COMPANY SECURITY AGREEMENT
This Company Security Agreement dated as of [DATE], 1998 (this
"AGREEMENT"), is made by Mercury Finance Company, a Delaware corporation (the
"COMPANY"), in favor of [NAME OF TRUSTEE], as trustee for the Holders under
the Indenture described below (in such capacity, the "TRUSTEE").
PRELIMINARY STATEMENTS:
1. 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. It is a condition precedent to the issuance of the senior secured
notes that the Company enter into this Agreement and grant to the Trustee,
for the benefit of itself and the holders of such senior secured notes the
security interests provided in this Agreement to secure the obligations of
the Company described below.
AGREEMENT:
In consideration of the mutual agreements, provisions, covenants and for
other valuable consideration, the sufficiency of which is acknowledged, the
Company 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 the
Company, and in any event includes all accounts receivable, contract
rights, rights to payment and other obligations of any kind owed to the
Company 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
the Company 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 the Company'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 the
Company and any service bureau, computer or data processing company or
other Person charged with preparing or maintaining any of the Company's
books or records or with credit reporting, including with regard to the
Company'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 the
Company.
"COLLATERAL" has the meaning specified in SECTION 2.1.
"COMPANY" has the meaning set forth in the PREAMBLE.
"DEPOSIT ACCOUNT" means any demand, time, savings, passbook or like
account now or hereafter maintained by or for the benefit of the Company
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 the Company, 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 the Company 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 the Company in all of its
forms, wherever located, and in any event includes any and all machinery,
furniture, equipment, furnishings and fixtures in which the Company 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,
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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 the Company.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in the UCC, whether now existing or hereafter arising or acquired
by the Company, and in any event includes (i) all tax and other refunds,
rebates or credits of every kind and nature to which the Company 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 the Company 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.
"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 the
Company.
"INTELLECTUAL PROPERTY COLLATERAL" means the following properties and
assets owned or held by the Company or in which the Company 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
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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 the Company 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 the Company,
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 the Company'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 the
Company 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,
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interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares, (ii) all
securities entitlements of the Company including without limitation, the
rights of the Company to any securities account of the Company 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 the Company, (iv) all commodity contracts held by the Company and
(v) all commodity accounts held by the Company.
"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 LIEN" has the meaning set forth in the First Supplemental
Trust Indenture of even date with this Agreement between the Company and
the Trustee.
"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 the
Company, any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to or for the account of the Company 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 the Company 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 all Indenture Obligations (as defined in
the Indenture).
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"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 issue the Securities as provided therein, the Company 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 the Company'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 such trademark applications would be void or
voidable as a result of the pledge and collateral assignment hereunder.
2.2 COMPANY REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) the Company 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 the Company 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 the Company thereunder or to xxxx
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any action to collect or enforce any such contract, agreement or other
document included in the Collateral hereunder.
2.3 CONTINUING SECURITY INTEREST. The Company 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 Company shall execute and deliver to the Trustee 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, as the Trustee may
reasonably request, 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 Company set forth in the Indenture, the Company represents
and warrants to the Trustee that:
4.1 LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. The Company'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
the Company 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 the Company, are set forth in SCHEDULE B.
4.3 TRADE NAMES AND TRADE STYLES. All trade names and trade styles
under which the Company presently conducts its business operations are set
forth in SCHEDULE C, and, except as set forth in SCHEDULE C, the Company has
not, 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. The Company 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 the
Company acquires rights in such Collateral, will be the legal and beneficial
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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 the Company now has rights and will create a security
interest which is enforceable against the Collateral in which the Company
hereafter acquires rights at the time the Company acquires any such rights
and (ii) subject to Permitted Liens and assuming the filing 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 the Company now has rights, and will have a perfected
and first priority security interest in the Collateral in which the Company
hereafter acquires rights at the time the Company 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 the
Company as debtor, assignor, grantor, 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) the Company has not 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) the Company has no knowledge of any fact or circumstance which would
impair the validity or collectibility 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
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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 Company 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 the Company is a party or
to which such Inventory is subject.
4.9 INTELLECTUAL PROPERTY. Except as set forth in SCHEDULE E, the
Company does 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 Company's knowledge, each of the patents is valid and enforceable;
(C) to the Company's knowledge after due inquiry, no material infringement
or unauthorized use presently is being made of any Intellectual
Property Collateral by any Person;
(D) the Company is the sole and exclusive owner of the Intellectual
Property Collateral identified on SCHEDULE E (other than Intellectual
Property Collateral licensed by the Company) and the past, present and
contemplated future use of such Intellectual Property Collateral by
the Company has not, does not and will not infringe or violate any
right, privilege or license agreement of or with any other Person; and
(E) the Company 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 Company has supplied
the Trustee with all information and documentation necessary to make all fixture
filings required to perfect and protect the priority
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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 Company maintains its 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 Company; and
(C) all original documentation evidencing Chattel Paper has been marked
with a legend as described in SECTION 5.14.
SECTION 5. COVENANTS
In addition to and not in limitation of the covenants of the Company set
forth in the Indenture, so long as any of the Secured Obligations remain
unsatisfied, the Company agrees that:
5.1 DEFENSE OF COLLATERAL. The Company 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. The Company 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. The Company 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 effect the value of the
Collateral or the worth of the Collateral as Collateral Security or have a
Material Adverse Effect.
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5.4 LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. The Company 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 the Company or
(b) any changes in the location of the Company's chief executive office or
principal place of business.
5.5 LOCATION OF COLLATERAL AND DEPOSIT ACCOUNTS. The Company 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. The Company 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. The Company will keep accurate and complete
Books with respect to the Collateral, and at the Trustee's request the Company
shall legend the Books pertaining to such Collateral with an appropriate
disclosure of the Trustee's security interest hereunder.
5.8 DISPOSITION OF COLLATERAL. The Company will not 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, the Company will keep the
Collateral free of all Liens.
5.10 EXPENSES. The Company 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, the Company will use its
best efforts to obtain from each Person from whom the Company 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.
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5.12 RIGHTS TO PAYMENT. The Company 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. The Company 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) at the reasonable request of the
Trustee, 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 [NAME OF TRUSTEE], 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, the Company 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.
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5.14 INVENTORY. The Company 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. The Company 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. The Company 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 the Company'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.
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5.17 NOTICES, REPORTS AND INFORMATION. The Company 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 the Company is entitled to make in respect of the
Collateral.
