AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT (this "Security Agreement"), dated
as of April 30, 2000 by and between NC CAPITAL CORPORATION, a California
corporation ("NCCC" or a "Grantor"), NC RESIDUAL II CORPORATION , a Delaware
corporation ("NCRC" or a "Grantor" and together with NCCC, the "Grantors"), and
U.S. BANK NATIONAL ASSOCIATION, a national banking association ("USBNA"), as
collateral agent (in such capacity, together with any successor Agent hereunder,
the "Agent") for (A) the Lenders (as defined below), (B) U.S. Bancorp Leasing &
Financial, successor in interest to FBS Business Finance Corp. (the "Lessor"),
as lessor under any present or future leases of equipment by the Lessor, as the
lessor, to New Century Mortgage Corporation (the "Company") or New Century
Financial Corporation ("NCFC"), as lessee, or as lender under any present or
future loan by the Lessor, as lender, to the Company or NCFC, as Company,
secured by equipment, and (C) the Subordinated Noteholder (as defined below).
RECITALS
1. The Company, the lenders party thereto (the "Lenders") and the Agent
are party to the Fourth Amended and Restated Credit Agreement dated as of May
26, 1999 (as the same has heretofore been amended and as may hereafter be
amended, modified, extended or restated and in effect from time to time, the
"Credit Agreement").
B. The Lessor has leased, and may from time to time hereafter lease,
equipment to the Company or NCFC, or make loans to the Company or NCFC secured
by equipment.
C. USBNA has extended and has agreed to extend subordinated loans to the
Company under a Subordinated Loan Agreement (as the same may hereafter be
amended, modified, extended or restated and in effect from time to time, the
"Subordinated Loan Agreement") and a Second Amended and Restated Subordinated
Promissory Note in the principal amount of $40,000,000 (as the same may
hereafter be amended, modified, extended or restated and in effect from time to
time, the "Subordinated Note"), both of even date herewith.
D. It is a condition precedent to the agreement of USBNA to loan or
advance additional monies under such Subordinated Loan Agreement and the
Subordinated Note that each Grantor and the Agent execute and deliver this
Security Agreement to amend and restate the Security Agreement dated as of
February 17, 2000 from the Grantors to the Agent (the "Existing Security
Agreement").
E. NCCC is a wholly owned subsidiary of the Company and NCRC is a wholly
owned subsidiary of NCCC. Each Grantor participates with the Company in Company
Securitization Transactions, and has concluded that it is in its best interests
that the Company borrow the additional loans from USBNA.
Accordingly, each Grantor and the Agent hereby agree to amend and restate
the Existing Security Agreement as follows:
Section 1. Defined Terms.
Section 1.01. Terms Defined in Credit Agreement. All terms used herein
that are not otherwise defined herein but that are defined in the Credit
Agreement, including Exhibit E thereto, shall have the respective meanings
assigned to them therein unless otherwise expressly defined herein.
Section 1.02. Definition of Certain Terms. As used herein, the following
terms shall have the following respective meanings (such terms to be equally
applicable to both the singular and plural forms of the terms defined):
"Bankruptcy Code" shall mean 11 U.S.C.ss.101 et. seq., as amended from
time to time.
"Collateral" shall mean all property and rights in property now owned or
hereafter at any time acquired by either Grantor in or upon which a Lien is
granted to the Agent by such Grantor under this Security Agreement or under any
other document or instrument executed by such Grantor pursuant to this Security
Agreement, including, without limitation, the property described in Section 2.
"Company" shall have the meaning assigned to it in the introductory
paragraph hereof.
"Financing Statement" shall have the meaning given to such term in Section
4(c).
"GCFPI" shall mean Greenwich Capital Financial Products, Inc., a Delaware
corporation.
"Grantor Address" shall mean 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx 00000.
"Lease Agreement" shall mean each and any agreement for the lease of
equipment or for the making of a loan secured by equipment now existing or at
anytime entered into between the Lessor, as lessor or lender, and the Company or
NCFC, as lessee or borrower.
"Lease Obligations" shall mean all of the obligations now or hereafter
arising owed by the Company or NCFC to the Lessor in connection with any lease
of equipment or loan secured by equipment.
"Proceeds" shall mean any consideration received from the sale, exchange,
lease or other disposition of any asset or property which constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or other involuntary
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conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include all cash and negotiable instruments received or
held on behalf of the Agent pursuant to this Security Agreement.
"PWRESI" shall mean Xxxxx Xxxxxx Real Estate Securities Inc., a Delaware
corporation.
"Residual Financing" shall have the meaning assigned to it in Section
4(c).
