SECURITY AGREEMENT dated as of September 28, 2006 among MANCHESTER INC., NICE CARS ACCEPTANCE ACQUISITIONCO., INC., NICE CARS OPERATIONS ACQUISITIONCO., INC., as Guarantors, THE BANK OF NEW YORK, as the Collateral Agent and PALM BEACH MULTI-STRATEGY...
dated
as
of
September
28, 2006
among
NICE
CARS
ACCEPTANCE ACQUISITIONCO., INC.,
NICE
CARS
OPERATIONS ACQUISITIONCO., INC.,
as
Guarantors,
THE
BANK
OF NEW YORK,
as
the
Collateral Agent
and
PALM
BEACH MULTI-STRATEGY FUND, L.P.,
as
Lender
TABLE
OF CONTENTS
Page
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ARTICLE
I DEFINITIONS
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4
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SECTION
1.01
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Definitions
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4
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SECTION
1.02
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Other
Definitional Provisions
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6
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ARTICLE
II REPRESENTATIONS AND WARRANTIES
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6
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SECTION
2.01
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Representations
and Warranties of Guarantors
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6
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ARTICLE
III COVENANTS
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10
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SECTION
3.01
|
Certain
Affirmative Covenants of Guarantors
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10
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SECTION
3.02
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Financial
Covenants
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12
|
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SECTION
3.03
|
Negative
Covenants
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12
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SECTION
3.04
|
Covenants
by Manchester
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13
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SECTION
3.05
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Covenants
by NCOC
|
13
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SECTION
3.06
|
Financial
Reports
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13
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ARTICLE
IV GUARANTOR ACCOUNTS
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15
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SECTION
4.01
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Guarantor
Accounts
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15
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ARTICLE
V REMEDIES
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15
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SECTION
5.01
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Remedies
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15
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SECTION
5.02
|
No
Waiver
|
16
|
|
SECTION
5.03
|
Appointment
Of Lender As Attorney-In-Fact
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17
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ARTICLE
VI EXPENSES AND INDEMNITIES
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18
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SECTION
6.01
|
Payment
For Expenses
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18
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ARTICLE
VII COLLATERAL AGENT
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18
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SECTION
7.01
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Exculpation,
Collateral Agent’s Reliance, Etc
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18
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SECTION
7.02
|
Benefit
of
Article 7
|
19
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SECTION
7.03
|
Resignation
And Removal Of Collateral Agent
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19
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SECTION
7.04
|
Notice
of Guarantor Default
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19
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ARTICLE
VIII MISCELLANEOUS
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19
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SECTION
8.01
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Notices
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19
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SECTION
8.02
|
Prior
Agreements Superseded
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19
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SECTION
8.03
|
Parties
Bound
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20
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SECTION
8.04
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No
Third Party Beneficiary
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20
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SECTION
8.05
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Execution
In Counterparts
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20
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SECTION
8.06
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Severability
Of Provisions
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20
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SECTION
8.07
|
Further
Instruments
|
20
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|
SECTION
8.08
|
GOVERNING
LAW
|
20
|
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SECTION
8.09
|
CONSENT
OF JURISDICTION
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21
|
|
SECTION
8.10
|
WAIVER
OF JURY TRIAL
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21
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SECTION
8.11
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TIME
OF ESSENCE
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21
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Schedule
I- Chief Executive Office
i
THIS
SECURITY AGREEMENT
dated as
of September 28, 2006 (as amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof, this “Security
Agreement”)
is
made among (1) Manchester Inc., a Nevada corporation (“Manchester”);
Nice
Cars Acceptance AcquisitionCo., Inc., a Delaware corporation (“NCAC”),
and
Nice Cars Operations AcquisitionCo., Inc., a Delaware corporation (“NCOC”)
(together, the “Guarantors”,
and
each,
a “Guarantor”),
(2)
The Bank Of New York as collateral agent for the Secured Parties (in
such
capacity, the “Collateral
Agent”)
and
(3) Palm Beach Multi-Strategy Fund, L.P. (the “Lender”).
WITNESSETH:
WHEREAS,
the
Guarantors have executed that certain Guaranty (the “Guaranty”)
dated
the date hereof in favor of the Lender in respect of certain obligations of
Nice
Cars Funding LLC (the “Borrower”)
under
that certain Loan and Security Agreement (the “Loan
Agreement”)
dated
the date hereof between the Borrower and Lender, and the other Loan Documents
(as defined in the Loan Agreement), and in respect of certain obligations of
the
Guarantors under the Sale and Security Agreement (as defined in the Loan
Agreement) and the other Loan Documents;
WHEREAS,
it is a
condition precedent to the Lender making advances to the Borrower under the
Loan
Agreement that the Guarantors have executed and delivered this Security
Agreement as security for the Guarantors’ obligations under the
Guaranty;
WHEREAS,
each
Guarantor is duly authorized to execute and deliver this Security Agreement.
All
agreements made by each Guarantor herein are for the benefit and security of
the
Secured Parties and the Collateral Agent. Each Guarantor is entering into this
Security Agreement, and the Collateral Agent is accepting the grants created
hereby, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged; and
WHEREAS,
all
things necessary to make this Security Agreement a valid, binding and legal
obligation of each Guarantor, in accordance with the terms of this Security
Agreement, have been done and performed and have happened.
