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Exhibit 4.16
COLLATERAL SHARING
AND
AGENCY AGREEMENT
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This Collateral Sharing and Security Agreement is dated as of April __,
1998 by and among NATIONAL RECORD MART, INC. ("Borrower"), NRM INVESTMENT, INC.
("Guarantor"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INC., as agent for the "Holders" under the Senior
Note Agreement (as defined below) ("▇▇▇▇▇▇▇"), FLEET CAPITAL CORPORATION
("Fleet"), and Fleet, as collateral agent for (i) Fleet and (ii) ▇▇▇▇▇▇▇ (Fleet,
in such capacity, the "Collateral Agent").
BACKGROUND
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Fleet and Borrower have entered into a Loan and Security Agreement dated as of
June 11, 1993 (as same has been or may be amended or modified from time to time,
the "Loan Agreement"). Pursuant to the terms of the Loan Agreement, Fleet
provides credit accommodations to Borrower. Fleet is willing to continue to make
such extensions of credit available to the Borrower upon the condition, among
others, that Borrower execute and deliver this Agreement to Collateral Agent.
Borrower, Guarantor (as hereafter defined) and ▇▇▇▇▇▇▇, individually and as
agent for the "Holders" thereunder have entered into a Senior Subordinated
Secured Note Purchase Agreement dated this date (as amended or modified from
time to time, the "Senior Note Agreement"). Pursuant to the terms of the Senior
Note Agreement, ▇▇▇▇▇▇▇ agreed to make certain extensions of credit available to
Borrower. ▇▇▇▇▇▇▇ is willing to make such extensions of credit available to
Borrower upon the condition, among others, that Borrower execute and deliver
this Agreement to Collateral Agent. Fleet has agreed to act as Collateral Agent
and allocate the Collateral among the Creditors (as herein defined) on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the parties hereto
agree as follows:
1. DEFINITIONS.
(A) Other Terms. All capitalized terms used herein and not
otherwise defined herein shall have the meanings given to them in the Loan
Agreement.
(B) GENERAL DEFINITIONS. When used in this Agreement, the
following terms shall have the following meanings:
BORROWER - National Record Mart, Inc., a Delaware corporation.
CODE - the Uniform Commercial Code as adopted and in force in the State
of New York, as from time to time in effect.
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COLLATERAL - shall have the meaning given to such term in the Loan
Agreement and shall also include all property and interests in property that now
or hereafter secure the payment and performance of Guarantor's obligations to
the Creditors.
COLLATERAL AGENT - Fleet Capital Corporation acting in its capacity as
collateral agent for the Creditors hereunder and any successor agent.
COLLATERAL AGENT AGREEMENTS - collectively, this Agreement, together
with such other written agreements among the Creditors and Collateral Agent, or
written instructions from any Creditor to Collateral Agent, as now or at any
time hereafter may be executed and/or delivered in connection herewith, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
COLLECTIONS - any payments or amounts realized or recovered or
otherwise received on any Collateral in respect of the Obligations.
CREDIT AGREEMENTS - collectively, the Lender Documents, the ▇▇▇▇▇▇▇
Documents and all agreements, documents and instruments now or at any time
hereafter executed and/or delivered by the Borrower in connection therewith or
related thereto, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
CREDITORS - collectively, Fleet , ▇▇▇▇▇▇▇ and their respective
successors and assigns.
EVENT OF DEFAULT - an event of default (if any) pursuant to the terms
of any Credit Agreement.
FLEET - Fleet Capital Corporation
▇▇▇▇▇▇▇ - ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ DOCUMENTS - the Senior Note Agreement and all agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by Borrower in connection therewith or related thereto, as same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
GUARANTOR - NRM Investment, Inc., a Delaware corporation.
LENDER DOCUMENTS - the Loan Agreement and all agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Borrower
in connection therewith or related thereto, as same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
LOAN AGREEMENT - as defined in the background section of this
Agreement.
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OBLIGATIONS - all loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from Borrower to the Creditors
of any kind or nature, under any Credit Agreement.
SECURED PARTY REMEDIES - any action which results in the sale,
foreclosure, realization upon, or a liquidation of, any Collateral.
SENIOR NOTE AGREEMENT - as defined in the background section of this
Agreement.
