EXHIBIT 10.2
Execution Copy
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Medallion Funding Corp.
$22,500,000 7.20% Senior Secured Notes, Series A
Due June 1, 2004
and
$22,500,000 7.20% Senior Secured Notes, Series B
Due September 1, 2004
Note Purchase Agreement
Dated as of June 1, 1999
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TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES; SECURITY FOR NOTES............................................... 1
Section 1.1. Authorization of Notes................................................................... 1
Section 1.2. Security for Notes....................................................................... 1
SECTION 2. SALE AND PURCHASE OF NOTES............................................................... 2
SECTION 3. CLOSING.................................................................................. 2
SECTION 4. CONDITIONS TO CLOSING.................................................................... 2
Section 4.1.1. Representations and Warranties........................................................... 3
Section 4.1.2. Performance; No Default.................................................................. 3
Section 4.1.3. Compliance Certificates.................................................................. 3
Section 4.1.4. Opinions of Counsel...................................................................... 3
Section 4.1.5. Purchase Permitted By Applicable Law, etc................................................ 3
Section 4.1.6. Sale of Other Notes...................................................................... 4
Section 4.1.7. Payment of Special Counsel Fees.......................................................... 4
Section 4.1.8. Private Placement Number................................................................. 4
Section 4.1.9. Changes in Corporate Structure........................................................... 4
Section 4.1.10. Security Documents....................................................................... 4
Section 4.1.11. Evidence of Insurance.................................................................... 4
Section 4.1.12. Intercreditor Agreement.................................................................. 4
Section 4.1.13. Consents................................................................................. 4
Section 4.1.14. Funding Instructions..................................................................... 5
Section 4.1.15. Merger................................................................................... 5
Section 4.1.16. SBA Approval of Merger and Release of SBA Liens.......................................... 5
Section 4.1.17. UCC Searches............................................................................. 5
Section 4.1.18. Proceedings and Documents................................................................ 5
Section 4.2. Additional Conditions of Second Closing Date............................................. 5
Section 4.2.2. First Closing Condition.................................................................. 6
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................ 6
Section 5.1. Organization; Power and Authority........................................................ 6
Section 5.2. Authorization, etc....................................................................... 6
Section 5.3. Disclosure............................................................................... 6
Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates......................... 7
Section 5.5. Financial Statements..................................................................... 7
Section 5.6. Compliance with Laws, Other Instruments, etc............................................. 7
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Section 5.7. Governmental Authorizations, etc......................................................... 8
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders................................ 8
Section 5.9. Taxes.................................................................................... 8
Section 5.10. Title to Property; Leases................................................................ 9
Section 5.11. Licenses, Permits, etc................................................................... 9
Section 5.12. Compliance with ERISA.................................................................... 9
Section 5.13. Private Offering by the Company.......................................................... 10
Section 5.14. Use of Proceeds; Margin Regulations...................................................... 10
Section 5.15. Existing Indebtedness; Future Liens...................................................... 10
Section 5.16. Foreign Assets Control Regulations, etc.................................................. 11
Section 5.17. Status under Certain Statutes............................................................ 11
Section 5.18. Environmental Matters.................................................................... 11
Section 5.19. Location of Offices, Books and Records................................................... 12
Section 5.20. SBIC..................................................................................... 12
Section 5.21. Investment Company....................................................................... 12
Section 5.22. Priority................................................................................. 12
Section 5.23. Advertising, Origination and Servicing Activities........................................ 12
Section 5.24. Activities............................................................................... 12
Section 5.25. Solvency................................................................................. 13
Section 5.26. Year 2000................................................................................ 13
SECTION 6. REPRESENTATIONS OF THE PURCHASER......................................................... 13
Section 6.1. Purchase for Investment.................................................................. 13
Section 6.2. Source of Funds.......................................................................... 13
SECTION 7. INFORMATION AS TO COMPANY................................................................ 15
Section 7.1. Financial and Business Information....................................................... 15
Section 7.2. Officer's Certificate.................................................................... 17
Section 7.3. Inspection............................................................................... 18
SECTION 8. PREPAYMENT OF THE NOTES.................................................................. 18
Section 8.1. Required Prepayments..................................................................... 18
Section 8.2. Optional Prepayments with Make-Whole Amount.............................................. 19
Section 8.3. Change in Control........................................................................ 19
Section 8.4. Allocation of Partial Prepayments........................................................ 21
Section 8.5. Maturity; Surrender, etc................................................................. 21
Section 8.6. Purchase of Notes........................................................................ 21
Section 8.7. Make-Whole Amount........................................................................ 21
SECTION 9. AFFIRMATIVE COVENANTS.................................................................... 23
Section 9.1. Compliance with Law...................................................................... 23
Section 9.2. Insurance................................................................................ 23
Section 9.3. Maintenance of Properties................................................................ 23
Section 9.4. Payment of Taxes and Claims.............................................................. 23
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Section 9.5. Corporate Existence, etc................................................................. 24
Section 9.6. Line of Business......................................................................... 24
Section 9.7. Further Assurances....................................................................... 24
Section 9.8. Maintenance of Security Interest......................................................... 24
Section 9.9. Required Percentage of Medallion Loans................................................... 24
Section 9.10. Covenant to Secure Notes Equally......................................................... 25
Section 9.11. Delivery of Termination Statements....................................................... 25
SECTION 10. NEGATIVE COVENANTS....................................................................... 25
Section 10.1. Transactions with Affiliates............................................................. 25
Section 10.2. Merger, Consolidation, Sale or Transfers Assets.......................................... 25
Section 10.3. Sale of Assets........................................................................... 26
Section 10.4. Minimum Tangible Net Worth............................................................... 26
Section 10.5. Maximum Liability Ratio.................................................................. 26
Section 10.6. Minimum Net Finance Assets............................................................... 26
Section 10.7. Minimum Net Income to Interest Expense Ratio............................................. 27
Section 10.8. Limitation on Loans and Investments...................................................... 27
Section 10.9. Restricted Payments...................................................................... 27
Section 10.10. Portfolio Purchases...................................................................... 27
Section 10.11. Amendments of Agreements................................................................. 28
Section 10.12. Capital Expenditures..................................................................... 28
SECTION 11. EVENTS OF DEFAULT........................................................................ 28
SECTION 12. REMEDIES ON DEFAULT, ETC................................................................. 31
Section 12.1. Acceleration............................................................................. 31
Section 12.2. Other Remedies........................................................................... 31
Section 12.3. Rescission............................................................................... 31
Section 12.4. No Waivers or Election of Remedies, Expenses, etc........................................ 32
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES............................................ 32
Section 13.1. Registration of Notes.................................................................... 32
Section 13.2. Transfer and Exchange of Notes........................................................... 32
Section 13.3. Replacement of Notes..................................................................... 33
SECTION 14. PAYMENTS ON NOTES........................................................................ 33
Section 14.1. Place of Payment......................................................................... 33
Section 14.2. Home Office Payment...................................................................... 33
SECTION 15. EXPENSES, ETC............................................................................ 34
Section 15.1. Transaction Expenses..................................................................... 34
Section 15.2. Survival................................................................................. 34
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SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT............................. 34
SECTION 17. AMENDMENT AND WAIVER..................................................................... 35
Section 17.1. Requirements............................................................................. 35
Section 17.2. Solicitation of Holders of Notes......................................................... 35
Section 17.3. Binding Effect, etc...................................................................... 35
Section 17.4. Notes Held by Company, etc............................................................... 36
SECTION 18. NOTICES.................................................................................. 36
SECTION 19. REPRODUCTION OF DOCUMENTS................................................................ 36
SECTION 20. CONFIDENTIAL INFORMATION................................................................. 37
SECTION 21. SUBSTITUTION OF PURCHASER................................................................ 38
SECTION 22. MISCELLANEOUS............................................................................ 38
Section 22.1. Successors and Assigns................................................................... 38
Section 22.2. Payments Due on Non-Business Days........................................................ 38
Section 22.3. Severability............................................................................. 38
Section 22.4. Construction............................................................................. 38
Section 22.5. Counterparts............................................................................. 39
Section 22.6. Governing Law............................................................................ 39
Section 22.7. Additional Indebtedness.................................................................. 39
Signature......................................................................................................... 40
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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 4.1.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 5.19 -- Location of Offices, Books and Records
EXHIBIT 1(a) -- Form of 7.20% Senior Secured Note, Series A, due
June 1, 2004
EXHIBIT 1(b) -- Form of 7.20% Senior Secured Note, Series B, due
September 1, 2004
EXHIBIT 4.1.4(a) -- Form of Opinion of Special Counsel for the Company
EXHIBIT 4.1.4(b) -- Form of Opinion of Special Counsel for the
Purchasers
EXHIBIT 4.10 -- Form of Company Security Agreement
EXHIBIT 4.12 -- Form of Intercreditor Agreement
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MEDALLION FUNDING CORP.
437 MADISON AVENUE
38TH FLOOR
NEW YORK, NEW YORK 10022
$22,500,000 7.20% Senior Secured Notes, Series A, due June 1, 2004
and
$22,500,000 7.20% Senior Secured Notes, Series B, due September 1, 2004
Dated as of June 1, 1999
To each of the Purchasers listed in
the attached Schedule A:
Ladies and Gentlemen:
Medallion Funding Corp., a New York corporation (the "Company"), agrees
with you as follows:
Section 1. Authorization of Notes; Security for Notes.
Section 1.1. Authorization of Notes. The Company will authorize the issue
and sale of (a) $22,500,000 aggregate principal amount of its 7.20% Senior
Secured Notes, Series A, due June 1, 2004 (the "Series A Notes") and (b)
$22,500,000 aggregate principal amount of its 7.20% Senior Secured Notes, Series
B, due September 1, 2004 (the "Series B Notes" and together with the Series A
Notes sometimes collectively referred to herein as the "Notes"). The term
"Notes" is to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement or the Other Agreements (as hereinafter defined).
The Series A Notes and the Series B Notes shall be substantially in the forms
set out in Exhibit 1(a) and Exhibit 1(b), respectively, with such changes
therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
Section 1.2. Security for Notes. The Notes will be entitled to the benefit
of the Security Documents. Reference is hereby made to the Security Documents
for a description of the Collateral described therein and the rights and
remedies of the holders of the Notes with respect thereto.
Section 2. Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the applicable
Closing provided for in Section 3,
Notes in the principal amount specified opposite your name in Schedule A at the
purchase price of 100% of the principal amount thereof. Contemporaneously with
entering into this Agreement, the Company is entering into separate Note
Purchase Agreements (the "Other Agreements") identical with this Agreement with
each of the other purchasers named in Schedule A (the "Other Purchasers"),
providing for the sale at such Closing to each of the Other Purchasers of Notes
in the principal amount specified opposite its name in Schedule A. Your
obligation hereunder, and the obligations of the Other Purchasers under the
Other Agreements, are several and not joint obligations, and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.