GRANTING
CLAUSE
NOW,
THEREFORE, THIS SECURITY AGREEMENT WITNESSETH, that, to secure the prompt and
complete payment of all Secured Guaranty Obligations and the performance and
observance by each Guarantor of all the agreements, covenants and provisions
contained in the Guaranty for the benefit of the Lender, and in consideration
of
the premises and of the covenants herein contained, each Guarantor does hereby
grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm,
to
the Collateral Agent and its successors and assigns, for the security and
benefit of the Lender, a first priority security interest in and mortgage Lien
on all estate, right, title and interest of such Guarantor in, to and under
all
personal property of any kind or description whatsoever, wherever located,
whether now owned or hereafter acquired, tangible or intangible, including
(i)
all Accounts, Chattel Paper, Commercial Tort Claims, copyrights, Documents,
Equipment, Financial Assets, Fixtures, General Intangibles, Goods, Guarantor
Accounts, Instruments, Inventory, Investment Property, Letter-of-Credit Rights
(and all letters of credit), money, Supporting Obligations and the Intellectual
Property Collateral and (ii) without limiting the foregoing, the following
described properties, rights, interests and privileges whether now owned or
hereafter acquired:
-1-
1. The
Acquisition Agreements, including, without limitation, (i) any and all rights
of
any Guarantor to receive moneys under or pursuant to the Acquisition Agreements,
(ii) any and all claims of any Guarantor for damages under or in respect of
the
Acquisition Agreements including, without limitation, any and all claims arising
under any warranty or indemnity provision contained in the Acquisition
Agreements, and (iii) any and all rights of any Guarantor to compel performance
of the Acquisition Agreements;
2. All
rights of the Guarantors under the Loan Documents to which they are a party
(other than the Guaranty and this Agreement);
3. The
membership interests, shares, stock and other equity interests (the
“Equity
Interests”)
of
each and any direct and indirect subsidiary of each Guarantor (each, a
“Equity
Interest”),
all
certificates (if any) representing or evidencing such Equity Interests, and
all
of the rights of the applicable member or stockholder under the related
constitutional documents, and all present and future rights of the applicable
member to receive payment of money or other distributions, dividends or payments
arising out of or in connection with such Equity Interests and its rights under
such constitutional documents;
4. All
debt
securities, indebtedness and liabilities now or hereafter issued to, owed to
or
held by any Guarantor,
in each
case whether direct or indirect, joint or several, absolute or contingent,
liquidated or unliquidated
and
whether now or hereafter outstanding,
together
with all
certificates, promissory notes, Instruments, Chattel Paper
or other
documents representing or evidencing any of the foregoing (collectively, the
“Pledged
Debt Interests”);
5. Each
Guarantor Account, all security entitlements with respect to all Financial
Assets credited from time to time to the Guarantor Accounts, all dividends,
distributions, return of capital, interest, Cash, Instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or
in exchange for any or all of such security entitlements or such Financial
Assets and all subscription warrants, rights or options issued thereon or with
respect thereto, and all certificates and Instruments, if any, from time to
time
representing or evidencing the Guarantor Accounts;
6. All
Accounts, Chattel Paper, Instruments, General Intangibles and other obligations
of any kind, whether or not arising out of or in connection with the sale or
lease of Goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all security
agreements, leases, charters and other contracts securing or otherwise relating
to any such Accounts, Chattel Paper, Instruments, General Intangibles or
obligations;
7. All
rents, issues, profits, revenues, insurance or requisition proceeds and other
income of the property subjected or required to be subjected to the Lien of
this
Security Agreement and all other property of the Guarantors, whether tangible
or
intangible, now owned or hereafter acquired; and
-2-
together
with, to the extent not otherwise included above, all Proceeds and products
of
any and all of the foregoing (or of such Proceeds and products). All of the
foregoing is collectively referred to herein as the “Guaranty
Collateral”.
HABENDUM
CLAUSE
TO
HAVE
AND TO HOLD all and singular the aforesaid property unto the Collateral Agent,
its successors and assigns, in trust, for the benefit and security of the
Lender, and for the uses and purposes and subject to the terms and provisions
set forth in this Security Agreement.
It
is
expressly agreed that anything herein contained to the contrary notwithstanding,
each Guarantor shall remain liable under each of the agreements and contracts
included in the Guaranty Collateral to which such Guarantor is a party (the
“Collateral
Documents”)
and to
perform all of the obligations assumed by such Guarantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and that
the
Collateral Agent and the Secured Parties shall have no obligation or liability
under any thereof by reason of or arising out of the assignment hereunder,
nor
shall any of the Secured Parties be required or obligated in any manner to
perform or fulfill any obligations of any Guarantor under or pursuant to any
of
the Collateral Documents, except as herein expressly provided, to make any
payment, to make any inquiry as to the nature or sufficiency of any payment
received by it or present or file any claim, or take any action to collect
or
enforce the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
Each
Guarantor does hereby constitute the Collateral Agent the true and lawful
attorney of such Guarantor, irrevocably, with full power (in the name of such
Guarantor or otherwise) to ask, require, demand, receive, compound and give
acquittance for any and all monies and claims for monies (in each case including
insurance and requisition proceeds) due and to become due under or arising
out
of the Collateral Documents and all other property which now or hereafter
constitutes part of the Guaranty Collateral, to endorse any checks or other
Instruments or orders in connection therewith and to file any claims or to
take
any action or to institute any proceedings which the Collateral Agent may deem
to be necessary or advisable in the premises.
Each
Guarantor agrees that at any time and from time to time, upon the written
request of the Collateral Agent, such Guarantor will promptly and duly execute
and deliver or cause to be duly executed and delivered any and all such further
instruments and documents as the Collateral Agent may reasonably deem desirable
in obtaining the full benefits of the assignment hereunder and of the rights
and
powers granted herein.
Each
Guarantor does hereby warrant and represent that it has not assigned or pledged,
and hereby covenants that it will not assign or pledge, so long as this Security
Agreement shall remain in effect and shall not have been terminated pursuant
to
its terms, any of its estate, right, title or interest hereby assigned, to
anyone other than the Collateral Agent, and that, with respect to such right,
title and interest hereby assigned, it will not, except as expressly provided
in
this Security Agreement and the Guaranty, (i) enter into any agreement amending
or supplementing any of the Collateral Documents, (ii) execute any waiver or
modification of, or consent under, the terms of any of the Collateral Documents,
(iii) settle or compromise any claim arising under any of the Collateral
Documents, or (iv) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any of the Collateral
Documents to arbitration thereunder.
-3-
Each
Guarantor does hereby agree that it will not take or omit to take any action,
the taking or omission of which might result in an alteration or impairment
of
any of the Collateral Documents or of any of the rights created by any thereof
or the assignment hereunder.
It
is
hereby further agreed that any and all property described or referred to in
the
Granting Clause hereof which is hereafter acquired by any Guarantor shall
ipso facto,
and
without any other conveyance, assignment or act on the part of such Guarantor
or
the Collateral Agent, become and be subject to the Lien herein granted as fully
and completely as though specifically described herein, but nothing contained
in
this paragraph shall be deemed to modify or change the obligations of such
Guarantor contained in the foregoing paragraphs.
IT
IS
HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE
I
DEFINITIONS
SECTION
1.01 Definitions.
For all
purposes of this Agreement, (a) terms capitalized herein that are not defined
herein shall have the meanings given to them in the Guaranty or the Loan
Agreement and (b) the following terms which are defined in the UCC are used
herein as so defined: Accounts, Cash, Chattel Paper, Commercial Tort Claim,
Deposit Account, Document, Equipment, Financial Assets, Fixtures, General
Intangible, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit
Right, letter of credit, money, Proceeds, promissory note, Securities Account
and Supporting Obligation.
In
addition, the following terms shall have the meaning herein
specified:
“Acquisition
Agreements”
means
the (i) Share Purchase and Exchange Agreement, dated the date hereof, among
Manchester, NCAC, Nice Cars Capital Acceptance Corporation, a Georgia
corporation (“NCCAC”) and the shareholders of NCCAC, (ii) the Share Purchase and
Exchange Agreement, dated the date hereof, among Manchester, NCOC, Nice Cars,
Inc., a Georgia corporation (“NCI”) and the shareholders of NCI, and (iii) the
Employment Agreements, dated the date hereof, between Manchester and each of
Xxxxxxx X. Xxxx, Xxxxxxxx X. Xxxx, Xxxxxx Xxxx, Xxxxxxx X. Xxxx,
XX and Xxxxxx Xxxx.
“Guarantor
Accounts”
means
all accounts of the Guarantors (except the Blocked Account) as of the date
hereof with any bank or financial institution, details of which have been given
to Lender.
“Guarantor
Account Control Agreements”
means
the account control agreements entered into in accordance with Section 4.01
hereof.
