SUBSIDIARIES SECURITY AGREEMENT
This Subsidiaries Security Agreement dated as of March 23, 1999 (this
"Agreement"), is made by each of the corporations listed on Annex I
(collectively, the "Guarantors"), in favor of Norwest Bank Minnesota, National
Association, as trustee for the Holders under the Indenture described below (in
such capacity, the "Trustee").
PRELIMINARY STATEMENTS:
1. MFN Financial Corporation, a Delaware corporation (the "Company"),
is a party to the Indenture of even date with this Agreement (as amended,
restated, supplemented or otherwise modified from time to time, the
"Indenture"), with the Trustee, under which the Company will issue its senior
secured notes to the holders thereof and their successors and assigns.
2. The Guarantors have entered into the Subsidiaries Guaranty Agreement
of even date with this Agreement (the "Guaranty"), made in favor of the Trustee
under which the Guarantors jointly and severally guaranteed the obligations and
liabilities of the Company under the Indenture.
3. It is a condition precedent to the issuance of the senior secured
notes that the Guarantors enter into this Agreement.
4. Each Guarantor is a direct or indirect subsidiary of the Company and
will derive substantial and direct benefits (which benefits are acknowledged by
each Guarantor) from the issuance of the senior secured notes and other benefits
to be provided to the Company under the Indenture.
AGREEMENT:
In consideration of the mutual agreements, provisions, covenants and
for other valuable consideration, the sufficiency of which is acknowledged, each
Guarantor agrees as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 TERMS DEFINED IN THE INDENTURE. Unless otherwise defined in this
Agreement, capitalized terms used in this Agreement and not otherwise defined
have the meanings given to such terms from time to time in the Indenture.
1.2 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"Accounts" means any and all "accounts," as such term is
defined in the UCC, whether now existing or hereafter arising or
acquired by a Guarantor, and in any event includes all accounts
receivable, contract rights, rights to payment and other obligations of
any kind owed to a Guarantor arising out of or in connection with the
sale or lease of merchandise, goods or commodities or the rendering of
services or arising from any other transaction, however evidenced, and
whether or not earned by performance, all guaranties, indemnities and
security with respect to the foregoing, and all letters of credit
relating thereto, in each case whether now existing or hereafter
acquired or arising.
"Agreement" has the meaning set forth in the preamble.
"Books" means all books, records and other written, electronic
or other documentation in whatever form maintained now or hereafter by
or for a Guarantor in connection with the ownership of its assets or
the conduct of its business or evidencing or containing information
relating to the Collateral, including (i) ledgers, (ii) records
indicating, summarizing, or evidencing such Guarantor's assets
(including Inventory and Rights to Payment), business operations or
financial condition, (iii) computer programs and software, (iv)
computer discs, tapes, files, manuals, spreadsheets, (v) computer
printouts and output of whatever kind, (vi) any other computer prepared
or electronically stored, collected or reported information and
equipment of any kind and (vii) any and all other rights now or
hereafter arising out of any contract or agreement between a Guarantor
and any service bureau, computer or data processing company or other
Person charged with preparing or maintaining any of such Guarantor's
books or records or with credit reporting, including with regard to
such Guarantor's Accounts.
"Chattel Paper" means any "chattel paper," as such term is
defined in the UCC, whether now existing or hereafter arising or
acquired by a Guarantor.
"Collateral" has the meaning specified in Section 2.1.
"Company" has the meaning set forth in the first preliminary
statement.
"Deposit Account" means any demand, time, savings, passbook or
like account now or hereafter maintained by or for the benefit of a
Guarantor with a bank, savings and loan association, credit union or
like organization and all funds and amounts therein, whether or not
restricted or designated for a particular purpose.
"Documents" means any and all "documents," as such term is
defined in the UCC, including without limitation all documents of
title, bills of lading, dock warrants, dock receipts, warehouse
receipts and other documents of a Guarantor, whether or not negotiable,
and includes all other documents which purport to be issued by a bailee
or agent and purport to cover goods in any bailee's or agent's
possession which are either identified or are tangible portions of an
identified mass, including such documents of title made available to a
Guarantor for the purpose of ultimate sale or exchange of goods or for
the purpose of loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing with goods in a manner
preliminary to their sale or exchange, in each case whether now
existing or hereafter acquired or arising.
"Equipment" means all "equipment," as such term is defined in
the UCC, whether now existing or hereafter acquired by a Guarantor in
all of its forms, wherever located, and in any event includes any and
all machinery, furniture, equipment, furnishings and fixtures in which
a Guarantor now or hereafter acquires any right, and all other goods
and tangible personal property (other than Inventory), including tools,
parts and supplies, computer and other electronic data processing
equipment and other office equipment, computer programs and related
data processing software, and all additions, substitutions,
replacements, parts, accessories, and accessions to and for the
foregoing, now owned or hereafter acquired, and including any of the
foregoing which are or are to become fixtures on real property.
"Financing Statements" has the meaning specified in Section 3.
"Fixtures" shall mean any "fixtures" as such term is defined
in the UCC, whether now owned or hereafter acquired by a Guarantor.
"General Intangibles" means any "general intangibles," as such
term is defined in the UCC, whether now existing or hereafter arising
or acquired by a Guarantor, and in any event includes (i) all tax and
other refunds, rebates or credits of every kind and nature to which
Guarantor is now or hereafter may become entitled, (ii) all goodwill,
choses in action and causes of action, whether legal or equitable,
whether in contract or tort and however arising, (iii) all Intellectual
Property Collateral, (iv) all uncertificated securities and interests
in limited and general partnerships and limited liability companies,
(v) all rights of stoppage in transit, replevin and reclamation, (vi)
all licenses, permits, consents, indulgences and rights of whatever
kind issued in favor of or otherwise recognized as belonging to a
Guarantor by any Governmental Authority and (vii) all indemnity
agreements, guaranties, insurance policies and other contractual,
equitable and legal rights of whatever kind or nature; in each case
whether now existing or hereafter acquired or arising.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation or other
entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guarantor" has the meaning set forth in the preamble.
"Guaranty" has the meaning set forth in the second preliminary
statement.
"Indenture" has the meaning set forth in the first preliminary
statement.
"Insolvency Default" means a Default under Section
9.01(a)(vii) or Section 9.01(a)(viii) of the Indenture.
"Instruments" means any and all negotiable instruments,
certificated securities and every other writing which evidences a right
to the payment of money, in each case whether now existing or hereafter
acquired by a Guarantor.
