockbox service for application to the
Notes;
(ii) the Company shall forward to the Collateral Agent, on a
daily basis, deposit slips related to all such items of payment
received by the Company and, if requested by the Collateral Agent,
copies of such checks and other items, together with a statement
showing the application of that portion of such items of payment
relating to payment in connection with the Loans and a collection
report with regard thereto in form and substance satisfactory to the
Collateral Agent;
(iii) All such items of payment shall be the sole and exclusive
property of the Collateral Agent for the benefit of the Noteholders
immediately upon the earlier of receipt of such items by the
Collateral Agent or the receipt of such items by the Company;
(iv) The lockbox service shall be subject to the sole control of
the Collateral Agent and the Collateral Agent shall have the right at
all times in its sole discretion to apply all or part of such items of
payment to the payment in accordance with Section 5.3 hereof. The
Collateral Agent may, and upon the direction of the Required Holders
shall, release to the Company all or any part of such items of
payment; and
(v) The Collateral Agent assumes no responsibility for such
lockbox arrangement, including, without limitation, any claim of
accord and satisfaction or release with respect to deposits accepted
by any Noteholder thereunder.
(e) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may:
(i) if the Collateral Agent so elects and gives notice of such
election to the Company, vote any or all of the Stock possessing
voting rights (whether or not the same shall have been transferred
into its name or the name of its nominee or nominees) and give all
consents, waivers and ratifications in respect of the Stock and
otherwise act with respect thereto as though it were the outright
owner thereof (the Company hereby irrevocably constituting and
appointing the Collateral Agent the proxy and attorney-in-fact of the
Company, with full power of substitution, to do so); and
(ii) cause all or any part of the Stock held by it to be
transferred into its name or the name of its nominee or nominees, if
it has not already done so.
22
(f) the Company recognizes that the Collateral Agent may be unable to
effect a public sale of the Stock by reason of certain prohibitions contained in
the Securities Act of 1933, as amended, but may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers. The Company
recognizes that any such private sales may be at prices and other terms less
favorable to the seller than if sold at public sales and that such private sales
shall not by reason thereof be deemed not to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation to delay a
sale of any of the Stock for the period of time necessary to permit the issuer
of such securities to register such securities for public sale under the
Securities Act of 1933, as amended, even if the issuer would agree to do so.
SECTION 5.3. Application of Proceeds. (a) Upon receipt thereof in
accordance with the terms of Section 5 of the Intercreditor Agreement, any
proceeds of any lockbox collection or sale of, or other realization upon, all or
any part of the Collateral shall be applied by the Collateral Agent in the
following order of priority:
first, to payment of the expenses of such lockbox or sale or other
realization, including reasonable compensation to the Collateral Agent and
its agents and counsel and all expenses, liabilities, advances incurred or
made by the Collateral Agent in connection therewith, and any other
unreimbursed expenses for which the Collateral Agent is to be reimbursed
under this Agreement;
second, to the payment of the Obligations, pro rata in accordance with
the respective outstanding balances thereof (including principal, interest,
fees and all other amounts due thereunder); and
third, after indefeasible payment in full of all Obligations, to
payment to the Company or its successors and assigns, or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Collateral Agent may make distributions hereunder in cash or in
kind, but such distributions to the Noteholders shall in all events be made pro
rata on the basis of the respective Exposure Percentages of the Obligations.
Distributions made under clause "second" above may also be made in a combination
of cash or property, but distributions to the Noteholders shall be made pro rata
on the basis of the respective Exposure Percentages of the Obligations.
Distributions made under clauses "first" and "third" may also be made in a
combination of cash or property. Any deficiency remaining, after application of
such cash or cash proceeds to the Obligations, shall continue to be Obligations
for which the Company remains liable.
(b) In making the determinations and allocations required by this
Section 5.3 or otherwise by this Agreement, the Collateral Agent may rely upon
information supplied by the Noteholders as to the amounts of the Obligations
held by them, or as to other matters (with each such matter being conclusively
deemed to be
23
proved or established by a certificate executed by an officer of such Person),
and the Collateral Agent shall have no liability to any of the Noteholders for
actions taken in reliance upon such information. All distributions made by the
Collateral Agent pursuant to this Section 5.3 shall be final, and the Collateral
Agent shall have no duty to inquire as to the application by the Noteholders, of
any amount distributed to them. However, if at any time the Collateral Agent
determines that an allocation was based upon a mistake of fact (including
without limitation, mistakes based on an assumption that principal or interest
or any other amount has been paid by payments that are subsequently recovered
from the recipient thereof through the operation of any bankruptcy,
reorganization, insolvency or other laws or otherwise), the Collateral Agent may
in its discretion, but shall not, subject to Section 5.3(d), be obligated to,
adjust subsequent allocations and distributions hereunder so that, on a
cumulative basis, the Noteholders receive the distributions to which they would
have been entitled if such mistake of fact had not been made. If any dispute or
disagreement shall arise as to the allocation of any sum of money received by
the Collateral Agent hereunder or under any Security Document, the Collateral
Agent shall have the right to deliver such sum to a court of competent
jurisdiction and therein commence an action for interpleader.
