SECURITY AGREEMENT
Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx April 30, 2003
(Banking Office)
FOR VALUE RECEIVED, and in order to induce THE BANK OF NEW YORK (the
"Bank"), in its discretion, to make loans or otherwise extend credit at any
time, and from time to time to, or at the request of, the undersigned (the
"Debtor"), whether the loans or credit so extended shall be absolute or
contingent, the Debtor (jointly and severally, if more than one and whether
executing the same or separate instruments) grants to the Bank, as security for
all present or future obligations under the Master Promissory Note executed by
the Debtor in favor of the Bank in the original principal of $40,000,000, and
dated the date hereof, as amended, modified or restated from time to time, of
the Debtor to it, whether due or to become due, secured or unsecured, absolute
or contingent, joint and/or several, and howsoever or whensoever acquired by the
Bank including interest accruing thereon before or after the commencement of any
insolvency, bankruptcy or reorganization proceeding of the Debtor whether or not
such interest is an allowable claim in any proceeding and irrespective of the
discharge or release of the Debtor in such proceeding (all of which are referred
to collectively as the "Obligations"), a security interest in and a lien upon
all personal property and fixtures of the Debtor or in which the Debtor has an
interest wherever located and whether now or hereafter existing or now owned or
hereafter acquired and whether or not subject to the Uniform Commercial Code
(the "Code"), all of the foregoing only to the extent specified in Schedule A
hereto, and also including all interest, dividends and other distributions
thereon paid and payable in cash or in property, and all replacements and
substitutions for, and all accessions and additions to, and all products and
proceeds of, all of the foregoing (all of which are referred to as the
"Collateral").
The Debtor agrees to deliver to the Bank whenever called for by it such
additional collateral security of a kind and of a market value satisfactory to
the Bank, so that there will, at all times, be with the Bank a margin of
security for the payment of all Obligations which shall be reasonably
satisfactory to it. In addition to the Bank's security interest in the
Collateral, it shall have, and the Debtor hereby grants to the Bank, a security
interest and a lien for all the Obligations in and upon any personal property of
the Debtor or in which the Debtor may have an interest which is now or may at
any time hereafter come into the possession or control of the Bank, or of any
third party acting on its behalf, whether for the express purpose of being used
by the Bank as collateral security or held in custody or for any other or
different purpose, including such personal property as may be in transit by mail
or carrier for any purpose, or covered or affected by any documents in the
Bank's possession or control, or in the possession or control of any third party
acting on its behalf (said additional personal property is also referred to as
the "Collateral"). The Debtor hereby authorizes the Bank in its discretion,
whether or not the Collateral is deemed by it adequate, to appropriate and apply
upon any of the Obligations not paid when due, any of such property of the
Debtor and to charge any of the Obligations not paid when due against any
balance of any account standing to the credit of the Debtor on the books of the
Bank.
Upon failure of the Debtor to pay any Obligation when due, in accordance
with its terms, the Bank shall have, in addition to all other rights and
remedies allowed by law, the rights and remedies of a secured party under the
Code and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without notice of intention to
sell or otherwise dispose of or of time or place of sale or other disposition or
of redemption or other notice or demand whatsoever to the Debtor, all of which,
to the extent permitted by law, are hereby expressly waived, and without
advertisement, (a) sell at public or private sale, grant options to purchase or
otherwise realize upon, in the State of New York, or elsewhere, the whole or
from time to time any part of the Collateral upon which the Bank shall have a
security interest or lien as aforesaid, or any interest which the Debtor may
have therein,
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and (b) exercise any and all rights, options, powers, benefits or privileges
given to the Bank upon any life insurance policies held as Collateral. After
deducting from the proceeds of any such sale or other disposition of the
Collateral all expenses (including, but not limited to, reasonable attorneys'
fees and expenses and other expenses as set forth below), the Bank shall apply
the residue of such proceeds toward the payment of any of the Obligations, in
such order as the Bank shall elect, the Debtor remaining liable for any
deficiency, plus interest thereon, remaining unpaid after such application. If
notice of any sale or other disposition is required by law to be given, the
Debtor hereby agrees that a notice sent at least five days before the time of
any intended public sale or of the time after which any private sale or other
disposition of the Collateral is to be made, shall be reasonable notice of such
sale or other disposition. The Debtor also agrees to assemble the Collateral at
such place or places as the Bank designates by written notice.
At any such sale or other disposition the Bank or any other person
designated by the Bank may itself purchase the whole or any part of the
Collateral sold, free from any right of redemption on the part of the Debtor,
which right, to the extent permitted by law, is hereby waived and released.