Section 3. Closing.
The sale and purchase of the Series A Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, at 10:00 a.m., Chicago time, at a
closing (the "First Closing") on June 1, 1999 or on such other Business Day
thereafter on or prior to June 30, 1999 as may be agreed upon by the Company and
you and the Other Purchasers. The sale and purchase of the Series B Notes to be
purchased by you and the Other Purchasers shall occur at the offices of Chapman
and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00 a.m.,
Chicago time, at a closing (the "Second Closing") on September 1, 1999 or on
such other Business Day thereafter on or prior to September 30, 1999, as may be
agreed upon by the Company and you and the Other Purchasers. The First Closing
and the Second Closing are hereinafter sometimes collectively referred to as the
"Closings" and each of such Closings is hereinafter sometimes referred to as a
"Closing". At each such Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $100,000 as you may request) dated the date of such
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number 2189006536 at
Fleet Bank, N.A., 1187 Avenue of the Americas, New York, New York 10036 (ABA
No. 021200339). If at such Closing the Company shall fail to tender such Notes
to you as provided above in this Section 3, or any of the conditions specified
in Section 4 shall not have been fulfilled to your satisfaction, you shall, at
your election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights you may have by reason of such failure or
such nonfulfillment.
Section 4. Conditions to Closing.
Section 4.1. Your obligation to purchase and pay for the Notes to be sold
to you at the First Closing is subject to the fulfillment to your satisfaction,
prior to or at such Closing, of the following conditions:
Section 4.1.1. Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of the First Closing.
Section 4.1.2. Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be
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performed or complied with by it prior to or at the First Closing and after
giving effect to the issue and sale of the Notes (and the application of the
proceeds thereof as contemplated by Section 5.14) no Default or Event of Default
shall have occurred and be continuing. Neither the Company nor any Subsidiary
shall have entered into any transaction since the date of the Memorandum that
would have been prohibited by Section 10.1, 10.2, 10.3 or 10.8 hereof had such
Sections applied since such date.
Section 4.1.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to you an
Officer's Certificate, dated the date of the First Closing, certifying that the
conditions specified in Sections 4.1.1, 4.1.2 and 4.1.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Agreements.
Section 4.1.4. Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the applicable Closing
(a) from Willkie Farr & Gallagher, counsel for the Company, covering the matters
set forth in Exhibit 4.1.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such opinion to you)
and (b) from Chapman and Cutler, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.1.4(b) and
covering such other matters incident to such transactions as you may reasonably
request.
Section 4.1.5. Purchase Permitted By Applicable Law, etc. On the date of
the First Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the
character of the particular investment, (ii) not violate any applicable law or
regulation (including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System) and (iii) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.
Section 4.1.6. Sale of Other Notes. Contemporaneously with the First
Closing, the Company shall sell to the Other Purchasers, and the Other
Purchasers shall purchase the Notes to be purchased by them at the First Closing
as specified in Schedule A.
Section 4.1.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the First
Closing, the fees, charges and disbursements of your special counsel referred to
in Section 4.1.4 to the extent reflected in a
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statement of such counsel rendered to the Company at least one Business Day
prior to the First Closing.
Section 4.1.8. Private Placement Number. A Private Placement number issued
by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
Section 4.1.9. Changes in Corporate Structure. Except as specified in
Schedule 4.1.9, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.
Section 4.1.10. Security Documents. (a) On the date of the First Closing,
the Security Documents shall have been duly executed and delivered by the
parties thereto and shall be in full force and effect and you shall have
received true, correct and complete copies of each thereof.
(b) On or prior to the date of the First Closing the Security Documents
(and/or financing statements or similar notices thereof if and to the extent
permitted or required by applicable law) shall have been recorded or filed for
record in such public offices as may be deemed necessary or appropriate by you
or your special counsel in order to prefect the Liens and security interests
granted or conveyed thereby.
Section 4.1.11. Evidence of Insurance. You shall have received a
certificate dated the date of the First Closing executed by the independent
insurance broker of the Company certifying to the existence of the insurance
required hereunder and by the Security Documents and the payment of all premiums
due thereon.
Section 4.1.12. Intercreditor Agreement. On or prior to the date of the
First Closing, the Intercreditor Agreement shall be substantially in the form of
Exhibit 4.1.12 hereto, shall be in form and substance satisfactory to you and
your special counsel, shall have been duly executed and delivered by the parties
thereto, and you shall have received true, correct and completed copies thereof.
Section 4.1.13. Consents. On or prior to the date of the First Closing, any
consents or approvals required to be obtained from any holder or holders of any
outstanding Security or Indebtedness of the Company and any amendments or
agreements pursuant to which any Security or evidence of Indebtedness may have
been issued (including the amendment of the Bank Loan Agreement) which shall be
necessary to permit the consummation of the transactions contemplated hereby
shall have been obtained and all such consents or amendments shall be
satisfactory in form and substance to you and your special counsel.
Section 4.1.14. Funding Instructions. At least three Business Days prior to
the date of the applicable Closing, you shall have received written instructions
executed by a Responsible Officer of the Company directing the manner of the
payment of funds and setting forth (a) the name and address of the transferee
bank, (b) such transferee bank's ABA number, (c) the account name and
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number into which the purchase price for the Notes being purchased on the date
of such Closing is to be deposited and (d) the name and telephone number of the
account representative responsible for verifying receipt of such funds.
Section 4.1.15. Merger. Concurrently with the issuance of the Notes, the
Merger shall have occurred and be final and the Company shall be the surviving
corporation. Such Merger shall be upon terms and conditions satisfactory to you
and your special counsel and you shall have received all evidence thereof
satisfactory to you and your special counsel.
Section 4.1.16. SBA Approval of Merger and Release of SBA Liens.
Concurrently with the issuance of the Notes, the SBA shall have approved the
Merger and shall have released any Liens held by the SBA. Such approval (which
may be conditional) and release shall be in a satisfactory form to you and your
special counsel and you shall have received all evidence thereof satisfactory to
you and your special counsel.
Section 4.1.17. UCC Searches. You shall have received the results of a
recent search by a Person satisfactory to you of the Uniform Commercial Code
filings which may have been filed with respect to the property of the Company
and its Subsidiaries.
Section 4.1.18. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
Section 4.2. Additional Conditions of Second Closing Date. Your
obligation to purchase the Notes to be issued on the date of the Second Closing
shall be subject to the following further conditions precedent:
Section 4.2.1. Issuance of Series A Notes. The Company shall have issued
all of the Series A Notes which were scheduled to have been issued on the date
of the First Closing.
Section 4.2.2. First Closing Conditions. All of the closing conditions
set forth in Sections 4.1.1 through 4.1.9, 4.1.13, 4.1.14, and 4.1.18 shall have
been fulfilled or performed with respect to the date of the Second Closing.
Section 5. Representations and Warranties of the Company.
The Company represents and warrants to you that:
Section 5.1. 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 authority to own
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or hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Other Agreements and the Notes and to perform the
provisions hereof and thereof.
Section 5.2. Authorization, etc. This Agreement and the Other Agreements
and the Notes have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company 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).
Section 5.3. Disclosure. The Company, through its agent, Fleet Corporate
Finance, has delivered to you and each Other Purchaser a copy of a Confidential
Information Memorandum, dated April, 1999 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. This Agreement, the Memorandum, the
documents, certificates or other writings delivered to you by or on behalf of
the Company in connection with the transactions contemplated hereby and the
financial statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.5, since December 31, 1998, there has been no
change in the financial condition, operations, business, properties or prospects
of the Company or any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that could reasonably be expected to have
a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its Capital Stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of Capital Stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
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(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity 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. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of Capital Stock or similar equity
interests of such Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(i) 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 or
any Subsidiary 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 is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with 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 (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
Section 5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes except those that have been
obtained or UCC-1 filings filed with the offices of the Secretary of State of
the State of New York and the City Register of New York County, New York,
necessary to perfect the security interests contemplated by the Security
Documents.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a)
Except as disclosed in Schedule 5.8, there are no actions, suits or proceedings
pending or, to the knowledge
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of the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is bound, or
any order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
federal, state or other taxes for all fiscal periods are adequate.
Section 5.10. Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.
Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and
trade names, or rights thereto, that individually or in the aggregate are
Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(c) to the best knowledge of the Company, there is no Material violation
by any Person of any right of the Company or any of its Subsidiaries with
respect to any patent, copyright,
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service mark, trademark, trade name or other right owned or used by the Company
or any of its Subsidiaries.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and no
event, transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $500,000 in the case of any
single Plan and by more than $1,000,000 in the aggregate for all Plans. The
terms "benefit liabilities" has the meaning specified in section 4001 of ERISA
and the terms "current value" and "present value" have the meaning specified in
section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to (i) the accuracy of your representation in Section 6.2 as to
the sources of the funds used to pay the purchase price of the Notes to be
purchased by you and (ii) the assumption, made solely for the purpose of making
such representation, that Department of Labor Interpretive Bulletin 75-2 with
respect to prohibited transactions remains valid in the circumstances of the
transactions contemplated herein.
Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar Securities for
sale to, or solicited any offer to
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buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any Person other than you, the Other Purchasers and not more than
20 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor anyone acting on its behalf
has taken, or will take, any action that would subject the issuance or sale of
the Notes to the registration requirements of section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes to refinance SBA Debt and for general
corporate purposes. No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any Securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 5% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 5% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.
Section 5.15. Existing Indebtedness; Future Liens. (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of all outstanding
Indebtedness for borrowed money of the Company and its Subsidiaries as of March
31, 1999, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the Company or such
Subsidiary and no event or condition exists with respect to any Indebtedness of
the Company or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien which is not a Permitted Lien.
Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.
Section 5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, as amended, the ICC Termination Act of 1995, as amended, or the Federal
Power Act, as amended.
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Section 5.18. Environmental Matters. Neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of violation
of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly
owned, leased or operated by any of them or to other assets or their use,
except, in each case, such as could not reasonably be expected to result
in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned, leased
or operated by any of them and has not disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each case in
any manner that could reasonably be expected to result in a Material
Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
Section 5.19. Location of Offices, Books and Records. Schedule 5.19 annexed
hereto completely and accurately lists all places (i) at which the Company
maintains its books and records relating to, among other things, its Loans, (ii)
at which the Company has any places of business and (iii) at which the Company
has its chief executive office.
Section 5.20. SBIC. The Company is a qualified SBIC. The Company is in
material compliance with all conditions or requirements imposed by the SBA or
any other applicable Governmental Authority with respect to its status as an
SBIC including, without limitation, all conditions and requirements imposed
under the SBI Act and the SBA Regulations promulgated thereunder.
