Exhibit 99.f.19
CUSTODIAL AGREEMENT
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THIS CUSTODIAL AGREEMENT (this "Agreement") is dated as of June ___, 1998
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among MCG FINANCE CORPORATION, a Delaware corporation with its principal place
of business at 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000
("Borrower"), MCG CREDIT CORPORATION, a Delaware corporation with its principal
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place of business at 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000
("Servicer"), XXXXXX FINANCIAL, INC., a Delaware corporation with an address at
000 X. Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, for itself and as
agent for certain other lenders ("Lender"), and XXXXX BANK, N.A., a national
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banking association with an address at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, XX
00000 ("Custodian").
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Agreement
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A. Borrower and Lender have entered into a Credit Agreement dated as of
June 24, 1998 (as same may be amended or modified from time to time, the
"Credit Agreement").
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B. Pursuant to the Credit Agreement, Lender is extending to Borrower a
revolving and term credit facility to fund the acquisition of certain "Finance
Acquired Assets" (as defined in the Credit Agreement), the origination of
"Eligible Assets" (as defined therein) and certain other purposes, which will be
secured by Finance Acquired Assets and "Eligible Loans" (as defined in the
Credit Agreement).
C. Servicer is acting as servicer of all loans in favor of Borrower
pursuant to a Management, Underwriting and Servicing Agreement (as same may be
modified or amended from time to time, the "Servicing Agreement").
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D. Borrower has executed and delivered to Lender a Security Agreement
(as same may be modified or amended from time to time, the "Security Agreement")
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granting Lender a security interest in, among other things, all present and
future Receivables, Equity Documents, Security Documents and Other Loan
Documents, as such terms are defined below.
E. Custodian is willing to hold the Receivables, Security Documents,
Equity Documents and Other Loan Documents as the custodian for, and bailee of,
Lender in accordance with the terms and conditions of this Agreement to perfect
the security interest of Lender in the Receivables, Security Documents, Equity
Documents and Other Loan Documents in its possession from time to time, as well
as to administer all of the Receivable Files (as defined below). Custodian is
also willing to hold certain of the Equity Documents, Security Documents and
Other Loan Documents as the custodian and bailee for Borrower with respect to
collateral for the Receivables as to which Borrower is perfecting its security
interest by possession.
In consideration of the mutual undertakings herein expressed, the parties
hereto hereby agree as follows:
1. Definitions. Whenever used herein, the following words and phrases,
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unless the context otherwise requires, shall have the following meanings:
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
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on which Custodian is authorized or obligated by law or executive order to be
closed.
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Closing Checklist: With respect to the Receivables listed on the
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Receivable Schedule attached as Exhibit A (the "Existing Loans"), all documents
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and instruments listed in attachments to such schedule. With respect to all
other Receivables, the Closing Checklist completed by Borrower or Servicer which
shall list the Receivable and all Security Documents, Equity Documents and the
material Other Loan Documents with respect to such Receivable delivered or to be
delivered to Custodian after June 15, 1998.
Equity Documents: Original counterparts of all instruments, certificates,
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shares, warrants and other documents evidencing Borrower's equity interest in an
Obligor or related party, including those as to which possession is the
exclusive method of perfection under the Uniform Commercial Code.
Obligor: The obligor(s) on a Receivable.
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Other Loan Documents: Original counterparts of all certifications,
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permits, approvals, opinions and other documentation with respect to a
Receivable, other than the Receivable itself, Security Documents and Equity
Documents.
Person: Any individual, corporation, partnership, limited liability
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company, joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Receivable: The note(s) or other evidence of the indebtedness of an
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Obligor to Borrower.
Receivable File: As to each Receivable, the documents or instruments
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specified in Section 2 hereof.
Receivable Schedule: Any schedule (substantially in the form of Exhibit A
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attached hereto) from time to time delivered by Borrower to Custodian and
Lender.
Security Documents: Original counterparts of credit agreements,
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instruments, documents, security agreements, pledge agreements, mortgages, deeds
of trust, collateral assignments, guaranties, agreements, financing statements
and other loan documents that have been or will be executed by or on behalf of
any Obligor or other Person to guaranty or provide collateral security with
respect to a Receivable, and all replacements, substitutions, additions,
amendments and modifications thereof.
Servicer: Defined in the initial paragraph.