"SBI": Salomon Brothers International, Limited, an English corporation.
"Secured Parties" shall mean the Agent, the Lenders, the Lessor, and the
Subordinated Noteholder.
"Securitization Documents" shall mean all agreements, instruments,
certificates, and other documents executed and delivered in connection with any
Company Securitization Transaction, as the same may be amended, modified,
extended or restated and in effect from time to time.
"Subordinated Note" shall have the meaning assigned to it in the Recital C
hereto.
"Subordinated Note Obligations" shall mean the obligations of the Company
to pay principal and interest on the Subordinated Note and all fees, costs,
expenses and indemnities for which the Company is liable in connection
therewith.
"Subordinated Noteholder" shall mean USBNA and any subsequent holder of
the Subordinated Note.
Section 1.03. Terms Defined in Uniform Commercial Code. All other terms
used in this Agreement that are not specifically defined herein or the
definitions of which are not incorporated herein by reference shall have the
meaning assigned to such terms in the Uniform Commercial Code in effect in the
State of Minnesota as of the date first above written (the "Uniform Commercial
Code") to the extent such other terms are defined therein.
Section 1.04. Rules of Interpretation. Unless the context of this Security
and Agreement otherwise clearly requires, references to "or" has the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereunder," and similar terms in this Security Agreement refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement. References to Sections, Attachments and Schedules are references to
Sections in, and Attachments and Schedules to, this Security Agreement unless
otherwise provided.
Section 2. Grant of Security Interest. As security for the payment and
performance of all of the Obligations (as defined in the Credit Agreement),
Lease Obligations, and Subordinated
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Note Obligations, each Grantor hereby assigns and pledges to the Agent for the
benefit of the Secured Parties and their respective successors and assigns, and
hereby grants to the Agent for the benefit of the Secured Parties and their
respective successors and assigns, a security interest in and to, all of such
Grantor's right, title, and interest in and to the following:
(a) all Junior Securitization Interests described on Schedules 1, 2
and 3 hereto, and all Junior Securitization Interests hereafter arising
(the "Pledged Junior Securitization Interests");
(b) all rights, remedies and other interests of such Grantor to and
under any agreement pursuant to which any Pledged Junior Securitization
Interest was, is or may be acquired, sold or financed, either before or
after the date hereof;
(c) all rights, remedies and other interests of such Grantor in any
Securitization Documents related to the Pledged Junior Securitization
Interests;
(d) all sums paid or payable to such Grantor under or by virtue of
any Pledged Junior Securitization Interests;
(e) all books, correspondence, credit files, records, invoices,
bills of lading, and other documents, including, without limitation, all
tapes, cards, computer runs, and other papers and documents in the
possession or control of such Grantor or any computer bureau from time to
time acting for such Grantor relating to the foregoing;
(f) any and all Hedging Arrangements related to the Pledged Junior
Securitization Interests or the Mortgage Loans backing the related Company
Securitization Transactions, and any and all rights, remedies and other
interests of such Grantor therein or thereunder;
(g) any and all balances, credits, deposits, accounts or moneys of,
or in the name of, such Grantor representing or evidencing the foregoing
or any proceeds thereof; and
(h) all Proceeds of any of the foregoing;
provided, however, that with respect to the Junior Securitization Interests
listed on Schedule 1 hereto, and any related Collateral described in clauses
(b), (c), (d), (e), (f), (g) and (h) above, such security interest shall not
take effect until consented to by GCFPI, and with respect to the Junior
Securitization Interests listed on Schedule 3 hereto, and any related Collateral
described in clauses (b), (c), (d), (e), (f), (g) and (h) above, such security
interest shall not take effect until consented to by PWRESI.
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Section 3. The Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements 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
Security Agreement had not been executed, (b) the exercise by the Agent of any
of the rights hereunder shall not release either Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral,
and (c) none of the Agent or the Secured Parties shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Security Agreement, nor shall the Agent or the Secured Parties be
obligated to perform any of the obligations or duties of either Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
Section 4. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) The chief place of business and the office where each Grantor
keeps its books and records concerning the Collateral is located at the
Grantor Address. The chief executive office of each Grantor is located at
the Grantor Address.
(b) Each Junior Securitization Interest described in Schedule 1, 2
or 3, or which is at any time hereafter created or acquired by either
Grantor is, or upon the creation or acquisition thereof by such Grantor
will be, in full force and effect without modification or amendment of any
kind.
