EXHIBIT 10.4
CHEX GUARANTEE SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of March 8, 2004,
by and between Chex Services, Inc. ("Chex"), a Minnesota corporation, Pandora
Select Partners, L.P., ("Pandora") and Whitebox Hedged High Yield Partners,
L.P., ("WHHY").
RECITALS
A. Equitex, Inc., a Delaware corporation ("Equitex"), Pandora and WHHY
have entered into a Purchase Agreement dated as of this date, pursuant to which
Pandora is purchasing a $3,000,000, and WHHY is purchasing a $2,000,000, face
amount promissory note (together the "Notes") from Equitex in consideration of a
$5,000,000 loan (the "Equitex Loan") by Pandora and WHHY to Equitex. Pandora and
WHHY are referred to herein as the "Secured Parties."
B. In connection with the issuance of the Equitex Notes, Equitex is
pledging to Secured Parties its interest in the capital stock of Chex, its
wholly owned subsidiary, under the terms of a Security Agreement dated as of
this date (the "Equitex Security Agreement").
C. Equitex, concurrent with its borrowing of $5,000,000 from Secured
Parties, is loaning $5,000,000 to Chex (the "Chex Loan") under the terms of a
promissory note in the like principal amount dated as of the date of this
Agreement.
D. As a condition to making the Equitex Loan, Secured Parties are
requiring, and as a condition of making the Chex Loan, Equitex is requiring,
that Chex guarantee (the "Guarantee") the obligations of Equitex under the Notes
and Equitex Security Agreement, and secure the Guarantee by pledging all of
Chex's assets.
NOW, THEREFORE, in consideration of the agreements herein and in
reliance upon the representations and warranties set forth herein and therein,
the parties agree as follows:
ARTICLE 1.
DEFINED TERMS
1.1 Definitions. Unless otherwise defined herein or unless the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Uniform Commercial Code in effect in
the State of Minnesota (the "UCC"). In addition, the following terms when used
in this Agreement, including its preamble and recitals, shall have the following
meanings:
"Loan Documents" means the Guarantee and this Agreement.
"Obligations" means the payment and other performance
obligations under the Guarantee.
ARTICLE 2.
SECURITY INTEREST
2.1 Grant of Security Interest. To secure the timely payment and performance in
full of the Obligations, Chex does hereby assign, grant and pledge to Secured
Parties, all of the estate, right, title and interest of Chex in and to the
Collateral as more fully described on Exhibit A hereto, whether now owned or
later acquired or created, and including all proceeds of the Collateral, whether
cash or non-cash (the "Collateral"). As to any equity interest that Chex may
acquire (the "Pledged Equity Interests") in wholly or partially owned
subsidiaries (each a "Pledged Entity"), the Collateral includes Chex's share of:
(a) all rights to receive income, gain, profit, dividends and other
distributions allocated or distributed to Chex in respect of or in exchange for
all or any portion of such Pledged Equity Interests;
(b) all of Chex's capital or ownership interest, including capital
accounts, in each Pledged Entity, and all accounts, deposits or credits of any
kind with each Pledged Entity;
(c) all of Chex's voting rights in or rights to control or direct
the affairs of each Pledged Entity;
(d) all of Chex's rights, title and interest, as a member or
shareholder of each Pledged Entity, in, to or under any and all of each Pledged
Entity's assets or properties;
(e) all other rights, title and interest in or to each Pledged
Entity derived from the Pledged Equity Interests;
(f) all indebtedness or other obligations of each Pledged Equity
owed to Chex;
(g) all claims of Chex for damages arising out of, or for any breach
or default relating to, any of the Pledged Equity Interests;
(h) all rights of Chex to terminate, amend, supplement, modify, or
cancel, the governing documents of any Pledged Entity, to take all actions
thereunder and to compel performance and otherwise exercise all remedies
thereunder; and
(i) all securities, notes, certificates and other instruments
representing or evidencing any of the foregoing rights and interests or the
ownership thereof and any interest of Chex reflected in the books of any
financial intermediary pertaining to such rights and interests and all non-cash
dividends, cash, options, warrants, stock splits, reclassifications, rights,
instruments or other investment property and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such rights and interests.
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2.2 Delivery of Certificates. All certificates, notes and other
instruments representing or evidencing any Pledged Equity Interests shall be
delivered to and held by or on behalf of Secured Parties, or their designee
pursuant hereto, in the manner set forth in Section 4.6 (Delivery of Pledged
Equity Interests; Proxy).