"Intellectual Property Collateral" means the following
properties and assets owned or held by a Guarantor or in which a
Guarantor otherwise has any interest, now existing or hereafter
acquired or arising:
(A) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and
royalties with respect to any licenses (including without
limitation such patents, patent applications and patent
licenses as described in Schedule E), present or future
infringement thereof, all rights arising therefrom and
pertaining thereto and all reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof;
(B) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship
(including titles), whether or not the underlying works of
authorship have been published and whether said copyrights are
statutory or arise under the common law, and all other rights
and works of authorship, all rights, claims and demands in any
way relating to any such copyrights or works, including
royalties and rights to xxx for past, present or future
infringement, and all rights of renewal and extension of
copyright;
(C) all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications
for registration of such trademarks, service marks and trade
names, all licenses relating to any of the foregoing and all
income and royalties with respect to any licenses (including
without limitation such marks, names, applications and
licenses as described in Schedule E), whether registered or
unregistered and wherever registered, all rights to xxx for
past, present or future infringement or unconsented use
thereof, all rights arising therefrom and pertaining thereto
and all reissues, extensions and renewals thereof;
(D) all trade secrets, confidential information, customer lists,
license rights, advertising materials, operating manuals,
methods, processes, know-how, sales literature, drawings,
specifications, blue prints, descriptions, inventions name
plates and catalogs; and
(E) the entire goodwill of or associated with the businesses now
or hereafter conducted by a Guarantor connected with an
symbolized by any of the aforementioned properties and assets.
"Inventory" means any "inventory," as such term is defined in
the UCC, wherever located, whether now owned or hereafter acquired by a
Guarantor, and in any event includes all goods (including goods in
transit) which are held for sale, lease or other disposition, including
those held for display or demonstration or out on lease or consignment
or to be furnished under a contract of service, or which are raw
materials, work in process, finished goods or materials used or
consumed in a Guarantor's business, and the resulting product or mass,
and all repossessed, returned, rejected, reclaimed and replevied goods,
together with all parts, components, supplies, packing and other
materials used or usable in connection with the manufacture,
production, packing, shipping, advertising, selling or furnishing of
such goods; and all other items hereafter acquired by a Guarantor by
way of substitution, replacement, return, repossession or otherwise,
and all additions and accessions thereto, and any Document representing
or relating to any of the foregoing at any time.
"Investment Property" shall have the meaning ascribed thereto
in Section 9-115 of the UCC in those jurisdictions in which such
definition has been adopted and shall include without limitation (i)
all securities, whether certificated or uncertificated, stocks, bonds,
interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares, (ii) all
securities entitlements of a Guarantor including without limitation,
the rights of a Guarantor to any securities account of a Guarantor and
financial assets held by a securities intermediary in such securities
account and any fee, credit balance or other money owing by any
securities intermediary with respect to that account, (iii) all
securities accounts held by a Guarantor, (iv) all commodity contracts
held by the Company and (v) all commodity accounts held by a Guarantor.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, collateral deposit arrangement, security
interest, encumbrance for the payment of money, lien (statutory or
other), preference, right of setoff, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease,
any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement (other
than a financing statement filed by a "true" lessor under Section 9-408
of the UCC) naming the owner of the asset to which such Lien relates as
debtor, under the UCC or other comparable law of any jurisdiction.
"Majority Holders" means Holders having at least 25% in
principal amount of the Outstanding Securities.
"Permitted Liens" means, without duplication (i) Liens on new
receivables securing any Working Capital Facility, (ii) Liens incurred
and pledges and deposits made in the ordinary course of business in
connection with liability insurance, workers' compensation,
unemployment insurance, old-age pensions, and other social security
benefits other than in respect of employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as amended, (iii)
Liens imposed by law, such as carriers', warehousemen's, mechanics',
materialmen's, and vendor's Liens, incurred in the ordinary course of
business and securing obligations which are not yet due or which are
being contested in good faith by appropriate proceedings, (iv) Liens
securing the payment of taxes, assessments, and governmental charges or
levies, either (a) not delinquent or (b) being contested in good faith
by appropriate legal or administrative proceedings and as to which
adequate reserves shall have been established on the books of the
relevant Person in conformity with GAAP, (v) zoning restrictions,
easements, rights of way, reciprocal easement agreements, operating
agreements, covenants, conditions, or restrictions on the use of any
parcel of property that are routinely granted in real estate
transactions or do not interfere in any material respect with the
ordinary conduct of the business of the Guarantors or the value of such
property for the purpose of such business, (vi) Liens on property
existing at the time such property is acquired, (vii) purchase money
Liens upon or in any property acquired or held in the ordinary course
of business to secure Indebtedness incurred solely for the purpose of
financing the acquisition of such property, (viii) Liens on the assets
of any Subsidiary of a Guarantor at the time such Subsidiary is
acquired, (ix) Liens with respect to obligations in outstanding amounts
not to exceed $5,000,000 for the Company and the Guarantors on a
consolidated basis at any particular time and that (a) are not incurred
in connection with the borrowing of money or obtaining advances or
credit (other than trade credit in the ordinary course of business) and
(b) do not in the aggregate interfere in any material respect with the
ordinary conduct of the business of the Company and the Guarantors, (x)
deposits to secure the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of the business of the Guarantors, (xi)
Liens resulting from any judgment or award, the time for the appeal or
petition for rehearing of which shall not have expired, or in respect
of which (a) such Guarantor shall in good faith be prosecuting an
appeal or proceeding for a review, (b) a stay of execution pending such
appeal or proceeding for review shall be in effect and (c) such
Guarantor shall have established on its books adequate reserves in
accordance with GAAP, (xii) rights of banks to set off deposits against
Indebtedness owed to such banks whether arising by law or pursuant to
deposit, cash collateral or similar agreements and (xiii) any
extension, renewal or replacement, in whole or in part, of any Lien
described in the foregoing clauses; provided, that any such extension,
renewal or replacement Lien is limited to the property or assets
covered by the Lien extended, renewed or replaced or substitute
property or assets, the value of which is not materially greater than
the value of the property or assets for which the substitute property
or assets are substituted.
"Proceeds" means "proceeds," as such term is defined in the
UCC, and in any event, includes whatever is receivable or received from
or upon the sale, lease, license, collection, use, exchange or other
disposition, whether voluntary or involuntary, of any Collateral or
other assets of a Guarantor, any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to or for the account of a
Guarantor from time to time with respect to any of the Collateral, any
and all payments (in any form whatsoever) made or due and payable to a
Guarantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of
the Collateral by any Governmental Authority (or any Person acting
under color of Governmental Authority), any and all other amounts from
time to time paid or payable under or in connection with any of the
Collateral or for or on account of any damage or injury to or
conversion of any Collateral by any Person, any and all other tangible
or intangible property received upon the sale or disposition of
Collateral, and all proceeds of proceeds.
"Rights to Payment" means all Accounts, and any and all rights
and claims to the payment or receipt of money or other forms of
consideration of any kind in, to and under all Chattel Paper,
Documents, General Intangibles, Instruments and Proceeds.
"Secured Obligations" means the obligations of each Guarantor
under the Guaranty.
"Transaction Documents" means the Indenture, the Collateral
Security Documents and any and all other agreements, instruments and
documents executed or delivered in connection therewith.
"Trustee" has the meaning set forth in the preamble.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; provided, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" shall
mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions
related to such provisions.