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2. Delivery of Documents.
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2.1 Deliveries Prior to Initial Funding under Credit Agreement.
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Borrower represents that it has or will have delivered and released to Custodian
the following documents (each clearly identified on its face with the Obligor's
name pertaining to each Receivable identified in the Receivable Schedule):
(a) The original Receivable payable to Borrower, or properly endorsed
to be payable to Borrower, and endorsed by Borrower pursuant to
an original allonge as follows:
"Pay to the order of Xxxxxx Financial, Inc., with recourse."
(b) An original counterpart of all Security Documents, Equity
Documents and
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Other Loan Documents listed on the Closing Checklist with respect
to such Receivable, all of which shall be fully executed and
properly acknowledged.
(c) Such assignments of Security Documents, Equity Documents and
other Loan Documents as Borrower may be required to execute and
deliver under the Credit Agreement and Security Agreement.
From time to time, Borrower shall forward to the Custodian a checklist
itemizing additional documentation, together with additional original documents
evidencing any assumption, modification, consolidation or extension of a
Receivable received by Borrower, all of which shall be held in the Receivable
File for such Receivable.
2.2 Subsequent Deliveries. With respect to each Receivable
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acquired by Borrower after the date hereof, Borrower shall deliver to Custodian
a Closing Checklist and the documents and instruments described in Section 2.1.
Each document delivered to Custodian shall be clearly identified on its face
with the Obligor's name.
2.3 Other Loan Documents. From time to time, Borrower may also
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deliver to Custodian Other Loan Documents with respect to one or more
Receivables. Custodian will hold such Other Loan Documents, together with the
related Receivable, in accordance with the terms of this Agreement.
3. Covenants, Representations and Warranties. Borrower and Servicer
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hereby agree with Lender that Borrower and Servicer will allow Lender to examine
at reasonable times and intervals all pertinent servicing and liquidation
correspondence and disclosure statements evidencing compliance with all federal
and state disclosure laws and regulations applicable to credit transactions.
Borrower and Servicer shall deliver to Custodian original documents constituting
part of each Receivable File in cases where copies were previously delivered to
Custodian promptly upon receipt by Borrower or Servicer.
4. Receivable Schedule. Custodian shall, upon request of Lender from
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time to time, deliver to Lender a Receivable Schedule for all Receivables and
Receivable Files held by Custodian as of the date of such request.
5. Custodian's Duties. With respect to each Receivable File which is
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delivered to Custodian hereunder, Custodian will perform the following duties:
(a) Within two (2) Business Days of receipt of each Receivable File
and the applicable Closing Checklist, Custodian will cause to
be delivered or faxed to Lender, Borrower and Servicer a
certification (a "Custodian's Certificate") in the form of
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Exhibit B attached hereto.
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(b) Within ten (10) days after receipt of substantially all of the
items shown on the Closing Checklist (which is anticipated to be
not later than forty-five (45) days after the receipt of the
matters listed in (a) above), Custodian shall give Lender, Owner
and Servicer written notice of any exception with respect to a
Receivable File in the form of the Custodian's Certificate.
(c) During the term that any Receivable File is held by Custodian and
after the initial receipt of documents under (a) and (b), if
Custodian discovers any exceptions with respect to such
Receivable File, Custodian shall give Lender and Borrower written
notice of such exception no later than within
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ten (10) business days of such discovery.
(d) Custodian shall hold all documents constituting each Receivable
File received by it as bailee for the exclusive use and benefit
of Lender and (subject to Lender's interest) Borrower under this
Agreement. Custodian shall segregate and maintain continuous
custody of all documents constituting each Receivable File in
secure and fireproof facilities in accordance with customary
standards for such custody, until otherwise notified pursuant to
this Agreement.
6. Release of Files. (a) Upon written request by Lender, at any time and
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from time to time after Custodian has been notified by Lender that an Event of
Default has occurred under the Credit Agreement, Custodian is hereby authorized
and instructed to release and deliver to Lender or Lender's designee any or all
Receivable Files. Any request for release shall include written instructions as
to the method of shipment and identity of the shipper Custodian is directed to
utilize. Borrower shall pay all costs and expenses of shipment and maintain such
insurance against loss or damage Lender deems appropriate.
