EXHIBIT 10.23
EXECUTION COPY
CONFIDENTIAL TREATMENT REQUESTED.
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED
SEPARATELY WITH THE COMMISSION.
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MASTER BUSINESS LEASE FINANCING AGREEMENT
AMRESCO LEASING CORPORATION,
as Lender
eROOM SYSTEM SPE, INC.,
as Borrower
ROOMSYSTEMS, INC.
and
eROOM SYSTEM TECHNOLOGIES, INC.
Dated May 11, 2000
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS; ACCOUNTING TERMS..................................................................1
Section 1.1 DEFINITIONS.........................................................................1
Section 1.2 ACCOUNTING TERMS...................................................................16
ARTICLE 2 BUSINESS LEASES, LEASE FINANCING LOANS; SERVICING.............................................16
Section 2.1 THE BUSINESS LEASES................................................................16
Section 2.2 THE LEASE FINANCING LOANS..........................................................17
Section 2.3 CONDITIONS TO BORROWING; TRANSACTION APPROVAL OR DENIAL............................18
Section 2.4 ADVANCE FUNDED LEASE FINANCING LOANS...............................................19
Section 2.5 ADVANCE FUNDING TRANSACTION APPROVAL...............................................19
Section 2.6 BORROWINGS DURING TERM.............................................................19
Section 2.7 USE OF PROCEEDS....................................................................19
Section 2.8 PRE-SECURITIZATION PERIOD..........................................................20
Section 2.9 TIMELINE OF EVENTS.................................................................22
Section 2.10 INTEREST RATES AND PAYMENT DATES...................................................23
Section 2.11 PREPAYMENTS........................................................................23
Section 2.12 INTEREST COMPUTATIONS..............................................................23
Section 2.13 EVIDENCE OF INDEBTEDNESS...........................................................24
Section 2.14 EQUIPMENT SERVICING................................................................24
Section 2.15 CONSOLIDATION OF LEASE FINANCING NOTES INTO CREDIT \
ENHANCEMENT NOTES..................................................................25
ARTICLE 3 SECURITY INTEREST.............................................................................25
Section 3.1 GRANT OF SECURITY INTEREST.........................................................25
Section 3.2 CHIEF EXECUTIVE OFFICE; LOCATION OF PLEDGED ASSETS.................................26
Section 3.3 PERFECTION OF SECURITY INTEREST....................................................27
Section 3.4 GENERAL COVENANTS..................................................................27
Section 3.5 ASSIGNMENT OF INSURANCE PROCEEDS...................................................28
Section 3.6 LEGENDS............................................................................28
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS.....................................................28
Section 4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE eROOM PARTIES.....................28
Section 4.2 REPRESENTATIONS AND WARRANTIES OF THE LENDER.......................................31
ARTICLE 5 CONDITIONS PRECEDENT TO EFFECTIVENESS, EACH LOAN POOL AND THE LEASE FINANCING LOANS...........33
Section 5.1 EFFECTIVENESS......................................................................33
Section 5.2 THE INITIAL LEASE FINANCING LOAN...................................................35
Section 5.3 THE LEASE FINANCING LOANS..........................................................36
Section 5.4 SUBSEQUENT LOAN POOLS..............................................................36
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ARTICLE 6 DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION................................37
Section 6.1 ANNUAL FINANCIAL STATEMENTS........................................................37
Section 6.2 QUARTERLY FINANCIAL STATEMENTS.....................................................37
Section 6.3 OTHER INFORMATION..................................................................38
Section 6.4 NO DEFAULT CERTIFICATE.............................................................38
Section 6.5 OTHER DOCUMENTS....................................................................38
Section 6.6 NOTICES OF DEFAULTS................................................................38
ARTICLE 7 AFFIRMATIVE COVENANTS.........................................................................38
Section 7.1 BOOKS AND RECORDS..................................................................38
Section 7.2 INSPECTIONS AND AUDITS.............................................................38
Section 7.3 PERFORM OBLIGATIONS................................................................39
Section 7.4 NOTICE OF LITIGATION...............................................................39
Section 7.5 INSURANCE..........................................................................39
Section 7.6 PRIORITY OF LIEN ON EQUIPMENT AND LEASES; FURTHER SECURITY.........................39
Section 7.7 MAINTENANCE OF SEPARATE EXISTENCE..................................................39
Section 7.8 TAXES..............................................................................40
Section 7.9 BUSINESS LEASE PRODUCTION REQUIREMENT..............................................40
Section 7.10 DIRECTION TO LESSEES...............................................................40
Section 7.11 SAFE UNIT REFRESHMENT CENTERS......................................................40
Section 7.12 CASUALTY EVENTS....................................................................40
Section 7.13 SERVICING, BILLING AND MAINTENANCE MANUAL..........................................41
Section 7.14 INSTALLATION AND MAINTENANCE OF EQUIPMENT..........................................41
Section 7.15 MISAPPLIED PAYMENTS................................................................41
Section 7.16 LEGAL OPINION......................................................................41
ARTICLE 8 NEGATIVE COVENANTS............................................................................41
Section 8.1 LIENS..............................................................................41
Section 8.2 CHANGES IN BUSINESS................................................................41
Section 8.3 CHANGE OF OFFICE ADDRESS...........................................................41
Section 8.4 AMENDMENT OF THE CHARTER DOCUMENTS.................................................41
Section 8.5 SALE, TRANSFER OR TERMINATION OF PLEDGED ASSETS....................................41
ARTICLE 9 ADDITIONAL COVENANTS OF THE PARTIES...........................................................42
Section 9.1 EXCLUSIVITY........................................................................42
Section 9.2 RIGHT OF FIRST REFUSAL.............................................................42
Section 9.3 MARKETING; TRADITIONAL EQUIPMENT FINANCING.........................................42
Section 9.4 MERGER; CONSOLIDATION..............................................................43
Section 9.5 LENDER COVENANT TO FINANCE; BORROWER'S EXCLUSIVE REMEDY............................44
Section 9.6 TERMINATION OF EXISTING LIENS......................................................44
Section 9.7 CREATION OF NEW LOAN POOLS.........................................................44
Section 9.8 DIRECTION TO LESSEES...............................................................44
Section 9.9 PRINCIPAL PLACE OF BUSINESS........................................................44
ARTICLE 10 EVENTS OF DEFAULT; EVENTS OF ACCELERATION....................................................44
Section 10.1 EVENTS OF DEFAULT..................................................................45
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Section 10.2 RIGHTS AND REMEDIES ON EVENT OF DEFAULT............................................46
Section 10.3 EVENTS OF ACCELERATION.............................................................47
Section 10.4 RIGHTS AND REMEDIES ON EVENT OF ACCELERATION.......................................48
ARTICLE 11 LIQUIDATED DAMAGES...........................................................................50
Section 11.1 LIQUIDATED DAMAGES.................................................................50
Section 11.2 PLEDGE AND GRANT OF SECURITY INTEREST FOR LIQUIDATED
DAMAGE OBLIGATION..................................................................50
ARTICLE 12 MISCELLANEOUS PROVISIONS.....................................................................51
Section 12.1 FEES AND EXPENSES..................................................................51
Section 12.2 INDEMNIFICATION....................................................................51
Section 12.3 WAIVER OF TRIAL BY JURY............................................................52
Section 12.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT..............................52
Section 12.5 REMEDIES CUMULATIVE................................................................53
Section 12.6 FURTHER ASSURANCES.................................................................53
Section 12.7 NOTICES............................................................................53
Section 12.8 CONSTRUCTION; GOVERNING LAW; CONSENT TO JURISDICTION...............................54
Section 12.9 CONFIDENTIALITY....................................................................55
Section 12.10 SEVERABILITY.......................................................................55
Section 12.11 BINDING EFFECT: NO ASSIGNMENT OR DELEGATION........................................55
Section 12.12 TERM OF AGREEMENT; TERMINATION.....................................................56
Section 12.13 NO JOINT VENTURE...................................................................56
Section 12.14 COUNTERPARTS.......................................................................56
Section 12.15 CERTAIN REMEDIES...................................................................56
Section 12.16 USURY..............................................................................57
Section 12.17 SURVIVAL OF CERTAIN PROVISIONS.....................................................57
ARTICLE 13 SECURITIZATION SERVICES......................................................................57
Section 13.1 SECURITIZATION.....................................................................57
SCHEDULE I - Refreshment Center Loan Amount
EXHIBIT A - GUIDELINES
EXHIBIT B - FORM OF LEASE FINANCING NOTE
EXHIBIT C - FORM OF CREDIT ENHANCEMENT NOTE
EXHIBIT D - FORM OF BORROWING NOTICE
EXHIBIT E - FORM OF TRANSACTION APPROVAL
EXHIBIT F - FORM OF ACKNOWLEDGMENT
EXHIBIT G - FORMS OF BUSINESS LEASE
EXHIBIT H - FORM OF CUSTODIAL AGREEMENT
EXHIBIT I - FORM OF LICENSE AGREEMENT
EXHIBIT J - FORM OF PURCHASE AGREEMENT
EXHIBIT K - FORM OF SERVICING AGREEMENT
EXHIBIT L - FORM OF STOCK PLEDGE AGREEMENT
EXHIBIT M - FORM OF PLEDGE AND SECURITY AGREEMENT
iii
EXHIBIT N - FORM OF LEGAL OPINION OF COUNSEL TO THE eROOM
PARTIES
EXHIBIT O - CONFIDENTIAL eROOM DOMESTIC PRICE AND PRODUCT
SCHEDULE
EXHIBIT P - THRESHOLD PLAN CALCULATION
EXHIBIT Q - PERCENTAGE PLAN CALCULATION
EXHIBIT R - PLATINUM PLAN CALCULATION
EXHIBIT S - ACTUAL COST OF GOODS SOLD
EXHIBIT T - FORM OF CONFIDENTIALITY AGREEMENT
iv
MASTER BUSINESS LEASE FINANCING AGREEMENT
THIS MASTER BUSINESS LEASE FINANCING AGREEMENT (this "AGREEMENT") is made
as of this 11th day of May 2000, by and among eRoom System SPE, Inc., a Nevada
corporation, having an office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the "BORROWER"), RoomSystems Inc., a Nevada corporation,
having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇., ▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("RSi"), eRoom
System Technologies, Inc., a Nevada corporation having an office at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("eROOM"; and collectively,
with the Borrower and RSi, the "eRoom Parties") and AMRESCO Leasing Corporation,
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "LENDER").
W I T N E S S E T H:
WHEREAS, the Lender, RSi and eRoom are parties to the Program Agreement
which provides for the creation of a program to engage in (i) the origination by
eRoom of Business Leases for the Equipment to hotels and time-shares located in
the United States, (ii) the purchase by the Borrower from eRoom of certain
Business Leases and Equipment, (iii) the receipt by the Borrower and RSi of a
License to use the Equipment Intellectual Property, (iv) the making of Lease
Financing Loans by the Lender to the Borrower secured by the Pledged Assets to
enable eRoom and the Borrower to engage in (i) - (iii) above, and (v) the
disposition of pools of Business Leases or Lease Financing Loans through
Securitizations (collectively, the "PROGRAM");
WHEREAS, subject to the terms and conditions hereinafter set forth, to
finance the operation of the Program the Lender is willing to extend Lease
Financing Loans to the Borrower;
WHEREAS, the parties agree that in order to facilitate Securitizations it
may be necessary to consolidate the Lease Financing Loans into several Loan
Pools, each of which will be separate from the other Loan Pools (except as
otherwise described herein); and
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS; ACCOUNTING TERMS
Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"ACCELERATED LOAN AMOUNT" shall mean for any Lease Financing Loan, all
amounts owed under the related Note, including but not limited to all
unamortized principal, all accrued and unpaid interest (and interest thereof)
and the Prepayment Amount.
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"ACKNOWLEDGEMENT" shall mean an Acknowledgement by the eRoom Parties in
substantially the form set out hereto as Exhibit F.
"ACTUAL COST OF GOODS SOLD" shall mean the actual cost incurred by the
eRoom Parties in connection with the manufacture, assembly and installation
(excluding all internal costs, expenses and overhead of any of the eRoom
Parties) of the related Refreshment Centers, as described in more detail on
Exhibit S hereto.
"ADVANCE FUNDED LEASE FINANCING LOAN" shall mean any Lease Financing Loan
funded by the Lender in connection with an Advance Funding Transaction Approval
Obligation.
"ADVANCE FUNDING TRANSACTION APPROVAL OBLIGATION" shall mean, prior to the
expiration of the Seasoning Period for the Business Leases relating to a Lease
Financing Loan, the Lender's obligation to make a decision regarding Transaction
Approval for such Lease Financing Loan as provided in Sections 2.4 and 2.5
hereof.
"AFFILIATE" shall mean, as to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person and includes (i) any Person who directly or indirectly holds 5% or more
of any class of voting stock of such Person or (ii) an Affiliate of such Person.
As used in this definition, the term "CONTROL" (including its use in the phrases
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); provided, that at all times
Sunyich shall be an Affiliate.
"AGGREGATE CREDIT ENHANCEMENT AMOUNT" shall mean, for a Loan Pool, a
limited guarantee from the Borrower guaranteeing all Program Loans in the
Program Pool of which such Loan Pool is a part, in an amount equal to 1.01% of
the then outstanding Loan Amount of all of the Lease Financing Loans in such
Loan Pool. "AGREEMENT" shall mean this Master Business Lease Financing
Agreement, as it may be amended from time to time.
"AVERAGE DAILY eROOM THRESHOLD PLAN REVENUE" shall have the meaning as set
forth in Schedule I.
"AVERAGE DAILY eROOM PLATINUM PLAN REVENUE" shall have the meaning as set
forth in Schedule I.
AVERAGE DAILY eROOM PERCENTAGE PLAN REVENUE" shall have the meaning as set
forth in Schedule I.
"AVERAGE GROSS REVENUE" shall mean the average revenue per day produced by
the Refreshment Centers subject to a Business Lease.
"BORROWER" shall have the meaning assigned to such term in the first
paragraph of
2
this Agreement.
"BORROWING DATE" shall mean the Business Day specified in a Borrowing
Notice on which the Borrower requests the Lender to make a Lease Financing Loan
and on which the Lender makes such Lease Financing Loan to the Borrower.
"BORROWING NOTICE" shall mean a notice of the Borrower to the Lender in
substantially the form set out as Exhibit D hereto certifying that each of the
requirements for the issuance of a Lease Financing Loan have been satisfied.
"BUSINESS DAY" shall mean any day that is not a Saturday, Sunday or other
day on which commercial banking institutions in the States of Texas, Idaho,
Minnesota, Utah or Nevada are authorized or obligated by law or executive order
to be closed.
"BUSINESS LEASE" shall mean a lease (or revenue sharing agreement),
substantially in the form of Exhibit G hereto (including any and all schedules,
supplements and amendments thereto and modifications thereto), providing for the
leasing and use of the Equipment and/or Refreshment Centers by hotels and
time-shares located in the United States that provides for a sharing of
revenues, or any other kind of payment or arrangement between one of the eRoom
Parties (or any of their Affiliates) and such hotels and time-shares.
"CARRY FORWARD AMOUNT" shall mean, for each Loan Pool an amount equal to
the sum of (i) the difference between (A) the Monthly Payment Amount due on all
prior Disbursement Dates and (B) the amount actually distributed to the Lender
pursuant to Section 2.8(c)(iii) as the Monthly Payment Amount on all prior
Disbursement Dates and (ii) interest at the then current Interest Rate on the
amount determined by clause (i) hereof.
"CASUALTY EVENT" shall mean an event that causes all or a portion of the
Equipment leased pursuant to a Business Lease to be lost, stolen, damaged beyond
repair or destroyed.
"COLLECTED FUNDS" shall mean, for each Loan Pool, all revenues, lease
payments and other amounts actually collected by the Custodian on all Business
Leases related to such Loan Pool commencing upon the Funding Date of each Lease
Financing Loan.
"COMMITMENT TERMINATION DATE" shall mean the seventh anniversary of the
Start Date.
"COMPLIANCE CERTIFICATE" shall have the meaning set forth in Section
5.3(b)(iv) hereof.
"CONFIDENTIAL INFORMATION" shall mean all information which has or will be
disclosed by any party to this Agreement in connection with the Program and all
terms contained in this Agreement, provided that Confidential Information shall
not include information which is publicly available, was acquired by any party
to this Agreement from third parties or is required to be disclosed by law.
3
"CREDIT ENHANCEMENT AMOUNT" shall mean, for a Lease Financing Loan, a
limited guarantee from the Borrower guaranteeing all Program Loans in the
Program Pool of which such Lease Financing Loan is a part in an amount equal to
1.01% of the then outstanding Loan Amount of such Lease Financing Loan. "CREDIT
ENHANCEMENT NOTE" shall mean the promissory note, or other evidence of
indebtedness, evidencing the indebtedness, including the then outstanding Loan
Amount, accrued interest and the Aggregate Credit Enhancement Amount, of the
Borrower under all the Lease Financing Loans relating to a Loan Pool amended,
restated and consolidated into such Credit Enhancement Note, in substantially
the form set forth in Exhibit C hereto.
"CREDIT ENHANCEMENT PREPAYMENT" shall mean for any Lease Financing Loan and
Prepayment Date, the lesser of (i) the outstanding Credit Enhancement Amount for
such Lease Financing Loan and (ii) the Program Credit Enhancement Amount.
"CUMULATIVE LEASE FINANCING LOANS" shall mean the sum of the original Loan
Amount of all Lease Financing Loans funded under the Program.
"CUSHION AMOUNT" shall mean, the Next Monthly Payment Amount minus the
amount on deposit in the Loan Payment Account as of such Distribution Date
without giving effect to any disbursements on such Disbursement Date with
respect to all Lease Financing Loans in such Loan Pool.
"CUSTODIAL ACCOUNT" shall mean the account of such name created pursuant to
each Custodial Agreement.
"CUSTODIAL AGREEMENT" shall mean each Custodial Agreement executed in
connection with a Loan Pool by and among the Borrower, the Lender, the Servicer
and the Custodian, a form of which is attached hereto as Exhibit H.
"CUSTODIAL FEE" shall mean the fee payable to the Custodian on each Payment
Date, which shall be in an amount set out in a letter agreement or other
agreement among eRoom, the Lender and the Custodian.
"CUSTODIAN" shall mean Norwest Bank Minnesota, National Association, or
some other bank or trust company acting as custodian under a Custodial
Agreement.
"CUSTOMER" shall mean any customer or potential customer of the eRoom
Parties (or any of their Affiliates) that desires to have a Refreshment Center
or Equipment.
"DEFAULT" shall mean an event that with notice or lapse of time or both
would constitute an Event of Default or an Event of Acceleration.
"DELINQUENT PROGRAM LOAN" shall mean a Program Loan on which any portion of
the Monthly Payment Amount is delinquent or otherwise in default.
4
"DISBURSEMENT DATE" shall mean, for each Loan Pool, the 10th day of each
month, or if such day is not a Business Day, the next succeeding Business Day
beginning for each Lease Financing Loan in the month following the month in
which the Funding Date occurs.
"DISCOUNTED VALUE" shall mean, with respect to each Lease Financing Loan,
the amount calculated by discounting all remaining scheduled Monthly Payment
Amounts from their respective due dates to the Prepayment Date of such Lease
Financing Loan in accordance with acceptable financial practices and at a
discount factor (applied on a monthly basis) equal to the Reinvestment Rate.
"DOLLARS" AND "$" shall mean the lawful money of the United States of
America.
"EQUIPMENT" shall mean, individually or collectively, Standard Unit
Equipment and Safe Unit Equipment, as the context may require.
"EQUIPMENT INTELLECTUAL PROPERTY" shall mean all Intellectual Property of
any of the eRoom Parties (or any of their Affiliates) necessary to manufacture,
sell, lease, install, maintain, service or operate the Equipment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time, and the regulations promulgated thereunder.
"eROOM PARTIES" shall mean eRoom, RSi and the Borrower.
"eROOM" shall have the meaning assigned to such term in the first paragraph
of this Agreement.
"EVENT OF ACCELERATION" shall have the meaning specified in Section 10.3.
"EVENT OF DEFAULT" shall have the meaning specified in Section 10.1.
"FINAL PAYMENT DATE" shall mean for each Lease Financing Loan, the date on
which a Lease Financing Loan is, by its terms, scheduled to terminate assuming
that all amounts owed thereunder shall be paid on a timely basis.
"FINANCIAL STATEMENTS" shall mean all financial statements delivered to the
Lender pursuant to Sections 6.1 and 6.2 hereof.
"FIXED CHARGE COVERAGE RATIO" shall mean for any Person, the ratio of (a)
the Person's cash flow to (b) the sum of fixed charges and rental expense of
such Person, determined by the Lender in its sole discretion consistent with the
Lender's normal business practices.
"FUNDING DATE" shall mean, with respect to each Lease Financing Loan, the
date on which the Lender first funds such Lease Financing Loan, which in the
case of a Lease Financing Loan that is not an Advance Funded Lease Financing
Loan, shall be a date in the month following the end of the related Seasoning
Period.
5
"GENERAL INTANGIBLES" shall mean any computer programs, source codes,
hardware schematics and working drawings, operating manuals, procedural
documentation, performance data, customer lists, guidelines, applications,
files, records, memoranda, reports, information (including sales, business,
financial, accounting, media and other information) or other similar items.
"GUIDELINES" shall mean the general and business specific underwriting
guidelines set out on Exhibit A hereto.
"INDEBTEDNESS" shall mean with respect to any Person all (i) liabilities or
obligations, direct and contingent, which in accordance with generally accepted
accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person on any given date,
including, without limitation, lease obligations required to be shown as a
liability on the balance sheet of such Person in accordance with generally
accepted accounting principles; (ii) liabilities or obligations of others for
which such Person is directly or indirectly liable, by way of guaranty or
otherwise; and (iii) liabilities or obligations secured by Liens on any assets
of such Person, whether or not such liabilities or obligations shall have been
assumed by it.
"INITIAL LOAN POOL" shall mean the initial pool of Lease Financing Loans
accumulated from the Start Date through the initial Securitization of such Lease
Financing Loans.
"INTELLECTUAL PROPERTY" shall mean any patent, copyright, trademark,
service ▇▇▇▇, trade name or other ▇▇▇▇, license, invention, or design,
registered or unregistered.