(c) Each Grantor is the legal and beneficial owner of the Collateral
free and clear of any Lien except for the security interests created by
this Security Agreement and (i) in the case of Junior Securitization
Interests listed on Schedule 1, a Lien in favor of GCFPI, (ii) in the case
of Junior Securitization Interests listed on Schedule 2, a Lien in favor
of SBI, (iii) in the case of Junior Securitization Interests listed on
Schedule 3, a Lien in favor of PWRESI, and (iv) in the case of future
Junior Securitization Interests, a Lien in favor of the Person(s)
providing financing described in Section 4.08(d) of the Credit Agreement
("Residual Financing") secured by such Junior Securitization Interests. No
effective financing statement or other similar document used to perfect
and preserve a security interest under the laws of any jurisdiction (a
"Financing Statement") covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor
of the Agent relating to this Security Agreement or to perfect permitted
Liens as described above.
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(d) Each Grantor has good right, power and lawful authority to
pledge, assign and deliver the Collateral in the manner hereby done or
contemplated.
(e) No consent or approval of any governmental body, regulatory
authority, person, trust, or entity is or will be (i) necessary to the
validity of the rights created hereunder or (ii) required prior to the
assignment, transfer and delivery of any of the Collateral to the Agent,
except for the consent of SBI to the Agent's security interest in the
Junior Securitization Interests listed on Schedule 2, which has been
obtained.
(f) To each Grantor's knowledge, no material dispute, right of
setoff, counterclaim or defense exists with respect to all or any part of
the Collateral.
(g) This Security Agreement constitutes the legal, valid and binding
obligation of each Grantor enforceable against such Grantor and the
Collateral in accordance with its terms (subject to limitations as to
enforceability which might result from bankruptcy, reorganization,
arrangement, insolvency or other similar laws affecting creditors' rights
generally and general principles of equity).
(h) Immediately upon the acquisition by either Grantor of rights in
the Collateral and the filing of an appropriate financing statement in the
appropriate filing office or offices, the Agent shall have a valid,
perfected security interest and lien in the Collateral, subject to no
other security interest or lien except as provided in this Security
Agreement.
(i) Neither Grantor has used any trade names and styles in its
business during the last five years. No such trade names or styles and no
trademarks or other similar marks owned by either Grantor are or have been
registered with any governmental unit during the last five years.
Section 5. Covenants of the Grantors.
(a) Name Change. Without the prior written consent of the Agent,
neither Grantor will change its name from that set forth in the first
paragraph of this Security Agreement nor use any other name.
(b) Change of Location or Jurisdiction of Organization. Each Grantor
shall give at least 30 days' prior written notification to the Agent of
the opening of a new place of business where any of the Collateral or
records relating thereto are
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to be located, any other change in the location of the office where it
keeps its books and records concerning the Collateral, and of any change
in the location of its chief executive office. Neither Grantor will take
any action that would cause its jurisdiction of organization to change
without giving at least 30 days' prior written notification of such change
to the Agent and executing and delivering such financing statements
covering the Collateral as the Agent may request in connection therewith.
(c) Use of Trade Names or Styles. Neither Grantor will, except after
giving at least 30 days' prior written notice to the Agent, use any trade
names or styles in its business in any state.
(d) Inspection and Verification of Books Records and Collateral. The
Agent, or any persons designated by the Agent, shall have the right, at
reasonable times, without hindrance or delay, to inspect the books and
records of each Grantor relating to the Collateral. The Agent, or any
persons designated by the Agent, shall have the right to make such
verifications concerning each Grantor's business and the Collateral as may
be reasonable.
(e) Marking Collateral and Records. Promptly upon the request of the
Agent, each Grantor will xxxx, or will permit the Agent to xxxx in a
reasonable manner, such Grantor's books, records and accounts showing or
dealing with the Collateral with a notation clearly setting forth that a
security interest in the Collateral has been granted to the Agent for the
benefit of the Secured Parties, which notations shall be in form and
substance reasonably satisfactory to the Agent.
(f) Reports and Schedules. Each Grantor will from time to time as
the Agent may reasonably request, deliver to the Agent such schedules and
such certificates and reports respecting all or any of the Collateral, and
the items or amounts received by such Grantor in full or partial payment,
or otherwise as proceeds of any of the Collateral, all to such extent as
the Agent may reasonably request. Any such schedule, certificate or report
shall be executed by a duly authorized officer of such Grantor and shall
be in such form and detail as the Agent may reasonably specify. Each
Grantor will also furnish the Agent such additional information concerning
the Collateral as it may from time to time reasonably request.