The Bank may, without any notice to the Debtor, in its discretion,
subsequent to a default under the Obligations, in its name or in the name of the
Debtor, demand, xxx for, collect and receive any money or property at any time
due, payable or receivable on or on account of or in exchange for, and may
compromise, settle or extend the time of payment of, any of the demands or
obligations represented by any of the Collateral, and may also exchange any of
the Collateral for other property upon the reorganization, recapitalization or
other readjustment of the issuer, maker or other person who is obligated on or
otherwise has liabilities with respect to the Collateral, and in connection
therewith may deposit any of the Collateral with any committee or depositary
upon such terms as the Bank may in its reasonable discretion deem appropriate,
and the Debtor does hereby constitute and appoint the Bank the Debtor's true and
lawful attorney to compromise, settle or extend payment of said demands or
obligations and exchange such Collateral as the Debtor might or could do
personally; all without liability or responsibility for action herein authorized
and taken or not taken in good faith. The Bank is entitled at any time in its
discretion to notify an account debtor or the obligor on any instrument included
in the Collateral to make payment to it and hold same as Collateral, regardless
of whether or not the Debtor had been previously making collections on the
Collateral, and the Bank may take control of any proceeds of any of the
Collateral and hold same as Collateral. Upon request of the Bank, the Debtor
shall receive and hold all proceeds of the Collateral in trust for the Bank and
not commingle any collections with any of its own funds and immediately deliver
such collections to the Bank.
The Debtor agrees that the Collateral secures, and further agrees to pay on
demand, all expenses (including, but not limited to, reasonable attorneys' fees
and out of pocket expenses and costs of any insurance and payment of taxes or
other charges) of, or incidental to, the custody, care, sale or collection of,
or realization upon, any of the Collateral or in any way relating to the
enforcement or protection of the rights of the Bank hereunder, whether or not
litigation is commenced.
The Debtor agrees to xxxx its books and records as the Bank shall request
in order to reflect the rights of the Bank granted herein. The Bank may, upon 20
days prior written notice to the Debtor, sell, assign or transfer any of the
Obligations and the Bank's rights and duties hereunder, and may deliver the
Collateral, or any part thereof, to the assignee or transferee of any of the
Obligations, who shall become vested with all the rights, remedies, powers,
security interests and liens herein given to the Bank with respect thereto; and
the Bank shall thereafter be relieved and fully discharged from any liability or
responsibility in the premises.
The Bank may, without any notice to the Debtor, in its discretion,
transfer, or cause to be transferred, all or any part of the Collateral to its
name, or to the name of its nominee, subsequent to a
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default under the Obligations, vote the Collateral so transferred and receive
income and make or receive collections, including money, thereon and hold said
income and collections as Collateral or apply said income and collections to any
of the Obligations past due, the manner and distribution of the application to
be made as the Bank shall elect.
Calls for Collateral, demand for payment or notice to the Debtor may be
given by leaving same at the address given below or any other address hereafter
filed with the Bank, or by mailing same to such address with the same effect as
if delivered personally. Such notice given in the manner herein provided shall
be effective whether or not received by the Debtor. The Debtor agrees not to
change its name, any of its places of business, remove any records of the Debtor
relating to any of the Collateral or move any of the Collateral without giving
the Bank thirty days' prior written notice.
With respect to the Collateral, the Bank shall be under no duty to send
notices, perform services, exercise any rights of collection, enforcement,
conversion or exchange, vote, pay for insurance, taxes or other charges or take
any action of any kind in connection with the management thereof and its only
duty with respect thereto shall be to use reasonable care in its custody and
preservation while in its possession, which shall not include any steps
necessary to preserve, obtain, secure or acquire rights or property against or
from any parties.
The Debtor authorizes the Bank, at the Debtor's expense, to file one or
more financing statements and amendments thereto to perfect the security
interests granted herein, without the Debtor's signature thereon, and to take
all actions necessary to perfect (whether by filing, possession, control or
otherwise) its security interest in the Collateral under any applicable law or
regulation, and the Debtor agrees to do, file, record, make, execute and deliver
all such acts, deeds, things, agreements, notices, instruments and financing
statements as the Bank may request in order to perfect and enforce the rights of
the Bank herein.
If at any time subsequent to a default under the Obligations it is
necessary in the opinion of counsel to the Bank that any or all of the
securities held as Collateral (the "Pledged Securities") be registered under the
Securities Act of 1933, as amended, or that an indenture with respect thereto be
qualified under the Trust Indenture Act of 1939, as amended, in order to permit
the sale or other disposition of the Pledged Securities, the Debtor shall at the
Bank's request and at the expense of the Debtor use the commercially reasonable
efforts of the Debtor promptly to cause the registration of the Pledged
Securities or the qualification of such indenture and to continue such
registration or qualification under such laws and in such jurisdictions and for
as long as deemed appropriate by the Bank.