"INTEREST PERIOD" shall mean with respect to each Lease Financing Loan (i)
the period from the Borrowing Date of such Lease Financing Loan to (but
excluding) the first Payment Date and (ii) thereafter, the period from a Payment
Date to (but excluding) the next succeeding Payment Date.
"INTEREST RATE" shall mean the annual rate of interest (calculated on the
basis of a year of 360 days and subject to Section 2.15(d)) borne by each Lease
Financing Loan, as set forth in the related Note, which rate shall be determined
for each such Lease Financing Loan as follows:
(i) For all Lease Financing Loans until *** in cumulative volume of
Lease Financing Loans have been funded, ***;
(ii) For all Lease Financing Loans funded after the first *** in
cumulative volume of Lease Financing Loans have been funded but prior to
completion of the first Securitization, ***;
(iii) For all Lease Financing Loans funded after the first
Securitization until *** in cumulative volume of Lease Financing Loans have been
funded, ***;
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
6
(iv) For all Lease Financing Loans funded during the time period that
the total amount of Lease Financing Loans funded is between *** and *** in
cumulative volume, ***;
(v) For all Lease Financing Loans funded during the time period that
the total amount of Lease Financing Loans funded is between *** and *** in
cumulative volume, ***; and
(vi) For all Lease Financing Loans funded after the total amount of
all Lease Financing Loans exceeds a cumulative volume of ***, ***;
provided, that in the event that at any time the Borrower shall fail to meet the
production requirements set out in Section 7.9, (A) the interest rate on any
Lease Financing Loans previously funded by the Lender shall be automatically and
retroactively increased to *** and (B) the interest rate on all future Lease
Financing Loans shall be ***, provided, further, that upon the Borrower's later
satisfaction of the production requirements set out in Section 7.9, the interest
rate for all Lease Financing Loans funded thereafter shall be as set forth in
clauses (i) - (vi) above.
"INVESTORS" shall mean the owners of the securities issued in a
Securitization.
"LATEST BALANCE SHEET" shall have the meaning set forth in Section 4.1(m)
hereof.
"LEASE FINANCING LOAN" shall mean a loan of funds, effected pursuant to
this Agreement, by the Lender to the Borrower, related to a Business Lease in
the United States of America and secured by the related Pledged Assets.
"LEASE FINANCING NOTE" shall mean the promissory note, or other evidence of
indebtedness evidencing the obligations of the Borrower under a Lease Financing
Loan, in substantially the form set out as Exhibit B hereto.
"LENDER" shall mean AMRESCO Leasing Corporation, a Nevada corporation, and
its successors and assigns.
"LESSEE" shall mean the lessee under a Business Lease relating to a Lease
Financing Loan and each successor or assignee of such lessee's interest under
such Business Lease.
"LICENSE" shall mean a nonrevocable license to use all Equipment
Intellectual Property granted by eRoom to the Borrower and RSi for a term which
will end upon the satisfaction in full of all obligations of the eRoom Parties
to Lender under this Agreement and the Operative Documents.
"LICENSE AGREEMENT" shall mean the License Agreement dated as of May 11,
2000, by and among eRoom, RSi and the Borrower, pursuant to which a License is
granted to RSi and the Borrower, a form of which is attached hereto as Exhibit
I.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
7
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
security interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement and any lease in the nature of a grant of a security
interest or lien).
"LIQUIDATED DAMAGES" shall mean an amount equal to *** of the present value
of the Projected Annual Spread Income calculated as of the date the first breach
of any Liquidated Damages Obligation occurs, utilizing a discount rate of ***
per annum, and a term which begins in the year in which such breach occurs
(including such year), and which ends in the year 2006.
"LIQUIDATED DAMAGES COLLATERAL" shall mean, collectively, the eRoom
Parties' right, title and interest in and to all Residual Profits, Refreshment
Centers, Equipment, Intellectual Property, Equipment Intellectual Property,
Licenses, Business Leases, accounts, goods, inventory, documents, chattel paper,
deposit accounts, equipment, General Intangibles, contracts, certificates of
title, fixtures, credits, claims, demands, assets and other personal property of
the eRoom Parties, whether now owned, existing, hereafter acquired, held, used,
or sold, and any other property, rights and interests of the eRoom Parties which
at any time relate to, arise out of or in connection with the foregoing or which
shall come into the possession or custody or under the control of the eRoom
Parties or any of their agents, representatives, associates or correspondents,
in connection with the foregoing; any and all additions and accessions,
replacements, substitutions, and improvements, of or to all of the foregoing and
all products, rents, profits, offspring, and proceeds thereof; PROVIDED,
HOWEVER, that Liquidated Damages Collateral shall not include any of the
foregoing which constitutes Pledged Assets.
"LIQUIDATED DAMAGES OBLIGATION" shall mean any obligation of the eRoom
Parties set forth in Sections 9.1, 9.2, 9.3(a) 9.4, 9.6, 9.7, 9.8 or 9.9(a)
hereof.
"LOAN AMOUNT" shall have the meaning specified in Section 2.2(b) for Lease
Financing Loans and Section 2.4 for Advance Funded Lease Financing Loans.
"LOAN PAYMENT ACCOUNT" shall mean for each Loan Pool, the loan payment
account established and maintained by the Custodian pursuant to the related
Custodial Agreement.
"LOAN POOL" shall mean the pool of Lease Financing Loans extended by the
Lender to the Borrower from the cut-off date of the last Securitization of Lease
Financing Loans until the cut-off date of the next Securitization; provided that
all Lease Financing Loans extended by the Lender to the Borrower during the
period from the Start Date to the cut-off date of the initial Securitization
shall be the Initial Loan Pool.
"LOAN POOL ACCELERATED AMOUNT" shall mean for each Loan Pool, all amounts
owed under all the Lease Financing Loans advanced by the Lender hereunder and
included in such Loan Pool and all amounts owed under the related Notes,
including but not limited to, all unamortized principal, all accrued and unpaid
interest (and interest thereon) and the Prepayment Amount for the Lease
Financing Loans in such Loan Pool.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
8
"LOSS RESERVE ACCOUNT" shall mean for each Loan Pool, a loss reserve
account established and maintained by the Custodian pursuant to the related
Custodial Agreement.
"LOSS RESERVE AMOUNT" shall mean, for each Loan Pool, *** of the difference
between (i) the monthly gross revenues and all other amounts from all Business
Leases collected by the Custodian pursuant to the Custodial Agreement related to
such Loan Pool and (ii) the sum of the amounts paid, disbursed or reserved
pursuant to clauses (i) - (iii) of Section 2.8(c) with respect to all Lease
Financing Loans related to such Business Leases, until the amounts reserved for
such Lease Financing Loans equal the Reserve Cap for such Lease Financing Loans.
"MAKE WHOLE PREMIUM" shall mean, with respect to any Lease Financing Loan,
a premium equal to the excess, if any, of the Discounted Value over the
outstanding Loan Amount of such Lease Financing Loan. The Make Whole Amount
shall in no event be less than zero.
"MASTER CUSTODIAL AGREEMENT" shall mean the Master Custodial Agreement by
and among the eRoom Parties, the Lender, RSi and the Custodian to be executed
within 90 days of the date of this Agreement.
"MINIMUM DAILY SAFE UNIT CHARGE" shall have the meaning set forth in
Section 7.11(a).
"MONTHLY PAYMENT AMOUNT" shall mean, for each Lease Financing Loan (i) the
amount of principal due during the prior calendar month on such Lease Financing
Loan as provided in the related Note plus (ii) interest on such amount in an
amount equal to the product of (A) the Interest Rate for such Lease Financing
Loan and (B) the remaining principal balance of such Lease Financing Loan and
(iii) any other amounts owing under the related Note with respect to such Lease
Financing Loan.
"NET BORROWER PERCENTAGE PLAN REVENUE" shall have the meaning as set forth
in Schedule I.
"NET BORROWER REVENUE" shall have the meaning as set forth in Schedule I.
"NET WORTH" shall mean, as at any date, all amounts which would be included
under shareholder's equity on a consolidated balance sheet of the eRoom Parties
as of such date in accordance with generally accepted accounting principles,
consistently applied.
"NEXT MONTHLY PAYMENT AMOUNT" shall mean, for all Lease Financing Loans in
a Loan Pool and for each Disbursement Date, the Monthly Payment Amount due in
the following month for all such Lease Financing Loans.
"NOTE" shall mean, individually or collectively, as the context may
require, the Lease Financing Notes and/or the Credit Enhancement Notes.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
9
"OPERATIVE DOCUMENTS" shall mean collectively, this Agreement, the Notes,
the Program Agreement, the License Agreement, the Purchase Agreement, the Stock
Pledge Agreement, the Master Custodial Agreement, the Servicing Agreements, the
Custodial Agreements and the Pledge and Security Agreements.
"OVERALL LEASE FINANCING LOANS" shall mean the sum of the Cumulative Lease
Financing Loans and the Proposed Advance Funded Lease Financing Loans.
"PAYMENT DATE" shall mean for each Lease Financing Loan, the first Business
Day of each month commencing in the month following the month in which the
Funding Date for such Lease Financing Loan occurs.
"PBGC" shall have the meaning set forth in Section 4.1(p) hereof.
"PERCENTAGE CALCULATION" shall have the meaning as set forth in Schedule I.
"PERCENTAGE PLAN" shall mean any of the Percentage Plans set forth on
Exhibit O.
"PERMITTED LIENS" shall mean with respect to any Person, item of Equipment
or Business Leases: (i) Liens imposed by law, such as carriers', warehousemen's,
materialmen's and mechanics' liens, or Liens arising out of judgments or awards
against such Person with respect to which such Person at the time shall
currently be prosecuting an appeal or proceedings for review; and, (ii) Liens
for taxes not yet subject to penalties for nonpayment and Liens for taxes the
payment of which is being contested as permitted by Section 7.3 hereof.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
incorporated organization or government or any agency or political subdivision
thereof.
"PLAN" shall have the meaning set forth in Section 4.1(p).
"PLATINUM CALCULATION" shall have the meaning as set forth in Schedule I.
"PLATINUM PLAN" shall mean any of the Platinum Plans set forth on Exhibit
O.
"PLEDGED ASSETS" shall mean, for each Loan Pool, the collateral securing
each Lease Financing Loan included in such Loan Pool, which shall consist of (i)
the related Business Lease and the Refreshment Centers and Equipment leased
thereunder, (ii) all amounts held in the related Custodial Account by the
Custodian pursuant to the related Custodial Agreement, (iii) all amounts held in
the related Loan Payment Account by the Custodian pursuant to the related
Custodial Agreement, (iv) the stock of RSi pledged to the Lender pursuant to the
related Stock Pledge Agreement and (v) the Licenses.
"PLEDGE AND SECURITY AGREEMENT" shall mean each Pledge and Security
Agreement by and among the Borrower, eRoom and RSi in favor of the Lender
executed in connection with a Loan Pool prior to the consolidation of the Lease
Financing Notes into a Credit Enhancement Note, a form of which is attached as
Exhibit M.
10
"PREPAYMENT AMOUNT" shall mean (i) with respect to a Lease Financing
Loan that has been consolidated into a Credit Enhancement Note, an amount
equal to the sum of (A) the outstanding Loan Amount of such Lease Financing
Loan on the Prepayment Date, (B) all interest accrued and unpaid on the Loan
Amount of such Lease Financing Loan from the immediately preceding Payment
Date through the Prepayment Date, if any, plus an additional month of
interest on such Loan Amount, (C) all accrued and unpaid Scheduled Monthly
Credit Enhancement Obligation Payments due through the Prepayment Date, (D)
if any Program Loan Deficiencies exist on the Prepayment Date, the Credit
Enhancement Prepayment and (E) the Make Whole Premium, and (ii) with respect
to a Lease Financing Loan that has not been consolidated into a Credit
Enhancement Note, items (A), (B) and (E) above for such Lease Financing Loan.
"PREPAYMENT DATE" shall have the meaning set forth in Section 2.11(a)
hereof.
"PREPAYMENT NOTICE" shall have the meaning set forth in Section 2.11(a)
hereof.
"PRE-SECURITIZATION PERIOD" with respect to a Lease Financing Loan shall
mean, the period of time between the funding of such Lease Financing Loan and
the Securitization of such Lease Financing Loan or the Business Lease pledged as
collateral for such Lease Financing Loan.
"PRICE AND PRODUCT SCHEDULE" shall mean the list of prices and products
offered by eRoom to hotels and time-shares, as set out in Exhibit O hereto, as
such schedule may be amended by written agreement of eRoom and the Lender from
time to time.
"PROGRAM" shall have the meaning specified in the recitals hereto.
"PROGRAM AGREEMENT" shall mean the Amended and Restated Program Agreement
dated as of March 10, 1999, by and among RSi, eRoom (formerly known as
RoomSystem Technologies, Inc. and RoomSystems International Corp.), Sunyich and
the Lender, as at any time amended and in effect.
"PROGRAM CREDIT ENHANCEMENT AMOUNT" shall mean, with respect to each Lease
Financing Loan, an amount equal to the product of (i) the ratio of (A) the
outstanding Loan Amount plus the Credit Enhancement Amount on the Prepayment
Date of such prepaying Lease Financing Loan to (B) the outstanding loan amounts
plus the outstanding credit enhancement amounts of all Program Loans in the
related Program Pool that are not Delinquent Program Loans, multiplied by (ii)
the sum (without duplication) of (A) the Program Prepayment Amounts for all
Delinquent Program Loans in the related Program Pool on the Prepayment Date plus
(B) any other outstanding Program Loan Deficiencies with respect to such Program
Pool.
"PROGRAM LOAN" shall mean a commercial loan made by the Lender (or one of
its Affiliates) to a third party that is included in a pool of loans formed by
the Lender (or one of its Affiliates).
"PROGRAM LOAN DEFICIENCIES" shall mean any defaults or delinquencies on any
of the Program Loans, as determined by the Lender in its sole discretion.
11
"PROGRAM POOL" shall mean a pool of Program Loans.
"PROGRAM PREPAYMENT AMOUNT" shall mean, with respect to any Delinquent
Program Loan, an amount equal to the sum of (i) the outstanding loan amount of
such Delinquent Program Loan on the prepayment date, (ii) all accrued and unpaid
interest on such Delinquent Program Loan to the Prepayment Date, (iii) all
accrued and unpaid scheduled monthly credit enhancement obligation payments on
such Delinquent Program Loan to the Prepayment Date and (iv) the make whole
premium with respect to such Delinquent Program Loan.
"PROJECTED ANNUAL SPREAD INCOME" shall be equal to the number of projected
Refreshment Centers for each year shown below, multiplied by ***:
PROJECTED
REFRESHMENT
YEAR CENTERS
---- -------
*** ***
"PROPERTY TAX RESERVE ACCOUNT" shall mean for each Loan Pool, an escrow
reserve account established and maintained by the Custodian pursuant to the
related Custodial Agreement for payment of applicable property or use taxes on
the Equipment subject to each Business Lease related to such Loan Pool.
"PROPERTY TAX RESERVE AMOUNT" shall mean for each Loan Pool and each
Disbursement Date, an amount equal to the product of (i) *** per day (ii) the
number of days since the last Disbursement Date (or 30 days in the case of the
first Disbursement Date) and (iii) the number of Refreshment Centers included in
the Business Leases relating to the Lease Financing Loans in such Loan Pool.
"PROPOSED ADVANCE FUNDED LEASE FINANCING LOANS" shall mean the sum of the
Loan Amount of all Advance Funded Lease Financing Loans submitted by Borrower to
Lender and then under consideration for funding.
"PURCHASE AGREEMENT" shall mean the Business Lease and Equipment Purchase
and Sale Agreement dated as of May 11, 2000, by and between eRoom and the
Borrower, pursuant to which the Borrower will purchase Business Leases (other
than the right to service such Business Leases) and Equipment from eRoom, from
time to time, a form of which is attached hereto as Exhibit J.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
12
"RECALCULATED PERCENTAGE CALCULATION" shall have the meaning as set forth
in Schedule I.
"RECALCULATED THRESHOLD CALCULATION" shall have the meaning as set forth in
Schedule I.
"REFRESHMENT CENTER" shall mean either a Standard Unit Refreshment Center
or a Safe Unit Refreshment Center, as applicable.
"REFRESHMENT CENTER LOAN AMOUNT" for each Lease Financing Loan shall have
the meaning specified on Schedule I hereto under the Threshold Plan, the
Percentage Plan or the Platinum Plan, as applicable.
"REINVESTMENT RATE" shall mean the bond equivalent yield to maturity
implied by either (i) the yield reported, as of 10:00 A.M. (New York City time)
on the Business Day next preceding the Prepayment Date, on the display
designated as "Page 678" on the Bridge Capital Telerate Service (or such other
display as may replace Page 678 on the Bridge Capital Telerate Service) for
actively traded United States Treasury obligations having a maturity equal to
the Remaining Average Life, or (ii) if such yields shall not be reported as of
such time or the yields reported as of such times shall not be ascertainable,
the Treasury Constant Maturity Series yields reported (for the latest day for
which such yields shall have been so reported as of the Business Day next
preceding the Prepayment Date) in Federal Reserve Statistical Release H. 15
(519) (or any comparable successor publication) for actively traded United
States Treasury obligations having a constant maturity equal to the Remaining
Average Life. Such implied yield shall be determined, if necessary, by (A)
converting United States Treasury ▇▇▇▇ quotations to bond-equivalent yields in
accordance with accepted financial practice, and (B) interpolating linearly
between reported yields.
"REMAINING AVERAGE LIFE" shall mean, with respect to each Lease Financing
Loan, the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) the outstanding Loan Amount on the Prepayment Date into (ii) the
sum of the products obtained by multiplying (A) the principal portion of each
remaining scheduled Monthly Payment Amount by (B) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Prepayment Date and the Final Payment Date.
"RESERVE CAP" shall mean with respect to all Lease Financing Loans in a
Loan Pool, an amount equal to *** of the sum of all Monthly Payment Amounts on
such Lease Financing Loans.
"RESIDUAL PROFITS" shall mean, for each Loan Pool, all revenues and other
amounts collected by the Custodian and not required to be disbursed or retained
pursuant to Section 2.8(c)(i) - (v).
"RESIDUAL PROFITS COLLECTION ACCOUNT" shall mean the account of such name
created pursuant to the Master Custodial Agreement.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
13
"RIGHT OF FIRST REFUSAL" shall have the meaning assigned to such term in
Section 9.2 hereof.
"RSi" shall have the meaning assigned to such term in the first paragraph
of this Agreement.
"RSi STOCK" shall mean all of the issued and outstanding capital stock of
RSi.
"SAFE UNIT EQUIPMENT" shall mean all network computer systems, equipment
(including refrigerators and safes) and all other personal property related to a
Safe Unit Refreshment Center.
"SAFE UNIT REFRESHMENT CENTER" shall mean a fully-automated refreshment
center (including but not limited to a Convenience Center) or RoomServ
refreshment center that includes an attached room safe (including but not
limited to RoomSafe).
"SCHEDULED MONTHLY CREDIT ENHANCEMENT OBLIGATION PAYMENT" shall mean, with
respect to a Lease Financing Loan, an amount equal to (i) the product of (A) the
Interest Rate on such Lease Financing Loan and (B) the Credit Enhancement Amount
for such Lease Financing Loan DIVIDED BY (ii) twelve (12).
"SEASONING PERIOD" shall mean the period beginning on the first day of the
month following the month in which all Equipment subject to the applicable
Business Lease is installed and fully operational, and ending ninety (90) days
thereafter; provided that in the case of any Lease Financing Loan that has a
remaining term of less than 82 months as provided in Section 2.2(c), the
Seasoning Period shall be the period beginning 90 days prior to the date of
funding of such Lease Financing Loan and ending on the date of such Lease
Financing Loan.
"SECURITIZATION" shall mean the disposition of pools of Business Leases or
Loan Pools of Lease Financing Loans through securitization or any other form of
transfer of such assets from the Borrower's or the Lender's balance sheet.
"7-YEAR TREASURY" shall mean the yield to maturity for the United States
Treasury bond equal to seven (7) years (as determined by the Lender) as set
forth in THE WALL STREET JOURNAL, as of the Business Day immediately preceding
the date of funding of the related Lease Financing Loan.
"SERVICER" shall mean RSi, as servicer under the Servicing Agreement or any
successor or assign thereof.
"SERVICING AGREEMENT" shall mean each Servicing Agreement executed in
connection with a Loan Pool by and among the Servicer, the Borrower, the Lender,
as Lender and Back-Up Servicer and the Custodian, pursuant to which RSi will
service the Equipment and the Business Leases related to the Lease Financing
Loans in such Loan Pool, a form of which is attached hereto as Exhibit K.
14
"SERVICING FEE" shall mean, for each Loan Pool and for each Disbursement
Date, the product of (i) *** (ii) the number of days since the last Disbursement
Date (or 30 days in the case of the first Disbursement Date) and (iii) the
number of units of installed Refreshment Centers included in the Business Leases
relating to the Lease Financing Loans in such Loan Pool.
"STANDARD LEASE" shall mean a lease entered into between a Customer and any
party other than an eRoom Party or an Affiliate of an eRoom Party, providing for
the lease of Equipment or a Refreshment Center that does not provide for a
sharing of revenues between any eRoom Party or Affiliate and such Customer.
"STANDARD UNIT EQUIPMENT" shall mean all network computer systems and
software (including network systems, room management systems and restocking
systems), equipment (including refrigerators) and other personal property
related to a Standard Unit Refreshment Center.
"STANDARD UNIT REFRESHMENT CENTER" shall mean a fully-automated refreshment
center (including but not limited to a Convenience Center or RoomServ
refreshment center) that does not include an attached room safe.
"START DATE" shall mean the date of the initial Lease Financing Loan made
hereunder.
"STOCK COLLATERAL" shall have the meaning given to such term in the Stock
Pledge Agreements.
"STOCK PLEDGE AGREEMENT" shall mean each Stock Pledge and Security
Agreement executed in connection with a Loan Pool by and among the Lender, RSi
and eRoom, a form of which is attached hereto as Exhibit L.
"SUNYICH" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"TERM" shall mean have the meaning set forth in Section 12.12(a) hereof.