-4-
“Guarantor
Default”
means
any breach by any Guarantor of any of its obligations, covenants or agreements
under the Guaranty or this Agreement, or any event which with the passage of
time or notice or both would constitute such a breach.
“Intellectual
Property Collateral”
means,
collectively, (a)(i) all computer and other electronic data processing hardware,
(ii) all software programs, (iii) all firmware associated therewith, (iv) all
documentation with respect to such hardware, software and firmware described
in
the preceding clauses (i) through (iii) and (v) all rights with respect to
all
of the foregoing, (b) all copyrights of each Guarantor and all applications
for
registration thereof, (c)(i) all letters patent and applications for letters
patent throughout the world, (ii) all patent licenses of each Guarantor, (iii)
all reissues, divisions, continuations, continuations-in-part, extensions,
renewals and reexaminations of any of the items described in the preceding
clauses (i) and (ii), and (iii) all proceeds of, and rights associated with,
the
foregoing, (d) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared
or
appear, designs and General Intangibles of a like nature, in each case, of
the
Guarantor and (e) common law and statutory trade secrets and all other
confidential or proprietary or useful information and all know-how obtained
by
or used in or contemplated at any time for use in the business of the Guarantor.
“Interest
Coverage Ratio”
shall
mean the fraction, expressed as a ratio, the numerator of which shall be
(i) the consolidated interest income of NCAC and NCOC according to GAAP and
the denominator of which shall be (ii) the consolidated interest expense of
NCAC and NCOC according to GAAP.
“Leverage
Ratio”
means,
the fraction, expressed as a ratio, the numerator of which is equal to
(i) (a) the consolidated liabilities of NCAC and NCOC according to
GAAP, less (b) any consolidated subordinate debt of NCAC and NCOC according
to GAAP, and the denominator of which is equal to (ii) (x) the
Tangible Net Worth, plus (y) any consolidated subordinate debt of NCAC and
NCOC according to GAAP.
“Secured
Guaranty Obligations”
means
all obligations and liabilities of the Guarantors under the
Guaranty.
“Servicer
Termination Event”
shall
have the meaning given to that term in the Sale and Servicing
Agreement.
“Tangible
Net Worth”
means
(i) the consolidated stockholders’ equity of NCAC and NCOC according to
GAAP, less (ii) any intangible assets of NCAC and NCOC according to
GAAP.
“UCC”
means
the Uniform Commercial Code as in effect from time to time in the State of
New
York; provided
that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any item or portion
of
the Guaranty Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of New York, “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
-5-
SECTION
1.02 Other
Definitional Provisions.
The
definitions of terms herein shall apply equally to the singular and plural
forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”. The word “will” shall be construed to have the same
meaning and effect as the word “shall”. Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed
to
include such Person’s successors and assigns, (c) any reference to any statute
or act shall include all related current regulations and all amendments and
any
successor statutes, acts and regulations (and any reference to any statute
or
act, without additional reference, shall be deemed to refer to federal statutes
and acts of the United States), (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to,
this Agreement and (f) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including money, Securities, Accounts and
contract rights.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
SECTION
2.01 Representations
and Warranties of Guarantors.
The
Guarantors jointly and severally represent and warrant as follows:
(a) Each
Guarantor is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, is duly qualified
to
do business and is in good standing as a foreign corporation in all states
where
such qualification is required, has all necessary corporate power and authority
to enter into this Agreement and each of the other Loan Documents to which
it is
a party and to perform all of its obligations hereunder and
thereunder.
(b) Each
Guarantor operates its business only under the assumed names listed on Schedule
5.1(b) of Schedule A attached to the Loan Agreement.
(c) Each
Guarantor has all requisite right and power and is duly authorized and empowered
to enter into, execute, deliver and perform this Agreement and each other Loan
Document to which it is a party and this Agreement and each other Loan Document
to which it is a party are the legal, valid and binding obligations of such
Guarantor and are enforceable against such Guarantor in accordance with their
terms.
-6-
(d) The
execution, delivery and performance by each Guarantor of this Agreement and
the
other Loan Documents to which it is a party does not and shall not (i) violate
any provision of any Law, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to such
Guarantor; (ii) violate any provision of its charter documents or bylaws; or
(iii) result in a breach of or constitute a default under any indenture or
loan
or credit agreement or any other agreement, lease or instrument to which such
Guarantor is a party or by which it or any of its assets or properties may
be
bound or affected; and no Guarantor is in default of any such Law, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument.
(e) No
consent, approval, license, exemption of or filing or registration with, giving
of notice to, or other authorization of or by, any court, administrative agency
or other governmental authority is or shall be required in connection with
the
execution, delivery or performance by any Guarantor of this Agreement or any
other Loan Document for the valid consummation of the transactions contemplated
hereby or thereby.
(f) No
event
has occurred and is continuing which constitutes a Guarantor Default. There
is
no action, suit, proceeding or investigation pending or threatened against
or
affecting any Guarantor before or by any court, administrative agency or other
governmental authority that brings into question the validity of the
transactions contemplated hereby, or that might result in any Material Adverse
Effect.
(g) No
Guarantor is in default in the payment of any taxes levied or assessed against
it or any of its assets or properties, except for taxes being contested in
good
faith and by appropriate proceedings and for which adequate reserves have been
made.
(h) Each
Guarantor has good and marketable title to its assets and properties as
reflected in its financial statements furnished to Lender.
(i) Each
of
the financial statements furnished to Lender by the Guarantors was prepared
in
accordance with GAAP and fairly and accurately reflects their financial
condition as of the date thereof; and each Guarantor hereby certifies that
there
have been no Material Adverse Effects, since the date of such statements, and
there are no known contingent liabilities not provided for or disclosed in
such
statements.
(j) Neither
this Agreement, the Guaranty or any statement or document referred to herein
or
delivered to any Secured Party or the Custodian by any Guarantor contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements made herein or therein not misleading.
(k) The
Guarantors have good, indefeasible and merchantable title to and ownership
of
the Guaranty Collateral, free and clear of all Liens, except those of the
Collateral Agent for the benefit of Lender.
(l) All
books, records and documents relating to the Guaranty Collateral are and shall
be genuine and in all respects what they purport to be.
-7-
(m) Each
place of business of each Guarantor is only at the locations set forth in
Section 5.1(n) of Schedule A attached to the Loan Agreement. No Guarantor shall
begin or do business (either directly or through subsidiaries) at other
locations or cease to do business at any of the above locations or at
Guarantor’s principal place of business without first notifying
Lender.
(n) The
present value of all benefits vested under all Plans of the Guarantors or any
Commonly Controlled Entity (based on the assumptions used to fund the Plans)
did
not, as of the last annual valuation date (which in case of any Plan was not
earlier than December 31, 1982) exceed the value of the assets of the Plans
applicable to such vested benefits.