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(g) Maintenance of Security Interest. Each Grantor will do all acts
and things, and will execute and file or record all instruments
(including, but not limited to, mortgages, pledges, assignments, security
agreements, financing statements, amendments to financing statements,
continuation statements, etc.) required, or reasonably requested by the
Agent, to establish, perfect, maintain and continue the perfection and
priority of the interests of the Agent in the Collateral. Each Grantor
will also pay the costs and expenses of: all filings and recordings,
including taxes thereon; all searches necessary, or reasonably deemed
necessary by the Agent, to establish and determine the validity and the
priority of such interests; and also to satisfy all other liens which in
the reasonable opinion of the Agent might prejudice, imperil or otherwise
affect the Collateral or the existence or priority of such interests. A
carbon, photographic or other reproduction of this Security Agreement or
of a financing statement shall be sufficient as a financing statement and
may be filed in lieu of the original in any or all jurisdictions which
accept such reproductions. On or before May 31, 2000, the Grantors shall
cause GCFPI and PWRESI to enter into intercreditor and agency agreements,
on terms reasonably acceptable to the Agent, concerning the Agent's
security interest in the Junior Securitization Interests described in
Schedules 1 and 3.
(h) Collections. Until notified in writing by the Agent to the
contrary, each Grantor shall, at its own expense, endeavor to collect as
and when due, all amounts due with respect to amounts payable under or
with respect to the Collateral, including the taking of such action with
respect to collection as such Grantor may deem advisable. Whenever an
Event of Default shall have occurred and be continuing, all collections of
the Collateral received by either Grantor shall be held in trust for the
Agent and shall be promptly remitted to the Agent in the form received,
properly endorsed, or as the Agent may otherwise direct in writing.
(i) Indemnity. Each Grantor will indemnify and save and hold the
Secured Parties harmless from and against any and all claims, damages,
losses, liability or judgments which may be incurred or sustained by, or
asserted against, any one or more of the Secured Parties, directly or
indirectly, in connection with the existence of or the exercise of any of
its or their rights under this Security Agreement; provided, that such
Grantor shall not be liable to any Secured Party for any portion of such
claims, damages, losses, liabilities or judgments resulting from (i) the
gross negligence or willful misconduct of the Secured Party seeking
indemnification, (ii) any breach by the Secured Party seeking
indemnification of the terms of the Loan Documents to which such Secured
Party is a party, or (iii) any violation of law by the Secured Party
seeking indemnification.
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(j) Third-Party Claims. Each Grantor will defend the Collateral and
the security interests therein against all claims and demands of all
Persons, at any time claiming any adverse interest with respect thereto,
except for claims of (i) GCFPI with respect to the Junior Securitization
Interests listed on Schedule 1, (ii) SBI with respect to the Junior
Securitization Interests listed on Schedule 2, (iii) PWRESI with respect
to the Junior Securitization Interests listed on Schedule 3, and (iv) in
the case of future Junior Securitization Interests, the Person(s)
providing Residual Financing secured by such Junior Securitization
Interests.
(k) Taxes. Each Grantor will promptly pay any and all taxes,
assessments and governmental charges upon the Collateral prior to the date
that penalties are attached thereto or the same become a lien on any of
the Collateral, except to the extent that such taxes, assessments and
charges shall be contested by such Grantor in good faith and through
appropriate proceedings.
(l) Additional Junior Securitization Interests. With respect to any
Junior Securitization Interests created or acquired after the date hereof,
the Grantors will promptly deliver the following documents to the Agent:
(i) copies of all Securitization Documents relating thereto, (ii) such
amendments to this Security Agreement and the related financing statements
as the Agent may deem necessary to describe more fully such Junior
Securitization Interests and any related Hedging Arrangements or other
Collateral, and (iii) an intercreditor and agency agreement with the
Person providing Residual Financing to either Grantor, on terms reasonably
acceptable to the Agent, with respect to such Junior Securitization
Interests.
(m) Disposition of Collateral. Neither Grantor will sell or offer to
sell or otherwise assign, transfer or dispose of any of the Collateral or
any interest therein except as and to the extent permitted under the
Credit Agreement.
Section 6. Remedies.
(a) Collections.