(b) Upon prior written request by Servicer (x) to the extent
specifically permitted under Section 3.7 of the Credit Agreement or (y) in
connection with the enforcement, collection or restructuring of any of the
Receivables, unless in either case Custodian has received notice from Lender
that an Event of Default has occurred under the Credit Agreement, Custodian is
authorized upon written receipt from Borrower or Servicer of a request for
release of documents, to release to Servicer or Borrower the Receivable File
(other than the Receivable and Equity Documents) or the documents (other than
the Receivable and Equity Documents), set forth in such Release Request (a
"Release Request") to Servicer or Borrower. With respect to Receivables and
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Equity Documents, a Release Request must be approved in writing by Lender.
Servicer or Borrower shall return to Custodian the Receivable File or other such
documents when Servicer's need therefor no longer exists, unless the Receivable
shall be liquidated.
(c) Upon receipt by Custodian of a Request Release from Servicer or
Borrower in connection with payment in full of a Receivable, unless Custodian
has received notice from Lender that an Event of Default has occurred under the
Credit Agreement, Custodian shall promptly release the related Receivable File
to Servicer.
7. Fees. It is understood that Custodian will charge such fees for its
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services under this Agreement as are listed on the attached Exhibit C. Such
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fees, together with Custodian's expenses in connection herewith, shall be
payable exclusively by Borrower.
8. Termination. Without prejudice to Custodian's right to payment for
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fees and expenses accrued or incurred prior to the effective date thereof,
Lender, if it is dissatisfied with the quality of Custodian's performance
hereunder or if the Servicing Agreement has been terminated, or Custodian may
terminate this Agreement upon sixty (60) days written notice; provided, that
Lender may terminate this Agreement for cause at any time without prior notice.
In the event of any such removal and discharge, Custodian shall promptly deliver
all of the Receivable Files as set forth in Section 6(a). In the event Lender
fails to direct Custodian as to the delivery of the files within thirty (30)
days from the date of the termination notice, Custodian shall deliver all files
to Lender. Upon any discharge of Custodian by Lender hereunder, Lender may
maintain custody of all files or Lender may appoint a successor custodian
subject to Borrower's approval, which approval shall not be unreasonably
withheld, delayed or conditioned; provided that Borrower's approval shall not be
required if an Event of Default (as defined in the Credit Agreement) has
occurred and is continuing.
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9. Examination of Custodian's Documents. Upon reasonable prior written
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notice to Custodian, Lender and Borrower and their authorized agents,
accountants, attorneys and auditors will be permitted during normal business
hours to examine the Receivable Files, documents, records and other papers in
possession of or under the control of Custodian relating to any or all of the
Receivables. Borrower shall pay all reasonable costs and expenses incurred in
connection with such examination, including any out-of-pocket expenses incurred
by Custodian relating to such examination, as and to the extent provided in this
Agreement or the Credit Agreement.
10. Copies of the Receivable Files. Upon reasonable prior written
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notice by Borrower, Servicer or Lender and at the cost and expense of Borrower,
Custodian shall provide Lender, Servicer or Borrower with copies of documents
contained in any of the Receivable Files.
11. Insurance. Custodian shall, at its own expense, maintain the usual
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errors and omissions insurance in such amounts, with standard coverage and
subject to such deductibles, as are customary for insurance typically maintained
by banks which act as custodians in similar transactions. Custodian shall
furnish to Lender or Borrower on request a schedule of insurance coverage.
12. Execution in Counterparts. This Agreement may be executed in any
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number of counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute and be one and the same
instrument.
13. Choice of Law. This Agreement shall be construed in accordance with
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the laws of the State of Virginia and all applicable federal laws and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
14. Notices. Any notice or other communication required or permitted to
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be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on
a Business Day, or on the Business Day following the date of transmission if
telecopied on a non-Business Day or on a Business Day after 3:00 p.m. (Chicago
time); provided that a hard copy of such notice is also sent pursuant to (c) or
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(d) below; (c) if by overnight courier, on the first business day after delivery
to the courier; or (d) if by U.S. Mail, certified or registered mail, return
receipt requested on the fourth (4th) day after deposit in the mail postage
prepaid.
Notices to Borrower: MCG Finance Corporation
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
and if to Servicer: MCG Finance Corporation
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
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in each case, with a copy to:
Xxxxx Xxxx LLP
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
and if to Lender: Xxxxxx Financial, Inc.