(o) The
liability to which any Guarantor or any Commonly Controlled Entity would become
subject under Sections 4063 or 4064 of ERISA if such Guarantor or any Commonly
Controlled Entity were to withdraw from all Multi-employer Plans or if such
Multi- employer Plans were to be terminated as of the valuation date most
closely preceding the date hereof, is not in excess of One Thousand Dollars
($1,000.00);
(p) No
Guarantor is engaged nor shall it engage, principally or as one of its important
activities, in a business of extending credit for the purpose of “purchasing” or
“carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulations G or X of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No
part
of the proceeds of any advances hereunder shall be used for “purchasing” or
“carrying” “margin stock” as so defined or for any purpose which violates, or
which would be inconsistent with, the provisions of the Regulations of such
Board of Governors. If requested by Lender, each Guarantor shall furnish to
Lender a statement in conformity with the requirement of Federal Reserve Form
G-3 referred to in said Regulation G to the foregoing effect. All of the
outstanding securities of each Guarantor have been offered, issued, sold and
delivered in compliance with, or are exempt from, all federal and state laws
and
rules and regulations of federal and state regulatory bodies governing the
offering, issuance, sale and delivery of securities.
(q) No
Guarantor is an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as
amended.
(r) To
the
best of each Guarantor’s knowledge, the land and improvements owned or leased by
each Guarantor for use in its business operations (including the locations
listed in Section 5.1(n) of Schedule A of the Loan Agreement) are free of
dangerous levels of contaminates, oils, asbestos, radon, PCB’s, hazardous
substances or waste as defined by federal, state or local environmental laws,
regulations or administrative orders or other materials, the removal of which
is
required or the maintenance of which is prohibited, regulated or penalized
by
any federal, state or local governmental authority.
(s) Each
Guarantor is solvent, generally able to pay its obligations as they become
due,
has sufficient capital to carry on its business and transactions and all
businesses and transactions in which it intends to engage, and the current
value
of each Guarantor’s assets, at fair saleable valuation, exceeds the sum of its
liabilities. No Guarantor shall be rendered insolvent by the execution and
delivery of this Agreement and the other Loan Documents and the consummation
of
the transactions contemplated hereby and thereby and the capital remaining
in
each Guarantor is not now and shall not foreseeably become unreasonably small
to
permit such Guarantor to carry on its business and transactions and all
businesses and transactions in which it is about to engage. No Guarantor intends
to, nor does it reasonably believe it shall, incur debts beyond its ability
to
repay the same as they mature.
-8-
(t) The
Collateral Agent for the benefit of Lender has a perfected first priority
security interest in favor of the Collateral Agent for the benefit of Lender
in
all of the Guarantors’ respective right, title and interest in the Guaranty
Collateral, prior and superior to any other Lien, except any statutory or
constitutional lien for taxes not yet due and payable.
(u) There
are
no material actions, suits or proceedings pending, or threatened against or
affecting the assets of any Guarantor or the consummation of the transactions
contemplated hereby, at law, or in equity, or before or by any governmental
authority or instrumentality or before any arbitrator of any kind. No Guarantor
is subject to any judgment, order, writ, injunction or decree of any court
or
governmental agency. There is not a reasonable likelihood of an adverse
determination of any pending proceeding which would, individually or in the
aggregate, have a Material Adverse Effect.
(v) Section
5.1(x) of Schedule A attached to the Loan Agreement correctly and completely
sets forth for each Guarantor (i) its full legal name and state of organization,
(ii) its Federal Tax Identification Number; (iii) its chief executive office,
(iv) all prior names used in the last five (5) years (including, without
limitation, such Guarantor’s predecessors in interest as a result of a merger or
consolidation) and (v) the charter or other similar number for such Guarantor
in
its state of organization.
(w) No
Guarantor (i) is a person whose property or interest in property is blocked
or
subject to blocking pursuant to Section 1 of Executive Order 13224 of September
23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii)
engages in any dealings or transactions prohibited by Section 2 of such
executive order, or is otherwise associated with any such person in any manner
violative of Section 2, or (iii) is a Person on the list of Specially Designated
Nationals and Blocked Persons or subject to the limitations or prohibitions
under any other U.S. Department of Treasury’s Office of Foreign Assets Control
regulation or executive order.
(x) Each
Guarantor is in compliance with the Patriot Act. No part of the proceeds of
any
of the Loans will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act
of
1977, as amended.
-9-
(y) This
Security Agreement constitutes the legal, valid and binding obligations of
each
Guarantor enforceable in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally, by general equitable principles (whether enforcement is sought by
proceedings in equity or at law) and an implied covenant of good faith and
fair
dealing.
(z) No
Guarantor has any Deposit Accounts, Securities Accounts, collateral accounts
or
any other accounts with any Person other than the Guarantor Accounts
(collectively, the “Other
Accounts”).
ARTICLE
III
COVENANTS
SECTION
3.01 Certain
Affirmative Covenants of Guarantors.
So long
as any of the Secured Guaranty Obligations remain outstanding or any obligations
of the Lender under the Loan Agreement shall remain outstanding, the Guarantors
hereby jointly and severally agree and covenant that each Guarantor
shall:
(a) Pay
or
cause to be paid currently all of its expenses, including all payments on its
obligations whenever due, as well as all payments of any and all taxes of
whatever nature when due. This provision shall not apply to taxes or expenses
which are due, but which are challenged in good faith and for which adequate
reserves have been established.
(b) Maintain,
preserve, and protect the Guaranty Collateral.
(c) Furnish
to Secured Parties prompt written notice as to the occurrence of any Guarantor
Default hereunder or Servicer Termination Event or any event which with the
passage of time or the giving of notice would become a Servicer Termination
Event.
(d) Carry
on
and conduct its business in the same manner and in the same fields of enterprise
as it is presently engaged, and shall preserve its existence, licenses or
qualifications as a domestic corporation in the state of its incorporation
and
as a foreign organization in every jurisdiction in which the character of its
assets or properties or the nature of the business transacted by it at any
time
makes qualification as a foreign organization necessary, and to maintain all
other material organizational rights and franchises.
(e) Comply
and cause each of the Guarantors to comply with all statutes, governmental
rules
and regulations applicable to them and their business (including, without
limitation, applicable usury and consumer Laws).
(f) Permit
and authorize Secured Parties and allow Secured Parties to access, without
notifying any Guarantor, (i) to make such inquiries or investigation through
business credit, other credit reporting services or other sources concerning
any
Guarantor as any Secured Party, in its sole discretion, shall deem appropriate
and (ii) to inspect, audit and examine the Guaranty Collateral at the premises
of Guarantors.
-10-
(g) Provide
each Secured Party sixty (60) days prior written notice of any Guarantor
initiating any activities in any state other than the then-Approved
States.
(h) Provide
Lender with evidence of such Guarantor’s insurance (including, without
limitation, property damage and liability insurance) issued by a reputable
carrier, as required by Lender (which insurance shall be in such amounts and
cover such risks as is satisfactory to Lender and shall include without
limitation, Director and Officer insurance, Errors and Omissions insurance
and
Fidelity insurance). This insurance shall reflect the Collateral Agent for
the
benefit of Lender as the loss payee or additional insured, as required by
Lender, and contain a provision that the Collateral Agent for the benefit of
Lender shall be notified by the carrier thirty (30) days prior to the
termination or cancellation of any such insurance.
