JOINDER AND AMENDMENT TO AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT
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This Joinder and Amendment to Loan and Security Agreement ("Amendment")
is made as of the 26th day of March, 1999 by and among First Union National
Bank, a national banking Association in its capacity as agent ("Agent") and as
Lender, and the financial institutions listed on Schedule A attached hereto and
made part hereof, in their capacity as lenders (singly, each as a "Lender" and
collectively, all are "Lenders") and Fidelity Leasing, Inc. ("Existing
Borrower"), JLA Credit Corporation, ("JLA" or "Joining Borrower"and collectively
with Existing Borrower, "Borrowers"), Resource America, Inc., Resource Leasing,
Inc., FL Partnership Management, Inc. and FL Financial Services, Inc. (singly,
each is a "Guarantor"and collectively, all are "Guarantors").
BACKGROUND
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A. Existing Borrower, Agent and Lenders are parties to a certain Amended and
Restated Loan and Security Agreement dated September 30, 1998 (as modified and
amended from time to time, the "Loan Agreement") pursuant to which Existing
Borrower established certain financing arrangements with Agent and Lenders. The
Loan Agreement and all instruments, documents and agreements executed in
connection therewith or related thereto are referred to herein collectively as
the "Existing Loan Documents". All capitalized terms not otherwise defined
herein shall have the meaning ascribed thereto in the Loan Agreement.
B. Existing Borrower has informed Agent and Lenders that Existing Borrower
purchased all of the capital stock of Joining Borrower and Joining Borrower has
become a wholly-owned subsidiary of Existing Borrower.
C. In recognition of the benefits and privileges thereunder, Joining Borrower
and Existing Borrowers have requested that Joining Borrower be permitted to join
into the Existing Loan Documents as if an original signatory thereto.
D. Agent and Lenders have consented to Joining Borrower's joining into the
Existing Loan Documents and to certain amendments to the Existing Loan
Documents, subject to the terms and conditions hereof.
E. All obligations of Borrowers to Agent and Lenders under the Existing Loan
Documents shall continue to be guaranteed by Guarantors, on a joint and several
basis.
NOW, THEREFORE, with the foregoing Background incorporated by reference
and made a part hereof, and intending to be legally bound, the parties agree as
follows:
1. Joinder.
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(a) Upon the effectiveness of this Amendment, Joining Borrower joins in as,
assumes the obligations and liabilities of, adopts the obligations, liabilities
and role of, and becomes, a Borrower under the Existing Loan Documents, the
Credit Facility and all Loans. All references to Borrower contained in the
Existing Loan Documents are hereby deemed for all purposes to also refer to and
include Joining Borrower as a Borrower and Joining Borrower, hereby agrees to
comply with all of the terms and conditions of the Existing Loan Documents as if
Joining Borrower were an original signatory thereto.
(b) Without limiting the generality of the provisions of subparagraph (a) above,
Joining Borrower hereby becomes liable, on a joint and several basis, along with
Existing Borrower, for all Obligations, including, without limitation, all
existing and future Loans and other liabilities and obligations incurred at any
time by Existing Borrower under the Existing Loan Documents, as amended hereby
or as may be hereafter amended, modified, supplemented or replaced.
2. Adjusted Debt to Tangible Net Worth Ratio. The Loan Agreement is
hereby amended by deleting the definition of "Adjusted Debt to Tangible Net
Worth" contained in Section 1.1 of the Loan Agreement and replacing it with the
following:
"Adjusted Debt to Tangible Net Worth Ratio - At any time means
the ratio of (i) total Liabilities less Nonrecourse Debt to
(ii) Borrowers' Tangible Net Worth less an amount equal to
fifty percent (50%) of all restricted cash, restricted
receivables and other collateral pledged or sold in connection
with the JLA Securitization II and III or other Securitization
Transactions (it being understood that for the purposes
hereof, the asset identified on Borrowers' balance sheet as of
June 30, 1998 as $14,000,000 in notes secured by equipment
leases shall not be considered restricted receivables provided
no additional assets shall be included therein).