"THRESHOLD AMOUNT" shall have the meaning as set forth in Schedule I.
"THRESHOLD CALCULATION" shall have the meaning as set forth in Schedule I.
"THRESHOLD PLAN" shall mean any of the Threshold Plans set forth on Exhibit
O.
"TRADITIONAL EQUIPMENT FINANCING" shall mean any financing requested or
obtained by a Customer to facilitate the Customer's purchase of Equipment, or
any Standard Lease requested or obtained by a Customer.
"TRANSACTION" shall mean the funding of a Lease Financing Loan or an
Advance Funded Lease Financing Loan.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
15
"TRANSACTION APPROVAL" shall mean a written approval of a Lease Financing
Loan, in substantially the form set forth in the attached Exhibit E, and
executed by the Lender.
"TRANSACTION SUBMISSION PACKAGE" shall have the meaning assigned to such
term in Exhibit A hereto entitled "Guidelines."
"UCC" shall mean the Uniform Commercial Code (or any comparable law) in
effect in any relevant jurisdiction, the laws of which govern the attachment or
perfection of security interests under this Agreement.
"UNDERPERFORMING PROPERTY" shall mean a hotel or timeshare property under
(i) a Threshold Plan that earned a share of the Average Gross Revenues (less the
portion of such revenues paid to eRoom) during the Seasoning Period of less than
*** of the total revenue generated by the Refreshment Centers in such hotel or
timeshare property during the Seasoning Period, or (ii) a Platinum Plan that
does not qualify for a Refreshment Center Loan Amount under Option 1 or Option 2
of Section C to Schedule I to this Agreement and where such hotel or time-share
property earned a share of the Average Gross Revenues (less the portion of such
revenues paid to eRoom and the guaranteed payment to eRoom) during the Seasoning
Period of less than *** of the total revenue generated by the Refreshment
Centers in such hotel or timeshare property during the Seasoning Period.
Section 1.2 ACCOUNTING TERMS. Except as otherwise defined or provided
herein, any accounting terms used in this Agreement which are not specifically
defined herein shall have the meanings customarily given thereto, and all
financial computations shall be made, in accordance with generally accepted
accounting principles, consistently applied.
ARTICLE 2
BUSINESS LEASES, LEASE FINANCING LOANS; SERVICING
Section 2.1 THE BUSINESS LEASES.
(a) Subject to the requirements of Section 2.1(c) below, eRoom will
be solely responsible for the negotiation, origination, servicing and management
of each Business Lease.
(b) Pursuant to the Purchase Agreement, eRoom will sell, assign,
transfer, set over and otherwise convey without recourse to the Borrower, each
Business Lease related to a Lease Financing Loan, other than the right to
service the Business Lease, which shall be transferred by eRoom to RSi pursuant
to the Servicing Agreement.
(c) Prior to or contemporaneously with the closing date of the
transfer of a Business Lease from eRoom to the Borrower as required by Section
2.1(b), eRoom shall sell, assign, transfer, set over and otherwise convey the
related Equipment to the Borrower pursuant to the Purchase Agreement and eRoom
shall, pursuant to the License
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
16
Agreement, have granted to the Borrower and RSi a License to use all the related
Equipment Intellectual Property.
(d) The Borrower and the Lender agree that in connection with any
Business Lease financing: (i) for each proposed Lease Financing Loan, the
related Business Lease and the Lessee thereof shall be underwritten by the
Lender as part of the Transaction Approval process; (ii) the form of Business
Lease must be substantially similar to one of the form(s) of Business Lease set
out in Exhibit G and must contain a term of 84 months and pricing terms that
incorporate one of the options set out on Exhibit O; and, (iii) any proposed
change to a form of Business Lease set out in Exhibit G must be acceptable to
the Lender in its reasonable discretion as evidenced by a written
acknowledgement of such changed form by the Lender.
(e) In the event the Borrower wishes to obtain Business Lease
Financing for a Business Lease that is in a form that is not substantially
similar to those set out in Exhibit G or that contains pricing terms that are
not one of the options set out in Exhibit G, the Borrower shall submit a form of
such proposed Business Lease (the "Proposed Lease Form") to the Lender at least
30 days prior to the date the Borrower wishes to obtain such Lease Financing
Loan. Upon receipt of the Proposed Lease Form, the Lender shall, within 14 days
of receipt, indicate whether it will make a Lease Financing Loan with respect to
the Proposed Lease Form.
Section 2.2 THE LEASE FINANCING LOANS.
(a) The Lender hereby agrees, subject to the terms and conditions of
this Agreement, to make Lease Financing Loans to the Borrower during the Term of
this Agreement. Unless the Borrower and the Lender shall agree, in writing, to
extend the Term, the Lender shall have no obligation to make any Lease Financing
Loans after the Commitment Termination Date.
(b) The amount of each Lease Financing Loan shall be equal to the
Refreshment Center Loan Amount for all Refreshment Centers included in the
related Business Leases and installed at the related hotel or time-share
property or properties that secure such Lease Financing Loan (such amount, the
"LOAN AMOUNT").
(c) The term of each Lease Financing Loan (other than an Advance
Funded Lease Financing Loan) shall be eighty-two (82) months from the date of
such Lease Financing Loan. The term of each Advance Funded Lease Financing Loan
shall be eighty-four (84) months from the date of such Advance Funded Lease
Financing Loan, which shall be funded on the first Business Day in the Seasoning
Period. If the remaining term of the Business Lease related to a Lease Financing
Loan is less than eighty-two (82) months, upon the Lender's consent (determined
by the Lender in its sole and absolute discretion), the term of such loan may be
adjusted to correspond to the remaining term of the related Business Lease (but
not less than the remaining term of the related Business Lease); PROVIDED,
HOWEVER, that the Loan Amount of such Lease Financing Loan shall be reduced
consistent with the methodology provided in the table below to adjust for the
reduced term of the related Business Lease.
17
REMAINING TERM OF TERM OF LEASE NEW BORROWER REVENUE
BUSINESS LEASE FINANCING LOAN ADVANCE RATE*
-------------- -------------- -------------
*** *** ***
* This amount shall be inserted in clause (i)(A) of the definition of
"REFRESHMENT CENTER LOAN AMOUNT" for the Threshold Plan and clause (i)(A)
of the definition of "REFRESHMENT CENTER LOAN AMOUNT" for the Percentage
Plan.
(d) Notwithstanding the foregoing, if the Lessee of the Business
Lease related to a proposed Lease Financing Loan is an Underperforming Property,
the Lender shall have the right, but not the obligation to fund such proposed
Lease Financing Loan.
Section 2.3 CONDITIONS TO BORROWING; TRANSACTION APPROVAL OR DENIAL.
(a) Prior to requesting a Lease Financing Loan hereunder, the
Borrower must submit to the Lender an initial Borrowing Notice on which the
Borrower shall certify that each of the requirements other than those indicated
with asterisks thereon set out thereto has been satisfied (or otherwise waived
by the Lender in writing).
(b) The Lender shall, within 7 Business Days after its receipt of the
initial Borrowing Notice for a requested Lease Financing Loan, determine whether
the proposed transaction satisfies the preliminary requirements for a Lease
Financing Loan.
(c) In the event that the Lender indicates that the proposed
transaction satisfies the preliminary requirements for a Lease Financing Loan,
the Lender shall so inform the Borrower in writing, within 7 Business Days after
its receipt of the initial Borrowing Notice for the requested Lease Financing
Loan.
(d) At the end of the related Seasoning Period for a Business Lease
(or, as provided below, sooner in the case of Lease Financing Loans for which
the Lender has an Advance Funding Transaction Approval Obligation), the Borrower
will present to the Lender for its review a full Transaction Submission Package
(excluding those items previously submitted as part of the Borrowing Notice)
relating to such Business Lease.
(e) Within 7 Business Days after its receipt of the Transaction
Submission Package, the Lender shall determine, in its reasonable discretion,
whether the proposed transaction satisfies the requirements for a Lease
Financing Loan.
(f) In the event that the Lender approves the issuance of a Lease
Financing Loan for a proposed transaction, the Lender shall execute and deliver
to the
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
18
Borrower a Transaction Approval. In the event that the Lender does not approve
the issuance of a Lease Financing Loan for a proposed transaction, the Lender
shall execute and deliver to the Borrower a transaction denial.
(g) On the Business Day prior to the closing of each Lease Financing
Loan, the eRoom Parties shall provide the Lender with an Acknowledgement that
the related Transaction Submission Package and representations and warranties
set forth in Section 4.1 hereto are, and will as of the date of such closing, be
true and correct in all material respects and that the Borrower has satisfied
the Guidelines and all terms and conditions of this Agreement. The eRoom Parties
agree that upon the Securitization of any Business Leases or Lease Financing
Loans, they will each execute a similar Acknowledgement in connection with the
Securitization.
(h) Notwithstanding the foregoing, the obligation of the Lender to
make a Lease Financing Loan is subject to the satisfaction (or waiver) of the
conditions set out in Section 5.3 hereof.
Section 2.4 ADVANCE FUNDED LEASE FINANCING LOANS. Upon the satisfaction of
the requirements set out in Section 2.5(a) and (b), the Borrower can request
advance funding of certain Lease Financing Loans no less than ten (10) Business
Days prior to the first day of the Seasoning Period for the related Business
Lease and the Lender hereby agrees, on the terms and subject to the conditions
of this Agreement to make Advance Funded Lease Financing Loans. The "LOAN
AMOUNT" for each Advance Funded Lease Financing Loan shall equal (a) *** for
each Standard Unit Refreshment Center and (b) *** for each Safe Unit Refreshment
Center.
Section 2.5 ADVANCE FUNDING TRANSACTION APPROVAL. Upon satisfaction of the
terms and conditions of this Agreement, the Borrower can request an Advance
Funded Lease Financing Loan from the Lender no less than ten (10) Business Days
prior to the first day of the Seasoning Period with respect to the related
Business Lease upon the satisfaction of the following additional conditions: (a)
the eRoom Parties must have at least *** installed Refreshment Centers which
have completed the related Seasoning Period and which have been funded by the
Lender through Lease Financing Loans; and (b) as of the date of the request for
such advance funding, the average revenues received by the Borrower (after
giving effect to the revenue sharing allocations under the related Business
Leases and excluding any revenues for each Advance Funded Lease Financing Loan
which has not completed its respective Seasoning Period) must be at least ***
per day for each *** of Overall Lease Financing Loans.
Section 2.6 BORROWINGS DURING TERM. On the Borrowing Date specified for
each Lease Financing Loan hereunder, the Lender shall make available the Loan
Amount at the office of the Lender or, if the Borrower shall make a written
request to the Lender, wire or cause to be wired such amount to such account or
accounts of the Borrower specified in such written request and which shall be
located within the State of Utah.
Section 2.7 USE OF PROCEEDS. The proceeds of each Lease Financing Loan
hereunder shall be used by the Borrower solely for lawful business or
commercial purposes.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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Section 2.8 PRE-SECURITIZATION PERIOD.
(a) During the Pre-Securitization Period, the Lender shall retain the
Lease Financing Loans in a Loan Pool in accordance with the terms hereof.
(b) The Custodian shall, on behalf of the Lender and the Borrower as
their interests may appear, hold the Pledged Assets for a Loan Pool (other than
the stock of RSi, which shall be held by the Lender). Pursuant to the related
Custodial Agreement, the Custodian shall collect directly from each Lessee the
Collected Funds and shall deposit such Collected Funds into the Custodial
Account created pursuant to such Custodial Agreement.
(c) On each Disbursement Date for each Loan Pool, the Custodian
(based on the report provided to the Custodian pursuant to the related Servicing
Agreement) shall disburse the Collected Funds held on deposit in the Custodial
Account established for such Loan Pool to the parties or accounts indicated in
the following priorities (to the extent of funds available therefor):
(i) ***
(ii) ***
(iii) ***
(iv) ***
(v) to the Residual Profits Collection Account, if necessary
to cover a shortfall in funds available to pay items (i) - (iv) of Section
2.8(c) with respect to any other Loan Pools; and
(vi) ***
(d) Notwithstanding the foregoing, to the extent that Collected Funds
for any Disbursement Date are insufficient to make a full disbursement of the
amounts required for a Loan Pool in clauses (i) - (iii) above, the Custodian
shall, to the extent of funds available therefor, withdraw amounts from (x)
first, the Loss Reserve Account for such Loan Pool and (y) second, the Residual
Profits Collection Account and disburse such amounts in accordance with the
priorities set out in such clauses (i) - (iii) of Section 2.8(c).
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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(e) Notwithstanding clause (d) above, to the extent that Collected
Funds for any Disbursement Date are insufficient to make a full payment to the
related Loss Reserve Account for a Loan Pool pursuant to clause (c)(iv) above,
the Custodian shall, to the extent of funds available therefor, withdraw amounts
from the Residual Profits Collection Account and distribute such amounts to such
Loss Reserve Account pursuant to such clause (c)(iv) above.
(f) On the Disbursement Date in May of each year, any amounts
remaining in the Property Tax Reserve Account with respect to each Loan Pool,
after the payment of all applicable taxes for the prior calendar year, will be
released and applied as payments in accordance with the priorities set out in
clauses (iii) - (vi) of Section 2.8(c) for the related Loan Pool.
(g) On each Disbursement Date, the Custodian will provide each of the
eRoom Parties and the Lender with an accounting of the disbursements and
allocations of Collected Funds with respect to each Loan Pool for such
Disbursement Date.
(h) In the event that on any Disbursement Date more than one Loan
Pool has a shortfall in Collected Funds and amounts on deposit in the related
Loss Reserve Account such that such Loan Pool requires amounts on deposit in the
Residual Profits Collection Account to satisfy the payments required by Section
2.8(c)(i) - (iv) above, amounts distributed from the Residual Profits Collection
Account shall be allocated PRO RATA among such Loan Pools based upon the then
outstanding Loan Amount of all Lease Financing Loans in such Loan Pools.
(i) On each Disbursement Date, after the making of all of the
disbursements from the Custodial Account set out in Section 2.8(c) above, the
Custodian shall disburse the amounts on deposit in the Loan Payment Account to
the parties or accounts indicated in the following priorities (to the extent of
funds available therefor):
(i) to the Lender, an amount equal to the sum of (A) the
Monthly Payment Amount for such Disbursement Date with respect to all Lease
Financing Loans in such Loan Pool, (B) the Carry Forward Amount for such
Disbursement Date with respect to all Lease Financing Loans in such Loan
Pool, and (C) if applicable, the Accelerated Loan Amount for such
Disbursement Date with respect to all Lease Financing Loans in such Loan Pool
(ii) to the Custodial Account for such Loan Pool, an amount
equal to the amount of interest accrued since the prior Disbursement Date on
funds on deposit in the Loan Payment Account on the day prior to such
Disbursement Date; and
(iii) any amount remaining in the Loan Payment Account after
making the disbursements set out in subclauses (i) and (ii) of this clause
(i) shall be retained in the Loan Payment Account.
(j) On the final Disbursement Date with respect to a Loan Pool, all
amounts on deposit in the Loss Reserve Account and Loan Payment Account shall,
to the
21
extent not required to be distributed pursuant to Section 2.8(c) or (i), be
distributed to the Borrower.
Section 2.9 TIMELINE OF EVENTS. The following is a timeline showing the
sequence of events relating to a Lease Financing Loan.
*** Equipment installed at a hotel or time-share
property in connection with a Business Lease
between eRoom and a Lessee.
*** Seasoning Period.
*** RSi bills the Lessee under the Business Lease for
the period from ***.
*** Lessee's due date for lease payment for period
from *** (this payment belongs to eRoom). Also RSi
bills the Lessee for the month of ***.
*** Lessee's due date for lease payment for the ***
lease payment - this payment belongs to eRoom.
Also RSi bills the Lessee for the month of ***.
*** Lessee's due date for the *** lease payment (this
payment belongs to eRoom). RSi bills the Lessee
for the *** lease payment.
*** Funding Date. Lender makes Lease Financing Loan to
the Borrower (which has acquired the Business
Lease and related Equipment from eRoom pursuant to
the Purchase Agreement). Lender withholds Monthly
Payment Amount for *** from amounts loaned on such
Lease Financing Loan.
*** Initial Payment Date. Custodian receives the ***
lease payment directly from the Lessee (this
payment belongs to the Program and will be
distributed on the Disbursement Date pursuant to
Section 2.8). Also RSi bills the Lessee for the
*** lease payment.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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*** Initial Disbursement Date. Amounts received by the
Custodian on the Business Leases since the Funding
Date will be disbursed pursuant to Section 2.8.
*** Payment Date. Lessee's due date for the *** lease
payment and the billing date for the month of ***.
*** Disbursement Date. Amounts received by the
Custodian on the Business Leases since the prior
Distribution Date will be disbursed pursuant to
Section 2.8.
Section 2.10 INTEREST RATES ANDPAYMENT DATES. The Borrower shall
pay interest on the unpaid principal amount of each Lease Financing Loan from
the Borrowing Date of such Lease Financing Loan until the date such Lease
Financing Loan shall have been repaid in full (whether at scheduled maturity
or by acceleration or otherwise) at a rate per annum equal to the Interest
Rate for such Lease Financing Loan as specified in the related Note or this
Agreement.
Section 2.11 PREPAYMENTS.
(a) Each Lease Financing Loan is subject to prepayment in whole, but
not in part. In the event of prepayment, the Borrower shall pay the related
Prepayment Amount. The Prepayment Amount is due and payable regardless of
whether the prepayment by the Borrower is made voluntarily or involuntarily,
including any prepayment required by the Lender's exercise of its rights upon
the occurrence of an Event of Acceleration. In the event that the Borrower
ELECTS to prepay any Lease Financing Loan, the Borrower shall deliver written
notice (the "PREPAYMENT NOTICE") of such prepayment election to the Lender not
less than thirty (30) days nor more than sixty (60) days from the proposed
prepayment date (such date or the date of the exercise of Lender's rights of
acceleration upon the occurrence of an Event of Acceleration, the "PREPAYMENT
DATE"). Within twenty (20) days of the Lender's receipt of such Prepayment
Notice, the Lender shall deliver a written notice to the Borrower setting forth
the estimated total amount of the Prepayment Amount payable on the proposed
Prepayment Date, which amount shall be subject to adjustment for changes in the
Reinvestment Rate.
(b) On the Prepayment Date, the Borrower shall pay the Lender the
related Prepayment Amount, with respect to the related Lease Financing Loan to
be prepaid.
Section 2.12 INTEREST COMPUTATIONS. All interest due on any Payment Date
shall be computed from and including the immediately preceding Payment Date to
but excluding such Payment Date.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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Section 2.13 EVIDENCE OF INDEBTEDNESS.
(a) Each Lease Financing Loan shall be evidenced by a single Lease
Financing Note dated as of the related Borrowing Date payable to the order of
the Lender in the principal amount specified in such Note and otherwise duly
completed. As provided in Section 2.15, each Lease Financing Note may at any
time and at the discretion of the Lender be consolidated with other Lease
Financing Notes into a Credit Enhancement Note.
(b) The Lender shall maintain records showing all Lease Financing
Loans made by the Lender hereunder, all payments made on account of the Lease
Financing Loans, the computation and payment of interest, and other amounts due
and sums paid hereunder.
Section 2.14 EQUIPMENT SERVICING.
(a) In consideration for the Servicing Fee, RSi shall service all of
the Equipment and the Business Leases in accordance with the Servicing
Agreements.
(b) To secure RSi's obligations under the Servicing Agreements, the
eRoom Parties will pledge to the Lender (i) pursuant to Article 3 hereof, the
Equipment Intellectual Property and, (ii) pursuant to the Stock Pledge
Agreements, the stock of RSi.
(c) In the event that a Lessee fails to make a payment under a
Business Lease within 15 days of the due date thereof, RSi shall disrupt the
related Equipment through its electronic locking mechanism thereby rendering the
Equipment unusable. In the event that a Business Lease is in default for a
period of sixty (60) days or more, RSi shall promptly take all action (including
legal action) necessary to gain possession of the related Equipment and shall
use its best efforts to enter into a new Business Lease or sell the Equipment.
(d) In the event that any of the eRoom Parties receive proceeds from
any sale of Equipment pursuant to clause (c) above, the lesser of (i) the then
outstanding Loan Amount of the related Lease Financing Loan or (ii) the proceeds
actually received shall immediately be delivered to the Custodian for deposit in
the Loss Reserve Account related to such Loan Pool, but such proceeds shall not
be counted toward the Reserve Cap.
(e) Any new Business Lease with respect to the Equipment pursuant to
clause (c) above, shall be pledged as security for the applicable Lease
Financing Loan and all revenues received by the Custodian with respect to such
new Business Lease shall be disbursed by the Custodian pursuant to the
priorities set out in Section 2.8(c) for the related Loan Pool.
24
Section 2.15 CONSOLIDATION OF LEASE FINANCING NOTES INTO CREDIT ENHANCEMENT
NOTES.
(a) The Lender, in its sole discretion, may at any time, and from
time to time, consistent with the terms of this Agreement, amend, restate and
consolidate all of the Lease Financing Notes relating to the Lease Financing
Loans in a Loan Pool into a Credit Enhancement Note.
(b) Each Credit Enhancement Note shall be substantially in the form
attached hereto as Exhibit C and shall include the Borrower's obligation to pay
the Aggregate Credit Enhancement Amount. The eRoom Parties shall cooperate with
the Lender in the process of consolidating such Notes and shall execute any and
all documents required by the Lender in connection therewith; including but not
limited to, a Credit Enhancement Note.
(c) The interest rate on the Credit Enhancement Note shall be equal
to the weighted average of the Interest Rates (after making the adjustment in
such Interest Rates specified in clause (d) below) on all Lease Financing Loans
consolidated in such Credit Enhancement Note.
(d) Notwithstanding anything to the contrary herein, upon the
consolidation of Lease Financing Loans in a Loan Pool into a Credit Enhancement
Note, the Interest Rate otherwise determined pursuant to the definition of
"INTEREST RATE" shall be lowered on each such Lease Financing Loan by an amount
equal to *** per annum.
(e) Upon execution and delivery of a Credit Enhancement Note, the
Lease Financing Notes amended, restated and consolidated in such Credit
Enhancement Note shall automatically be cancelled.