1.3 TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
SECTION 2. SECURITY INTEREST
2.1 GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, and to induce the Trustee to enter into
the Indenture and the Holders to accept and exchange the Securities and to
authenticate the Securities as provided therein, each Guarantor grants, pledges,
assigns, transfers, hypothecates and sets over to the Trustee for the benefit of
itself and the Holders, a security interest in all of such Guarantor's right,
title and interest in, to and under the following property, wherever located and
whether now existing or owned or hereafter acquired or arising (collectively,
the "Collateral"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Deposit
Accounts; (iv) all Documents; (v) all General Intangibles; (vi) all Instruments;
(vii) all Books; (viii) all Fixtures; (ix) all Investment Property; (x) all
Equipment, (xi) all Inventory, (xii) all money, cash or cash equivalents; and
(xiii) all products and Proceeds of any and all of the foregoing; provided, that
the Collateral will not include (a) General Intangibles which by their terms are
unassignable to the extent that consent to such an assignment is not obtained
and (b) intent to use trademark applications to the extent the pledge and
assignment hereunder renders such trademark applications void or voidable.
2.2 GUARANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) each Guarantor shall remain liable under any contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Trustee of any of the rights hereunder shall not release any Guarantor from any
of its duties or obligations under such contracts, agreements and other
documents included in the Collateral and (iii) neither the Trustee nor any
Holder shall have any obligation or liability under any contracts, agreements
and other documents included in the Collateral by reason of this Agreement, nor
shall the Trustee or any Holder be obligated to perform any of the obligations
or duties of a Guarantor thereunder or to take any action to collect or enforce
any such contract, agreement or other document included in the Collateral
hereunder.
2.3 CONTINUING SECURITY INTEREST. Each Guarantor agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 11.15.
SECTION 3. FINANCING STATEMENTS ETC.
The Guarantors shall execute, deliver, file and record concurrently
with the execution of this Agreement, and at any time and from time to time
thereafter, all financing statements, continuation financing statements,
termination statements, security agreements, chattel mortgages, assignments,
patent, copyright and trademark collateral assignments, fixture filings, blocked
account agreements, warehouse receipts, documents of title, affidavits, reports,
notices, schedules of account, letters of authority and all other documents and
instruments, in form satisfactory to the Trustee (the "Financing Statements"),
and take all other action, at Guarantors' expense, to perfect and continue
perfected, maintain the priority of or provide notice of the Trustee's security
interest in the Collateral and to accomplish the purposes of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In addition to and not in limitation of the representations and
warranties of the Guarantors set forth in the Guaranty, each Guarantor
represents and warrants to the Trustee that:
4.1 LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. Each Guarantor's
chief executive office, corporate office and principal place of business is
located at the address set forth in Schedule A, and all other locations where
such Guarantor conducts business or Collateral is kept are set forth in Schedule
A.
4.2 LOCATIONS OF BOOKS. All locations where Books pertaining to the
Rights to Payment are kept, including all equipment necessary for accessing such
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping any Books or collecting Rights to
Payment for each Guarantor, are set forth in Schedule B.
4.3 TRADE NAMES AND TRADE STYLES. All trade names and trade styles
under which each Guarantor presently conducts its business operations are set
forth in Schedule C, and, except as set forth in Schedule C, no Guarantor has,
at any time during the preceding five years (i) been known as or used any other
corporate, trade or fictitious name, (ii) changed its name, (iii) been the
surviving or resulting corporation in a merger or consolidation or (iv) acquired
through asset purchase or otherwise any business of any Person.
4.4 OWNERSHIP OF COLLATERAL. Each Guarantor is, and, except as
permitted by Section 5.9, will continue to be, the legal and beneficial owner of
the Collateral (or, in the case of after-acquired Collateral, at the time such
Guarantor acquires rights in such Collateral, will be the legal and beneficial
owner thereof), and has good, indefeasible and merchantable title to the
Collateral free and clear of any and all Liens other than Permitted Liens.
4.5 ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This Agreement
creates a valid and continuing security interest which is enforceable against
the Collateral in which each Guarantor now has rights and will create a security
interest which is enforceable against the Collateral in which such Guarantor
hereafter acquires rights at the time such Guarantor acquires any such rights
and (ii) subject to Permitted Liens and assuming the filing by such Guarantor of
the Financing Statements, the possession of Instruments and the control over
Investment Property, the Trustee has a perfected and first priority security
interest in the Collateral in which each Guarantor now has rights, and will have
a perfected and first priority security interest in the Collateral in which such
Guarantor hereafter acquires rights at the time such Guarantor acquires any such
rights, in each case for the Trustee's own benefit or for the benefit of the
Holders, and in each case securing the payment and performance of the Secured
Obligations. All action necessary or desirable to protect and perfect such
security interest in the existing Collateral under the UCC has been duly taken.
4.6 OTHER FINANCING STATEMENTS. Other than (i) financing statements or
similar filings naming the owner of the asset to which such lien relates as
debtor, under the UCC or any comparable law ("UCC Financing Statements")
disclosed to the Trustee and filed in connection with the Permitted Liens and
(ii) UCC Financing Statements in favor of the Trustee in its capacity as Trustee
for the benefit of itself and the Holders under the Indenture and any other
Transaction Documents, no effective UCC Financing Statement naming a Guarantor
as debtor, assignor, Guarantor, mortgagor, pledgor or the like and covering all
or any part of the Collateral is on file in any filing or recording office in
any jurisdiction.
4.7 RIGHTS TO PAYMENT. The Rights to Payment represent valid, binding
and enforceable obligations of the account debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in accordance
with the terms and provisions contained in any documents related thereto, and
are and will be genuine, free from Liens other than Permitted Liens, and not
subject to any adverse claims, counterclaims, setoffs, defaults, disputes,
defenses, discounts, retainages, holdbacks or conditions precedent of any kind
of character, except to the extent permitted under the Indenture and for
ordinary course setoffs and asserted claims or to the extent, if any, that such
account debtors or other Persons may be entitled to normal and ordinary course
trade discounts, returns, adjustments and allowances in accordance with Section
5.15, or as otherwise disclosed to the Trustee in writing;
(A) no Guarantor has assigned any of its rights under the Rights
to Payment except as provided in this Agreement or as set
forth in the Indenture or other Transaction Documents; and
(B) no Guarantor has knowledge of any fact or circumstance which
would impair the validity or collectible of any of the Rights
to Payment.
4.8 INVENTORY. With respect to any Inventory in which the Trustee is
granted a security interest pursuant to the terms of this Agreement, (i) such
Inventory is located at the locations set forth on Schedule A, (ii) no Inventory
is now, or shall at any time or times hereafter be stored with a bailee,
warehouseman or similar party (except as disclosed on Schedule D) without the
Trustee's prior written consent, and if the Trustee gives such written consent,
the Guarantors will concurrently therewith at the Trustee's reasonable request
use its best efforts to cause any such bailee, warehouseman or similar party to
issue and deliver to the Trustee in form and substance acceptable to the
Trustee, warehouse receipts therefor in the Trustee's name, (iii) such Inventory
is of good and merchantable quality, free from any material defects, (iv) such
Inventory is not subject to any licensing, patent, royalty, trademark, trade
name or copyright agreements with any third parties which would require any
consent of any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party as a precondition of such sale or other
disposition and (v) the completion of manufacture, sale or other disposition of
such Inventory by the Trustee following a Default or an Event of Default will
not require the consent of any Person and will not constitute a breach or
default under any contract or agreement to which a Guarantor is a party or to
which such Inventory is subject.