Section 5.21. Investment Company. Each of the Company and Medallion
Financial is an "investment company," as such term is defined in the 1940 Act.
The purchase of the Notes by you and the Other Purchasers, 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 will
not violate any provision of said 1940 Act, or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder.
Section 5.22. Priority. Except as otherwise permitted hereunder, the
Collateral Agent, for the ratable benefit of the holders of the Notes, has a
valid and perfected first priority security
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interest (subject to the terms of the Intercreditor 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.
Section 5.23. Advertising, Origination and Servicing Activities. All
advertising, origination and servicing activities, procedures and materials used
with regard to any Loan made or accounts acquired, collected or serviced by the
Company comply with all applicable Federal, state and local laws, ordinances,
rules and regulations, including but not limited to those related to usury,
truth in lending, real estate settlement procedures, consumer protection, equal
credit opportunity, fair debt collection, rescission rights and disclosures,
except where failure to comply would not have a Material Adverse Effect.
Section 5.24. Activities. The only transactions engaged in by the Company
in the ordinary course of its business consist of: (i) the making and servicing
of Loans and Investments in compliance with the SBI Act and the SBA Regulations
promulgated thereunder; and (ii) transactions incidental to the foregoing.
Section 5.25. Solvency. The Company is Solvent, and will not, as a result
of the transactions contemplated hereby or by the Note Documents, become not
Solvent.
Section 5.26. Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the computer systems of the
Company and its Subsidiaries and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others, or to the extent
practicable and commercially reasonable, with which the systems of the Company
and its Subsidiaries interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by June 30, 1999, except where
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. The cost to the Company and its
Subsidiaries of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 to the Company and its Subsidiaries (including
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or a Material Adverse Effect. Except for such reprogramming
referred to in the preceding sentence as may be necessary, the computer and
management information systems of the Company and its Subsidiaries are and, with
ordinary course upgrading and maintenance and expansion, will continue for the
term of this Agreement to be, sufficient to permit the Company to conduct its
business without a Material Adverse Effect.
Section 6. Representations of the Purchaser.
Section 6.1. Purchase for Investment. You represent that you are
purchasing the Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of
your or their property shall at all times be within your or their control. You
understand that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.
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Section 6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
(a) if you are an insurance company, the Source to be used by you
is an "insurance company general account" within the meaning of
Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 and
there is no "employee benefit plan" (within the meaning of section 3(3)
of ERISA or section 4975(e)(1) of the Code), treating as a single plan,
all plans maintained by the same employer or employee organization, with
respect to which the amount of the general account reserves and
liabilities for all contracts held by or on behalf of such plan, exceed
ten percent (10%) of the total reserves and liabilities of such general
account (exclusive of separate account liabilities) plus surplus, as set
forth in the NAIC Annual Statement filed with your state of domicile; or
(b) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest, other than
a separate account that is maintained solely in connection with your
fixed contractual obligations under which the amounts payable, or
credited, to such plan and to any participant or beneficiary of such plan
(including any annuitant) are not affected in any manner by the
investment performance of the separate account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption ("PTE")
90-1 (issued January 29, 1990), or (ii) a bank collective investment
fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and,
except as you have disclosed to the Company in writing pursuant to this
paragraph (c), no employee benefit plan or group of plans maintained by
the same employer or employee organization beneficially owns more than
10% of all assets allocated to such pooled separate account or collective
investment fund; or
(d) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part l(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the
Company in writing pursuant to this paragraph (d); or
(e) the Source is a governmental plan; or
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(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in section 3 of ERISA.
Section 7. Information as to Company.
Section 7.1. Financial and Business Information. The Company shall deliver
to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and retained earnings,
changes in shareholders' equity and cash flows of the Company and
its Subsidiaries for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail (which detail
shall include data as to non-accruals and related collateral, repossessions,
charge-offs and reconciliation allowance for losses), prepared in accordance
with GAAP applicable to quarterly financial statements generally, and certified
by a Senior Financial Officer as fairly presenting, in all material respects,
the financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q, if any, prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this Section
7.1(a);
(b) Annual Statements -- within 120 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
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(ii) consolidated statements of income and retained earnings,
changes in shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail (which detail shall include data as
to non-accruals and related collateral, repossessions, charge-offs and
reconciliation allowance for losses), prepared in accordance with GAAP, and
accompanied by
(A) an opinion thereon of Independent Public Accountants,
which opinion shall state that such financial statements present
fairly, in all material respects, the financial position of the
companies being reported upon and their results of operations and
cash flows and have been prepared in conformity with GAAP and SBA
Regulations, and that the examination of such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event
that then constitutes a Default or an Event of Default, and, if
they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof,
provided that, as to a certificate prepared by the Independent
Public Accountants, such period, as it relates to the compliance
by the Company with the covenants contained in Sections 9 and 10
hereof shall apply to the fiscal period covered by their audit
(it being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such accountants should
have obtained knowledge thereof in making an audit in accordance
with generally accepted auditing standards or did not make such
an audit),
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K, if any, for such fiscal year
(together with the Company's annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
accordance with the requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's certificate described
in clause (B) above, shall be deemed to satisfy the requirements of this
Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public Securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by the
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Company or any Subsidiary with the Securities and Exchange Commission and
of all press releases and other statements made available generally by the
Company or any Subsidiary to the public concerning developments that are
Material;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default hereunder
or that any Person has given any notice or taken any action with respect to
a claimed default of the type referred to in Section 11(f), a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to
have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any federal or state Governmental Authority
relating to any order, ruling, statute or other law or regulation that
could reasonably be expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the
-16-
Company to perform its obligations hereunder and under the Notes as from
time to time may be reasonably requested by any such holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.4 through Section 10.7
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to take with
respect thereto.
Section 7.3. Inspection. The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to discuss
the affairs, finances and accounts of the Company and its Subsidiaries with
the Company's officers, and (with the consent of the Company, which consent
will not be unreasonably withheld) its Independent Public Accountants, and
(with the consent of the Company, which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and Independent Public
Accountants (and by this provision the Company authorizes said accountants
to discuss the affairs.
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finances and accounts of the Company and its Subsidiaries), all at such
times and as often as may be requested.
Section 8. Prepayment of the Notes.
Section 8.1. Required Prepayment. The Notes shall not be subject to required
prepayments except in connection with an acceleration of the Notes pursuant to
the provisions of Section 12.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company may,
at its option, upon notice as provided below, 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, at 100% of the principal amount
so prepaid, plus the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Company will give each holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with Section 8.3), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
Section 8.3. Change in Control. (a) Notice of Change in Control. The Company
will, within thirty (30) Business Days after any Responsible Officer has
knowledge of the occurrence of any Change in Control, give written notice of
such Change in Control to each holder of Notes unless notice in respect of such
Change in Control shall have been given pursuant to subparagraph (b) of this
Section 8.3. If a Change in Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in subparagraph (c) of this
Section 8.3 and shall be accompanied by the certificate described in
subparagraph (g) of this Section 8.3.
(b) Condition to Company Action. The Company will not take any action
that consummates a Change in Control unless (i) at least thirty (30) days prior
to such action it shall have given to each holder of Notes written notice
containing and constituting an offer to prepay Notes as described in
subparagraph (c) of this Section 8.3, accompanied by the certificate described
in subparagraph (g) of this Section 8.3, and (ii) contemporaneously with such
action, it prepays all Notes required to be prepaid in accordance with this
Section 8.3.
(c) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraphs (a) and (b) of this Section 8.3 shall be an offer to prepay, in
accordance with and subject to this Section 8.3, all, but not less than all, the
Notes held by each holder (in this case only, "holder" in respect of any Note
registered in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on a date specified in such offer (the "Proposed
Prepayment Date").
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If such Proposed Prepayment Date is in connection with an offer contemplated by
subparagraph (a) of this Section 8.3, such date shall be not less than thirty
(30) days and not more than forty-five (45) days after the date of such offer
(if the Proposed Prepayment Date shall not be specified in such offer, the
Proposed Prepayment Date shall be the thirtieth day after the date of such
offer).
(d) Acceptance; Rejection. A holder of Notes may accept the offer to
prepay made pursuant to this Section 8.3 by causing a notice of such acceptance
to be delivered to the Company at least fifteen (15) days prior to the Proposed
Prepayment Date. A failure by a holder of Notes to respond to an offer to
prepay made pursuant to this Section 8.3 shall be deemed to constitute a
rejection of such offer by such holder.
(e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to the date of prepayment. On the Business
Day preceding the date of prepayment, the Company shall deliver to each holder
of Notes being prepaid a statement showing the amount due in connection with
such prepayment and setting forth the details of the computation of such amount.
The prepayment shall be made on the Proposed Prepayment Date except as provided
in subparagraph (f) of this Section 8.3.
(f) Deferral Pending Change in Control. The obligation of the Company to
prepay Notes pursuant to the offers required by subparagraph (b) and accepted in
accordance with subparagraph (d) of this Section 8.3 is subject to the
occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in Control does
not occur on the Proposed Prepayment Date in respect thereof, the prepayment
shall be deferred until and shall be made on the date on which such Change in
Control occurs. The Company shall keep each holder of Notes reasonably and
timely informed of (i) any such deferral of the date of prepayment, (ii) the
date on which such Change in Control and the prepayment are expected to occur,
and (iii) any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and acceptances
made pursuant to this Section 8.3 in respect of such Change in Control shall be
deemed rescinded).
(g) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section 8.3 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.3; (iii) the principal amount of each Note offered to be prepaid; (iv)
the interest that would be due on each Note offered to be prepaid, accrued to
the Proposed Prepayment Date; (v) that the conditions of this Section 8.3 have
been fulfilled; and (vi) in reasonable detail, the nature and date or proposed
date of the Change in Control.
(h) "Change in Control" Defined. "Change in Control" means any
of the following events or circumstances:
the failure, for any reason including, without limitation,
by reason of death, disability, incapacity, removal,
resignation or failure to be
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elected, of 50% or more members of Current Management to
hold, and actively discharge the duties customarily
associated with, offices held by any member of Current
Management as of the date of the First Closing.
(i) "Current Management" Defined. "Current Management" means Alvin
Murstein, Chairman and Director; Andrew M. Murstein, Senior Vice President and
Director; Michael J. Kowalsky, President; Marie Russo, Senior Vice President and
Secretary; Daniel F. Baker, Treasurer and Chief Financial Officer; Allen S.
Greene, Senior Executive Vice President and Chief Operating Officer; and Harvey
Goldman, Senior Vice President.
Section 8.4. Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes of each series, the principal amount of the Notes to be
prepaid shall be allocated among all of 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.