(i) promptly
notify Lender and the Collateral Agent in writing of:
(i) the
occurrence of any Material Adverse Effect;
(ii) the
acceleration of the maturity of any indebtedness owed by any Guarantor, or
any
default by any Guarantor under any indenture, mortgage, agreement, contract
or
other instrument to which any of them is a party or by which any of them or
any
of their properties is bound;
(iii) the
filing of any suit or proceeding against any Guarantor.
Upon
the
occurrence of any of the foregoing, the Guarantors will take all necessary
or
appropriate steps to remedy promptly any such Material Adverse Effect,
acceleration, default, to protect against any such adverse claim, to defend
any
such suit or proceeding, and to resolve all controversies on account of any
of
the foregoing.
(j) Perform
its obligations and undertakings hereunder and pursuant to the other Loan
Documents.
(k) Contemporaneously
herewith and from time to time hereafter, deliver to the Collateral Agent
possession all originals of all negotiable Documents and Instruments and Chattel
Paper and promissory notes currently owned or held by such Guarantor and
representing or evidencing any indebtedness (duly endorsed in
blank).
(l) If
at any
time any Guarantor shall acquire or otherwise have rights with respect to a
Commercial Tort Claim which such Guarantor reasonably believes, based upon
then-current information, is likely to result in a judgment in favor of such
Guarantor in excess of $250,000, it shall promptly notify the Lender and the
Collateral Agent thereof in a writing (such writing to be in form and substance
satisfactory to the Lender and the Collateral Agent) signed by it containing
brief details thereof to the Collateral Agent and take such other actions as
necessary or desirable or reasonably requested by the Collateral Agent or the
Lender to grant and perfect a Lien in such Commercial Tort Claim in favor of
the
Collateral Agent for the benefit of the Lender.
-11-
(m) During
the term of this Agreement and so long as any of the Indebtedness remains
unpaid, maintain a modern system of accounting in accordance with GAAP or other
systems of accounting acceptable to Lender. For the purpose of determining
compliance with the covenants and representations in the Loan Documents, Lender
shall have the right to recast any financial statement or report presented
to
Lender by or on behalf of any Guarantor to comply with GAAP.
SECTION
3.02 Financial
Covenants.
Manchester, NCAC and NCOC jointly and severally undertake and covenant with
the
Lender that (i) the Leverage Ratio shall not exceed 5:1 on any date of
determination; (ii) the Tangible Net Worth shall not be less than
$18,000,000 on any date of determination, (iii) the Interest Coverage Ratio
shall not exceed 1.5:1 on any date of determination and (iv) the
consolidated net income of NCAC and NCOC determined in accordance with GAAP
for
every period of one calendar month shall exceed $1.00 (one dollar).
SECTION
3.03 Negative
Covenants.
So long
as any of the Secured Guaranty Obligations remain outstanding or any obligations
of the Lender under the Loan Agreement shall remain outstanding, the Guarantors
hereby jointly and severally agree and covenant that no Guarantor shall, without
the Lender’s prior written consent , do any of the following:
(a) (i)
Incur
or permit to exist any Lien with respect to the Guaranty Collateral now owned
or
hereafter acquired by such Guarantor, except Liens in favor of the Collateral
Agent for the benefit of Lender or (ii) enter into or become subject to any
agreement (other than this Agreement or any Loan Document) that prohibits or
otherwise restricts the right of such Guarantor to create, assume or suffer
to
exist any Lien in favor of the Collateral Agent for the benefit of Lender on
such Person’s assets.
(b) Delegate,
transfer or assign any of its obligations or liabilities under this Agreement
or
any other Loan Document, or any part thereof, to any other Person.
(c) Be
a
party to or participate in: (i) any merger or consolidation; (ii) any purchase
or other acquisition of all or substantially all of the assets or properties
or
shares of any class of, or any partnership or joint venture interest in, any
other Person; or (iii) any sale, transfer, conveyance or lease of all or
substantially all of such Guarantor’s assets or properties.
(d) Incur,
assume or suffer to exist any Liabilities (including any contingent liabilities)
or otherwise become liable upon the obligations of any Person by assumption,
endorsement or guaranty thereof or otherwise other than (i) Liabilities under
the Loan Documents to which it is a party; (ii) accounts payable incurred in
the
ordinary course of business; or (iii) other Liabilities consented to in writing
by Lender.
(e) Directly
or indirectly make loans to, invest in, extend credit to, or guaranty the debt
of any Person, other than in the ordinary course of such Guarantor’s
business.
(f) Amend,
modify, or otherwise change in any respect any material agreement, instrument,
or arrangement (written or oral) by which such Guarantor, or any of its assets,
are bound, including, without limitation, the Loan Documents.
-12-
(g) Change
its name, convert from one type of entity to another type, change its principal
place of business, change the state in which it is organized under, or make
any
material changes in the nature of its business as carried on as of the date
hereof.
(h) Make
any
expenditure or commitment or incur any obligation or enter into or engage in
any
transaction except as expressly authorized pursuant to the Loan Documents;
(ii) engage directly or indirectly in any business or conduct any
operations except as expressly authorized pursuant to the Loan Documents; or
(iii) make any acquisitions of or capital contributions to or other investments
in any Person, except pursuant to the Loan Documents.
(i) Establish
or deposit any monies, securities or any other assets in any Other Account
without the prior written consent of the Lender.
(j) Sell,
assign (by operation of law or otherwise) or otherwise dispose of any of the
Guaranty Collateral, or create or suffer to exist any Lien or other charge
or
encumbrance upon or with respect to any of the Guaranty Collateral to secure
indebtedness of any Person, except for the security interest created by this
Security Agreement.
SECTION
3.04 Covenants
by Manchester.
Manchester covenants with the Lender that it shall not at any time make any
Distribution to its equity owners or any other Person if such Distribution
would
cause (i) a Guarantor Default or (ii) a Default or Event of Default (as those
terms are defined in the Loan Agreement).
SECTION
3.05 Covenants
by NCOC.
NCOC
represents and warrants to the Lender that, as of the date hereof, it does
not
own any interest in any retail installment sale contracts for any new or used
automobiles, light trucks, vans or minivans and covenants with the Lender that
it shall not on any date after the date of this Agreement own any such interest
or originate any such sale contracts.
SECTION
3.06 Financial
Reports.