5.18 FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and from time
to time upon the written consent of the Trustee and at the sole expense of the
Company, the Company shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further actions as the
Trustee may deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including without limitation (i) 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 the Company or to which the
Company has any rights not heretofore assigned, or any other General Intangible
which by its terms is unassignable, (ii) 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 such Collateral consists of Chattel Paper or if a security interest in such
Collateral can be perfected only by possession) and (iv) using its best efforts
to obtain waivers of Liens, if any exist, from landlords and mortgagees in
accordance with the Indenture. The Company 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 the Company 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 the Company'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 Company'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 Company's books, records, journals, orders, receipts and any
correspondence and other data relating to the Company'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, the Company 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 Company shall be held in trust
for the Trustee and, in accordance with the Trustee's instructions, remitted to
the Trustee or deposited to an
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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
The Company 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 the Company and in the
name of the Company 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 the Company, without notice to or assent by the Company, 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 the Company 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 the Company;
(F) send requests for verification of Rights to Payment to the customers
or other obligors of the Company;
(G) contact, or direct the Company 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;
15
(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 the Company, 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 the Company, 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 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. The
Company 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 COMPANY OBLIGATIONS
16
After a Default or an Event of Default has occurred and is continuing,
Trustee may perform or pay any obligation which the Company has agreed to
perform or pay under or in connection with this Agreement, and the Company shall
reimburse the Trustee on demand for any amounts paid by the Trustee pursuant to
this SECTION 8.
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SECTION 9. TRUSTEE'S DUTIES
Notwithstanding any provision contained in this Agreement, but subject to
the following sentence, the Trustee shall have no duty to exercise any of the
rights, privileges or powers afforded to it and shall not be responsible to the
Company 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, the Company agrees that the
Trustee may:
(A) peaceably and without notice enter any premises of the Company, 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 Company 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 Company'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 Company's 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 Company shall be credited with the net proceeds of sale
18
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 the
Company hereby releases, to the extent permitted by law. The
Company hereby agrees that the sending of notice by ordinary mail,
postage prepaid, to the address of the Company 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 Company 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 Company) 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 the Company
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. The
Company agrees that the Proceeds Account shall be a blocked account and that
upon the irrevocable deposit of funds into the Proceeds Account, the Company
shall not have any right of withdrawal with respect to such funds. Accordingly,
the Company 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:
19
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 Company or to whomever
lawfully may be entitled to receive such surplus.
The Company 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. The Company 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, when sent.
20
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 Company 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 Company agrees 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 Company and the Trustee, and their
respective successors and assigns; PROVIDED, that the Company may not assign any
of its rights hereunder or interests herein without the written consent of the
Trustee and the Majority Holders. The Company 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
Company, 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.
21
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 COMPANY 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 COMPANY
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 COMPANY 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 COMPANY 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 COMPANY 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
22
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 Company 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. The Company 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. The Company 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 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 Company such documents and instruments reasonably requested by the
Company as shall be necessary to evidence termination of this Agreement and
of all security interests given by the Company to the Trustee hereunder;
PROVIDED, that the obligations of the Company under SECTION 11.4 shall
survive such termination.
* * * * *
23
Executed and delivered as of the date first above written.
MERCURY FINANCE COMPANY
By:_____________________________________
Name:
Title:
[TRUSTEE]
By:_____________________________________
Name:
Title:
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 Company conducts 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
SUBSIDIARIES GUARANTY AGREEMENT
This Subsidiaries Guaranty Agreement dated as of [DATE], 1998 (this
"GUARANTY"), is made by each of the corporations listed on ANNEX I
(collectively, the "GUARANTORS" and each individually, a "GUARANTOR"), in favor
of [NAME OF TRUSTEE], as trustee for the Holders under the Indenture described
below (in such capacity, the "TRUSTEE").
PRELIMINARY STATEMENTS:
1. Mercury Finance Company, a Delaware corporation (the "COMPANY"), is a
party to the Indenture of even date with this Guaranty (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. It is a condition precedent to the issuance of the senior secured
notes that the Guarantors enter into this Guaranty.
3. 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, the
Guarantors, jointly and severally, issue this Guaranty and agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 TERMS DEFINED IN THE INDENTURE. Unless otherwise defined in this
Guaranty, capitalized terms used in this Guaranty 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 Guaranty, the following terms
have the following meanings:
"AGREEMENT" has the meaning set forth in the PREAMBLE.
"COMPANY" has the meaning set forth in the first preliminary
statement.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Sections 101-1330.
"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.
"INDENTURE" has the meaning set forth in the first preliminary
statement.
"MAJORITY HOLDERS" means Holders having at least 25% in principal
amount of the Outstanding Securities.
"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.
SECTION 2. GUARANTY
2.1 GUARANTY. Each Guarantor, jointly and severally, irrevocably,
absolutely and unconditionally guarantees to the Trustee for the benefit of
itself, the Holders and their respective successors, endorsees, transferees and
assigns, the full and punctual payment or performance when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all of the Indenture Obligations, including Indenture Obligations
in respect of amounts that would become due but for the operation of the
automatic stay under section 362(a) of the Bankruptcy Code or the operation of
sections 502(b) and 506(b) of the Bankruptcy Code. This Guaranty constitutes a
guaranty of payment and performance when due and not of collection, and each
Guarantor specifically agrees that it shall not be necessary or required that
the Trustee or any Holder whatsoever against the Company (or any other Person)
before or as a condition to the Indenture Obligations of such Guarantor under
this Guaranty.
2.2 INDENTURE OBLIGATIONS INDEPENDENT. The obligations under this Guaranty
are independent of the Indenture Obligations of the Company, and a separate
action or actions may be brought and prosecuted against each Guarantor whether
action is brought against the Company or whether the Company be joined in any
such action or actions.
2.3 WAIVER OF CERTAIN RIGHTS. Each Guarantor waives any and all rights
such Guarantor may have now or in the future under any statute, or at common
law, or at law or in equity, or otherwise, to require the Trustee or any Holder:
(A) to proceed against the Company or any other Person;
(B) to proceed against or exhaust any security for the Indenture
Obligations or any other indebtedness of the Company to the Trustee or
any Holder; or
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(C) to pursue any other remedy in the Trustee's or any such Holder's power
whatsoever.
It is agreed among each Guarantor, Trustee and the Holders that the waivers
contained in this SECTION 2.3 are of the essence to the transactions
contemplated by the Transaction Documents and that, but for this Guaranty and
such waivers, the Trustee would decline to enter into the Indenture and the
Holders would decline to purchase the Securities.