Section 8.5. Maturity; Surrender, etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.6. Purchase of Notes. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means, with
respect to any Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called Principal
of such Note over the amount of such Called Principal, provided that the Make-
Whole Amount may in no event be less than zero. For the purposes of determining
the Make-Whole Amount, the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such
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Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to
the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "PX1" on the Bloomberg Financial Markets Services
Screen (or such other display as may replace PX1 on Bloomberg Financial
Markets Services Screen) for actively traded U.S. Treasury Securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
Securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded
U.S. Treasury Security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has
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become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
Section 9. Affirmative Covenants.
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will, and will cause each of
its Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
those of the SBA and all Environmental Laws, and will obtain and maintain in
effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (other than those the validity of which are being diligently
contested in good faith by appropriate proceedings and adequate reserves in
conformity with GAAP have been provided therefor on the books of the Company).
Section 9.2. Insurance. (a) The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
(b) The Company, from time to time upon request of the Collateral Agent or
any holder of Notes, promptly shall furnish or cause to be furnished to the
Collateral Agent and any such requesting holder of Notes evidence, in form and
substance satisfactory to the Collateral Agent and such holder of Notes (if
requested by a holder of Notes), of the maintenance of all insurance required by
this Section 9.2 to be maintained, including, but not limited to, such originals
or copies as the Collateral Agent or such holder of Notes may request of
policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments.
Section 9.3. Maintenance of Properties. The Company will, and will cause
each of its Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. The Company will, and will cause
each of its Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge
-22-
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
Section 9.5. Corporate Existence, etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.2 and 10.3, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Subsidiaries (unless
merged into the Company or a Subsidiary) and all rights and franchises of the
Company and its Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
Section 9.6. Line of Business. The Company will not, and will not permit
any of its Subsidiaries to, engage to any substantial extent in any business
other than the businesses in which the Company and its Subsidiaries are engaged
on the date of this Agreement as described in the Memorandum.
Section 9.7. Further Assurances. Upon the request of the Collateral Agent
or the Required Holders, the Company at its cost and expense shall duly execute
and deliver, or cause to be duly executed and delivered, to the Collateral Agent
and the holders of the Notes such further instruments and do and cause to be
done such further acts as may be reasonably necessary or proper in the opinion
of the Collateral Agent or the Required Holders to carry out more effectually
the provisions and purposes of this Agreement and the other Note Documents.
Section 9.8. Maintenance of Security Interest. The Company shall maintain
perfected, first priority security interests in the Collateral in favor of the
Collateral Agent in accordance with the terms of the Company Security Agreement,
subject only to Permitted Liens.
Section 9.9. Required Percentage of Medallion Loans. The Company shall
ensure that, for so long as any amounts are owed by it to the holders of the
Notes under the Note Documents, at all times at least 50% of the aggregate
principal amount of all Loans made by it and then outstanding shall be Eligible
Medallion Loans to Persons who have obtained such Loans for the purpose of
acquiring Medallion Rights for use primarily in New York City.
Section 9.10. Covenant to Secure Notes Equally. If the Company or any of
its Subsidiaries shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Permitted Liens, the
Company will make or cause to be made effective provision whereby the Notes will
be contemporaneously secured by such Lien
-23-
equally and ratably with any and all other Senior Debt thereby secured pursuant
to instruments reasonably satisfactory to the Required Holders.
Section 9.11. Delivery of Termination Statements. Within 30 days after the
date of the First Closing the Company shall file all necessary UCC financing
statements in all offices to terminate any UCC financing statements on property
owned by Edwards Capital Corp. existing prior to the Merger.
Section 10. Negative Covenants.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1. Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into directly or indirectly any transaction
or Material group of related transactions (including without limitation the
purchase, lease, sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate (other than the Company or another Subsidiary),
except in the ordinary course and 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 would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
Section 10.2. Merger, Consolidation, Sale or Transfers Assets. The Company
will not, and will 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 Person
(except that a Subsidiary of the Company may (x) consolidate with or merge with,
or convey, transfer or lease substantially all of its assets in a single
transaction or series of transactions to, the Company or another Wholly-Owned
Subsidiary of the Company and (y) convey, transfer or lease all of its assets in
compliance with the provisions of Section 10.3), provided that the foregoing
restriction does not apply to the consolidation or merger of the Company with,
or the conveyance, transfer or lease of substantially all of the assets of the
Company in a single transaction or series of transactions to, any Person so long
as:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case
may be (the "Successor Corporation"), shall be a solvent corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, such
corporation shall have executed and delivered to each holder of Notes its
assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement, the Notes and the other Note
Documents; and
(c) immediately after giving effect to such transaction no Default
or Event of Default would exist.
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No such conveyance, transfer or lease of substantially all of the assets of the
Company shall 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. Except as permitted under Section 10.2, the
Company will not, and will not permit any of its Subsidiaries to, make any Asset
Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value at
least equal to that of the property exchanged and is in the best interest
of the Company or such Subsidiary; and
(b) immediately after giving effect to the Asset Disposition, no
Default or Event of Default would exist; and
(c) immediately after giving effect to the Asset Disposition, the
Disposition Value of all property that was the subject of any Asset
Disposition occurring (i) in the period of four fiscal quarters of the
Company then next ending would not exceed 10% of Consolidated Total Assets
as of the end of the then most recently ended fiscal quarter of the Company
and (ii) on or after the date of the First Closing to and including the
date of any such Asset Disposition would not exceed 25% of Consolidated
Total Assets as of the end of the then most recently ended fiscal quarter
of the Company.
If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment
Application or a Property Reinvestment Application within 365 days after such
Transfer, then such Transfer, only for the purpose of determining compliance
with subsection (c) of this Section 10.3 as of a date on or after the Net
Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition.
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.
Section 10.5. Maximum Liability Ratio. The Company will not suffer or permit
the ratio of Total Liabilities to Tangible Net Worth of the Company and its
Subsidiaries to be more than 4.5:1.0 at any time.
Section 10.6. Minimum Net Finance Assets. The Company will not suffer or
permit the ratio of Net Finance Assets to the sum of (i) Senior Debt plus (ii)
SBA Debt to be less than 1.15:1.0 at any time.
Section 10.7. Minimum Net Income to Interest Expense Ratio. The Company will
not suffer or permit the ratio, on a rolling four quarter basis, of (a) Net
Income plus Interest Expense to (b) Interest Expense to be less than 1.20:1.0.
Section 10.8. Limitation on Loans and Investments. The Company will not, and
will not permit any Subsidiary to, (a) make, or obligate itself to make, any
Loan or Investment that is not a Domestic Loan or a Domestic Investment;
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(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; or
(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.
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. The Company will not, and will not
permit any Subsidiary to, make, or obligate itself to make, any Portfolio
Purchase unless:
(i) no Default or Event of Default exists or would exist after
giving effect to the applicable Portfolio Purchase;
(ii) the Company has provided the Collateral Agent and each of the
holders of the Notes with a pro forma certificate of the Chief Financial
Officer of the Company evidencing the Company's computation of compliance
with each of the financial ratios, tests or covenants specified in Sections
9.9, 10.4, 10.5, 10.6, 10.7, 10.8 and 10.12 hereof after giving effect to
the applicable Portfolio Purchase;
(iii) the applicable Portfolio Purchase has the approval of the
seller;
(iv) (1) the seller of the loans constituting such Portfolio
Purchase is in the business of making loans secured by New York City
Taxicab Medallions and the loans to be acquired in connection therewith are
secured by New York City Taxicab Medallions; or (2) the Portfolio Purchase
is being made from a Person to any other line of business; provided, that,
to the extent such Portfolio Purchase does not entirely involve loans
secured by New York City Taxicab Medallions, in addition to the foregoing,
(A) the aggregate outstanding principal balances of all loans included in
such Portfolio Purchase that are not secured by New York City Taxicab
Medallions, if any, shall not exceed $25,000,000 during any period of
twelve consecutive calendar months with respect to all such Portfolio
Purchases in the aggregate during such period and (B) such loans that are
not secured by New York City Taxicab Medallions may be purchased only from
a qualified SBIC.
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Section 10.11. Amendments of Agreements. The Company will not, and will not
permit any Subsidiary to, consent to any amendment, supplement, 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 materially adversely affects the interests of
the Collateral Agent or any holder of Notes.
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 11. Events of Default.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) (i) the Company defaults in the performance of or compliance
with any term contained in Section 7.1(d), 9.8, 10.4, 10.5, 10.6 or 10.7 or
(ii) less than 100% of the Series B Notes scheduled to be sold on the date
of the Second Closing shall have been sold on the date of the Second
Closing as a result of a failure of the Company to satisfy the applicable
closing conditions or (iii) if the Company defaults in the performance or
observance of, or a default shall occur under, any covenant, agreement or
provision of any other Note Document or in any other agreement, instrument
or document delivered to the Collateral Agent or the holders of the Notes
and such default shall not have been remedied within such grace or cure
period, if any, as may be provided therefor;
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Section 11) and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company receiving written notice of
such default from any holder of a Note (any such written notice to be
identified as a "notice of default" and to refer specifically to this
paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf
of the Company or by any officer of the Company in this Agreement or in the
other Note Documents or in any writing furnished in connection with the
transactions contemplated
-27-
hereby proves to have been false or incorrect in any material respect on
the date as of which made; or
(f) (i) the Company or any Material Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal
of or premium or make-whole amount or interest on any Indebtedness that is
outstanding in an aggregate principal amount of at least $1,000,000 beyond
any period of grace provided with respect thereto, or (ii) the Company or
any Material Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Indebtedness in an aggregate
outstanding principal amount of at least $1,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness
has become, or has been declared (or, other than in the case of
Indebtedness of the Company under the Bank Loan Agreement, one or more
Persons are entitled to declare such Indebtedness to be), due and payable
before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the
holder of Indebtedness to convert such Indebtedness into equity interests),
(x) the Company or any Material Subsidiary has become obligated to purchase
or repay Indebtedness before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of
at least $1,000,000 or (y) one or more Persons have the right to require
(or, in the case of the Banks, have required) the Company or any Material
Subsidiary to purchase or repay such Indebtedness; or
(g) the Company or any Material Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing against
it of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of
any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Material Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part
of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company or any of its Material Subsidiaries, or any such petition
shall be filed against the Company or any of its Material Subsidiaries and
such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 are rendered against one or more of the
Company and its Material
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Subsidiaries and which judgments are not, within 45 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 45 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (iii) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of section 4001(a)(18)
of ERISA) under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $1,000,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase
the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect; or
(k) if there shall occur any change in the Collateral or in the
business of the Company, or its operation, conduct or prospects thereof,
that individually or in the aggregate, could have or result in a Material
Adverse Effect and the Collateral Agent has been directed to declare such
Event of Default by the Required Holders.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
Section 12. Remedies on Default, etc.
Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (g) or (h) of Section 11 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 51% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section
11 has occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event
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of Default may at any time, at its or their option, by notice or notices to the
Company, declare all the Notes held by it or them to be immediately due and
payable.
Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been declared
due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of
not less than 51% in principal amount of the Notes then outstanding, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any
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enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
Section 13. Registration; Exchange; Substitution of Notes.
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at
the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or his attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver within five (5) Business Days,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1(a) or 1(b), as the case may be. Each such
new Note shall be dated and bear interest from the date to which interest shall
have been paid on the surrendered Note or dated the date of the surrendered Note
if no interest shall have been paid thereon. The Company may require payment of
a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than $100,000, provided that if necessary to enable the
registration of transfer by a holder of its entire holding of Notes, one Note
may be in a denomination of less than $100,000. Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee), shall
be deemed to have made the representation set forth in Section 6.2.
Section 13.3. Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a Note
with a minimum net worth of at least $50,000,000, such Person's own
unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
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the Company at its own expense shall execute and deliver within five (5)
Business Days, in lieu thereof, a new Note, dated and bearing interest from the
date to which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
Section 14. Payments on Notes.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York at the principal office of the
Company in such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
Section 14.2. Home Office Payment. So long as you or your nominee shall be
the holder of any Note, and notwithstanding anything contained in Section 14.1
or in such Note to the contrary, the Company will pay all sums becoming due on
such Note for principal, Make-Whole Amount, if any, and interest by the method
and at the address specified for such purpose below your name in Schedule A, or
by such other method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, you shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by you or your nominee you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.
Section 15. Expenses, Etc.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of one special counsel and, if reasonably
required, local or other counsel) incurred by you and each Other Purchaser or
holder of a Note in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b) the
costs and expenses, including financial advisors' fees, incurred in connection
with the
-32-
insolvency or bankruptcy of the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses, if any, of
brokers and finders (other than those retained by you).
Section 15.2. Survival. The obligations of the Company under this Section
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement or the Notes, and the termination
of this Agreement.
Section 16. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
Section 17. Amendment and Waiver.
Section 17.1. Requirements. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note of each series at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes of each series, (ii) change
the percentage of the principal amount of the Notes of each series the holders
of which are required to consent to any such amendment or waiver, or (iii) amend
any of Sections 8, 11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each
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holder of outstanding Notes promptly following the date on which it is executed
and delivered by, or receives the consent or approval of, the requisite holders
of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as consideration
for or as an inducement to the entering into by any holder of Notes or any
waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently paid, or security is concurrently granted, on the
same terms, ratably to each holder of Notes then outstanding even if such holder
did not consent to such waiver or amendment.
Section 17.3. Binding Effect, etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
Section 17.4. Notes Held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
Section 18. Notices.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address
as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
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(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of Chief Financial Officer, or at
such other address as the Company shall have specified to the holder of
each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
Section 19. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
Section 20. Confidential Information.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any Person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, employees, agents, attorneys and
Affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which you offer to purchase any Security of the Company
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be
-35-
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
Section 21. Substitution of Purchaser.
You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
Section 22. Miscellaneous.
Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.
-36-
Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 22.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
Section 22.6. Governing Law. This Agreement 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.
Section 22.7. Additional Indebtedness. Subject to the terms and provisions
hereof, the Company may, from time to time, issue and sell additional senior
secured promissory notes and may, in connection with the documentation thereof,
incorporate by reference various provisions of this Agreement. Such
incorporation by reference shall not modify, dilute or otherwise affect the
terms and provisions hereof including, without limitation, the priority of the
Notes and the percentage of the Notes required to approve an amendment or
effectuate a waiver under the provisions of Section 17 or the percentages of the
Notes required to accelerate the Notes or rescind such an acceleration under the
provisions of Section 12.
* * * * *
-37-
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
Medallion Funding Corp.
By: /s/ Andrew Murstein
-----------------------
Name: Andrew Murstein
Title: President
-38-
The foregoing is hereby agreed
to as of the date thereof.
The Travelers Insurance Company
By: /s/ Bill Carnduff
-------------------------------
Name: Bill Carnduff
Title:
-39-
The foregoing is hereby agreed
to as of the date thereof.
First Citicorp Life Insurance Company
By Travelers Asset Management International
Corporation
By: /s/ Bill Carnduff
-------------------------------
Name: Bill Carnduff
Title:
-40
The foregoing is hereby agreed
to as of the date thereof.
Citicorp Life Insurance Company
By Travelers Asset Management International
Corporation
By: /s/ Bill Carnduff
----------------------------
Name: Bill Carnduff
Title:
-41-
The foregoing is hereby agreed
to as of the date thereof.
United of Omaha Life Insurance Company
By: /s/ Edwin Garrison
------------------------------
Name: Edwin Garrison
Title:
-42-
The foregoing is hereby agreed
to as of the date thereof.
Companion Life Insurance Company
By __________________________________
Name:
Title:
By __________________________________
Name:
Title:
-43-
INFORMATION RELATING TO PURCHASERS
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
The Travelers Insurance Company $10,000,000
One Tower Square Series A
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series A, due June 1,
2004, PPN 58403# AA 5, principal, premium or interest") to:
The Travelers Insurance Company --
Consolidated Private Placement Account No. 910-2-587434
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: TRAL & CO
Taxpayer I.D. Number: 06-0566090
Schedule A
(to Note Purchase Agreement)
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
First Citicorp Life Insurance Company $1,000,000
c/o The Travelers Insurance Company Series A
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series A, due June 1,
2004, PPN 58403# AA 5, principal, premium or interest") to:
First Citicorp Life Insurance Company
Concentration Account No. 36858201
For further credit to Account No. 260529
Citibank, N.A.
New York, New York
ABA #021000089
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
First Citicorp Life Insurance Company
c/o The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-3078429
A-2
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
Citicorp Life Insurance Company $1,000,000
c/o The Travelers Insurance Company Series A
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series A, due June 1,
2004, PPN 58403# AA 5, principal, premium or interest") to:
Citicorp Life Insurance Company
Concentration Account No. 36858201
For further credit to Account No. 260370
Citibank, N.A.
New York, New York
ABA #021000089
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
Citicorp Life Insurance Company
c/o The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 43-0979556
A-3
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
United of Omaha Life Insurance Company $8,500,000
Mutual of Omaha Plaza Series A
Omaha, Nebraska 68175-1011
Attention: 4-Investment Loan Administration
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series A, due June 1,
2004, PPN 58403# AA 5, principal, premium or interest") to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
for credit to: United of Omaha Life Insurance Company
Account #900-9000200
a/c: G07097
PPN: 58403# AA 5
Interest Amount:__________________________________
Principal Amount:_________________________________
Notices
All notices of payments, on or in respect of the Notes and written confirmation
of each such payment, corporate actions and reorganization notifications to:
The Chase Manhattan Bank
4 New York Plaza-13th Floor
New York, New York 10004
Attention: Income Processing-J. Pipperato
a/c: G07097
All other notices and communications (i.e., quarterly/annual reports, tax
filings, modifications, waivers regarding the Note Purchase Agreement) to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0322111
A-4
Notes should be forwarded to:
The Chase Manhattan Bank
North America Insurance - 6th Floor
Attn: Christine Alonzo
3 Chase MetroTech Center
Brooklyn, New York 11245
A-5
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
Companion Life Insurance Company $1,500,000
c/o Mutual of Omaha Insurance Company Series A
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Attention: 4-Investment Loan Administration
Telefacsimile: (402) 351-2913
Confirmation: (402) 351-2583
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series A, due June 1,
2004, PPN 58403# AA 5, principal, premium or interest") to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
For credit to: Companion Life Insurance Company Account #900-9000200
A/C: G07903
PPN: 58403# AA 5
Interest Amount:_______________________________
Principal Amount:______________________________
Notices
All notices of payment, on or in respect of the Notes and written confirmation
of each such payment, to:
The Chase Manhattan Bank
4 New York Plaza - 13/th/ Floor
New York, New York 10004
Attention: Income Processing
a/c: G07903
All other notices and communications (i.e., quarterly/annual reports, tax
filings, modifications, waivers regarding the Note Purchase Agreement) to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
A-6
Taxpayer I.D. Number: 13-1595128
Address for delivery of Notes:
The Chase Manhattan Bank
North America Insurance - 6/th/ Floor
Attn: Christine Alonzo
3 Chase Metrotech Center
Brooklyn, NY 11245
A-7
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
Citicorp Life Insurance Company $500,000
c/o The Travelers Insurance Company Series A
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series A, due June 1,
2004, PPN 58403# AA 5, principal, premium or interest") to:
Citicorp Life Insurance Company
Concentration Account No. 36858201
For further credit to Account No. 260528
Citibank, N.A.
New York, New York
ABA #021000089
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
Citicorp Life Insurance Company
c/o The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 43-0979556
A-8
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
The Travelers Insurance Company $10,000,000
One Tower Square Series B
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series B, due September 1,
2004, PPN 58403# AB 3, principal, premium or interest") to:
The Travelers Insurance Company --
Consolidated Private Placement Account No. 910-2-587434
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: TRAL & CO
Taxpayer I.D. Number: 06-0566090
A-9
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
First Citicorp Life Insurance Company $1,000,000
c/o The Travelers Insurance Company Series B
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series B, due September 1,
2004, PPN 58403# AB 3, principal, premium or interest") to:
First Citicorp Life Insurance Company
Concentration Account No. 36858201
For further credit to Account No. 260529
Citibank, N.A.
New York, New York
ABA #021000089
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
First Citicorp Life Insurance Company
c/o The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-3078429
A-10
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
Citicorp Life Insurance Company $1,000,000
c/o The Travelers Insurance Company Series B
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series B, due September 1,
2004, PPN 58403# AB 3, principal, premium or interest") to:
Citicorp Life Insurance Company
Concentration Account No. 36858201
For further credit to Account No. 260370
Citibank, N.A.
New York, New York
ABA #021000089
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
Citicorp Life Insurance Company
c/o The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 43-0979556
A-11
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
Citicorp Life Insurance Company $500,000
c/o The Travelers Insurance Company Series B
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Private Placements
Telecopy: (860) 954-5243
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series B, due September 1,
2004, PPN 58403# AB 3, principal, premium or interest") to:
Citicorp Life Insurance Company
Concentration Account No. 36858201
For further credit to Account No. 260528
Citibank, N.A.