(C) ACCOUNTING TERMS. Any accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily given them in
accordance with GAAP.
(D) CODE TERMS. All terms used in this Agreement and defined in the
Code as adopted in shall have the meaning given therein unless otherwise defined
herein.
2. COLLATERAL AGENCY.
(A) APPOINTMENT OF COLLATERAL AGENT.
(i) For purposes of the Agreement, each Creditor hereby
irrevocably designates and appoints Fleet to act as Collateral Agent and
attorney-in-fact for and on behalf of each of the Creditors to take such action
on behalf of the Creditors under the provisions of this Agreement, and to
exercise such powers and to perform such duties, with respect to the management,
supervision, servicing, administration and disbursement of the Collateral
(including, without limitation, perfecting its security interest in the
Collateral by filing financing statements, holding physical possession of
instruments or otherwise) and the Collections of the Collateral as are
specifically delegated to or required of Collateral Agent by the terms of this
Agreement or the other Collateral Agent Agreements, together with such other
powers as are incidental thereto, with (1) full power of substitution and (2)
the power to select one or more sub-agents or designees to carry out certain
specific powers and obligations of Collateral Agent pursuant hereto. This power
of attorney is irrevocable while this Agreement remains in effect.
(ii) The Collateral Agent agrees to act as such on the express
conditions contained herein. The provisions of this Agreement and any other
Collateral Agent Agreements are solely for the benefit of Collateral Agent and
Creditors and neither Borrower, nor any other person shall have any right to
rely on, inquire into or enforce any of the provisions hereof. In performing its
functions and duties under this Agreement, the other Collateral Agent Agreements
and the Credit Agreements, Collateral Agent shall act solely as Collateral Agent
of Creditors and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for Borrower, or
any of its Affiliates. Collateral Agent shall have no duties or responsibilities
except as expressly set forth in this Agreement or the other Collateral Agent
Agreements. Collateral Agent shall not have, by reason of this Agreement or the
other Collateral Agent Agreements, a fiduciary relationship in respect of the
Creditors. In no event shall Collateral Agent be required to take any action
which, in Collateral Agent's opinion exposes Collateral Agent to liability
unless it has received an indemnification therefor on terms and conditions
reasonably
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satisfactory to it or which is contrary to any of the Credit Agreements or
applicable law. Collateral Agent shall not be removed as agent for the term of
this Agreement, without the prior written consent of all of the Creditors.
Collateral Agent shall at all times have the right to resign as agent without
the consent of the Creditors upon thirty (30) days prior written notice to each
of the Creditors and the appointment of a successor collateral agent in
accordance with the provisions of this Agreement.
(B) GENERAL POWERS OF COLLATERAL AGENT. Subject to and without
limitation of the terms of this Agreement, Creditors agree that Collateral Agent
shall have the right to and shall exercise the following powers as long as this
Agreement remains in effect:
(i) maintain, in accordance with its customary business
practices, ledger and records reflecting the status of the Collateral and/or
Collections, as the case may be;
(ii) execute and/or file in its name as Collateral Agent for
the benefit of the Creditors any and all financing or similar statements or
notices, amendments, renewals, supplements, documents, instruments, proofs of
claim, notices and other written agreements with respect to the Lender Documents
and hold and maintain physical possession of the instruments constituting the
Collateral;
(iii) exclusively receive, apply and distribute Collections as
provided in the Lender Documents, this Agreement and the other Collateral Agent
Agreements;
(iv) open and maintain such bank accounts and lock boxes as
Collateral Agent deems necessary and appropriate, in its discretion, for the
foregoing purposes with respect to the Collateral and/or the Collections;
(v) exclusively perform, exercise and enforce any and all
other rights and remedies of Creditors with respect to the Collateral or
otherwise related to any of same as provided in the Lender Documents, this
Agreement and the other Collateral Agent Agreements;
(vi) enter into landlord, mortgagee, bailee and other third
party agreements with respect Collateral located at leased or mortgaged
locations or held by bailees;
(vii) incur and pay such reasonable expenses as Collateral
Agent may deem necessary or appropriate for the performance and fulfillment of
its functions and powers pursuant to the Lender Documents, this Agreement and
the other Collateral Agent Agreements.