(c) If any Noteholder acquires custody, control or possession of any
Collateral or proceeds therefrom, other than pursuant to the terms of this
Agreement, such Noteholder shall promptly cause such Collateral or proceeds to
be delivered to or put in the custody, possession or control of the Collateral
Agent or, if the Collateral Agent shall so designate, an agent of the Collateral
Agent (which agent may be a branch or affiliate of the Collateral Agent or any
Noteholder) in the same form of payment received, with appropriate endorsements,
in the country in which such Collateral is held for distribution in accordance
with the provisions of this Section 5.3. Until such time as the provisions of
the immediately preceding sentence have been complied with, such Noteholder
shall be deemed to hold such Collateral and proceeds in trust for the Collateral
Agent.
(d) If, through the operation of any bankruptcy, reorganization,
insolvency or other laws or otherwise, the security interests created hereby are
enforced with respect to some, but not all, of the Obligations, the Collateral
Agent shall nonetheless apply the proceeds for the benefit of the Noteholders in
the proportion and subject to the priorities of Section 5.3(a) hereof. To the
extent that the Collateral Agent distributes proceeds collected with respect to
one Obligation to or on behalf of the holder of another Obligation or a
Noteholder obtains the equivalent of proceeds through the exercise of any right
of setoff, counterclaim, cross action, voluntary payment by the Company,
enforcement of claim, proceedings in bankruptcy, reorganization, liquidation or
otherwise, the holder of the former Obligation shall be deemed to have purchased
a participation in the latter Obligation or shall be subrogated to the rights of
the holder thereof to receive any subsequent payments and distributions made
with respect to the portion thereof paid or to be paid by the application of
such proceeds; provided that if all or any part of such excess payment is
thereafter recovered, such distribution and arrangements shall be rescinded and
the amount restored to the extent of such recovery, without interest. If any
Noteholder exercises any right of setoff, banker's lien or similar
24
right with respect to any Collateral for payment of any Obligations, each of the
Noteholders agrees with each other Noteholder that if an amount to be set off is
to be applied to Indebtedness of the Company to such Noteholder, other than
Indebtedness evidenced by the Notes held by such Noteholder, as applicable, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness evidenced by all such Notes held by such Noteholder.
SECTION 5.4. Release of Collateral; Subordination of Lien. To the
extent permitted by the Note Purchase Agreements and the Intercreditor
Agreement, the Collateral Agent, for the benefit of itself and the Noteholders,
is hereby authorized, upon receipt of a request from the Company, to release any
Collateral and to provide such releases and termination statements with respect
to any Collateral in connection with any sale, exchange or other disposition
thereof permitted under the Note Purchase Agreements so long as (i) the
Collateral Agent obtains a first priority perfected security interest in any
non-cash proceeds of such sale, exchange or other disposition and (ii) any net
cash proceeds of such sale, exchange or other disposition are paid in accordance
with the provisions hereunder. Whether or not so instructed by the Required
Holders, the Collateral Agent may release any Collateral and may provide any
release, termination statement or instrument of subordination required by order
of a court of competent jurisdiction or otherwise required by applicable law. To
the extent permitted by the Note Purchase Agreements, the Collateral Agent
shall, on the written instructions of the Required Holders, subordinate by
written instrument the Lien on all or any portion of the Collateral to any other
lender extending to the Company indebtedness permitted by the terms of the Note
Purchase Agreements, and (iii) the Collateral Agent is so instructed by the
Required Holders in accordance with the terms of the Note Purchase Agreements.