(i) Each Grantor shall have the right to collect all amounts
payable under the Collateral in the ordinary course of its business;
provided, however, that during the occurrence and continuation of an
Event of Default, each Grantor agrees, upon the request of the
Agent, promptly to
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deposit all payments received by such Grantor on account of the
Collateral, whether in the form of cash, checks, notes, drafts,
bills of exchange, money orders or otherwise, in one or more
accounts designated by the Agent in precisely the form received (but
with any endorsements of such Grantor necessary for deposit or
collection), subject to withdrawal by the Agent only, as hereinafter
provided, and until they are deposited, such payments shall be
deemed to be held in trust by such Grantor for and as the property
of the Secured Parties and shall not be commingled with any of such
Grantor's other funds. Notwithstanding the occurrence and
continuation of an Event of Default, each Grantor agrees to perform
under all Securitization Documents in accordance with its normal
collection practices, whether the remittances received in connection
with the Junior Subordination Interests are transferred to an
account for the benefit of the Agent or otherwise.
(ii) Upon receipt by the Agent of notice that an Event of
Default has occurred and is continuing, the Agent shall have the
right, as the true and lawful agent of each Grantor, with power of
substitution for each Grantor and in either Grantor's name, the
Agent's name or otherwise, for the use and benefit of the Secured
Parties, (A) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences
of payment relating to the Collateral or any part thereof; (B) to
demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (C) to sign
the name of either Grantor on any invoice or xxxx of lading relating
to any of the Collateral; (D) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or any
of the Collateral or to enforce any rights in respect of any
Collateral; (E) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the
Collateral; (F) to notify, or to require either Grantor to notify,
the Person obligated on any of or all the Collateral to make payment
thereof directly to the Agent; and (G) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise
deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Security
Agreement, as fully and completely as though the Agent were the
absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as
requiring or obligating the Agent or the Secured Parties to make any
commitment or to make any inquiry as to the nature or sufficiency of
any payment received by the Agent or the Secured Parties, or to
present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby,
and no action taken or omitted to be taken by the Agent or the
Secured
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Parties with respect to the Collateral or any part thereof shall
give rise to any defense, counterclaim or offset in favor of either
Grantor or to any claim or action against the Agent or the Secured
Parties. It is understood and agreed that the appointment of the
Agent as the agent of each Grantor for the purposes set forth above
is coupled with an interest and is irrevocable. The provisions of
this Section 6(a) shall in no event relieve either Grantor of any of
its obligations hereunder or under any of the other Loan Documents
with respect to the Collateral or any part thereof or impose any
obligation on the Agent or the Secured Parties to proceed in any
particular manner with respect to the Collateral or any part
thereof, or in any way limit the exercise by the Agent or any
Secured Party of any other or further right which it may have on the
date of this Security Agreement or hereafter, whether hereunder,
under any Loan Documents or by law or otherwise.
(iii) the rights of the Agent set forth in clauses (i) and
(ii) above, in Section 5(h) above and in Section 6(c) below are
subject to (A) with respect to the Junior Securitization Interests
described on Schedule 1, the rights of GCFPI, (B) with respect to
the Junior Securitization Interests described on Schedule 2, the
rights of SBI, (C) with respect to the Junior Securitization
Interests described on Schedule 3, the rights of PWRESI, and (D)
with respect to future Junior Securitization Interests, the rights
of the Person providing Residual Financing therefor.
(b) Right to Use Certain Assets of the Grantors. Upon receipt by the
Agent of notice that an Event of Default has occurred and is continuing,
the Agent and any representatives of the Agent shall have, in addition to
all its other rights under this Security Agreement, the right to obtain
access to each Grantor's data processing equipment, computer hardware and
software relating to the Collateral and to use all of the foregoing and
the information contained therein in any manner the Agent deems necessary
for the purpose of effectuating its rights under this Security Agreement
and any other Loan Documents. Each Grantor agrees that the Agent has no
obligation to preserve rights to the Collateral against any other parties.
The Agent is hereby granted a license or other right to use, without
charge, each Grantor's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks and
advertising matter, or any
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property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and each Grantor's rights
under all licenses and all franchise agreements shall inure to the Agent's
benefit until the Obligations are paid in full.