2.4 WAIVER OF CERTAIN DEFENSES. In addition to the waivers set forth in
SECTION 2.3, each Guarantor waives any defense arising by reason of any
disability or other defense of the Company, or the cessation from any cause
whatsoever of the liability of the Company, whether consensual or arising by
operation of law or any bankruptcy, insolvency or debtor relief proceeding, or
from any other cause, or any claim that such Guarantor's obligations hereunder
exceed or are more burdensome than those of the Company. Each Guarantor waives
any defense arising by reason of any statute of limitations affecting the
liability of the Company. Each Guarantor waives all rights and defenses arising
out of an election of remedies by the Trustee or any Holder, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for the Indenture Obligations, has destroyed such Guarantor's rights of
subrogation and reimbursement against the Company by operation of Section 580d
of the California Code of Civil Procedure (if applicable) or other applicable
law, and all rights or defenses such Guarantor may have by reason of protection
afforded to the Company with respect to the Indenture Obligations pursuant to
the antideficiency laws or other laws of the State of California (or other
applicable jurisdiction) limiting or discharging the Indenture Obligations. Each
Guarantor waives any benefit of; and any right to participate in, any security
or other guaranty now or hereafter held by the Trustee or any Holder securing
the Indenture Obligations.
2.5 WAIVER OF PRESENTMENTS, ETC. Each Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor and notices of acceptance of this Guaranty and of
the existence, creation, or incurring of new or additional Indenture Obligations
or any other indebtedness of the Company to the Trustee or any Holder.
2.6 SUBORDINATION. Any obligations of the Company to any Guarantor, now
or hereafter existing, are hereby fully subordinated in time and priority of
payment to the Indenture Obligations and all other indebtedness of the Company
to the Trustee or any Holder; PROVIDED, that in no event shall this SECTION 2.6
be deemed to grant any Guarantor a right of subrogation contrary to the terms of
SECTION 2.10. Such obligations of the Company to such Guarantor if the Trustee
so requests shall be enforced and performance received by such Guarantor as
trustee for the Trustee and such Holders and the proceeds thereof shall be paid
over to the Trustee and the Holders on account of the Indenture Obligations, but
without reducing or affecting in any manner the liability of such Guarantor
under the other provisions of this Guaranty.
2.7 REINSTATEMENT OF GUARANTY. If any payment or transfer of any interest
in property by the Company to the Trustee or any Holder in fulfillment of any
Indenture Obligation is rescinded or must at any time (including after the
return or cancellation of this Guaranty) be returned, in whole or in part, by
the Trustee or any Holder to the Company or any other Person, upon the
insolvency,
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bankruptcy or reorganization of the Company or otherwise, this Guaranty shall
be reinstated with respect to any such payment or transfer, regardless of any
such prior return or cancellation.
2.8 POWERS. It is not necessary for the Trustee or any Holder to inquire
into the powers of the Company or of the officers, directors, partners or agents
acting or purporting to act on its behalf, and any Indenture Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
2.9 TAXES.
(A) Any and all payments by the Guarantors to each Holder or the Trustee
under this Agreement shall be made free and clear of, and without
deduction or withholding for, any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each
Holder and the Trustee, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Holder's net
income by the jurisdiction under the laws of which such Holder or the
Trustee, as the case may be, is organized or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being referred to as "TAXES").
(B) In addition, the Guarantors shall pay any present or future stamp 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 (hereinafter referred to as "OTHER TAXES").
(C) The Guarantors shall indemnify and hold harmless each Holder and the
Trustee for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this SECTION 2.9) paid by the Holder or the Trustee and any
liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days from the date
the Holder or the Trustee makes written demand therefor.
(D) If the Guarantors shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder
to any Holder or the Trustee, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable
to additional sums payable under this SECTION 2.9) such Holder or
the Trustee, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made;
(ii) the Guarantors shall make such deductions, and
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(iii) the Guarantors shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(E) Within 30 days after the date of any payment by the Guarantors of
Taxes or Other Taxes, the Guarantors shall furnish to the Trustee the
original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Trustee.
2.10 WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in
this Guaranty or in any other Transaction Document to which any Guarantor is a
party, so long as any of the Indenture Obligations remain unsatisfied, each
Guarantor hereby expressly waives any right of subrogation, reimbursement,
indemnification and contribution (contractual, statutory or otherwise), against
the Company arising from the existence or performance of this Guaranty and each
Guarantor hereby expressly waives any right to enforce any remedy which the
Trustee or any Holder now has or may hereafter have against the Company, and
waives any benefit of, and any right to participate in, any security now or
hereafter held by the Trustee or any Holder securing the Indenture Obligations.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Each Guarantor jointly and severally represents and warrants to the Trustee
and each Holder as follows, which representations and warranties survive the
execution and delivery of this Guaranty:
3.1 CORPORATE EXISTENCE AND POWER. Each Guarantor (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the power and authority to own its
assets, carry on its business and execute, deliver, and perform its Indenture
Obligations under, this Guaranty and any other Transaction Document to which it
is a party, (iii) is duly qualified as a foreign corporation, and licensed and
in good standing, under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification or license except where failure to be so qualified or licensed
would not have a Material Adverse Effect and (iv) has all necessary governmental
licenses, authorizations, consents and approvals to own its assets and carry on
its business, and is in compliance with all applicable requirements of law of
any Governmental Authority except where failure to obtain such licenses,
authorizations, consents or approvals or comply with such laws would not have a
Material Adverse Effect.
3.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Guarantor of this Guaranty and any other Transaction
Document to which it is party have been duly authorized by all necessary
corporate action, and do not and will not (i) contravene the terms of any of
such Guarantor's constitutive documents, (ii) conflict with or result in any
breach or contravention of, or the creation of any lien under, any agreement to
which such Guarantor is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Guarantor or its Property is subject or
(iii) violate any requirement of law of any Governmental Authority.
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3.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, each Guarantor of
this Guaranty or any other Transaction Document to which it is a party or the
transactions contemplated hereby or thereby.
3.4 BINDING EFFECT. This Guaranty and each other Transaction Document to
which each Guarantor is a party constitute the legal, valid and binding
obligations of each Guarantor, enforceable against each Guarantor in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
3.5 REGULATED ENTITIES. No Guarantor, nor any Person controlling any
Guarantor or any Subsidiary of any Guarantor is (i) an "Investment Company"
within the meaning of the Investment Company Act of 1940 or (ii) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur or
guarantee Indebtedness.