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Account Manager, Corporate Finance Group
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Financial, Inc.
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal Department
Corporate Finance Group
Facsimile: (000) 000-0000
and if to Custodian: Xxxxx Bank, N.A.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Facsimile: (000) 000-0000
15. Indemnification. Borrower agrees to indemnify and hold harmless
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Custodian, its directors, officers, employees and agents from and against any
and all liability, loss and expense, including reasonable counsel fees, arising
from or connected with Custodian's execution and performance of this Agreement,
including but not limited to claims of third parties, but excluding any claim,
loss, liability or expense resulting from negligence or willful misconduct on
the part of Custodian.
16. Authority. Custodian shall have the power to employ such agents as
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it may deem necessary or appropriate in the performance of its duties and the
exercise of its powers under this Agreement.
17. Bailment. This Agreement constitutes a bailment for hire. Custodian
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is not intended to be, nor shall it be construed to be (except only as bailee
and custodian), the representative, trustee or fiduciary of or for Lender,
Servicer or Borrower. In its capacity as bailee hereunder, Custodian shall only
be liable for any action or omission involving Custodian's negligence or willful
misconduct. In no event shall Custodian have any responsibility to ascertain any
matter or take any action with respect to the Receivables except as expressly
provided herein, whether or not Custodian has or is deemed to have notice or
knowledge of such matter. Custodian does not assume and shall have no
responsibility for monitoring the value of the Receivable nor for determining
the accuracy of Borrower's or Servicer's representations or certifications made
pursuant to this Agreement.
18. Custodian's Standard of Care. Custodian makes no representations as
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to the value or condition of the Receivable or any part thereof, or as to the
title of Borrower thereto, or as to the validity or adequacy of the security
afforded thereby, or hereby, or as to the validity of this Agreement (except as
to Custodian's authority to enter into this Agreement) and Custodian
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shall incur no liability or responsibility in respect of any such matters.
Without limiting the generality of the foregoing, but subject to Custodian's
obligation to act without negligence or willful misconduct, Custodian shall not
be under any duty to examine or pass upon the genuineness or validity of any of
the documents constituting part of a Receivable File and shall be entitled to
assume that all documents constituting part of each Receivable File are genuine
and valid and that they are what they purport to be, and that any endorsements
or assignments thereon are genuine and valid. Under no circumstances shall
Custodian be obligated to verify the authenticity of any signature on any of the
documents received or examined by it or the authority or capacity of any person
to execute or issue any such document. Custodian agrees to use its best judgment
and good faith in the performance of any obligations and duties required under
this Agreement and shall incur no liability to any person for its acts or
omissions hereunder, excluding those as may result from its negligence or
willful misconduct.
In no event shall Custodian be liable, directly or indirectly, for any
special or consequential damages, even if Custodian has been advised of the
possibility of such damages. Custodian shall be entitled to rely upon the
advice of legal counsel selected by it with reasonable care from time to time
and shall not be liable for any action or inaction by it in reliance upon such
advice; provided, however, that nothing contained in this sentence shall limit
the liability of Custodian for its negligence or willful misconduct. Custodian
shall be also entitled to rely upon any notice, document, correspondence,
request or directive received by it from Lender or Borrower, as the case may be,
that Custodian believes to be genuine and to have been signed or presented by
proper and duly authorized agent or representative thereof (including any
officer of Lender or Borrower, as applicable), and shall not be obligated to
inquire as to the authority or power of any person so executing or presenting
such documents or as to the truthfulness of any statements set forth therein.
19. Agreement Provisions Governing Conduct. The provisions of this
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Agreement set forth exclusively the duties of Custodian and no implied duties or
obligations shall be read into this Agreement against Custodian. Custodian shall
not be bound in any way by any agreement or contract other than this Agreement
nor shall it be required to take notice of any fact or event, whether or not it
has actual knowledge thereof, except as expressly provided herein. Custodian
shall not be required to ascertain or inquire as to the performance or
observance of any of the covenants or agreements herein contained to be
performed or observed by Borrower or Lender, except as specifically provided in
this Agreement. Custodian shall be under no responsibility or duty with respect
to any Receivable File or documents thereof once they have been delivered by
Custodian to any person in accordance with any of the provisions of this
Agreement.