2.3 Financing Statements.
(a) Chex hereby authorizes Secured Parties to file all financing
statements, continuation statements, assignments, certificates, and other
documents and instruments with respect to the Collateral pursuant to the UCC and
otherwise as may be necessary or reasonably requested by Secured Parties to
perfect or from time to time to publish notice of, or continue or renew the
security interests granted hereby (including, such financing statements,
continuation statements, certificates, and other documents as may be necessary
or reasonably requested to perfect a security interest in any additional
property rights hereafter acquired by Chex or in any replacements, products or
proceeds thereof), in each case in form and substance satisfactory to Secured
Parties.
(b) Secured Parties will pay the cost of filing the same in all public
offices where filing is necessary or reasonably requested by Secured Parties and
will pay any and all recording, transfer or filing taxes that may due in
connection with any such filing. Chex grants Secured Parties the right, at any
time and at Secured Parties' option, to file any or all such financing
statements, continuation statements, and other documents pursuant to the UCC and
otherwise as Secured Parties reasonably may deem necessary or desirable.
(c) Chex hereby authorizes the filing of any financing statements or
continuation statements, and amendments to financing statements, or any similar
document in any jurisdictions and with any filing offices as Secured Parties may
reasonably determine are necessary or advisable to perfect the security
interests granted to Secured Parties. Such financing statements may describe the
Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner as
Secured Parties may reasonably determine is necessary, advisable or prudent to
ensure the perfection of the security interest in the Collateral granted to
Secured Parties herein.
2.4 Debtor RemainS Liable.
(a) Anything herein contained to the contrary notwithstanding, Chex
shall remain liable under its articles of incorporation, bylaws or other
constituent documents (together, the "Constituent Documents"), to perform all of
the obligations undertaken by it thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and Secured Parties shall have no
obligations or liabilities under the Constituent Documents by reason of or
arising out of this Agreement, nor shall Secured Parties be required or
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obligated in any manner to perform or fulfill any obligations of Chex thereunder
or to make any payment, or to make any inquiry as to the nature or sufficiency
of any payment received by their or present or file any claim, or take any
action to collect or enforce the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
(b) If any default by Chex under any of the Constituent Documents shall
occur, Secured Parties shall, at its option, be permitted (but shall not be
obligated) to remedy any such default by giving written notice of such intent to
Chex and to the parties to such agreement. Any cure by Secured Parties of Chex's
default under a Constituent Document shall not be construed as an assumption by
Secured Parties of any obligations, covenants or agreements of Chex under the
Constituent Documents, and Secured Parties shall not incur any liability to Chex
or any other person as a result of any actions undertaken by Secured Parties in
curing or attempting to cure any such default. This Agreement shall not be
deemed to release or to affect in any way the obligations of Chex under any of
the Constituent Documents.
2.5 Retention of Certain Rights. So long as Secured Parties have not
exercised remedies with respect to the Collateral under and in accordance with
this Agreement, upon the occurrence and during the continuance of an Event of
Default, Chex reserves the right to exercise all voting rights with respect to
the Pledged Equity Interests; provided, that no vote shall be cast, right
exercised or other action taken which could materially impair the Collateral.
2.6 merger or reorganization. Notwithstanding anything to the contrary
contained herein, Chex may engage in a merger, consolidation or sale of its
business, but only as permitted by Section 2.6 of the Equitex Security
Agreement, which Section is incorporated herein by reference.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF DEBTOR
Chex makes the following representations and warranties to and in favor
of Secured Parties as of the date hereof. All of these representations and
warranties shall survive the execution and delivery of this Agreement:
3.1 ORGANIZATION. Chex:
(a) is a corporation duly incorporated and validly existing and in good
standing under the laws of the state of Minnesota;
(b) is duly qualified, authorized to do business as a foreign
corporation in each jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary; and
(c) has the corporate power (A) to enter into the Loan Documents and to
perform its obligations thereunder and to consummate the transactions
contemplated thereby, (B) to carry on its business as now being conducted and as
proposed to be conducted by it, (C) to execute, deliver and perform this
Agreement, (D) to take all action as may be necessary to consummate the
transactions contemplated hereunder, and (E) to grant the liens and security
interests provided for in this Agreement.
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3.2 OFFICES, LOCATION OF COLLATERAL. The chief executive office or
chief place of business of Chex is located at 00000 Xxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxxxxxx 00000.
3.3 Title and Liens. The Pledged Equity Interests, if and when owned by
Chex will be duly authorized and validly issued, and fully paid and
non-assessable. Chex has good, valid, and marketable title to the Collateral,
free from all liens and encumbrances of any kind. As a result of this Agreement,
Secured Parties will have a security interest in the Collateral, subordinate
only to the security interest of Equitex under a Chex Note Security Agreement
entered into between Equitex and Chex as of this date.
3.4 UCC Article 8. All membership interests or shares in any Pledged
Entity that constitute the Pledged Equity Interests will be securities governed
by Article 8 of the UCC.