3. Borrowing Base. The Loan Agreement is hereby amended by deleting the
definition of "Borrowing Base" contained in Section 1.1 of the Loan Agreement
and replacing it with the following:
"Borrowing Base - As of any date of determination, an amount
equal to the lesser of:
(i) the Maximum Credit Limit, and
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(ii) (A) eighty percent (80%) of the sum of gross
Lease Receivable balance corresponding to each Eligible Lease
(net of any deposits or other advances and cash receipts) plus
(B) the lesser of (1) eighty percent (80%) of the sum of gross
Lease Receivable balance corresponding to each Mexican
Eligible Lease (net of any deposits or other advances and cash
receipts) or (2) Three Million Dollars ($3,000,000) plus (C)
one hundred percent (100%) of Facsimile Leases so long as (i)
the aggregate amount of all Lease Receivables corresponding to
Facsimile Leases documented on a Quincy Distributor Vendor
Finance Agreement does not exceed Two Million Dollars
($2,000,000) and (ii) the aggregate amount of all Lease
Receivables corresponding to Facsimile Leases other than those
documented on a Quincy Distributor Vendor Financing Agreement
does not exceed the Facsimile Lease Sublimit. Notwithstanding
the foregoing, Lease Receivables corresponding to Leases
documented on a Quincy Distributor Vendor Finance Agreement
shall be Eligible Leases for Borrowing Bases purposes (subject
to all other terms and conditions of this Agreement) for a
period not to exceed one hundred twenty (120) days after the
effective date of such Lease."
4. Eligible Leases. The Loan Agreement is hereby amended by deleting
the definition of "Eligible Lease(s)" contained in Section 1.1 of the Loan
Agreement and replacing it with the following:
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"Eligible Lease(s) - Each Lease which meets all of the
following specifications: (1) is not subject to any Lien,
security interest or prior assignment other than Agent's
security interest for the benefit of Lenders and the rights of
the Lessee's thereunder; (2) is a valid enforceable Lease,
representing the undisputed obligation of the Lessee, with
rentals due thereunder not more than sixty-one (61) days
contractually past due; (3) is not subject to any defense,
setoff, counterclaim, deduction, allowance or adjustment; (4)
unless otherwise agreed to in writing by Agent, provides for
the lease of Leased Property with an aggregate invoice price
of less than $1,500,000; (5) provides for the lease of Leased
Property which has not been returned, rejected, lost or
damaged; (6) arose in the ordinary course of Borrowers'
business; (7) Borrowers have not received notice of
bankruptcy, receivership, reorganization, insolvency or
material adverse change in the financial condition of the
Lessee; (8) the Lessee has not a Subsidiary or Affiliate of
Borrowers; (9) is not Defaulted Lease and complies with all
general warranties set forth in Section 5.17 hereof; (10) does
not have an initial stated term in excess of seventy-two (72)
months, provided, however, that lease(s) with an initial
stated term of up to ninety-six (96) months may be considered
Eligible Leases so long as the aggregate Lease Receivable(s)
of all such Lease(s) shall, at no time, exceed Two Million
Dollars ($2,000,000); (11) has not, in the case of Revolving
Credit Loans, been pledged to Agent and/or Lenders for a
period of more than twelve (12) months; (12) contains a
provision whereby the Lessee agrees not to assert any claim or
reduction, counterclaim, setoff, recoupment, or any other
claim, allowance or adjustment against any assignee of
Borrowers; (13) is a Lease with a Lease Receivable, which
together with all other Lease Receivables owed by the same
Lessee does not exceed One Million Seven Hundred Fifty
Thousand Dollars ($1,750,000) in the aggregate; (14) Borrowers
are in possession of the Lessee's original signatures pages to
the Lease or are in possession of a Facsimile Lease, and (15)
the Lessee's chief executive office and the Leased Property
under such Lease is located in the continental United States."
