1
LOAN AND SECURITY AGREEMENT
DATED AS OF DECEMBER 22ND, 1999
BETWEEN
▇▇▇▇▇▇▇ BANK
AS LENDER
AND
GOLDEN EAGLE LLC
AS BORROWER
2
INDEX OF EXHIBITS AND SCHEDULES
Schedule A - Definitions
Schedule B - Lender's and Borrower's Representatives for Notices;
Addresses
Schedule C - Intentionally Blank
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.10) - Taxes
Disclosure Schedule (3.12) - ERISA
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.14) - Intellectual Property
Disclosure Schedule (3.16) - Environmental Matters
Disclosure Schedule (3.17) - Insurance
Disclosure Schedule (5(c)) - Indebtedness
Disclosure Schedule (5(h)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Intentionally Blank
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Lease Certificate
Exhibit E - Intentionally Blank
Exhibit F - Form of Revolving Credit Note
Exhibit G - Intentionally Blank
[Exhibit H - Required Monthly Reports]
Exhibit I - Form of Secretarial Certificate
Exhibit J - Form of Power of Attorney
Exhibit K - Intentionally Blank
Exhibit L - Form of Trust Agreement
Exhibit M - Intentionally Blank
Exhibit N - Form of Guarantee
3
This LOAN AND SECURITY AGREEMENT is dated as of December 22nd, 1999 and agreed
to by and between GOLDEN EAGLE LLC, a Connecticut limited liability company
("Borrower"), any other Credit Party executing this Agreement, and ▇▇▇▇▇▇▇ BANK,
a federally chartered savings bank ("Lender").
RECITALS
A. The purpose of this Agreement is to provide to Borrower revolving credit
loans (the "Loan") having the following general description:
--------------------------------------------------------------------------------
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
REVOLVING CREDIT LOAN
Maximum Amount: $10,000,000
Term: Expires on June 30, 2001
Revolving Credit Rate: The Wall Street Journal Prime Rate plus 1%, or
LIBOR plus 275 basis points
Borrowing Base: 87% of the net present value of Borrower's
Eligible Lease Receivables.
--------------------------------------------------------------------------------
The Loan described generally here is established and governed by the terms and
conditions set forth below in this Agreement and the other Loan Documents, and
if there is any conflict between this general description and the express terms
and conditions below or elsewhere in the Loan Documents, such other express
terms and conditions shall control.
B. Borrower desires to obtain the Loan and other financial accommodations from
Lender and Lender is willing to provide the Loan and accommodations all in
accordance with the terms of this Agreement.
C. Capitalized terms used herein shall have the meanings assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents, the
rules of construction set forth in Schedule A shall govern. All Schedules,
Disclosure Schedules, Attachments, Addenda and Exhibits (collectively,
"Appendices") hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement,
constitute but a single agreement. These Recitals shall be construed as part of
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Loan. (a) Subject to the terms and conditions of this Agreement, from the
Closing Date and until the Commitment Termination Date (i) Lender agrees to make
available advances (each, a "Revolving Credit Advance"), in an aggregate
outstanding amount not to exceed the Borrowing Availability and (ii) Borrower
may at its request from time to time borrow, repay and reborrow under the
Revolving Credit Loan.
(b) Borrower shall request each Revolving Credit Advance by written notice to
Lender substantially in the form of Exhibit A (each a "Notice of Revolving
Credit Advance") given no later than 11:00 a.m. (New York time) on the Business
Day of the proposed Revolving Credit Advance. Lender shall be fully protected
under this Agreement in relying upon, and shall be entitled to rely upon (i) any
Notice of Revolving Credit Advance believed by Lender to be genuine, and (ii)
the assumption that the Persons making electronic requests or executing and
delivering a Notice of Revolving Credit Advance were duly authorized, unless the
responsible individual acting thereon for Lender shall have actual knowledge to
the contrary.
2
4
(c) The Revolving Credit Loan shall be evidenced by, and be repayable in
accordance with the terms of, the Revolving Credit Note and this Agreement.
(d) Borrower agrees that Lender, in making any Revolving Credit Advance or
incurring any other Obligation hereunder, shall be entitled to rely upon the
most recent Borrowing Base Certificate delivered to Lender and other
information available to Lender by Borrower. Borrower further agrees that
Lender shall be under no obligation to make any further Revolving Credit
Advance or incur any other Obligation if Borrower shall have failed to deliver
a Borrowing Base Certificate and a Lease Certificate to Lender by the time
specified in Section 4.1(a); provided, that, unless otherwise in Default, the
Borrower may resume borrowing under this Agreement upon compliance with the
terms set forth in this Section and in Section 4.1(a).
1.2 Term and Termination. (a) The obligation of Lender to make Revolving
Credit Advances and extend other financial accommodations shall be in effect
from the Closing Date until the Commitment Termination Date. Upon the
Commitment Termination Date, Borrower shall pay to Lender in full, in cash; all
outstanding Revolving Credit Advances and all accrued but unpaid interest
thereon, and all other non-contingent Obligations due to or incurred by Lender.
(b) If the Revolving Credit Loan shall at any time exceed the Borrowing
Availability, then Borrower shall have the option of (i) immediately repaying
the Revolving Credit Loan in the amount of such excess; any such excess balance
outstanding shall nevertheless constitute Obligations that are evidenced by the
Revolving Credit Note, secured by the Collateral and entitled to all of the
benefits of the Loan Documents, or (ii) pledging additional Collateral to
secure Lender for the amount of such excess, the amount and the sufficiency of
such Collateral shall be subject to the sole and absolute discretion of the
Lender.
(c) The Borrower may prepay the Revolving Credit Note in whole or in part as
follows (i) with respect to Revolving Credit Advances bearing the Revolving
Prime-Based Rate (as hereafter defined), without penalty with accrued
interest to the date of such prepayment on the amount prepaid, provided that,
it gives Lender one (1) day prior written notice, and (ii) with respect to
Revolving Credit Advances bearing the Revolving LIBOR-Based Rate (as hereafter
defined), provided that Borrower prepays all of the Obligations. If the
Borrower (i) fails to borrow the Revolving Credit Loan after delivering a
Notice of Revolving Credit Advance; (ii) fails to pay as and when due any
principal of or interest on the Loan; or (iii) makes any payment or prepayment
of the Loan other than on the last day of a month, then the Borrower shall pay
to the Lender the amount of any losses, costs and expenses reasonably incurred
as a consequence thereof, including any loss of margin or expenses in
liquidating or re-employing deposits or other funds acquired to make such
Loan. A certificate, calculating in reasonable detail the amount of any such
losses, costs and expenses, submitted to the Borrower by the Lender shall,
absent manifest error, be final, conclusive and binding for all purposes.
1.3 Use of Proceeds. Borrower shall use the proceeds of the Revolving Credit
Loan to finance the purchase of new equipment to be leased by Borrower to
unrelated third parties and for other general corporate purposes.
1.4 Single Loan. The Revolving Credit Loans and all of the other Obligations
of Borrower to Lender shall constitute one general obligation of Borrower
secured by all of the Collateral.
1.5 Interest. (a) Borrower shall pay interest to Lender on the aggregate
outstanding Revolving Credit Advances at the rate elected by Borrower from time
to time (the "Revolving Credit Rate") of the following:
(i) A rate per annum (the "Revolving LIBOR-Based Rate") equal to the
sum of London InterBank Offering Rate available to Lender for U.S. dollar
thirty-day deposits, plus two hundred seventy five (275) basis points such
Revolving LIBOR-Based Rate to be further adjusted to compensate Lender for all
applicable reserve requirements imposed upon Lender in respect of LIBOR
investments; or
(ii) A floating rate per annum (the "Revolving Prime-Based Rate")
equal to the "Prime Rate" as published in the section of the Wall Street
Journal entitled "Money Rates," plus one percent (1.0%).
3
5
The Revolving Prime-Based Rate will change automatically and immediately as of
the date of a change in the Prime Rate, without notice to Borrower.
(iii) A fixed rate can be requested by Borrower at the Lender's
option.
Interest shall be calculated on the basis of a 360-day year, but
shall be computed for the actual number of days in each period for which
interest is charged. With respect to a Revolving Prime-Based Rate, interest
shall be payable monthly in arrears on the first Business Day of each month.
With respect to a Revolving LIBOR-Based Rate, interest shall be payable, in
arrears, on the first Business Day following the expiration of the 30-day LIBOR
period. Notwithstanding anything else set forth herein, all interest on the
Revolving Credit Loan shall be payable on the Commitment Termination Date, and
if any interest accrues or remains payable after the Commitment Termination
Date, upon demand by Lender.
(b) Each determination by Lender of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Effective upon the occurrence of any Event of Default and for so long as
any Event of Default shall be continuing, upon notice to the Borrower (except
that no notice shall be required upon the occurrence of any Event of Default
specified in Sections 7.1(e), (f) or (g)) the Revolving Credit Rate shall be
increased by two percentage points (2.00%) per annum (such increased rate, the
"Default Rate"), and all outstanding Obligations, shall continue to accrue
interest from the date of such Event of Default at the Default Rate applicable
to such Obligations.
(d) If any interest or other payment to Lender under this Agreement becomes
due and payable on a day other than a Business Day, such payment date shall be
extended to the next succeeding Business Day and interest thereon shall be
payable at the then applicable rate during such extension.
(f) In no event will Lender charge interest at a rate that exceeds the highest
rate of interest permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable.
1.6 Cash Management System. On or prior to the Closing Date and until the
Termination Date, Borrower will establish and maintain the cash management
system described in Schedule D.
1.7 Fees. As compensation for Lender's costs and efforts incurred and expended
in entering into this Agreement and in consideration of Lender's making the
Loans available to Borrower, Borrower agrees to pay to Lender the Fees set
forth in Schedule E.
1.8 Receipt of Payments. Borrower shall make each payment under this Agreement
(not otherwise made pursuant to Section 1.9) without set-off or counterclaim not
later than 1:00 p.m. (New York time) on the day when due in lawful money of the
United States of America in immediately available funds. For purposes of
computing interest and Fees, all payments shall be deemed received by Lender two
(2) Business Days following receipt of good funds by Lender, except that
payments made to Lender by wire or other forms of immediate cash shall be deemed
received by Lender upon confirmation by Lender that it has received such funds.
For purposes of determining the Borrowing Availability, payments shall be deemed
received by Lender upon receipt of good funds by Lender. To cover the extra
expenses involved in handling delinquent payments, Lender may collect a late
charge equal to five percent (5.00%) of any amount due (including, without
limitation, payments of principal and interest), with a minimum late charge of
$15.00, if any such amount is not paid by Borrower within ten (10) days after
the due date thereof.
1.9 Application and Allocation of Payments. Borrower irrevocably agrees that
Lender shall have the continuing and exclusive right to apply any and all
payments against the then due and payable Obligations in such order as Lender
may deem advisable. Lender is authorized to, and at its option may (without
prior notice or precondition and at any time or times), but shall not be
obligated to, make or cause to be made Revolving Credit Advances on behalf of
Borrower for: (a) payment of all Fees, expenses, indemnities, charges, costs,
principal, interest, or other Obligations owing by Borrower under this
Agreement or any of the other Loan Documents,
4
6
(b) the payment, performance or satisfaction of any of Borrower's obligations
with respect to preservation of the Collateral or otherwise under this
Agreement, or (c) any premium in whole or in part required in respect of any of
the policies of insurance required by this Agreement, even if the making of any
such Revolving Credit Advance causes the outstanding balance of the Revolving
Credit Loan to exceed the Borrowing Availability, and, except as otherwise
permitted by this Agreement, Borrower agrees to repay immediately, in cash, any
amount by which the Revolving Credit Loan exceeds the Borrowing Availability.
Borrower irrevocably agrees that Lender shall have the right to charge any
amounts due under the Loan (including, without limitation, principal, interest
and Fees) against any account of Borrower maintained with Lender.
1.10 Accounting. Lender is authorized to record on its books and records
the date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrower on a monthly basis a
statement and accounting of such recordations but any failure on the part of the
Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to Borrower shall not in any manner affect the obligation of
Borrower to repay (with applicable interest) the Loan made to Borrower under
this Agreement. Except to the extent that Borrower shall, within 30 days after
such statement and accounting is sent, notify Lender in writing of any objection
Borrower may have thereto (stating with particularity the basis for such
objection), such statement and accounting shall be deemed final, binding and
conclusive upon Borrower, absent manifest error.
1.11 Indemnity. Borrower and each other Credit Party executing this
Agreement jointly and severally agree to indemnify and hold Lender and its
Affiliates, and their respective employees, attorney and agents (each, and
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses liabilities and expenses of any kind or
nature whatsoever (including attorney's fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan Documents or
any other documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities, Environmental Liabilities and legal
cost and expenses arising out of or incurred in connection with disputes between
or among any parties to any of the Loan Documents (collectively, "Indemnified
Liabilities"), except to the extent that any such Indemnified Liabilities"),
except to the extent that any such Indemnified Liability is finally determined
by a court of competent jurisdiction to have resulted solely from such
Indemnified Person's gross negligence or willful misconduct. NO INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWER OR TO ANY OTHER PARTY TO
ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY
OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
1.12 Taxes. All payments to Lender under any Loan Document shall be made
free and clear of, and without deduction for, any Taxes. If Borrower shall be
required by law to deduct any Taxes from any payment to Lender under any Loan
Document, then the amount payable to Lender shall be increased so that, after
making all required deductions (including deductions applicable to additional
sums payable under this Section 1.12), Lender receives an amount equal to that
which it would have received had no such deductions been made and Borrower shall
pay the full amount deducted to the relevant taxing authority, and promptly
furnish to Lender tax receipts evidencing such payment. Borrower shall pay and
indemnify Lender for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 1.12) paid by Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.
1.13 Borrowing Base; Reserves. The Borrowing Base shall be determined by
Lender (including the eligibility of Lease Receivables) based on the most recent
Borrowing Base Certificate delivered to Lender in accordance with Section 4.1(b)
and such other information available to Lender. Without limiting any other
rights and remedies of
5
7
Lender hereunder or under the other Loan Documents, the Revolving Credit Loan
shall be subject to Lender's continuing right to withhold from Borrowing
Availability reserves, and to increase and decrease such reserves from time to
time, if and to the extent that in Lender's reasonable credit judgment and sole
discretion such reserves are necessary, including to protect Lender's interest
in the Collateral or to protect Lender against possible non-payment of Lease
Receivables for any reason by Account Debtors or possible diminution of the
value of any Collateral or possible non-payment of any of the Obligations or for
any taxes or customs duties or in respect of any state of facts which could
constitute a Default. Lender may, at its option, implement reserves by
designating as ineligible a sufficient amount of Lease Receivables which would
otherwise be Eligible Lease Receivables, as the case may be, so as to reduce the
Borrowing Base by the amount of the intended reserves.