3.5 Authorization; No Conflict. Chex has duly authorized, executed and
delivered this Agreement, and Chex's execution and delivery hereof and its
consummation of the transactions contemplated hereby and the compliance with the
terms thereof:
(a) does not or will not contravene the Constituent Documents of any
Pledged Entity or any other legal requirements applicable to or binding on Chex
which could reasonably be expected to have a material adverse effect upon the
Collateral or Secured Parties' rights therein;
(b) does not or will not contravene or result in any breach of or
constitute any default, or result in or require the creation of any lien upon
any of Chex's property, under any agreement or instrument to which Chex is a
party or by which it or any of its properties may be bound or affected; and
(c) does not or will not require the consent or approval of any third
party which has not already been obtained.
3.6 Enforceability. This Agreement is a legal, valid and binding
obligation of Secured Parties, enforceable against Chex in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting the enforcement of creditors' rights or by the effect of general
equitable principles.
ARTICLE 4.
COVENANTS OF DEBTOR
Chex covenants to and in favor of Secured Parties as follows:
4.1 Compliance with Obligations. Chex shall perform and comply in all
material respects with all obligations and conditions on its part to be
performed with respect to the Collateral.
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4.2 Information Concerning Collateral. Chex shall, promptly upon
request, provide to Secured Parties all information and evidence they may
reasonably request concerning the Collateral to enable Secured Parties to
enforce the provisions of this Agreement.
4.3 Defense of Collateral. Chex shall defend its title to the
Collateral and the interests of Secured Parties in the Collateral pledged
hereunder against the claims and demands of all third parties whomsoever.
4.4 Maintenance of Collateral. Chex shall not (i) take any action to
terminate, modify or amend any Constituent Document of any Pledged Entity which
impairs Secured Parties' interest in the Collateral, except with the consent of
Secured Parties, (ii) fail to deliver to Secured Parties a copy of each demand
or notice received or given by it relating to any Constituent Document of Chex
or to any other Collateral which could reasonably be expected to have a material
adverse effect upon the Collateral or Secured Parties' rights therein, or (iii)
sell, contract to sell, assign, transfer or dispose of any of the Collateral,
except, in the ordinary course of business, or with the consent of Secured
Parties, which consent will not be unreasonably withheld.
4.5 Events of Default. Chex shall give to Secured Parties prompt notice
of any material default under any Constituent Document of any Pledged Entity or
otherwise with respect to the Collateral, of which Chex has knowledge or has
received notice.
4.6 DELIVERY OF PLEDGED EQUITY INTERESTS; PROXY. All certificates or
instruments representing or evidencing the Pledged Equity Interests shall be
delivered to and held by or on behalf of Secured Parties pursuant hereto. All
such certificates or instruments shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance acceptable to Secured Parties.
Secured Parties shall have the right, at any time its discretion and without
prior notice to Chex, following the occurrence and during the continuation of an
Event of Default, to transfer to or to register in the name of Secured Parties
or any of its nominees any or all of the Pledged Equity Interests and to
exchange certificates or instruments representing or evidencing Pledged Equity
Interests for certificates or instruments of smaller or larger denominations;
provided, however, that once such Event of Default has been cured, Secured
Parties will promptly transfer to or register in the name or cause its nominees
to transfer to or register in the name of Chex all such Pledge Equity Interests.
In furtherance of the foregoing, Chex shall further execute and deliver to
Secured Parties as to each of the Pledged Equity Interests a proxy in the form
attached hereto as Exhibit B.
4.7 Preservation of Value; Limitation of Liens. Chex shall not take any
action in connection with the Collateral which would impair in any material
respect the interests or rights of Secured Parties therein or with respect
thereto, except as expressly permitted hereby; provided, however, that nothing
in this Agreement shall prevent Chex, prior to the exercise by Secured Parties
of any rights pursuant to the terms hereof, from undertaking Chex's operations
in the ordinary course of business. Chex shall not directly or indirectly
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create, incur, assume or suffer to exist any liens on or with respect to all or
any part of the Collateral (other than the lien created by this Agreement). Chex
shall at its own cost and expense promptly take such action as may be necessary
to discharge any such liens.
4.8 No Other Filings. Chex shall not file or authorize to be filed in
any jurisdiction any financing statements under the UCC or any like statement
relating to the Collateral, except as contemplated by the Chex Note Security
Agreement dated as of this date between Chex and Equitex.
4.9 Maintenance of Records. Chex shall, at all times, keep accurate and
complete records of the Collateral. Chex shall permit representatives of Secured
Parties, upon reasonable prior notice, at any time during normal business hours
of Chex to inspect and make abstracts from Chex's books and records pertaining
to the Collateral. Upon the occurrence and during the continuation of any Event
of Default, at Secured Parties' request, Chex shall promptly deliver copies of
any and all such records to Secured Parties.