New York, New York
ABA #021000089
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:
Citicorp Life Insurance Company
c/o The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group--Cashier
Telecopy: (860) 277-2299
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 43-0979556
A-12
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
United of Omaha Life Insurance Company $8,500,000
Mutual of Omaha Plaza Series B
Omaha, Nebraska 68175-1011
Attention: 4-Investment Loan Administration
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series B, due September 1,
2004, PPN 58403# AB 3, principal, premium or interest") to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
for credit to: United of Omaha Life Insurance Company
Account #900-9000200
a/c: G07097
PPN: 58403# AA 5
Interest Amount:_________________________
Principal Amount:________________________
Notices
All notices of payments, on or in respect of the Notes and written confirmation
of each such payment, corporate actions and reorganization notifications to:
The Chase Manhattan Bank
4 New York Plaza-13th Floor
New York, New York 10004
Attention: Income Processing-J. Pipperato
a/c: G07097
All other notices and communications (i.e., quarterly/annual reports, tax
filings, modifications, waivers regarding the Note Purchase) to be addressed as
first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0322111
A-13
Notes should be forwarded to:
The Chase Manhattan Bank
North America Insurance - 6th Floor
Attn: Christine Alonzo
3 Chase MetroTech Center
Brooklyn, New York 11245
A-14
Principal Amount
and Series of Notes
Name and Address of Purchaser to be Purchased
COMPANION LIFE INSURANCE COMPANY $1,500,000
c/o Mutual of Omaha Insurance Company Series B
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Attention: 4-Investment Loan Administration
Telefacsimile:(402) 351-2913
Confirmation: (402) 351-2583
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Medallion Funding Corp., 7.20% Senior Secured Notes, Series B, due September 1,
2004, PPN 58403# AB 3, principal, premium or interest") to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
For credit to: Companion Life Insurance Company Account #900-9000200
A/C: G07903
PPN: 58403# AA 5
Interest Amount:_________________________
Principal Amount:________________________
Notices
All notices of payment, on or in respect of the Notes and written confirmation
of each such payment, to:
The Chase Manhattan Bank
4 New York Plaza - 13/th/ Floor
New York, New York 10004
Attention: Income Processing
a/c: G07903
All other notices and communications (i.e., quarterly/annual reports, tax
filings, modifications, waivers regarding the Note Purchase Agreement) to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
A-15
Taxpayer I.D. Number: 13-1595128
Address for delivery of Notes:
The Chase Manhattan Bank
North America Insurance - 6/th/ Floor
Attn: Christine Alonzo
3 Chase Metrotech Center
Brooklyn, NY 11245
A-16
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting Securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Asset Disposition" means any Transfer except:
(a) any Transfer from a Subsidiary to the Company or a Wholly-Owned
Subsidiary so long as immediately before and immediately after the
consummation of any such Transfer and after giving effect thereto, no
Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or (ii)
equipment, fixtures, supplies or materials no longer required in the
operation of the business of the Company or any of its Subsidiaries or that
is obsolete.
"Bank Loan Agreement" means the Amended and Restated Loan Agreement dated
as of December 24, 1997, as amended to date and as it may be amended from time
to time as permitted hereunder, by and among the Company, the Lenders party
thereto, Fleet Bank, National Association ("Fleet"), as Swing Line Lender,
Administrative Agent and Collateral Agent (the "Agent"), The Bank of New York,
as Documentation Agent and Fleet as Arranger.
"Bank Loan Documents" shall mean and include Bank Loan Agreement and all
other "Loan Documents" as defined in the Bank Loan Agreement.
"Bank Security Documents" shall mean and include the "Borrower Security
Agreement" and the "Borrower Financing Statements" as such term is defined in
the Bank Loan Agreement.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York are required or authorized to be
closed.
Schedule B
(to Note Purchase Agreement)
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Stock" with respect to any corporation, shall mean common stock,
Preferred Stock, and any and all shares or other equivalents (however
designated) of any other corporate stock, of such corporation.
"Change in Control" is defined in Section 8.3.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Collateral" shall mean and include the assets, property or interests in
property of whatever nature whatsoever, real, personal or mixed, tangible or
intangible, of the Company securing the Notes and all other property and
interests in personal property that shall, from time to time, secure the Notes.
"Collateral Agent" shall mean Fleet Bank, National Association, a national
banking association or any successor.
"Commercial Loan" shall mean any Loan that is secured in whole or in part
by Real Property, Inventory, Equipment and/or Receivables and that is not a
Medallion Loan.
"Commercial Paper" shall mean any and all commercial paper issued by the
Company from time to time pursuant to a Commercial Paper Dealer Agreement and a
Paying Agency Agreement.
"Commercial Paper Dealer Agreement" shall mean one or more commercial paper
dealer agreements between the Company and a dealer for the issuance and sale of
Commercial Paper by the Company, as the same shall be amended from time to time,
each as approved by the Collateral Agent and the Required Holders.
"Company" means Medallion Funding Corp., a New York corporation.
"Company Financing Statements" shall mean financing statements approved for
filing in accordance with the Uniform Commercial Code, and all other titles,
certificates, assignments and other documents, including, but not limited to,
the Mortgage Assignments, that the Collateral Agent or any holder of Notes may
require to perfect the security interests to be granted under the Company
Security Agreement.
"Company Security Agreement" shall mean the Security Agreement dated as of
June 1, 1999, between the Company and the Collateral Agent for the benefit of
the holders of the Notes,
B-2
substantially in the form of Exhibit 4.10 hereto, as the same may be amended or
supplemented from time to time.
"Confidential Information" is defined in Section 20.
"Consolidated Total Assets" shall mean the total assets of the Company and
its Subsidiaries as determined in accordance with GAAP.
"CP Debt" shall mean all Indebtedness from the Company to the CP Holders
from time to time outstanding.
"CP Holders" shall mean the holders from time to time of outstanding
Commercial Paper issued by the Company.
"Current Management" is defined in Section 8.3.
"Debt Prepayment Application" means, with respect to any Transfer of
property, the application by the Company or its Subsidiaries of cash in an
amount equal to the Net Proceeds Amount with respect to such Transfer to pay
Senior Debt of the Company (other than Senior Debt owing to the Company, any of
its Subsidiaries or any Affiliate and Senior Debt in respect of any revolving
credit or similar credit facility providing the Company or any of its
Subsidiaries with the right to obtain loans or other extensions of credit from
time to time, except to the extent that in connection with such payment of
Senior Debt the availability of credit under such credit facility is permanently
reduced by an amount not less than the amount of such proceeds applied to the
payment of such Indebtedness), provided that in the course of making such
application the Company shall prepay each outstanding Note in accordance with
Section 8.2 in a principal amount which, when added to the Make-Whole Amount
applicable thereto, equals the Ratable Portion for such Note. As used in this
definition, "Ratable Portion" for any Note means an amount equal to the product
of (x) the Net Proceeds Amount being so applied to the payment of Indebtedness
multiplied by (y) a fraction the numerator of which is the outstanding principal
amount of such Note and the denominator of which is the aggregate principal
amount of Indebtedness of the Company and its Subsidiaries.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Default Rate" means that rate of interest that is the greater of (i) 9.20%
per annum above the rate of interest stated in clause (a) of the first paragraph
of the Notes or (ii) 2% over the rate of interest publicly announced by
Citibank, N.A. in New York, New York as its "base" or "prime" rate.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute Subsidiary
Stock, the book value thereof, valued at the time of such disposition in
good faith by the Company, and
B-3
(b) in the case of property that constitutes Subsidiary Stock, an
amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that the
book value of such Subsidiary Stock represents of the book value of all of
the outstanding Capital Stock of such Subsidiary (assuming, in making such
calculations, that all Securities convertible into such Capital Stock are
so converted and giving full effect to all transactions that would occur or
be required in connection with such conversion) determined at the time of
the disposition thereof, in good faith by the Company.
"Dividends" shall mean, for the most recently completed four fiscal
quarters of the Company, the sum of all paid and accrued and unpaid cash
dividends on Capital Stock plus any paid and accrued and unpaid repurchase or
redemption for cash of Capital Stock.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Investment" shall mean an Investment in respect of a Person which
is a resident of the United States or a Person (other than a Governmental
Authority) organized or qualified under the laws of any state, excluding any
Domestic Investment that is a Portfolio Purchase.
"Domestic Loan" shall mean a Loan that is denominated and payable only in
Dollars, the Person in respect of which is a resident of the United States or a
Person (other than a Governmental Authority) organized or qualified under the
laws of any state.
"Edwards Debt" shall mean the outstanding amount which, once the Merger is
effective, shall be owed by the Company to the SBA under the following notes,
originally issued by Edwards Capital Corp., a Delaware corporation, to the SBA,
namely: two debentures dated September 23, 1992, in the original principal
amount of $3,500,000 and $6,050,000, respectively; a debenture dated June 29,
1994, in the original principal amount of $4,600,000; and a debenture dated
September 28, 1994, in the original principal amount of $5,100,000.
"Eligible Commercial Loan" shall mean any Commercial Loan that satisfies
the Eligibility Requirements and (a) that is secured by Eligible Real Estate,
Eligible Equipment, Eligible Inventory or Eligible Receivables and (b) that is
made to a Person that is an ongoing business concern.
"Eligible Equipment" shall mean Equipment in which a first priority
perfected security interest has been obtained by Company to secure the
obligations of such Person under a Loan by Company to such Person, or in the
case of such beneficial owner, to secure a Guaranty which shall have been made
by the such beneficial owner guaranteeing the Loan, and the same has been
assigned to the Collateral Agent, for the benefit of the holders of the Notes,
pursuant to the Company Security Agreement.
"Eligible Inventory" shall mean Inventory in which a first priority
perfected security interest has been obtained by Company to secure the
obligations of such Person under a Loan by Company to such Person, or in the
case of such beneficial owner, to secure a Guaranty which
B-4
shall have been made by such beneficial owner guaranteeing the Loan, and the
same has been assigned to the Collateral Agent, for the benefit of the holders
of the Notes, pursuant to the Company Security Agreement.
"Eligible Loans" shall mean any Loan that constitutes or comprises either
an Eligible Medallion Loan or Eligible Commercial Loan or both.
"Eligible Medallion Loan" shall mean any Medallion Loan that satisfies the
Eligibility Requirements and that is secured by Medallion Rights.
"Eligible Real Estate" shall mean Real Property in which a mortgage
interest has been obtained (and continuously maintained) by the Company to
secure the obligations of such Person under a Loan by the Company to such
Person, or in the case of such beneficial owner, to secure a guaranty which
shall have been made by such beneficial owner guaranteeing the Loan.
"Eligible Receivables" shall mean Receivables (i) that are reasonably
determined in good faith to be eligible by Company, (ii) that arise in the
ordinary course of a Person's business, (iii) that are net of credits, rebates,
offsets, holdbacks or adjustments and (iv) in which a first priority perfected
security interest has been obtained by Company to secure the obligations of such
Person under a Loan by Company to such Person, or in the case of such beneficial
owner, to secure a Guaranty which shall have been made by such beneficial owner
guaranteeing the Loan, and the same has been assigned to the Collateral Agent,
for the benefit of the holders of the Notes, pursuant to the Company Security
Agreement.