3. MANAGEMENT OF COLLATERAL. Collateral Agent, on behalf of Creditors,
shall have the exclusive right to manage, perform and enforce the terms of this
Agreement, the other Collateral Agent Agreements and the Lender Documents with
respect to the Collateral and to exercise and enforce all privileges and rights
thereunder according to its discretion and the exercise of its business
judgment, including, without limitation the rights and powers described in
Section 2(B) above and, the exclusive right to enforce or settle insurance
claims, take or retake control or possession of such Collateral and to hold,
prepare for sale, process, sell, lease, dispose of, or liquidate such
Collateral. In connection therewith, each Creditor waives any and all
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rights to affect the method or challenge the appropriateness of any action by
Collateral Agent provided that (i) Collateral Agent shall always proceed in a
commercially reasonable manner and in compliance with the terms of this
Agreement and (ii) Collateral Agent shall use its best efforts to consult with
and keep each Creditor advised on a current basis with respect to the exercise
of its Secured Party Remedies and endeavor to keep each Creditor advised of
information the Collateral Agent receives with respect to the Collateral
PROVIDED, the failure of Collateral Agent to provide any Creditor with any such
information shall not give rise to any liability to Collateral Agent hereunder.
4. SALES OF COLLATERAL.
Notwithstanding anything to the contrary contained in any of
the Agreements:
(A) At any time prior to the occurrence of an Event of Default
under the Lender Documents, Collateral Agent may restrict or permit, approve or
disapprove, the sale, transfer or other disposition of Collateral only upon the
joint direction of the Creditors. At any time following the occurrence of an
Event of Default under the Lender Documents and until the payment in full in
cash of all Obligations under the Lender Documents and the irrevocable
termination of Fleet's obligation to provide advances under the Lender
Documents, only Fleet shall have the right to direct Collateral Agent to
restrict or permit, or approve or disapprove, the sale, transfer or other
disposition of Collateral;
(B) Each Creditor shall authorize Collateral Agent to, within
five (5) Business Days after the request of Collateral Agent and Collateral
Agent will, immediately upon the request of any Creditor permitted to make such
a request pursuant to Section 4(A) above, release or otherwise terminate its
Liens upon the Collateral to the extent such Collateral is sold or otherwise
disposed of either by Collateral Agent or Borrower with the consent of Fleet
and/or or ▇▇▇▇▇▇▇, as the case may be, as may be required under the Credit
Agreements;
(C) Collateral Agent shall provide the Creditors with two (2)
Business Days prior written notice of sales of Collateral of which it has been
notified by (i) Borrower pursuant to the Loan Agreement and the Senior Note
Agreement and as to which it requests the release of the security interests
therein or (ii) the Creditor permitted to make such a request pursuant to
Section 4(A) above;
(D) In no event shall ▇▇▇▇▇▇▇ direct Collateral Agent to
exercise, nor shall ▇▇▇▇▇▇▇ exercise any Secured Party Remedies until such time
as the Obligations under the Lender Documents shall have been paid in full in
cash and Fleet's obligation to provide advances under the Lender Documents shall
have been irrevocably terminated PROVIDED, however, if Collateral Agent shall
breach its obligations to exercise Secured Party Remedies in a commercially
reasonable manner ▇▇▇▇▇▇▇ shall have the right, subject to the provisions of
Section 2(A)(ii) hereof, to direct Collateral Agent to take such action with
respect to the Collateral;
(E) Each Creditor acknowledges that this Agreement shall
constitute notice of their respective interests in the Collateral, request for
notice of sale and notice of demand for satisfaction of debt, in each case as
provided by Section 9-504 of the Uniform Commercial Code and each hereby waive
any right to compel any marshaling of any of the Collateral.
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5. INTERCREDITOR, COLLATERAL AND COLLECTIONS.
(A) Collateral Agent will, and shall have in such capacity the
exclusive right, to collect and receive all Collections. All Collections shall
be promptly distributed by Collateral Agent to the Creditors on the following
basis:
(i) So long as (x) no Event of Default shall have occurred and
be continuing and (y) Collateral Agent shall not have commenced exercising
Secured Party Remedies, the Collections shall be applied to the Obligations
under the Lender Documents in accordance with the provisions of the Loan
Agreement.