(c) Other Remedies. Upon receipt by the Agent of notice that an
Event of Default has occurred and is continuing, the Agent may, in
addition to any other right or remedy available to the Agent or the
Secured Parties under any Loan Documents, exercise any and all rights and
remedies available to it and/or the Secured Parties under the Uniform
Commercial Code as in effect in the State of Minnesota and any other
applicable law to the fullest extent permitted thereby. Without limiting
the foregoing, upon receipt of notice by the Agent that an Event of
Default has occurred and is continuing, the Agent may exercise any of the
following rights and remedies: (a) in the name of either Grantor, any
Secured Party or otherwise, to demand, collect, receive and receipt for,
compound, compromise, settle and give acquittance for, and prosecute and
discontinue any suits or proceedings in respect of any or all of the
Collateral; (b) upon written notice to either Grantor and any other Person
entitled to receive such notice under any Junior Securitization Interest
or the related Securitization Documents, specifying the effective date of
any assumption thereof, to assume, become bound by, and agree to perform
and observe the covenants, agreements, obligations and conditions to be
performed and observed under any Servicing Contract specified in such
notice and to exercise all of the rights, powers and privileges of such
Grantor thereunder; (c) to sell and assign to any other Person or Persons
the right, title and interest of either Grantor in any Servicing Contract
or Servicing Rights; (d) to require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of the Agent
forthwith, assemble all or part of the Collateral as directed by the Agent
and make it available to the Agent at a place to be designated by the
Agent that is reasonably convenient to both the Agent and the Grantors;
(e) without notice except as specified below, to sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any
of the Agent's offices or elsewhere, for cash, on credit, or for future
delivery, and upon such other terms as the Agent may reasonably believe
are commercially reasonable; (f) to occupy any premises owned or leased by
either Grantor where the Collateral or any part thereof or any books and
records relating thereto is assembled for a reasonable period in order to
effectuate the Agent's rights and remedies hereunder or under law, without
obligation to compensate such Grantor for such occupation; (g) to take any
action which the Agent may reasonably deem necessary or desirable in order
to realize on the Collateral, including, the power to endorse in
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the name of either Grantor any checks, drafts, notes or other instruments
or documents received in payment of or on account of the Collateral; and
(h) to exercise any and all rights and remedies of either Grantor under or
in connection with the Collateral. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' prior written
notice to such Grantor (which such Grantor agrees is reasonable
notification within the meaning of Section 9-504(3) of the Uniform
Commercial Code) 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 Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent 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. The
Agent may, but shall not be obligated to, advance any sums or do any act
or thing necessary to uphold and enforce its security interest hereunder,
including, without limitation, payment of amounts secured by prior Liens,
delinquent taxes or assessments and insurance premiums. All advances,
charges, costs and expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Agent in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement hereof,
together with interest thereon, at a rate per annum equal to the Reference
Rate plus the Applicable Margin plus 2.0%, from the time of payment until
repaid, shall become a part of the Obligations secured hereby.
(d) Waiver of Certain Claims. Each Grantor acknowledges that because
of present or future circumstances, a question may arise under the
Securities Act of 1933, as from time to time amended (the "Securities
Act"), with respect to any disposition of the Collateral permitted
hereunder. Each Grantor understands that compliance with the Securities
Act may very strictly limit the course of conduct of the Agent if the
Agent were to attempt to dispose of all or any portion of the Collateral
and may also limit the extent to which or the manner in which any
subsequent transferee of the Collateral or any portion thereof may dispose
of the same. There may be other legal restrictions or limitations
affecting the Agent in any attempt to dispose of all or any portion of the
Collateral under the applicable Blue Sky or other securities laws or
similar laws analogous in purpose or effect. The Agent may be compelled to
resort to one or more private sales to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment only and not to engage in
a distribution or resale thereof. Each Grantor agrees that the Agent shall
not incur any liability, and any liability of either Grantor for any
deficiency shall not be
13
impaired, as a result of the sale of the Collateral or any portion thereof
at any such private sale in a manner that in all other respects is
commercially reasonable (within the meaning of Section 9-504(3) of the
Uniform Commercial Code). Each Grantor hereby waives any claims against
the Agent arising by reason of the fact that the price at which the
Collateral may have been sold at such sale was less than the price that
might have been obtained at a public sale or was less than the aggregate
amount of the Obligations, even if the Agent shall accept the first offer
received and does not offer any portion of the Collateral to more than one
possible purchaser. Each Grantor further agrees that the Agent has no
obligation to delay sale of any Collateral for the period of time
necessary to permit the issuer of such Collateral to qualify or register
such Collateral for public sale under the Securities Act, applicable Blue
Sky laws and other applicable state and federal securities laws, even if
said issuer would agree to do so. Without limiting the generality of the
foregoing, the provisions of this Section would apply if, for example, the
Agent were to place all or any portion of the Collateral for private
placement by an investment banking firm, or if such investment banking
firm purchased all or any portion of the Collateral for its own account,
or if the Agent placed all or any portion of the Collateral privately with
a purchaser or purchasers.