(f) Following the amendment, restatement and consolidation of the
Lease Financing Notes relating to the Lease Financing Loans in a Loan Pool into
a Credit Enhancement Note, the related Pledge and Security Agreement, Stock
Pledge Agreement (as amended from time to time), and UCC-1 Financing Statements
shall continue to secure the prompt and complete payment and performance of such
Credit Enhancement Note and all obligations contained therein.
ARTICLE 3
SECURITY INTEREST
Section 3.1 GRANT OF SECURITY INTEREST. To secure the due payment and
performance of any and all obligations of the eRoom Parties hereunder and under
any and all Notes executed in connection with or related to this Agreement (1)
eRoom hereby pledges and grants to the Lender, a continuing security interest
in, and Lien on, all of eRoom's right, title and interest in and to the
Equipment Intellectual Property, (2) eRoom shall execute a Stock Pledge
Agreement for each Loan Pool that provides for a grant by eRoom to the Lender of
a continuing Lien upon, and first priority security interest in, all
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
25
of eRoom's right, title and interest in, to and under the Stock Collateral and
(3) the Borrower shall execute a Pledge and Security Agreement for each Loan
Pool which will provide for a grant by the Borrower to the Lender of a
continuing Lien upon, and a first priority security interest in, all of the
Borrower's right, title and interest in, to and under all of the Pledged Assets
related to such Loan Pool including (without limitation) the following:
(a) any and all Business Leases included in all Transaction
Submission Packages submitted to the Lender pursuant to this Agreement and
related to such Loan Pool and all of the Borrower's right, title and interest
in, to and under any contracts, including any security agreements, or other
documents executed by, or in favor of, the Borrower in connection therewith;
(b) any and all Refreshment Centers and Equipment related to any of
the foregoing Business Leases;
(c) the Collected Funds, the Custodial Accounts, the Loss Reserve
Accounts, the Loan Payment Accounts, the Property Tax Reserve Accounts and any
other bank or similar accounts in the name, or held for the benefit of, the
Borrower or the Lender and all amounts on deposit therein;
(d) the Licenses;
(e) all additions, accessions, replacements, substitutions and
improvements to any of the foregoing; and
(f) any and all proceeds of the foregoing, including all insurance
payments (whether or not the Lender is the loss payee thereof).
Section 3.2 CHIEF EXECUTIVE OFFICE; LOCATION OF PLEDGED ASSETS. The
Borrower represents and warrants to the Lender that (i) the address of the
Borrower's chief executive office is its address stated in Section 12.7, (ii)
all records (including books of account) pertaining to the Pledged Assets are
kept by the Borrower at such address or at the office of one of the eRoom
Parties set out in Section 12.7 and (iii) to the best of the Borrower's
knowledge, no Refreshment Center or Equipment is kept at any location that is
not expressly specified or permitted by any Business Lease applicable thereto.
The Borrower covenants to the Lender that the Borrower will notify the Lender of
any change in the foregoing representations not later than ten (10) Business
Days after such change shall have occurred. The Borrower covenants that the
Borrower shall maintain all records pertaining to the Pledged Assets at the
Borrower's chief executive office or at the office of one of the eRoom Parties
set out in Section 12.7 and that the Borrower will not store, use or locate any
of the Pledged Assets at any place other than its chief executive office or,
with respect to any Refreshment Centers and Equipment, at such locations as are
expressly specified or permitted under any Business Lease applicable thereto.
26
Section 3.3 PERFECTION OF SECURITY INTEREST.
(a) To perfect the Lender's security interest in the Pledged Assets
with respect to each Loan Pool, the Borrower shall execute one or more UCC
financing statements and other UCC financing statement amendments and/or
assignments and other notices appropriate under applicable law in form and
substance satisfactory to the Lender. To perfect the Lender's security interest
in the Equipment Intellectual Property, eRoom shall execute one or more UCC
financing statements and other UCC financing statement amendments and/or
assignments and other notices appropriate under applicable law in form and
substance satisfactory to the Lender. The related eRoom Party will pay all
filing or recording costs with respect to such UCC financing statements and all
costs of filing or recording this Agreement or any other instrument, agreement
or document executed or delivered in connection with the transactions
contemplated hereby (including the cost of all federal, state or local,
documentary, stamp or other taxes), in each case, in all public offices where
filing or recording is deemed by the Lender to be necessary or desirable. The
Borrower and eRoom each hereby authorizes the Lender to take all action at the
expense of such party (including, without limitation, the filing of any UCC
financing statements or amendments thereto without the signature of such party)
which the Lender may deem necessary or desirable to perfect or otherwise protect
the Liens and security interest created hereunder or under any of the Operative
Documents and to obtain the benefits of this Agreement or any of the Operative
Documents. Without limiting the generality of the foregoing, the eRoom Parties
shall, at their own expense, execute and deliver such instructions, documents
and certificates and take and cause to be taken all such actions as the Lender
may request (including, without limitation, the execution and filing of all
financing and continuation statements under the UCC) to evidence, maintain,
protect, perfect and continue the perfection of the Liens and security interest
granted to the Lender in any Pledged Assets, the Equipment Intellectual Property
and the rights and interests of the Lender hereunder.
(b) On or prior to the date of this Agreement, eRoom shall deliver
the RSi Stock to the Lender along with all necessary stock powers duly executed
in blank.
(c) The Lender shall have the right at any time at Borrower's
expense, to the extent provided in Section 11.2, to cause the perfection of the
security interest granted to the Lender in the Liquidated Damages Collateral by
whatever means the Lender shall deem to be necessary, and the Borrower shall
cooperate fully with the Lender in connection therewith.
Section 3.4 GENERAL COVENANTS.
The Borrower (and, with respect to the Equipment Intellectual Property,
eRoom) shall:
(a) furnish the Lender from time to time at the Lender's request
written statements and schedules further identifying and describing the Pledged
Assets and Equipment Intellectual Property in such detail as the Lender may
reasonably require;
27
(b) advise the Lender promptly, in sufficient detail, of the
occurrence of any event which would have a material adverse effect on the value
of the Pledged Assets or Equipment Intellectual Property or on the Lender's
security interest therein;
(c) promptly execute and deliver to the Lender such further security
agreements or other instruments, documents, certificates and assurances and take
such further actions as the Lender may from time to time in its sole discretion
deem reasonably necessary to perfect, protect or enforce its security interest
in the Pledged Assets or Equipment Intellectual Property or otherwise to
effectuate the intent of this Agreement; and
(d) use commercially reasonable efforts to enforce the provisions of
the Business Leases requiring the Lessees to maintain the Refreshment Centers
and Equipment leased thereunder.
Section 3.5 ASSIGNMENT OF INSURANCE PROCEEDS. The eRoom Parties shall, or
shall cause all Lessees to, maintain insurance in scope and amount required by
the related Business Lease. Each eRoom Party shall pay over to the Custodian as
Collected Funds all sums it receives from Lessees which may have become payable
under or in respect of any policy of insurance owned by such Lessees.
Section 3.6 LEGENDS. The Borrower will conspicuously ▇▇▇▇, or cause to be
conspicuously marked, with the following legend the cover page of each original
copy of all Business Leases (including all security agreements, and all
promissory notes and instruments, as defined in the UCC, evidencing any monetary
obligation owing to the Borrower in connection with such Business Leases):
ALL OF THE RIGHTS OF eROOM HEREUNDER HAVE BEEN ASSIGNED TO AMRESCO LEASING
CORPORATION.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE eROOM PARTIES.
Each of the eRoom Parties hereby represents and warrants to the Lender as
follows:
(a) ORGANIZATION. Each of the eRoom Parties is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with full power and authority to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted or is proposed to be conducted.
(b) QUALIFICATION; LICENSES. Each of the eRoom Parties is duly
qualified to do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals in all jurisdictions in which the
ownership or leasing of its properties or the conduct of its business requires
such qualifications, except where the failure to be so qualified or to have
obtained such licenses or approvals would not have a
28
material adverse effect on the transactions contemplated by this Agreement and
the other Operative Documents to which it is a party.
(c) NO VIOLATION OF LAW OR AGREEMENTS. The execution and delivery of
this Agreement by each of the eRoom Parties in the manner contemplated herein
and the performance and compliance with the terms hereof by it (i) shall not
violate: (A) its articles of incorporation or bylaws, or (B) any laws that could
have any material adverse effect whatsoever upon the validity, performance or
enforceability of any of the terms of this Agreement or the other Operative
Documents applicable to such eRoom Party, and (ii) will not constitute a
material default (or an event that, with notice or lapse of time or both, would
constitute a material default) under, or result in the breach of, any material
contract, agreement or other instrument to which such eRoom Party is a party or
that may be applicable to it or any of its assets.
(d) NO CONSENT. The execution and delivery of this Agreement and the
other Operative Documents to which it is a party by each of the eRoom Parties in
the manner contemplated herein and the performance and compliance with the terms
hereof by it do not require the consent or approval of any governmental
authority, or if such consent or approval is required, it has been obtained.
(e) LEGAL, VALID AND BINDING OBLIGATIONS. Assuming due authorization,
execution and delivery by each other party hereto or thereto, this Agreement and
the other Operative Documents to which it is a party and all of the obligations
of each eRoom Party hereunder are the legal, valid and binding obligations of
such eRoom Party and are enforceable in accordance with the terms of this
Agreement, except as such enforcement may be limited by applicable debtor relief
laws.
(f) POWER AND AUTHORITY. Each of the eRoom Parties has the full power
and authority to enter into and consummate all transactions contemplated by this
Agreement and the other Operative Documents to which it is a party, has duly
authorized the execution, delivery and performance of this Agreement and the
other Operative Documents to which it is a party, and has duly executed and
delivered this Agreement and such other documents, and has taken all requisite
corporate action to make this Agreement and such other documents valid, binding
and enforceable upon such eRoom Party in accordance with its terms.
(g) NO VIOLATION OF LAW. Each eRoom Party's execution and delivery of
this Agreement and the other Operative Documents to which it is a party and its
performance and compliance with the terms hereof and thereof will not constitute
a violation of, any law, any order or decree of any court, or any order,
regulation or demand of any federal, state or local governmental or regulatory
authority.
(h) NO ACTIONS. No action, suit or other proceeding or investigation
is pending or, to the best of any eRoom Party's knowledge, threatened before any
court or any federal, state or local governmental or regulatory authority (i)
asserting the invalidity of this Agreement or the other Operative Documents to
which it is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or
29
the other Operative Documents to which it is a party, or (iii) seeking any
determination or ruling that would materially and adversely affect the ability
of a eRoom Party to perform its obligations under this Agreement or the other
Operative Documents to which it is a party.
(i) NO FILINGS REQUIRED. No consent, approval, authorization or order
of, registration or filing with or notice to, any court or any federal, state or
local governmental or regulatory authority is required for the execution,
delivery and performance by the eRoom Parties of this Agreement (other than
those that have been obtained or will be obtained prior to the effective date of
this Agreement).
(j) INTELLECTUAL PROPERTY; NO INFRINGEMENT. No eRoom Party is
infringing upon, or otherwise violating the rights of any third party with
respect to any Intellectual Property. The use of General Intangibles by the
eRoom Parties in connection with their respective businesses and operations or
the transactions contemplated under this Agreement and the other Operative
Documents does not, and will not, violate or otherwise infringe the rights of
any third party. The eRoom Parties own and possess all Intellectual Property and
General Intangibles necessary for the conduct of their businesses and
operations, including, without limitation, the development, manufacture, sale,
leasing, maintenance, installation, servicing and operation of the Equipment and
no eRoom Party is aware of any claim to the contrary or challenge by any person
to the rights of a eRoom Party with respect to such Intellectual Property and
General Intangibles.
(k) AVERAGE REVENUE. As of the date of this Agreement, the average
revenue per day of all installed Refreshment Centers (excluding revenue
generated from room safes) in businesses is at least ***/unit.
(l) PROPERTIES, PRIORITY OF LIENS. As of the Funding Date of each
Lease Financing Loan, the Borrower will have good and marketable title to the
related Pledged Assets, free and clear of any Lien of any nature whatsoever,
except for Permitted Liens and the rights of the Lessees under the related
Business Leases. The Liens which will be created and granted to the Lender by
this Agreement and any other Operative Document shall constitute valid first
priority Liens on the Pledged Assets, subject to no Lien other than Permitted
Liens.
(m) FINANCIAL STATEMENTS. Each of the Financial Statements is correct
and complete in all material respects and presents fairly the financial position
of the eRoom Parties as of its date, and has been prepared in accordance with
generally accepted accounting principles consistently applied. The eRoom Parties
do not have any material obligation, liability or commitment, direct or
contingent, which is not reflected in the Financial Statements. There has been
no material adverse change in the financial position or operations of the eRoom
Parties since the date of the latest balance sheet included in the Financial
Statements (the "LATEST BALANCE SHEET").
(n) TAX RETURNS. Each eRoom Party has filed all federal and state
income tax returns required to be filed by it and has not failed to pay any
taxes, or interest
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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and penalties relating thereto, on or before the due dates thereof except with
respect to which such eRoom Party has duly filed extensions. Except to the
extent that reserves therefor are reflected in the Financial Statements, (i)
there are no material federal, state or local tax liabilities of a eRoom Party
due or to become due for any tax year ended on or prior to the date of the
Latest Balance Sheet, whether incurred in respect of or measured by the income
of such entity, which are not properly reflected in the Latest Balance Sheet,
and (ii) there are no material claims pending or, to the knowledge of any eRoom
Party proposed or threatened against a eRoom Party for past federal, state or
local taxes, except those, if any, as to which proper reserves are reflected in
the Financial Statements.
(o) FULL DISCLOSURE. Neither the Financial Statements nor any
certificate, opinion, or any other statement made or furnished in writing to the
Lender by or on behalf of the eRoom Parties in connection with this Agreement or
the transactions contemplated herein, as of the effective dates thereof or at
the time such documents were delivered to the Lender contained, or at the date
hereof contains, any untrue statement of a material fact, or as of the effective
date thereof or at the time such documents were delivered to the Lender omitted,
or at the date hereof omits, to state a material fact required to be stated
therein or necessary to make the statements contained therein or herein not
misleading.
(p) ERISA. No eRoom Party has a pension or other employee benefit
plans which is subject to the provisions of Title IV of ERISA (any such plans
which have been or may hereafter be adopted or assumed by a eRoom Party are
hereinafter referred to individually as a "PLAN" and, collectively, as the
"PLANS"), the application of which could give rise to direct or contingent
liabilities of such eRoom Party to the Pension Benefit Guaranty Corporation
("PBGC"), the Department of Labor or the Internal Revenue Service. No eRoom
Party is a participating employer in any Plan under which more than one employer
makes contributions as described in Sections 4063 and 4064 of ERISA. No eRoom
Party is a participating employer in a multi-employer plan as defined in Section
4001(a) of ERISA, which participation could give rise to withdrawal liability on
the part of the eRoom Party under Subtitle E of Title IV of ERISA.
(q) INVESTMENT COMPANY. The Borrower is not an "investment company"
or a company "controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section 4.2 REPRESENTATIONS AND WARRANTIES OF THE LENDER. The Lender hereby
represents and warrants to the eRoom Parties as follows:
(a) ORGANIZATION. The Lender is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation with full power and authority to own its properties and conduct
its business as such properties are presently owned and such business is
presently conducted.
(b) QUALIFICATIONS. The Lender is duly qualified to do business as a
foreign corporation in good standing in all jurisdictions in which the ownership
or leasing of its properties or the conduct of its business requires such
qualifications, except where
31
the failure to be so qualified would not have a material adverse effect on the
transactions contemplated by this Agreement and the other Operative Documents.
(c) NO VIOLATION OF LAW OR AGREEMENTS. The execution and delivery of
this Agreement by the Lender in the manner contemplated herein and the
performance and compliance with the terms hereof by it (i) shall not violate:
(A) its articles of incorporation or bylaws, or (B) any laws that could have any
material adverse effect whatsoever upon the validity, performance or
enforceability of any of the terms of this Agreement and the other Operative
Documents applicable to the Lender, and (ii) will not constitute a material
default (or an event that, with notice or lapse of time or both, would
constitute a material default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Lender is a party or that
may be applicable to it or any of its assets.
(d) NO CONSENT. The execution and delivery of this Agreement and the
other Operative Documents by the Lender in the manner contemplated herein and
the performance and compliance with the terms hereof by it do not require the
consent or approval of any governmental authority, or if such consent or
approval is required, it has been obtained.
(e) LEGAL, VALID AND BINDING OBLIGATIONS. Assuming due authorization,
execution and delivery by each other party hereto, this Agreement and the other
Operative Documents and all of the obligations of the Lender hereunder are the
legal, valid and binding obligations of the Lender, enforceable in accordance
with the terms of this Agreement, except as such enforcement may be limited by
applicable debtor relief laws.
(f) POWER AND AUTHORITY. The Lender has the full power and authority
to enter into and consummate all transactions contemplated by this Agreement and
the other Operative Documents, has duly authorized the execution, delivery and
performance of this Agreement and the other Operative Documents, and has duly
executed and delivered this Agreement and the other Operative Documents, and has
taken all requisite corporate action to make this Agreement and the other
Operative Documents valid, binding and enforceable upon the Lender in accordance
with its terms.
(g) NO VIOLATION OF LAW. The Lender's execution and delivery of this
Agreement and the other Operative Documents and all other related documents, its
performance and compliance with the terms hereof and thereof will not constitute
a violation of, any law, any order or decree of any court, or any order,
regulation or demand of any federal, state or local governmental or regulatory
authority.
(h) NO ACTIONS. No action, suit or other proceeding or investigation
is pending or, to the best of the Lender's knowledge, threatened before any
court or any federal, state or local governmental or regulatory authority (i)
asserting the invalidity of this Agreement and the other Operative Documents to
which it is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement and the other Operative Documents or
(iii) seeking any determination or ruling that would
32
materially and adversely affect the ability of the Lender to perform its
obligations under the Agreement or the other Operative Documents to which it is
a party.
(i) NO FILINGS REQUIRED. No consent, approval, authorization or order
of, registration or filing with or notice to, any court or any federal, state or
local governmental or regulatory authority is required for the execution,
delivery and performance by the Lender of this Agreement (other than those that
have been obtained or will be obtained prior to the effective date of this
Agreement and other than any such actions, approvals, etc., under any state
securities laws or "Blue Sky" statutes, as to which the Lender makes no such
representation or warranty).
ARTICLE 5
CONDITIONS PRECEDENT TO EFFECTIVENESS, EACH LOAN POOL
AND THE LEASE FINANCING LOANS
Section 5.1 EFFECTIVENESS. This Agreement shall become effective upon the
satisfaction (or waiver by the Lender in its sole discretion) of the following
conditions precedent:
(a) The Borrower shall have:
(i) duly executed and delivered to the Lender this Agreement;
(ii) delivered to the Lender the fully executed Stock Pledge
Agreement and the Pledge and Security Agreement relating to the Initial Loan
Pool;
(iii) delivered to the Lender the fully executed License
Agreement, and Purchase Agreement;
(iv) duly executed and delivered to the Lender appropriate UCC
financing statements to enable the Lender to perfect and preserve the priority
of its security interest in the Liquidated Damages Collateral and the Pledged
Assets relating to the Initial Loan Pool;
(v) otherwise fully complied with all of the terms and
conditions of the Operative Documents;
(vi) delivered to the Lender:
(A) a copy of the articles of incorporation of the
Borrower, certified by the Secretary of State of Nevada;
(B) a copy of the bylaws of the Borrower, certified by the
Secretary of the Borrower;
(C) a copy of all corporate action taken by the Borrower to
authorize the Borrower's execution and delivery of each of the Operative
Documents
33
and the consummation of the transactions contemplated thereby, certified by the
Secretary of the Borrower;
(D) a good standing certificate relating to the Borrower
dated as of a date not more than ten (10) days prior to the date of this
Agreement from the Secretary of State of Nevada;
(E) an incumbency certificate with respect to the officers
of the Borrower, certified by the Secretary of the Borrower;
(F) the legal opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in-house
counsel to the Borrower, in the form set out as Exhibit N hereto and
satisfactory to the Lender; and
(G) copies of the Financial Statements, all of which shall
be certified as true and correct by an officer of the Borrower.
(b) RSi shall have delivered to the Lender:
(i) a copy of the articles of incorporation of RSi, certified by
the Secretary of State of Nevada;
(ii) a copy of the bylaws of RSi, certified by the Secretary of
RSi;
(iii) a copy of all corporate action taken by RSi to authorize
RSi's execution and delivery of each of the Operative Documents to which it is a
party and the consummation of the transactions contemplated thereby, certified
by the Secretary of RSi;
(iv) a good standing certificate relating to RSi dated as of a
date not more than ten (10) days prior to the date of the making of the initial
Lease Financing Loan from the Secretary of State of Nevada;
(v) an incumbency certificate with respect to the officers of
RSi, certified by the Secretary of RSi; and
(vi) the legal opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in-house counsel to
RSi, in the form set out as Exhibit N hereto and satisfactory to the Lender.
(c) eRoom shall have delivered to the Lender:
(i) a copy of the articles of incorporation of eRoom, certified
by the Secretary of State of Nevada;
(ii) a copy of the bylaws of eRoom, certified by the Secretary of
eRoom;
34
(iii) a copy of all corporate action taken by eRoom to authorize
eRoom's execution and delivery of each of the Operative Documents to which it is
a party and the consummation of the transactions contemplated thereby, certified
by the Secretary of eRoom;
(iv) a good standing certificate relating to eRoom dated as of a
date not more than ten (10) days prior to the date of the making of the initial
Lease Financing Loan from the Secretary of State of Nevada;
(v) an incumbency certificate with respect to the officers of
eRoom, certified by the Secretary of eRoom;
(vi) the legal opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in-house counsel to
eRoom, in the form set out as Exhibit N hereto and satisfactory to the Lender;
and
(vii) the RSi Stock with executed stock powers in blank.
(d) (i) The Borrower shall have complied and shall then be in
compliance with all the terms, covenants and conditions of this Agreement;
(ii) There shall exist no Default or Event of Default or Event of
Acceleration hereunder;
(iii) The representations and warranties contained in Section 4
hereof shall be true and correct in all material respects; and
(iv) The Lender shall have received such other documents,
certificates and information as it may reasonably request.