Each
Guarantor shall furnish to Lender and its duly authorized representatives such
information respecting the business and financial condition such Guarantor
may
reasonably request, and without any request, the following financial statements
and reports, in a form satisfactory to Lender:
(a) As
soon
as available, and in any event within ten (10) calendar days after the close
of
each month, a copy of the consolidated and consolidating balance sheet of such
Guarantor and the Borrower as of the close of the preceding month and the
consolidated and consolidating statements of income, retained earnings and
cash
flows of such Guarantor and for the preceding month, each in reasonable detail
showing in comparative form the figures for the corresponding date and period
in
the previous fiscal year (to the extent available to compare), prepared in
accordance with GAAP, consistently applied;
(b) As
soon
as available, and in any event within ninety (90) calendar days after the close
of each fiscal year of such Guarantor, a copy of the consolidated and
consolidating balance sheets of such Guarantor and the Borrower as of the close
of such period and the consolidated and consolidating statements of income,
retained earnings and cash flows of such Guarantor and the Borrower for such
period, and all supporting schedules and footnotes thereto, all in detail
reasonably satisfactory to Lender, prepared in accordance with GAAP,
consistently applied. All such annual financial statements shall be audited
by a
firm of independent public accountants of recognized standing, selected by
such
Guarantor and satisfactory to Lender, in accordance with GAAP, and shall be
accompanied by the written statement of the accountants who prepared the audited
financial statements, certifying whether such accountants have obtained
knowledge of any Event of Default under the Loan Documents;
-13-
(c) As
soon
as available, and in any event within forty-five (45) calendar days prior to
the
close of each annual accounting period of such Guarantor, pro forma balance
sheets and statements of income, retained earnings and cash flows of the
Borrower for the next annual accounting period;
(d) Promptly
after receipt thereof, any additional written reports, management letters or
other detailed information contained in writing concerning significant aspects
of such Guarantor’s or any of its subsidiary’s operations or concerning
significant aspects of such Guarantor’s or any of its subsidiary’s financial
affairs, given to it by its independent public accountants;
(e) Promptly
after receipt thereof and in no event more than five (5) Business Days
thereafter, a copy of each audit or other report made by any state or federal
agency of the books and records or assets of such Guarantor of its compliance
or
non-compliance with applicable laws relating to the underwriting, origination,
servicing and/or collection of loans;
(f) Promptly
(but never more than five (5) Business Days) after knowledge thereof shall
have
come to the attention of such Guarantor, written notice of (i) any threatened
or
pending litigation or governmental proceeding or labor controversy against
such
Guarantor or (ii) the occurrence of any Guarantor Default;
(g) As
soon
as available, a copy of all federal and state tax returns filed by such
Guarantor during the current fiscal year and each fiscal year
hereafter;
(h) Within
ten (10) calendar days of a request therefor from Lender, such other information
(whether financial or otherwise) regarding such Guarantor as Lender shall
reasonably require; and
(i) As
soon
as available, and in any event within ten (10) calendar days prior to the
beginning of each calendar month, monthly financial projections of such
Guarantor for the next month.
Each
of
the financial statements furnished to Lender pursuant to subsections (b) and
(c)
of this Section shall be accompanied by a written certificate signed by the
chief financial officer or other authorized representative of Manchester, to
the
effect that to the best of the chief financial officer’s or applicable
authorized representative’s knowledge and belief no Default or Event of Default
has occurred during the period covered by such statements or, if any such
Default or Event of Default has occurred during such period, setting forth
a
description of such Default or Event of Default and specifying the action,
if
any, taken to remedy the same.
-14-
ARTICLE
IV
GUARANTOR
ACCOUNTS
SECTION
4.01 Guarantor
Accounts.
Within
15 calendar days after the date hereof, each Guarantor shall enter into account
control agreements with the Lender, the Collateral Agent and the applicable
banks with respect to all the Guarantor Account(s) held in the name of such
Guarantor, each such account control agreements to be in form and substance
satisfactory to the Lender in its sole discretion.
ARTICLE
V
REMEDIES
SECTION
5.01 Remedies.
If any
Guarantor Default shall occur and be continuing, the Lender or the Collateral
Agent at the direction of the Lender may protect and enforce their rights under
the Guaranty and this Agreement by any appropriate proceedings, including
proceedings for specific performance of any covenant or agreement contained
in
the Guaranty and this Agreement and the following rights and
remedies:
(a) All
of
the rights and remedies of a secured party under the UCC, as amended, or other
applicable law.
(b) The
right, to the fullest extent permissible by law, to: (i) enter upon the premises
of any Guarantor, or any other place or places where the Guaranty Collateral
is
located and kept, without any obligation to pay rent to any Guarantor, through
self-help and without judicial process, without first obtaining a final judgment
or giving any Guarantor notice and opportunity for a hearing on the validity
of
such Secured Party’s claim, and remove the Guaranty Collateral therefrom to the
premises of any Secured Party or any agent of Lender, for such time as Lender
may desire, in order to effectively collect and liquidate the Collateral; and/or
(ii) require any Guarantor to assemble the Guaranty Collateral and make it
available to such Secured Party at a place to be designated by such Secured
Party, in Lender’s reasonable discretion.
(c) The
right
to sell or otherwise dispose of any or all Guaranty Collateral in its then
condition at public or private sale or sales, in lots or in bulk, for cash
or on
credit, all as any Secured Party, in its discretion, may deem advisable;
provided that such sales may be adjourned from time to time with or without
notice. The requirement of reasonable notice to Guarantors of the time and
place
of any public sale of the Guaranty Collateral or of the time after which any
private sale either by any Secured Party or at Lender’s option, a broker, or any
other intended disposition thereof is to be made, shall be met if such notice
is
mailed, postage prepaid, to Guarantors at the address of Guarantors designated
herein at least ten (10) Business Days before the date of any public sale or
at
least ten (10) Business Days before the time after which any private sale or
other disposition is to be made unless applicable law requires
otherwise.
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(d) Each
Secured Party shall have the right to conduct such sales on Guarantors’ premises
or elsewhere and shall have the right to use the Guarantors’ premises without
charge for such sales for such time or times as Lender may see fit. Each Secured
Party is hereby granted a license or other right to use, without charge,
Guarantors’ labels, copyrights, rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, or any property of a similar nature,
as it pertains to the Guaranty Collateral, in advertising for sale and selling
any Guaranty Collateral and Guarantors’ rights under all licenses and all
franchise agreements shall inure to the benefit of the Collateral Agent for
the
benefit of the Lender.
(e) Each
Secured Party shall have the right to sell, lease or otherwise dispose of the
Guaranty Collateral, or any part thereof, for cash, credit or any combination
thereof, and such Secured Party may purchase all or part of the Guaranty
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Secured Guaranty Obligations, all in the discretion of the Lender.
The proceeds realized from the sale of any Guaranty Collateral shall be applied
first to reasonable costs and expenses, attorney’s fees, expert witness fees
incurred by any Secured Party for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Guaranty Collateral;
second to all Secured Guaranty Obligations; and third the remainder, if any,
to
the Guarantors, their successors or assigns, or to whomsoever may be lawfully
entitled to receive the same. If any deficiency shall arise, each Guarantor
shall remain liable to the Secured Parties therefor.
(f) The
right
to appoint or seek appointment of a receiver, custodian or trustee of any
Guarantor or any of its properties or assets pursuant to court
order.
(g) All
other
rights and remedies that any Secured Party may have at law or in
equity.