SECTION 5.5. Waiver by Collateral Agent or Noteholders. The Collateral
Agent's or any Noteholder's failure at any time or times hereafter to require
strict performance by the Company of any of the provisions, warranties, terms
and conditions contained in this Agreement or any of the Other Agreements shall
not waive, affect or diminish any right of the Collateral Agent or any
Noteholder at any time or times hereafter to demand strict performance therewith
and with respect to any other provisions, warranties, terms and conditions
contained in this Agreement or any of the Other Agreements, and any waiver of
any Event of Default shall not waive or affect any other Event of Default,
whether prior or subsequent thereto, and whether of the same or a different
type. None of the warranties, conditions, provisions and terms contained in this
Agreement or any Other Agreement shall be deemed to have been waived by any act
or knowledge of the Collateral Agent or any Noteholder, or their respective
agents, officers or employees except by an instrument in writing signed by an
officer of the Collateral Agent or such Noteholder and directed to the Company
specifying such waiver.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Continuing Lien. The Collateral described in this
Agreement secures all present and future Obligations of the Company. There is
included
25
within the term "Collateral;" as used herein, all other property and all
interests therein of any kind hereafter acquired by the Company, meeting or
falling within the general description of the Collateral set forth herein and
also the proceeds and products thereof.
SECTION 6.2. Waivers by Company. (a) The Company irrevocably waives
the right to direct the application of any and all payments which may be
received by the Collateral Agent during the continuance of an Event of Default,
and the Company does hereby irrevocably agree that, during the continuance of an
Event of Default, the Collateral Agent shall have the continuing exclusive right
to apply and reapply any and all such payments received in such manner as the
Collateral Agent may deem advisable, notwithstanding any entry upon any of its
books and records.
(b) The Company also waives any and all notices of demand, notice or
protest that the Company might be entitled to receive with respect to this
Agreement by virtue of any applicable statute or law, and waives demand,
protest, notice of protest, notice of default, release, compromise, settlement,
extension or renewal of all commercial paper, accounts, contract rights,
instruments, guaranties, and otherwise, at any time held by the Collateral Agent
or the Noteholders on which the Company may in any way be liable, notice of
nonpayment at maturity of any and all Loans, and notice of any action taken by
the Collateral Agent or the Noteholders unless expressly required by this
Agreement.
SECTION 6.3. Parties. This Agreement and any of the Other Agreements,
instruments and documents executed and delivered pursuant hereto or to
consummate the transactions contemplated hereunder shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto.
SECTION 6.4. GOVERNING LAW. THIS AGREEMENT AND ANY OTHER AGREEMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE LAWS OF ANOTHER JURISDICTION ARE MANDATORILY APPLICABLE TO THE
EXERCISE OF REMEDIES OR THE PERFECTION OF SECURITY INTERESTS UNDER THE UCC.
SECTION 6.5. WAIVER OF JURY TRIAL AND SETOFF. EACH OF THE COLLATERAL
AGENT AND THE COMPANY HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OTHER
AGREEMENTS OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR
THE OTHER AGREEMENTS, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE, HOWSOEVER ARISING, BETWEEN
OR AMONG THE COMPANY AND ANY OF THE NOTEHOLDERS OR THE COLLATERAL AGENT, BETWEEN
OR AMONG ANY NOTEHOLDERS AND BETWEEN OR AMONG THE COLLATERAL AGENT
26
AND ANY NOTEHOLDERS AND THE COMPANY HEREBY WAIVES THE RIGHT TO INTERPOSE ANY
SETOFF, COUNTERCLAIM OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH LITIGATION,
IRRESPECTIVE OF THE NATURE OF SUCH SETOFF, COUNTERCLAIM OR CROSS-CLAIM (UNLESS
SUCH SETOFF, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE
FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER
ACTION).
SECTION 6.6. Jurisdiction; Service of Process. The Company hereby
irrevocably consents to the jurisdiction of the courts of the State of New York,
County of New York and of any Federal Court located in the Southern District of
New York, and agrees that venue in each of such Courts is proper in connection
with any action or proceeding arising out of or relating to this Agreement, the
Other Agreements, or any document or instrument delivered pursuant to this
Agreement or the Other Agreements. Nothing herein shall affect the right of any
Noteholder to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction.
SECTION 6.7. Survival of Representations and Warranties. All
representations and warranties of the Company and all terms, provisions,
conditions and agreements to be performed by the Company contained in this
Agreement and in the other Note Documents shall be true and correct, and
satisfied, where applicable, at the time of the execution of this Agreement, and
shall survive the execution and delivery of this Agreement and all Other
Agreements.
SECTION 6.8. Obligations Secured by Property Other Than Collateral. To
the extent that the Obligations are now or hereafter secured by property other
than the Collateral, or by a guarantee, endorsement or property of any other
Person, then the Collateral Agent shall have the right to, and upon the
direction of the Required Holders shall, proceed against such other property,
guarantee or endorsement upon the occurrence and during the continuance of an
Event of Default, and the Collateral Agent shall have the right, with the
consent of the Required Holders, to determine which rights, security, liens,
security interests or remedies the Collateral Agent shall at any time pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of them or any of the Collateral
Agent's rights or any of the Holders' rights under the Obligations, this
Agreement or any Other Agreements.