Section 5.2 THE INITIAL LEASE FINANCING LOAN. The obligation of the Lender
to make the initial Lease Financing Loan hereunder, shall be subject to the
following conditions precedent:
(a) The Lender shall have received evidence satisfactory to it that
the eRoom Parties have fully complied with all of the terms and conditions of
this Agreement (including the terms and conditions of Section 9.6 hereof) and
the other Operative Documents;
(b) The Lender shall have received duly executed appropriate UCC
financing statements for filing in each jurisdiction in which Pledged Assets
would be deemed located or otherwise necessary or advisable to enable the Lender
to create and/or perfect and preserve a first priority security interest in all
of the Pledged Assets;
(c) The Lender shall have received a fully executed copy of the
Custodial Agreement relating to the Initial Loan Pool and the Custodian shall
have established the Custodial Account, the Loss Reserve Account, the Loan
Payment Account and the Property Tax Reserve Account with respect to the Initial
Loan Pool in its name for the benefit of the Borrower and the Lender, as their
interest may appear; and
35
(d) The Lender shall have received a fully executed copy of the
Servicing Agreement relating to the Initial Loan Pool; and
Section 5.3 THE LEASE FINANCING LOANS. The obligation of the Lender to make
any Lease Financing Loan hereunder, including the initial Lease Financing Loan,
shall be subject to the following conditions:
(a) The Lender shall have received a Borrowing Notice relating to
such Lease Financing Loan
(b) (i) The Borrower shall have complied and shall then be in
compliance with all the terms, covenants and conditions of this Agreement and
the Operative Documents;
(ii) There shall exist no Default or Event of Default or Event of
Acceleration hereunder;
(iii) The representations and warranties contained in Section 4.1
hereof shall be true and with the same effect as though such representations and
warranties had been made at the time of the making of such Lease Financing Loan;
(iv) The Lender shall have received a certificate with respect to
the compliance by the Borrower with the conditions specified in clauses (b)(i),
(ii) and (iii) above (a "Compliance Certificate") dated the date of the making
of such Lease Financing Loan, executed on behalf of the Borrower by one of its
officers;
(v) The Lender shall have received such other documents,
certificates and information as it may request;
(vi) The Lender shall have received copies of the most recent
Financial Statements then required to be delivered hereunder;
(v) The Guidelines and all terms and conditions of this
Agreement shall have been satisfied to the satisfaction of the Lender; and
(c) All legal matters incident to such Lease Financing Loan shall be
reasonably satisfactory to counsel for the Lender.
Section 5.4 SUBSEQUENT LOAN POOLS. The obligation of the Lender to create
any Loan Pool other than the Initial Loan Pool and to perform any other
obligation hereunder, shall be subject to the following conditions precedent:
(a) The Borrower shall have delivered to the Lender the fully
executed Stock Pledge Agreement, Pledge and Security Agreement, Servicing
Agreement and Custodial Agreement relating to such Loan Pool;
(b) The Borrower shall have duly executed and delivered to the Lender
the appropriate UCC financing statements to enable the Lender to perfect and
preserve the priority of its security interests in the Pledged Assets relating
to such Loan Pool; and
36
(c) The Borrower shall have complied and shall then be in compliance
with all the terms, covenants and conditions of this Agreement and the Operative
Documents.
ARTICLE 6
DELIVERY OF FINANCIAL REPORTS,
DOCUMENTS AND OTHER INFORMATION
So long as the Borrower is indebted to the Lender and until payment in full of
each of the Notes and full and complete performance of all of its other
obligations arising hereunder, the eRoom Parties shall deliver to the Lender:
Section 6.1 ANNUAL FINANCIAL STATEMENTS. Annually, as soon as available,
but in any event within ninety (90) days after the last day of each of its
fiscal years, a balance sheet of the eRoom Parties as at such last day of the
fiscal year, and statements of income and retained earnings and changes in
financial position, for such fiscal year, each prepared in accordance with
generally accepted accounting principles consistently applied, in reasonable
detail, such financial statements of the eRoom Parties to be certified without
qualification by a firm of independent certified public accountants which, if
none of the eRoom Parties is then a public company traded on a nationally
recognized stock exchange, must be reasonably satisfactory to the Lender, as
fairly presenting the financial position and the results of operations of the
eRoom Parties as at and for the year ending on its date and as having been
prepared in accordance with generally accepted accounting principles.
Section 6.2 QUARTERLY FINANCIAL STATEMENTS. As soon as available, but in
any event within sixty (60) days after the end of each calendar quarter (other
than the fourth calendar quarter of each fiscal year) of the eRoom Parties a
balance sheet as of the last day of each such quarter and statements of income
and retained earnings for such quarter, all in reasonable detail, each such
statement to be certified, on behalf of the eRoom Parties by an officer of
eRoom, as fairly presenting the financial position and the results of operations
of the eRoom Parties at its date and for such quarter and as having been
prepared in accordance with generally accepted accounting principles
consistently applied (subject to year-end audit adjustments).
(a) Simultaneously with the delivery of each set of quarterly and
annual financial statements returned to Section 6.1 and Section 6.2 (a), a
certificate of the treasurer or chief financial officer of eRoom (i) certifying
that none of the eRoom Parties has violated the provisions of Section 9.4
(i)-(iii) and (ii) that no Event of Default or Event of Acceleration then exists
or if such event does exist setting forth the details thereof and the action the
eRoom Parties are taking or are proposing to take with respect thereto.
37
(b) The Lender agrees to execute a Confidentiality Agreement
substantially in the form of Exhibit T hereto with respect to the information
provided by the eRoom Parties in Section 6.1 and 6.2.
Section 6.3 OTHER INFORMATION. Promptly after a written request thereof
such other financial data or information evidencing compliance with the
requirements of this Agreement as the Lender may reasonably request from time to
time.
Section 6.4 NO DEFAULT CERTIFICATE. At the same time as it delivers the
financial statements required under the provisions of Sections 6.1 and 6.2, a
certificate on behalf of each of the eRoom Parties by one of its officers to the
effect that, to the best of such officer's knowledge after due inquiry, there
has not occurred (i) any Default, Event of Default or Event of Acceleration
hereunder or (ii) any event which would constitute or cause a material adverse
change in the condition, financial or otherwise, of the operations of any of the
eRoom Parties or, if such cannot be so certified, specifying in reasonable
detail the exceptions, if any, to such statement.
Section 6.5 OTHER DOCUMENTS. Such other documents, reports, notices,
financial statements or other financial information as shall be reasonably
requested by the Lender.
Section 6.6 NOTICES OF DEFAULTS. Promptly, notice of the occurrence of any
Default, Event of Default or Event of Acceleration hereunder, or any event which
would constitute or cause a material adverse change in the condition, financial
or otherwise, of the operations of the Borrower.
ARTICLE 7
AFFIRMATIVE COVENANTS
So long as the Borrower is indebted to the Lender, and until payment in full of
each of the Notes and full and complete performance of all of its other
obligations arising hereunder the eRoom Parties shall:
Section 7.1 BOOKS AND RECORDS. Keep proper books of record and account in
accordance with generally accepted accounting principles, consistently applied
in which full, true and correct entries shall be made of all dealings or
transactions in relation to its business and activities. All executed originals
of the Business Leases shall be marked with a legend on the cover page
disclosing the security interest in favor of the Lender in a form and format
approved by the Lender.
Section 7.2 INSPECTIONS AND AUDITS. Permit the Lender to make or cause to
be made, inspections and audits of any books, records and papers of the eRoom
Parties (including the Business Leases and financial and other information
pertaining to the Equipment) and to make extracts therefrom and copies thereof
at all such reasonable times as the Lender may reasonably require; provided that
unless an Event of Default or Event of Acceleration has occurred and is
continuing, the Lender agrees to limit such inspections to no more than one per
calendar quarter. Such originals shall be retained by the eRoom Parties and not
delivered to any third party. All costs associated with such inspections and
audits shall be at the expense of the Lender unless such inspection or
38
audit reveals a material misstatement, in which case the cost and expense of
such inspections or audit shall be borne by the eRoom Parties.
Section 7.3 PERFORM OBLIGATIONS. Pay and discharge all of its obligations
and liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties, when due, unless and to the
extent only that such obligations, liabilities, taxes, assessment and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by generally accepted accounting
principles then in effect, proper and adequate book reserves relating thereto
are established by the eRoom Parties.
Section 7.4 NOTICE OF LITIGATION. Immediately notify the Lender in writing
of any litigation, legal proceeding or dispute involving amounts in excess of
One Hundred Thousand Dollars ($100,000) instituted against any of the eRoom
Parties and regardless of the subject matter thereof (excluding, however, any
actions relating to workmen's compensation claims or negligence claims relating
to use of motor vehicles, if fully covered by insurance, subject to
deductibles). The parties agree that such notice has been provided with respect
to the Willow Creek matter.
Section 7.5 INSURANCE. (i) Maintain at its own expense or cause Lessees to
maintain all-risk insurance on each item of Equipment and other assets material
to the conduct of the business of the eRoom Parties in an amount at least equal
to the book or fair market value thereof, whichever is greater, and liability
insurance with respect to each item of Equipment in amounts customarily
maintained by similar businesses, (ii) maintain at its own expense property
insurance, all-risk liability insurance, business interruption insurance and all
other insurance material to the conduct of the business of the eRoom Parties as
set forth in each Pledge and Security Agreement, and (iii) deliver to the
Lender, upon the Lender's request, evidence (which shall be in form and
substance satisfactory to the Lender) of the maintenance thereof. The eRoom
Parties shall maintain the insurance policies required hereunder in the name of
the Lender, its successors and assigns, as loss payee and as named insured.
Section 7.6 PRIORITY OF LIEN ON EQUIPMENT AND LEASES; FURTHER SECURITY.
Whenever any Borrowing Notice with respect to a Lease Financing Loan is
delivered, cause the Lender to have a valid first-priority, perfected Lien on
and security interest in the Pledged Assets including (i) all Refreshment
Centers and Equipment relating to the Business Lease to be financed with the
proceeds of such Lease Financing Loan, (ii) all Business Leases, and (iii) all
instruments and chattel paper evidencing any Business Leases. Each Business
Lease and the Refreshment Centers and Equipment related thereto shall be free
and clear of any Lien, charge or encumbrance other than Permitted Liens. The
eRoom Parties shall assist the Lender in evidencing and/or perfecting such
security interest by completing and assisting in filing or recording UCC
financing statements and such other instruments, certificates or agreements
requested by the Lender.
Section 7.7 MAINTENANCE OF SEPARATE EXISTENCE. Maintain (i) records and
books of account separate from those of any Affiliate and (ii) adequate
capitalization for the conduct of each of their respective business.
39
Section 7.8 TAXES. Pay all taxes, assessments and other governmental
impositions related to their properties, businesses and operations other than
property taxes on the Equipment.
Section 7.9 BUSINESS LEASE PRODUCTION REQUIREMENT. Originate Business
Leases which result in Cumulative Lease Financing Loans as set forth in the
following table:
PERIOD CUMULATIVE LEASE
FINANCING LOANS
*** ***
If Cumulative Lease Financing Loans are equal to or greater than ***, the
production requirement will be satisfied in full. If the Cumulative Lease
Financing Loans are less than ***, the production requirement shall not be
satisfied until such time as the Cumulative Lease Financing Loans equal or
exceed ***.
Section 7.10 DIRECTION TO LESSEES. Upon the funding of a Lease Financing
Loan or Advance Funded Lease Financing Loan, the Borrower shall instruct the
Lessee, in writing, to make all payments under the related Business Lease to the
related Custodial Account.
Section 7.11 SAFE UNIT REFRESHMENT CENTERS.
(a) Ensure that the daily minimum charge to hotel or time-share
guests for the room safe component of each Safe Unit Refreshment Center offered
pursuant to a Percentage Plan is equal to or greater than *** per day (the
"MINIMUM DAILY SAFE UNIT CHARGE").
(b) Contractually agree with the Customer in the related Business
Lease that the monthly payment from the Customer to the Borrower for each Safe
Unit Refreshment Center offered pursuant to a Percentage Plan shall be equal to
or greater than the sum of: (i) 25% of the monthly gross revenues generated from
each such Safe Unit Refreshment Center and (ii) the product of (A) ***, (B) ***,
(C) ***, and (D) ***. The Borrower shall promptly enforce against each Customer
the contractual agreement referenced in the preceding sentence of this Section
7.11(b).
Section 7.12 CASUALTY EVENTS. Upon the occurrence of a Casualty Event, the
Borrower shall either (i) pay the accelerated portion (on a pro rata basis) of
the Accelerated Loan Amount of any Lease Financing Loan relating to a Business
Lease for which all or a portion of the related Equipment has been lost, stolen,
damaged beyond repair or destroyed or (ii) within 90 days after such Casualty
Event, replace such portion of the related Equipment that has been lost, stolen,
damaged beyond repair or destroyed with similar Equipment that is in good
working condition.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
40
Section 7.13 SERVICING, BILLING AND MAINTENANCE MANUAL. Within 90 days of
the date of this Agreement, prepare a detailed Equipment servicing, billing and
maintenance manual in a form acceptable to the Lender.
Section 7.14 INSTALLATION AND MAINTENANCE OF EQUIPMENT. Install or cause
the Lessee to install the Equipment in accordance with the Customer Installation
Manual attached as an exhibit to the Servicing Agreement and maintain or cause
the Lessee to maintain the Equipment in accordance with the Customer Maintenance
Manual attached as an exhibit to the Servicing Agreement.
Section 7.15 MISAPPLIED PAYMENTS. Immediately upon receipt thereof, at any
time after the Funding Date with respect to any Lease Financing Loan, forward
any payments received by it with respect to the Business Lease related to such
Lease Financing Loan to the Custodian for deposit in the related Custodial
Account.
Section 7.16 LEGAL OPINION. Deliver to the Lender within 45 days of the
date of this Agreement, a legal opinion of outside counsel to the eRoom Parties
(which counsel must be acceptable to the Lender) in the form set out as Exhibit
N hereto and which must be acceptable to the Lender in its sole discretion.
ARTICLE 8
NEGATIVE COVENANTS
So long as the Borrower is indebted to the Lender and until payment in full of
each of the Notes and full and complete performance of all of its other
obligations arising hereunder:
Section 8.1 LIENS. None of the eRoom Parties shall create, or assume or
permit to exist any Lien on any of the Equipment or any other equipment
purchased and provided as collateral or the Business Leases or any of the
Pledged Assets except (i) Liens in favor of the Lender and (ii) Permitted Liens.
Section 8.2 CHANGES IN BUSINESS. None of the eRoom Parties shall make any
material change in its business, or in the nature of its operations, or
liquidate or dissolve itself (or suffer any liquidation or dissolution).
Section 8.3 CHANGE OF OFFICE ADDRESS. The Borrower shall not change the
address of its principal office or place of business or open any other office or
place of business in any jurisdiction unless the Borrower shall have provided to
the Lender written notice thereof within ten (10) days of such action.
Section 8.4 AMENDMENT OF THE CHARTER DOCUMENTS. The Borrower shall not
amend the articles of incorporation or by-laws of the Borrower, or agree to do
the same, if the effect of any such amendment is to materially adversely affect
the Borrower's ability to perform its obligations hereunder.
Section 8.5 SALE, TRANSFER OR TERMINATION OF PLEDGED ASSETS. The eRoom
Parties shall not sell or transfer any of the Pledged Assets without the prior
written consent of the Lender. The eRoom Parties shall not terminate any
Business Lease or relocate any Equipment without the prior written consent of
the Lender.
41
ARTICLE 9
ADDITIONAL COVENANTS OF THE PARTIES
Section 9.1 EXCLUSIVITY.
(a) During the Term of this Agreement, the eRoom Parties hereby
covenant and agree, with respect to each Business Lease to a hotel or time-share
property located in the United States that: (i) the eRoom Parties shall request
financing in the form of Lease Financing Loans from the Lender, (ii) the Lender
shall have the exclusive right to provide such financing and (iii) in connection
with such financing, the eRoom Parties shall use their best efforts to provide
Lender with the information required in items k, l, m and n of Section 1 of the
Business Specific Underwriting Requirements of the Guidelines, (iv) upon the
specific written request of Lender, the eRoom Parties shall use their best
efforts to provide the Lender with all of the information required in the
Business Specific Underwriting Requirements of the Guidelines and (v) shall use
their best efforts to facilitate communication and information exchange between
Lender and Lessees.
(b) During the Term of this Agreement, if the Guidelines and all
terms and conditions of this Agreement are not satisfied, the Lender shall
continue to have the exclusive right (but not the obligation) to provide Lease
Financing Loans to the Borrower pursuant to the terms of this Agreement,
however, in the event that the Lender declines to exercise its exclusive right
to engage in business lease financing for any Business Lease pursuant to the
terms of this Section 9.1(b), the eRoom Parties may sell or finance such
Business Lease to, or with, a third party.
Section 9.2 RIGHT OF FIRST REFUSAL. During the Term of this Agreement, the
eRoom Parties hereby acknowledge and agree that the Lender shall have an
exclusive right of first refusal (the "RIGHT OF FIRST REFUSAL") to provide
financing for all Refreshment Centers, Equipment or any other goods, equipment
or personal property provided by any of the eRoom Parties or their Affiliates to
all customers in all industries (other than the hotel and time-share industries
in which the Lender has the exclusive right set out in Section 9.1) pursuant to
a lease (or revenue sharing agreement) that provides for the sharing of revenue
or any other kind of payment or arrangement between any of the eRoom Parties (or
their Affiliates) and such customer. In the event that the Lender does not
exercise the Right of First Refusal with respect to a new industry within 90
days from the date the Lender receives notice from eRoom requesting the Lender
to consider such industry, this covenant shall be null and void with respect to
such industry. If the Lender agrees to exercise the Right of First Refusal for
an industry, the eRoom Parties and the Lender shall document such program in a
mutually agreed upon time period and upon mutually acceptable terms.
Section 9.3 MARKETING; TRADITIONAL EQUIPMENT FINANCING.
(a) (i) During the Term of this Agreement, the eRoom Parties covenant
and agree to use their best efforts to market Refreshment Centers to Customers
in the hotel and time-share industries through Business Leases satisfying the
42
requirements set forth herein and which offer Customers lease terms of 84 months
and the pricing terms set out in Exhibit O (unless the Lender agrees in its sole
discretion to lease or pricing terms that either from those set out in Exhibit
O). Notwithstanding the foregoing, the eRoom Parties shall be allowed to sell
Refreshment Centers to Customers that do not finance such purchase or which
finance such purchase through Traditional Equipment Financing.
(ii) During the Term of this Agreement, the eRoom Parties shall
not offer Business Leases to Customers unless such Business Leases are for a
lease term of 84 months and are on the pricing terms set out in Exhibit O.
(iii) During the Term of this Agreement, except as expressly
permitted by this Agreement, the eRoom Parties shall not allow or permit any
third party to offer or provide leases (or revenue sharing arrangements) that
provide for the leasing and use of Equipment and/or Refreshment Centers to
hotels or time-shares located within the United States that provide for a
sharing of revenue, or any other kind of payment or arrangement.
(b) eRoom shall provide the Lender with written notice that a
proposed Customer intends to utilize or is considering utilizing Traditional
Equipment Financing within five (5) Business Days from the date eRoom first
becomes aware of such Customer's intentions.
(c) The Lender shall credit *** of the amount financed by the Lender
through Traditional Equipment Financing (calculated based on the cost of the
Equipment financed) against the cumulative volume amounts set forth in the
definition of "Interest Rate" and for purposes of Section 7.9.
(d) For each Traditional Equipment Financing Transaction entered into
between the Lender and a Customer and funded by the Lender, the Lender shall pay
eRoom a cash referral fee of 0.50% of the principal amount financed by the
Lender.
Section 9.4 MERGER; CONSOLIDATION. Without the written consent of the
Lender, the eRoom Parties will not, nor will any of them permit any of their
subsidiaries or Affiliates to: (i) enter into any transaction of merger or
consolidation or amalgamation, unless the person or entity resulting from such
merger or consolidation (if not the relevant eRoom Party) shall expressly
assume, by supplemental agreement satisfactory in form to the Lender and
executed and delivered to the Lender, the due and punctual performance and
observance of each and every covenant and condition of this Agreement and the
other Operative Documents to be performed and observed by the eRoom Parties,
(ii) liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or (iii) convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or a substantial part of its
assets, whether now owned or hereafter acquired (including without limitation)
receivables, but excluding any inventory or other assets sold or disposed of in
the ordinary course of business). The eRoom Parties shall not be in breach of
the covenant reflected in item (iii) unless the Lender provides the eRoom
Parties with notice of the violation of such covenant within ninety (90) days
from
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
43
the date that the Lender receives Financial Statements from the eRoom Parties
pursuant to Section 6.1 and 6.2 that make such violation reasonably and clearly
apparent.
Section 9.5 LENDER COVENANT TO FINANCE; BORROWER'S EXCLUSIVE REMEDY. The
Lender hereby covenants and agrees that upon presentation by the Borrower of a
Transaction Submission Package that meets the requirements of this Agreement and
the Guidelines, the Lender shall provide Lease Financing Loans pursuant to the
terms hereof. In the event that the Lender fails to provide Lease Financing
Loans pursuant to the terms hereof after receipt of a Transaction Submission
Package that meets the requirements of this Agreement and the Guidelines, the
Lender shall have 90 days to cure such failure. If, at the end of such 90 day
period, the Lender has not cured such failure the Borrower's sole remedy shall
be the right to terminate the Lender's exclusive rights under Section 9.1
hereof.
Section 9.6 TERMINATION OF EXISTING LIENS. Immediately upon completion
of the initial public offering of shares in any of the eRoom Parties or upon the
sale of ten percent (10%) or more of the capital stock of any of the eRoom
Parties in a single transaction or a series of transactions, the eRoom Parties
shall (i) pay in full all debt related to all existing Liens on any of the
property of any of the eRoom Parties, (ii) terminate all such Liens, and (iii)
evidence such termination by providing to the Lender copies of Uniform
Commercial Code termination statements relating to all such Liens.