1.14 Audits. It is anticipated that Collateral audits will be required
annually. If a Default shall have occurred, the Lender may require additional
audits its sole discretion. Collateral audits will be performed by an
independent certified public accounting firm acceptable to the Lender, such
acceptance not to be unreasonably withheld. Borrower will reimburse Lender for
the fees incurred by such audits provided that such fees shall not exceed $7,500
per audit, plus out of pocket expenses, unless a Default shall have occurred.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Revolving Credit Advance. Lender shall not be
obligated to make any Loan, or to take, fulfill, or perform any other action
hereunder, until the following conditions have been satisfied in a manner
satisfactory to Lender in its sole discretion, or waived in writing by Lender:
(a) The Loan Documents to be delivered on or before the Closing Date shall
have been duly executed and delivered by the appropriate parties, all as set
forth in the Schedule of Documents and all as satisfactory to Lender in its
discretion;
(b) Lender shall have received evidence satisfactory to it that all of the
obligations of Borrower under its Existing Credit Facilities under the financing
documentation as in effect immediately prior to the Closing Date are in full
force and effect and Borrower is not in default thereunder;
(c) Lender shall have received evidence satisfactory to it that each Credit
Party has obtained all consents and acknowledgements of all Persons and
Governmental Authorities whose consents or acknowledgments may be required prior
to the execution and delivery of this Agreement and the other Loan Documents (or
pursuant to the terms hereof or thereof) and the consummation of the
transactions contemplated hereby and thereby and that such consents or
acknowledgments remain in full force and effect;
(d) Lender shall have received evidence satisfactory to it that the
insurance policies provided for in Section 3.17 are in full force and effect,
together with appropriate evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender as required under such Section;
(e) All representations or warranties by any Credit Party contained herein
or in any of the other Loan Documents shall be true and correct as of such date,
except to the extent that such representation or warranty is expressly stated to
relate to a specific earlier date, in which case, such representation and
warranty shall be true and correct as of such earlier date;
(f) Lender shall have received an opinion of counsel to the Borrower with
respect to the Loan Documents in form and substance satisfactory to Lender;
(g) Payment by Borrower of the Closing Fee and all other fees, costs, and
expenses payable by Borrower hereunder that have accrued as of the Closing Date;
(h) Lender shall be satisfied (i) that all other Financial Statements
delivered to it fairly present the business and financial condition of Borrower
and Guarantor and the results of operations for the periods then ended, and
there has been no Material Adverse Effect on Borrower's or Guarantor's business,
assets or financial condition since the respective dates of such Financial
Statements; (ii) as to the solvency of Borrower following the
6
8
transactions contemplated hereby; and (iii) with the results of customer
checkings and due diligence, including without limitation, reference checks;
(i) Verification of Lease Receivables constituting Eligible Lease Receivables
satisfactory to Lender;
(j) Guarantors shall have delivered updated personal and/or corporate, as
applicable, Financial Statements to Lender, in form and substance satisfactory
to Lender;
(k) Borrower shall have delivered to Lender its audited Financial Statements
from an independent certified accounting firm acceptable to Lender for the
Fiscal Year ending December 31, 1998 and internally prepared Financial
Statements for the Fiscal Quarter ending June 30, 1999, and (ii) internally
prepared Financial Statements for the period ending on the last day of
September, 1999, provided, that Borrower will deliver an audited balance sheet
for such period to Lender promptly after receipt of such statements by Borrower;
and
(l) All Indebtedness owing to any Affiliates of Borrower or any Borrower's
stockholders, officers or employees, shall be subordinated to the Obligations on
terms and conditions satisfactory to Lender.
2.2 Further Conditions to the Loan. Lender shall not be obligated to fund any
Loan, if, as of the date thereof:
(a) Any representation or warranty by any Credit Party contained herein or in
any of the other Loan Documents shall be untrue or incorrect as of such date,
except to the extent that such representation or warranty is expressly stated to
relate to a specific earlier date, in which case, such representation and
warranty shall be true and correct as of such earlier date; or
(b) Any event or circumstance which has had or reasonably could be expected to
have a Material Adverse Effect shall have occurred since the Closing Date; or
(c) Any Default shall have occurred and be continuing or would result after
giving effect to such Loan; or
(d) After giving effect to such Loan, the Revolving Credit Loan exceeds the
Borrowing Availability; or
(e) Any action, proceeding, investigation, regulation or legislation shall have
been instituted, threatened or proposed before any Governmental Authority to
enjoin, restrain or prohibit, or to obtain damages in respect of, or which is
related to or arises out of, this Agreement or any other Loan Document or the
consummation of any transaction contemplated hereby or thereby and which, in
Lender's sole judgment, would make it inadvisable to consummate any transaction
contemplated by this Agreement or any other Loan Document; or
(f) The Borrower shall have promptly executed and/or delivered to the Lender,
in its sole discretion, any and all other documents and/or instruments that the
Lender shall request in connection with the Gross Lease Receivables and/or the
Leases and/or the Leased Equipment.
The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request and the date of such
acceptance, (i) a representation and warranty by Borrower that the conditions in
Sections 2.1 and 2.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Lender's Liens pursuant to the Loan Documents.
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, Borrower
and each other Credit Party executing this Agreement represent and warrant to
Lender (each of which representations and warranties shall survive the execution
and delivery of this Agreement), and promise to and agree with Lender until the
Termination Date as follows:
7
9
3.1 Corporate Existence: Compliance with Law. Each Corporate Credit Party: (a)
is, as of the Closing Date, and will continue to be (i) a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation, (ii) duly qualified to do
business and in good standing in each other jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect; and (iii) in compliance with all Requirements of
Law and Contractual Obligations, except to the extent failure to comply
therewith could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and (b) has and will continue to have (i) the
requisite corporate power and authority and the legal right to execute, deliver
and perform its obligations under the Loan Documents, and to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore or
proposed to be conducted, and (ii) all licenses, permits, franchises, rights,
powers, consents or approvals from or by all Persons or Governmental Authorities
having jurisdiction over such Corporate Credit Party which are necessary or
appropriate for the conduct of its business.
3.2 Executive Offices: Corporate or Other Names; Conduct of Business. The
location of each Corporate Credit Party's chief executive office and principal
place of business, corporate offices, warehouses, other locations of Collateral
and locations where records with respect to Collateral are kept (including in
each case the county of such locations) are as set forth in Disclosure Schedule
(3.2) and, except as set forth in such Disclosure Schedule, such locations have
not changed during the preceding twelve months. As of the Closing Date, during
the prior five years, except as set forth in Disclosure Schedule (3.2), no
Corporate Credit Party has been known as or conducted business in any other name
(including trade names). No Corporate Credit Party shall change its (a) name,
(b) chief executive office, (c) principal place of business, (d) corporate
offices, (e) warehouse or other Collateral locations, or (f) location of its
records concerning the Collateral, or acquire, lease or use any real estate
after the Closing Date without such Person, in each instance, giving thirty (30)
days prior written notice thereof to Lender and taking all actions deemed
necessary or appropriate by Lender to continuously protect and perfect Lender's
Liens upon the Collateral.
3.3 Corporate Power: Authorization: Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party, and the creation of all Liens provided for herein and therein: (a)
are and will continue to be within such Credit Party's power and authority; (b)
have been and will continue to be duly authorized by all necessary or proper
action; (c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Credit Party (d) do not and will not result in
the creation or imposition of any Lien (other than Permitted Encumbrances) upon
any of the Collateral; and (e) do not and will not require the consent or
approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c) (all of which will have been duly obtained, made
or complied with on or before the Closing Date and shall be in full force and
effect on such date). As of the Closing Date, each Loan Document shall have been
duly executed and delivered on behalf of each Credit Party part thereto, and
each such Loan Document upon execution and delivery shall be and will continue
to be a legal, valid and binding obligation of such Credit Party enforceable
against it in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency and other similar laws affecting creditors'
rights generally, and by general principles of equity. In addition to, and not
in limitation of, any other representation or warranty made by Borrower
hereunder, the Borrower has a right to assign, and/or grant security interests
in, and has validly assigned and/or granted security interests in and to, the
Collateral, including, without limitation, the Gross Lease Receivables, the
Leases and the Leased Equipment to the Lender. The Lender will have a legally
valid and perfected first priority security interest in, and assignment of, all
of the Collateral effective against all parties or persons except as otherwise
provided in this Agreement.
3.4 Financial Statements and Projections: Books and Records. (a) The Financial
Statements delivered by Borrower to Lender for its most recently ended Fiscal
Year and Fiscal Month are true, correct and complete and reflect fairly and
accurately the financial condition of Borrower as of the date of each of such
Financial Statement in accordance with GAAP.
(b) Borrower and each other Corporate Credit Party shall keep adequate Books
and Records with respect to the Collateral and its business activities in which
proper entries, reflecting all consolidated and consolidating financial
transactions, and payment received on any and all credits granted to, and all
other dealings with, the
8
10
Collateral, will be made in accordance with GAAP and all Requirements of Law
and on a basis consistent with the Financial Statements.
3.5 Material Adverse Change. Between the date of Borrower's most recent
Financial Statements delivered to Lender and the Closing Date: (a) no Corporate
Credit Party has incurred any obligations, contingent or non-contingent
liabilities, or liabilities for Charges, long-term leases or unusual forward or
long-term commitments which could, alone or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (b) no event has occurred which
alone or in the aggregate has had or could reasonably be expected to have a
Material Adverse Effect. No Requirements of Law or Contractual Obligation of
any Credit Party has had or could reasonably be expected to have a Material
Adverse Effect and no Credit Party is in default, and to such Credit Party's
knowledge no third party is in default under or with respect to any of its
Contractual Obligations, which alone or in the aggregate has had or could
reasonably be expected to have a Material Adverse Effect.
3.6 Real Estate. The real estate listed in Disclosure Schedule (3.6)
constitutes all of the real property owned, leased, or used by each Corporate
Credit Party in its business, and such Corporate Credit Party will not execute
any material agreement or contract in respect of such real estate after the
date of this Agreement without giving Lender prompt written notice thereof.
Each Corporate Credit Party holds and will continue to hold good and marketable
fee simple title to all of its owned real estate, and good and marketable title
to all of its other properties and assets, and valid and insurable leasehold
interests in all of its leases (both as lessor and lessee, sublessee or
assignee), and none of the properties and assets of any Corporate Credit Party
are or will be subject to any Liens, except Permitted Encumbrances.
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.7), as of the
Closing Date no Corporate Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. All of the issued and outstanding Stock of each Corporate Credit
Party (including all rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Corporate Credit Party may be required to
issue, sell, repurchase or redeem any of its Stock) as of the Closing Date is
owned by each of the Stockholders (and in the amounts) set forth on Disclosure
Schedule (3.7). Upon consummation of the transactions contemplated by the Loan
Documents, the Corporate Credit Parties will not have any outstanding
Indebtedness other than the Indebtedness under this Agreement or as is
described in Section 5(c).
3.8 Government Regulation. No Credit Party is subject to or regulated under
the Investment Company Act of 1940, the Public Utility Holding Company Act of
1935, the Federal Power Act or any other Federal or state statute, rule or
regulation that restricts or limits such Person's ability to incur
Indebtedness, pledge its assets, or to perform its obligations under the Loan
Documents. The making of the Loan, the application of the proceeds and
repayment thereof, and the consummation of the transactions contemplated by the
Loan Documents do not and will not violate any provision of any such statute or
any rule, regulation or order issued by the Securities and Exchange Commission.
3.9 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing " or "carrying" any "margin security" as
such terms are defined in Regulations U or G of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none
of the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any Margin Stock or for any
other purpose which might cause the Loan or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulation G, T, U or X of the Federal Reserve Board. No Credit Party will take
or permit to be taken any action that might cause any Loan Document to violate
any regulation of the Federal Reserve Board.
3.10 Taxes; Charges. Except as disclosed on Disclosure Schedule (3.10) all
tax returns, reports and statements required by any Governmental Authority to
be filed by Borrower or any other Credit Party have, as of the Closing Date,
been filed and will, until the Termination Date, be filed with the appropriate
Governmental
9
11
Authority and no tax Lien has been filed against any Credit Party or any Credit
Party's property. Proper and accurate amounts have been and will be withheld by
Borrower and each other Credit Party from their respective employees for all
periods in complete compliance with all Requirements of Law and such
withholdings have and will be timely paid to the appropriate Governmental
Authorities. Disclosure Schedule (3.10) sets forth as of the Closing Date those
taxable years for which any Credit Party's tax returns are currently being
audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on Disclosure Schedule
(3.10), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee. As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
could reasonably be expected to have a Material Adverse Effect.
3.11 Payment of Obligations. Each Credit Party will pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its Charges and other obligations of whatever nature, except where
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of such Credit Party and none of the
Collateral becomes subject to any Lien or forfeiture or loss as a result of such
contest. Borrower and each Corporate Credit Party is, and at the time of each of
the Revolving Credit Advances, (i) has capital sufficient to carry on its
business and transactions in which it is engaged or about to engage; (ii) is
able to pay its debts as they mature; and (iii) owns property whose fair salable
value is greater than the amounts required to pay its debts.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists and separately identifies all
Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Lender. Each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred which would cause
the loss of such qualification or tax-exempt status. Each Plan is in compliance
with the applicable provisions of ERISA and the IRC, including the filing of
reports required under the IRC or ERISA. No Corporate Credit Party or ERISA
Affiliate has failed to make any contribution or pay any amount due as required
by either Section 412 of the IRC or Section 302 of ERISA or the terms of any
such Plan. No Corporate Credit Party or ERISA Affiliate has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Corporate Credit Party to a material tax
on prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan has
any Unfunded Pension Liability; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Corporate Credit Party, threatened claims (other than claims for benefits in
the normal course), sanctions, actions or lawsuits, asserted or instituted
against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no
Credit Party or ERISA Affiliate has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a Multiemployer
Plan; (v) within the last five years no Title IV Plan with Unfunded Pension
Liabilities has been transferred outside of the "controlled group" (within the
meaning of Section 4001(a)(14) of ERISA) of any Corporate Credit Party or ERISA
Affiliate; and (vi) no liability under any Title IV Plan has been satisfied with
the purchase of a contract from an insurance company that is not rate AAA by the
Standard & Poor's Corporation or the equivalent by another nationally recognized
rating agency.
3.13 Litigation. No Litigation is pending or, to the knowledge of any Credit
Party, threatened by or against any Credit Party or against any Credit Party's
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Affect. Except as set forth on Disclosure
Schedule (3.13), as of the Closing Date there is no Litigation pending or
threatened against any Credit Party which seeks damages in excess of $50,000 or
10
12
injunctive relief or alleges criminal misconduct of any Credit Party. Each
Credit Party shall notify Lender promptly upon learning of the existence or
commencement of any Litigation commenced or to the knowledge of any Credit Party
threatened against any Credit Party that: (x) may involve an amount in excess of
$50,000; (y) could reasonably be expected to have a Material Adverse Effect
whether or not determined adversely; or (z) regardless of amount (i) is asserted
or instituted, against any Plan, its fiduciaries or its assets, or against any
Credit Party or any ERISA Affiliate in connection with any Plan, (ii) includes
any demand for injunctive relief, (iii) alleges criminal misconduct by any
Credit Party, or (iv) alleges the violation of any law regarding, or seeks
remedies in connection with, any Environmental Liabilities.
3.14 Intellectual Property. As of the Closing Date, all material Intellectual
Property owned or used by any Corporate Credit Party is listed, together with
application or registration numbers, where applicable, in Disclosure Schedule
(3.14). Each Corporate Credit Party owns, or is licensed to use, all
Intellectual Property necessary to conduct its business as currently conducted
except for such Intellectual Property the failure of which to own or license
could not reasonably be expected to have a Material Adverse Effect.
3.15 Full Disclosure. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of any
Credit Party under any Loan Document, or to induce Lender to execute the Loan
Documents, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
3.16 Hazardous Materials. Except as set forth on Disclosure Schedule (3.16) as
of the Closing Date, (a) each real property location owned, leased or occupied
by each Corporate Credit Party (the "Real Property") is maintained free of
contamination from any Hazardous Material, (b) no Corporate Credit Party is
subject to any Environmental Liabilities or, to any Corporate Credit Party's
knowledge, potential Environmental Liabilities, in excess of $50,000 in the
aggregate, (c) no notice has been received by any Corporate Credit Party
identifying it as a "potentially responsible party" or requesting information
under CERCLA or analogous state statutes, and to the knowledge of any Corporate
Credit Party, there are no facts, circumstances or conditions that may result
in any Corporate Credit Party being identified as a "potentially responsible
party" under CERCLA or analogous state statues; and (d) each Corporate Credit
Party has provided to Lender copies of all existing environmental reports,
reviews and audits and all written information pertaining to actual or
potential Environmental Liabilities, in each case relating to any Corporate
Credit Party. Each Corporate Credit Party: (i) shall comply in all material
respects with all applicable Environmental Laws and Environmental Permits; (ii)
shall notify Lender in writing within seven days if and when it becomes aware
of any Release, on, at, in, under, above, to, from or about any of its Real
Estate; and (iii) shall promptly forward to Lender a copy of any order, notice,
permit, application, or any communication or report received by it or any other
Credit Party in connection with any such Release.