"Eligibility Requirements" with respect to any Loan, shall mean the
following requirements:
(a) such Loan is made to, and is a recourse obligation of, the
Person to whom such Loan is made,
(b) such Loan is a Domestic Loan,
(c) 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,
(d) such Loan is pledged in accordance with Section 2.1 of the
Company Security Agreement,
(e) 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, and
(f) the Collateral Agent, on behalf of the holders of the Notes, has
a perfected, first priority security interest in such Loan.
B-5
"Environmental Laws" means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"Equipment" shall mean all machinery, equipment, fixtures, vehicles, 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 9-109(2) of the UCC and all products, profits, rents and proceeds of any
of the foregoing; all whether now owned or hereafter created or acquired.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
"First Closing" is defined in Section 3.
"Funding SBA Debt" shall mean the outstanding amount owed by the Company to
the SBA under the following notes to the SBA: a debenture dated September 26,
1990, in the original principal amount of $510,000; a debenture dated December
19, 1990, in the original principal amount of $640,000; a debenture dated
September 23, 1992, in the original principal amount of $1,950,000; a debenture
dated June 29, 1994, in the original principal amount of $900,000; a debenture
dated March 29, 1995, in the original principal amount of $1,700,000 and a
debenture dated September 27, 1995, in the original principal amount of
$500,000.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
B-6
(i) the United States of America or any state or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
B-7
"Indebtedness" of a Person shall mean and include, without duplication, (i)
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, (ii) any liability secured by any Lien on property owned or acquired
by such Person, whether or not such liability shall have been assumed by such
Person, and (iii) guaranties, endorsements (other than for collection in the
ordinary course of business), reimbursement obligations in respect of undrawn
letters of credit and other contingent obligations of such Person in respect of
the obligations of others.
"Independent Public Accountants" shall mean Arthur Andersen & Co. LLP or
such other firm of independent certified public accountants of recognized
national standing selected by the Company and satisfactory to the Required
Holders.
"Institutional Investor" means (a) any original purchaser of a Note, (b)
any holder of a Note holding more than 5% of the aggregate principal amount of
the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Intercreditor Agreement" shall mean that certain intercreditor agreement
entered into among (i) the Collateral Agent, (ii) the Agent, on behalf of the
Banks (as defined therein), the Swing Line Lender and the CP Holders, (iii) the
Banks, (iv) the holders of the Notes and (v) the Collateral Agent (as defined
therein), substantially in the form of Exhibit 4.12 hereto, and as such
agreement is amended from time to time, with the consent of the Collateral Agent
and the Required Holders.
"Interest Expense" shall mean, for any period, all interest paid or
scheduled to be paid (including amortization of original issue discount and non-
cash interest payments or accruals and the interest component of leases that, in
accordance with GAAP, are Capital Leases) by the Company or any of its
Subsidiaries during such period on Indebtedness of the Company or any of such
Subsidiaries (determined on a consolidated basis).
"Inventory" shall mean, with respect to any Person, all goods held by such
Person for sale or lease by such Person, or to be furnished under contracts of
service, in each case in the ordinary course of such Person's business.
"Investment" in any Person shall mean any loan, advance, or extension 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, but shall not include any Loan or any capital
expenditures or any Portfolio Purchase.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other
B-8
secured party to or of such Person under any conditional sale or other title
retention agreement or Capital Lease, upon or with respect to any property or
asset of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).
"Loan" shall mean any loan or advance made in the ordinary course of
business by Company (which for purposes of this definition shall include those
acquired pursuant to a Portfolio Purchase that is permitted pursuant to the
terms of this Agreement) to or for the account of any client or customer of
Company, which loan, advance or extension of credit is permitted pursuant to the
terms of this Agreement. Any loan, advance or extension of credit made at a
different point in time than another loan, advance or extension of credit shall
be deemed to be separate and distinct Loans.
"Make-Whole Amount" is defined in Section 8.7.
"Material" means material in relation to the business, operations, affairs,
financial condition or assets of the Company and its Subsidiaries taken as a
whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement, the Notes or the other Note
Documents, or (c) the validity or enforceability of this Agreement, the Notes or
the other Note Documents.
"Material Subsidiary" means at any time any Subsidiary whose assets
represent 1% or more of Consolidated Total Assets.
"Medallion" shall mean the metal plate which displays the license number of
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 similar Governmental
Authority for a jurisdiction other than New York City charged with the authority
to issue licenses for the operation of Taxicabs.
"Medallion Financial" shall mean Medallion Financial Corporation, a
Delaware corporation.
"Medallion Loans" shall mean Loans secured in whole or in part by Medallion
Rights.
"Medallion Rights" shall mean all license, operating and/or subscription
rights to Taxicab Medallion(s), and all license, operating and/or subscription
rights evidenced by such Medallions, and all renewals thereof, in which a
perfected security interest has been obtained by the Company to secure the Loan
made by the Company to such Person, and assigned to the Collateral Agent, for
the benefit of the holders of the Notes, pursuant to the Company Security
Agreement.
"Memorandum" is defined in Section 5.3.
"Merger" shall mean the merger of Edwards Capital Corp., a Delaware
corporation and Transportation Capital Corp., a New York corporation with and
into the Company.
B-9
"Mortgage Assignment" shall mean a Mortgage Assignment between the Company
and the Collateral Agent, in such form as the Collateral Agent shall determine
as is necessary or desirable under the law applicable to the property covered by
such Mortgage Assignment, delivered from time to time by the Company to the
Collateral Agent as contemplated by the definition of "Eligible Real Estate".
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).
"Net Finance Assets" shall mean, as of any date of calculation, an amount
equal to the sum of:
(i) cash and Short Term Investments shown on the Company's balance
sheet as of such date, plus
(ii) the aggregate outstanding principal balances of, plus accrued
interest on, all Eligible Medallion Loans and Eligible Commercial Loans
shown on the Company's balance sheets as of the most recent fiscal quarter,
minus
(iii) the portion, if any, of the Loans and accrued interest
described in (ii) above that the Company, in its reasonable business
judgment deems to be uncollectible or subject to classification as non-
accruing and for which it has not made appropriate credits to the reserves
described in (ii) above, minus
(iv) intentionally omitted, minus
(v) the Eligible Loans and accrued interest described in (ii) above
which are more than 59 days past due, plus
(vi) 75% of the New York Medallion Loans and accrued interest
thereon which are 60 days past due (but are not more than 60 days past
due), plus
(vii) 65% of the New York Medallion Loans and accrued interest
thereon which are more than 60 days past due, but are not more than 90 days
past due, plus
(viii) 50% of the New York Medallion Loans which are more than 90
days past due, but are not more than 120 days past due, provided that the
amount in this subparagraph (viii) shall in no event or on any occasion
exceed 2% of the aggregate outstanding principal balances of New York
Medallion Loans.
provided, that, if all or any part of any Loan would be excluded under any of
the provisions set forth above, then the entire outstanding principal amount of,
plus accrued interest on, such Loan shall be excluded.
"Net Income" shall mean, for any period, the gross revenues of the Company,
less (i) all realized and unrealized gains and losses on investments, (ii) all
changes in loan loss reserve and
B-10
(iii) all operating and nonoperating expenses (including, without limitation,
Interest Expense and all fees and commissions, however designated, payable for
management, administrative, or other services) of the Company for such period,
derived in the ordinary course of its business, including all charges of a
proper character (including current and deferred taxes on income, provision for
taxes on income, and current additions to loan loss and other reserves), all
determined on a basis consistent with prior years.
"Net Proceeds Amount" means, with respect to any Transfer of any property
by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of such
Transfer) received by such Person in respect of such Transfer, minus
(b) the sum of (i) all ordinary and reasonable out-of-pocket costs
and expenses actually incurred by such Person in connection with such
Transfer plus (ii) all amounts estimated by the Company in good faith that
are required to be paid as a dividend on or any distribution in respect of
any Capital Stock of the Company in order to avoid the imposition of income
taxes pursuant to the Code, or, for so long as the Company is a registered
investment company under the 1940 Act, the payment of such amounts as may
be required by the 1940 Act) in respect of such Transfer.
"New York Medallion Loans" shall mean any Eligible Medallion Loan that is
secured in whole or in part by Medallion Rights that relate to the operating of
taxicabs in the City of New York.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
"Note Documents" means this Agreement, the Other Agreements, the Notes, the
Security Documents and the Company Financing Statements and all other documents,
instruments, certificates and notices at any time delivered in connection with
the foregoing.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"Paying Agency Agreement" shall mean one or more issuing and paying agency
agreements between the Company and a Paying Agent providing for the issuance of
Commercial Paper by the Company, as the same shall be amended from time to time,
each as approved by the Collateral Agent and the Required Holders in accordance
with the terms of this Agreement.
B-11
"Paying Agent" shall mean one or more paying agents acting as paying agent
under a Paying Agency Agreement with the Company.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Debt" shall mean all Indebtedness owed to the holders of the
Notes, all Indebtedness of the Company owed to the Banks under the Bank Loan
Agreement, all Indebtedness of the Company owed to the CP Holders under the
Commercial Paper Agreement, all unsecured Indebtedness of the Company owed to
Permitted Lenders (other than the SBA Debt), all CP Debt and until September 1,
1999, the SBA Debt.
"Permitted Lenders" shall mean the Banks under the Bank Loan Agreement, the
SBA and the financial institutions approved from time to time by the Required
Holders, which approval shall not be unreasonably withheld.
"Permitted Liens" shall mean:
(a) (i) Liens created under the Company Security Agreement or other
Liens in favor of the Collateral Agent or the holders of the Notes, (ii)
Liens created under the Bank Security Documents, subject to the terms and
conditions of the Intercreditor Agreement and (iii) Liens securing
Additional Senior Obligations (as defined in the Intercreditor Agreement),
subject to the terms of the Intercreditor Agreement, so long as the
incurrence of such Additional Senior Obligations does not result in a
Default or Event of Default as a result of a breach of Section 10.6;
(b) Liens existing on property at the time acquired by the Company
after the date of the financial statements referred to in Section 5.5
hereof, provided that 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
B-12
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; and
(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, 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.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Portfolio Purchase" shall mean any purchase or acquisition, whether for
cash, for stock, pursuant to financing otherwise, of any assets, business,
Capital Stock, obligations or securities of, any Person; or other interest in or
capital contribution to, any Person that results in, or would result in (after
taking into account the applicable Portfolio Purchase), the Company having any
additional Loans.