(ii) At any time following (x) the occurrence and during the
continuation of an Event of Default and (y) the commencement of Secured Party
Remedies by Collateral Agent:
(a) First, to the payment of any and all reasonable expenses
incurred by Collateral Agent for which reimbursement has not been made by
Borrower pursuant to the Lender Documents;
(b) Second, to Fleet to pay in full the outstanding
Obligations under the Lender Documents;
(c) Third, to ▇▇▇▇▇▇▇ to pay in full the outstanding
Obligations under the ▇▇▇▇▇▇▇ Documents;
(d) Fourth, any sums remaining after such applications and
disbursements shall be paid to the Person(s) entitled thereto or as a court of
competent jurisdiction shall direct.
(B) The security interests and liens upon the Collateral applicable
to ▇▇▇▇▇▇▇ shall be, in all respects, subject and subordinate to the security
interests and liens upon the Collateral of Fleet to the full extent of the
Obligations outstanding from time to time under the Lender Documents.
(C) All Collections received by Collateral Agent shall be held by
Collateral Agent for the benefit of Creditors and deposited by Collateral
Agent in one or more of its bank accounts and applied as provided herein.
Collateral Agent does not assume and shall not have any liability to Creditors
for the repayment of the Obligations except that Collateral Agent shall have
the obligation to account to Creditors for their applicable share of the
Collections as set forth in Section 5(A) hereof.
(D) Each Creditor hereby authorizes, instructs and directs the
Borrower to pay all sums now or hereafter due in respect of the Obligations
held by such Creditors constituting Collections directly to the Collateral
Agent for distribution to the Creditors in accordance with this Agreement.
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6. SETTLEMENT AND ADMINISTRATION.
(A) SETTLEMENT. Collateral Agent will from time to time in its
reasonable discretion (but no less frequently than once every quarter) provide
to each of the Creditors a statement of account with Borrower. Such statement
of account shall state the value of the Collateral as reported to Collateral
Agent by Borrower.
(B) COLLATERAL AGENT'S BOOKS AND RECORDS. Collateral Agent agrees
that it will keep a separate record or records of all the Collateral and of
the status of its account with Borrower, appropriately marked so as to show
the interest of the Creditors therein and that it will in the recording of the
Collateral on its books appropriately disclose the interests of Creditors
therein. Collateral Agent agrees that at any time and from time to time during
normal business hours, upon five days prior written notice it will permit
Creditors or their agents to examine Collateral Agent's books, records and
accounts relating to the Collateral and the Creditors Agreements. Creditors
agree that they will keep all such information confidential.
7. SCOPE OF COLLATERAL AGENCY, LIABILITY; INDEMNIFICATION.
(A) NON-RELIANCE ON COLLATERAL AGENT. Each Creditor agrees that it
has, independently and without reliance upon Collateral Agent or the other
Creditors, and based on such documents and information as it has deemed
appropriate, made and shall continue to make (a) its own independent
investigation of the financial condition and affairs of Borrower in connection
with the extension of credit pursuant to the Credit Agreements and the taking
or not taking of any action in connection herewith, and (b) its own appraisal
of the Collateral and the creditworthiness of Borrower. Except as specifically
provided herein, Collateral Agent shall have no duty or responsibility either
initially or on a continuing basis, to provide Creditors with any credit or
other information with respect thereto, whether coming into its possession
before making the extension of credit pursuant to the Credit Agreements or at
any time or times thereafter.
(B) RESPONSIBILITY OF COLLATERAL AGENT.
(i) Neither Collateral Agent nor any of its officers,
directors, employees or agents shall be liable to any Creditor or the Borrower
for any action taken or omitted to be taken in accordance with this Agreement,
the other Collateral Agent Agreements or, the Credit Agreements except as a
result of willful misconduct, bad faith or gross negligence on the part of
Collateral Agent or such other Persons. Collateral Agent does not assume any
responsibility for any failure or delay in performance or breach by Borrower
or any Creditor of its obligations in this Agreement, the other Collateral
Agent Agreements or the Credit Agreements.