5. Facsimile Lease. The Loan Agreement is hereby amended by adding the
definition of "Facsimile Lease" to Section 1.1 of the Loan Agreement as follows:
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"Facsimile Lease - A Lease which meets all the requirements of
being an Eligible Lease except that Borrowers are in
possession of the facsimile copy of the Lessee's signature and
the original signature of a Borrower to such Lease and such
Lease is governed by a law allowing for a facsimile copy to be
binding upon the parties thereto."
6. Facsimile Lease Sublimit - The Loan Agreement is hereby amended by
adding a definition of "Facsimile Lease Sublimit" to Section 1.1 of the Loan
Agreement as follows:
"Facsimile Lease Sublimit - The sublimit under the Borrowing
Base with respect to Facsimile Leases in an amount not to
exceed two percent (2.0%) of the Lease Receivables owing under
all Eligible Leases."
7. Lease(s). The Loan Agreement is hereby amended by deleting the
definition of "Lease(s)" contained in Section 1.1 of the Loan Agreement and
replacing it with the following:
"Lease(s) - All of Borrowers' Accounts, Documents, General
Intangibles, Instruments and Chattel Paper arising in
connection with each and every equipment lease (whether a
"true lease" or a lease intended as security) and/or schedule
to a master lease agreement or each and every equipment
financing transaction, assigned to Lenders and/or Agent for
the benefit of Lenders, or now or hereafter designated on any
schedule as being assigned to Lenders and/or Agent for the
benefit of Lenders. The term "Lease" includes (i) all payments
to be made thereunder, (ii) all rights of Borrower therein and
(iii) any and all amendments, renewals, extensions or
guarantees thereof."
8. Mexican Eligible Leases. The Loan Agreement is hereby amended by
adding the definition of "Mexican Eligible Leases" to Section 1.1 of the Loan
Agreement as follows:
"Mexican Eligible Lease(s) - A Lease which meets all of the
requirements of being an Eligible Lease(s) except that the
Leased Property is located in Mexico and Borrowers have taken
all steps necessary to perfect its security interest in such
Leased Property under the laws of Mexico (as determined in
Agent's sole and absolute discretion)."
9. Leases and Leased Property. The Loan Agreement is hereby amended by
deleting Section 5.17(d) and replacing it with the following:
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"(d) Except as otherwise consented to by Agent in writing, the
aggregate amount of Leases with the same Lessee (or its
Affiliates) is not in excess of $1,500,000;"
Furthermore, the Loan Agreement is hereby amended by deleting Section 5.17(p)
and replacing it with the following:
"(p) For each Lease, with a Lease Receivable in excess of
$25,000, Borrowers have either (i) listed Agent for the
benefit of Lenders, as assignee on a UCC-1 Financing Statement
so filed, or (ii) after Borrowers have received acknowledgment
copies of the UCC-1s, deliver to Agent executed UCC-3
Financing Statements naming Agent for the benefit of Lenders
as assignee of Borrowers' security interest. Agent agrees not
to file the UCC-3 Financing Statements until such time as an
Event of Default or Unmatured Event of Default occurs under
this Agreement, and Agent will return such UCC-3 Financing
Statements to Borrowers if such Leases are ultimately sold or
refinanced on a permanent basis with another lender;"
10. Lease Forms. Exhibit 5.17 of the Loan Agreement is hereby amended
to also include and make a part thereof the lease forms attached hereto as
Exhibit A.
11. Financial Covenants. The Loan Agreement is hereby amended by
deleting Section 6.8 of the Loan Agreement and replacing it with the following:
"6.8 Financial Covenants. Borrowers shall maintain and comply
with the following financial covenants as reflected on and
computed from their Financial Statements:
(a) Adjusted Debt to Tangible Net Worth Ratio: Borrowers shall
have and maintain at all times an Adjusted Debt to Tangible
Net Worth Ratio on a consolidated basis, measured quarterly as
of the last day of each fiscal quarter during each fiscal
year, of not more than 5.50 to 1.