"Preferred Stock" means any class of Capital Stock of a corporation that is
preferred over any other class of Capital Stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"property" or "properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"Property Reinvestment Application" means, with respect to any Transfer of
property, the application of an amount equal to the Net Proceeds Amount with
respect to such Transfer to the acquisition by the Company or any Subsidiary of
operating assets of the Company or any Subsidiary to be used in the principal
business of such Person.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
B-13
"Real Property" shall mean real property of a Person or an ultimate
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
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.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes, without regard to series, at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"Restricted Investment" shall mean any Investment, to the extent it does
not constitute a Short Term Investment.
"Restricted Payment" shall mean, with respect to the Company, any of the
following when paid (or when the proceeds of which are paid) to any Person
during the continuance of any Default or Event of Default: (i) the payment of
any dividend on or any distribution in respect of any Capital Stock of the
Company (other than the payment of Dividends required to be paid in order to
avoid the imposition of income taxes pursuant to the Code, or, for so long as
the Company is a registered investment company under the 1940 Act, the payment
of such Dividends as may be required by the 1940 Act), (ii) 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 subsequent
to the maturity of the Notes (other than Permitted Debt), (iii) the redemption,
repurchase, retirement or other acquisition of any Capital Stock of the Company
or of any warrants, rights or options to purchase or acquire any Capital Stock
of the Company, (iv) any expenditure or the incurrence of any liability to make
any expenditure for any Restricted Investment, (v) the payment of any principal
of, interest on, or any amounts due in respect of, any Indebtedness not
permitted by Section 10 hereof, and (vi) the payment of any principal of, or
interest on, or any other amounts due in respect of, any Subordinated Debt.
"Satisfactory Subordinated Debt" shall mean Subordinated Debt, excluding
any such Subordinated Debt owing to the SBA; provided, that no such Subordinated
Debt shall be deemed Satisfactory Subordinated Debt unless and until the
Collateral Agent has provided written notice to the Company that same shall be
deemed Satisfactory Subordinated Debt for purposes of this Agreement.
"SBA" shall mean the Small Business Administration.
"SBA Regulations" shall mean the regulations set forth at 13 CFR 107
implementing the SBI Act, as the same may be amended from time to time, and all
related guidelines, directives,
B-14
treaties and interpretations thereof by any Governmental Authority charged with
the administration or interpretation thereof.
"SBA Debt" shall mean the Edwards Debt, Funding SBA Debt and the TCC Debt.
"SBI Act" shall mean Title III of the Small Business Investment Act of
1958, as amended, 15 U.S.C. 681 et seq.
"SBIC" shall mean a small business investment company established under and
operating in compliance with the SBI Act and the SBA Regulations promulgated
thereunder.
"Second Closing" is defined in Section 3.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Security" has the meaning set forth in section 2(1) of the Securities Act.
"Security Documents" means the Company Security Agreement, the Company
Financing Statements and any other instruments, documents, agreements referred
to herein or related hereto pursuant to which the Company or any of its
Subsidiaries agree to grant Liens in favor of the holders of the Notes.
"Senior Debt" shall mean all Indebtedness of the Company other than the SBA
Debt and Subordinated Debt.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Short Term Investment" shall mean an Investment in (i) direct obligations
of the United States of America; (ii) negotiable certificates of deposit issued
by, or negotiable bankers' acceptances (eligible for discount at Federal Reserve
Banks) of, or repurchase agreements in respect of obligations described in
clause (i) with, any bank or trust company organized under the laws of the
United States of America or any state thereof having capital and surplus of not
less than $250,000,000; and (iii) readily marketable commercial paper which, at
the time of acquisition, is rated at least A-1 by Standard & Poor's Ratings
Group or P-1 by Moody's Investor Services, Inc.; provided, that all of such
Investments described in clauses (i), (ii) and (iii) shall be payable in Dollars
and shall mature within twelve months after the date of acquisition thereof.
"Solvent" shall mean, as to any Person, that such Person has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as they
mature and owns property having a value both at fair valuation and at present
fair saleable value, greater than the amount required to pay its debts
(including contingencies).
"Subordinated Debt" shall mean all Indebtedness of the Company for borrowed
money that is subordinated to the Notes on terms that are, and pursuant to a
form of subordination that is, acceptable in form and substance to the Required
Holders.
B-15
"Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a "Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"Swaps" means, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined.
"Tangible Net Worth" shall mean the sum of capital surplus, earned surplus,
Capital Stock and Satisfactory Subordinated Debt minus deferred charges,
intangibles and treasury stock, all determined in accordance with GAAP
consistently applied.
"Taxicab" shall mean a motor vehicle carrying passengers for hire, duly
licensed as a taxicab by the 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.
"TCC Debt" shall mean the outstanding amount which, once the Merger is
effective, shall be owed by the Company to the SBA under a debenture dated as of
June 24, 1992, originally issued by Transportation Capital Corp., a New York
corporation, to the SBA in the original principal amount of $5,600,000.
"Total Liabilities" shall mean, as of any date of calculation, the
aggregate outstanding Indebtedness of the Company as of such date, determined on
an unconsolidated basis.
"Transfer" means, with respect to any Person, any transaction in which such
Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock. For purposes of determining the
application of the Net Proceeds Amount in respect of any Transfer, the Company
may designate any Transfer as one or more separate
B-16
Transfers each yielding a separate Net Proceeds Amount. In any such case, (a)
the Disposition Value of any property subject to each such separate Transfer and
(b) the amount of Consolidated Total Assets attributable to any property subject
to each such separate Transfer shall be determined by ratably allocating the
aggregate Disposition Value of, and the aggregate Consolidated Total Assets
attributable to, all property subject to all such separate Transfers to each
such separate Transfer on a proportionate basis.
"UCC" shall mean, with respect to any jurisdiction, the Uniform Commercial
Code as then in effect in that jurisdiction.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such time.
B-17
Schedule 4.1.9
Changes in Corporate Structure
The merger on June 1, 1999 of TCC and Edwards into the Company, with the
Company being the surviving corporation.
Schedule 5.3
Disclosure Materials
None.
Schedule 5.4
Subsidiaries of the Company and Ownership of Subsidiary Stock
(a)(i) Subsidiaries
Name of Subsidiary Jurisdiction of Percentage of Shares
Incorporation Owned by Company
F.A.P. Holding Corporation New York 100%
(a)(ii) Affiliates
1. Medallion Financial Corp., a Delaware corporation
2. Edwards Capital Corp. ("Edwards") (prior to the Merger)
3. Transportation Capital Corp. ("TCC") (prior to the Merger)
4. Business Lenders LLC ("BLL")
5. Medallion Taxi Media, Inc. ("Media")
6. Medallion Capital, Inc. ("Medallion")
7. Medallion Business Credit LLC ("MBC")
8. Capital Guardian Trust Company
(a)(iii) Directors and Senior Officers
Directors: Alvin Murstein
Andrew Murstein
Mario M. Cuomo
Stanley Kreitman
David L. Rudnick
Benjamin Ward
Frederick Hammer
Executive
Officers: Alvin Murstein, Chief Executive Officer
Allen S. Greene, Senior Executive Vice President
and Chief Operating Officer
Andrew Murstein, Senior Vice President
Michael Kowalsky, President
Daniel F. Baker, Treasurer and Chief Financial Officer
Marie Russo, Senior Vice President and Secretary
Harvey Goldman, Senior Vice President
(d): Restrictions
None
Schedule 5.5
Financial Statements
Audited consolidated balance sheets of the Company for the fiscal years
ended December 31, 1996, 1997 and 1998 and the related consolidated statements
of income, retained earnings and cash flow for the fiscal years ended on the
same dates.
Schedule 5.8
Certain Litigation
None
Schedule 5.11
Patents, Etc.
None
Schedule 5.15
Existing Indebtedness for Borrowed Money
Indebtedness Outstanding Principal Amount as at March 31, 1999
Indebtedness under Bank Loan Agreement $ 48,250,000
CP Debt $129,270,810
SBA Debt $ 6,200,000
Schedule 5.19
Location of Offices, Books and Records
437 Madison Avenue
38th Floor
New York, New York 10022
[Form of Series A Note]
Medallion Funding Corp.
7.20% Senior Secured Note, Series A, Due June 1, 2004
No. RA-[_] [Date]
$[____________] PPN 58403# AA 5
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 [________________], or registered
assigns, the principal sum of [________________] Dollars on June 1, 2004, with
interest (computed on the basis of a 360-day year of twelve 30-day months) (a)
on the unpaid balance thereof at the rate of 7.20% per annum from the date
hereof, payable semiannually, on the first day of June and December in each
year, commencing with the June or December next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually 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) 9.20% 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 7.20% Senior Secured
Notes, Series B, due September 1, 2004, 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.
Exhibit 1(a)
(to Note Purchase Agreement)
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 optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
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 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.
Medallion Funding Corp.
By
Its
E-1(a)-2
[Form of Series B Note]
Medallion Funding Corp.
7.20% Senior Secured Note Due September 1, 2004
No. RB-[_] [Date]
$[_____________] 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 [________________], or
registered assigns, the principal sum of [________________] Dollars on September
1, 2004, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 7.20% per annum from
the date hereof, first semiannually, on the first day of March and September in
each year, commencing with the March or September next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually 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) 9.20% 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 7.20% Senior Secured
Notes, Series A, due June 1, 2004, 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.
Exhibit 1(b)
(to Note Purchase Agreement)
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 optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
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 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.
Medallion Funding Corp.
By
Its
E-1(b)-2
Form of Opinion of
Special Counsel to the Company
[Final draft of opinion to be attached]
Exhibit 4.1.4(a)
(to Note Purchase Agreement)
Description of Special Counsel's Closing Opinion
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by Section 4.1.4(b) of the Note Purchase Agreements,
shall be dated the date of the applicable Closing and addressed to you and the
other Purchasers, shall be satisfactory in form and substance to you and the
other Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of New York, has the corporate power
and the corporate authority to execute and deliver the Note Purchase
Agreements and to issue the Notes.
2. Each Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding contract of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreements do not, under
existing law, require the registration of the Notes under the Securities
Act of 1933, as amended, or the qualification of an indenture under the
Trust Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state the opinion of Willkie
Farr & Gallagher is satisfactory in scope and form to Chapman and Cutler and
that, in their opinion, you and the other Purchasers are justified in relying
thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and Cutler
may rely solely upon an examination of the Certificate of Incorporation
certified by, and a certificate of good standing of the Company from, the
Department of State of the State of New York of the Company, the By-laws of the
Company and the Business Corporation Law of the State of New York. The opinion
of Chapman and Cutler is limited to the laws of the State of New York and the
Federal laws of the United States.
With respect to matters of fact upon which such opinion is based, Chapman
and Cutler may rely on appropriate certificates of public officials and officers
of the Company.
Exhibit 4.14(b)
(to Note Purchase Agreement)
Form of Company Security Agreement
Exhibit 4.10
(to Note Purchase Agreement)
Form of Intercreditor Agreement
Exhibit 4.12
(to Note Purchase Agreement)