3.17 Insurance. As of the Closing Date, Disclosure Schedule (3.17) lists all
insurance of any nature maintained for current occurrence by Borrower and each
other Corporate Credit Party, as well as a summary of the terms of such
insurance. Each Corporate Credit Party shall deliver to Lender endorsements to
all of its and those of its Subsidiaries (a) "All Risk" and business
interruption insurance policies naming Lender loss payee, and (b) general
liability and other liability policies naming Lender as an additional insured.
All policies of insurance on real and personal property will contain an
endorsement, in form and substance acceptable to Lender, showing loss payable to
Lender (Form 438 BFU or equivalent) and extra expense and business interruption
endorsements. Such endorsement, or an independent instrument furnished to
Lender, will provide that the insurance companies will give Lender at least 30
days prior written notice before any such policy or policies of insurance shall
be altered or cancelled and that no act or default of Borrower or any other
Person shall effect the right of Lender to recover under such policy or policies
of insurance in case of loss or damage. Each Corporate Credit Party shall direct
all present and future insurers under its "All Risk" policies of insurance to
pay all proceeds payable thereunder directly to Lender. If any insurance
proceeds are paid by check, draft or other instrument payable to Borrower and
Lender jointly, Lender may endorse Borrower's name thereon and do such other
things as Lender may deem advisable to reduce the same to cash. Lender reserves
the right at any time, upon review of each Credit Party's risk profile, to
require additional forms and limits of insurance to adequately protect Lender's
interests in accordance with Lender's normal practice for similarly situated
borrowers. Each Corporate Credit Party shall, on each anniversary of the Closing
Date and from time to time at Lender's request, deliver to Lender
11
13
a report by a reputable insurance broker, satisfactory to Lender, with respect
to such Person's insurance policies. All policies of insurance covering the
Collateral provide coverage for property located on premises other than the
Borrower's premises.
3.18 Deposit and Disbursement Accounts. Attachment 1 to Schedule D lists all
banks and other financial institutions at which Borrower, or any other Corporate
Credit Party, maintains deposits and/or other accounts, including the Operating
Account, and such Attachment correctly identifies the name, address and
telephone number of each such depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number. No
Corporate Credit Party will establish any depository or other bank account of
any kind with any financial institution (other than the accounts set forth on
Attachment 1 to Schedule D) without Lender's prior written consent.
3.19 Lease Receivables. As of the date of each Borrowing Base Certificate
delivered to Lender, and subject to Lender's determination in its sole
discretion, each Lease Receivable listed thereon as an Eligible Lease Receivable
is an Eligible Lease Receivable. Borrower has not made, and will not make, any
agreement with any Account Debtor for any extension of time for the payment of
any Lease Receivable, any compromise or settlement for less than the full amount
thereof, any release of any Account Debtor from liability therefor, or any
deduction therefrom except a discount or allowance for prompt or early payment
allowed by Borrower in the ordinary course of its business consistent with
historical practice and as previously disclosed to Lender in writing. With
respect to the Lease Receivables pledged as collateral pursuant to any Loan
Document (a) the amounts shown on all invoices, statements and reports which may
be delivered to the Lender with respect thereto are actually and absolutely
owing to the relevant Credit Party as indicated thereon and are not in any way
contingent; (b) no payments have been or shall be made thereon except payments
immediately delivered to the applicable Bank Accounts or the Lender as required
hereunder; and (c) to Borrower's knowledge, all Account Debtors have the
capacity to contract. Borrower shall notify Lender promptly of any event or
circumstance which, to Borrower's knowledge would cause Lender to consider any
then existing Lease Receivable as no longer constituting an Eligible Lease
Receivable.
3.20 Leases. With respect to the Leases, the Lease Receivables and/or the
Gross Lease Receivables, as the case may be, Borrower warrants and represents to
Lender that, unless otherwise indicated in writing by Borrower: (i) they are
genuine, are in all respects what they purport to be, are not evidenced by a
judgment and are only evidenced by one, if any, executed original instrument,
agreement, contract or document; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in
any documents related thereto; (iii) the amounts of the face value shown on any
Leases or schedules thereto or schedule of accounts or accounts receivable
report delivered or provided to Lender, and all invoices, statements and reports
delivered or provided to Lender, with respect to any Gross Lease Receivables
and/or Leases are actually and absolutely owing to Borrower and are not
contingent for any reason; (iv) there are no setoffs, counterclaims or disputes
existing or asserted with respect thereto and Borrower has not made any
agreement with any Account Debtor thereunder for any deduction therefrom; (v)
there are no facts, events or occurrences which in any way impair the validity
or enforcement thereof or tend to reduce the amount payable thereunder from the
amount of any such Lease Receivables and/or Leases, and on all contracts,
reports, invoices and statements delivered or provided to Lender with respect
thereto; (vi) to the best of Borrower's knowledge and belief, all Account
Debtors, under any Gross Lease Receivables and/or Leases, (A) had the capacity
to contract at the time any Lease or contract or other document giving rise to
the Lease Receivable was executed, (B) are solvent, and (C) are not the subject
of a bankruptcy or insolvency proceeding of any kind; (vii) the Lease
Receivable, the Leased Equipment and the Leases giving rise to any such Lease
Receivable are not subject to any Liens or claim or encumbrance, except those of
Lender, those removed or terminated prior to the date hereof and those
subordinate to Lender's security interest (unless otherwise agreed by the Lender
in its sole discretion); (viii) Borrower has no knowledge of any fact or
circumstance which would impair the validity or collectibility thereof; (ix) to
the best of Borrower's knowledge and belief, there are no proceedings or actions
which are threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in said party's financial condition;
(x) they have not been pledged, assigned or transferred to any Person other than
to the Lender; (xi) the Leases and any guarantees or undertakings of any kind
whatsoever regarding the same constitutes legal, valid and binding agreements
enforceable against the Account Debtors and any guarantors in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy,
12
14
insolvency and other similar laws affecting creditors' rights generally; (xii)
Borrower is the sole and absolute owner of (or has a perfected, first priority
lien and security interest in) all the applicable Leases, Gross Lease
Receivables and Leased Equipment (subject only to the Liens of the Lender
hereunder); (xiii) the applicable Leased Equipment shall have been delivered
and/or installed, shall be in good working order and shall have been fully and
duly accepted by the applicable lessee; (xiv) it has been originated by the
Borrower; (xv) there are no verbal, written or implied agreements or
representations between the Borrower and the Account Debtor regarding any such
Lease Receivables and/or Leases and/or Leased Equipment other than the written
agreements or documents either delivered to and held by the Lender, or held by
the Borrower or the Trustee (if applicable) on behalf of the Lender, pursuant
to the terms of this Agreement; and (xvi) all of the Leases relate to
commercial and business transactions and not consumer transactions and the
Leased Equipment is used for commercial purposes only and not for any consumer
or farming purposes.
3.21 Conduct of Business; Maintenance of Existence. Each Corporate Credit
Party (a) shall conduct its business substantially as now conducted or as
otherwise permitted hereunder and preserve all of its rights, privileges and
franchises necessary and desirable in connection therewith, and (b) shall at
all times maintain, preserve and protect all of the Collateral and such Credit
Party's other property, used or useful in the conduct of its business and keep
the same in good repair, working order and condition (taking into consideration
ordinary wear and tear) and from time to time make, or cause to be made, all
necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices.
3.22 Further Assurances. At any time and from time to time, upon the
written request of Lender and at the sole expense of Borrower, Borrower and
each other Credit Party shall promptly and duly execute and deliver any and all
such further instruments and documents, including any requested projections,
and take such further action as Lender may reasonably deem desirable (a) to
obtain the full benefits of this Agreement, (b) to protect, preserve and
maintain Lender's rights in the Collateral, or any of it, and under this
Agreement, or (c) to enable Lender to exercise all or any of the rights and
powers herein granted.
3.23 No Joint Venture. Lender and Borrower shall not be deemed to be
partners or joint venturers and Borrower shall indemnify and hold Lender
harmless from damages and expenses resulting from such a construction of the
relationship of the parties.
3.24 Year 2000 Compliant. The Borrower's computer hardware, programs, data,
applications, codes and software systems are Year 2000 Compliant.
4. AFFIRMATIVE COVENANTS
4.1 Reports and Notices. Borrower represents, agrees and promises that
from and after the Closing Date until the Termination Date, Borrower shall
deliver to Lender:
(a) As frequently as Lender may request and in any event no less
frequently than once per month, (i) a Borrowing Base Certificate in the form of
Exhibit C detailing ineligible Lease Receivables for adjustment to the
Borrowing Base, (ii) an accounts receivable analysis and aging report for those
Lease Receivables pledged as Collateral, and (iii) a statement that all Lease
Receivables over 60 days past due have been replaced by additional Collateral,
each to be certified as true and correct by the Chief Financial Officer of
Borrower or such other officer as is acceptable to Lender;
(b) Within 15 days following the end of each Fiscal Month, (i) a list of
all Account Debtors, lessees, Leases, loans, Lease and loan types, Leased
Equipment, types of Leased Equipment, original and outstanding Lease and loan
balances relating to the Collateral, (ii) a backlog report relating to the
Collateral, (iii) a summary accounts receivable analysis and aging report for
Borrower's entire Lease portfolio, including those Leases which have been sold
or pledged to third parties but which Borrower continues to service, (iv) an
accounts payable analysis and aging report, and (v) a description of all
ineligible calculations;
(c) Within 45 days following the end of each Fiscal Quarter, the internally
prepared Financial Statements for such Fiscal Quarter, accompanied by a
certification by the Chief Executive Officer or Chief Financial Officer of
13
15
Borrower that such Financial Statements are complete and correct, that there was
no Default (or specifying those Defaults of which he or she was aware), and
showing in reasonable detail the calculations used in determining compliance
with the financial covenants hereunder;
(d) Within 120 days following the close of each Fiscal Year, the audited
Financial Statements for such Fiscal Year, accompanied by (i) a report from
Borrower's accountants to the effect that in connection with their audit
examination nothing has come to their attention to cause them to believe that a
Default has occurred or specifying those Defaults of which they are aware, and
(ii) any management letter that may be issued;
(e) Within 45 days of the filing thereof, copies of the federal and state
income tax returns of Borrower and Guarantors; and
(f) Within 45 days following the close of each Fiscal Year, annual personal
financial statements of Guarantors.
4.2 Financial Covenants. Borrower shall not breach any of the financial
covenants set forth in Schedule G and as frequently as Lender may request and in
any event no less frequently than once per Fiscal Quarter, Borrower shall
deliver to Lender a statement, in a form satisfactory to Lender, confirming
Borrower's compliance with such financial covenants, certified as true and
correct by Chief Financial Officer of Borrower or such other officer as is
acceptable to Lender.
4.3 Other Reports and Information. Borrower shall advise Lender promptly, in
reasonable detail, of: (a) any Lien, other than Permitted Encumbrances,
attaching to or asserted against any of the Collateral or any occurrence causing
a material loss or decline in value of any Collateral and the estimated (or
actual, if available) amount of such loss or decline; (b) any material change in
the composition of the Collateral; and (c) the occurrence of any Default or
other event which could reasonably be expected to have a Material Adverse
Effect. Borrower shall, upon request of Lender, furnish to Lender such other
reports and information in connection with the affairs, business, financial
condition, operations, prospects or management of Borrower or any other Credit
Party or the Collateral as Lender may request, all in reasonable detail.
4.4 Maintain its Existence. Preserve and maintain (i) as to Golden Eagle Credit
Corporation, its corporate existence and good standing in the jurisdiction of
its organization, and qualify and remain qualified as a foreign corporation in
each jurisdiction in which such qualification is required, and (ii) as to Golden
Eagle LLC, its limited liability company existence and good standing in the
jurisdiction of its organization, and qualify and remain qualified as a foreign
limited liability company in each jurisdiction in which such qualification is
required.
4.5 Maintenance of Properties. Maintain, keep and preserve all of its
properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear expected.
4.6 Conduct of Business. Continue to engage in a business of the same general
type as conducted and proposed to be conducted by it on the date of this
Agreement.
4.7 Maintenance of Insurance.
(a) Keep its properties and the properties subject to each Lease, including,
without limitation, and Leased Equipment, insured against fire and other hazards
(so called "All Risk" coverage) in amounts and with companies satisfactory to
the Lender to the same extent in covering such risks as is customary in the same
or similar business, but in no event in an amount less than the lesser of (i)
the total indebtedness or (ii) the amount necessary to avoid and co-insurance
penalty which policy shall name the Lender as loss payee as its interest may
appear, (b) Maintain public liability coverage against claims for personal
injuries, death or property damage in an amount deemed reasonable by the Lender,
which policy shall name the Lender as an additional insured, and (c) Maintain
all worker's compensation, employment or similar insurance as may be required by
applicable law. Notwithstanding the above, Borrower's obligations under this
Section will be complied with provided that Borrower maintains a general
insurance policy insuring Leased Equipment located at lessee's premises,
containing a $250.00 deductible for each loss and the Borrower and/or lessee
shall be required to insure the Leased
14
16
Equipment based upon Borrower's current business practices which allows certain
lessees, that Borrower determines are "good credit risks" to self-insure the
Leased Equipment or it charges a monthly fee in lieu of insurance to such
lessees. Such All Risk property insurance coverage shall provide for a minimum
of thirty (30) days' written cancellation notice to the Lender. The Borrower
agrees to deliver copies of all of the aforesaid insurance policies to the
Lender. In the event of any loss or damage to any Collateral, the Borrower
shall give immediate written notice to the Lender and to its insurers of such
loss of damage and shall properly file its proofs of loss with said insurers.
All insurance policies required hereunder shall provide that Borrower's
successors and assigns shall also be covered by said insurance policies.
4.8 Compliance With Laws. Comply with all respects with all applicable laws,
statutes, rules, ordinances, regulations, and orders of Governmental
Authorities, such compliance to include, without limitation, paying before the
same become delinquent all taxes, assessments, and governmental charges imposed
upon it or upon its property, and complying with all broker, truth-in-lending
or lending or banking laws, rules or regulations.
4.9 Eligible Lease Receivables. Promptly after receiving notice or otherwise
become aware thereof, notify the Lender in writing that a Lease Receivable that
the Borrower has represented or warranted to the Lender to be an Eligible Lease
Receivable has ceased to be an Eligible Lease Receivable for any reason
whatsoever.
4.10 Collateral. Shall (a) preserve the Collateral in good condition and order
and not permit it to be abused or misused, (b) not allow any of the applicable
Collateral to be affixed to real estate, (c) until a request from the Lender or
the occurrence of a Default or an Event of Default or upon contrary
instructions from Lender, collect its accounts pursuant to this Agreement, (d)
following the request of the Lender or upon the occurrence of a Default or an
Event of Default (and upon request of the Lender), deliver all proceeds of the
Collateral to the Lender immediately upon receipt in the identical form
received without commingling with other property, (e) following the request of
the Lender or upon the occurrence of a Default or an Event of Default and when
and to the extent required by the Lender, notify Account Debtors and obligers
that their accounts, instruments, documents, contracts and all of the
Borrower's rights to receive payments have been assigned to the Lender and
shall be paid directly to the Lender, (f) take reasonably necessary steps to
preserve the liability of Account Debtors, and obligers, and secondary parties
whose liabilities are part of the Collateral, (g) take any action required by
the Lender with reference to the Federal Assignment of Claims Act, (h) allow
the Lender to inspect the Collateral and to inspect and copy all records
relating to the Collateral, (i) immediately upon request by the Lender or
following the occurrence of a Default or an Event of Default: (a) transfer
possession or permit the Lender to take possession of all Collateral (to the
extent applicable); and (b) allow the Lender to immediately take possession of
all instruments, and documents, which are part of the Collateral, or as to
those hereafter required immediately following acquisition, and (j) notify the
Lender of any change of location or material adverse change in the condition of
any of the Collateral, or of any material adverse change in any fact or
circumstance warranted or represented by the Borrower herein or finished to the
Lender, or if any Default or Event of Default occurs.