4.10 Payment of Taxes. Chex shall pay or cause to be paid, before any
fine, penalty, interest or cost attaches thereto, all taxes, assessments and
other governmental or non-governmental charges or levies (other than those taxes
that it is contesting in good faith and by appropriate proceedings, and in
respect of which it has established adequate reserves for such taxes) now or
hereafter assessed or levied against the Collateral pledged by them hereunder
and shall retain copies of, and, upon request, permit Secured Parties to examine
receipts showing payment of any of the foregoing.
4.11 Name; Jurisdiction of Organization. Chex shall give Secured
Parties at least 30 days prior written notice before Chex changes its name,
jurisdiction of organization or entity type and shall at the expense of Chex
execute and deliver such instruments and documents as may be required by Secured
Parties or applicable legal requirements to maintain a first perfected security
interest in the Collateral.
4.12 Proceeds of Collateral. Chex shall, at all times, keep pledged to
Secured Parties pursuant hereto all Collateral and all dividends, distributions,
interest, principal and other proceeds received by Chex with respect thereto,
and all other Collateral and other securities, instruments, proceeds and rights
from time to time received by or distributable to Chex in respect of any
Collateral, and shall not permit any issuer of such Collateral to issue any
shares of stock or other equity interests which shall not have been immediately
duly pledged to Secured Parties hereunder.
ARTICLE 5.
RIGHTS AND REMEDIES
5.1 Event of Default Defined. Any event of default under the Guarantee
shall constitute an "Event of Default" hereunder.
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5.2 Remedies Upon Event of Default.
(a) During any period during which an Event of Default shall have
occurred and be continuing, Secured Parties may (but shall be under no
obligation to), directly or by using agent or broker:
(i) in connection with any acceleration and foreclosure, vote or
exercise, any and all of Chex's rights or powers incident to its ownership of
any of the Pledged Equity Interests, including any rights or powers to manage or
control a Pledged Entity;
(ii) proceed to protect and enforce the rights vested in it by this
Agreement and under the UCC;
(iii) cause all moneys and other property pledged as security to be
paid and/or delivered directly to it, and demand, xxx for, collect and receive
any such moneys and property;
(iv) cause any action at law or suit in equity or other proceeding
to be instituted and prosecuted to collect or enforce any Obligations of Chex or
rights included in the Collateral, or for specific enforcement of any covenant
or agreement contained herein, or in aid of the exercise of any power therein or
herein granted, or for any foreclosure hereunder and sale under a judgment or
decree in any judicial proceeding, or to enforce any other legal or equitable
right vested in it by this Agreement or by law;
(v) foreclose or enforce any other agreement or other instrument by
or under or pursuant to which the Obligations of Chex are issued or secured;
(vi) subject to Section 5.2(b), sell, lease or otherwise dispose of
any or all of the Collateral, in one or more transactions, at such prices as
Secured Parties may deem best, and for cash or on credit or for future delivery,
without assumption of any credit risk, at any broker's board or at public or
private sale, without demand of performance or notice of intention to sell,
lease or otherwise dispose of, or of time or place of disposition (except such
notice as is required by applicable statute and cannot be waived), it being
agreed that Secured Parties may be purchasers or lessees on their own behalf at
any such sale and that Secured Parties or anyone else who may be the purchaser,
lessee or recipient for value of any or all of the Collateral so disposed of
shall, upon such disposition, acquire all of Chex's rights therein. Secured
Parties may adjourn any public or private sale or cause the same to be adjourned
from time to time by announcement at the time and place fixed for the same, and
such sale may, without further notice or publication, be made at any time or
place to which the same may be so adjourned. If Secured Parties sell any of the
Collateral upon credit, after reasonable inquiry as to the credit worthiness of
the purchaser, Chex will be credited only with payments actually made by the
purchaser, received by Secured Parties and applied to the indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral, Secured
Parties may resell the Collateral and Chex shall be credited with the proceeds
of the sale;
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(vii) incur expenses, including reasonable attorneys' fees,
consultants' fees, and other costs appropriate to the exercise of any right or
power under this Agreement;
(viii) perform any obligation of Chex hereunder and make payments,
purchase, contest or compromise any encumbrance, charge, or lien, and pay taxes
and expenses;
(ix) make any reasonable compromise or settlement deemed desirable
with respect to any or all of the Collateral and extend the time of payment,
arrange for payment installments, or otherwise modify the terms of, any or all
of the Collateral;
(x) secure the appointment of a receiver of any or all of the
Collateral;
(xi) exercise any other or additional rights or remedies granted to
Secured Parties under any other provision of this Agreement or exercisable by a
secured party under the UCC, whether or not the UCC applies to the affected
Collateral, or under any other applicable law and take any other action which
Secured Parties deem necessary or desirable to protect or realize upon their
security interests in the Collateral or any part thereof; and/or
(xii) appoint a third party (who may be an employee, officer or
other representative of Secured Parties) to do any of the foregoing, or take any
other action permitted hereunder, on behalf of Secured Parties.