(ii) Collateral Agent does not make to Creditors, and each of
Creditors, in their capacity as a lender, does not make to the others, any
express or implied warranty, representation or guarantee with respect to the
Obligations, Collateral, the Collections or the Credit Agreements. Collateral
Agent shall not be responsible to Lenders, and each Creditor shall not be
responsible to the other or the Collateral Agent, for: (i) any recitals,
statements, information, representations or warranties in connection with the
Credit Agreements, or (ii) the execution,
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effectiveness, genuineness, validity, enforceability, collectability, value or
sufficiency of the Obligations, the Collateral, the Collections, the Credit
Agreements, or be required to make any inquiry concerning either the
performance or observance of any other terms, provisions or conditions of the
Credit Agreements, or (iii) the assets, liabilities, financial condition,
results of operations, business or creditworthiness of Borrower, any obligor
or any account debtors.
(iii) Collateral Agent shall be entitled to act, and shall be
fully protected in acting upon, any communication in whatever form reasonably
believed by Collateral Agent to be genuine and correct and to have been signed
or sent or made by a proper person or persons or entity. Collateral Agent may
consult counsel and shall be entitled to act, and shall be fully protected in
any action taken in good faith in accordance with advice given by counsel.
Collateral Agent may employ agents and attorneys-in-fact approved in advance
and reasonably satisfactory to Creditors and shall not be liable for the
default or misconduct of any such agents or attorneys-in-fact selected by
Collateral Agent with reasonable care.
(C) CERTAIN RIGHTS OF COLLATERAL AGENT. If Collateral Agent shall
request instructions from Creditors with respect to any act or action
(including failure to act) in connection with the Credit Agreements,
Collateral Agent shall be entitled to refrain from such act or taking such
action unless and until Collateral Agent shall have received instructions from
the Creditors; and Collateral Agent shall not incur liability to any person by
reason of so refraining. Collateral Agent shall be entitled to act or refrain
from acting, and in all cases shall be fully protected in acting or refraining
from acting under this Agreement, the other Collateral Agent Agreements or the
Credit Agreements in accordance with any instructions from Creditors.
(D) INDEMNIFICATION.
(i) Borrower shall reimburse and indemnify Collateral Agent
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may be imposed on, incurred by or asserted against
Collateral Agent, in its capacity as such, in performing its duties hereunder
or in any way relating to or arising out of this Agreement or the Credit
Agreements, other than as a consequence of bad faith, willful misconduct or
gross negligence on the part of the Collateral Agent.
(ii) To the extent Collateral Agent is not reimbursed and
indemnified by Borrower out of Collateral or otherwise, Creditors will
reimburse and indemnify Collateral Agent in proportion to the Obligations
owing to them by Borrower at the time of such reimbursement or indemnification
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Collateral Agent, in its capacity as such, in performing its duties
hereunder or in any way relating to or arising out of this Agreement or the
Credit Agreements, other than as a consequence of bad faith, willful
misconduct or gross negligence on the part of Collateral Agent.
(iii) Without limiting the generality of the foregoing in the
event that, at any time, whether during, or after the term of this Agreement,
any action or proceeding shall be
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brought against Collateral Agent by Borrower or by any other person claiming
by, through or under Borrower or otherwise, which action shall be to recover
damages for any act taken or omitted by Collateral Agent under the Credit
Agreements or in the performance of any rights, powers or remedies of
Collateral Agent against Borrower, any account debtors of Borrower, the
Collateral or with respect to the Obligations, or which action or proceeding
shall be for any other relief of any kind, arising directly or indirectly out
of any transaction between Collateral Agent and Borrower under or in relation
to the Credit Agreements, each of the Creditors agree to indemnify and hold
harmless with respect thereto and to pay to Collateral Agent its proportionate
share based on the Obligations owing to them by Borrower at the time of such
reimbursement or indemnification of such amount as Collateral Agent shall be
required to pay by reason of a judgment, decree, or other order entered in
such action or proceeding or by reason of any compromise or settlement agreed
to by Collateral Agent with consent of each Credit, including, without
limitation, all interest and costs assessed against Collateral Agent in
defending or compromising such action, together with attorneys' fees and other
legal expenses paid or incurred by Collateral Agent in connection therewith
other than in connection with any action or proceeding arising as a
consequence of actual bad faith, willful misconduct or gross negligence on the
part of Collateral Agent. In Collateral Agent's reasonable discretion,
Collateral Agent may also, to the extent Collateral Agent is entitled to
indemnification hereunder, reserve for and/or satisfy any such judgment,
decree or order from Collections prior to any distributions therefrom to or
for the account of the Creditors.