4.11 Defend Collateral. Defend the Collateral against all claims and demands of
all Persons at any time claiming the same or any interest therein and, in the
event the Lender's security interest in (and/or assignment of) the Collateral,
or any part thereof, would be impaired by an adverse decision, allow the Lender
to contest or defend any such claim or demand in the Borrower's name and the
Borrower agrees to pay, upon demand, the Lender's reasonable costs, charges and
expenses, including, without limitation reasonable attorney's fees in
connection therewith.
4.12 Assignments of Leases, Leased Equipment, Etc.
(a) Assign to the Lender, among other things, all Leases, including, without
limitation, the assignment of all applicable leases, schedules, any and all
other lease documentation relating thereto, all Leased Equipment, all Gross
Lease Receivables and any and all guarantees or undertaking of any kind
whatsoever of any of the foregoing.
(b) Simultaneously with any assignment of any Leases hereunder, execute any
other documents or instruments requested by the Lender regarding the Leases
and/or the Leased Equipment and/or Gross Lease Receivables and deliver the same
to the Lender in its sole discretion.
15
17
(c) The original Leases, schedules, acceptance certificates, amendments,
modifications, riders, supplements, purchase options, exhibits, addendum, and
any and all other documents or instruments executed and/or delivered in
connection with (including, without limitation, any and all guarantees or
undertaking of any kind whatsoever of the same) the Leases shall be delivered to
the Lender or, if acceptable to the Lender (in its sole discretion), to the
Trustee, on the Lender's behalf pursuant to the terms of this Agreement and/or
the Trust Agreement, or any of the same which the Lender does not require to be
delivered to it or to the Trustee shall be held by the Borrower in trust as
trustee of an express trust for the Lender and any such documents or items shall
be promptly delivered to the Lender upon the Lender's request or demand for the
same.
(d) Promptly executed and/or delivery to the Lender or, if acceptable to the
Lender (in its sole discretion), to the Trustee, on behalf of Lender pursuant
to the terms of this Agreement and/or the Trust Agreement, any and all
documents and/or instrument that the Lender shall request in connection with
the Gross Lease Receivables, the Leases and/or the Leased Equipment.
4.13 No Material Change to Management Team. The Borrower shall not make a
material change to the executive management team of the Borrower as it exists
as of the date hereof.
4.14 Lease Documentation. Maintain its standard forms of lease documents and
notify the Lender of any proposed material changes in its standard forms, which
change shall be subject to the prior written approval of the Lender.
4.15 UCC Filings. Duly and timely record and file all applicable Uniform
Commercial Code Financing Statements in favor of the Lender and/or the
Borrower, as the case may be, regarding the Collateral, including, without
limitation, the Leases, the Gross Lease Receivables and/or the Leased Equipment
under the applicable Lease, in all appropriate offices and/or records;
provided, that the obligation to file such Financing Statements shall only
apply to Collateral where the underlying Leased Equipment has a value in excess
of (i) $8,000, with respect to credit card authorization equipment, and (ii)
$20,000, with respect to paging devices.
4.16 Hold Documents as the Trustee. Hold any original Leases, schedules,
acceptance certificates, riders, supplements, purchase options, exhibits,
addendum, tax authorizations and liability and hazard insurance policies for,
and any and all other documents or instruments executed and/or delivered in
connection with (including, without limitation, any guarantees or undertakings
of any kind whatsoever of the same) the Leases which the Lender does not
require to be delivered to it or, if acceptable to the Lender (in its sole
discretion), to the Trustee, on Lender's behalf pursuant to the terms of this
Agreement and/or the Trust Agreement, in trust as trustee of an express trust
for the Lender and, upon the Lender's request or demand, promptly deliver the
same to the Lender.
4.17 Leased Equipment. Acquire and/or purchase any Collateral, including,
without limitation, any Leased Equipment, with good and merchantable title free
and clear of any Lien except as otherwise provided under this Agreement.
4.18 Leases. With respect to any Leases entered into at any time after the
date of this Agreement and any Lease Receivables and/or Gross Lease Receivables
related thereto, Borrower warrants and represents to Lender that as of the date
of any such Leases, Lease Receivables and/or Gross Lease Receivables, as the
case may be, unless otherwise indicated in writing by Borrower: (a) they are
genuine, are in all respects what they purport to be, are not evidenced by a
judgment and are only evidenced by one, if any, executed original instrument,
agreement, contract or document; (B) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in
any documents related thereto; (C) the amounts of the face value shown on any
Leases or schedules thereto or schedule of accounts or accounts receivable
report delivered or provided to Lender, and all invoices, statements and reports
delivered or provided to Lender, with respect to any Gross Lease Receivables
and/or Leases are actually and absolutely owing to Borrower and are not
contingent for any reason; (D) there are no setoffs, counterclaims or disputes
existing or asserted with respect thereto and Borrower has not made any
agreement with any Account Debtor thereunder for any deduction therefrom; (E)
there are no facts, events or occurrences which in any way impair the validity
or enforcement thereof or tend to reduce the amount payable thereunder from the
amount of any Gross Lease Receivables and/or Leases, and on all contracts,
reports,
16
18
invoices and statements delivered or provided to Lender with respect thereto;
(F) to the best of Borrower's knowledge and belief, all Account Debtors, under
any Gross Lease Receivables and/or Leases, (i) had the capacity to contract at
the time any Lease or contract or other document giving rise to the Gross Lease
Receivable was executed, (ii) are solvent, and (iii) are not the subject of a
bankruptcy or insolvency proceeding of any kind; (G) the Gross Lease Receivable,
the Leased Equipment and the Leases giving rise to any such Gross Lease
Receivable are not subject to any Liens or claim or encumbrance, except those of
Lender, those removed or terminated prior to the date hereof and those
subordinate to Lender's security interest (unless otherwise agreed by the Lender
in its sole discretion); (H) Borrower has no knowledge of any fact or
circumstance which would impair the validity or collectibility thereof; (I) to
the best of Borrower's knowledge and belief, there are no proceedings or actions
which are threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in said party's financial condition;
(J) they have not been pledged, assigned or transferred to any Person other than
to the Lender; (K) the Leases and any guarantees or undertakings of any kind
whatsoever regarding the same constitutes legal, valid and binding agreements
enforceable against the Account Debtors and any guarantors in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally; (L) Borrower is the sole and absolute owner of (or
has a perfected, first priority lien and security interest in) all the
applicable Leases, Gross Lease Receivables and Leased Equipment (subject only to
the Liens of the Lender hereunder); (M) the applicable Leased Equipment shall
have been delivered and/or installed, shall be in good working order and shall
have been fully and duly accepted by the applicable lessee; (N) it has been
newly originated by the Borrower and does not arise from a re-written lease; (O)
there are no verbal, written or implied agreements or representations between
the Borrower and the Account Debtor regarding any such Gross Lease Receivables
and/or Leases and/or Leased Equipment other than the written agreements or
documents delivered to and held by the Lender, or held by the Borrower or the
Trustee (if applicable) on behalf of the Lender, pursuant to the terms of this
Agreement; and (P) all of the applicable Leases are commercial and business
transactions and not consumer transactions and the Leased Equipment is used for
commercial purposes only and not for any consumer of farming purposes.
5. NEGATIVE COVENANTS
Borrower and each Credit Party executing this Agreement covenants and agrees
(for itself and each other Credit Party) that, without Lender's prior written
consent, from the Closing Date until the Termination Date, neither Borrower nor
any other Credit Party shall, directly or indirectly, by operation of law or
otherwise:
(a) Merge with, consolidate with, acquire all or substantially all of the
assets or capital stock of, or otherwise combine with, any Person or form any
Subsidiary; provided, however, that Borrower may sell substantially all of its
assets to Hypercom Financial, Inc. so long as prior to any such proposed sale of
the Borrower's assets to Hypercom Financial, Inc., (i) the Lender consents in
writing to the sale of the Borrower's assets to Hypercom Financial, Inc., which
consent shall be in the Lender's sole discretion, (ii) Hypercom Financial, Inc.
and Hypercom Corporation promptly delivers to the Lender any and all financial
and other information requested by the Lender; and (iii) Hypercom Financial,
Inc. and Hypercom Corporation unconditionally guaranties the prompt payment and
performance of all of the Borrower's obligations to the Lender under this
Agreement and any other Loan Documents and Hypercom Financial, Inc. and Hypercom
Corporation executes and delivers to the Lender any documents or agreements
required by the Lender, which documents or agreements shall be prepared by, and
shall be in form and substance satisfactory in all respects to, the Lender.
(b) Except as otherwise permitted in this Section 5 below, make any investment
in, or make or accrue loans or advances of money to, any Person, except that
Borrower may hold investments comprised of notes payable, or stock or other
securities issued by Account Debtors to Borrower pursuant to negotiated
agreements with respect to settlement of such Account Debtor's Lease Receivables
in the ordinary course of business;
(c) Enter into any lending, borrowing or other commercial transaction with any
of its employees, directors, Affiliates or any other Credit Party (including
upstreaming and downstreaming of cash and intercompany advances and payments by
a Credit Party on behalf of another Credit Party which are not otherwise
permitted hereunder) other than loans or advances to employees in the ordinary
course of business in an aggregate outstanding amount not exceeding $50,000;
17
19
(d) Make any changes in any of its business objectives, purposes, or
operations which could have or reasonably be expected to adversely affect
repayment of the Obligations or have a Material Adverse Effect or engage in any
business other than that presently engaged in or proposed to be engaged in the
Projections delivered to Lender on the Closing Date;
(e) Amend its charter or by-laws or other organizational documents;
(f) Create or permit any Lien on any of the Collateral;
(g) Take any action or omit to take any action, which act or omission would
constitute a material default or an event of default pursuant to, or
noncompliance with, any of its Contractual Obligations;
(h) Cancel any debt owing to it, except for cancellation of debt not
constituting Lease Receivables for reasonable consideration and in the ordinary
course of its business consistent with past practice;
(i) Make or permit any Restricted Payment;
(j) Change its fiscal year end from December 31st at any time; or
(k) Except for the sale of substantially all of its assets to Hypercom
Financial, Inc. make or consent to a material change in the ownership or
structure of the Borrower or in the manner in which the business of the
Borrower is conducted or in its method of accounting or in its election to be
taxed under the IRC, as applicable.
6. SECURITY INTEREST
6.1 Grant of Security Interest. (a) As collateral security for the prompt and
complete payment and performance of the Obligations, each of the Borrower and
any other Credit Party executing this Agreement hereby grants to the Lender a
present and continuing security interest in and Lien upon all of the following
property in which it now has or at any time in the future may acquire any right,
title or interest: (i) all now existing and hereafter arising or acquired Leases
under which Lender has advanced funds to Borrower and said Leases have been
delivered to the Lender or the Trustee, including, without limitation, any and
all rents, payments, advance rentals, security deposits, and other amounts due
thereunder, proceeds of sale from sale of the equipment leased or financed
thereunder or the lease or other disposition of same, any and all other amounts
due under any Leases; (ii) all now existing and hereafter arising or acquired
Gross Lease Receivables; (iii) all now existing and hereafter arising or
acquired Leased Equipment and any and all substitutions, replacements,
accessories, additions and improvements thereto or therefor now owned and
hereafter acquired with respect to all of the foregoing, and any and all
returns, exchanges therefor or repossessions thereof, and any proceeds resulting
from the sale, lease or other disposition of the foregoing; (iv) the Operating
Account (and any and all now existing and hereafter arising or acquired amounts
and/or proceeds contained therein); (v) any escrow account (and any and all now
existing and hereafter arising or acquired amounts and/or proceeds contained
therein) relating to any Leases; (vi) all now existing and hereafter arising or
acquired Chattel Paper of the Borrow relating to any Leases, Leased Equipment or
Gross Lease Receivables; (vii) all now existing and hereafter arising or
acquired guaranties, letter of credit or any undertakings of any kind whatsoever
of any Leases or Chattel Paper of the Borrower relating to any Leases, Leased
Equipment or Gross Lease Receivables, and all collateral or security relating
thereto; (viii) all now existing and hereafter arising or acquired general
intangibles of the Borrower relating to any or all of the foregoing or any other
collateral described herein; (ix) all now existing and hereafter arising or
acquired proceeds and products of any or all of the foregoing contained in
subsections (i) through (vii), including, without limitation, cash, deposit
accounts (whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including property, hazard, liability, flood and credit
insurance), negotiable instruments and other instruments for the payment of
money, chattel paper, security agreements or documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds; and (x) all now existing and
hereafter arising or acquired books and records relating to any or all of the
above, including, without limitation, all ledger sheets, ledger cards, files,
correspondence, books of account, business papers, tapes, cards, computer
programs, computer software, computer discs, computer runs, computer data and
computer records and any other electronic or computer
18
20
documents, information or records of any kind whatsoever in the possession or
control of Borrower, any computer service bureau or any other third party of any
kind whatsoever; except the foregoing shall, after compliance with the
applicable provisions of this Agreement, exclude any Permitted Sale Collateral
pursuant to the terms of this Agreement (all of the foregoing, together with any
other collateral pledged to the Lender pursuant to any other Loan Document,
collectively, the "Collateral").
(b) Borrower, Lender and each other Credit Party executing this Agreement
agree that this Agreement creates, and is intended to create, valid and
continuing Liens upon the Collateral in favor of Lender. Borrower and each other
Credit Party executing this Agreement represents, warrants and promises to
Lender that: (i) Borrower and each other Credit Party granting a Lien in
Collateral is the sole owner of each item of the Collateral upon which it
purports to ▇▇▇▇▇ ▇ ▇▇▇▇ pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Encumbrances which have
priority by operation of law; and (iii) no effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Encumbrances.
Borrower and each other Credit Party executing this Agreement promise to defend
the right, title and interest of Lender in and to the Collateral against the
claims and demands of all Persons whomsoever, claiming by, through or under
Borrower, and shall take such actions, including (x) the prompt delivery of all
original Instruments, Chattel Paper and certificated Stock owned by Borrower and
each other Credit Party granting a Lien on Collateral to Lender, (y)
notification of Lender's interest in Collateral at Lender's request, and (z) the
institution of litigation against third parties as shall be prudent in order to
protect and preserve each Credit Party's and Lender's respective and several
interests in the Collateral. Borrower (and any other Credit Party granting a
Lien in Collateral) shall ▇▇▇▇ its Books and Records pertaining to the
Collateral to evidence the Loan Documents and the Liens granted under the Loan
Documents.
6.2 Lender's Rights. (a) Lender may, (i) at any time in Lender's own name
or in the name of Borrower, communicate with Account Debtors, parties to
Contracts, and obligors in respect of Leases, Instruments, Chattel Paper or
other Collateral to verify to Lender's satisfaction, the existence, amount and
terms of any Leases, Lease Receivables, Instruments, Chattel Paper or other
Collateral, and (ii) at any time and without prior notice to Borrower or any
other Credit Party, notify Account Debtors, parties to Contracts, and obligors
in respect of Leases, Instruments, Chattel Paper or other Collateral that the
Collateral has been assigned to Lender and that payments shall be made directly
to Lender. Upon the request of Lender, Borrower shall so notify such Account
Debtors, parties to Contracts, and obligors in respect of Leases, Instruments,
Chattel Paper or other Collateral. Borrower hereby constitutes Lender or
Lender's designee as Borrower's attorney with power to endorse Borrower's name
upon any notes, acceptance drafts, money orders or other evidences of payment or
Collateral.
(b) It is expressly agreed by Borrower that, notwithstanding anything
herein to the contrary, Borrower shall remain liable under each Contract,
Instrument, License, or Lease to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, and Lender shall have
no obligation or liability whatsoever to any Person under any Contract,
Instrument, License, or Lease (between Borrower or any other Credit Party and
any Person other than Lender) by reason of or arising out of the execution,
delivery or performance of this Agreement, and Lender shall not be required or
obligated in any manner (i) to perform or fulfill any of the obligations of
Borrower, (ii) to make any payment or inquiry, or (iii) to take any action of
any kind to collect or enforce any performance or the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time or
times under or pursuant to any Lease.