SECTION 4. MISCELLANEOUS
4.1 APPLICATION OF PAYMENTS ON GUARANTY. All payments required to be made
by each Guarantor hereunder shall, unless otherwise expressly provided herein,
be made to the Trustee for the account of the Holders at the address of the
Trustee set forth in the Indenture. The Trustee will promptly distribute to each
Holder its pro rata share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Payments received from the
Guarantors shall be applied by the Trustee as follows;
FIRST: to the payment of the costs and expenses due under this Guaranty,
including reasonable compensation to the Trustee and its agents and
attorneys, 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 Indenture 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 Indenture
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 Indenture Obligation together with, to the
maximum extent permitted by law, interest thereon at the interest rate(s)
applicable to the Indenture Obligations pursuant to and in accordance with
the Indenture from the date such amount is due, owing or unpaid until paid
in full to be applied in accordance with the Indenture;
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FOURTH: to the payment of the whole amount of principal then due, owing or
unpaid in respect of any Security or any other Indenture Obligation secured
by this Guaranty to be applied in accordance with the Indenture; and
FIFTH: the surplus, if any, to be paid to the applicable Guarantor or to
whomever lawfully may be entitled to receive such surplus.
4.2 ASSIGNMENT. Any Holder may from time to time, without notice to the
Guarantors and without affecting each Guarantor's Indenture Obligations
hereunder, transfer its interest in the Indenture Obligations as provided in the
Indenture.
4.3 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.
4.4 BINDING EFFECT. This Guaranty 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
Indenture 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.
4.5 GOVERNING LAW. THIS GUARANTY 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.
4.6 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY 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 GUARANTY, 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
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HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS GUARANTY 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.
4.7 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
GUARANTY, 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 4.7 AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY.
4.8 AMENDMENT. This Guaranty shall not be amended except by the written
agreement of the parties as provided in the Indenture.
4.9 SEVERABILITY. Whenever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If; however, any provision of this Guaranty
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 Guaranty, or the validity or effectiveness of such provision
in any other jurisdiction. This Guaranty 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 Guaranty of the Trustee, the
Holders and the Guarantors with respect to the matters referred to herein and
therein.
4.10 COUNTERPARTS. This Guaranty 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 Guaranty.
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4.11 NO INCONSISTENT REQUIREMENTS. Each Guarantors acknowledges that this
Guaranty 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.
4.12 ENTIRE GUARANTY. This Guaranty (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 Guaranty with
respect to the terms and conditions set forth in this Guaranty and as the
complete and exclusive statement of the terms agreed to by the parties.
4.13 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 Guaranty to be, become or
remain, valid and effective in accordance with its terms.
4.14 TERMINATION. This Guaranty shall terminate and be of no further force
or effect upon the payment and performance in full of the Indenture Obligations
subject to the provisions of SECTION 2.9. Upon termination of this Guaranty,
the Trustee shall deliver to the Guarantors such documents as the Guarantors may
reasonably request to evidence such termination.
4.15 LIMITATION ON GUARANTEED INDENTURE OBLIGATIONS. Notwithstanding any
provision herein contained to the contrary, each Guarantor's liability hereunder
shall be limited to an amount not to exceed the amount which could be claimed by
the Trustee and Holders from such Guarantor under this Guaranty without
rendering such claim voidable or avoidable under section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute of common law. The
right of a Guarantor to contribution from other Guarantors or any other rights
such Guarantor may have, contractual or otherwise, will be taken into account in
making any determination under this SECTION 4.15.
4.16 CERTAIN ADDITIONAL CONSENTS AND WAIVERS (A) This Guaranty is
absolute, unconditional and irrevocable and is in no way conditioned or
contingent on the Company's performance of any obligation under the Indenture or
any other Transaction Document, any attempt to enforce in whole or in part any
of the Company's liabilities and Indenture Obligations to any Holder or the
existence or continuance of the Company or any other Person as a legal entity,
nor shall this Guaranty or each Guarantor's obligations hereunder be limited,
impaired, restricted or otherwise affected by the consolidation or merger of the
Company with or into any other entity, the sale, lease or other disposition by
the Company of all or substantially all of its assets to any other entity
(whether or not effected in compliance with the Transaction Documents), or the
bankruptcy or insolvency of the Company, the admission in writing by the Company
of its inability to pay its debts as they mature, or its making of a general
assignment for the benefit of, or entering into a composition or arrangement
with, creditors.
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(B) The Trustee and the other Holders may, at any time and from time to
time, without the consent of or notice to any Guarantor, except such notice as
may be required by applicable statute which cannot be waived, without incurring
responsibility to such Guarantor, and without impairing or releasing the
obligations of such Guarantor hereunder, upon or without any terms or conditions
and in whole or in part, (i) to the extent permitted by the Indenture, change
the manner; place and terms of payment or change or extend the time of payment
of, renew or alter any obligation of the Company hereby guaranteed, or in any
manner modify, amend or supplement the terms of the Indenture or other
Transaction Documents (other than this Guaranty) or any documents, instruments
or agreements executed in connection therewith (other than this Guaranty), and
this Guaranty shall apply to the Indenture Obligations and liabilities of the
Company, as changed, extended, renewed, modified, amended, supplemented or
altered in any manner, (ii) exercise or refrain from exercising any rights
against the Company or others (including such Guarantor) or otherwise act or
refrain from acting, (iii) settle or compromise any Indenture Obligations and
liabilities herein guaranteed or any Indenture Obligations and liabilities
(including any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and may subordinate the payment of all or any part thereof to
the payment of any Indenture Obligations and liabilities which may be due to the
Trustee, the other Holders or others, (iv) sell, exchange, release, surrender,
realize upon or otherwise deal with in any manner or in any order any property
pledged or mortgaged by anyone to secure or in any manner securing the Indenture
Obligations, any liabilities or obligation (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof or any other
Indenture Obligations or liabilities of the Company or such Guarantor to the
Holders or any offset thereagainst, (v) take and hold security or additional
security for any or all of the Indenture Obligations, (vi) apply any sums by
whomsoever paid or howsoever realized to any Indenture Obligations and
liabilities of the Company to the Holders regardless of what Indenture
Obligations and liabilities remain unpaid and (vii) in accordance with the
Indenture, assign their rights and interests under this Guaranty, the Indenture
or the other Transaction Documents, in whole or in part. Without limiting the
generality of the foregoing, each Guarantor hereby specifically waives such
Guarantor's rights and benefits under any statute, regulation, judicial decision
or other law which purports to exonerate or reduce the liability of a surety if
the underlying obligation is altered in any respect or if the rights and
remedies of the creditor against the principal in respect of a secured
obligation are in any way altered, impaired or suspended and agrees that, by so
doing, such Guarantor's obligations hereunder shall continue even if the Holders
alter any Indenture Obligations under the Indenture or the other Transaction
Documents (other than this Guaranty) in any respect or the Holders' remedies or
rights against the Company are in any way impaired or suspended without such
Guarantor's consent.