Additionally,
if any Guarantor Default shall occur and be continuing, each Secured Party
may
enforce the payment of any Secured Guaranty Obligations due it or enforce any
other legal or equitable right which it may have. All rights, remedies and
powers conferred upon the Secured Parties under the Guaranty and this Agreement
shall be deemed cumulative and not exclusive of any other rights, remedies
or
powers available under the Guaranty and this Agreement or at law or in
equity.
SECTION
5.02 No
Waiver.
No
delay, failure or omission of any Secured Party to exercise any right upon
the
occurrence of any Guarantor Default shall impair any such right or shall be
construed to be a waiver of any such Guarantor Default or an acquiescence
therein. Any Secured Party may, from time to time, in a writing waive compliance
by the other parties with any of the terms of the Guaranty and this Agreement
and its rights and remedies upon any Guarantor Default, and, and each Guarantor
agrees that no waiver by any Secured Party shall ever be legally effective
unless such waiver shall be acknowledged and agreed to in writing by Lender.
No
waiver of any Guarantor Default by any Secured Party shall impair any right
or
remedy of such Secured Party not specifically waived. No single, partial or
full
exercise of any right of any Secured Party shall preclude any other or further
exercise thereof. No modification or amendment of or supplement to this
Agreement or any other written agreement between the parties hereto shall be
valid or effective (or serve as a basis of reliance by way of estoppel) unless
the same is in writing and signed by the Lender and the party against whom
it is
sought to be enforced. The acceptance by any Secured Party at any time and
from
time to time of a partial payment or partial performance of any of Secured
Guaranty Obligations set forth herein shall not be deemed a waiver, reduction,
modification or release from any Guarantor Default then existing. No waiver
by
any Secured Party of any Guarantor Default shall be deemed to be a waiver of
any
other existing or any subsequent Guarantor Default.
-16-
SECTION
5.03 Appointment
Of Lender As Attorney-In-Fact.
Each
Guarantor irrevocably designates, makes, constitutes and appoints each Secured
Party (and all persons reasonably designated by any Secured Party), with full
power of substitution, as such Guarantor’s true and lawful attorney-in-fact (and
not agent-in-fact) and each Secured Party, or such Secured Party’s agent, may,
without notice to any Guarantor, and at such time or times thereafter as such
Secured Party or said agent, in its discretion, may determine, in any
Guarantor’s or such Secured Party’s name, at no duty or obligation on such
Secured Party, do the following:
(a) Upon
the
occurrence of any Guarantor Default, all acts and things necessary to fulfill
the Guarantor’s obligations under this Agreement and the other Loan Documents,
except as otherwise set forth herein, at the cost and expense of the
Guarantors.
(b) In
addition to, but not in limitation of the foregoing, at any time or times upon
the occurrence of a Guarantor Default, each Secured Party shall have the right:
(i) to enter upon Guarantors’ premises and to receive and open all mail directed
to the Guarantors and remove all payments to the Guarantors on the Guaranty
Collateral; (ii) in the name of the Guarantors, to notify the Post Office
authorities to change the address for the delivery of mail addressed to the
Guarantors to such address as such Secured Party may designate; (iii) demand,
collect, receive for and give renewals, extensions, discharges and releases
of
any Guaranty Collateral; (iv) institute and prosecute legal and equitable
proceedings to realize upon the Guaranty Collateral; (v) settle, compromise,
compound or adjust claims in respect of any Guaranty Collateral or any legal
proceedings brought in respect thereof; (vi) generally, sell in whole or in
part
for cash, credit or property to others or to itself at any public or private
sale, assign, make any agreement with respect to or otherwise deal with any
of
the Guaranty Collateral as fully and completely as though such Secured Party
were the absolute owner thereof for all purposes, except to the extent limited
by any applicable laws and subject to any requirements of notice to the
Guarantors or other persons under applicable laws; (vii) take possession and
control in any manner and in any place of any cash or non-cash items of payment
or proceeds of Guaranty Collateral; (viii) endorse the name of the Guarantors
upon any notes, acceptances, checks, drafts, money orders, chattel paper or
other evidences of payment of Guaranty Collateral that may come into the
possession of such Secured Party; and (ix) sign the Guarantors’ name on any
instruments or documents relating to any of the Guaranty Collateral. The
appointment of each Secured Party as attorney-in-fact for the Guarantors is
coupled with an interest and is irrevocable.
-17-
ARTICLE
VI
EXPENSES
AND INDEMNITIES
SECTION
6.01 Payment
For Expenses.
The
Guarantors shall pay (within thirty (30) days after any invoice or other
statement or notice) all costs and expenses incurred by any Secured Party or
any
of their affiliates, including, without limitation, (a) all documentation and
diligence fees and expenses, (b) all search, appraisal, recording, professional
and filing fees and expenses and all other out-of-pocket charges and expenses
(including, without limitation, UCC and judgment and tax lien searches and
UCC
filings and fees for post-closing UCC, judgment and tax lien searches and wire
transfer fees), (c) all audit fees and expenses, (d) all of the Secured Parties’
attorneys’ fees and expenses, but only to the extent incurred after a Guarantor
Default or incurred in connection with (i) any effort to enforce, protect or
collect payment of any Secured Guaranty Obligations or to enforce the Guaranty
or this Agreement or any related agreement, document or instrument, or effect
collection hereunder or thereunder, (ii) instituting, maintaining, preserving,
enforcing and foreclosing on the Liens of the Collateral Agent for the benefit
of the Secured Parties in any of the Guaranty Collateral, whether through
judicial proceedings or otherwise, (v) defending or prosecuting any actions,
claims or proceedings arising out of or relating to the Secured Parties’
transactions with the Guarantors unless there is a final, non-appealable
judgment by a court which finds the applicable Secured Party to have acted
in
gross negligence or willful misconduct in connection therewith, or (vi) any
modification, restatement, supplement, amendment, waiver or extension of this
Agreement, the Guaranty or any related agreement, document or instrument, and
all of the same may and shall be part of the Secured Guaranty Obligations.
ARTICLE
VII
COLLATERAL
AGENT
SECTION
7.01 Exculpation,
Collateral Agent’s Reliance, Etc.
Neither
Collateral Agent nor any of its directors, officers, agents, attorneys, or
employees shall be liable to Lender, any Guarantor or any other Person for
any
action taken or omitted to be taken by any of them under or in connection with
the this Agreement or the Guaranty, including their negligence of any kind,
except that each shall be liable for its own gross negligence or willful
misconduct, as determined by a non-appealable judgment of a court of competent
jurisdiction. Without limiting the generality of the foregoing, Collateral
Agent
(a) may consult with legal counsel (including counsel for the Guarantors),
independent public accountants and other experts selected by it and shall not
be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (b) makes
no
warranty or representation to Lender and shall not be responsible to Lender
for
any statements, warranties or representations made in or in connection with
the
Loan Documents; (c) shall not have any duty to ascertain or to inquire as to
the
performance or observance of any of the terms, covenants or conditions of the
this Agreement or the Guaranty on the part of any Guarantor or to inspect the
property (including the books and records) of any Guarantor; (d) shall not
be
responsible to Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any this Agreement or the Guaranty or
any
instrument or document furnished in connection therewith; (e) may rely upon
the
representations and warranties of each Guarantor or Secured Party in exercising
its powers hereunder; and (f) shall incur no liability to Lender under or in
respect of the this Agreement or the Guaranty by acting upon any notice,
consent, certificate or other instrument or writing (including any facsimile,
telegram, cable or telex) believed by it to be genuine and signed or sent by
the
proper Person or Persons. Collateral Agent shall not be liable to Lender, any
Guarantor or any other Person for special, exemplary, punitive or consequential
damages. The Collateral Agent shall be fully justified in failing or refusing
to
take any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Lender as it deems appropriate
or it shall first be indemnified to its satisfaction by the Lender against
any
and all liability and expense which may be incurred by it by reason of taking
or
continuing to take any such action.