4.9 INTELLECTUAL PROPERTY. Except as set forth in Schedule E, the
Guarantors do not own, possess or use under any licensing arrangement any
patents, copyrights, trademarks, service marks or trade names, nor is there
currently pending before any Governmental Authority any application for
registration of any patent, copyright, trademark, service xxxx or trade name;
(A) all patents, copyrights, trademarks, service marks and trade
names are subsisting and none have been adjudged invalid or
unenforceable in whole or in part;
(B) all maintenance fees required to be paid on account of any
patents have been timely paid for maintaining such patents in
force, and, to the Guarantor's knowledge, each of the patents
is valid and enforceable;
(C) to the Guarantor's knowledge after due inquiry, no material
infringement or unauthorized use presently is being made of
any Intellectual Property Collateral by any Person;
(D) each Guarantor is the sole and exclusive owner of the
Intellectual Property Collateral identified on Schedule E
(other than Intellectual Property Collateral licensed by such
Guarantor) and the past, present and contemplated future use
of such Intellectual Property Collateral by the Guarantors has
not, does not and will not infringe or violate any right,
privilege or license agreement of or with any other Person;
and
(E) each Guarantor either owns, has material rights under, is a
party to, or an assignee of a party to all material licenses,
patents, patent applications, copyrights, service marks,
trademarks, trademark applications, trade names and all other
Intellectual Property Collateral necessary to continue to
conduct its business as heretofore conducted.
4.10 EQUIPMENT. None of the Equipment or other Collateral is affixed to
real property, except Collateral with respect to which the Guarantors have made
all fixture filings required to perfect and protect the priority of the
Trustee's security interest in all such Collateral which may be fixtures as
against all Persons having an interest in the premises to which such property
may be affixed.
4.11 DEPOSIT ACCOUNTS. The names and addresses of all financial
institutions at which the Guarantors maintain their respective Deposit Accounts,
and the account numbers and account names of such Deposit Accounts, are set
forth in Schedule F.
4.12 CHATTEL PAPER AND INSTRUMENTS. All action necessary to protect and
perfect the security interest of the Trustee in all Instruments (including the
delivery of all originals thereof to the Trustee) has been duly taken. With
respect to Chattel Paper in which the Trustee is granted a security interests
under the terms of this Agreement:
(A) all action necessary to protect and perfect the security
interest in the specific goods underlying Chattel Paper has
been duly taken;
(B) all original documentation evidencing Chattel Paper is in the
possession of the Guarantors; and
(C) all original documentation evidencing Chattel Paper has been
marked with a legend as described in Section 5.13.
SECTION 5. COVENANTS
In addition to and not in limitation of the covenants of the Guarantors
set forth in the Guaranty, so long as any of the Secured Obligations remain
unsatisfied, each Guarantor agrees that:
5.1 DEFENSE OF COLLATERAL. Each Guarantor will defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Trustee other than holders of Permitted
Liens.
5.2 PRESERVATION OF COLLATERAL. Each Guarantor shall maintain, preserve
and protect the Collateral which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, except as permitted by the Indenture.
5.3 COMPLIANCE WITH LAWS, ETC. Each Guarantor will comply with all
requirements of law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act) relating in a
material way to the possession, operation, maintenance and control of the
Collateral, except such as may be contested in good faith or as to which a bona
fide dispute may exist and except to the extent that noncompliance could not
reasonably be expected to materially adversely affect the value of the
Collateral or the worth of the collateral as collateral security or have a
Material Adverse Effect.
5.4 LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. Each Guarantor will
(i) keep all Books pertaining to the Rights to Payment at the locations set
forth in Schedule B and (ii) give at least thirty days' prior written notice to
the Trustee of (a) any changes in any such location where Books pertaining to
the Rights to Payment are kept, including any change of name or address of any
service bureau, computer or data processing company or other Person preparing or
maintaining any Books or collecting Rights to Payment for such Guarantor or (b)
any changes in the location of such Guarantor's chief executive office or
principal place of business.
5.5 LOCATION OF COLLATERAL AND DEPOSIT ACCOUNTS. Each Guarantor will
(i) keep the Collateral at the locations set forth in Schedule A or Schedule D
and not remove the Collateral from such locations (other than Collateral in
transit between locations listed in Schedule A or Schedule D in the ordinary
course of business and disposals of Collateral permitted by clause (i) below)
except upon at least thirty days' prior written notice of any removal to the
Trustee, (ii) give the Trustee at least thirty days' prior written notice of any
change in the locations set forth in Schedule A or Schedule D and (iii) give the
Trustee at least thirty days' prior written notice of the creation and
maintenance of any Deposit Account not set forth on Schedule F.
5.6 CHANGE IN NAME, IDENTITY OR STRUCTURE. Each Guarantor will give the
Trustee at least thirty days' prior written notice of (i) any change in name,
(ii) any changes in, additions to or other modifications of its trade names and
trade styles set forth in Schedule C and (iii) any changes in its identity or
structure in any manner which might make any Financing Statement filed hereunder
incorrect or misleading in such a manner as would require the refiling of
Financing Statements under the UCC.
5.7 MAINTENANCE OF RECORDS. Each Guarantor will keep accurate and
complete Books with respect to the Collateral, and such Guarantor shall legend
the Books pertaining to such Collateral with an appropriate disclosure of the
Trustee's security interest hereunder.
5.8 DISPOSITION OF COLLATERAL. No Guarantor will surrender or lose
possession of (other than to the Trustee), sell, lease, rent, or otherwise
dispose of or transfer any of the Collateral or any right or interest therein,
except to the extent permitted by the Indenture.
5.9 LIENS. Other than liens in favor of the Trustee in its capacity as
Trustee under the Indenture and Permitted Liens, each Guarantor will keep the
Collateral free of all Liens.
5.10 EXPENSES. Each Guarantor will maintain, keep and preserve the
Collateral at its own cost and expense in accordance with its customary business
practices.
5.11 LEASED PREMISES. At the Trustee's request, each Guarantor will use
its best efforts to obtain from each Person from whom such Guarantor leases any
premises at which any Collateral is at any time present such subordination,
waiver, consent and estoppel agreements as the Trustee may reasonably require,
in form and substance reasonably satisfactory to the Trustee.