(b) If, pursuant to any law, prior notice of any action described in
Section 5.2(a) is required to be given to Chex, Chex hereby acknowledges that
the minimum time required by such law, or if no minimum is specified, ten days,
shall be deemed a reasonable notice period.
(c) Any action or proceeding to enforce this Agreement may be taken by
Secured Parties either in Chex's name or in Secured Parties' name, as Secured
Parties may deem necessary.
(d) All rights of marshaling of assets of Chex, including any such
right with respect to the Collateral, are hereby waived by Chex.
(e) Secured Parties shall incur no liability as a result of the sale of
any or all of the Collateral at any private sale pursuant to Section 5.2(a)
conducted in a commercially reasonable manner. Chex hereby waives any claims
against Secured Parties arising by reason of the fact that the price at which
any or all of the Collateral may have been sold at such a private sale was less
than the price that might have obtained at a public sale or was less than the
aggregate amount of the Obligations, even if Secured Parties accept the first
offer received and does not offer the Collateral to more than one offeree.
5.3 AttorneyS-in-Fact. Upon the occurrence and during the continuation
of an Event of Default, Chex hereby irrevocably constitutes and appoints Secured
Parties as its true and lawful attorneys-in-fact to enforce all rights of Chex
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with respect to the Collateral, including the right to give appropriate
receipts, releases and satisfactions for and on behalf of and in the name of
Chex or, at the option of Secured Parties, in the name of Secured Parties, with
the same force and effect as Chex could do if this Agreement had not been made.
If Secured Parties shall so elect after the occurrence and during the
continuation of an Event of Default hereunder, Secured Parties shall have the
right at all times to settle, compromise, adjust, or liquidate all claims or
disputes directly with Chex or any obligor of Chex upon such terms and
conditions as Secured Parties may determine in their sole discretion, and to
charge all costs and expenses thereof (including reasonable attorneys' fees and
charges) to Chex's account and to add them to the Obligations whereupon such
costs and expenses shall be and become part of the Obligations. This power of
attorney is a power coupled with an interest and shall be irrevocable.
5.4 Expenses; Interest. All costs and expenses (including reasonable
attorneys' fees and expenses) incurred by Secured Parties in connection with
exercising any actions taken under Article 5, together with interest thereon (to
the extent permitted by law) computed at a rate of 10% per annum (or if less,
the maximum rate permitted by law) from the date on which such costs or expenses
are invoiced to and become payable by Chex, to the date of payment thereof,
shall constitute part of the Obligations secured by this Agreement and shall be
paid by Chex to Secured Parties within 10 days after written demand.
5.5 No Impairment of Remedies. If under applicable law, Secured Parties
proceed by either judicial foreclosure or by non-judicial sale or enforcement,
Secured Parties may, at their sole option, determine which of their remedies or
rights to pursue without affecting any of their rights and remedies under this
Agreement. If, by exercising any right and remedy, Secured Parties forfeit any
of their other rights or remedies, including any right to enter a deficiency
judgment against Chex or any third party (whether because of any applicable law
pertaining to "election of remedies" or the like), Chex nevertheless hereby
consents to such action by Secured Parties. To the extent permitted by
applicable law, Secured Parties also waive any claim based upon such action,
even if such action by Secured Parties results in a full or partial loss of any
rights of subrogation, indemnification or reimbursement which Chex might
otherwise have had but for such action by Secured Parties or the terms herein.
Any election of remedies which results in the denial or impairment of the right
of Secured Parties to seek a deficiency judgment against any third party shall
not, to the extent permitted by applicable law, impair Chex's obligations
hereunder. If Secured Parties bid at any foreclosure or trustee's sale or at any
private sale permitted by law or this Agreement, Secured Parties may bid all or
less than the amount of the Obligations. To the extent permitted by applicable
law, the amount of the successful bid at any such sale, whether Secured Parties
or any other party is the successful bidder, shall be conclusively deemed to be
the fair market value of the Collateral and the difference between such bid
amount and the remaining balance of the Obligations shall be conclusively deemed
to be the amount of the Obligations.
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ARTICLE 6.