(c) Borrower and each other Credit Party shall, with respect to each owned,
leased, or controlled property or facility, during normal business hours and
upon reasonable advance notice (unless a Default shall have occurred and be
continuing, in which event no notice shall be required and Lender shall have
access at any and all times): (i) provide access to such facility or property to
Lender and any of its officers, employees and agents, as frequently as Lender
determines to be appropriate; (ii) permit Lender and any of its officers,
employees and agents to inspect, audit and make extracts from all of Borrower's
and each Corporate Credit Party's Books and Records; and (iii) permit Lender to
inspect, review, evaluate and make physical verifications and appraisals of the
Leased Equipment and other Collateral in any manner and through any medium that
Lender considers advisable,
19
21
and Borrower and such Credit Party agree to render to Lender, at Borrower's and
such Credit Party's cost and expense, such clerical and other assistance as may
be reasonably requested with regard thereto. Borrower and each other Credit
Party shall make available to Lender and its counsel, as quickly as practicable
under the circumstances, originals or copies of all Borrower's and each
Corporate Credit Party's Books and Records and any other instruments and
documents which Lender may request. Borrower shall deliver any document or
instrument reasonably necessary for Lender, as it may from time to time
request, to obtain records from any service bureau or other Person which
maintains records for Borrower or any other Credit Party.
6.3 Lender's Appointment as Attorney-in-fact. On the Closing Date Borrower
and each other Credit Party executing this Agreement shall execute and deliver
the Power of Attorney in the form attached as Exhibit J. The power of attorney
granted pursuant to the Power of Attorney and all powers granted under any Loan
Document are powers coupled with an interest and shall be irrevocable until the
Termination Date. The powers conferred on Lender under the Power of Attorney
are solely to protect Lender's interests in the Collateral and shall not impose
any duty upon it to exercise any such powers. Lender agrees and promises that
(a) it shall not exercise any power or authority granted under the Power of
Attorney unless an Event of Default has occurred and is continuing, (b) Lender
shall only exercise the powers granted under the Power of Attorney in respect
of Collateral, provided, except as otherwise required by applicable law, Lender
shall not have any duty as to any Collateral, and Lender shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers. NONE OF LENDER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER OR ANY OTHER CREDIT PARTY FOR
ANY ACT OR FAILURE TO ACT PURSUANT TO THE POWERS GRANTED UNDER THE POWER OF
ATTORNEY OR OTHERWISE, EXCEPT FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
Borrower and each other Credit Party executing this Agreement also hereby
authorizes Lender to file any financing or continuation statement without the
signature of Borrower or such Credit Party to the extent permitted by
applicable law.
6.4 Grant of License to Use Intellectual Property Collateral. For the
purpose of enabling Lender to exercise its rights and remedies under the Loan
Documents, Borrower and each other Credit Party executing this Agreement hereby
grants to Lender an irrevocable, non-exclusive license (exercisable upon the
occurrence and during the continuance of an Event of Default without payment of
royalty or other compensation to Borrower or such Credit Party) to use,
transfer, license or sublicense any Intellectual Property now owned, licensed
to, or hereafter acquired by Borrower or such Credit Party, and whenever the
same may be located, and including in such license access to all media in which
any of the licensed items may be recorded or stored and to all computer and
automatic machinery software and programs used for the compilation or printout
thereof, and represents, promises and agrees that any such license or sublicense
is not and will not be in conflict with the contractual or commercial rights of
any third Person; provided, that such license will terminate on the Termination
Date.
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder which shall be deemed to be continuing until waived in
writing by Lender in accordance with Section 9.3:
(a) Borrower shall fail to make any payment in respect of any Obligations
when due and payable or declared due and payable; or
(b) Borrower or any other Credit Party shall fail or neglect to perform,
keep or observe any of the covenants, promises, agreements, requirements,
conditions or other terms or provisions contained in this Agreement or any of
the other Loan Documents, regardless of whether such breach involves a covenant,
promise, agreement, condition, requirement, term or provision with respect to a
Credit Party that has not signed this Agreement, and such default shall continue
unremedied for a period of ten (10) days; or
(c) An event of default shall occur under any Contractual Obligation of
the Borrower or any other Credit Party (other than this Agreement and the other
Loan Documents), beyond the period of grace (not to exceed 10 days), if any,
provided in the instrument or agreement under which such Contractual Obligation
was created, and
20
22
such event of default (i) involves the failure to make any payment, whether of
principal, interest or otherwise, and whether due by scheduled maturity,
required prepayment, acceleration, demand or otherwise, in respect of any
Indebtedness (other than the Obligations) of such Person, or (ii) causes (or
permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment; or
(d) Any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by
Borrower or any other Credit Party shall be untrue or incorrect as of the date
when made, regardless of whether such breach involves a representation or
warranty with respect to a Credit Party that has not signed this Agreement, and
such default shall continue unremedied for a period of ten (10) days; or
(e) There shall be commenced against the Borrower or any other Credit Party
any Litigation seeking issuance of a warrant of attachment, execution, distrait
or similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which remains unstayed or
undismissed for thirty (30) consecutive days; or Borrower or any other Credit
Party shall have concealed, removed or permitted to be concealed or removed,
any part of its property with intent to hinder, delay or defraud its creditors
or any of them or made or suffered a transfer of any of its property or the
incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent transfer or other similar law; or
(f) A case or proceeding shall have been commenced involuntarily against
Borrower or any other Credit Party in a court having competent jurisdiction
seeking a decree or order: (i) under the United States Bankruptcy Code or any
other applicable Federal, state or foreign bankruptcy or other similar law, and
seeking either (x) the appointment of a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Person or of
any substantial part of its properties, or (y) by the reorganization or winding
up or liquidation of the affairs of any such Person and such case or proceeding
shall remain undismissed or unstayed for sixty (60) consecutive days or such
court shall enter a decree or order granting the relief sought in such case or
proceeding; or (ii) invalidating or denying any Person's right, power, or
competence to enter into or perform any of its obligations under any Loan
Document or invalidating or denying the validity or enforceability of this
Agreement or any Loan Document or any action taken hereunder or thereunder; or
(g) Borrower or any other Credit Party shall (i) commence any case,
proceeding or other action under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it or seeking appointment of a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
for it or any substantial part of its properties, (ii) make a general
assignment for the benefit of creditors, (iii) consent to or take any action in
furtherance of, or, indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in paragraphs (e) or (f) of this Section 7.1 or
clauses (i) and (ii) of this paragraph (g), or (iv) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as such debts
become due; or
(h) A final judgment or judgments for the payment of money shall be
rendered against Borrower or any other Credit Party, unless the same shall be
(i) fully covered by insurance and the issuer(s) of the applicable policies
shall have acknowledged full coverage in writing within fifteen (15) days of
judgment, or (ii) vacated, stayed, bonded, paid or discharged within a period
of fifteen (15) days from the date of such judgment; or
(i) Any other event shall have occurred which has had or could reasonably
be expected to have a Material Adverse Effect and Lender shall have given
Borrower notice thereof; or
(j) Any provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms, or any Lien
granted, or intended by the Loan Documents to be granted, to Lender shall cease
to be a valid and perfected Lien having the first priority (or a lesser
priority if expressly permitted in the Loan Documents) in any of the
Collateral; or
(k) Except with respect to the purchase of substantially all of the assets
of Borrower by Hypercom Financial, Inc. a Change of Control shall have
occurred; or
21
23
(l) The Borrower or any of the Guarantors shall (i) fail to pay any
Indebtedness for borrowed money or any other indebtedness or obligations of any
kind whatsoever, including any interest or premium thereon, when due (whether
by scheduled maturity, required prepayment, acceleration, demand, or otherwise)
(except that with regard to any Guarantors any such failure to pay any
Indebtedness shall not be a default unless such failure to pay any Indebtedness
shall not be a default unless such failure to pay the same involves
Indebtedness in the aggregate of $50,000.00 or more), or (ii) fail to perform
or observe any term, covenant, or condition on its part, to be performed or
observed under any agreement or instrument relating to any Indebtedness or any
other indebtedness for borrowed money or any other indebtedness or obligations
of any kind whatsoever, when required to be performed or observed (including
any applicable grace periods), if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration after the giving of
notice or passage of time, or both, of the maturity of such indebtedness,
whether or not such failure to perform or observe shall be waived by the holder
of such indebtedness or obligations; or any such indebtedness or obligations
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof, or (B) the occurrence of a default under, or demand for payment of,
any other indebtedness or obligations of the Borrower or any of the Guarantors
to Lender; or
(m) At any time after its execution and delivery and for any reason, any
Guaranty shall cease to be in full force and effect or shall be declared null
and void, or the validity or enforceability of any Guaranty shall be contested
by any of the Guarantors, or the Guarantors shall deny they have any further
liability or obligation under any Guaranty, or the Guarantors shall fail to
perform any of their respective obligations under any Guaranty; or
(n) At any time after its execution and delivery and for any reason, any
collateral assignment or assignment of any Collateral shall cease to be in
full force and effect or shall be declared null and void, or the validity or
enforceability of any collateral assignment or assignment of any Collateral
shall be contested by any Person, or any Person shall deny they have any
further liability or obligation under any collateral assignment or assignment
of any Collateral, or any Person shall fail to perform any of their obligations
under any collateral assignment or assignment of any Collateral; or
(o) The death or incapacity of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇, or the dissolution of the Borrower; or
(p) There shall occur any material uninsured damage to or loss, theft, or
destruction of any of the Collateral; or
(q) Borrower ceases to conduct its business as currently conducted or is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business affairs.
7.2 Remedies. (a) If any Default shall have occurred and be continuing,
then Lender may terminate or suspend its obligation to make further Revolving
Credit Advances. in addition, if any Event of Default shall have occurred and
be continuing, Lender may, without notice, take any one or more of the
following actions: (i) declare all or any portion of the Obligations to be
forthwith due and payable, including contingent liabilities, whereupon such
Obligations shall become and be due and payable; (ii) exercise any rights and
remedies provided to Lender under the Loan Documents or at law or equity,
including all remedies provided under the Code; provided, that upon the
occurrence of any Event of Default specified in Sections 7.1(e), (f) or (g),
the Obligations shall become immediately due and payable (and any obligation of
Lender to make further Loans, if not previously terminated, shall immediately
be terminated) and the Obligations shall automatically begin to accrue interest
at the Default Rate, in each case, without declaration, notice or demand by
Lender.
(b) Without limiting the generality of the foregoing, Borrower and each
other Credit Party executing this Agreement expressly agrees that upon the
occurrence of any Event of Default, Lender may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase or
otherwise dispose of and deliver said Collateral (or contract to do so), or
any part thereof, in one or more parcels at public or private sale or sales, at
any exchange at such prices as
22
24
it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Lender shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase for the benefit of Lender the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which equity of
redemption Borrower and each other Credit Party executing this Agreement hereby
releases. Such sales may be adjourned, or continued from time to time with or
without notice. Lender shall have the right to conduct such sales on any Credit
Party's premises or elsewhere and shall have the right to use any Credit Party's
premises without rent or other charge for such sales or other action with
respect to the Collateral for such time or times as Lender deems necessary or
advisable.
(c) Borrower and each other Credit Party executing this Agreement further
agrees, upon the occurrence and during the continuance of an Event of Default
and at Lender's request, to assemble the Collateral and make it available to
Lender at places which Lender shall reasonably select, whether at its premises
or elsewhere. Until Lender is able to effect a sale, lease, or other disposition
of the Collateral, Lender shall have the right to complete, assemble, use or
operate the Collateral or any part thereof, to the extent that Lender deems
appropriate, for the purpose of preserving such Collateral or its value or for
any other purpose. Lender shall have no obligation to any Credit Party to
maintain or preserve the rights of any Credit Party as against third parties
with respect to any Collateral while such Collateral is in the possession of
Lender. Lender may, if it so elects, seek the appointment of a receiver or
keeper to take possession of any Collateral and to enforce any of Lender's
remedies with respect to such appointment without prior notice or hearing. To
the maximum extent permitted by applicable law, Borrower and each other Credit
Party executing this Agreement waives all claims, damages, and demands against
Lender, its Affiliates, agents, and the officers and employees of any of them
arising out of the repossession, retention or sale of any Collateral except such
as are determined in a final judgment by a court of competent jurisdiction to
have arisen solely out of the gross negligence or willful misconduct of such
Person. Borrower and each other Credit Party executing this Agreement agrees
that ten (10) days prior notice by Lender to such Credit Party of the time and
place of any public sale or of the time after which a private sale may take
place is reasonable notification of such matters. Borrower and each other Credit
Party shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to which
Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be cumulative and
nonexclusive of any other rights and remedies which Lender may have under any
Loan Document or at law or in equity. Recourse to the Collateral shall not be
required. All provisions of this Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited, to the extent necessary, so that they do not render this Agreement
invalid, unenforceable, in whole or in part.
7.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement and to the fullest extent permitted by applicable law, Borrower and
each other Credit Party executing this Agreement waives: (a) presentment, demand
and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Loan Documents, the Notes or any
other notes, commercial paper, Lease Receivables, Accounts, Contracts,
Documents, Instruments, Chattel Paper and guaranties at any time held by Lender
on which such Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Lender may do in this regard; (b) all rights to notice and a
hearing prior to Lender's taking possession or control of, or to Lender's
replevy, attachment or levy upon, any Collateral or any bond or security which
might be required by any court prior to allowing Lender to exercise any of its
remedies; and (c) the benefit of valuation, appraisal and exemption laws.
Borrower and each other Credit Party executing this Agreement acknowledges that
it has been advised by counsel of its choices and decisions with respect to
this Agreement, the other Loan Documents and the transactions evidenced hereby
and thereby.
7.4 Proceeds. The Proceeds of any sale, disposition or other realization upon
any Collateral shall be applied by Lender upon receipt, in the following order
of priorities: first, to reimburse or pay in full the actual expenses of Lender
incurred in connection with such sale, disposition or other realization,
including all other expenses, liabilities and advances incurred or made by
Lender in connection therewith; second, to the other Obligations in such order
as the Lender may deem advisable; and finally, after the indefeasible payment
and satisfaction in full in cash of all of the Obligations, and after the
payment by Lender of any other amount required by any provision
23
25
of law, including Section 9-504(1)(c) of the Code (but only after Lender has
received what Lender considers reasonable proof of a subordinate party's
security interest), the surplus, if any, to Borrower or its representatives or
to whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of
Borrower and each other Credit Party executing such Loan Document, Lender, and
their respective successors and assigns, except as otherwise provided herein or
therein. Neither Borrower nor any other Credit Party may assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender. Any such purported assignment, transfer, hypothecation, delegation or
other conveyance by Borrower or such Credit Party without the prior express
written consent of Lender shall be void. The terms and provisions of this
Agreement and the other Loan Documents are for the purpose of defining the
relative rights and obligations of Borrower, the other Credit Parties and
Lender with respect to the transactions contemplated hereby and thereby, and
there shall be no third party beneficiaries of any of the terms and provisions
of any of the Loan Documents. Lender reserves the right at any time to create
and sell participations in the Loans and the Loan Documents and to sell,
transfer or assign any or all of its rights in the Loans and under the Loan
Documents.
9. MISCELLANEOUS
9.1 Complete Agreement; Modification of Agreement. This Agreement and the other
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and no Loan Document may be modified, altered or amended
except by a written agreement signed by Lender, Borrower any other Credit Party
a party to such Loan Document. Borrower and each other Credit Party executing
this Agreement or any other Loan Document shall have all duties and obligations
under this Agreement and such other Loan Documents from the date of its
execution and delivery, regardless of whether a Loan has been funded at that
time.