(C) No invalidity, irregularity or unenforceability of the Indenture
Obligations or liabilities of the Company under the Indenture or any other
Transaction Document shall affect, impair or be a defense to this Guaranty.
Each Guarantor hereby waives any and all benefits and defenses under any
statute, regulation, judicial decision or other law which purports to exonerate
or reduce the liability of a surety as a result of any disability or absence of
liability of the principal or any defense to liability or enforcement which the
principal may have and agrees that, by so doing, such Guarantor's obligations
and the guarantees granted hereunder shall continue even if the Company had no
liability at the time of execution of the Indenture or thereafter ceased or
cease to be liable. Each Guarantor also waives any and all benefits and defenses
under any statute, regulation, judicial decision or other law which purports to
limit the liability of a surety to that of the principal
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or to reduce the liability of a surety in proportion to any reduction in the
liability of the principal and agrees that, by so doing, such Guarantor's
obligations hereunder may be more burdensome than that of the Company.
(D) Each Guarantor, to the extent permitted under applicable law, hereby
waives any right, whether arising under any statute, regulation, judicial
decision or otherwise, to require the Trustee or any other Holder to (i) proceed
against the Company or any other Person acting as surety, guaranteeing or
providing collateral or other credit support for the Company's Indenture
Obligations under the Indenture or any other Transaction Document (a "THIRD
PARTY CREDIT SUPPORT PROVIDER"), (ii) proceed against or exhaust any security
received from the Company or any Third Party Credit Support Provider or (iii)
pursue any other right or remedy in the Trustee's or the other Holders' power
whatsoever.
(E) Each Guarantor further waives, to the extent permitted under
applicable law (i) any defense resulting from the absence, impairment or loss of
any right of reimbursement, subrogation, contribution or other right or remedy
of such Guarantor against the Company, any Third Party Credit Support Provider
or any security, whether resulting from an election by the Trustee and the other
Holders to foreclose upon security by judicial or nonjudicial sale or otherwise,
(ii) any setoff or counterclaim of the Company or any defense of any kind
(including defenses resulting from any disability) or the cessation or stay of
enforcement from any cause whatsoever of the liability of the Company (including
without limitation the lack of validity or enforceability of the Indenture or
any other Transaction Document), (iii) any right to exoneration, in whole or in
part, of sureties or Third Party Credit Support Providers which would otherwise
be applicable, (iv) any right of subrogation or reimbursement, any right of
contribution, any right to enforce any remedy which the Trustee and the other
Holders now have or may hereafter have against the Company, and any benefit of,
and any right to participate in, any security now or hereafter held or received
by the Holders (or the Trustee on their behalf), (v) except as required under
the Indenture, all presentments, demands for performance, notices of
non-performance, protests, notice of dishonor, notices of acceptance of this
Guaranty or of the existence, creation or incurring of new or additional
Indenture Obligations under the Indenture or the other Transaction Documents, or
any other notices of any kind and (vi) all valuation, appraisal, extension or
redemption laws now or hereafter in effect.
(F) Each Guarantor further specifically waives any and all benefits,
rights and defenses arising out of an election of remedies by the Trustee or any
other Holder even though that election of remedies (i) has destroyed such
Guarantor's rights of subrogation and reimbursement against the Company and all
rights or defenses such Guarantor may have by reason of protection afforded to
the Company with respect to the Indenture Obligations pursuant to antideficiency
laws or other laws limiting or discharging the Indenture Obligations or (ii)
would require the Trustee and the other Holders to foreclosure on all collateral
covered by the other Transaction Documents in one action or would prevent the
Trustee on behalf of itself and the Holders from bringing more than one action
to enforce the Indenture Obligations. Each Guarantor agrees by so doing that (i)
such Guarantor's obligations hereunder shall continue even if the Company had no
liability at the time of execution of the Indenture and other Transaction
Documents or thereafter ceased or ceases to be liable, (ii) that such
Guarantor's obligations hereunder may be more burdensome than that of the
Company and (iii) such Guarantor's obligations hereunder shall continue even if
the Trustee or any Holder alters
11
any obligations under the Indenture or the other Transaction Documents (other
than this Guaranty) in any respect or if the Trustee's or the Holder's
remedies or rights against the Company are in any way impaired or suspended
without such Guarantor's consent.
(G) Each Guarantor acknowledges that it has the ability, and hereby
assumes the obligation and responsibility, to keep informed of the financial
condition of the Company and any Third Party Credit Support Provider and of
other matters or circumstances affecting the ability of any of them to pay or
perform their respective obligations thereunder or the risk of nonpayment and
nonperformance. Each Guarantor hereby waives any obligation on the part of the
Trustee or any Holder to inform such Guarantor of the financial condition, or
any changes in financial condition, of the Company or any Third Party Credit
Support Provider or of any other matter or circumstance which might effect the
ability of the Company to pay and perform under the Indenture or any other
Transaction Document, or the risk of nonpayment or nonperformance.
* * * * *
Executed and delivered as of the day and year first above written.
[TO COME]
By:
----------------------------
Name:
Title:
[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 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
MFN Insurance Company
COMPANY PLEDGE AGREEMENT
This Company Pledge Agreement dated as of [DATE], 1998 (this "AGREEMENT"),
is made by Mercury Finance Company, a Delaware corporation (the "COMPANY"), in
favor of [NAME OF TRUSTEE], as trustee for Holders under the Indenture described
below (in such capacity, the "TRUSTEE").
PRELIMINARY STATEMENTS:
1. 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. It is a condition precedent to the issuance of the senior secured
notes that the Company enter into this Agreement and grant to the Trustee, for
the benefit of itself and the holders of such senior secured notes the security
interests provided in this Agreement to secure the obligations of the Company
described below.
AGREEMENT:
In consideration of the mutual agreements, provisions, covenants and for
other valuable consideration, the sufficiency of which is acknowledged, the
Company 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:
"AGREEMENT" has the meaning set forth in the PREAMBLE.