SECTION 6.9. Resignation of Collateral Agent; Successor Collateral
Agent.
(a) The Collateral Agent may at any time resign by giving ten (10)
days prior written notice thereof to each Noteholder and the Company, provided
--------
that no resignation shall be effective until a successor for the Collateral
Agent is appointed. Upon such resignation, the Required Holders (or, if the
Obligations have been paid in full) shall have the right to appoint a successor
Collateral Agent. If no successor
27
Collateral Agent shall have been so appointed and shall have accepted such
appointment within thirty (30) days after the retiring Collateral Agent's giving
of notice of resignation, then the retiring Collateral Agent may, on behalf of
the Required Holders, as applicable, appoint a successor Collateral Agent, which
shall be a bank or trust company incorporated and doing business within the
United States of America having a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Collateral Agent's resignation, the provisions of this Agreement shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Collateral Agent.
(b) In the event a successor Collateral Agent is appointed pursuant to
the provisions of the Note Purchase Agreements, such successor Collateral Agent
shall succeed to the rights, powers and duties of the Collateral Agent
hereunder, and the term "Collateral Agent" shall mean such successor Collateral
Agent effective upon its appointment, and the former Collateral Agent's rights,
powers and duties as Collateral Agent shall be terminated, without any other or
further act or deed on the part of such former Collateral Agent or any of the
parties to the Note Purchase Agreements or any holders of the Notes. Such former
Collateral Agent agrees to take such actions as are reasonably necessary to
effectuate the transfer of its rights, powers and duties to such successor
Collateral Agent.
SECTION 6.10. Amendment and Waiver. No modification or amendment of
this Agreement shall be effective unless the same shall be in writing and signed
by the Collateral Agent (acting with the requisite consent of the Noteholders as
required by the Note Purchase Agreements) and the Company; provided, however,
-------- -------
(i) no amendment or waiver shall adversely affect any of the Collateral Agent's
rights, immunities or rights to indemnification hereunder or under any of the
Note Documents or expand its duties or reduce any amount payable to the
Collateral Agent hereunder without the written consent of the Collateral Agent;
and (ii) any provisions of this Agreement affecting the rights and obligations
of the Collateral Agent hereunder may not be amended without the written consent
of the Collateral Agent. No waiver of any provision of this Agreement and no
consent to any departure by any party hereto from the provisions hereof shall be
effective unless such waiver or consent shall be set forth in a written
instrument executed by the party against which it is sought to be enforced, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on any party hereto in
any case shall entitle such party to any other or further notice or demand in
the same, similar or other circumstances.
SECTION 6.11. Termination. This Agreement and the security interest in
the Collateral created hereby will terminate when the Obligations have been
28
irrevocably paid and finally discharged in full in accordance with the terms of
the Note Purchase Agreements.
No waiver by the Collateral Agent or any Noteholder or any other
holder of the Notes of any default will be effective unless in writing or
operate as a waiver of any other default or of the same default on a future
occasion. In the event of a sale or assignment by any Noteholder of a Note or
any portion thereof, such Noteholder may assign or transfer its rights and
interest under this Agreement in whole or in part to the purchaser or purchasers
of the Note, whereupon such purchaser or purchasers will become vested with all
of the powers, rights and responsibilities of such Noteholder hereunder, and
such Noteholder will thereafter be forever released and fully discharged from
any liability or responsibility hereunder with respect to the rights, interest
and responsibilities so assigned, other than liabilities arising out of actions
taken prior to the date of assignment. The Company may not assign this Agreement
without the express written consent of the Noteholders.
SECTION 6.12. Notices. All notices, requests, consents, demands or
other communications provided for herein shall be given in accordance with the
terms of the Note Purchase Agreements.
SECTION 6.13. Severability. To the extent any provision of this
Agreement is prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
29
SECTION 6.14. Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be an original and both of
which shall together constitute one and the same agreement.
[Remainder of this page intentionally left blank]
30
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written by the duly authorized officers of the parties hereto.
MEDALLION FUNDING CHICAGO
CORP.
By: /s/ Alvin Murstein
--------------------------------------
Alvin Murstein
Chairman & Chief Executive Officer:
By: /s/ James E. Jack
--------------------------------------
James E. Jack
Chief Financial Officer
FLEET NATIONAL BANK, as Collateral
Agent
By: /s/ Jeffrey H. Robinson
--------------------------------------
Name: Jeffrey H. Robinson
Title:Senior Vice President