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(b) Tangible Net Worth: Borrowers shall have and maintain a
Tangible Net Worth of not less than Fourteen Million Dollars
($14,000,000) as of March 31, 1999. As of the last day of each
fiscal quarter thereafter, Borrowers shall have a Tangible Net
Worth of not less than the amount required hereby for the
immediately preceding fiscal quarter plus an amount equal to
seventy-five percent (75%) of Borrower's Net Income for the
immediately proceeding fiscal quarter (for the purposes of
such step up, Net Income shall never be less than zero). The
amount of Tangible Net Worth required to be maintained by
Borrowers pursuant to this Section 6.8(b) shall be adjusted
upon receipt by Borrowers of the net proceeds of any capital
contribution by an amount to be agreed upon by Borrowers and
Agent.
(c) Fixed Charge Coverage Ratio: Borrowers shall have and
maintain as of the end of each fiscal quarter, based on
financial information for the twelve (12) month period ending
as of the end of such fiscal quarter, on a consolidated basis,
a Fixed Charge Coverage Ratio of not less than 1.25 to 1."
12. Representations and Warranties. Each Borrower and each Guarantor,
including, without limitation, Joining Borrower, represents and warrants to
Agent and Lenders that:
(a) All warranties and representations made to Agent and
Lenders under the Existing Loan Documents are true and correct as of the date
hereof.
(b) The execution and delivery by each Borrower and each
Guarantor of this Amendment and the performance by each of them of the
transactions herein contemplated (i) are and will be within such Borrower's and
such Guarantor's corporate powers, (ii) have been authorized by all necessary
corporate action and (iii) are not and will not be in contravention of any law,
any order of any court or other agency of government, or any other indenture,
agreement or undertaking to which either Borrower or any Guarantor is a party or
by which the property of either Borrower or any Guarantor is bound, or be in
conflict with, result in a breach of, or constitute (with due notice and/or
lapse of time) a default under any such indenture, agreement or undertaking or
result in the imposition of any lien, charge or incumbrance of any nature on any
of the properties of either Borrower or any Guarantor.
(c) This Amendment and all allonges, assignments, instruments,
documents, and agreements executed and delivered in connection herewith, will be
valid, binding and enforceable in accordance with their respective terms.
(d) No Unmatured Event of Default or Event of Default has
occurred under any of the Existing Loan Documents.
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13. Collateral. As security for the timely payment of the Obligations
and satisfaction by Borrowers (including, without limitation, Joining Borrower)
of all covenants and undertakings contained in the Existing Loan Documents,
Existing Borrower reconfirms the prior security interest and lien on, and
Joining Borrower hereby assigns and grants to Agent for the benefit of Lenders a
continuing first lien on and security interest in, upon and to the Collateral,
including, without limitation, all of the following of each Borrower (including,
without limitation, Joining Borrower), whether now owned or hereafter acquired,
created or arising and wherever located: Leases and Leased Property, Books and
Records and all cash and non-cash proceeds, thereof, including insurance
proceeds. Agent and each Lender hereby agree and acknowledge that the Collateral
does not include those specific vehicle leases shown on Exhibit B attached
hereto and made part hereof which have been pledged to First Union pursuant to
the First Union Loan Agreement.