"COLLATERAL" is defined in SECTION 2.1.
"COMPANY" has the meaning set forth in the PREAMBLE.
"DISTRIBUTIONS" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of)
stock splits, reclassifications, warrants, options, non-cash dividends,
mergers, consolidations, and all other distributions (whether similar or
dissimilar to the foregoing) on or with respect to any Pledged Shares or
other shares of capital stock constituting Collateral, but shall not
include Dividends.
"DIVIDENDS" means cash dividends and cash distributions with respect
to any Pledged Shares or other Pledged Property made in the ordinary course
of business and not a liquidating dividend.
"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.
"PLEDGED PROPERTY" means all Pledged Shares and all other pledged
shares of capital stock, all assignments of any amounts due or to become
due, all other instruments which are now being delivered by the Company to
the Trustee or may from time to time hereafter be delivered by the Company
to the Trustee for the purpose of pledge under this Agreement or any other
Transaction Document, and all proceeds of any of the foregoing.
"PLEDGED SHARE ISSUER" means each Person identified in SCHEDULE I as
the issuer of the Pledged Shares identified opposite the name of such
Person; it being agreed that no insurance company shall be a Pledged Share
Issuer.
"PLEDGED SHARES" means all shares of capital stock of any Pledged
Share Issuer.
"COMPANY" is defined in the PREAMBLE.
"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. PLEDGE
2.1 GRANT OF SECURITY INTEREST. The Company pledges, hypothecates,
assigns, charges, mortgages, delivers, and transfers to the Trustee, for its
benefit and the ratable benefit of each of the
2
Holders, and grants to the Trustee, for its benefit and the ratable benefit of
the Holders, a continuing security interest in, all of the following property
(the "COLLATERAL"):
(A) all issued and outstanding shares of capital stock of each Pledged
Share Issuer identified on SCHEDULE I;
(B) all other Pledged Shares issued from time to time;
(C) all other Pledged Property, whether now or hereafter delivered to the
Trustee in connection with this Agreement;
(D) all Dividends, Distributions, interest and other payments and rights
with respect to any Pledged Property; and
(E) all proceeds of any of the foregoing.
2.2 SECURITY FOR INDENTURE OBLIGATIONS. This Agreement secures the
payment in full of all Indenture Obligations of the Company now or hereafter
existing under or in connection with the Indenture and each other Transaction
Document, including, without limitation, obligations for costs, fees and
expenses.
2.3 DELIVERY OF PLEDGED PROPERTY. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares, shall
be delivered to and held by or on behalf of the Trustee pursuant hereto, shall
be in suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank.
2.4 DIVIDENDS ON PLEDGED SHARES. Subject to Section 4.4, in the event
that any Dividend is to be paid on any Pledged Share, such Dividend or payment
shall be paid directly to the Trustee.
2.5 CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall
(A) remain in full force and effect until payment in full of all Indenture
Obligations and the termination of the Indenture in accordance with
its terms,
(B) be binding upon the Company and its successors, transferees and
assigns, and
(C) inure, together with the rights and remedies of the Trustee hereunder,
to the benefit of the Trustee and each Holder.
Without limiting the foregoing CLAUSE (C) above, any Holder may assign or
otherwise transfer (in whole or in part) any Security held by it to any other
Person or entity, and such other Person or entity shall thereupon become vested
with all the rights and benefits in respect thereof granted to such Holder under
any Transaction Document (including this Agreement) or otherwise, subject,
however,
3
to any contrary provisions in such assignment or transfer. Upon the
payment in full of all Indenture Obligations and the termination of the
Indenture in accordance with its terms, the security interest granted herein
shall terminate and all rights to the Collateral shall revert to the Company.
Upon any such termination, the Trustee will, at the Company's sole expense,
deliver to the Company, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Pledged Shares, together with all other Collateral held by the Trustee
hereunder, and execute and deliver to the Company such documents as the Company
shall reasonably request to evidence such termination.
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants unto each Holder, as at the date of
each pledge and delivery hereunder (including each pledge and delivery of
Pledged Shares) by the Company to the Trustee of any Collateral, as set forth in
this SECTION 3:
3.1 OWNERSHIP, NO LIENS, ETC. The Company is the legal and beneficial
owner of, and has good and marketable title to (and has obtained full right and
authority to pledge and assign) such Collateral, free and clear of all liens,
security interests, options, or other charges or encumbrances, except any lien
or security interest granted pursuant hereto in favor of the Trustee. The
Company has obtained all comments and waivers necessary from other creditors to
avoid conflicts with other agreements.
3.2 VALID SECURITY INTEREST. The delivery of such Collateral to the
Trustee is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Indenture
Obligations. No filing or other action will be necessary to perfect or protect
such security interest.
3.3 AS TO PLEDGED SHARES. In the case of any Pledged Shares constituting
such Collateral, all of such Pledged Shares are duly authorized and validly
issued, fully paid, and nonassessable, and constitute all of the issued and
outstanding shares of capital stock of each Pledged Share Issuer. The Company
has no Subsidiary other than the Pledged Share Issuers and insurance companies.
3.4 AUTHORIZATION, APPROVAL, ETC. No authorization, approval, or other
action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(A) for the pledge by the Company of any Collateral pursuant to this
Agreement or for the execution, delivery, and performance of this
Agreement by the Company, or
(B) for the exercise by the Trustee of the voting or other rights provided
for in this Agreement, or, except with respect to any Pledged Shares,
as may be required in connection with a disposition of such Pledged
Shares by laws affecting the offering and sale of securities
generally, the remedies in respect of the Collateral pursuant to this
Agreement.
4
3.5 COMPLIANCE WITH LAWS. The Company is in compliance with the
requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which could reasonably be
expected to have a Material Adverse Effect or materially adversely affect the
value of the Collateral or the worth of the Collateral as collateral security.
SECTION 4. COVENANTS
4.1 PROTECT COLLATERAL: FURTHER ASSURANCES, ETC. The Company will not
sell, assign, transfer, pledge, or encumber in any other manner the Collateral
(except in favor of the Trustee hereunder). The Company will warrant and defend
the right and title herein granted unto the Trustee in and to the Collateral
(and all right, title, and interest represented by the Collateral) against the
claims and demands of all Persons whomsoever. The Company agrees that at any
time, and from time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments, and take all further
action, that may be necessary or desirable, or that the Trustee may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Trustee to exercise and enforce
its rights and remedies hereunder with respect to any Collateral.