(E) THE COLLATERAL AGENT IN ITS INDIVIDUAL CAPACITY. With
respect to its obligation to extend credit under the Lender Documents, the
Collateral Agent shall have the rights and powers specified herein for a
"Creditor" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the terms "Creditors", or any
similar terms shall, unless the context clearly otherwise indicates, include
Fleet in its individual capacity.
8. POWER OF ATTORNEY. Borrower hereby irrevocably appoints
Collateral Agent or any other Person whom Collateral Agent may designate as
Borrower's attorney-in-fact, with full power and authority in place and stead of
Borrower and in its own name to: (i) endorse Borrower's name on any checks,
notes, acceptances, money orders, drafts or other forms of payment or security
that may come into Collateral Agent's possession; (ii) sign Borrower's name on
any invoice or ▇▇▇▇ of lading relating to any Receivables, drafts against
customers, schedules and assignments of Receivables, notices of assignment,
financing statements and other public records, verifications of account and
notices to or from customers; (iii) verify the validity, amount or any other
matter relating to any Receivable by mail, telephone, telegraph or otherwise
with Account Debtors; (iv) execute customs declarations and such other documents
as may be required to clear Inventory through United States Customs; (v) do all
things necessary to carry out this Agreement, and all related documents; (vi)
continue any insurance existing pursuant to the terms of this Security Agreement
and pay all or any part of the premium therefor and the cost thereof; and (vii)
on or after the occurrence and continuation of an Event of Default, notify the
post office authorities to change the address for delivery of Borrower's mail to
an address designated by Collateral Agent, and to receive, open and dispose of
all mail addressed to Borrower. Borrower hereby ratifies and approves all acts
of the attorney. The powers conferred on the Collateral Agent hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. Neither Collateral Agent nor the attorney
will be liable for any acts or omissions or for any
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error of judgment or mistake of fact or law. This power, being coupled with an
interest, is irrevocable until the Obligations have been fully satisfied.
9. REMEDIES. Promptly upon obtaining actual knowledge of the
existence of an Event of Default under any Credit Agreement, Collateral Agent or
any Creditor shall notify the Creditors or the other Creditors and Collateral
Agent, as the case may be, of such Event of Default. Upon the occurrence and
during the continuance of an Event of Default, Collateral Agent shall have,
subject to Section 4(D), the sole and exclusive right to direct the time, method
and place of, and may exercise from time to time any rights and remedies
available to or any power conferred on the following rights and remedies:
(A) All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable rights
to which Collateral Agent may be entitled, all of which rights and remedies
shall be cumulative and shall be in addition to any other rights or remedies
contained in this Agreement or any Credit Agreement, and none of which shall be
exclusive.
(B) The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Collateral Agent at a place designated by Collateral
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, Borrower agrees not to charge Collateral Agent for storage thereof).
(C) The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Collateral
Agent, in its reasonable discretion, may deem advisable. Borrower agrees that 10
days written notice to Borrower of any public or private sale or other
disposition of Collateral shall be reasonable notice thereof, and such sale
shall be at such locations as Collateral Agent may designate in said notice.
Collateral Agent shall have the right to conduct such sales on Borrower's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with applicable law. Collateral Agent shall have the right to
sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Collateral Agent or any Creditor
may purchase all or any part of the 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 Obligations. The Collections shall be
applied in accordance with Section 5 hereof. If any deficiency shall arise,
Borrower shall remain liable to Collateral Agent and the Creditors therefor.
(D) Collateral Agent is hereby granted a license or other
right to use, without charge, Borrower's labels, patents, copyrights, rights of
use of any name, trade secrets, tradenames, trademarks and advertising matter,
or any Property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Collateral Agent's benefit.