Upon payment in full of all of the Obligations and at the request of the
Debtor, the security interest granted hereby shall terminate hereunder and all
rights to the Collateral shall revert and be deemed reassigned to the Debtor.
Upon any such termination, the Bank shall, at the Debtor's request and expense,
execute and deliver to the Debtor such documents and take such other action as
the Debtor shall reasonably request to evidence such termination, reversion
and/or reassignment, without representation or warranty.
This agreement may not be amended, or compliance with its terms waived,
orally or by course of dealing, but only by a writing signed by an authorized
officer of the Bank.
No failure on the part of the Bank to exercise, and no delay in exercising,
any right, remedy or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Bank of any right, remedy or power
hereunder preclude any other or future exercise thereof or the exercise of any
other right, remedy or power.
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Each and every right, remedy and power hereby granted to the Bank or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other right, remedy or power, and may be exercised by the Bank at any time
and from time to time.
This agreement may be assigned by the Bank and its benefits shall inure to
the successors, indorsees and assigns of the Bank.
This agreement shall be construed and interpreted, and all rights and
obligations hereunder shall be determined, in accordance with the laws of the
State of New York without regard to principles of conflict of laws.
Unless otherwise defined or the text otherwise requires, all terms used
herein shall have the meanings specified in the Code.
Every provision of this agreement is intended to be severable; if any term
or provision of this agreement shall be invalid, illegal or unenforceable for
any reason whatsoever, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
Any notice to the Bank shall be effective only upon receipt by the Bank and
if directed to the Bank at its banking office set forth above or any other
address hereafter specified by written notice from the Bank to the Debtor.
The Debtor represents and warrants that at the time the Collateral becomes
subject to the Bank's security interest, the Debtor shall be the sole owner of
and fully authorized and able to sell, transfer, pledge and/or grant a first
priority security interest in the Collateral to the Bank and the Collateral
shall be free and clear of all other claims, liens, charges, security interests
and encumbrances except as permitted in writing by the Bank. The Debtor
represents and warrants to the Bank that any information furnished to the Bank
by the Debtor in writing regarding the Collateral is true and correct on the
date hereof and is complete in all material respects.
The Debtor represents and warrants that the Debtor is a statutory trust
duly organized, validly existing and in good standing under the laws of the
state of its organization; that the execution delivery and performance of this
agreement are within the Debtor's company powers and have been duly authorized
by all necessary action of its members; and that each person executing this
agreement has the authority to execute and deliver this agreement on behalf of
the Debtor.
THE DEBTOR SUBMITS TO THE JURISDICTION OF STATE AND FEDERAL COURTS LOCATED
IN THE CITY AND STATE OF NEW YORK IN PERSONAM AND AGREES THAT ALL ACTIONS AND
PROCEEDINGS RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT SHALL BE LITIGATED
ONLY IN SAID COURTS OR IN COURTS LOCATED ELSEWHERE AS THE BANK MAY SELECT AND
THAT SUCH COURTS ARE CONVENIENT FORUMS AND WAIVES PERSONAL SERVICE UPON IT AND
CONSENTS TO SERVICE OF PROCESS OUT OF SAID COURTS BY MAILING A COPY THEREOF TO
IT BY REGISTERED OR CERTIFIED MAIL.
THE DEBTOR AND THE BANK WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
5
BARON SELECT FUNDS ADDRESS OF DEBTOR
/s/ Xxxxx Xxxxxx 000 Xxxxx Xxxxxx, 00xx Xx
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President Xxx Xxxx, XX 00000
--------------------------
[SCHEDULE A ON THE FOLLOWING
PAGE MUST BE COMPLETED]
SCHEDULE A
TO
SECURITY AGREEMENT
EXECUTED BY
BARON SELECT FUNDS
------------------
(Name of Debtor)
Property specifically included as "Collateral" for purposes of the within
Security Agreement.