5.12 RIGHTS TO PAYMENT. Each Guarantor will:
(A) with such frequency as the Trustee may reasonably require upon
the occurrence and during the continuance of an Insolvency
Default or an Event of Default, furnish to the Trustee (i)
master customer listings, including all names and addresses,
together with copies or originals (as requested by the
Trustee) of documents, customer statements, repayment
histories and present status reports relating to the Accounts,
(ii) accurate records and summaries of Accounts, including
detailed agings specifying the name, face value and date of
each invoice, and listings of Accounts that are disputed or
have been canceled and (iii) such other matters and
information relating to the Accounts as the Trustee shall from
time to time reasonably request;
(B) in accordance with its sound business judgment perform and
comply in all material respects with its obligations in
respect of the Accounts and other Rights to Payment;
(C) upon the request of the Trustee (i) at any time, notify all or
any designated portion of the account debtors and other
obligors on the Rights to Payment of the security interest
hereunder and (ii) if an Insolvency Default or an Event of
Default has occurred and is continuing, notify the account
debtors and other obligors on the Rights to Payment or any
designated portion thereof that payment shall be made directly
to the Trustee or to such other Person or location as the
Trustee shall specify; and
(D) establish such lockbox, blocked account or similar
arrangements for the payment of the Accounts and other Rights
to Payment as the Trustee shall require.
5.13 DOCUMENTS ETC. Each Guarantor will (i) immediately deliver to the
Trustee, or an agent designated by it, appropriately endorsed or accompanied by
appropriate instruments of transfer or assignment, all Documents and Instruments
and all other Rights to Payment at any time evidenced by promissory notes, trade
acceptances or other instruments and (ii) xxxx all Documents and Chattel Paper
with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security interest of Norwest Bank Minnesota,
National Association, as trustee, for the benefit of itself and certain
holders." With respect to Chattel Paper in which the Trustee is granted a
security interests under the terms of this Agreement, each Guarantor will
(A) take all action necessary to protect and perfect the security
interest in the specific goods underlying Chattel Paper;
(B) take possession of all original documentation evidencing
Chattel Paper; and
(C) not sell or transfer any Chattel Paper, whether in the
ordinary course of business or otherwise.
5.14 INVENTORY. Each Guarantor will:
(A) at such times as the Trustee shall reasonably request but in
any event not more than once each fiscal year, prepare and
deliver to the Trustee a report of all Inventory, in form and
substance satisfactory to the Trustee; and
(B) upon the request of the Trustee after an Insolvency Default or
an Event of Default has occurred and is continuing, take a
physical listing of the Inventory and promptly deliver a copy
of such physical listing to the Trustee.
5.15 EQUIPMENT. Each Guarantor will:
(A) upon the Trustee's reasonable request but in any event not
more than once each fiscal year, prepare and deliver to the
Trustee a report of each item of Equipment, in form and
substance satisfactory to the Trustee; and
(B) upon the request of the Trustee after an Insolvency Default or
an Event of Default has occurred and is continuing, take a
physical listing of the Equipment and promptly deliver a copy
of such physical listing to the Trustee.
5.16 INTELLECTUAL PROPERTY COLLATERAL. Each Guarantor will:
(A) not enter into any agreements or transactions (including any
license or royalty agreement) pertaining to any Intellectual
Property Collateral except in the ordinary course of business;
(B) if reasonably within such Guarantor's abilities, not allow or
suffer any Intellectual Property Collateral to become
abandoned, nor any registration thereof to be terminated,
forfeited, expired or dedicated to the public unless such
Intellectual Property Collateral is no longer useful or
necessary to the operation of its business;
(C) diligently prosecute all applications for patents, copyrights
and trademarks useful and necessary to the operation of its
business, and file and prosecute any and all continuations,
continuations-in-part, applications for reissue, applications
for certificate of correction and like matters as shall be
reasonable and appropriate in accordance with prudent business
practice, and promptly and timely pay any and all maintenance,
license, registration and other fees, taxes and expenses
incurred in connection with any Intellectual Property
Collateral; and
(D) provide the Trustee on a quarterly basis with a list of all
new applications and registrations for United States and
foreign patents, copyrights, trademarks, service marks or
trade names, which such new applications and registrations
shall be subject to the terms and conditions of the Indenture
and this Agreement.
5.17 NOTICES, REPORTS AND INFORMATION. Each Guarantor will (i) furnish
to the Trustee such statements and schedules further identifying and describing
the Collateral and such other reports and other information in connection with
the Collateral as the Trustee may reasonably request, all in reasonable detail
and (ii) upon the reasonable request of the Trustee make such demands and
requests for information and reports as such Guarantor is entitled to make in
respect of the Collateral.
5.18 FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and from
time to time and at the sole expense of the Guarantors, each Guarantor shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further actions as are necessary to obtain the full
benefits of this Agreement and of the rights and powers herein granted,
including without limitation (i) upon the written request of the Trustee, using
its best efforts to secure all consents and approvals necessary or appropriate
for the assignment to or for the benefit of the Trustee for the benefit of
itself and the Holders, of any license or contract held by such Guarantor or to
which such Guarantor has any rights not heretofore assigned, or any other
General Intangible which by its terms is unassignable, (ii) in accordance with
Section 5.02 of the Indenture, filing any financing or continuation statements
under the UCC with respect to the Liens and security interests granted hereunder
or under any other Transaction Document, (iii) transferring Collateral to the
Trustee's possession for the benefit of itself and the Holders (if a security
interest in such Collateral can be perfected only by possession, but not
including any Collateral consisting of Chattel Paper, which shall remain in such
Guarantor's possession in accordance with Section 4.12 hereof) and (iv) using
its best efforts to obtain waivers of Liens, if any exist, from landlords and
mortgagees in accordance with the Indenture. Each Guarantor also hereby
authorizes the Trustee, for the benefit of itself and the Holders to file any
such financing or continuation statements without the signature of such
Guarantor to the extent permitted by applicable law. If any amount payable under
or in connection with any of the collateral is or shall become evidenced by any
Instrument, such Instruments, other than checks and Securities received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
the Trustee immediately upon such Guarantor's receipt thereof.
5.19 RIGHT OF INSPECTION. The Trustee, or any agent or employee
designated by the Trustee in writing, has the right, from time to time after the
date of this Agreement, to call at the Guarantor's place or places of business
(or any other place where the Collateral or any information relating to the
Collateral is kept or located) during reasonable business hours and, without
unreasonable hindrance or delay, (i) to inspect, audit, check and make copies of
and extracts from the Guarantor's books, records, journals, orders, receipts and
any correspondence and other data relating to the Guarantor's business or to any
transactions between the parties thereto and (ii) to make such verification
concerning the Collateral as the Trustee may consider reasonable under the
circumstances.
SECTION 6. COLLECTION OF RIGHTS TO PAYMENT
Until the Trustee exercises its rights hereunder to collect Rights to
Payment, each Guarantor shall endeavor in the first instance diligently to
collect all amounts due or to become due on or with respect to the Rights to
Payment. At the request of the Trustee, upon and after the occurrence of any
Default or Event of Default, all remittances received by the Guarantors shall be
held in trust for the Trustee and, in accordance with the Trustee's
instructions, remitted to the Trustee or deposited to an account with the
Trustee in the form received (with any necessary endorsements or instruments of
assignment or transfer).