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(E) No individual Creditor shall have any right to institute
any suit, action or proceeding at law or in equity for the enforcement of any
provisions of any Credit Agreement with respect to the Collateral. Except as
otherwise expressly provided herein, all rights and remedies provided in the
Credit Agreements with respect to the Collateral shall reside in and inure to
the benefit of Collateral Agent and Creditors collectively, and shall be
exercised solely by Collateral Agent for the ratable benefit of the Lenders in
accordance with the terms hereof and of the Credit Agreements. The provisions
of this Section are solely for the benefit of Collateral Agent and Creditors
and neither Borrower, any obligor nor any other person shall have any rights
to rely on, inquire into, or enforce any of the provisions hereof.
(F) All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Borrower contained in this
Agreement, the Credit Agreements or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule given to
Creditors or contained in any other agreement between any Creditor and Borrower,
heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrower herein contained. The failure or delay of
Collateral Agent or any Creditor to require strict performance by Borrower of
any provision of this Agreement or to exercise or enforce any rights, Liens,
powers, or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from Borrower
to any Creditor shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Borrower contained in
this Agreement, the Credit Agreements and no Event of Default by Borrower under
this Agreement or any Credit Agreement shall be deemed to have been suspended or
waived by any Creditor, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of each Creditor and directed to Borrower.
10. COSTS AND EXPENSES.
(A) Collateral Agent may incur and pay reasonable costs and
expenses to the extent it deems reasonably necessary or appropriate for the
performance and fulfillment of its functions ("Collateral Expenses"), powers and
obligations pursuant to the Credit Agreements including without limiting the
generality of the foregoing, court costs, attorneys' fees, costs of collection
by outside collection agencies and auctioneer's fees and costs of security
guards or insurance premiums paid to maintain the Collateral, whether or not
Borrower is obligated to reimburse Collateral Agent or the Creditors for such
expenses pursuant to the Credit Agreements or otherwise. Collateral Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
to reimburse Collateral Agent for such costs and expenses prior to the
distribution of any amounts to any of the Creditors.
(B) All reasonable costs and expenses of Collections and/or
disposition or realization upon the Collateral including, without limitation,
attorneys' fees, expenses of liquidations, salaries of employees involved in
collecting and/or liquidating Collateral and living expenses of such employees
if required to live away from home, incurred by Collateral Agent or
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Creditors hereunder or in connection herewith or in enforcing any of the
Obligations shall constitute a part of the Obligations and shall be borne by
Creditors PRO RATA in accordance with the outstanding principal balance of the
Obligations owing to each respectively, but only out of Collections. In
furtherance of the foregoing, in the event of liquidation, all Collections
thereafter received shall be applied by Collateral Agent as provided in
Section 5 hereof.
11. MISCELLANEOUS.
(A) NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been duly given or made: if
by telecopy, telex, telegram or by hand, immediately upon sending; if by
Federal Express, Express Mail or any other overnight delivery service, one (1)
day after dispatch; and if mailed by certified mail, return receipt requested,
five (5) days after mailing. All notices, requests and demands are to be given
or made to the respective parties at the following addresses (or to such other
address as any party may designate by notice in accordance with this Section):
If To Collateral Agent: Fleet Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Northeast Loan Administrator
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇ & Hessen LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: National Record Mart, Inc.;
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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If to ▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Sidley & Austin
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by notice given
in accordance with this Section.
(B) TERM. This Agreement shall become effective upon the date hereof
and shall continue in full force and effect for the term of the Credit
Agreements as provided therein. This Agreement shall automatically terminate
effective upon the effective date of the termination of the Credit Agreements,
except as otherwise specifically provided herein. Termination of this
Agreement shall not affect the respective rights or obligations hereunder
incurred prior to the effective date of such termination.
(C) NO BENEFIT TO THIRD PARTIES. The terms and provisions of this
Agreement shall be for the sole benefit of Collateral Agent, Creditors and, to
the extent permitted hereunder, Borrower and their permitted successors and
assigns and no other person, firm, entity or corporation shall have any right,
benefit, priority or interest under, or because of the existence of this
Agreement.
(D) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which, together, shall constitute one and the same instrument.