All of the Debtor's right, title and interest in and to the following
safekeeping and/or custody account(s) and any demand deposit account(s)
established in connection with such safekeeping and/or custody account(s)
(together with any successor account(s), the "Account(s)"):
Custody account in the name of BARON PARTNERS FUND maintained at the
Bank and designated as account number 158112;
all property from time to time held in or credited to the Account(s), whether
now held or hereafter acquired and transferred into or credited to the
Account(s), including, without limitation, all monies, bills, bonds, notes,
obligations, securities, commercial paper, instruments or other investment
property and financial assets of any nature held in or credited to the
Account(s), together with all payments and distributions now or hereafter made
thereon (whether constituting principal, interest or dividends and whether
payable in cash or property); all sums now or hereafter deposited in, and all
sums due or to become due on (whether as interest, dividends or otherwise), the
Account(s); all rights (contractual or otherwise) now or hereafter arising
under, connected with or in any way related to the foregoing items of Collateral
including all securities entitlements with respect thereto; all claims
(including the right to xxx or otherwise recover such claims) against third
parties now or hereafter arising under, connected with or in any way related to
the foregoing items of Collateral; and all additions thereto and all
substitutions, exchanges and replacements therefor, and all products and
proceeds thereof.
MASTER PROMISSORY NOTE
(FEDERAL FUNDS RATE)
$40,000,000 April 30, 2003
FOR VALUE RECEIVED, the undersigned (the "Borrower"),with respect to Baron
Partners Fund (the "Series"), hereby promises to pay to the order of THE BANK OF
NEW YORK (the "Bank") at its Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx office, the
principal sum of Forty Million Dollars ($40,000,000) or the aggregate unpaid
principal amount of all advances made by the Bank to the Borrower (which
aggregate unpaid principal amount shall be equal to the amount duly indorsed and
set forth opposite the date last appearing on the schedule attached to this
note), whichever is less. Advances evidenced by this note shall be payable ON
DEMAND.
The Borrower agrees to pay interest on the unpaid principal balance of each
advance evidenced hereby from the date such advance is made at a rate per annum
equal to the Federal Funds Rate plus 1.5%, but not to exceed the maximum rate
permitted by law. If any payment which is to be made hereunder is not paid when
due, the Borrower agrees to pay interest on such payment, payable on demand, at
a rate per annum equal to the rate specified in the preceding sentence plus 2%,
but not to exceed the maximum rate permitted by law. Interest shall be computed
on the basis of a 360 day year for the actual number of days elapsed and shall
be payable on the last day of each month and at maturity of each advance
evidenced by this note (whether by acceleration or otherwise).
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded,
if necessary, to the next greater 1/100 of 1%) equal to the rate at which the
Bank is offered overnight Federal funds by a Federal funds broker selected by
the Bank on such day (or if such day is not a business day, the Federal Funds
Rate for such day shall be such rate at which the Bank is offered overnight
Federal funds by such Federal funds broker, on the next preceding business day).
If any payment of principal of or interest on the advances evidenced by
this note becomes due and payable on a Saturday, Sunday or other day on which
the Bank is permitted or required by law to be closed, then such payment shall
be extended to the next succeeding business day, and interest shall be payable
at the rate set forth above during such extension.
Advances evidenced by this note may be prepaid at any time without penalty,
but with interest on the amount being prepaid through the date of prepayment.
If the Bank shall make a new advance on a day on which the Borrower is to
repay an advance hereunder, the Bank shall apply the proceeds of the new advance
to make such repayment and only the amount by which the amount being advanced
exceeds the amount being repaid shall be made available to the Borrower in
accordance with the terms of this note.
The Borrower authorizes the Bank to accept oral (including telephonic) and
written (including facsimile) instructions from the Borrower or an authorized
representative of the Borrower to make an advance hereunder or receive any
payment hereof and to indorse on the schedule attached hereto the amount of all
advances hereunder and all principal payments hereof received by the Bank. The
Borrower agrees that the Bank may rely on instructions believed by the Bank to
be genuine and given by the Borrower or an authorized representative of the
Borrower.
At the Borrower's option, the Bank shall credit a deposit account
maintained by the Borrower in the name of the Series at the Bank in the amount
of an advance hereunder or transfer the
2
proceeds of an advance hereunder to a bank designated by the Borrower for credit
to an account designated by the Borrower maintained at such bank. The Borrower
agrees that the crediting of the amount of an advance to the Borrower's deposit
account maintained at the Bank or the origination of a payment order for a funds
transfer of the proceeds of an advance in accordance with the instructions of
the Borrower shall constitute conclusive evidence that such advance was made,
and neither the failure of the Bank to indorse on the schedule attached hereto
the amount of such advance, nor the failure of the bank designated by the
Borrower to credit the proceeds of the advance to the designated account
maintained at such bank, shall affect the Borrower's obligations hereunder.
The Borrower acknowledges that the advances evidenced hereby are payable on
demand and payment thereof may be demanded by the Bank at any time for any
reason in the sole and absolute discretion of the Bank.