CERTAIN WAIVERS
6.1 Modification of Obligations. Chex's liability hereunder shall not
be reduced, limited, impaired, discharged or terminated if Secured Parties at
any time with Chex's consent (or, to the extent permissible by the terms of the
Loan Documents and law, without notice to or demand of Chex):
(a) renew, extend, accelerate, increase the rate of interest on, or
otherwise change the time, place, manner or terms, or otherwise modifies any of
the Obligations (including any payment terms);
(b) extend or waive the time for Chex's performance of, or compliance
with, any term, covenant or agreement on their part to be performed or observed
under the Loan Documents, or waive such performance or compliance or consent to
a failure of, or departure from, such performance or compliance;
(c) settle, compromise, release or discharge, or accept or refuse any
offer of performance with respect to, or substitutions for, any of the
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations;
(d) request and accept other guaranties of any of the Obligations and
take and hold security for the payment hereof or any of the Obligations;
(e) release, surrender, exchange, substitute, compromise, settle,
rescind, waive, alter, subordinate or modify, with or without consideration, any
security for payment of any of the Obligations, any other guaranties of any of
the Obligations, or any other obligation of any third party with respect to any
of the Obligations;
(f) to the extent permitted by law, enforce and apply any security, if
any, now or hereafter held by or for the benefit of Secured Parties in respect
hereof or any of the Obligations and direct the order or manner of sale thereof,
or exercise any other right or remedy that Secured Parties may have against any
such security, in each case as Secured Parties in their discretion may
determine, including foreclosure on any collateral pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable; or
(g) exercise any other rights available to them under any of the Loan
Documents, at law or in equity.
6.2 Security InterestS Absolute. All rights of Secured Parties and the
security interests hereunder, and all obligations of Chex hereunder, shall be
absolute and unconditional irrespective of:
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(a) any failure or omission to assert or enforce or agreement or
election not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under any Loan
Document, at law, in equity or otherwise) with respect to any of the Obligations
or any agreement relating thereto, or with respect to any other guaranty of or
security for the payment of any of the Obligations;
(b) any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including provisions
relating to events of default) hereof, in any other Loan Document or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for any of the Obligations, in each case, whether or not in accordance
with the terms hereof or any other Loan Document or any agreement relating to
such other guaranty or security;
(c) the application of payments received from any source (other than
payments received from the proceeds of any security for any of the Obligations,
except to the extent such security also serves as collateral for indebtedness
other than the Obligations) to the payment of indebtedness of Chex to Secured
Parties other than the Obligations, even though Secured Parties might have
elected to apply such payment to any part or all of the Obligations;
(d) Secured Parties' consent to the change, reorganization or
termination of the corporate structure or existence of Chex or any Pledged
Entity and to any corresponding restructuring of any of the Obligations;
(e) any other act or thing or omission, or delay to do any other act or
thing, which may or might in any manner or to any extent vary the risk of Chex
as an obligor in respect of any of the Obligations;
(f) any Obligations or any agreement relating thereto, at any time
being found to be illegal, invalid or unenforceable in any respect; and
(g) any defenses, set-offs or counterclaims which Chex may allege or
assert against Secured Parties in respect of the Obligations.
6.3 Certain Waivers. Except as provided in Section 7.16, Chex hereby
waives any and all defenses afforded to a surety, including promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and this Agreement and any requirement that Secured Parties protect,
secure, perfect or insure any security interest or lien, or any property subject
thereto, or exhaust any right or take any action against Chex or any other third
party or entity or any collateral securing any of the Obligations, as the case
may be.
6.4 Postponement of Subrogation. Chex agrees that it will not exercise
any rights which it may acquire by way of rights of subrogation under this
Agreement, by any payment made hereunder or otherwise, while this Agreement is
in effect, unless such action is required to stay or prevent the running of any
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applicable statute of limitations. Any amount paid to Chex on account of any
such subrogation rights prior to such time shall be held in trust for Secured
Parties and shall immediately be paid to Secured Parties and credited and
applied against the Obligations. Any time after this Agreement has terminated
and if Chex has made payment to Secured Parties of all of the Obligations, or if
an action is required to stay or prevent the running of any applicable statute
of limitations, then, at Chex's request, Secured Parties will execute and
deliver to Chex appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
Chex of an interest in the Obligations resulting from such payment by Chex.
ARTICLE 7.
MISCELLANEOUS
7.1 Notices. Any communications, including notices and instructions, between the
parties hereto or notices provided herein to be given may be given to the
following addresses:
If to Secured Parties, in care of:
Whitebox Advisors, LLC
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxx Xxxx, Chief Financial Officer
Facsimile: (000) 000-0000
E-mail: xxxxx@xxxxxxxx-xxxxxxxx.xxx
With a copy to:
Xxxxxxxx & Xxxxxx P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxx.xxx
If to Chex, in care of:
Chex Services, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxx, Assistant Secretary
Facsimile: (000) 000-0000
E-mail: xxxxxx@xxxxxx.xxx
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With a copy to:
Felhaber, Larson, Xxxxxx & Xxxx, P.A.