SECTION 7. AUTHORIZATION; TRUSTEE APPOINTED ATTORNEY-IN-FACT
Each Guarantor hereby irrevocably constitutes and appoints the Trustee,
for the benefit of itself, the Holders and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Guarantor and in
the name of such Guarantor or in its own name, from time to time in the
Trustee's sole discretion for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and deliver any
and all documents which may be necessary or desirable to accomplish the purposes
of this Agreement and, without limiting the generality of the foregoing, hereby
grants to the Trustee, for the benefit of itself and the Holders, the power and
right, on behalf of such Guarantor, without notice to or assent by such
Guarantor, and at any time, to do the following:
(A) sign any of the Financing Statements which must be executed or
filed to perfect or continue perfected, maintain the priority
of or provide notice of the Trustee's security interest in the
Collateral;
(B) take possession of and endorse any securities, acceptances,
checks, drafts, money orders or other forms of payment or
security and collect any Proceeds of any Collateral;
(C) sign and endorse any invoice or xxxx of lading relating to any
of the Collateral, warehouse or storage receipts, drafts
against customers or other obligors, assignments, notices of
assignment, verifications and notices to customers or other
obligors;
(D) notify the United States Postal Service authorities to change
the address for delivery of mail addressed to such Guarantor
to such address as the Trustee may designate and, without
limiting the generality of the foregoing, establish with any
Person lockbox or similar arrangements for the payment of the
Rights to Payment;
(E) receive, open and dispose of all mail addressed to such
Guarantor;
(F) send requests for verification of Rights to Payment to the
customers or other obligors of such Guarantor;
(G) contact, or direct such Guarantor to contact, all account
debtors and other obligors on the Rights to Payment and
instruct such account debtors and other obligors to make all
payments directly to the Trustee;
(H) assert, adjust, xxx for, compromise or release any claims
under any policies of insurance;
(I) exercise dominion and control over, and refuse to permit
further withdrawals from, Deposit Accounts maintained with the
Trustee;
(J) notify each Person maintaining lockbox or similar arrangements
for the payment of the Rights to Payment to remit all amounts
representing collections on the Rights to Payment directly to
the Trustee;
(K) ask, demand, collect, receive and give acquittances and
receipts for any and all Rights to Payment, enforce payment or
any other rights in respect of the Rights to Payment and other
Collateral, grant consents, agree to any amendments,
modifications or waivers of the agreements and documents
governing the Rights to Payment and other Collateral, and
otherwise file any claims, take any action or institute,
defend, settle or adjust any actions, suits or proceedings
with respect to the Collateral, as the Trustee may deem
necessary or desirable to maintain, preserve and protect the
Collateral, to collect the Collateral or to enforce the rights
of the Trustee with respect to the Collateral;
(L) execute any and all applications, documents, papers and
instruments necessary for the Trustee to use the Intellectual
Property Collateral and grant or issue any exclusive or
non-exclusive license or sublicense with respect to any
Intellectual Property Collateral;
(M) execute any and all endorsements, assignments or other
documents and instruments necessary to sell, lease, assign,
convey or otherwise transfer title in or dispose of the
Collateral;
(N) execute any and all such other documents and instruments, and
do any and all acts and things for and on behalf of such
Guarantor, which the Trustee may deem necessary or advisable
to maintain, protect, realize upon and preserve the
Collateral; and
(O) execute any and all such other documents and instruments, and
do any and all acts and things for and on behalf of such
Guarantor, which the Trustee may reasonably deem necessary or
advisable to maintain, protect and preserve the Trustee's
security interest in the Collateral.
The Trustee agrees that, except upon and during the occurrence of an Insolvency
Default or an Event of Default, it shall not exercise the power of attorney, or
any rights granted to the Trustee, pursuant to clauses (B) through (N) above.
The Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys. The
foregoing power of attorney is coupled with an interest and irrevocable so long
as the Secured Obligations have not been paid and performed in full. Each
Guarantor hereby ratifies, to the extent permitted by law, all that the Trustee
shall lawfully and in good faith do or cause to be done by virtue of and in
compliance with this Section 7.
SECTION 8. TRUSTEE PERFORMANCE OF GUARANTOR OBLIGATIONS
After a Default or an Event of Default has occurred and is continuing,
Trustee may perform or pay any obligation which a Guarantor has agreed to
perform or pay under or in connection with this Agreement, and the Guarantors
shall reimburse the Trustee on demand for any amounts paid by the Trustee
pursuant to this Section 8.
SECTION 9. TRUSTEE'S DUTIES
Notwithstanding any provision contained in this Agreement, but subject
to the following sentence and Section 5.07 of the Indenture, the Trustee shall
have no duty to exercise any of the rights, privileges or powers afforded to it
and shall not be responsible to any Guarantor, the Company, any Holder (as
defined in the Indenture), subject to the Indenture and the Trust Indenture Act
(as defined in the Indenture) or any other Person for any failure to do so or
delay in doing so. Beyond the exercise of reasonable care to assure the safe
custody of Collateral in the Trustee's possession and the accounting for moneys
actually received by the Trustee hereunder, the Trustee shall have no duty or
liability to exercise or preserve any rights, privileges or powers pertaining to
the Collateral.
SECTION 10. REMEDIES
10.1 REMEDIES. After an Event of Default has occurred and is
continuing, the Trustee shall have, in addition to all other rights and remedies
granted to it in this Agreement, the Indenture or any other Transaction
Document, all rights and remedies of a secured party under the UCC and other
applicable laws. Without limiting the generality of the foregoing, each
Guarantor agrees that the Trustee may:
(A) peaceably and without notice enter any premises of the
Guarantors, take possession of any the Collateral, remove or
dispose of all or part of the Collateral on any premises or
elsewhere, or, in the case of Equipment, render it
nonfunctional, and otherwise collect, receive, appropriate and
realize upon all or any part of the Collateral, and demand,
give receipt for, settle, renew, extend, exchange, compromise,
adjust, or xxx for all or any part of the Collateral, as the
Trustee may determine;
(B) require the Guarantors to assemble all or any part of the
Collateral and make it available to the Trustee at any place
and time designated by the Trustee;
(C) use or transfer any of the Guarantor's rights and interests in
any Intellectual Property Collateral, by license, by
sublicense (to the extent permitted by an applicable license)
or otherwise, on such conditions and in such manner as the
Trustee may determine;
(D) secure the appointment of a receiver of the Collateral or any
part thereof to the extent and in the manner provided by
applicable law;
(E) withdraw (or cause to be withdrawn) any and all funds from
Deposit Accounts; and
(F) sell, resell, lease, use, assign, transfer or otherwise
dispose of any or all of the Collateral in its then condition
or following any commercially reasonable preparation or
processing (utilizing in connection therewith any of the
Guarantors' assets, without charge or liability to the Trustee
therefor) at public or private sale, by one or more contracts,
in one or more parcels, at the same or different times, for
cash or credit, or for future delivery without assumption of
any credit risk, all as the Trustee deems advisable; provided,
that the Guarantors shall be credited with the net proceeds of
sale only when such proceeds are finally collected by the
Trustee. The Trustee shall have the right upon any such public
sale, and, to the extent permitted by law, upon any such
private sale, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption,
which right or equity of redemption each Guarantor hereby
releases, to the extent permitted by law. Each Guarantor
hereby agrees that the sending of notice by ordinary mail,
postage prepaid, to the address of such Guarantor set forth in
the Indenture, of the place and time of any public sale or of
the time after which any private sale or other intended
disposition is to be made, shall be deemed reasonable notice
thereof if such notice is sent ten days prior to the date of
such sale or other disposition or the date on or after which
such sale or other disposition or the date on or after which
such sale or other disposition may occur; provided, that the
Trustee may provide the Guarantors shorter notice or no
notice, to the extent permitted by the UCC or other applicable
law.