Section 7. Application of Proceeds. The Agent shall apply the proceeds of
any collection, sale or other disposition of the Collateral as follows:
FIRST, ratably to the payment of the costs and expenses of the Agent
and the Secured Parties in connection with the enforcement of this
Security Agreement (including, without limitation, any costs or expenses
related to the sale or other disposition of the Collateral and any
advances made by the Agent pursuant to section 6(c) hereof) and the
reasonable fees and out of pocket expenses of counsel employed in
connection therewith, to the payment of all costs and expenses incurred by
the Agent in connection with the administration of this Security Agreement
and to the payment of all advances made by the Agent and the Secured
Parties for the account of the Company hereunder, to the extent that such
costs, expenses and advances have not been reimbursed to the Agent and the
Secured Parties, as the case may be;
SECOND, to the payment in full of the principal of and any Balances
Deficiency Fees, Usage Fees, facility fees and interest on the Notes;
THIRD, to the payment of all other Obligations, as provided in the
Credit Agreement, as the Agent or the Lenders may determine;
14
FOURTH, to the payment in full of the Lease Obligations, as provided
in the Lease Agreements, or otherwise, in such order as the Lessor may
determine;
FIFTH, to the payment in full of the Subordinated Note Obligations
until all of the Subordinated Note Obligations have been paid in full;
SIXTH, the balance (if any) of such proceeds shall be paid to the
Grantors, their successors or assigns, or as a court of competent
jurisdiction may direct; provided, that if such proceeds are not
sufficient to satisfy the Obligations, the Lease Obligations and the
Subordinated Note Obligations in full, the Company shall remain liable to
the Agent, the Lenders, the Lessor and the holder(s) of the Subordinated
Note, as applicable, for any deficiency.
The Company hereby agrees to pay all expenses incurred by the Agent or the
Secured Parties in the collection of the Collateral, including the reasonable
attorneys' fees incurred in connection therewith by the Agent or the Secured
Parties.
The Agent shall apply any such proceeds, moneys or balances in accordance with
this Security Agreement as promptly as is reasonably practicable. Upon any sale
of the Collateral by the Agent (including, pursuant to a power of sale granted
by statute or under a judicial proceeding), the receipt of the Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Agent or such officer or be answerable in any way for the
misapplication thereof.
Section 8. Amendments and Modifications. No amendment to this Security
Agreement, waiver of any provision of this Security Agreement or consent to any
departure by the Grantors therefrom shall in any event be effective unless the
same shall be in writing and signed or consented to in writing by the Agent
(with the consent of the Required Lenders, the Lessor and the Subordinated
Noteholder), and any such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
Section 9. Notices. Except as otherwise specifically provided for herein,
all notices and other communications provided for herein shall be in writing
(including teletransmission communication) and, unless otherwise required herein
or by law, shall be teletransmitted, mailed or delivered to the intended
recipient at the "Address for Notices" specified (i) in the case of the Agent or
the Lenders, in the Credit Agreement, (ii) in the
15
case of the Grantors, for the Company in the Credit Agreement, (iii) in the case
of the Lessor, by the Lessor to the Company from time to time, and (iv) in the
case of the Subordinated Noteholder, in the Subordinated Loan Agreement. All
notices and other communications hereunder shall be effective when transmitted
by telex or telecopier, delivered or, in the case of a mailed notice or notice
sent by overnight courier, upon receipt thereof as conclusively evidenced by the
signed receipt therefor, in each case given or addressed as aforesaid.
Section 10. Indemnification and Costs and Expenses. The Grantors will (a)
pay all reasonable out-of-pocket expenses incurred by the Agent or the Secured
Parties in connection with (i) the administration of this Security Agreement
(whether or not the transactions hereby contemplated shall be consummated), and
(ii) the enforcement of the rights of the Agent and the Secured Parties in
connection with this Security Agreement; (b) pay, and hold the Agent and the
Secured Parties harmless from and against, any and all present and future stamp
and other similar taxes with respect to the foregoing matters, and save the
Agent and the Secured Parties harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes; and (c) pay, and indemnify and hold harmless the Agent and the Secured
Parties from and against, any and all liabilities, obligations, losses, damages,
penalties, judgments, suits, costs, expenses and disbursements of any kind
whatsoever (the "Indemnified Liabilities") which may be imposed on, incurred by
or asserted against any of them in any way relating to or arising out of this
Security Agreement or any of the transactions contemplated hereby or thereby,
WHETHER OR NOT THE SAME ARE CAUSED BY THE SIMPLE NEGLIGENCE OF THE AGENT OR ANY
SECURED PARTY, unless the same are caused by the gross negligence or willful
misconduct of the Agent or such Secured Party, as the case may be. The
undertakings of the Company set forth in this Section 10 shall survive the
payment in full of the Obligations, the Lease Obligations, the Subordinated Note
Obligations, and the termination of this Security Agreement, the Credit
Agreement, the other Loan Documents, all Lease Agreements and the Subordinated
Note.