(E) FURTHER ASSURANCES. Each Creditor and Collateral Agent hereby
agree to execute and/or deliver any and all further documents, instruments or
agreements reasonably requested by the other party in order to give effect to,
and more fully carry out the terms and provisions of this Agreement including,
without limitation, providing copies of all amendments to any Credit
Agreements to each Creditor and Collateral Agent. Borrower, at its own
expense, shall do, make, execute and deliver all such additional and further
acts, things, deeds, assurances and instruments as the Collateral Agent may
require more completely to vest in and assure to the Collateral Agent its
rights hereunder or in any of the Collateral, including, without limitation,
(a) executing, delivering and, where appropriate, filing financing statements
and continuation statements under the Uniform Commercial Code, and powers of
attorney or other documents
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required by the Internal Revenue Service in order to enable the Collateral
Agent to exercise its rights hereunder, and (b) obtaining governmental and
other third party consents and approvals.
12. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. EACH CREDITOR SHALL HAVE THE RIGHTS AND REMEDIES OF A
CREDITOR UNDER APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM
COMMERCIAL CODE OF NEW YORK. BORROWER AGREES THAT ALL ACTIONS AND PROCEEDINGS
RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY CREDIT AGREEMENT OR
ANY OTHER OBLIGATIONS SHALL BE LITIGATED IN THE FEDERAL DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK OR, AT COLLATERAL AGENT'S OPTION, IN ANY OTHER
COURTS LOCATED IN NEW YORK STATE OR ELSEWHERE AS EACH CREDITOR MAY SELECT AND
THAT SUCH COURTS ARE CONVENIENT FORUMS AND BORROWER SUBMITS TO THE PERSONAL
JURISDICTION OF SUCH COURTS. BORROWER WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS THAT SERVICE OF PROCESS UPON BORROWER MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT BORROWER'S
ADDRESS APPEARING ON CREDITORS' RECORDS, AND SERVICE SO MADE SHALL BE DEEMED
COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED. BOTH PARTIES
HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN
BORROWER AND EACH CREDITOR AND BORROWER WAIVES THE RIGHT TO ASSERT IN ANY
ACTION OR PROCEEDING INSTITUTED BY EACH CREDITOR WITH REGARD TO THIS AGREEMENT
OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS WHICH IT MAY HAVE.
13. LIMITATION OF LIABILITY. Borrower acknowledges and understands
that in order to assure repayment of the Obligations Collateral Agent may be
required to exercise any and all of Collateral Agent's rights and remedies
hereunder and agrees that neither Collateral Agent nor any of Collateral
Agent's agents shall be liable for acts taken or omissions made in connection
herewith or therewith except for actual bad faith.
14. ENTIRE UNDERSTANDING. This Agreement and the Credit Agreements
contain the entire understanding between Borrower and the Creditors and any
promises, representations, warranties or guarantees not herein contained shall
have no force and effect unless in writing, signed by the Borrower's and each
Creditor's respective officers. Neither this Agreement, the Credit Agreements,
nor any portion or provisions thereof may be changed, modified, amended,
waived, supplemented, discharged, cancelled or terminated orally or by any
course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged.
15. SEVERABILITY. Wherever possible each provision of this Agreement
or the Credit Agreements shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement or the Credit Agreements shall be prohibited by or invalid under
applicable law such provision shall be ineffective to the extent of such
prohibi-
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tion or invalidity, without invalidating the remainder of such provision or
the remaining provisions thereof.
16. CAPTIONS. All captions are and shall be without substantive
meaning or content of any kind whatsoever.
17. MARSHALING. Collateral Agent shall not be required to marshal any
present or future collateral security (including but not limited to this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights hereunder
and in respect of such collateral security and other assurances of payment
shall be cumulative and in addition to all other rights, however existing or
arising. To the extent that it lawfully may, Borrower hereby agrees that it
will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of the Collateral Agent's rights
under this Agreement or under any other instrument creating or evidencing any
of the Obligations or under which any of the Obligations is outstanding or by
which any of the Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, Borrower hereby irrevocably
waives the benefits of all such laws.
18. CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this Agreement or any
amendments, schedules or exhibits thereto.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
NATIONAL RECORD MART, INC.
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President/CFO
NRM INVESTMENT, INC.
By:_____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
FLEET CAPITAL CORPORATION
By:_____________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior VP
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INC., as Agent
By:____________________________
Name: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Title: Senior VP
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