-18-
SECTION
7.02 Benefit
of
Article 7.
The
provisions of this Article are intended solely for the benefit of Lender, and
no
Guarantor shall be entitled to rely on any such provision or assert any such
provision in a claim or defense against Lender. Lender and the Collateral Agent
may waive or amend such provisions as they desire without any notice to or
consent of any Guarantor.
SECTION
7.03 Resignation
And
Removal Of Collateral Agent.
Collateral Agent may be removed and may resign in accordance with the provisions
of Section 9.5 of the Loan Agreement.
SECTION
7.04 Notice
of Guarantor Default.
Collateral Agent shall not be deemed to have knowledge or notice of the
occurrence of any Guarantor Default, unless Collateral Agent shall have received
written notice from a Lender or a Guarantor referring to this Agreement,
describing such Guarantor Default and stating that such notice is a “notice of
default.” Collateral Agent will notify Lender of its receipt of any such notice.
Collateral Agent shall take such action with respect to such Guarantor Default
as may be directed by Lender; provided, however, that unless and until
Collateral Agent has received any such direction, Collateral Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Guarantor Default as it shall deem advisable or in the
best
interest of Lender.
ARTICLE
VIII
MISCELLANEOUS
SECTION
8.01 Notices.
Except
when telephonic notice is expressly authorized by this Agreement, any notice
or
other communication to any party in connection with this Agreement shall be
in
writing and shall be sent by manual delivery, telegram, facsimile transmission,
overnight courier or United States mail (postage prepaid) addressed to such
party at the address specified on Schedule A to the Loan Agreement, or at
such other address as such party shall have specified to the other party hereto
in writing. All periods of notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending thereof if sent by
telegram, or facsimile transmission, from the first Business Day after the
date
of sending if sent by overnight courier, or from four days after the date of
mailing if mailed.
SECTION
8.02 Prior
Agreements Superseded.
This
Agreement, together with the other Loan Documents, constitute the sole and
only
agreement of the parties hereto and supersede any prior understandings or
written or oral agreements between the parties respecting the subject matter
of
this Agreement and the other Loan Documents. No provision of this Agreement
or
other Loan Document may be modified, waived or terminated except by instrument
in writing executed by the Lender and the party against whom a modification,
waiver or termination is sought to be enforced.
-19-
SECTION
8.03 Parties
Bound.
This
Agreement shall be binding upon the Guarantors, the Collateral Agent, Lender
and
their respective successors and assigns, and shall inure to the benefit of
the
Guarantors, the Collateral Agent, Lender and the successors and permitted
assigned of each Guarantor, the Collateral Agent and Lender. No Guarantor shall
assign its rights or duties hereunder without the consent of
Lender..
SECTION
8.04 No
Third Party Beneficiary.
This
Agreement is for the sole benefit of the Secured Parties and is not for the
benefit of any third party.
SECTION
8.05 Execution
In Counterparts.
This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, and all of which taken together shall
constitute but one and the same instrument.
SECTION
8.06 Severability
Of Provisions.
Any
provision which is determined to be unconscionable, against public policy or
any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION
8.07 Further
Instruments.
Each
Guarantor shall from time to time execute and deliver, and shall cause each
of
its subsidiaries to execute and deliver, all such amendments, supplements and
other modifications hereto and to the other Loan Documents to which they are
party and all such financing statements or continuation statements, instruments
of further assurance and any other instruments, and shall take such other
actions, as any Secured Party reasonably requests and deems necessary or
advisable in furtherance of the agreements contained herein.
SECTION
8.08 GOVERNING
LAW.
THIS
AGREEMENT SHALL BE DEEMED A CONTRACT AND INSTRUMENT MADE UNDER THE LAWS OF
THE
STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED STATES
OF AMERICA. EACH PARTY HERETO HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST IT WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK AS LENDER MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, EACH
PARTY HERETO ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS. EACH PARTY HERETO AGREES THAT SECTIONS 5-1401 AND 5.1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS AGREEMENT AND
WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE
SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. EACH PARTY HERETO HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND AGREES THAT ALL
SUCH
SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO IT AT THE ADDRESS
SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
UPON ACTUAL RECEIPT THEREOF.
-20-
SECTION
8.09 CONSENT
OF JURISDICTION.
AT THE
OPTION OF LENDER, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK; AND EACH PARTY HERETO CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT ANY RELATED PARTY COMMENCES
ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS, LENDER AT ITS OPTION SHALL BE ENTITLED
TO
HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
SECTION
8.10 WAIVER
OF JURY
TRIAL.
EACH
PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO
ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY OF THE
OTHER LOAN DOCUMENTS, OR (b) ARISING FROM ANY LENDING RELATIONSHIP EXISTING
AMONG THE COLLATERAL AGENT AND LENDER, ON THE ONE HAND, AND THE RELATED PARTIES,
ON THE OTHER HAND, IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
SECTION
8.11 TIME
OF ESSENCE.
Time is
of the essence for the performance of the obligations set forth in this
Agreement and the Guaranty.
signature
pages follow
-21-
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be
duly executed by their respective officers thereunto duly authorized, as of
the
day and year first above written.
Manchester,
Inc., a Nevada corporation
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By: | /s/ Xxxxxxx Xxxxxx | |
Name: |
Xxxxxxx Xxxxxx |
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Title: |
Secretary |
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Nice
Cars Acceptance AcquisitionCo., Inc.,
a
Delaware corporation
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By: | /s/ Xxxxxxx Xxxxxx | |
Name: |
Xxxxxxx Xxxxxx |
|
Title: |
President |
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Nice
Cars Operations AcquisitionCo., Inc.,
a
Delaware corporation
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By: | /s/ Xxxxxxx Xxxxxx | |
Name: |
Xxxxxxx Xxxxxx |
|
Title: |
President |
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The
Bank of New York,
as
Collateral Agent
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By: | /s/ Xxxxxxx X. Xxxxxx | |
Name: |
Xxxxxxx X. Xxxxxx |
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Title: |
Vice President |
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Palm
Beach Multi-Strategy Fund, L.P.
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By: |
Palm
Beach Links Capital, L.P.,
its General
Partner
|
By:
PBL
Holdings, LLC,
its
General Partner
|
By: B. Xxxxx Xxxxx
Managing
Director
|
By: Xxxxxx X. Xxxxxxx
Managing
Director
|