20. No Obligation to Expend Funds. Except as set forth herein,
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Custodian shall not be required to expend its own funds or otherwise incur any
financial risk or liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers, if, in its sole judgment, it
shall reasonably believe that repayment of any funds expended by Custodian or
adequate indemnity against such risk or liability is not assured to it.
21. Merger or Consolidation of Custodian. Any Person into which
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Custodian may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which
Custodian shall be a party, or any Person succeeding to the business of
Custodian, shall be the successor of Custodian under this Agreement, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
22. Assignment. Except as provided in Section 21 hereof, no party
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hereto may assign its rights or delegate its obligations under this Agreement
without the express written consent of
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the other parties hereto. Any attempted assignment of rights or delegation of
duties without such consent shall be void.
23. Rights Limited by Agreement. Nothing in this Agreement is intended
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to confer, expressly or by implication, upon any Person, other than the parties
hereto and their permitted successors and assigns, any rights or remedies under
or by reason of this Agreement.
24. No Partnership or Joint Venture. Nothing in this Agreement shall be
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deemed or construed to create a partnership or joint venture among the parties
hereto.
25. Entire Agreement. This Agreement represents the entire agreement
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and understanding of the parties with respect to the subject matter of this
Agreement.
26. Modification or Waiver. No modification or waiver of any provision
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of this Agreement, nor any consent to any departure by Borrower, Servicer,
Lender or Custodian from any provision of this Agreement shall in any event be
effective unless the same shall be in writing executed by all parties hereto,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given.
27. Severability. In case any one or more of the provisions contained
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in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
therein shall not in any way be affected or impaired thereby.
[EXECUTION PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Borrower, Lender, Servicer and Custodian have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the date first written above.
BORROWER:
MCG FINANCE CORPORATION, a Delaware
corporation
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name:
Its:
SERVICER:
MCG CREDIT CORPORATION, a Delaware
corporation
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name:
Its:
CUSTODIAN:
XXXXX BANK, N.A.
By: /s/ Xx Xxxxx
-----------------------------------
Name: Xx Xxxxx
Its: Executive Director
LENDER:
XXXXXX FINANCIAL, INC., as agent and as
Lender
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name:
Its:
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EXHIBIT A
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RECEIVABLE SCHEDULE FORM
Dated ______________________, 1998
Receivable Obligor
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EXHIBIT B
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CERTIFICATION OF CUSTODIAN
To: XXXXXX FINANCIAL, INC.
MCG Finance Corporation
MCG Credit Corporation
RE: Agreement dated _______________________, by and between MCG Finance
Corporation ("Borrower"), MCG Credit Corporation ("Servicer") Xxxxxx Financial,
Inc. ("Lender"), and Xxxxx Bank ("Custodian").
In accordance with the provisions of Section 5(a) and 5(b) of the
Agreement, the undersigned, as Custodian, hereby certifies that as to each
Receivable listed on the attached Receivable Schedule, it has reviewed the
Receivable File and has determined that, except as indicated on Schedule 1
attached hereto:
(i) all original documents required to be delivered to it with respect to
such Receivable pursuant to Section 2 of the Agreement, including the
Closing Statement and the documents listed thereon, are in its
possession;
(ii) such documents have been reviewed by it and, in Custodian's good
faith judgment, appear regular on their face and relate to such
Receivable;
(iii) the Note for such Receivable has been endorsed as provided in Section
2.1(a) of the Agreement.
Custodian hereby confirms that it is holding each such Receivable File as bailee
and custodian for the exclusive use and benefit of Lender and (subject to
Lender's interest) Borrower pursuant to the terms of the Agreement. No person
or entity other than Lender, Borrower and Servicer may rely or shall be entitled
to rely upon this Certification.
XXXXX BANK, N.A.
By: _________________________________
Name: _______________________________
Its: ________________________________
Date: _______________________________
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SCHEDULE 1
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REVIEW OF FILES AND
NOTED EXCEPTION REPORT
LOAN NUMBER OBLIGOR'S NAME NOTED EXCEPTION
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EXHIBIT C
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CUSTODIAL SERVICES
SCHEDULE OF FEES
For custodial services performed in connection with and pursuant to the
Agreement:
1. Review and certification of Receivable File, and Storage and Release of
Receivable File: $12,000 per annum, to be paid in equal quarterly installments
2. Out of pocket expenses: Billed at cost as incurred.
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