Attention: Xxxxx X. Xxxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxxx.xxx
All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be considered as properly given (a) on
the date received in person, (b) on the date received by overnight delivery
service (including Federal Express, UPS, ETA, Xxxxx, DHL, AirBorne and other
similar overnight delivery services), (c) on the fourth business day following
the date mailed by first class United States mail, postage prepaid, registered
or certified with return receipt requested, (d) on the next business day after
being transmitted by telecopy or by other electronic means (including electronic
mail). Any party shall have the right to change its address for notice hereunder
to any other location within the continental United States by giving of notice
to the other parties in the manner set forth hereinabove.
7.2 Delay and Waiver; Remedies Cumulative. No failure or delay by
Secured Parties in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. Any waiver, permit, consent or approval of any kind or
character on the part of Secured Parties of any breach or default under the
Agreement or any waiver on the part of Secured Parties of any provision or
condition of this Agreement must be in writing and shall be effective only to
the extent in such writing specifically set forth. No right, power or remedy
herein conferred upon or reserved to Secured Parties hereunder is intended to be
exclusive of any other right, power or remedy, and every such right, power and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right, power and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy. Resort to any or all
security now or hereafter held by Secured Parties, may be taken concurrently or
successively and in one or several consolidated or independent judicial actions
or lawfully taken nonjudicial proceedings, or both.
7.3 Entire Agreement. This Agreement and any agreement, document or
instrument referred to herein integrate all the terms and conditions mentioned
herein or incidental hereto and supersede all oral negotiations and prior
writings in respect of the subject matter hereof.
7.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, exclusive of its conflict of
laws rules.
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7.5 Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
7.6 Headings. Paragraph headings have been inserted in this Agreement
as a matter of convenience for reference only and it is agreed that such
paragraph headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.
7.7 Waiver of Jury Trial. CHEX HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY COURSE OR CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF SECURED PARTIES. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR SECURED PARTIES TO MAKE THE LOAN.
7.8 Consent to Jurisdiction. Each party hereto agrees that any legal
action or proceeding with respect to or arising out of this Agreement may be
brought in or removed to the federal or state courts located in Hennepin County,
Minnesota, as Secured Parties may elect. By execution and delivery of this
Agreement, each party hereto accepts, for themselves and in respect of their
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each of the parties hereto irrevocably consents to the service of
process out of any of the aforementioned courts in any manner permitted by law.
Nothing herein shall affect the right of Secured Parties to bring legal action
or proceedings in any other competent jurisdiction. Each party hereto hereby
waives any right to stay or dismiss any action or proceeding under or in
connection with this Agreement brought before the foregoing courts on the basis
of forum non-conveniens.
7.9 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
7.10 Counterparts. This Agreement may be executed in one or more duplicate
counterparts and when signed by all of the parties listed below, shall
constitute a single binding agreement. Delivery of an executed signature page of
this Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart thereof.
7.11 Benefit of Agreement. Nothing in this Agreement, express or
implied, shall give or be construed to give, any person other than the parties
hereto and their respective permitted successors, transferees and assigns any
legal or equitable right, remedy or claim under this Agreement, or under any
covenants and provisions of this Agreement, each such covenant and provision
being for the sole benefit of the parties hereto and their respective permitted
successors, transferees and assigns.
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7.12 Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Agreement or consent to any departure therefrom
shall be effective unless the same shall be in writing and signed by each of the
parties hereto. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given.
7.13 Survival of Agreements. The provisions regarding the payment of
expenses and indemnification obligations shall survive and remain in full force
and effect regardless of the termination of this Agreement pursuant to Section
7.14.
7.14 Release and Satisfaction. Upon the indefeasible payment (whether
in cash and/or other consideration which is satisfactory to Secured Parties in
their sole discretion) and performance in full of the Obligations, (i) this
Agreement and the security interests created hereby shall terminate and Secured
Parties will return the Collateral, including all documentation evidencing or
affecting the Collateral, and (ii) upon written request of Chex, Secured Parties
shall execute and deliver to Chex, at Chex's expense and without representation
or warranty by or recourse to Secured Parties, releases and satisfactions of all
financing statements, mortgages, notices of assignment and other registrations
of security.
7.15 Reinstatement. This Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time any payment
pursuant to this Agreement is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, reorganization, liquidation of Chex or
upon the dissolution of, or appointment of any intervenor or conservator of, or
trustee or similar official for, Chex or any substantial part of Chex's assets,
or otherwise, all as though such payments had not been made.