All advances evidenced hereby together with all accrued interest thereon
shall become immediately and automatically due and payable, without demand,
presentment, protest or notice of any kind, upon the commencement by or against
the Borrower, any guarantor of this note or any hypothecator of collateral
securing this note of a case or proceeding under any bankruptcy, insolvency or
other law relating to the relief of debtors, the readjustment, composition or
extension of indebtedness or reorganization or liquidation.
The Borrower waives presentment, demand, protest and notice of protest,
non-payment or dishonor of this note.
The Borrower agrees to pay all out of pocket costs and expenses incurred by
the Bank incidental to or in any way relating to the Bank's enforcement of the
obligations of the Borrower hereunder or the protection of the Bank's rights in
connection herewith, including, but not limited to, reasonable attorneys' fees
and expenses, whether or not litigation is commenced.
Promptly upon the Bank's request, the Borrower agrees to furnish to the
Bank such information (including, without limitation, financial statements and
tax returns of the Series, a statement of assets and liabilities of the Series
as of the end of the each quarter of the Borrower's fiscal years, a statement as
to the investment portfolio of the Series as of the end of each quarter of the
Borrower's fiscal years, proxy materials, and such other information as the Bank
shall reasonably request from time to time) and to permit the Bank to inspect
the books and records of the Borrower and the Series, as the Bank shall
reasonably request from time.
The Borrower waives any right to claim or interpose any counterclaim or
set-off of any kind in any litigation relating to this note or the transactions
contemplated hereby.
This note may not be amended, and compliance with its terms may not be
waived, orally or by course of dealing, but only by a writing signed by an
authorized officer of the Bank.
This note may be assigned or indorsed by the Bank and its benefits shall
inure to the successors, indorsees and assigns of the Bank.
No failure on the part of the Bank to exercise, and no delay in exercising,
any right, remedy or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Bank of any right, remedy or power
hereunder preclude any other or future exercise thereof or the exercise of any
other right, remedy or power.
3
Each and every right, remedy and power hereby granted to the Bank or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other right, remedy or power, and may be exercised by the Bank at any time
and from time to time.
Every provision of this note is intended to be severable; if any term or
provision of this note shall be invalid, illegal or unenforceable for any
reason, the validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
All obligations of the Borrower under this note are secured pursuant to the
terms of a security agreement executed by the Borrower in favor of the Bank
dated of even date herewith and the Bank is entitled to all of the benefits
thereof.
The Borrower represents and warrants that the Borrower is a statutory trust
duly organized, validly existing and in good standing under the laws of the
state of its organization and is duly qualified to do business in the State of
New York; that the execution, delivery and performance of this note are within
the Borrower's company powers and have been duly authorized by all necessary
action of its members; and that each person executing this note has the
authority to execute and deliver this note on behalf of the Borrower.
THE PROVISIONS OF THIS NOTE SHALL BE CONSTRUED AND INTERPRETED, AND ALL
RIGHTS AND OBLIGATIONS HEREUNDER DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
BORROWER SUBMITS TO THE JURISDICTION OF STATE AND FEDERAL COURTS LOCATED IN THE
CITY AND STATE OF NEW YORK IN PERSONAM AND AGREES THAT ALL ACTIONS AND
PROCEEDINGS RELATING DIRECTLY OR INDIRECTLY TO THIS NOTE SHALL BE LITIGATED ONLY
IN SAID COURTS OR COURTS LOCATED ELSEWHERE AS SELECTED BY THE BANK AND THAT SUCH
COURTS ARE CONVENIENT FORUMS. THE BORROWER WAIVES PERSONAL SERVICE UPON IT AND
CONSENTS TO SERVICE OF PROCESS BY MAILING A COPY THEREOF TO IT BY REGISTERED OR
CERTIFIED MAIL.
4
THE BORROWER AND THE BANK WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF OR IN ANY WAY CONNECTED TO THIS NOTE OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
BARON SELECT FUNDS
By: /s/ Xxxxx Xxxxxx
-----------------
Name: Xxxxx Xxxxxx
-----------------
Title: President
-----------------
ADDRESS OF BORROWER
000 Xxxxx Xxxxxx, 00xx XX
-------------------------
Xxx Xxxx, XX 00000
-------------------------
SCHEDULE
TO
MASTER PROMISSORY NOTE
EXECUTED BY
BARON SELECT FUNDS with respect to BARON PARTNERS FUND
(Name of Borrower)
Date of Amount of Amount of Aggregate Unpaid
Advance Advance Payment Principal Amount
------- --------- --------- ----------------