10.2 LICENSE. For the purpose of enabling the Trustee to exercise its
rights and remedies under this Section 10, the Company hereby grants, to the
extent it has the power and authority to do so, to the Trustee an irrevocable,
non-exclusive and assignable license (exercisable without payment or royalty or
other compensation to the Guarantors) to use, license or sublicense any
Intellectual Property Collateral.
10.3 PROCEEDS ACCOUNT. To the extent that any of the Secured
Obligations may be contingent, unmatured or unliquidated at such time as there
may exist an Insolvency Default or an Event of Default, the Trustee may, at its
election, (i) retain the proceeds of any sale, collection, disposition or other
realization upon the Collateral (or any portion thereof) in a special purpose
non-interest bearing restricted deposit account (the "Proceeds Account") created
and maintained by the Trustee for such purpose (which shall constitute a Deposit
Account included within the Collateral hereunder) until such time as the Trustee
may elect to apply such proceeds to the Secured Obligations, and each Guarantor
agrees that such retention of such proceeds by the Trustee shall not be deemed
strict foreclosure with respect thereto, (ii) in any manner elected by the
Trustee, estimate the liquidated amount of any such contingent, unmatured or
unliquidated claims and apply the proceeds of the Collateral against such amount
or (iii) otherwise proceed in any manner permitted by applicable law. Each
Guarantor agrees that the Proceeds Account shall be a blocked account and that
upon the irrevocable deposit of funds into the Proceeds Account, such Guarantor
shall not have any right of withdrawal with respect to such funds. Accordingly,
such Guarantor irrevocably waives until the termination of the security
interests granted under this Agreement in accordance with Section 11.15 the
right to make any withdrawal from the Proceeds Account and the right to instruct
the Trustee to honor drafts against the Proceeds Account.
10.4 APPLICATION OF PROCEEDS. Subject to Section 10.3, the cash
proceeds actually received from the sale or other disposition or collection of
Collateral upon the exercise of any remedy by the Trustee under this Section 10,
and any other amounts received in respect of the Collateral the application of
which is not otherwise provided for herein, shall be distributed to the Holders
pro rata and applied as follows:
First: to the payment of the costs and expenses of such sale, including
reasonable compensation to the Trustee and its agents and attorneys,
and of any judicial or private proceedings in which such sale may be
made, and of all other expenses, liabilities and advances made or
incurred by the Trustee, together with interest on such costs, expenses
and liabilities and on all advances made by the Trustee from the date
any such cost, expense or liability is past due or unpaid or any such
advance is made, in each case until paid in full;
Second: to the payment of any other fees, costs or other expenses
constituting obligations under the Transaction Documents other than
amounts payable under clause "First" above, together with interest on
each such amount at the interest rate(s) applicable to the Secured
Obligations pursuant to and in accordance with the Indenture from and
after the date such amount is due, owing or unpaid until paid in full;
Third: to the payment of any interest then due, owing or unpaid in
respect of any Security or any other Secured Obligation from the date
such amount is due, owing or unpaid until paid in full to be applied in
accordance with the Indenture;
Fourth: to the payment of the whole amount of principal then due, owing
or unpaid in respect of any Security or any other Secured Obligation
secured by this Agreement, to be applied in accordance with the
Indenture; and
Fifth: the surplus, if any, to be paid to the Guarantors or to whomever
lawfully may be entitled to receive such surplus.
The Guarantors shall remain liable to the Trustee for any deficiency which
exists after any sale or other disposition or collection of Collateral.
SECTION 11. MISCELLANEOUS
11.1 CERTAIN WAIVERS. Each Guarantor waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of marshaling of
the Collateral or other collateral or security for the Secured Obligations, (ii)
any right to require the Trustee (a) to proceed against any Person, (b) to
exhaust any other collateral or security for any of the Secured Obligations, (c)
to pursue any remedy in the Trustee's power or (d) to make or give any
presentments, demands for performance, notices of nonperformance, protests,
notices of protests or notices of dishonor in connection with any of the
Collateral and (iii) all claims, damages, and demands against the Trustee
arising out of the repossession, retention, sale or application of the proceeds
of any sale of the Collateral.
11.2 NOTICES. All notices or other communications hereunder shall be
given in the manner and to the addresses specified in the Indenture. All such
notices and other communications shall be effective (i) if delivered by hand or
pre-paid courier service, when delivered, (ii) if sent by mail, upon the earlier
of the date of receipt or five Business Days after deposit in the mail, first
class, postage prepaid, (iii) if sent by telex, upon receipt by the sender of an
appropriate answerback and (iv) if sent by facsimile transmission, upon receipt
of electronic confirmation of receipt.
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the
Trustee to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers and privileges that may
otherwise be available to the Trustee.
11.4 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(A) The Guarantors shall pay, indemnify, and hold the Trustee,
each Holder and each of their respective Affiliates, officers,
directors, employees, counsel, agents and attorneys-in-fact
harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses or disbursements, of any kind
or nature whatsoever in accordance with the terms and
conditions of the Indenture except to the extent arising from
the Trustee's or such Holder's gross negligence, bad faith,
wilful misconduct or fraud.
(B) The Guarantors agree to indemnify the Trustee against and hold
it harmless from any and all present and future stamp,
transfer, or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery, or
registration of, or otherwise with respect to, this Agreement.
(C) Any amounts payable to the Trustee and each Holder under this
Section 11.4 or otherwise under this Agreement if not paid
upon demand shall bear interest from the date of such demand
until paid in full, at the rate of interest set forth in the
Indenture for the Securities.
11.5 BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Guarantors and the Trustee, and their
respective successors and assigns; provided, that the Guarantors may not assign
any of its rights hereunder or interests herein without the written consent of
the Trustee and the Majority Holders. Each Guarantor acknowledges that upon any
assignment or other transfer by the Trustee or any Holder of any of the Secured
Obligations, the Trustee or such Holder may transfer its interest herein, or any
part thereof, to the assignee or transferee, who shall thereupon become vested
with all the rights, remedies, powers, security interests and liens herein
granted to the Trustee or such Holder, or the transferred part thereof, subject,
however, to the restrictions contained herein. No Persons other than the
Guarantors, the Holders, the Trustee and the respective assignees of the Holders
and the Trustee are intended to be benefited hereby or shall have any rights
hereunder, as third-party beneficiaries or otherwise.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT THE TRUSTEE
AND THE HOLDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
11.7 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GUARANTORS AND THE TRUSTEE
FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH CONSENT, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE
GUARANTORS AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH
IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE GUARANTORS AND THE TRUSTEE
FOR THE BENEFIT OF ITSELF AND THE HOLDERS, EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
11.8 WAIVER OF JURY TRIAL. THE GUARANTORS AND THE TRUSTEE FOR THE
BENEFIT OF ITSELF AND THE HOLDERS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
GUARANTORS AND THE TRUSTEE FOR THE BENEFIT OF ITSELF AND THE HOLDERS EACH AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION 11.8
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
11.9 AMENDMENT. This Agreement shall not be amended except by the
written agreement of the parties as provided in the Indenture.