4.2 STOCK POWERS, ETC. The Company agrees that all Pledged Shares (and
all other shares of capital stock constituting Collateral) delivered by the
Company pursuant to this Agreement will be accompanied by duly executed undated
blank stock powers, or other equivalent instruments of transfer acceptable to
the Trustee. The Company will, from time to time upon the request of the
Trustee, promptly deliver to the Trustee such stock powers, instruments, and
similar documents, satisfactory in form and substance to the Trustee, with
respect to the Collateral as the Trustee may reasonably request and will, from
time to time upon the request of the Trustee after the occurrence of any Event
of Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the Trustee.
4.3 CONTINUOUS PLEDGE. The Company will, at all times, keep pledged to
the Trustee pursuant hereto all Pledged Shares and all other shares of capital
stock constituting Collateral, all Dividends and Distributions with respect
thereto, and all other Collateral and other securities, instruments, proceeds,
and rights from time to time received by or distributable to the Company in
respect of any Collateral.
4.4 VOTING RIGHTS: DIVIDENDS, ETC. The Company agrees:
(A) Dividends and Distributions may be paid to the Company in respect of
the Pledged Shares; PROVIDED, that the Company shall not pay any
Dividends or Distributions in respect of the Company's capital stock;
and
(B) after any Event of Default shall have occurred and be continuing and
the Trustee has notified the Company of the Trustee's intention to
exercise its voting power under this SECTION 4.4(B):
5
(i) the Trustee may exercise (to the exclusion of the Company) the
voting power and all other incidental rights of ownership with
respect to any Pledged Shares or other shares of capital stock
constituting Collateral and the Company hereby grants the Trustee
an irrevocable proxy, exercisable under such circumstances, to
vote the Pledged Shares and such other Collateral; and
(ii) promptly to deliver to the Trustee such additional proxies and
other documents as may be necessary to allow the Trustee to
exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Company but which the
Company is then obligated to deliver to the Trustee, shall, until delivery to
the Trustee, be held by the Company separate and apart from its other property
in trust for the Trustee. The Trustee agrees that unless an Insolvency Default
or an Event of Default shall have occurred and be continuing and the Trustee
shall have given the notice referred to in SECTION 4.4(B), the Company shall
have the exclusive voting power with respect to any shares of capital stock
(including any of the Pledged Shares) constituting Collateral and the Trustee
shall, upon the written request of the Company, promptly deliver such proxies
and other documents, if any, as shall be reasonably requested by the Company
which are necessary to allow the Company to exercise voting power with respect
to any such share of capital stock (including any of the Pledged Shares)
constituting Collateral; PROVIDED, that no vote shall be cast, or consent,
waiver, or ratification given, or action taken by the Company that would impair
any Collateral or be inconsistent with or violate any provision of the Indenture
or any other Transaction Document (including this Agreement).
SECTION 5. THE TRUSTEE
5.1 TRUSTEE APPOINTED ATTORNEY-IN-FACT. The Company hereby irrevocably
appoints the Trustee the Company's attorney-in-fact, with full authority during
the continuance of an Insolvency Default or an Event of Default in the place and
stead of the Company and in the name of the Company or otherwise, from time to
time in the Trustee's discretion, to take any action and to execute any
instrument which the Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(A) to ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(B) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with CLAUSE (A) above; and
(C) to file any claims or take any action or institute any proceedings
which the Trustee may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the
Trustee with respect to any of the Collateral.
6
The Company hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
5.2 TRUSTEE MAY PERFORM. If the Company fails to perform any agreement
contained herein, the Trustee may itself perform, or cause performance of,
such agreement, and the expenses of the Trustee incurred in connection
therewith shall be payable by the Company pursuant to SECTION 6.4.
5.3 TRUSTEE HAS NO DUTY. The powers conferred on the Trustee hereunder
are solely to protect its interest (on behalf of the Holders) in the
Collateral and shall not impose any duty on it to exercise any such powers.
Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Trustee shall
have no duty as to any Collateral or responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Property, whether or not the
Trustee has or is deemed to have knowledge of such matters or (ii) taking any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
5.4 REASONABLE CARE. The Trustee is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its
possession; PROVIDED, that the Trustee shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if
it takes such action for that purpose as the Company reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Trustee to comply with any such
request at any time shall not in itself be deemed a failure to exercise
reasonable care.
SECTION 6. REMEDIES
6.1 CERTAIN REMEDIES. (A) If any Event of Default shall have occurred
and be continuing, the Trustee may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral) and
also may, without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any of
the Trustee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Trustee may deem commercially
reasonable. The Company agrees that, to the extent notice of sale shall be
required by law, at least ten days' prior notice to the Company of the time
and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Trustee shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Trustee may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(B) If any Event of Default shall have occurred and be continuing, the
Trustee may:
7
(i) transfer all or any part of the Collateral into the name of the
Trustee or its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest
hereunder,
(ii) notify the parties obligated on any of the Collateral to make
payment to the Trustee of any amount due or to become due
thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any
part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in the Company's
name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Company)
endorsements. assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral.
6.2 COMPLIANCE WITH RESTRICTIONS. The Company agrees that in any sale
of any of the Collateral whenever an Event of Default shall have occurred and
be continuing, the Trustee is hereby authorized to comply with any limitation
or restriction in connection with such sale as it may be advised by counsel
is necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution
or resale of such Collateral), or in order to obtain any required approval of
the sale or of the purchaser by any governmental regulatory authority or
official, and the Company further agrees that such compliance shall not
result in such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Trustee be liable nor
accountable to the Company for any discount allowed by the reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction.
6.3 APPLICATION OF PROCEEDS. All cash proceeds received by the Trustee
in respect of any sale of, collection from, or other realization upon, all or
any part of the Collateral may, in the discretion of the Trustee, be held by
the Trustee as additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to the Trustee
and any Holder pursuant to SECTION 6.4) in whole or in part by the Trustee
against, all or any part of the Indenture Obligations in the order specified
in Section 10.4 of the Company Security Agreement of even date herewith made
by the Company in favor of the Trustee.