Section 9.7 CREATION OF NEW LOAN POOLS. The eRoom Parties hereby covenant
and agree that they will cooperate with the Lender in the creation of new Loan
Pools, including executing all documents necessary to create such Loan Pool and
to secure the collateral comprising such Loan Pool
Section 9.8 DIRECTION TO LESSEES. The eRoom Parties hereby covenant and
agree that until the termination of all of their obligations under this
Agreement, they shall instruct each Lessee to make all payments on its Business
Lease (after the Funding Date with respect to the related Lease Financing Loan)
directly to the Custodian and not to any eRoom Party or any other entity.
Section 9.9 PRINCIPAL PLACE OF BUSINESS.
(a) The Borrower hereby covenants and agrees that it shall maintain
its principal place of business in the State of Idaho until such time as the
Lender becomes licensed in Nevada under the Nevada Installment Loan and Finance
Act (the "Nevada Installment Loan Act").
(b) The Lender hereby covenants and agrees that it shall use good
faith and its reasonable efforts to obtain all necessary licenses under the
Nevada Installment Loan Act.
ARTICLE 10
EVENTS OF DEFAULT; EVENTS OF ACCELERATION
44
Section 10.1 EVENTS OF DEFAULT. If any one or more of the following events
(each, an "EVENT OF DEFAULT") shall occur and be continuing, the Lender (i)
shall be relieved of all its obligations hereunder (including the obligation to
fund any future Lease Financing Loans), but shall not be relieved of its rights
hereunder and (ii) shall have the rights and remedies set out in Section 10.2,
upon written notice to that effect given to the Borrower by the Lender (except
that in the case of the occurrence of any Event of Default described in
paragraphs (c) - (e) of this Section 10.1 no such notice shall be required),
without presentment or demand for payment, notice of nonpayment, protest or
further notice or demand of any kind, all of which are expressly waived by the
Borrower, and the Lender may exercise any of the remedies specified in Section
10.2 or elsewhere in this Agreement:
(a) Any of the eRoom Parties shall fail to perform or observe any of
the covenants contained in Section 7.1, 7.2, 7.3, 7.4, 7.7, 7.8, 7.10, 7.15,
8.2, 8.3, 8.4, 8.5 or Article 9 (other than Section 9.9(b)) hereof and such
failure shall continue for thirty (30) days (five (5) days with respect to
Section 7.15) after the earlier of such eRoom Party's receipt of notice thereof
or the occurrence of such event;
(b) Any representation or warranty made by any of the eRoom Parties
in writing to the Lender in any of the Operative Documents or in connection with
the making of any Lease Financing Loan, or any certificate, statement or report
made or delivered in compliance with this Agreement, shall have been false or
misleading in any material respect when made or delivered; or
(c) Any of the eRoom Parties shall make an assignment for the benefit
of creditors, file a petition in bankruptcy, be adjudicated insolvent, petition
or apply to any tribunal for the appointment of a receiver, custodian, or any
trustee for it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect; or there shall have been filed any such petition or
application, or any such proceeding shall have been commenced against it, which
remains undismissed for a period of seventy-five (75) days or more; or any order
for relief shall be entered in any such proceeding; or any of the eRoom Parties
by any act or omission shall indicate its consent to, approval of or
`acquiescence in any such petition, application or proceeding or the appointment
of a custodian, receiver or any trustee for it or any substantial part of any of
its properties, or shall suffer any custodianship, receivership or trusteeship
to continue undischarged for a period of seventy-five (75) days or more; or
(d) Any of the eRoom Parties shall generally not pay their debts as
such debts become due or shall admit in writing their inability to pay their
debts as such debts become due; or
(e) Any of the eRoom Parties 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 which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar, law; or shall have made any fraudulent
transfer of its property to or for the
45
benefit of a creditor at a time when other creditors similarly situated have not
been paid; or shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its property through legal proceedings or distraint
which is not vacated within thirty (30) days from the date thereof; or
(f) Any judgment against any of the eRoom Parties or any attachment,
levy of execution against any of its assets or properties for any amount in
excess of One Hundred Thousand Dollars ($100,000) (not covered by insurance)
shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of ninety (90) days or more; or
(g) This Agreement, the Master Custodial Agreement, the License'
Agreement or the Purchase Agreement shall for any reason cease to be valid and
binding on any of the eRoom Parties, or any of the eRoom Parties shall so state
in writing.
Section 10.2 RIGHTS AND REMEDIES ON EVENT OF DEFAULT.
(a) If an Event of Default shall have occurred and be continuing, the
Lender shall have the right (but not the obligation), itself or through any of
its agents (including the Borrower), with or without notice to the Borrower (as
provided below), as to any or all of the Pledged Assets, by any available
judicial procedure, or without judicial process (PROVIDED, HOWEVER, that it is
in compliance with the UCC), to take possession of the Pledged Assets and
without liability to the eRoom Parties for trespass to enter any premises where
the Pledged Assets may be located for the purpose of taking possession of or
removing the Pledged Assets, and, generally, to exercise any and all rights
afforded to a secured party under the UCC or other applicable law. Without
limiting the generality of the foregoing, the Borrower agrees that the Lender
shall have the right to sell, lease, or otherwise dispose of all or any part of
the Pledged Assets, whether in its then condition or after further preparation
or processing, either at public or private sale or any broker's board, in lots
or in bulk, for cash or for credit, with or without warranties or
representations, and upon such terms and conditions, all as the Lender in its
sole discretion may deem advisable, and it shall have the right to purchase such
Pledged Assets at any such sale; and, if any Pledged Assets shall require
rebuilding, repairing, maintenance, preparation, the Lender shall have the
right, at its option, to do such rebuilding or repairing for the purpose of
putting the Pledged Assets in such salable or disposable form as it shall deem
appropriate. At the Lender's request, the Borrower shall assemble the Pledged
Assets and make them available to the Lender at places which the Lender shall
select, whether at Borrower's premises or elsewhere, and make available to the
Lender, without rent, all of Borrower's premises and facilities for the purpose
of the Lender's taking possession of, removing or putting the Pledged Assets in
saleable or disposable form. The proceeds of any such sale, lease or other
disposition of the Pledged Assets shall be applied, first to the expenses of
retaking, holding, storing, processing and preparing for sale, selling, lease,
leasing and the like, and to the reasonable attorneys' fees and legal expenses
incurred by the Lender and to the payment of any other amounts required by
applicable law. To the extent permitted by applicable law, the Borrower waives
all claims, damages and demands against the Lender arising out of the
repossession, removal, retention or sale or lease of the Pledged Assets.
46
(b) The Borrower authorizes the Lender and does hereby make,
constitute and appoint the Lender, and any officer, employee or agent of the
Lender, with full power of substitution, as Borrower's true and lawful
attorney-in-fact, effective as of the date hereof, with power, in its own name
or in the name of the Borrower, during the continuance of an Event of Default,
to endorse any notes, checks, drafts , money orders, or other instruments of
payment (including payments payable under or in respect of any policy of
insurance) in respect of the Pledged Assets that may come into possession of the
Lender, to sign and endorse any invoice, freight or express ▇▇▇▇, ▇▇▇▇ of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to Pledged Assets to pay or discharge taxes, Liens, security interests
or other encumbrances at any time levied or placed on or threatened against the
Pledged Assets; to demand, collect, issue receipt for, compromise, settle and
▇▇▇ for monies due in respect of the Pledged Assets: to notify Lessees and other
persons obligated with respect to the Pledged Assets to make payments directly
to the Lender; and, generally, to do, at the Lender's option and at Borrower's
expense, at any time, or from time to time, all acts and things which the Lender
deems necessary to protect, preserve and realize upon the Pledged Assets and the
Lender's security interest therein to effect the intent of this Agreement all as
fully and effectually as the Borrower night or could do; and the Borrower hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be irrevocable as long as any of the
obligations of the eRoom Parties under the Operative Documents shall be
outstanding.
Section 10.3 EVENTS OF ACCELERATION. If any one or more of the following
events (each, an "EVENT OF ACCELERATION") shall occur and be continuing with
respect to a Loan Pool, the Lender shall be relieved of its obligation to fund
any future Lease Financing Loans (but shall not be relieved of any of its rights
hereunder) and the Loan Pool Accelerated Amount related to each such Loan Pool
shall immediately become due and payable upon written notice to that effect
given to the Borrower by the Lender (except that in the case of the occurrence
of any Event of Acceleration described in paragraphs (c) - (e) of this Section
10.3 no such notice shall be required), without presentment or demand for
payment, notice of nonpayment, protest or further notice or demand of any kind,
all of which are expressly waived by the Borrower, and the Lender may exercise
any of the remedies specified in this Agreement:
(a) The Collected Funds and the amounts to be withdrawn from the Loss
Reserve Account and the Residual Profits Collection Account for each Loan Pool
pursuant to Section 2.8(d) of this Agreement on any Disbursement Date for such
Loan Pool shall be insufficient to pay the amounts specified in Section
2.8(c)(i) - (iii).
(b) Failure to perform or observe any of the covenants contained in
Sections 7.5, 7.6, 7.11, 7.12, 7.13, 7.14, 7.16, 8.1 or 8.5 hereof and such
failure shall continue for thirty (30) days after the earlier of the Borrower's
having notice thereof or the occurrence of such event;
(c) Any of the eRoom Parties shall make an assignment for the benefit
of creditors, file a petition in bankruptcy, be adjudicated insolvent, petition
or apply to
47
any tribunal for the appointment of a receiver, custodian, or any trustee for it
or a substantial part of its assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or there shall have been filed any such petition or application, or any
such proceeding shall have been commenced against it, which remains undismissed
for a period of sixty (60) days or more; or any order for relief shall be
entered in any such proceeding; or any of the eRoom Parties by any act or
omission shall indicate its consent to, approval of or `acquiescence in any such
petition, application or proceeding or the appointment of a custodian, receiver
or any trustee for it or any substantial part of any of its properties, or shall
suffer any custodianship, receivership or trusteeship to continue undischarged
for a period of sixty (60) days or more;
(d) Any of the eRoom Parties shall generally not pay their debts as
such debts become due or shall admit in writing their inability to pay their
debts as such debts become due;
(e) Any of the eRoom Parties 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 which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar, law; or shall have made any fraudulent
transfer of its property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or shall have suffered or
permitted, while insolvent, any creditor to obtain a Lien upon any of its
property through legal proceedings or distraint which is not vacated within
thirty (30) days from the date thereof;
(f) Any Lien of the Lender against the Pledged Assets with respect to
such Loan Pool shall at any time fail to be a valid, first-priority perfected
Lien, subject to no prior or equal Lien other than a Permitted Lien;
(g) Any of the Operative Documents relating to such Loan Pool shall
for any reason cease to be valid and binding on any of the eRoom Parties or any
of the eRoom Parties shall so state in writing.
Section 10.4 RIGHTS AND REMEDIES ON EVENT OF ACCELERATION.
(a) If an Event of Acceleration shall have occurred and be
continuing, the Lender (and its successor and assigns) shall have the right,
itself or through any of its agents (including the Borrower), with or without
notice to the Borrower (as provided below), as to any or all of the Pledged
Assets related to such Loan Pool, by any available judicial procedure, or
without judicial process (PROVIDED, HOWEVER, that it is in compliance with the
UCC), to take possession of the Pledged Assets related to such Loan Pool and
without liability for trespass to enter any premises where the Pledged Assets
related to such Loan Pool may be located for the purpose of taking possession of
or removing the Pledged Assets related to such Loan Pool, and, generally, to
exercise any and all rights afforded to a secured party under the UCC or other
applicable law. Without
48
limiting the generality of the foregoing, the Borrower agrees that the Lender
shall have the right to sell, lease, or otherwise dispose of all or any part of
the Pledged Assets related to such Loan Pool, whether in its then condition or
after further preparation or processing, either at public or private sale or any
broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such terms and conditions, all as the
Lender in its sole discretion may deem advisable, and it shall have the right to
purchase at any such sale; and, if any Pledged Assets related to such Loan Pool
shall require rebuilding, repairing, maintenance, preparation, the Lender shall
have the right, at its option, to do such rebuilding or repairing for the
purpose of putting the Pledged Assets related to such Loan Pool in such salable
or disposable form as it shall deem appropriate. At the Lender's request, the
Borrower shall assemble the Pledged Assets related to such Loan Pool and make
them available to the Lender at places which the Lender shall select, whether at
Borrower's premises or elsewhere, and make available to the Lender, without
rent, all of Borrower's premises and facilities for the purpose of the Lender's
taking possession of, removing or putting the Pledged Assets related to such
Loan Pool in saleable or disposable form. The proceeds of any such sale, lease
or other disposition of the Pledged Assets related to such Loan Pool shall be
applied, first to the expenses of retaking, holding, storing, processing and
preparing for sale, selling, lease, leasing and the like, and to the reasonable
attorneys' fees and legal expenses incurred by the Lender and to the payment of
any other amounts required by applicable law. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands against the
Lender arising out of the repossession, removal, retention or sale or lease of
the Pledged Assets related to such Loan Pool.
(b) The Borrower authorizes the Lender and does hereby make,
constitute and appoint the Lender, and any officer, employee or agent of the
Lender, with full power of substitution, as Borrower's true and lawful
attorney-in-fact, effective as of the date hereof, with power, in its own name
or in the name of the Borrower, during the continuance of an Event of
Acceleration, to endorse any notes, checks, drafts , money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Pledged Assets related to such Loan Pool
that may come into possession of the Lender, to sign and endorse any invoice,
freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with
accounts, and other documents relating to Pledged Assets related to such Loan
Pool to pay or discharge taxes, Liens, security interests or other encumbrances
at any time levied or placed on or threatened against the Pledged Assets related
to such Loan Pool; to demand, collect, issue receipt for, compromise, settle and
▇▇▇ for monies due in respect of the Pledged Assets related to such Loan Pool:
to notify Lessees and other persons obligated with respect to the Pledged Assets
related to such Loan Pool to make payments directly to the Lender; and,
generally, to do, at the Lender's option and at Borrower's expense, at any time,
or from time to time, all acts and things which the Lender deems necessary to
protect, preserve and realize upon the Pledged Assets related to such Loan Pool
and the Lender's security interest therein to effect the intent of this
Agreement all as fully and effectually as the Borrower night or could do; and
the Borrower hereby ratifies all that said attorney shall lawfully do or cause
to be done by virtue hereof. This power of attorney shall be
49
irrevocable as long as any of the obligations of the eRoom Parties under the
Operative Documents shall be outstanding.
Article 11
LIQUIDATED DAMAGES
Section 11.1 LIQUIDATED DAMAGES.
(a) Notwithstanding the foregoing, if any of the eRoom Parties breach
any Liquidated Damages Obligation, the eRoom Parties shall pay to the Lender
Liquidated Damages within sixty (60) days of the Borrower's receipt of notice of
such breach, unless such breach is cured to the satisfaction of the Lender
within such sixty (60) day period.
(b) The eRoom Parties and the Lender expressly acknowledge and agree
that it would be extremely difficult to determine the Lender's actual damages as
a result of any breach of a Liquidated Damages Obligation, and that the
Liquidated Damages are a fair and reasonable estimate of such actual damages in
light of the magnitude of the actual or anticipated harm that will be caused to
the Lender by any such breach.
(c) The eRoom Parties acknowledge and agree that their obligations to
pay Liquidated Damages are joint and several.
(d) The Liquidated Damages shall be reduced by sixty-six and
two-thirds percent (66 2/3%) if both ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇ are not
employed on a full-time basis by the Lender (or AMRESCO Commercial Finance, Inc.
or AMRESCO, INC. or their successors or assigns) on the date the related breach
of a Liquidated Damages Obligation occurs, unless (1) both ▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ are not employed by eRoom on such date (unless eRoom replaces
either Messrs. ▇▇▇▇▇ or Sunyich with a successor that holds a substantially
similar position and that is acceptable to the Lender as of the date of such
replacement in its reasonable and good faith judgment), and/or (2) the Lender
replaces either ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇ with a successor that holds a
substantially similar position and that is acceptable to eRoom as of the date of
such replacement in its reasonable and good faith judgment, in which event, the
Liquidated Damages shall not be reduced.
Section 11.2 PLEDGE AND GRANT OF SECURITY INTEREST FOR LIQUIDATED DAMAGE
OBLIGATION.
(a) As collateral security for the prompt and complete payment and
performance when due of each Liquidated Damages Obligation, and of the eRoom
Parties' obligation to pay Liquidated Damages, the eRoom Parties hereby amend,
modify and restate the continuing security interest in, and lien on, all of the
eRoom Parties' right, title and interest in and to the Liquidated Damages
Collateral which lien and security interest were granted by the eRoom Parties
pursuant to the Program Agreement. Without
50
limiting the generality of the foregoing, this Agreement also secures the
payment of all amounts that constitute part of the Liquidated Damages that would
be owed by the eRoom Parties to the Lender, but for the fact they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any of the eRoom Parties.
(b) All rights of the Lender and security interests hereunder, shall
be absolute and unconditional irrespective of: (i) any change in the time,
manner, amount or place of payment of, or any other term of, all or any of the
Liquidated Damages Obligation or the Liquidated Damages or any other amendment
or waiver of or any consent to any departure from this Agreement; (ii) any
exchange, release or non-perfection of all or any part of the Liquidated Damages
Collateral or any other collateral, or any release from, amendment to, waiver
of, or consent to departure from any or all of the Liquidated Damage Obligation
or the Liquidated Damages, or (iii) to the fullest extent permitted by law, any
other circumstances which might otherwise constitute a defense available to, or
a discharge of the eRoom Parties.
(c) At the request of the Lender, the eRoom Parties shall execute all
UCC financing statements and other documents and shall deliver items (including
but not limited to stock certificates) to the Lender required to continue the
perfection of the Lender's security interests granted pursuant to the Program
Agreement and amended, modified and restated pursuant to this Section 11.2.
ARTICLE 12
MISCELLANEOUS PROVISIONS
Section 12.1 FEES AND EXPENSES. The Lender and the eRoom Parties: (i) shall
equally share all legal fees and related costs incurred by the Lender in
connection with the negotiation and drafting of this Agreement and the Operative
Documents and (ii) shall each pay their own legal fees and related costs
associated with each Lease Financing Loan. The eRoom Parties shall pay their own
legal fees and related costs in connection with the negotiation and drafting of
this Agreement and the Operative Documents. If it is determined in a judicial
proceeding that a party to this Agreement has failed to perform under any
provision of this Agreement or the Operative Documents, and if the other party
shall employ attorneys or incur other expenses for the enforcement, performance
or observance of the terms of this Agreement or the Operative Documents on the
part of the nonperforming party, then such other party, shall be reimbursed by
the nonperforming party, on demand, for reasonable attorneys' fees and other
out-of-pocket expenses including any such costs and expenses incurred in any
bankruptcy or insolvency proceedings or on appeal.
Section 12.2 INDEMNIFICATION.
(a) The eRoom Parties agree to defend, indemnify, pay and hold
harmless (jointly and severally) the Lender and the officers, directors,
counsel, agents and affiliates of the Lender (collectively, the "ALC
INDEMNITEES") from and against any and
51
all losses, liabilities, damages and claims, whether based on any federal, state
or foreign laws, statutes, rules and regulations, on common law or equitable
cause or on contract or otherwise, that may be imposed on, incurred by or
asserted against any ALC Indemnitee, in any manner relating to, arising out of
or resulting from any of the Operative Documents, or the transactions
contemplated thereby (collectively, the "ALC INDEMNIFIED LIABILITIES");
PROVIDED, HOWEVER, that none of the eRoom Parties shall have any obligation to
any ALC Indemnitee hereunder with respect to ALC Indemnified Liabilities to the
extent such ALC Indemnified Liabilities arise from the gross negligence or
willful misconduct of that ALC Indemnitee as determined by a final judgment of a
court of competent jurisdiction. To the extent that the undertaking to defend,
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the eRoom
Parties shall contribute the maximum that they are permitted to pay and satisfy
under applicable law to the payment and satisfaction of all ALC Indemnified
Liabilities incurred by the ALC Indemnitee or any of them.
(b) The Lender agrees to defend, indemnify, pay and hold harmless the
eRoom Parties and the officers, directors, counsel, agents and affiliates of the
eRoom Parties (collectively, the "eROOM INDEMNITEES") from and against any and
all losses, liabilities, damages and claims, whether based on any federal, state
or foreign laws, statutes, rules and regulations, on common law or equitable
cause or on contract or otherwise, that may be imposed on, incurred by or
asserted against any such eRoom Indemnitee, in any manner relating to, arising
out of or resulting from the Lender's disclosure of information, or
representations, regarding the Equipment or Refreshment Centers to third parties
(collectively, the "eROOM INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, that the
Lender shall have no obligation to any eRoom Indemnitee hereunder with respect
to Indemnified Liabilities to the extent such eRoom Indemnified Liabilities
arise from the gross negligence or willful misconduct of that eRoom Indemnitee
as determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Lender shall contribute the maximum that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all eRoom Indemnified Liabilities incurred by the eRoom
Indemnitee or any of them.
Section 12.3 WAIVER OF TRIAL BY JURY. THE PARTIES, INCLUDING ANY ASSIGNEES,
HEREBY WAIVE (A) THEIR RIGHT TO TRIAL BY JURY OF DISPUTES, CLAIMS OR
CONTROVERSIES BETWEEN THEMSELVES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY AGREEMENTS, INSTRUMENTS OR TRANSACTIONS RELATING TO THIS AGREEMENT, WHETHER
ARISING IN CONTRACT, TORT OR OTHERWISE; AND (B) THEIR RIGHT TO ANY CONSEQUENTIAL
OR PUNITIVE DAMAGES.
Section 12.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT. No
modification, amendment or waiver of or with respect to any provision of this
Agreement or the other Operative Documents, nor consent to any departure by any
of the eRoom Parties from any of the terms or conditions thereof, shall in any
event be effective unless
52
it shall be in writing and signed by each of the eRoom Parties and the Lender.
Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on any of the eRoom
Parties in any case shall entitle any of the eRoom Parties to any other or
further notice or demand in similar or other circumstances. This Agreement
embodies the entire agreement and understanding between the Lender and each of
the eRoom Parties relating to the subject matter hereof and supersedes all prior
agreements and understandings including the Program Agreement; PROVIDED,
HOWEVER, that the parties hereto agree that Article IV, "Traditional Equipment
Financing" and Article III, Section 8, "Securitization Servicers" of the Program
Agreement shall remain in full force and effect and shall be binding on the
parties.