16
Section 11. Termination. This Security Agreement shall terminate when all
the Obligations, Lease Obligations and Subordinated Note Obligations have been
fully and indefeasibly paid and performed and the Commitments, all Lease
Agreements and the Subordinated Loan Agreement have expired, at which time the
Agent shall reassign and redeliver, without recourse upon, or representation or
warranty by, the Agent or any Secured Party and at the expense of the Grantors,
to the Grantors or to such other Person or Persons as the Grantors shall
designate, against receipt, such of the Collateral (if any) as shall not have
been sold or otherwise disposed of by the Agent pursuant to the terms hereof,
and shall still be held by the Agent, together with appropriate instruments of
reassignment and release; provided, however, that this Security Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Obligations, the Lease Obligations, or the
Subordinated Note Obligations is rescinded or must otherwise be returned by the
Agent, any Secured Party or any other Person upon the insolvency, bankruptcy or
reorganization of either Grantor or otherwise, all as though such payment had
not been made.
Section 12. Waivers, etc. No failure on the part of the Agent to exercise
and no delay in exercising, any power or right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 13. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
THIS SECURITY AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW, BUT NOT THE LAW OF CONFLICTS, OF
THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE
GRANTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION AND VENUE
OF ANY MINNESOTA STATE OR FEDERAL COURT SITTING IN HENNEPIN OR XXXXXX COUNTIES,
STATE OF MINNESOTA, FOR ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT, AND THE GRANTORS HEREBY IRREVOCABLY AGREE THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH MINNESOTA STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. THE GRANTORS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY
MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM AND VENUE OBJECTIONS
TO THE
17
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. THE GRANTORS HEREBY WAIVE PERSONAL
SERVICE OF PROCESS AND CONSENT THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED
OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9 OF THIS SECURITY
AGREEMENT, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED ON THE THIRD BUSINESS
DAY AFTER SUCH SERVICE IS DEPOSITED IN THE MAIL. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT, ANY SECURED PARTY OR ANY OTHER INDEMNIFIED PERSON TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE GRANTORS AND THE AGENT HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 14. Miscellaneous.
(a) Benefit of Agreement. This Security Agreement shall be binding
upon and inure to the benefit of each Grantor and the Agent and their
respective successors and assigns, and shall inure to the benefit of the
Secured Parties and their respective successors and assigns, except that
neither Grantor may assign or transfer any of its rights or obligations
under this Security Agreement without the prior written consent of the
Secured Parties.
(b) Successor Collateral Agent. In the event a successor Agent is
appointed pursuant to the Credit Agreement, such successor Agent shall
also succeed to the duties and responsibilities of the Agent hereunder.
From and after the payment in full of all of the Obligations and the
termination of the Commitments, the Agent under the Credit Agreement at
the time of such payment and termination shall remain the Agent hereunder
until the Lease Obligations and the Subordinated Note Obligations have
been paid in full and all Lease Agreements and the Subordinated Note
Agreement have been terminated; provided, however, that if any Person
other than USBNA is the Agent hereunder at such time, USBNA may direct
that such Person resign as Agent and appoint USBNA as successor Agent
hereunder.
(c) No Commitment by Lessor or Subordinated Noteholder. Nothing in
this Security Agreement shall be construed as a commitment on the part of
the Lessor to lease any equipment or make any loan, or on the part of the
Subordinated Noteholder to extend any loan pursuant to the Subordinated
18
Loan Agreement or the Subordinated Note, to or for the account of the
Company or NCFC.
(d) Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants made by either Grantor to the
Agent or the Secured Parties in connection with this Security Agreement
shall survive the execution and delivery of this Security Agreement. All
statements contained in any certificate or other instrument delivered to
the Agent or the Secured Parties pursuant to this Security Agreement shall
be deemed representations, warranties and covenants hereunder of such
Grantor.
(e) Headings. Section headings in this Security Agreement are for
convenience of reference only, and shall not govern the interpretation of
any of the provisions of this Security Agreement.
(f) Execution in Counterparts. This Security Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and either of the parties hereto
may execute this Security Agreement by signing any such counterpart.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Security Agreement as of the day and year first above written.
NC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------
Name:
---------------------------------
Title: President
-------------------------------
NC RESIDUAL II CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------
Name:
---------------------------------
Title: President
-------------------------------
U.S. BANK NATIONAL ASSOCIATION, as
Agent
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
[Signature Page to Amended and Restated Security Agreement]