9.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs and
expenses incurred in connection with: (a) except as set forth on Schedule E, the
preparation, negotiation, execution, delivery, performance and enforcement of
the Loan Documents and the preservation of any rights thereunder; (b) collection
(including the fees and expenses of all special counsel, advisors, consultants
(including environmental and management consultants) and auditors retained in
connection therewith), including deficiency collections; (c) the forwarding to
Borrower or any other Person on behalf of Borrower by Lender of the proceeds of
any Loan; (d) any amendment, extension, modification or waiver of, or consent
with respect to any Loan Document or advice in connection with the
administration of the Loan or the rights thereunder; (e) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by or between
any combination of Lender, Borrower or any other Person or Persons), and an
appeal or review thereof, in any way relating to the Collateral, any Loan
Document, or any action taken or any other agreements to be executed or
delivered in connection therewith, whether as a party, witness or otherwise; and
(f) any effort (i) to monitor the Loan, (ii) to evaluate, observe or assess
Borrower or any other Credit Party or the affairs of such Person, and (iii) to
verify, protect, evaluate, assess, appraise, collect, sell, liquidate or
otherwise dispose of the Collateral; including the following with respect to all
of the foregoing provisions of this Section 9.2: the fees, costs and expenses of
attorneys, accountants, environmental advisors, appraisers, investment bankers,
management and other consultants, and paralegals; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection therewith.
9.3 No Waiver. Neither Lender's failure, at any time or times, to require
strict performance by Borrower or any other Credit Party of any provision of any
Loan Document, nor Lender's failure to exercise, nor any delay in exercising,
any right, power or privilege hereunder, (a) shall waive, affect or diminish any
right of Lender thereafter to demand strict compliance and performance
therewith, or (b) shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
future exercise
24
26
thereof or the exercise of any other right, power or privilege. Any suspension
or waiver of a Default, or other provision under the Loan Documents shall not
suspend, waive or affect any other Default under any Loan Document, whether the
same is prior or subsequent thereto and whether of the same or of a different
type, and shall not be construed as a bar to any right or remedy which Lender
would otherwise have had on any future occasion. None of the undertakings,
indemnities, agreements, warranties, covenants and representations of Borrower
or any other Credit Party to Lender contained in any Loan Document and no
Default by Borrower or any other Credit Party under any Loan Document shall be
deemed to have been suspended or waived by Lender, unless such waiver or
suspension is by an instrument in writing signed by an officer or other
authorized employee of Lender and directed to Borrower specifying such
suspension or waiver (and then such waiver shall be effective only to the extent
therein expressly set forth), and Lender shall not, by any act (other than
execution of a formal written waiver), delay, omission or otherwise, be deemed
to have waived any of its rights or remedies hereunder.
9.4 Severability. Wherever possible, each provision of the Loan Documents shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of any Loan Document shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of such Loan Document. Except as otherwise expressly
provided for in the Loan Documents, no termination or cancellation (regardless
of cause or procedure) of any financing arrangement under the Loan Documents
shall in any way affect or impair the Obligations, duties, covenants,
representations and warranties, indemnities, and liabilities of Borrower or any
other Credit Party or the rights of Lender relating to any unpaid Obligation
(due or not due, liquidated, contingent or unliquidated), or any transaction or
event occurring prior to such termination, or any transaction or event, the
performance of which is not required until after the Commitment Termination
Date, all of which shall not terminate or expire, but rather shall survive such
termination or cancellation and shall continue in full force and effect until
the Termination Date; provided, that all indemnity obligations of the Credit
Parties under the Loan Documents shall survive the Termination Date.
9.5 Conflict of Terms. Except as otherwise provided in any Loan Document by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent
with, any provision in any other Loan Document, the provision contained in
this Agreement shall govern and control.
9.6 Authorized Signature. Until Lender shall be notified in writing by
Borrower or any other Credit Party to the contrary, the signature upon any
document or instrument delivered pursuant hereto and believed by Lender or any
of Lender's officers, agents, or employees to be that of an officer of Borrower
or such other Credit Party listed in the Secretarial Certificate in the form of
Exhibit I shall bind Borrower and such other Credit Party and be deemed to be
the act of Borrower or such other Credit Party affixed pursuant to and in
accordance with resolutions duly adopted by Borrower's or such other Credit
Party's Board of Directors, and Lender shall be entitled to assume the
authority of each signature and authority of the person whose signature it is
or appears to be unless the person acting in reliance of such signature shall
have actual knowledge of the fact that such signature is false or the person
whose signature or purported signature is presented is without authority.
9.7 Notices. Except as otherwise provided herein, whenever any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any party by any other party, or whenever any party
desires to give or serve upon any other party any communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (a) upon the earlier of actual
receipt and three (3) days after deposit in the United States Mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (b)
upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 9.7), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when hand-delivered, all of which shall
be addressed to the party to be notified and sent to the address or facsimile
number indicated in Schedule B or to such other address (or facsimile number)
as may be substituted by notice given as herein provided. The giving of any
notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than
25
27
Borrower or Lender) designated in Schedule B to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
9.8 Section Titles. The Section titles and Table of Contents contained in any
Loan Document are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
9.9 Counterparts. Any Loan Document may be executed in any number of separate
counterparts by any one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
9.10 Time of the Essence. Time is of the essence for performance of the
Obligations under the Loan Documents.
9.11 Right of Setoff. The Lender is hereby authorized at any time and from time
to time without notice to the Borrower or any other party (any such notice
being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) of any kind
whatsoever at any time held, including, without limitation, any amounts or
proceeds contained in the Lockbox Account and/or the Disbursement Account, and
other indebtedness at any time owing by the Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or the Revolving Credit Note or
any other Loan Document, irrespective of whether or not the Lender shall have
made any demand under this Agreement or the Revolving Credit Note or such other
Loan Document and although such obligations may be unmatured. The Lender agrees
promptly to notify the Borrower after any such setoff and application, provided
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of the Lender under this Section 9.11 are in
addition to any other rights and remedies of any kind whatsoever (including,
without limitation, other rights of setoff) which the Lender may have.
9.12 Intentionally Blank.
9.13 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER THE LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CONNECTICUT APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF
LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
9.14 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (A) BORROWER AND EACH
OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY CONSENT AND AGREE THAT THE
STATE OR FEDERAL COURTS LOCATED IN CONNECTICUT SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
SUCH CREDIT PARTY AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER, BORROWER AND SUCH
CREDIT PARTY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF CONNECTICUT; AND FURTHER PROVIDED, THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER.
BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT EXPRESSLY SUBMIT
AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND BORROWER AND SUCH CREDIT PARTY HEREBY WAIVE ANY OBJECTION
WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS. BORROWER AND
26
28
EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY WAIVE PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER OR SUCH CREDIT PARTY AT
THE ADDRESS SET FORTH IN SCHEDULE B OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S OR SUCH CREDIT PARTY'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID.
(B) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS
ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON
AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
LENDER, BORROWER AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THE
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
9.15 Reinstatement. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any part of
the Obligations is rescinded or must otherwise be returned or restored by the
Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Guarantor, or otherwise, all as though
such payments had not been made.
9.16 Permitted Sale Collateral. So long as no Default or an Event of Default
has occurred and is continuing under this Agreement or any other Loan Document
and the Borrower fully complies with all of the terms contained in this Section
9.16, upon ten (10) days prior written notice to the Lender, the Borrower may
sell or assign ("Sale") any Permitted Sale Collateral, provided, however, that
(a) as a result of any such proposed Sale of any portion or part of the
applicable Permitted Sale Collateral, the outstanding principal amount of the
Revolving Credit Loans at any time would exceed eighty-seven percent (87%) of
the aggregate Net Face Amount of Borrower's Eligible Lease Receivables, which
determination shall be in the Lenders sole discretion, the Borrower may not
sell, assign or otherwise transfer in any way whatsoever the Permitted Sale
Collateral; and (b) assuming the proposed Sale does not violate subclause (a)
above, (i) the entire proceeds of any proposed Sale shall be, simultaneously
with the consummation of any such Sale, directly paid, in immediately available
funds, to the Lender which proceeds shall be used to prepay the Loan pursuant to
the applicable terms of Section 1.2(c) hereof; and (ii) the Permitted Sale
Collateral shall be automatically released from and no longer subject to the
Liens of the Lender hereunder for all purposes; and (iii) the Borrower shall
execute and/or deliver to the Lender any documents, instruments and/or
agreements that the Lender requires or deems necessary in its sole discretion
prior to or simultaneously with the consummation of any such proposed Sale.
27
29
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed as
of the date first written above.
GOLDEN EAGLE LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Title: MANAGER
------------------
▇▇▇▇▇▇▇ BANK
By: /s/ ▇▇▇▇ ▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Title: Senior Vice Pres.
------------------
28
30
SCHEDULE A - DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents shall have
(unless otherwise provided elsewhere in this Agreement or in the other Loan
Documents) the following respective meanings:
"Account Debtor" shall mean any Person who is or may become obligated with
respect to, or on account of, a Lease or an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or Instruments),
whether arising out of goods sold or services rendered or from any other
transaction (including such obligations which may be characterized as an account
or contract right under the Code); (ii) all of such Person's rights in, to and
under all purchase orders or receipts for goods or services; (iii) all of such
Person's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of recission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods); (iv) all moneys
due or to become due to such Person under all purchase orders and contracts for
the sale of goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Person), including the right to receive the proceeds of said
purchase orders and contracts; and (v) all collateral security and guarantees of
any kind given by any other Person with respect to any of the foregoing.
"Affiliate" shall mean, with respect to any Person: (i) each other Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power for the election of directors of such Person; (ii) each
other Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person; or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall mean this Agreement including all Appendices attached or
otherwise identified thereto, restatements and modifications and supplements
thereto, and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to this Agreement as the same may be in effect at the time such
reference becomes operative; provided, that except as specifically set forth in
this Agreement, any reference to the Disclosure Schedules to this Agreement
shall be deemed a reference to the Disclosure Schedules as in effect on the
Closing Date or in a written amendment thereto executed by Borrower and Lender.
"Appendices" shall have the meaning assigned to it in the Recitals of this
Agreement.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral.
"Borrower" shall mean the Person identified as such in the preamble of this
Agreement.
"Borrowing Availability" shall mean, at any time, the lesser of (i) the Maximum
Amount or (ii) the Borrowing Base, in each case less reserves established by
Lender from time to time.
"Borrowing Base" shall mean at any time an amount equal to the sum at such time
of eighty seven percent (87%) of the value (as determined by Lender) of
Borrower's Eligible Lease Receivables.
"Borrowing Base Certificate" shall mean a certificate in the form of Exhibit C
or in such other form as Lender shall reasonably request, certified as being
complete and correct by Golden Eagle LLC's managing member or manager and by
Golden Eagle Credit Corporation's chief financial officer or president.
A-1
31
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of Connecticut.
"Capital Expenditures" shall mean all payments or accruals (including Capital
Lease Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet of such lessee in respect of such Capital
Lease or otherwise be disclosed in a note to such balance sheet.
"Change of Control" shall mean, with respect to any Person on or after the
Closing Date (i) that any Person or "group" shall increase its "beneficial
ownership" (as such terms are defined under Section 13d-3 of and Regulation 13D
under the Securities Exchange Act of 1934) either directly or indirectly, by
more than ten percent (10%) of the outstanding shares of Stock of such Person
having the right to vote for the election of directors of such Person under
ordinary circumstances, (ii) that any change in the composition of its
stockholders as of the Closing Date shall occur which would result in any
stockholder or group acquiring 49.9% or more of any class of Stock of such
Person, or (iii) that any Person (or group of Persons acting in concert) shall
otherwise acquire the power to direct the management or affairs of such Person
by obtaining proxies, entering into voting agreements or trusts, acquiring
securities or otherwise.
"Charges" shall mean all Federal, state, county, city, municipal, local, foreign
or other governmental taxes (including taxes owed to PBGC at the time due and
payable), levies, assessments, charges, liens, and all additional charges,
interest, penalties, expenses, claims or encumbrances upon or relating to (i)
the Collateral, (ii) the Obligations, (iii) the employees, payroll, income or
gross receipts of any Corporate Credit Party, (iv) the ownership or use of any
assets by any Corporate Credit Party, or (v) any other aspect of any Corporate
Credit Party's business.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located.
"Closing Date" shall mean the Business Day on which the conditions precedent set
forth in Section 2 have been satisfied or specifically waived in writing by
Lender.
"Closing Fee" shall have the meaning assigned to it in Schedule E.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Connecticut; provided, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of Connecticut, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall have the meaning assigned to it in Section 6.1.
"Commitment Termination Date" shall mean the earliest of (i) the Stated Expiry
Date, (ii) the date Lender's obligation to advance funds is terminated pursuant
to Section 7.2, and (iii) the date of prepayment in full by Borrower of the
Obligations in accordance with the provisions of Section 1.2(c) without
intention of borrowing under the commitment again.
A-2
32
"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound, including, without limitations, the Existing Credit
Facilities.
"Copyrights" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all copyrights in any original work of authorship fixed in any
tangible medium of expression, now known or later developed, all registrations
and applications for registration of any such copyrights in the United States or
any other country, including registrations, recordings and applications and
supplemental registrations, recordings, and applications in the United States
Copyright Office; and (ii) all Proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to ▇▇▇ for past, present
and future infringements, all rights corresponding thereto throughout the world
and all renewals and extensions thereof.
"Corporate Credit Party" shall mean any Credit Party that is a corporation or
other limited liability entity, such as a limited liability company.
"Credit Party" shall mean Borrower, and each other Person (other than Lender)
that is or may become a party to this Agreement or any other Loan Document.
"Default" shall mean any Event of Default of any event which, with the passage
of time or notice or both, would, unless cured or waived, become an Event of
Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
"Documents" shall mean all "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
bills of lading, dock warrants, dock receipts, warehouse receipts, and other
documents of title, whether negotiable or non-negotiable.