Section 12.5 REMEDIES CUMULATIVE. Each and every right granted to the
Lender hereunder or under any Operative Document or other document delivered
hereunder or in connection herewith, or allowed it by law or equity, shall be
cumulative and may be exercised from time to time. No failure on the part of the
Lender to exercise, and no delay in exercising, any right shall operate as a
waiver thereof, nor shall any single or partial exercise of any right preclude
any other or future exercise thereof or the exercise of any other right. The due
payment and performance of the Borrower's indebtedness, liabilities and
obligations under each Lease Financing Loan and the related Note and the other
documents delivered in connection therewith shall be without regard to any
counterclaim, right of set-off or any other claim whatsoever which the Borrower
may have against the Lender and without regard to any other obligation of any
nature whatsoever which the Lender may have to the Borrower, and no such
counterclaim or set-off shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Lender for payment or performance of the Borrower's
indebtedness, liabilities or obligations under any Note or any of the other
documents delivered in connection therewith, or otherwise other than that no
Event of Default or Event of Acceleration has occurred under any of the
Operative Documents or that the Lender has breached its obligations under any of
the Operative Documents.
Section 12.6 FURTHER ASSURANCES. At any time and from time to time, upon
the request of the Lender, the Borrower shall execute, deliver and acknowledge
or cause to be executed, delivered and acknowledged, such further documents and
instruments and do such other acts and things as the Lender may reasonably
request to fully effect the purposes of any of the Operative Documents and any
other agreements, instruments and documents delivered pursuant hereto or in
connection with any Lease Financing Loan or Securitization, subject to the
confidentiality requirements set forth in Section 12.9 hereof.
Section 12.7 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address as follows:
53
(1) If to the Borrower:
eRoom System SPE, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(2) If to RSi:
RoomSystems, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇.
▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(3) If to eRoom:
eRoom System Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(4) If to ALC:
AMRESCO Leasing Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 12.8 CONSTRUCTION; GOVERNING LAW; CONSENT TO JURISDICTION.
(a) The headings used in this Agreement and the table of contents are
for convenience only and shall not be deemed to constitute a part hereof. All
uses herein of the masculine gender or of singular or plural terms shall be
deemed to include uses of the feminine or neuter gender or plural or singular
terms, as the context may require.
(b) Each party acknowledges that it has had the opportunity to
consult with legal counsel in the preparation and review of this Agreement. The
parties therefore stipulate that the rule of construction that ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement to favor any party against the other.
(c) This Agreement shall be construed in accordance with the
laws of the State of Idaho, without regard to conflicts of law principles. The
parties hereto
54
irrevocably (i) agree that any suit, action or other legal proceeding arising
out of or relating to this Agreement may be brought in a court of record in the
State of Idaho or in the courts of the United States of America located in such
state, (ii) consent to the jurisdiction of each such court in any such suit,
action or proceeding, and (iii) waive any objection which it may have to the
laying of venue of any such suit, action or proceeding in any of such courts and
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum.
Section 12.9 CONFIDENTIALITY. The parties, without the prior written
consent of the other party, will not disclose or use, and will direct their
agents and representatives not to disclose or use any Confidential Information
at any time or in any manner other than in connection with the parties'
participation in the Program. Notwithstanding the foregoing, (a) the Lender
shall be allowed to disclose Confidential Information to statistical rating
agencies, investors, monoline insurers, investment bankers, equipment leasing or
financing companies, conduit purchasers, warehouse credit providers, other
potential sources of capital and other parties involved in a Securitization or
the providing of financing to the Lender and (b) eRoom shall be allowed to
disclose the general existence of the Program, the Lender's agreement to provide
Lease Financing Loans and eRoom's relationship with the Lender, but eRoom shall
have no authorization, without the Lender's express written consent, to disclose
the structure or financial terms of the Program or any Lease Financing Loans.
Upon the written request of any party to this Agreement ("REQUESTING PARTY"),
the party to whom such request is directed ("RECIPIENT PARTY") will promptly
return to the Requesting Party all originals and all copies of Confidential
Information, and the Recipient Party will promptly destroy all written
information prepared by such Recipient Party or any of its agents or
representatives which contain or refer to Confidential Information.
Section 12.10 SEVERABILITY. The provisions of this Agreement are severable,
and if any clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision in this Agreement in any
jurisdiction. Each of the covenants, agreements and conditions contained in this
Agreement is independent and compliance by the Borrower with any of them shall
not excuse noncompliance by the Borrower with any other. The Borrower shall not
take any action the effect of which shall constitute a breach or violation of
any provision of this Agreement.
Section 12.11 BINDING EFFECT: NO ASSIGNMENT OR DELEGATION. This Agreement
shall be binding upon and inure to the benefit of the Borrower and its
successors and to the benefit of the Lender and its successors and assigns. The
rights and obligations of the Borrower under this Agreement, including the
Borrower's right to receive Residual Profits, shall not be assigned or delegated
without the prior written consent of the Lender, and any purported assignment or
delegation without such consent shall be void. The Lender may sell, assign,
delegate or otherwise transfer its rights and obligations under this Agreement
to one or more purchasers, assignees or transferees.
55
Section 12.12 TERM OF AGREEMENT; TERMINATION.
(a) The term of this Agreement (the "TERM") shall commence on the
date hereof and shall continue until the Commitment Termination Date unless
terminated earlier pursuant to Section 12.12(b).
(b) Notwithstanding anything to the contrary herein, this Agreement
shall terminate upon the earliest to occur of (x) the date on which the Lender,
in its sole discretion, terminates the agreement as a result of the Borrower's
failure to meet the production requirements set out in Section 7.9 or (y) at the
discretion of the Lender upon the occurrence of an Event of Default or an Event
of Acceleration.
(c) Upon termination of the Agreement, (i) the Lender shall have no
further obligation to provide Lease Financing Loans, (ii) the Lender's exclusive
right to provide business lease financing shall terminate and (iii) in the event
that such termination is as a result of an Event of Acceleration, the
Accelerated Loan Amount of all Lease Financing Loans which have not been
included in a Securitization shall immediately become due and payable.
Section 12.13 NO JOINT VENTURE. This Agreement and the Program are not
intended and shall not be construed as creating a partnership or joint venture
for any purpose whatsoever.
Section 12.14 COUNTERPARTS. This Agreement may be executed in
counterparts, so that when all parties have signed this form of Agreement, such
signatures taken together form one complete agreement.
Section 12.15 CERTAIN REMEDIES. Without in any way limiting the
remedies otherwise available under this Agreement, the parties hereto
acknowledge that in the event of any breach or nonperformance by any party of
the agreements or covenants required by this Agreement to be performed or
observed by it, the other parties shall be entitled to such equitable remedies
as may be appropriate, including without limitation specific performance.
56
Section 12.16 USURY. The amount of interest payable or paid on any Lease
Financing Loan under the terms of this Agreement shall be limited to an amount
which shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the State of Idaho or any applicable law of the United States
permitting a higher maximum nonusurious rate that preempts such applicable Idaho
laws, which could lawfully be contracted for, charged or received.
Section 12.17 SURVIVAL OF CERTAIN PROVISIONS. All agreements,
representations and warranties made herein shall survive the delivery of this
Agreement. In addition, the provisions of Sections 12.1, 12.2, 12.8(c) and 12.9
shall survive the termination of this Agreement.
ARTICLE 13
SECURITIZATION SERVICES
Section 13.1 SECURITIZATION.
(a) On or prior to the date on which *** of Lease Financing Loans
have been funded hereunder, the Lender at its sole discretion may choose to
engage in a Securitization. Thereafter, the Lender will use its best efforts to
engage in a Securitization.
(b) The eRoom Parties agree to cooperate with the Lender in effecting
a Securitization (including signing any documents necessary thereto) in such
format as the Lender reasonably determines will maximize the economic interests
of the Lender. To such end the provisions of Article III, Section 8
"Securitization Services" of the Program Agreement are incorporated herein.
(c) The Lender agrees that, without the written consent of the eRoom
Parties, it will not take any action to effect a Securitization that would
result in the eRoom Parties receiving less than the Residual Profits from a Loan
Pool after such Residual Profits are first allocated as credit support on all
other Loan Pools as provided in Section 2.8 hereof.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
eROOM SYSTEM SPE, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
ROOMSYSTEMS, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
eROOM SYSTEM TECHNOLOGIES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
AMRESCO LEASING CORPORATION, as Lender
By:___________________________________
Name:_________________________________
Title:________________________________
ACKNOWLEDGED:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________
58
SCHEDULE I
DETERMINATION OF REFRESHMENT CENTER LOAN AMOUNT
With respect to each Refreshment Center, the Borrower in the related
Borrowing Notice shall indicate whether it is requesting a Lease Financing Loan
under the Threshold Plan, the Percentage Plan or the Platinum Plan (and, if the
Platinum Plan is selected, the type of Platinum Plan)
A. THRESHOLD PLAN.
The "REFRESHMENT CENTER LOAN AMOUNT" for each Refreshment Center financed
under the Threshold Plan is equal to the lesser of (i) the product obtained by
multiplying (A) ***, (B) Net Borrower Revenue, and (C) *** and (ii) *** times
the Actual Cost of Goods Sold for such Refreshment Center; provided that the
Lender may in its sole discretion, adjust the Refreshment Center Loan Amount to
(A) be equal to the Actual Costs of Goods Sold even if such amount is greater
than the amount set out in clause (i) above or (B) be determined by clause (i)
above even if such clause (i) is greater than clause (ii) above.
"NET BORROWER REVENUE" with respect to a Business Lease is determined by
the Lender in its sole discretion as either (i) the Average Daily eRoom
Threshold Plan Revenue during the Seasoning Period less ***, or (ii) the highest
Average Daily eRoom Threshold Plan Revenue during any calendar month period
during the Seasoning Period less ***.
"AVERAGE DAILY eROOM THRESHOLD PLAN REVENUE" shall mean the average revenue
received by eRoom (or Borrower) per Refreshment Center per day using either (i)
if the Lease Financing Loan satisfies requirement number 3 of the Business
Specific Underwriting Requirements of the Guidelines, the Threshold Calculation,
or (ii) if the Lease Financing Loan does not satisfy requirement number 3 of the
Business Specific Underwriting Requirements of the Guidelines (or if Lender does
not receive information adequate to determine if requirement number 3 has been
satisfied), but Lender elects to fund such Lease Financing Loan, either the
Recalculated Threshold Calculation or the Threshold Calculation, as determined
in Lender's sole and absolute discretion.
"THRESHOLD CALCULATION" shall mean a calculation of the revenue due eRoom
(or Borrower) from the Lessee under the applicable Threshold Plan, as shown by
way of example in Step 1 of Exhibit P.
"RECALCULATED THRESHOLD CALCULATION" shall mean a calculation of the
revenue due eRoom (or Borrower) from the Lessee under the applicable Threshold
Plan, assuming for such calculation, that the related Lessee's occupancy during
the Seasoning Period was equal to the Lessee's average occupancy for the
previous *** months (or since the opening of the related hotel or timeshare
property if less than *** months), as shown by way of example in Step 2 of
Exhibit P.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
I-1
B. PERCENTAGE PLAN.
The "REFRESHMENT CENTER LOAN AMOUNT" for each Refreshment Center financed
under the Percentage Plan is equal to the lesser of (i) the product obtained by
multiplying (A) ***, (B) Net Borrower Percentage Plan Revenue, and (C) *** and
(ii) *** times the Actual Cost of Goods Sold for such Refreshment Center;
provided that the Lender may in its sole discretion, adjust the Refreshment
Center Loan Amount to (A) be equal to the Actual Costs of Goods Sold even if
such amount is greater than the amount set out in clause (i) above or (B) be
determined by clause (i) above even if such clause (i) is greater than clause
(ii) above.
"NET BORROWER PERCENTAGE PLAN REVENUE" with respect to a Business Lease is
determined by the Lender in its sole discretion as either (i) the Average Daily
eRoom Percentage Plan Revenue during the Seasoning Period less ***, or (ii) the
highest Average Daily eRoom Percentage Plan Revenue during any calendar month
period during the Seasoning Period less ***.
"AVERAGE DAILY eROOM PERCENTAGE PLAN REVENUE" shall mean the average
revenue received by eRoom (or Borrower) per Refreshment Center per day using
either: (i) if the Lease Financing Loan satisfies requirement number 3 of the
Business Specific Underwriting Requirements of the Guidelines, either (as
determined by Lender in its sole and absolute discretion), (A) the Percentage
Calculation, or (B) if the Lessee's average occupancy for the previous ***
months (or since the opening of the related hotel or time-share property if less
than *** months) is more than *** occupancy, the Recalculated Percentage
Calculation, assuming for purposes of such Recalculated Percentage Calculation,
that the Lessee's average occupancy for the previous *** months (or since the
opening of the related hotel or time-share property if less than *** months)
equals *** occupancy, or (ii) if the Lease Financing Loan does not satisfy
requirement number 3 of the Business Specific Underwriting Requirements of the
Guidelines (or if Lender does not receive information adequate to determine if
requirement number 3 has been satisfied), but Lender elects to fund such Lease
Financing Loan, either the Recalculated Percentage Calculation or the Percentage
Calculation, as determined in Lender's sole and absolute discretion.
"PERCENTAGE CALCULATION" shall mean a calculation of the revenue due eRoom
(or Borrower) from the Lessee under the applicable Percentage Plan, as shown by
way of example in Step 1 of Exhibit Q.
"RECALCULATED PERCENTAGE CALCULATION" shall mean a calculation of the
revenue due eRoom (or Borrower) from the Lessee under the applicable Percentage
Plan, assuming for such calculation, that the related Lessee's occupancy during
the Seasoning Period was equal to the Lessee's average occupancy for the
previous *** months (or since the opening of the related hotel or timeshare
property if less than *** months), as shown by way of example in Step 2 of
Exhibit Q, and subject to the minimum conditions described in Section 7.11 of
the Agreement for any such Percentage Plan.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
I-2
C. PLATINUM PLANS.
The "REFRESHMENT CENTER LOAN AMOUNT" for each Refreshment Center financed
under the Platinum Plan is calculated using the same methodology used to
calculate the "Refreshment Center Loan Amount" described in Section A of this
Schedule I under the Threshold Plan, except that the Average Daily eRoom
Platinum Plan Revenue (defined below) shall be substituted for the "Average
Daily eRoom Threshold Plan Revenue".
The "AVERAGE DAILY eROOM PLATINUM PLAN REVENUE" shall mean the amount
calculated using either Option 1, Option 2 or Option 3 below, as applicable:
Option 1: If the Lessee has a Fixed Charge Coverage Ratio of at least 1.4:1
and occupancy of *** for the previous *** month period, the "Average Daily eRoom
Platinum Plan Revenue" shall be equal to the average revenue received by eRoom
(or Borrower) per Refreshment Center per day using the Platinum Calculation.
Option 2: If the Lessee has a Fixed Charge Coverage Ratio between *** and
*** and occupancy of at least *** for the previous *** month period, the
"Average Daily eRoom Platinum Plan Revenue" shall be equal to the average
revenue received by eRoom (or Borrower) per Refreshment Center per day using the
Platinum Calculation. Notwithstanding the foregoing, Lender may, in its sole and
absolute discretion, and at any time limit all such Lease Financing Loans funded
under this Option 2 to no more than *** of the then current Overall Lease
Financing Loans.
Option 3: In all other cases (including cases in which Lender does not
receive information adequate to determine the Lessee's Fixed Charge Coverage
Ratio), the "Average Daily eRoom Platinum Plan Revenue" shall be equal to the
Average Daily eRoom Threshold Plan Revenue (described in Section A of this
Schedule I) under the theoretical assumption that the Lessee to such Platinum
Plan Business Lease had selected a Threshold Plan instead of a Platinum Plan;
provided however, that the Average Daily eRoom Platinum Plan Revenue calculated
pursuant to Option 3 shall not exceed the amount calculated in Option 1 above,
assuming that the Lessee had qualified for Option 1 above.
"PLATINUM CALCULATION" shall mean a calculation of the revenue due eRoom
(or Borrower) from the Lessee under the applicable Platinum Plan, as shown by
way of example in Exhibit R.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
I-3
EXHIBIT A
GUIDELINES
GENERAL UNDERWRITING GUIDELINES
The Borrower shall certify that:
1. At all times during the Term of the Agreement, the Business Leases related
to all Lease Financing Loans funded under the Program must have average
revenues to the Borrower (after giving effect to the revenue sharing
allocations under the related Business Leases) per installed Refreshment
Center of at least *** per day for each *** advanced by the Lender as Lease
Financing Loans under the Program.
2. There is no existing default on any indebtedness or equity obligations of
any of the eRoom Parties.
3. The eRoom Parties must have and must have maintained at all times during
the term of the Agreement, a Net Worth of at least *** at all times
(determined on quarterly basis).
4. During the Term of the Agreement, no more than *** of the Business Leases
related to any Lease Financing Loan (determined by reference to the total
units of Refreshment Centers subject to such Business Leases) are or have
been more than *** days delinquent in the payment of rents or other
obligations thereunder.
5. During the Term of the Agreement, the eRoom Parties must maintain working
capital of at least *** (determined quarterly).
6. During the Term of this Agreement, the eRoom Parties must maintain a
liabilities to net worth ratio of no more than 3.0:1 (determined on a
quarterly basis.
BUSINESS SPECIFIC UNDERWRITING REQUIREMENTS
1. The Borrower must submit a full credit package relating to the proposed
Lease Financing Loan (the "TRANSACTION SUBMISSION PACKAGE") including:
a. Deal summary;
b. Copies of all required UCC- 1 financing statements;
c. Verification of business' *** (including dates received);
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
A-1
d. ***
e. ***
f. Business Lease and all supporting documentation;
g. Estoppel certificate signed by business/lessee;
h. ACH authorization forms (unless declined by business);
i. ▇▇▇▇ of Sale for Equipment from eRoom to the Borrower; j. License
for Equipment Intellectual Property to the Borrower and RSi;
k. ***
l. ***
m. ***
n. The Average Gross Revenue during the Seasoning Period; and
o. Evidence that such business has been in operation for at least
one year.
2. In addition, the Borrower must certify that:
a. The Lessee is not an Underperforming Property.
b. Neither of the first two full rental payments under the related
Business Lease have been more than 15 days late.
1. The Lessee (a) if a hotel, either has (i) a Fixed Charge Coverage Ratio of
at least *** and *** occupancy or (ii) a Fixed Charge Coverage Ratio of ***
and either: (A) *** occupancy and *** of average daily room rate for
comparable properties, or (B) *** occupancy and *** of average daily room
rate for comparable properties; or (b) if a commercial business other than
a hotel, has a Fixed Charge Coverage Ratio of at least ***; provided
however, if the Business Lease related to the Lease Financing Loan is a
Platinum Plan and the related Lease Financing Loan qualifies for a
Refreshment Center Loan Amount under Option 2 of Section C to Schedule I to
this Agreement, the Lessee need not satisfy the requirements of sections
(a) or (b) herein.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
A-2
EXHIBIT B
FORM OF LEASE FINANCING NOTE
Lease Financing Loan No. _______
US $______________ ___________, ____
FOR VALUE RECEIVED, the undersigned (the "BORROWER") promises to pay to the
order of AMRESCO Leasing Corporation, a Nevada corporation (together with its
successors and assigns, the "LENDER"), the principal sum of
_____________________ and __/___ Dollars (US $_______), with interest thereon,
to be computed from the date of this Note at the Applicable Interest Rate
(defined in Paragraph 3 below).
This Lease Financing Note is executed and delivered by the Borrower
pursuant to that certain Master Business Lease Financing Agreement, dated May
11, 2000 (as amended from time to time, the "AGREEMENT"), by and among the
Borrower, the Lender, RoomSystems, Inc. and eRoom System Technologies, Inc. to
evidence the obligation of the Borrower to repay the Lease Financing Loan made
by the Lender to the Borrower in accordance with the terms of the Agreement.
This Lease Financing Note is entitled to the benefit and security of the
Agreement and the other Operative Documents, to which reference is hereby made
for a statement of all of the terms and conditions under which the Lease
Financing Loan evidenced hereby is made. The Agreement requires certain of the
terms of the Lease Financing Loan to be evidenced by a Borrowing Notice and
Transaction Approval, and reference is hereby made to the related Borrowing
Notice and Transaction Approval for such terms.
1. DEFINED TERMS. As used in this Note, the term "INDEBTEDNESS" means the
principal of, interest on, or any other amounts due at any time under, this
Lease Financing Note, the Operative Documents or any other document delivered in
connection with the Lease Financing Loan, including the Prepayment Amount;
provided that such amounts are related to the Lease Financing Loan. Event of
Default, Event of Acceleration and other capitalized terms used but not defined
in this Lease Financing Note shall have the meanings given to such terms in the
Agreement (or, if not defined in the Agreement, as defined in the other
Operative Documents).
2. ADDRESS FOR PAYMENT. All payments due under this Note shall be payable
at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other place
as may be designated by written notice to the Borrower from or on behalf of the
Lender.
3. PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall be
paid as follows:
(a) This Lease Financing Note shall evidence a Lease Financing Loan
made under the Agreement. The Lease Financing Loan shall bear interest at a rate
(the "APPLICABLE INTEREST RATE") equal to __________ percent (____%) per annum;
PROVIDED, HOWEVER, that if a "NON-PRODUCTION EVENT" occurs, the Applicable
Interest Rate will automatically and retroactively be increased to the sum of
***
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
B-1
(determined as of the date of the Lease Financing Loan evidenced hereby) plus
***. Interest under this Lease Financing Note shall be computed on the basis of
a year of 360 days.
The term "NON-PRODUCTION EVENT" shall mean the failure of the Borrower to
satisfy the Business Lease and Cumulative Lease Financing Loan production
requirements set forth in Section 7.9 of the Agreement.
The term "7-YEAR TREASURY" shall mean the yield to maturity for the United
States Treasury bond equal to seven (7) years (as determined by the Lender) as
set forth in THE WALL STREET JOURNAL as of the Business Day immediately
preceding the date of funding of this Lease Financing Loan.