8
6.4 INDEMNITY AND EXPENSES. The Company hereby indemnifies and holds
harmless the Trustee and each Holder from and against any and all claims,
losses, and liabilities arising out of or resulting from this Agreement
(including enforcement of this Agreement), except claims, losses, or
liabilities resulting from the Trustee's or such Holder's gross negligence,
bad faith, wilful misconduct or fraud. Upon demand, the Company will pay to
the Trustee and each Holder the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel (which shall
include the allocated costs of in-house counsel fees and expenses) and of any
experts and Trustees, which the Trustee or such Holder may incur in
connection with:
(A) the administration of this Agreement and each other Transaction
Document to which Company is a party;
(B) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(C) the exercise or enforcement of any of the rights of the Trustee or
any Holder hereunder; or
(D) the failure by the Company to perform or observe any of the provisions
hereof.
SECTION 7. MISCELLANEOUS
7.1 PROTECTION OF COLLATERAL. The Trustee may from time to time, at
its option, perform any act which the Company agrees hereunder to perform and
which the Company shall fail to perform after being requested in writing so
to perform (it being understood that no such request need be given after the
occurrence and during the continuance of a Default or an Event of Default)
and the Trustee may from time to time take any other action which the Trustee
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.
7.2 CERTAIN WAIVERS. The Company 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 Indenture
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
Indenture 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.
7.3 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,
9
postage prepaid, (iii) if sent by telex, upon receipt by the sender of an
appropriate answerback and (iv) if sent by facsimile transmission, when sent.
7.4 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.
7.5 BINDING EFFECT. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Company and the Trustee, and their
respective successors and assigns; PROVIDED, that the Company may not assign
any of its rights hereunder or interests herein without the written consent
of the Trustee and the Holders having at least 25% in principal amount of the
Outstanding Securities. The Company acknowledges that upon any assignment or
other transfer by the Trustee or any Holder of any of the Indenture
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 Company, 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.
7.6 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.
7.7 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 COMPANY 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 COMPANY 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 COMPANY 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.
10
7.8 WAIVER OF JURY TRIAL. THE COMPANY 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
COMPANY 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.
7.9 AMENDMENT. This Agreement shall not be amended except by the
written agreement of the parties as provided in the Indenture.
7.10 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 Company with respect to the
matters referred to herein and therein.
7.11 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.
7.12 NO INCONSISTENT REQUIREMENTS. The Company 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
7.13 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.
7.14 FURTHER ASSURANCES. The Company 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.
* * * * *
12
Executed and delivered as of the date first above written.
MERCURY FINANCE COMPANY
By:
-------------------------
Name:
-----------------------
Title:
----------------------
[TRUSTEE]
By:
-------------------------
Name:
-----------------------
Title:
----------------------
SCHEDULE I
PLEDGED SHARES
Common Stock
------------------------- % of
Share Authorized Outstanding Outstanding
Pledged Share Issuer Certificate # Shares Shares Shares Pledged
-------------------- ------------- ---------- ----------- --------------
Mercury Finance Corporation of Alabama 2 1,000 250 100
Mercury Finance Company of Arizona 2 250 250 100
Merc Finance Company of California 2 250 250 100
Mercury Finance Company of Colorado 1 1,000 250 100
Mercury Finance Company of Delaware 1 1,000 250 100
Mercury Finance Company of Florida 2 1,000 250 100
Mercury Finance Company of Georgia 2 1,000 250 100
Mercury Finance Company of Idaho 1 1,000 250 100
Mercury Finance Company of Illinois 2 1,000 250 100
Mercury Finance Company of Indiana 2 1,000 250 100
Mercury Finance Company of Iowa 1 1,000 250 100
Mercury Finance Company of Kansas 2 1,000 250 100
Mercury Finance Company of Kentucky 2 1,000 250 100
Mercury Finance Company of Louisiana 2 1,000 250 100
Mercury Finance Company of Michigan 1 1,000 250 100
Mercury Finance Company of Mississippi 1 1,000 250 100
Mercury Finance Company of Missouri 2 250 250 100
Mercury Finance Company of Nevada 2 250 250 100
Mercury Finance Company of New Mexico 1 1,000 250 100
Mercury Finance Company of New York 1 1,000 250 100
Mercury Finance Company of North Carolina 2 1,000 250 100
Mercury Finance Company of Ohio 1 1,000 250 100
MFC Finance Company of Oklahoma 2 1,000 250 100
Mercury Finance Company of Oregon 1 1,000 250 100
Mercury Finance Company of Pennsylvania 1 1,000 250 100
Mercury Finance Company of South Carolina 1 1,000 250 100
Mercury Finance of Tennessee 1 250 250 100
MFC Finance Company of Texas 2 1,000 250 100
Mercury Finance Company of Utah 1 1,000 250 100
Mercury Finance Company of Virginia 2 1,000 250 100
Mercury Finance Company of Washington 1 1,000 250 100
Mercury Finance Company of Wisconsin 1 1,000 250 100
Filco Marketing Company 1 1,000 250 100
MFC Financial Services, Inc. 2 250 250 100
Gulfco Finance Company 1 300,000 1,000 100
Gulfco Investment, Inc. 1 1,000,000 1,000 100
Midland Finance Co. 1 10,000 1,503.5 100
SUBSIDIARIES SECURITY AGREEMENT
This Subsidiaries Security Agreement dated as of [DATE], 1998 (this
"AGREEMENT"), is made by each of the corporations listed on ANNEX I
(collectively, the "GUARANTORS"), in favor of [NAME OF TRUSTEE], as trustee for
the Holders under the Indenture described below (in such capacity, the
"TRUSTEE").
PRELIMINARY STATEMENTS:
1. Mercury Finance Company, 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
2
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.
3
"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,
4
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 Warehouse 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
5
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 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.
6
"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 issue
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
7
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 and deliver to the Trustee 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, as the Trustee may
reasonably request, 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.
8
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 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.
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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.
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4.10 EQUIPMENT. None of the Equipment or other Collateral is affixed to
real property, except Collateral with respect to which the Guarantors have
supplied the Trustee with all information and documentation necessary to make
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 5.14.
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
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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 at the Trustee's request 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
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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) at the reasonable request of the
Trustee, 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 [NAME OF TRUSTEE], 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.
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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.
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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 upon the written consent of the Trustee 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 the
Trustee may deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including without limitation (i) 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) 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 such Collateral consists of Chattel Paper or if a
security interest in such Collateral can be perfected only by possession) 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
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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;
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(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 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.
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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, 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 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
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(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.
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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.
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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, when sent.
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,
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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.
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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 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.
* * * * *
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Executed and delivered as of the date first above written.
[TO COME]
By:
------------------------------------
Name:
Title:
[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 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
MFN Insurance 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