11.10 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If; however, any provision of this Agreement
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction. This Agreement is to be read, construed and applied
together with the Indenture and the other Transaction Documents which, taken
together, set forth the complete understanding and agreement of the Trustee, the
Holders and the Guarantors with respect to the matters referred to herein and
therein.
11.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
11.12 NO INCONSISTENT REQUIREMENTS. Each Guarantor acknowledges that
this Agreement and the other Transaction Documents may contain covenants and
other terms and provisions variously stated regarding the same or similar
matters, and agrees that all such covenants, terms and provisions are cumulative
and all shall be performed and satisfied in accordance with their respective
terms; provided, in the event any terms or conditions contained herein conflict
with any term or condition set forth in the Indenture, such term or condition
set forth in the Indenture shall control.
11.13 ENTIRE AGREEMENT. This Agreement (i) integrates all the terms and
conditions mentioned herein or incidental hereto, (ii) supersedes all oral
negotiations and prior writings with respect to the subject matter hereof and
(iii) is intended by the parties as the final expression of the Agreement with
respect to the terms and conditions set forth in this Agreement and as the
complete and exclusive statement of the terms agreed to by the parties.
11.14 FURTHER ASSURANCES. Each Guarantor agrees upon the written
request of the Trustee or any Holder, to execute and deliver to the Trustee or
such Holder, from time to time, any additional instruments or documents
reasonably considered necessary by the Trustee or such Holder to cause this
Agreement to be, become or remain, valid and effective in accordance with its
terms.
11.15 THE INDENTURE. Anything in this Agreement to the contrary
notwithstanding, Section 5.02 of the Indenture is incorporated by reference
herein, mutatis mutandis.
11.16 TERMINATION. Upon payment and performance in full of all Secured
Obligations, this Agreement and the security interests granted under this
Agreement shall terminate and the Trustee shall promptly execute and deliver to
the Guarantors such documents and instruments reasonably requested by the
Guarantors as shall be necessary to evidence termination of this Agreement and
of all security interests given by the Guarantors to the Trustee hereunder;
provided, that the obligations of the each Guarantors under Section 11.4 shall
survive such termination.
* * * * *
Executed and delivered as of the date first above written.
MERCURY FINANCE COMPANY OF ALABAMA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF ARIZONA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF CALIFORNIA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF COLORADO
By:
Name:
Title:
MERCURY FINANCE COMPANY OF DELAWARE
By:
Name:
Title:
MERCURY FINANCE COMPANY OF FLORIDA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF GEORGIA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF IDAHO
By:
Name:
Title:
MERCURY FINANCE COMPANY OF ILLINOIS
By:
Name:
Title:
MERCURY FINANCE COMPANY OF INDIANA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF IOWA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF KANSAS
By:
Name:
Title:
MERCURY FINANCE COMPANY OF KENTUCKY
By:
Name:
Title:
MERCURY FINANCE COMPANY OF LOUISIANA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF MICHIGAN
By:
Name:
Title:
MERCURY FINANCE COMPANY OF MISSISSIPPI
By:
Name:
Title:
MERCURY FINANCE COMPANY OF MISSOURI
By:
Name:
Title:
MERCURY FINANCE COMPANY OF NEVADA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF NEW MEXICO
By:
Name:
Title:
MERCURY FINANCE COMPANY OF NEW YORK
By:
Name:
Title:
MERCURY FINANCE COMPANY OF NORTH CAROLINA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF OHIO
By:
Name:
Title:
MFC FINANCE COMPANY OF OKLAHOMA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF OREGON
By:
Name:
Title:
MERCURY FINANCE COMPANY OF PENNSYLVANIA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF SOUTH CAROLINA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF TENNESSEE
By:
Name:
Title:
MFC FINANCE COMPANY OF TEXAS
By:
Name:
Title:
MERCURY FINANCE COMPANY OF UTAH
By:
Name:
Title:
MERCURY FINANCE COMPANY OF VIRGINIA
By:
Name:
Title:
MERCURY FINANCE COMPANY OF WASHINGTON
By:
Name:
Title:
MERCURY FINANCE COMPANY OF WISCONSIN
By:
Name:
Title:
FILCO MARKETING COMPANY
By:
Name:
Title:
MFC FINANCIAL SERVICES, INC.
By:
Name:
Title:
GULFCO FINANCE COMPANY
By:
Name:
Title:
GULFCO INVESTMENT COMPANY
By:
Name:
Title:
MIDLAND FINANCE COMPANY
By:
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
ANNEX I
Guarantors
Mercury Finance Company of Alabama
Mercury Finance Company of Arizona
Mercury Finance Company of California
Mercury Finance Company of Colorado
Mercury Finance Company of Delaware
Mercury Finance Company of Florida
Mercury Finance Company of Georgia
Mercury Finance Company of Idaho
Mercury Finance Company of Illinois
Mercury Finance Company of Indiana
Mercury Finance Company of Iowa
Mercury Finance Company of Kansas
Mercury Finance Company of Kentucky
Mercury Finance Company of Louisiana
Mercury Finance Company of Michigan
Mercury Finance Company of Mississippi
Mercury Finance Company of Missouri
Mercury Finance Company of Nevada
Mercury Finance Company of New Mexico
Mercury Finance Company of New York
Mercury Finance Company of North Carolina
Mercury Finance Company of Ohio
MFC Finance Company of Oklahoma
Mercury Finance Company of Oregon
Mercury Finance Company of Pennsylvania
Mercury Finance Company of South Carolina
Mercury Finance Company of Tennessee
MFC Finance Company of Texas
Mercury Finance Company of Utah
Mercury Finance Company of Virginia
Mercury Finance Company of Washington
Mercury Finance Company of Wisconsin
Filco Marketing Company
MFC Financial Services, Inc.
Gulfco Finance Company
Gulfco Investment Company
Midland Finance Company
SCHEDULE A
LOCATIONS OF CHIEF EXECUTIVE OFFICE AND OTHER
LOCATIONS, INCLUDING OF COLLATERAL
a. Chief Executive Office and Principal Place of Business:
b. Other locations where the Guarantors conduct business or Collateral
is kept:
SCHEDULE B
LOCATIONS OF BOOKS PERTAINING TO RIGHTS TO PAYMENT
SCHEDULE C
TRADE NAMES AND TRADE STYLES: OTHER CORPORATE, TRADE OR FICTITIOUS NAMES, ETC.
SCHEDULE D
INVENTORY STORED WITH WAREHOUSEMEN OR ON LEASED PREMISES, ETC.
SCHEDULE E
PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
SCHEDULE F
DEPOSIT ACCOUNTS