7.16 Limitation on Duty of Secured Parties with Respect to the
Collateral. The powers conferred on Secured Parties hereunder are solely to
protect their interest in the Collateral and shall not impose any duty on
Secured Parties or any of their designated agents to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for monies actually received by them hereunder, Secured Parties shall
have no duty with respect to any Collateral and no implied duties or obligations
shall be read into this Agreement against Secured Parties. Secured Parties shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment that is
substantially equivalent to that which Secured Parties accord their own
property, it being expressly agreed, to the maximum extent permitted by
applicable law, that Secured Parties shall have no responsibility for (a) taking
any necessary steps to preserve rights against any parties with respect to any
Collateral or (b) taking any action to protect against any diminution in value
of the Collateral, but, in each case, Secured Parties may do so and all expenses
reasonably incurred in connection therewith shall be part of the Obligations.
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IN WITNESS WHEREOF, the undersigned have hereunto affixed their
signatures.
Chex: Secured Party:
Chex Services, Inc. Pandora Select Partners, L.P.
By /s/ Xxxxx Xxxxxxxx By /s/ Xxxxxx Xxxxxxx
---------------------------- ----------------------------------------
Its President Its Managing Partner
--------------------------- ---------------------------------------
Secured Party:
Whitebox Hedged High Yield Partners, L.P.
By /s/ Xxxxxx Xxxxxxx
----------------------------------------
Its Managing Partner
----------------------------------------
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EXHIBIT A
DESCRIPTION OF CHEX COLLATERAL
Inventory: All inventory of Chex Services, Inc., a Minnesota
corporation (the "Company"), as that term is defined in the Uniform Commercial
Code, whether now owned or hereafter acquired or in which the Company obtains
rights, whether consisting of whole goods, spare parts or components, supplies
or materials whether acquired, held or furnished for sale, for lease or under
contracts or for manufacture or processing, and wherever located;
Equipment: All equipment of the Company, whether now owned or hereafter
acquired, including all present and future machinery, vehicles, furniture,
fixtures, office and recordkeeping equipment, parts, tools, supplies and all
other goods (except inventory) used or bought for use by the Company for any
business or enterprise and including specifically (without limitation) all
accessions thereto, all substitutions and replacements thereof, and all like or
similar property now owned or hereafter acquired by the Company, and all of
which is owned by the Company;
Deposit Accounts and Other Cash: All deposits and deposit accounts with
any bank, savings and loan association, credit union or like organization, and
all funds and amounts therein, and whether or not held in trust, or in custody
or safekeeping, or otherwise restricted or designated for a particular purpose,
and all other cash or marketable securities on hand, whether held in-vault or
otherwise;
Receivables: Each and every right of the Company to the payment of
money, whether such right to payment now exists or hereafter arises, whether
such right to payment arises out of a sale, lease or other disposition of goods
or other property, out of a rendering of services, or of a loan, out of the
overpayment of taxes or other liabilities, or any other transaction or event,
whether such right to payment is created, generated or earned by the Company or
by some other person who subsequently transfers his, her or its interest to the
Company, whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be evidenced, together with
all other rights and interests (including all liens and other security
interests) which the Company may at any time have by law or agreement against
any account debtor or other person obligated to make such payment or against any
property of such account debtor or other persons including, but not limited to,
all present and future accounts, contract rights, chattel paper, bonds, notes
and other debt instruments, and rights to payment in the nature of general
intangibles;
General Intangibles: All general intangibles of the Company whether now
owned or hereafter acquired, including (without limitation) all present and
future patents, patent applications, copyrights, trademarks, trade names, trade
secrets, customer or supplier lists and contracts, manuals, operating
instructions, permits, franchises, the right to use the Company's name, the
Company's internet domain names and address and the goodwill of the Company's
business.
Securities: All securities and other equity interests owned by the
Company, whether now owned or hereafter acquired, including shares of capital
stock of any wholly owned or partially owned subsidiary of the Company.
The Collateral shall include (i) all substitutes and replacements for
and proceeds of any and all of the foregoing property, and in the case of all
tangible Collateral, all accessions, accessories, attachments, parts, equipment
and repairs now or hereafter attached or affixed to or use in connection with
any such goods and (ii) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods.
EXHIBIT B
IRREVOCABLE PROXY
The undersigned hereby appoints __________________________________
("Secured Party"), as Proxy with full power of substitution, and hereby
authorizes Secured Party to represent and vote (or to execute a consent in lieu
of voting) all _________ shares of ___________ Stock, _____ par value, of
_________________________, a ____________ corporation, as represented by
Certificate No. _____ (for ______ shares), together with any other shares or
securities issued pursuant to a stock split or dividend, reorganization or other
event affecting or relating to any of the foregoing shares, owned by the
undersigned on the date of exercise hereof during the continuance of an Event of
Default under, and as defined in, that certain Security Agreement dated as of
March 8, 2004 by and among Secured Parties and Chex Services, Inc., at any
meeting or at any other time chosen by Secured Party in its sole discretion.
Date: , 20 Chex Services, Inc.
--------------------- -----
By
-----------------------------------
Its
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