"Eligible Lease Receivables" shall mean at the time of calculation or
determination, any bona fide Lease Receivables in which the Lender has a first
priority perfected security interest and assignment, and which arise from or in
connection with any bona fide Lease in which the Lender has a first priority
perfected security interest and assignment, and which Lease Receivables and/or
Leases, as the case may be, satisfy all of the following requirements:
(a) It is owing to Borrower and is subject to a validly perfected
security interest and assignment in favor of Lender having priority over any
other liens or encumbrances thereon;
(b) It is a valid, legally enforceable obligation of the Account
Debtor thereunder and is not and may not become subject to any offset,
counterclaim or, in the opinion of Lender, counterclaims, claims or other
defense on the part of such Account Debtor or to any claim on the part of such
Account Debtor denying liability thereunder;
(c) It is subject to no Liens whatsoever, except for the security
interest or assignment of Lender hereunder (except for any applicable rights of
the lessee under such Lease);
(d) The Leased Equipment regarding the Leases is subject to no Liens
whatsoever, except for the security interest or assignment of Lender hereunder
(and except for any applicable rights of the lessee under such Lease), and the
Borrower has good and merchantable title to all of such Leased Equipment;
(e) It has (or any payment thereunder) not remained unpaid for a
period exceeding sixty (60) days from the date of the invoice and/or any
payment due date and the first scheduled payment is due within thirty (30) days
of the date of the Lease;
A-3
33
(f) It does not arise out of transactions with any Account Debtor located
outside the United States of America or any Governmental Authority;
(g) Each Lease shall have an aggregate Gross Lease Receivable of no more
than $100,000.00;
(h) The applicable Code Financing Statements in favor of the Lender and/or
the Borrower, as the case may be, regarding the Leases, the Gross Lease
Receivables and/or the Leased Equipment under the applicable Lease are duly
filed and record in all appropriate offices and/or records;
(i) Borrower is the sole and absolute owner of (or has a perfected, first
priority lien and security interest in) all the applicable Leases, Gross Lease
Receivables and Leased Equipment (subject only to the Liens of the Lender
hereunder);
(j) The applicable Leased Equipment under each Lease shall have been
delivered and/or installed, shall be in good working order and shall have been
fully and duly accepted by the lessee under the applicable Lease;
(k) It has been newly originated by the Borrower and is not part of a
re-written Lease;
(l) It shall remain part of the Collateral for no more than one hundred
eighty (180) days; provided, however, that (i) until Hypercom Financial, Inc.
acquires substantially all of the assets of Borrower (the "Hypercom
Transaction") or agrees to be bound by and unconditionally guarantees the
prompt payment and performance of all of the Borrower's obligations to Lender
under this Agreement, the Note and any other Loan Documents, in form and
substance satisfactory in all respects to the Lender, the maximum amount of
credit to be provided by Lender to Borrower under this Agreement shall be
$5,000,000 and $2,500,000 of such $5,000,000 may be allocated to Leases
remaining part of the Collateral for no more than three hundred sixty (360)
days, or (ii) after the closing of the Hypercom Transaction, in which case the
maximum amount of credit to be provided by Lender to Borrower under this
Agreement shall increase to $10,000,000, then $5,000,000 of such $10,000,000
may be allocated to Leases remaining part of the Collateral for no more than
three hundred sixty (360) days, or (iii) in the event the Hypercom Transaction
fails to close during the term of this Agreement, and upon delivery of audited
consolidated financial statements satisfactory to the Lender, in its sole and
absolute discretion, then the maximum amount of credit to be provided by Lender
to Borrower under this Agreement shall increase to $10,000,000 then $5,000,000
of such $10,000,000 may be allocated to Leases remaining part of the Collateral
for no more than three hundred sixty (360) days, (iv) in the event that the
Hypercom Transaction fails to close and the Lender is not satisfied with the
audited consolidated financial statements provided to Lender, then the maximum
amount of credit to be provided by Lender to Borrower under this Agreement
shall be $5,000,000 and $2,500,000 of such $5,000,000 may be allocated to
Leases remaining part of the Collateral for no more than three hundred sixty
(360) days, or;
(m) It shall be duly and fully insured under such liability and hazard
insurance policies as the Lender may require in its sole discretion, which
policies shall be in such amounts, with insurance carriers and on terms and
conditions acceptable to the Lender in its sole discretion, including, without
limitation, insuring the interest of the Borrower and its successors and
assigns and upon the Lender's request or demand, naming the Lender as
loss-payee and/or additional inured, as appropriate;
(n) It shall be, or arise from, a commercial transaction only;
(o) Each of the Leases and any documentation relating thereto shall be
marked, and contain a legend, that the executed counterpart marked "original"
of the Lease and any documentation related thereto is the original of the Lease
and all other counterparts are duplicates and to the extent, if any, that the
Lease and any documentation related thereto constitutes Chattel Paper no
security interest in the Lease and documentation related thereto may be created
through the transfer or possession of any counterpart other than the
counterpart marked "Original";
A-4
34
(p) Each Lease shall comply with all of the Borrower's credit
standards, policies and procedures, including, without limitation, all risk
acceptance criteria, which have been previously submitted to, and approved by,
the Lender prior to the date of this Agreement;
(q) It does not arise out of any Lease regarding used or residual
equipment which has been returned or delivered to the Borrower for any reason
whatsoever or has been repossessed by the Borrower;
(r) It shall not arise out of any restructured or rewritten Leases or
any Lease in default;
(s) It shall not be due from an Account Debtor which is affiliated in
any way whatsoever with any other Account Debtor with past due payments of more
than sixty (60) days;
(t) Each Lease shall be in form and substance satisfactory in all
respects to the Lender, and shall contain, among other things,
"waiver-of-defense", "consent to assignment" and "consent to security interest"
provisions, and any similar or like provisions, in favor of an assignee or a
lender, as the case may be;
(u) It shall be in full compliance with all laws, statues, rules,
ordinances or governmental regulations of any kind whatsoever including, without
limitation, any broker, truth-in-lending or leases or banking laws, rules or
regulations;
(v) It shall be assigned to the Lender by the Borrower pursuant to a
duly executed collateral assignment which collateral assignment shall be in form
and substance acceptable to the Lender in its sole discretion;
(w) That no power of attorney is used in connection with the
applicable Lease Receivable and/or Lease;
(x) A notice of assignment letter regarding the Lease Receivables,
the Lease and the Leased Equipment in connection with any Lease having aggregate
Gross Lease Receivable of $50,000.00 or more shall be duly executed by the
Account Debtor, which notice of assignment letter shall be in form and substance
satisfactory in all respects to the Lender;
(y) It does not arise out of transactions with any creditor of the
Borrower or any Guarantor or any employee, officer, partner, Affiliate or
Subsidiary of the Borrower and/or any Guarantor;
(z) The original Leases, schedules, acceptance certificates, riders,
supplements, purchase options, exhibits, addendum, and any and all other
documents or instruments executed and/or delivered in connection with, the
Leases (including, without limitation, any guarantees or undertakings of any
kind whatsoever of the same), shall have been delivered to the Lender or, if
acceptable to the Lender (in its sole discretion), to the Trustee, on the
Lender's behalf pursuant to the terms of this Agreement and/or the Trust
Agreement, or any of the same which the Lender does not require to be delivered
to it or to the Trustee shall be held by the Borrower in trust as trustee of an
express trust for the Lender shall be promptly delivered to the Lender upon the
Lender's request or demand for the same; and
(AA) That any and all documents and/or instruments that the Lender shall
request in connection with each such applicable Lease Receivable and/or Lease
and/or Leased Equipment shall be promptly executed and/or delivered to the
Lender or, if acceptable to the Lender (in its sole discretion), to the Trustee,
on the Lender's behalf pursuant to the terms of this Agreement and/or the Trust
Agreement, upon the Lender's request for the same.
In the event of any dispute as to whether a Lease Receivable is or has ceased to
be an Eligible Lease Receivable, the decision of the Lender shall control in its
sole discretion. Any Eligible Lease Receivable which the Lender subsequently
determines to be no longer eligible or acceptable hereunder at any time shall
nevertheless be and remain at all times part of the Collateral.
A-5
35
"Environmental Laws" shall mean all Federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof relating to the regulation and protection
of human health, safety, the environment and natural resources (including
ambient air, surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation). Environmental Laws include
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act (49 U.S.C. Sections 1801 et seq.); the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.) ("RCRA"); the
Toxic Substance Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act
(42 U.S.C. Sections 740 et seq.); the Federal Water Pollution Control Act (33
U.S.C. Sections 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.) ("OSHA"); and the Safe Drinking Water Act (42 U.S.C.
Sections 300(f) et seq.), and any and all regulations promulgated thereunder,
and all analogous state and local counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" shall mean all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including any thereof arising under any Environmental Law, permit, order or
agreement with any Governmental Authority) and which relate to any health or
safety condition regulated under any Environmental Law, Environmental Permits or
in connection with any Release, threatened Release, or the presence of a
Hazardous Material.
"Environmental Permits" shall mean all permits, licenses, authorizations,
certificates, approvals, registrations or other written documents required by
any Governmental Authority under any Environmental Law.
"Equipment" shall mean all "equipment" as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including any and
all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
kind and description which may be now or hereafter used in such Person's
operations or which are owned by such Person or in which such Person may have
an interest, and all parts, accessories and accessions thereto and
substitutions and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade or
business (whether or not incorporated) which, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c),
(m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status.
A-6
36
"ESOP" shall mean a Plan which is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 7.1.
"Existing Credit Facilities" shall mean Borrower's existing credit facilities
with Fleet Bank, Tokyo Leasing, Linc Capital, Savings Bank of Danbury and
Ridgefield Bank.
"Fees" shall mean the fees due to Lender as set forth in Schedule E.
"Financial Statements" shall mean the consolidated and consolidating income
statement, balance sheet and statement of cash flows of Borrower and its
Subsidiaries, prepared as set forth in this Agreement for each Fiscal Month and
for each Fiscal Year or for such other stated period as set forth in this
Agreement, prepared in accordance with GAAP.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of Borrower.
"Fiscal Year" shall mean the 12 month period of Borrower ending December 31st of
each year. Subsequent changes of the fiscal year of Borrower shall not change
the term "Fiscal Year" unless Lender shall consent in writing to such change.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied.
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest which such Person may now or hereafter have in or
under any Contract, Intellectual Property, interests in partnerships, joint
ventures and other business associations, permits, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials,
Books and Records, Goodwill (including the Goodwill associated with any
Intellectual Property), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums), uncertificated securities, chooses in action, deposit
accounts, rights to receive tax refunds and other payments and rights of
indemnification.
"Goods" shall mean all "goods," as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such guaranteeing Person
(whether or not contingent): (i) to purchase or repurchase any such primary
obligation; (ii) to advance or supply funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the
A-7
37
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor; (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Gross Lease Receivables" shall mean any and all now existing or owned and
hereafter arising or acquired rents, payments and other amounts due under or in
connection with any Leases (including, without limitation, any sales or use tax,
supplemental rent payments, additional rent payments, rental reserves, security
deposits, purchase option payments, renewal payments, early termination
payments, residual payments, casualty payments, termination payments, stipulated
loss payments, insurance payments, or any other payments, proceeds or amounts of
any kind whatsoever due under or in connection with any Leases and all proceeds
thereof), proceeds of sale from sale of the equipment leased or financed
thereunder or the lease or other disposition (temporary or otherwise) of same,
any and all other amounts due under the same, and all proceeds of the foregoing,
including, without limitation, insurance proceeds.
"Guarantor" shall mean each Person which executes a guarantee or a support, put
or other similar agreement in favor of Lender in connection with the
transactions contemplated by this Agreement.
"Guarantee" shall mean any agreement to perform all or any portion of the
Obligations on behalf of Borrower or any other Credit Party, in favor of, and in
form and substance satisfactory to, Lender, together with all amendments,
modifications and supplements thereto, and shall refer to such Guarantee as the
same may be in effect at the time such reference becomes operative.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Indebtedness" of any Person shall mean: (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers' acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary course of
business and not more than 45 days past due); (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments; (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property); (iv) all Capital Lease Obligations;
(v) all Guaranteed Indebtedness; (vi) all Indebtedness referred to in clauses
(i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; (vii) the Obligations; and (viii) all liabilities
under Title IV of ERISA.
"Indemnified Liabilities" shall have the meaning assigned to it in Section 1.11.
"Indemnified Person" shall have the meaning assigned to it in Section 1.11.
"Instruments" shall mean all "instruments," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents, Copyrights,
Trademarks, trade secrets and customer lists.
A-8
38
"Inventory" shall mean all "inventory," as such term is defined in the Code, now
or hereafter owned or acquired by any Person, wherever located, including all
inventory, merchandise, goods and other personal property which are held by or
on behalf of such Person for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in such Person's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies.
"IRC" shall mean the Internal Revenue Code of 1986, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Lease" or "Leases" shall mean (i) any of the Borrower's now existing or owned
and hereafter arising or acquired equipment lease or leases that are identified
on any Lease Certificate which as been delivered to the Lender by the Borrower
with regard to any Revolving Credit Advance under this Agreement, (ii) any of
the Borrower's now existing or owned and hereafter arising or acquired equipment
financing arrangement or arrangements determined or intended not to be a true
lease that are identified on any Lease Certificate which has been delivered to
the Lender by the Borrower with regard to any Revolving Credit Advance under
this Agreement, or (iii) any of the Borrower's now existing or owned and
hereafter arising or acquired equipment security agreements, condition sale
agreements or promissory notes and any schedules, amendments, modifications,
supplements, riders, purchase options, exhibits and addendum thereto, pursuant
to which the Borrower leases or finances equipment that are identified on any
Lease Certificate which has been delivered to the Lender by the Borrower with
regard to any Revolving Credit Advance under this Agreement. Any such lease,
financing arrangement, security agreement, conditional sale agreement or
promissory note that are identified on any Lease Certificate which has been
delivered to the Lender by the Borrower with regard to any Revolving Credit
Advance under this Agreement shall include, without limitation, any and all
rents, payments, rental reserves, security deposits and other amounts due
thereunder, proceeds of sale from sale of the equipment leased or financed
thereunder or the lease or other disposition (temporary or otherwise) of same,
any and all other amounts due under the same, and all proceeds of the foregoing,
including, without limitation, insurance proceeds.
"Lease Certificate" means a fully completed certificate in substantially the
form of Exhibit D or in such form as Lender shall otherwise request, certified
as being complete and correct by Golden Eagle Credit Corporation's chief
financial officer or president and by Golden Eagle LLC's managing member or
manager. Without limiting the generality of the foregoing, any such Lease
Certificate shall, among other things, identify the Lease or Leases regarding
the requested Revolving Credit Advance under this Agreement by the applicable
Account Debtor and the state in which the applicable Account Debtor's billing
address is located and setting forth for each such Lease (i) a number
identifying the Lease, (ii) the original and remaining term of the Lease, (iii)
the scheduled monthly or quarterly payments for each Lease and (iv) the original
cost of the applicable Leased Equipment.
"Lease Receivables" means only any regular rent or lease payments due under any
now existing or owned and hereafter arising or acquired Leases, and expressly
excludes any sales or use tax, supplemental rent payments, additional rent
payments, rental advances, security deposits, purchase option payments, renewal
payments, early termination payments, residual payments, casualty payments,
termination payments, stipulated loss payments, insurance payments or any other
payments, proceeds or amounts of any kind whatsoever due under or in connection
with any Leases, and all proceeds of the foregoing, including, without
limitation, insurance proceeds.
"Leased Equipment" means all now existing or owned and hereafter arising or
acquired equipment leased or financed under, or in connection with, or relating
to, any Leases (whether same constitutes "Equipment" or "Inventory" under the
Code, and any and all substitutions, replacements, accessories, accessions,
additions, and improvements thereto or therefor now existing or owned and
hereafter arising or acquired with respect to all of the foregoing, and any and
all returns, exchanges thereto or repossessions thereto, and any proceeds
resulting from the sale, lease or other disposition (temporary or otherwise) of
the foregoing, and any bills of sale, warranty agreements or any other purchase
agreements or documents of any kind whatsoever related to any or all of the
foregoing, and all the proceeds thereof, including, without limitation,
insurance proceeds.
A-9
39
"Lender" shall mean ▇▇▇▇▇▇▇ Bank and, if at any time ▇▇▇▇▇▇▇ Bank shall decide
to assign or syndicate all or any of the Obligations, such term shall include
such assignee or such other members of the syndicate.
"License" shall mean any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Person.
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"Litigation" shall mean any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"Loan Documents" shall mean this Agreement, the Note, the Financial Statements,
the Guarantee, the Power of Attorney, the Bank Account Agreements, and the other
documents and instruments listed in Schedule F, and all security agreements,
mortgages and all other documents, instruments, certificates, and notices at any
time delivered by any Person (other than Lender) in connection with any of the
foregoing.
"Loan" shall mean the Revolving Credit Loan.
"Material Adverse Effect" shall mean: (i) a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of
Borrower or any other Credit Party or the industry within which Borrower or any
other Credit Party operates, (b) Borrower's or any other Credit Party's ability
to pay or perform the Obligations under the Loan Documents to which such Credit
Party is a party in accordance with the terms thereof, (c) the Collateral or
Lender's Liens on the Collateral or the priority of any such Lien, or (d)
Lender's rights and remedies under this Agreement and the other Loan Documents;
or (ii) the incurrence by Borrower or any other Credit Party of any liability
(other than Indebtedness permitted by Section 5(c)), contingent or liquidated,
which has an actual or estimated incurrence of liability, or dollar exposure or
loss, greater than $50,000 to Borrower or any other Credit Party.
"Maturity Date" shall mean the date that is 2 years from the Closing Date.