14. Effectiveness Conditions. This Amendment shall be effective, and
Joining Borrower shall be deemed a Borrower under the Existing Loan Documents,
upon completion of the following conditions precedent (all documents to be in
form and substance satisfactory to Agent and Agent's counsel):
(a) Execution and delivery to Agent of this Amendment;
(b) Execution and delivery to each Lender of an allonge to
such Lender's Revolving Credit Note, joining Joining Borrower to such Revolving
Credit Note;
(c) UCC-1 Financing Statements to be executed by Joining
Borrower and filed in all jurisdictions which Agent may deem appropriate;
(d) Delivery of certified copies of (i) resolutions of each
Borrower's and each Guarantor's board of directors authorizing the execution of
this Amendment and all of the instruments, documents and agreements related
hereto and (ii) Joining Borrower's articles of incorporation and bylaws,
(e) Delivery of incumbency certificates for Joining Borrower
identifying all Authorized Officers with specimen signatures;
(f) Delivery of a written opinion of independent counsel for
Borrowers addressed to Agent for the benefit of all Lenders;
(g) Execution and delivery to Agent of a Stock Pledge
Agreement pursuant to which Existing Borrower shall pledge the stock of Joining
Borrower to Agent for the benefit of Lenders and delivery to Agent of all
original stock certificates issued by Joining Borrower evidencing ownership in
Joining Borrower as well as stock powers for transfer of such stock
certificates, duly endorsed in blank;
(h) Good standing certificates from the Secretary of State of
the State of Delaware showing Joining Borrower to be in good standing in such
state;
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(i) No Unmatured Event of Default or Event of Default shall
have occurred under the Existing Loan Documents or shall occur after taking into
account the effects of the Acquisition; and
(j) Delivery of Uniform Commercial Code financing statement,
judgment and state and federal tax lien searches against Joining Borrower
showing no Liens on any of the Collateral.
15. Ratification of Existing Loan Documents. Except as expressly set
forth herein, all of the terms and conditions of the Existing Loan Documents are
hereby ratified and confirmed and continue unchanged and in full force and
effect. All references to the Loan Agreement shall mean the Loan Agreement as
modified by this Amendment.
16. Collateral. Borrowers (including, without limitation, Joining
Borrower) each hereby confirm and agree that all security interests and Liens
granted to Agent for the benefit of Lenders continue in full force and effect
and shall continue to secure the Obligations. All Collateral remains free and
clear of any Liens. Nothing herein contained is intended to in any manner impair
or limit the validity, priority and extent of Agent's existing security interest
in and Liens upon the Collateral.
17. Acknowledgment of Guarantors. By execution of this Amendment, each
Guarantor hereby acknowledges the terms and conditions of this Amendment and
confirms that each remains jointly and severally liable, as surety, for all
Obligations pursuant to the terms and conditions of that certain Surety
Agreement dated as of September 30, 1998.
18. Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with the substantive laws of the Commonwealth of
Pennsylvania.
19. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement. Counterparts by facsimile shall bind the parties hereto.
20. Waiver of Jury Trial. EACH BORROWER, AGENT, EACH LENDER AND EACH
GUARANTOR HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AMENDMENT OR THE TRANSACTIONS DESCRIBED HEREIN.
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SIGNATURES ON FOLLOWING PAGES
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IN WITNESS WHEREOF, the parties have executed this Joinder and
Amendment to Loan and Security Agreement the day and year first above written.
EXISTING BORROWER: FIDELITY LEASING, INC.
By:
Name:
Title:
JOINING BORROWER: JLA CREDIT CORPORATION
By:
Name:
Title:
GUARANTORS: RESOURCE AMERICA, INC.
By:
Name:
Title:
RESOURCE LEASING, INC.
By:
Name:
Title:
FL PARTNERSHIP MANAGEMENT, INC.
By:
Name:
Title:
FL FINANCIAL SERVICES, INC.
By:
Name:
Title:
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AGENT: FIRST UNION NATIONAL BANK
By:
Name:
Title:
LENDERS: FIRST UNION NATIONAL BANK
By:
Name:
Title:
EUROPEAN AMERICAN BANK
By:
Name:
Title:
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SCHEDULE A
Lender Amount
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First Union National Bank $12,500,000
European American Bank $ 7,500,000
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