"Maximum Amount" shall mean the maximum amount of credit to be provided by
Lender to or for the benefit of Borrower for aggregate Revolving Credit Advances
outstanding at any time, without regard to the Borrowing Base or reserves, which
amount, for purposes of this Agreement, is $10,000,000; provided, however, that
in no event shall the aggregate outstanding principal amount of the Revolving
Credit Advances exceed $5,000,000 until (i) Hypercom Financial, Inc. acquires
substantially all of the assets of Borrower (the "Hypercom Transaction") or
agrees to be bound by and unconditionally guarantees the prompt payment and
performance of all of the Borrower's obligations to Lender under this Agreement,
the Note and any other Loan Documents, in form and substance satisfactory in all
respects to the Lender, in which case the maximum amount of credit to be
provided by Lender to Borrower under this Agreement shall increase to
$10,000,000, or (ii) in the event the Hypercom Transaction fails to close during
the term of this Agreement, then upon delivery of internally prepared
consolidated financial statements satisfactory to the Lender, in its sole and
absolute discretion, then the maximum amount of credit to be provided by Lender
to Borrower under this Agreement shall increase to $7,500,000, or (iii)
notwithstanding the provisions of paragraphs (i) and (ii) above, upon receipt by
the Lender of audited consolidated financial statements, satisfactory to Lender
in its sole and absolute discretion, for the Borrower, then the maximum amount
of credit to be provided by Lender to Borrower under this Agreement shall
increase to $10,000,000.
"Multiemployer Plan" shall mean a "multiemployer plan," as defined in Section
4001(a)(3) of ERISA, to which Borrower, any other Credit Party or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
A-10
40
"Net Borrowing Availability" shall mean at any time the Borrowing Availability
less the Revolving Credit Loan.
"Net Face Amount" shall mean the gross Lease Receivable less all sales, excise
or similar taxes charged thereon and less all discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed.
"Note" shall mean the Revolving Credit Note.
"Notice of Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(b).
"Obligations" shall mean loans, advances, debts, expense reimbursement, fees,
liabilities, and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or amounts are liquidated or determinable) owing by
Borrower and any other Credit Party to Lender, of any kind or nature, present
or future, whether or not evidenced by any note, agreement or other instrument,
whether arising under any of the Loan Documents or under any other agreement
between Borrower, such Credit Party and Lender, and all covenants and duties
regarding such amounts. This term includes all principal, interest (including
interest accruing at the then applicable rate provided in this Agreement after
the maturity of the Loans and interest accruing at the then applicable rate
provided in this Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to Borrower under any of the Loan Documents, and all principal and
interest due in respect of the Loans and all obligations and liabilities of any
Guarantor under any Guarantee.
"Operating Account" shall have the meaning assigned to it in Schedule D.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State or Territory thereof, or any other country; and (ii) all
reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of Section 3.11; (ii) pledges or deposits securing obligations under worker's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business; (iv)
deposits securing public or statutory obligations of any Credit Party; (v)
inchoate and unperfected workers', mechanics', or similar liens arising in the
ordinary course of business, so long as such Liens attach only to Equipment,
fixtures or real estate; (vi) carriers', warehousemans', suppliers' or other
similar possessory liens arising in the ordinary course of business and securing
indebtedness not yet due and payable in an outstanding aggregate amount not in
excess of $25,000 at any time so long as such Liens attach only to Inventory;
(vii) deposits of money securing, or in lieu of, surety, appeal or customs bonds
in proceedings to which any Credit Party is a party; (viii) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such real
estate; (ix) Purchase Money Liens securing Purchase Money Indebtedness (or rent)
to the extent permitted under Section 5(c)(ii); (x) Liens in existence on the
Closing Date as disclosed on Disclosure Schedule 5(h) provided that no such a
Lien is spread to cover additional property after the Closing Date and the
amount of Indebtedness secured thereby is not increased; and (xi) Liens in favor
of Lender securing the Obligations.
A-11
41
"Permitted Sale Collateral" shall mean any Leases, Gross Lease Receivables,
Leased Equipment, Chattel Paper of the Borrower, and/or guaranties or any
undertakings of any kind whatsoever of any Leases or Chattel Paper of the
Borrower which the Lender permits the Borrower to sell or assign after the
date of this Agreement only pursuant to the terms of Section 9.16 of this
Agreement.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public
benefit corporation, entity or government (whether Federal, state, county,
city, municipal or otherwise, including any instrumentality, division, agency,
body or department thereof), and shall include such Person's successors and
assigns.
"Plan" shall mean, with respect to Borrower or any other Credit Party, at any
time, an employee benefit plan, as defined in Section 3(3) of ERISA, which
Borrower or any other Credit Party maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower or any other Credit Party from time to
time with respect to any Collateral; (ii) any and all payments (in any form
whatsoever) made or due and payable to Borrower or any other Credit Party from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of any Collateral by any governmental body, authority,
bureau or agency (or any person acting under color of governmental authority);
(iii) any claim of Borrower or any other Credit Party against third parties (a)
for past, present or future infringement of any Intellectual Property or (b)
for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License; (iv)
any recoveries by Borrower or any other Credit Party against third parties with
respect to any litigation or dispute concerning any Collateral; and (v) any and
all other amounts from time to time paid or payable under or in connection with
any Collateral, upon disposition or otherwise.
"Purchase Money Indebtedness" shall mean (i) any Indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, (ii) any
Indebtedness incurred for the sole purpose of financing or refinancing all or
any part of the purchase price of any fixed asset, and (iii) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean any Lien upon any fixed assets which secures
the Purchase Money Indebtedness related thereto but only if such Lien shall at
all times be confined solely to the asset the purchase price of which was
financed or refinanced through the incurrence of the Purchase Money Indebtedness
secured by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.
"Qualified Plan" shall mean a Plan which is intended to be tax-qualified under
Section 401(a) of the IRC.
"Real Property" shall have the meaning assigned to it in Section 3.16.
"Release" shall mean, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by
such Person, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water or property.
"Requirement of Law" shall mean as to any Person, the Certificate or Articles of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
"Restricted Payment" shall mean: (i) the declaration or payment of any dividend
or the occurrence of any liability to make any other payment or distribution of
cash or other property or assets on or in respect of Borrower's or any other
Credit Party's Stock; (ii) any payment on account of the purchase, redemption,
defeasance or other
A-12
42
retirement of Borrower's or any other Credit party's Stock or Indebtedness or
any other payment or distribution made in respect of any thereof, either
directly or indirectly; other than (a) that arising under this Agreement, (b) if
no Default shall have occurred and be continuing, or shall result therefrom,
interest and principal, when due without acceleration or modification of the
amortization as in effect on the Closing Date, under Indebtedness (not including
the Subordinated Indebtedness) described in Disclosure Schedule (3.7) or
otherwise permitted under Section 5(c)(ii), and (c) distributions to
shareholders in respect of such shareholders' income taxes directly attributable
to the Borrower's net income, provided that such distributions are paid to the
appropriate Governmental Authorities within 5 Business Days of receipt thereof;
or (iii) any payment, loan, contribution, or other transfer of funds or other
property to any Stockholder of such Person which is not expressly and
specifically permitted in this Agreement; provided, that no payment to Lender
shall constitute a Restricted Payment.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare plan"
as defined in Section 3(2) of ERISA, that provides for continuing coverage or
benefits for any participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary or the participant.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
1.1(a).
"Revolving Credit Loan" shall mean at any time the aggregate amount of Revolving
Credit Advances then outstanding.
"Revolving Credit Note" shall mean the promissory note of Borrower dated the
Closing Date, substantially in the form of Exhibit F.
"Revolving Credit Rate" shall have the meaning assigned to it in Section 1.5(a).
"Schedule of Documents" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Loan Documents and the transactions
contemplated thereunder, substantially in the form of Schedule F.
"Stated Expiry Date" shall mean June 30, 2001.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, general or limited partnership interests, participation or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company or equivalent entity whether voting or nonvoting,
including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934).
"Stockholder" shall mean each holder of Stock of Borrower or any other Credit
Party.
"Subordinated Indebtedness" shall mean the Indebtedness of Borrower to ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇..
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner.
A-13
43
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by the net income of Lender.
"Termination Date" shall mean the date on which the Revolving Credit Loan, and
any other Obligations under this Agreement are indefeasibly paid in full, in
cash, and Borrower shall have no further right to borrow any moneys or obtain
other credit extensions or financial accommodations under this Agreement.
"Title IV Plan" shall mean an "employee pension benefit plan," as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which Borrower, any other Credit Party or any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
"Trademarks" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State or Territory thereof, or any other
country or any political subdivision thereof, and (ii) all reissues, extensions
or renewals thereof.
"Transaction Summary" shall mean the Transaction Summary set forth in the
Recitals to this Agreement.
"Trustee" shall mean any trustee, or any successor trustee, acceptable to the
Lender in its sole discretion, which, at the Lender's sole option, shall hold,
on behalf of the Lender pursuant to the terms of this Agreement and the Trust
Agreement, all of the original Leases, schedules, acceptance certificates,
riders, supplements, purchase options, exhibits, addendum, tax authorizations
and liability and hazard insurance policies for, and any and all other documents
or instruments executed and/or delivered in connection with (including, without
limitation, any guarantees or undertakings of any kind whatsoever of the same)
the Leases.
"Trust Agreement" shall mean the Trust Agreement between the Lender, the
Borrower and the Trustee, which shall be in form and substance acceptable to the
Lender in its sole discretion, and any and all riders, amendments, supplements
or modifications thereto and any exhibits or schedules delivered in connection
therewith.
"Unfunded Pension Liability" shall mean, at any time, the aggregate amount, if
any, of the sum of (i) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for such Title IV
Plan determined on the basis of a shutdown of the employees thereunder and using
the actuarial assumptions in effect for funding purposes under such Title IV
Plan, and (ii) for a period of five (5) years following a transaction which
could be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by Borrower, any other Credit Party or any ERISA
Affiliate as a result of such transaction.
"Year 2000 Compliant" shall mean, with regard to the Borrower and/or its
suppliers, vendors and customers, that all software, embedded microchips, and
other processing capabilities utilized by, and material to the business
operations or financial condition of, such entity are able to interpret and
manipulate date on and involving all calendar dates correctly and without
causing any abnormal ending scenario, including in relation to dates on and
after January 1, 2000.
Any accounting term used in this Agreement or the other Loan Documents shall
have, unless otherwise specifically provided therein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
thereunder shall be computed, unless otherwise specifically provided therein, in
accordance
A-14
44
with GAAP consistently applied; provided, that all financial covenants and
calculations in the Loan Documents shall be made in accordance with GAAP as in
effect on the Closing Date unless Borrower and Lender shall otherwise
specifically agree in writing. That certain items or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing. All other undefined terms contained in this
Agreement or the other Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code. The words "herein,"
"hereof" and "hereunder" or other words of similar import refer to this
Agreement as a whole, including the exhibits and schedules thereto, as the same
may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement.
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter; (b) the term "or" is not
exclusive; (c) the term "including" (or any form thereof) shall not be limiting
or exclusive; (d) all references to statutes and related regulations shall
include any amendments of same and any successor statues and regulations; (e)
all references in the Agreement or in the Schedules to this Agreement to
sections, schedules, disclosure schedules, exhibits, and attachments shall
refer to the corresponding sections, schedules, disclosure schedules, exhibits,
and attachments of or to this Agreement; and (f) all references to any
instruments or agreements, including references to any of the Loan Documents,
shall include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
▇-▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇ - LENDER'S AND BORROWERS REPRESENTATIVES
FOR NOTICES, ADDRESSES
Lender's Representative:
Name: ▇▇▇▇▇▇▇ Bank
Address: CityPlace II
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Borrower's Representative:
Name: Golden Eagle LLC
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
46
SCHEDULE C
INTENTIONALLY LEFT BLANK
47
SCHEDULE D - CASH MANAGEMENT
Borrower agrees to establish, and to maintain, until the Termination Date, the
cash management system described below:
1. Attachment I hereto sets forth all deposit, checking, operating or other
bank accounts, or similar money handling accounts, with any bank or other
financial institution of Borrower and Corporate Credit Party as of the date
hereof. Attachment I shall be updated annually by Borrower.
2. Commencing on the Closing Date and until the Termination Date, Borrower
shall maintain an account with Lender (the "Operating Account") into which
Lender shall, from time to time, deposit proceeds of Revolving Credit Advances
made pursuant to Section 1.1 for use solely in accordance with the provisions
of Section 1.3.
48
ATTACHMENT I TO SCHEDULE D
LIST OF BANK ACCOUNTS
1. Lock Box Accounts. Fleet Bank Account #▇▇▇-▇▇▇-▇▇▇▇
2. Disbursement Accounts. N/A
3. ▇▇▇▇▇ Cash Account (not to exceed $_______). N/A
4. Payroll Account (not to exceed one regular payroll). N/A
5. Cash Collateral Account. N/A
6. Operating Accounts. Fleet Bank Checking Account #936-136-2606
Fleet Bank Savings Account #936-082-2260
Savings Bank of Danbury #▇▇▇▇▇▇▇▇
Ridgefield Savings Bank #505013026
First Federal Funding #01910009081
49
SCHEDULE E - FEES
1. CLOSING FEE: a non-refundable fee of $40,000 (the "Closing Fee")
2. AUDIT FEE: It is anticipated that Collateral audits will be required
annually. If a Default shall have occurred, the Lender may require additional
audits its sole discretion. Collateral audits will be performed by an
independent certified public accounting firm acceptable to the Lender, such
acceptance not to be unreasonably withheld. Borrower will reimburse Lender for
the fees incurred by such audits provided that such fees shall not exceed
$7,500 per audit, plus out of pocket expenses, unless a Default shall have
occurred.
4. UNUSED LINE FEE: Lender shall charge, and the Borrower shall pay Lender, a
non-refundable unused facility fee ("Fee") in an amount equal to (a) 1/2 percent
(.50%) multiplied by (i) the difference between $10,000,000.00 and the actual
amount of the average daily principal balance of all outstanding principal
and/or Revolving Credit Advances during the applicable month (or applicable
portion thereof), multiplied by (ii) a fraction, the numerator of which shall be
the number of days in such applicable month (or applicable portion thereof), and
the denominator of which shall be 360. The Fee shall be calculated on a monthly
basis but shall be payable on a calendar quarterly basis in arrears. The first
calendar quarterly installments of the Fee shall be due and payable on the last
day of each calendar quarter (commencing December 31, 1999) and each quarterly
installment of the Fee thereafter through and including the Termination Date. No
portion of any fees paid to lender of any kind whatsoever shall be refundable
to Borrower for any reason whatsoever.
5. LEGAL FEES: Borrower will reimburse Lender for the fees incurred by Lender
in connection with the preparation, execution, and delivery of this Agreement
and the Loan Documents, provided, that such reimbursement shall not exceed
$20,000.
50
SCHEDULE F - SCHEDULE OF DOCUMENTS
1. Loan and Security Agreement
2. $10,000,000 Revolving Credit Note
3. Guarantees - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Golden Eagle
Credit Corporation
4. Financing Statement on Form ▇▇▇-▇ - ▇▇, ▇▇, ▇▇, ▇▇, ▇▇
5. Secretarial Certificate and Members' Certificate of Credit Parties with the
following attachments:
a. Articles of Incorporation or other organizational document
b. Certification by the Connecticut Secretary of State of Articles of
Incorporation or other organizational document
c. By-laws or Operating Agreement
d. Certificate of Good Standing
e. Resolutions of Board of Directors or Members
6. Power of Attorney
7. Custodial (Trust) Agreement
8. Closing Certificate Re: Evidence of Satisfaction of Preconditions
9. Borrowing Base Certificate
10. Tax Clearance Certificates
11. Post Office Change of Address Card
12. Subordination Agreements
a. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
b. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
13. Solvency Certificate
14. Evidence of Insurance - Casualty, Business Interruption, Environmental and
Liability
a. Copies of Policies
b. Certificates of Insurance
c. Loss Payable Endorsement
15. UCC Searches
16. Opinion of Credit Party's Counsel
17. Disbursement Authorization Letter
18. Evidence of Satisfaction of Tax Collector, Town of Watertown Lien
19. Post-Closing Letter