(b) Consecutive monthly installments of principal and interest, each in
the amount of _____________________ and __/___ Dollars (US $_______), shall be
payable on the first (1st) day of each month (or, if such day is not a Business
Day, the next succeeding Business Day), in arrears, beginning on
________________ (as provided in the Agreement), until the entire unpaid
principal balance evidenced by this Lease Financing Note is fully paid; provided
that notwithstanding anything to the contrary herein the initial monthly
installment due hereunder shall be due on the date of this Lease Financing Note
and shall be deducted by the Lender from the Loan Amount hereof. Any accrued
interest remaining past due for 30 days or more shall be added to and become
part of the unpaid principal balance and shall bear interest at the rate or
rates specified in this Lease Financing Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on _______________ or on any earlier date on which the unpaid
principal balance of this Lease Financing Note becomes due and payable, by
acceleration or otherwise (the "MATURITY DATE"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Lease Financing Note, until and including the date on which it is
paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by the Lender before the date it is due shall be deemed to have
been received on the due date.
4. APPLICATION OF PAYMENTS. If at any time the Lender receives, from the
Borrower or otherwise, any amount applicable to the Indebtedness that is less
than all amounts due and payable at such time, the Lender may apply that payment
to amounts then due and payable in any manner and in any order determined by the
Lender, in the Lender's discretion. The Borrower agrees that neither the
Lender's acceptance of a payment from the Borrower in an amount that is less
than all amounts then due and payable nor the Lender's application of such
payment shall constitute or be deemed to constitute either a waiver of the
unpaid amounts or an accord and satisfaction.
5. SECURITY. The Indebtedness is secured, among other things, by the
Pledged Assets described in the Agreement, and reference is made to the
Agreement and
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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the other Operative Documents for other rights of the Lender concerning the
collateral for the Indebtedness.
6. ACCELERATION. If an Event of Acceleration has occurred and is
continuing, the entire unpaid principal balance, any accrued interest, the
Prepayment Amount and all other amounts payable under this Lease Financing Note
and the Agreement with respect to the related Lease Financing Loan shall at once
become due and payable, at the option of the Lender, without any prior notice to
the Borrower. The Lender may exercise this option to accelerate regardless of
any prior forbearance.
7. LATE CHARGE. If any monthly amount payable under this Lease Financing
Note or under the Agreement is not received by the Lender within *** days after
the amount is due, the Borrower shall pay to the Lender, immediately and without
demand by the Lender, a late charge equal to *** of such amount. The Borrower
acknowledges that its failure to make timely payments will cause the Lender to
incur additional expenses in connection with the related Lease Financing Loan,
and that it is extremely difficult and impractical to determine those additional
expenses. The Borrower agrees that the late charge payable pursuant to this
Paragraph represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Lease Financing Note, of the
additional expenses the Lender will incur by reason of such late payment. The
late charge is payable in addition to, and not in lieu of, any interest payable
at the Default Rate pursuant to Paragraph 8.
8. DEFAULT RATE. So long as any monthly installment or any other payment
due under this Lease Financing Note remains past due for 30 days or more,
interest under this Lease Financing Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or other payment due, as applicable, at a rate (the "DEFAULT RATE") equal to the
lesser of *** above the Applicable Interest Rate or the maximum interest rate
which may be collected from the Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. The Borrower also acknowledges that
its failure to make timely payments will cause the Lender to incur additional
expenses in connection with the related Loan, that, during the time that any
monthly installment or payment under this Lease Financing Note is delinquent for
more than 30 days, the Lender will incur additional costs and expenses arising
from its loss of the use of the money due and from the adverse impact on the
Lender's ability to meet its other obligations and to take advantage of other
investment opportunities, and that it is extremely difficult and impractical to
determine those additional costs and expenses. The Borrower also acknowledges
that, during the time that any monthly installment or other payment due under
this Lease Financing Note is delinquent for more than 30 days, the Lender's risk
of nonpayment of this Note will be materially increased and the Lender is
entitled to be compensated for such increased risk. The Borrower agrees that the
increase in the rate of interest payable under this Lease Financing Note to the
Default Rate represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Lease Financing Note, of the
additional costs and expenses the Lender will incur by reason of the Borrower's
delinquent payment and the additional
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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compensation the Lender is entitled to receive for the increased risks of
nonpayment associated with a delinquent loan.
9. VOLUNTARY AND INVOLUNTARY PREPAYMENTS. The Lease Financing Loan may be
prepaid in whole but not in part. In the event of prepayment, the Borrower shall
pay the related Prepayment Amount. The Prepayment Amount is due and payable
regardless of whether the prepayment by the Borrower is made voluntarily or
involuntarily, including any prepayment required by the Lender's exercise of its
rights upon the occurrence of an Event of Default or an Event of Acceleration.
In the event the Borrower elects to prepay the related Lease Financing Loan, the
Borrower shall, at the dates and times specified therein, deliver written notice
to the Lender in accordance with Section 2.11(a) of the Agreement.
10. COSTS AND EXPENSES. The Borrower shall pay on demand all expenses and
costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by the Lender as a result of any
default under this Lease Financing Note or in connection with efforts to collect
any amount due under this Lease Financing Note, or to enforce the provisions of
the Agreement, including those incurred in post-judgment collection efforts, in
any appeal, and in any bankruptcy proceeding (including any action for relief
from the automatic stay of any bankruptcy proceeding) or judicial or
non-judicial foreclosure proceeding.
11. FORBEARANCE. Any forbearance by the Lender in exercising any right or
remedy under this Lease Financing Note or the Agreement or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of that or any
other right or remedy. The acceptance by the Lender of any payment after the due
date of such payment, or in an amount which is less than the required payment,
shall not be a waiver of the Lender's right to require prompt payment when due
of all other payments or to exercise any right or remedy with respect to any
failure to make prompt payment. Enforcement by the Lender of any security for
the Borrower's obligations under this Lease Financing Note shall not constitute
an election by the Lender of remedies so as to preclude the exercise of any
other right or remedy available to the Lender.
12. WAIVERS. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by the Borrower and all endorsers and
guarantors of this Lease Financing Note and all other third party obligors.
13. LOAN CHARGES. If any applicable law limiting the amount of interest or
other charges permitted to be collected from the Borrower in connection with the
Lease Financing Loan is interpreted so that any interest or other charge
provided for in the Agreement, whether considered separately or together with
other charges provided for in the Agreement, violates that law, and the Borrower
is entitled to the benefit of that law, that interest or charge is hereby
reduced to the extent necessary to eliminate that violation. The Borrower agrees
to an effective rate of interest that is the stated rate of interest plus any
additional rate of interest resulting from any other charges or fees that
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are to be paid by the Borrower to the Lender that may be found by a court of
competent jurisdiction to be interest. The amounts, if any, previously paid to
the Lender in excess of the permitted amounts shall be applied by the Lender to
reduce the unpaid principal balance of this Lease Financing Note. For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from the Borrower has been
violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Lease
Financing Note. Unless otherwise required by applicable law, such allocation and
spreading shall be effected in such a manner that the rate of interest so
computed is uniform throughout the stated term of the Lease Financing Note.
14. COMMERCIAL PURPOSE. The Borrower represents that the Indebtedness is
being incurred by the Borrower solely for lawful business or commercial
purposes.
15. COUNTING OF DAYS. Except where otherwise specifically provided, any
reference in this Lease Financing Note to a period of "days" means calendar
days, not Business Days.
16. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. The
provisions of Sections 12.3 and 12.8 of the Agreement are hereby incorporated
into this Lease Financing Note by this reference to the fullest extent as if the
text of such Sections were set forth in their entirety herein.
17. CAPTIONS. The captions of the paragraphs of this Lease Financing Note
are for convenience only and shall be disregarded in construing this Lease
Financing Note.
18. NOTICES. All notices, demands and other communications required or
permitted to be given by the Lender to the Borrower pursuant to this Lease
Financing Note shall be given in accordance with Section 12.7 of the Agreement.
19. INDIVIDUAL LEASE FINANCING LOAN. This Lease Financing Note is issued
as part of the business lease financing arrangement between the Lender and the
Borrower, as described in the Agreement. The Borrower may not re-borrow any
amounts under this Lease Financing Note that it has previously borrowed and
repaid under this Lease Financing Note.
20. AUTHORITY. The Borrower (and the undersigned representative of the
Borrower) represents that the Borrower has full power, authority and legal right
to execute and deliver this Lease Financing Note, and that this Lease Financing
Note constitutes the valid and binding obligation of the Borrower.
21. CONSOLIDATION; AMENDMENT. The Lender, in its sole discretion, may at
any time, amend, restate and consolidate this Lease Financing Note with other
Lease Financing Notes relating to Lease Financing Loans in the same Loan Pool
into a Credit Enhancement Note. The Borrower hereby agrees that it shall
cooperate with the Lender
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in the process of consolidating this Lease Financing Note and shall execute any
and all documents required by the Lender in connection therewith.
22. FULL RECOURSE. Notwithstanding anything to the contrary herein or in
the Agreement, the obligations of the Borrower hereunder are full recourse
obligations enforceable against the Borrower to the maximum extent allowable
under the law.
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IN WITNESS WHEREOF, the Borrower has signed and delivered this Lease
Financing Note under seal or has caused this Lease Financing Note to be signed
and delivered under seal by its duly authorized representative. The Borrower
intends that this Lease Financing Note shall be deemed to be signed and
delivered as a sealed instrument.
eROOM SYSTEM SPE, INC.
By:________________________________
Name:______________________________
Title:_____________________________
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EXHIBIT C
FORM OF CREDIT ENHANCEMENT NOTE
$
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PURSUANT to the Master Business Lease Financing Agreement (the "AGREEMENT")
dated as of May 11, 2000 among eRoom System SPE, Inc., a Nevada corporation,
having an office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇ (the "BORROWER"), RoomSystems Inc., a Nevada corporation, having an office
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇., ▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("RSi"), eRoom System Technologies,
Inc., a Nevada corporation having an office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("eROOM"; and collectively, with the Borrower and
RSi, the "eROOM PARTIES") and AMRESCO Leasing Corporation, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "LENDER"), the eRoom Parties and the
Lender agreed that the Lender, in its sole discretion, may amend, restate and
consolidate all of the Lease Financing Notes relating to the Lease Financing
Loans in a Loan Pool into a Credit Enhancement Note.
WHEREAS, it is the intent of the Lender and the Borrower to amend,
restate and consolidate those Lease Financing Notes relating to the Lease
Financing Loans for Loan Pool No. _____ described in Schedule I hereto into this
single Credit Enhancement Note;
FOR VALUE RECEIVED, the Borrower hereby promises to pay to the order of
the Lender, the principal sum of ______________________________ Dollars and __
Cents ($ ____________) (the "AGGREGATE LOAN AMOUNT") and an amount of up to
________________________________ Dollars and __ Cents ($_________) (the
"AGGREGATE CREDIT ENHANCEMENT AMOUNT"), and all other amounts owed under the
Operative Documents related to Loan Pool No. _____, together with all interest
accrued thereon, at the times and place and in the manner specified in the
Operative Documents.
This Credit Enhancement Note is one of a series of notes (the "PROGRAM
NOTES") issued by certain business owners or landlords of commercial properties
(the "PROGRAM BORROWERS") in connection with Program Loans made or to be made by
the Lender to the Program Borrowers as part of the [_________] Program. This
Credit Enhancement Note evidences the Borrower's obligation, INTER ALIA, (i) to
repay the Lease Financing Loans set forth on Schedule I attached hereto and made
a part hereof (each such loan, a "CONSOLIDATED LOAN" and collectively, the
"CONSOLIDATED LOANS") made by the Lender to the Borrower in an aggregate
principal amount equal to the Aggregate Loan Amount, (ii) to guarantee the
payment of delinquencies or defaults in respect of Program Loans or any
obligations in connection therewith, as determined in Lender's sole discretion
("PROGRAM LOAN DEFICIENCIES"; each such delinquent or defaulted Program Loan or
related obligation, a "DELINQUENT PROGRAM LOAN") in an amount up to the
Aggregate Credit Enhancement Amount, (iii) to pay, subject to rebate, the
Scheduled Monthly Credit Enhancement Obligation Payment, (iv) to pay interest on
the Aggregate Loan Amount, and (v) to pay all Indebtedness. For purposes of this
paragraph, a "delinquent" Program Loan is defined as a
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Program Loan where the loan payments are past due by one or more days. Moreover,
a "defaulted" Program Loan is defined as a Program Loan where an event of
default has occurred and remains uncured under the loan documents for such
Program Loan.
1. DEFINITIONS. Terms defined in the Agreement which are not otherwise
defined herein shall have the meanings ascribed to such terms in the Agreement.
Terms defined herein and also defined in the Agreement shall have the meanings
defined herein with respect to the Consolidated Loans. The following terms shall
have the meanings set forth on Schedule II attached hereto and made a part
hereof: [__________] Program, Applicable Interest Rate, Consolidation Payment,
Credit Enhancement Amount, Indebtedness, Loan Amount, Loan Deficiency, Note
Amount, Ratable Share, Scheduled Monthly Loan Payment, State and Stated Maturity
Date. All terms defined in the singular will have the same meaning when used in
the plural and vice versa.
2. INTEREST. This Credit Enhancement Note shall evidence the Consolidated
Loans made under the Agreement. The Borrower agrees to pay interest on the
outstanding Note Amount at the Applicable Interest Rate from the Consolidation
Date (defined below) until the Consolidated Loans have been discharged or
otherwise paid in full in accordance with the terms hereof. Interest shall be
payable in one (1) month installments on each Payment Date and, unless otherwise
expressly stated, in arrears (as provided in the Agreement). Interest on the
Aggregate Loan Amount shall be paid as part of the Scheduled Monthly Loan
Payment, and interest on the outstanding Aggregate Credit Enhancement Amount
shall be paid, subject to rebate, as the Scheduled Monthly Credit Enhancement
Obligation Payment. All computations of interest shall be made by the Lender on
the basis of a year of 360 days and shall be allocated in twelve (12) equal
monthly installments.
Notwithstanding the foregoing paragraph, upon the occurrence and during the
continuation of an Event of Default, the Borrower shall instead pay interest on
the outstanding Note Amount at a rate (the "DEFAULT RATE") per annum equal to
the Applicable Interest Rate ***, payable upon demand by the Lender. All
obligations hereunder which are not paid by the Borrower when due and payable
shall bear interest at the Default Rate.
3. GUARANTEE. As more fully specified herein, the Borrower hereby
irrevocably and unconditionally guarantees and promises to pay to the Lender
(the "GUARANTEE") an amount up to the Aggregate Credit Enhancement Amount PLUS
the aggregate Scheduled Monthly Credit Enhancement Obligation Payments for the
payment of Program Loan Deficiencies.
4. REQUIRED PAYMENTS AND REBATES.
(a) CONSOLIDATION PAYMENT. On the date hereof (the "CONSOLIDATION
DATE"), the Borrower shall pay the Lender the Scheduled Monthly Credit
Enhancement Obligation Payment for each Consolidated Loan.
(b) SCHEDULED MONTHLY LOAN PAYMENTS. The Borrower agrees to pay the
Lender an amount equal to the Scheduled Monthly Loan Payment for each
Consolidated Loan
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
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on each Payment Date until the earliest of (A) the acceleration or prepayment of
such Consolidated Loan (SUBJECT TO THE FULFILLMENT OF PREPAYMENT AMOUNTS UNDER
SECTION 5), (B) the applicable Loan Amount Repayment Date (as defined in Section
4(e), below) or (C) the applicable Stated Maturity Date. The Scheduled Monthly
Loan Payment for each Consolidated Loan equals (1) the monthly installment
amount which will fully amortize the Loan Amount and the Credit Enhancement
Amount of such Consolidated Loan (including the applicable interest on such
amounts) over the period from the next calendar month following the
Consolidation Date (the "INITIAL PAYMENT DATE") through the applicable Stated
Maturity Date LESS (2) the Scheduled Monthly Credit Enhancement Obligation
Payment for such Consolidated Loan.
(c) SCHEDULED MONTHLY CREDIT ENHANCEMENT OBLIGATION PAYMENTS. The
Borrower agrees to pay the Lender an amount equal to the Scheduled Monthly
Credit Enhancement Obligation Payment for each Consolidated Loan (i) on the
Consolidation Date (as part of the Consolidation Payment) and (ii) on each
Payment Date, commencing on the Initial Payment Date, until the earliest of (A)
the discharge, acceleration or prepayment of such Consolidated Loan (SUBJECT TO
THE FULFILLMENT OF PREPAYMENT AMOUNTS UNDER SECTION 5), (B) payment in full of
the applicable Credit Enhancement Amount or (C) the applicable Stated Maturity
Date. Each Scheduled Monthly Credit Enhancement Obligation Payment shall be
subject to the Monthly Enhancement Rebate provided for in Section 4(d), below.
(d) MONTHLY ENHANCEMENT REBATES.
(i) If, on any Payment Date, there are no outstanding Program
LoanDeficiencies, the Borrower shall be entitled to a rebate on each
Consolidated Loan (a "MONTHLY ENHANCEMENT REBATE") in an amount equal to the
Scheduled Monthly Credit Enhancement Obligation Payment for such Consolidated
Loan PLUS the Borrower's pro rata portion of recoveries of Program Loan
Deficiencies with respect to previously paid Scheduled Monthly Credit
Enhancement Obligation Payments which have not been previously rebated. On the
Initial Payment Date, if there are no outstanding Program Loan Deficiencies, the
Borrower shall also be entitled to a rebate of the Scheduled Monthly Credit
Enhancement Obligation Payments paid pursuant to Section 4(a).
(ii) If, on any Payment Date, there are outstanding Program Loan
Deficiencies, the amount of each Monthly Enhancement Rebate will be reduced, in
whole or in part, by an amount which would equal the Borrower's PRO RATA portion
of such Program Loan Deficiency or Deficiencies MULTIPLIED by the applicable
Ratable Share, PROVIDED, HOWEVER, that in no event shall the Monthly Enhancement
Rebate be reduced by more than the Scheduled Monthly Credit Enhancement
Obligation Payment. For the purposes of this subsection (ii), the Borrower's PRO
RATA portion of any Program Loan Deficiency shall be calculated by (A) dividing
the Borrower's aggregate Scheduled Monthly Credit Enhancement Obligation
Payments by the aggregate Scheduled Monthly Credit Enhancement Obligation
Payments of all non-delinquent Program Loans and (B) multiplying such amount by
the Program Loan Deficiency or Deficiencies.
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(iii) Any payment (excluding prepayments) made under this Credit
Enhancement Note which is less than (A) the aggregate of (1) the Scheduled
Monthly Loan Payment on each Consolidated Loan and (2) the Scheduled Monthly
Credit Enhancement Obligation Payment on each Consolidated Loan, MINUS (B) the
allocated Monthly Enhancement Rebate, if any, shall be applied ratably among the
Consolidated Loans, in accordance with their respective Ratable Shares (see
Schedule I), creating a Loan Deficiency on each of the Borrower's Consolidated
Loans. If the Borrower's Consolidated Loans are subject to any Loan Deficiency,
the Borrower will not be entitled to any Monthly Enhancement Rebate on any
Consolidated Loan.
(iv) Each Monthly Enhancement Rebate, if any, will be credited
against the payment of the Scheduled Monthly Credit Enhancement Obligation
Payment for the applicable Consolidated Loan due on the immediately succeeding
Payment Date.
(e) DISCHARGE; REPAYMENT OF THE CREDIT ENHANCEMENT AMOUNT.
(i) At any time after the Loan Amount of any Consolidated Loan
has been paid in full by the Borrower pursuant to Section 4(b), above (the "LOAN
AMOUNT REPAYMENT DATE"), the Borrower may elect to have such Consolidated Loan
discharged by making a payment in an amount (the "DISCHARGE AMOUNT") equal to
the lesser of (A) the outstanding Credit Enhancement Amount of such Consolidated
Loan and (B) the Program Credit Enhancement Amount, if any, as of such date.
(ii) In the event that the Borrower does not elect to discharge
any Consolidated Loan in accordance with paragraph (i), above, on the applicable
Loan Amount Repayment Date, the Borrower shall instead repay the outstanding
Credit Enhancement Amount of such Consolidated Loan in monthly installments
(each such installment to be in an amount equal to the Scheduled Monthly Loan
Payment for such Consolidated Loan) on each Payment Date, commencing on the
first Payment Date following the Loan Amount Repayment Date, until the earliest
of (A) payment in full of the outstanding Credit Enhancement Amount, (B) the
discharge or acceleration of such Consolidated Loan (IN ACCORDANCE WITH SECTION
4 AND 5) or (C) the applicable Stated Maturity Date.
(iii) Upon payment of the Loan Amount and either (A) the
Discharge Amount of any Consolidated Loan or (B) the amount described in Section
4(e)(ii), such Consolidated Loan and the Borrower's obligations hereunder
relating to such Consolidated Loan shall be terminated.
(f) STATED MATURITY DATE. Unless earlier repaid, prepaid or
accelerated hereunder, the outstanding Loan Amount of each Consolidated Loan and
all accrued and unpaid interest thereon, the outstanding Credit Enhancement
Amount of such Consolidated Loan and all accrued and unpaid Scheduled Monthly
Credit Enhancement Obligation Payments shall be due and payable in full on the
applicable Stated Maturity Date.
5. PREPAYMENTS.
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(a) PROCEDURES. Each Consolidated Loan is subject to prepayment in
whole, but not in part. In the event of prepayment, Borrower shall pay the
Prepayment Amount as such term is defined below. The Prepayment Amount is due
and payable regardless of whether the prepayment by Borrower is made voluntarily
or involuntarily, including any prepayment required by the holder's exercise of
its rights of acceleration upon the occurrence of an Event of Acceleration. In
the event that the Borrower ELECTS to prepay any Consolidated Loan, the Borrower
shall deliver written notice (the "PREPAYMENT NOTICE") of such prepayment
election to the Lender not less than thirty (30) days nor more than sixty (60)
days from the proposed prepayment date (such date or the date of Lender's
exercise of its rights of acceleration upon the occurrence of an Event of
Acceleration, the "PREPAYMENT DATE"). Within twenty (20) days of the Lender's
receipt of such Prepayment Notice, the Lender shall deliver a written notice to
the Borrower setting forth the estimated total amount of the Prepayment Amount
(as defined below) payable on the proposed Prepayment Date, which amount shall
be subject to adjustment for Delinquent Program Loans and changes in the
Reinvestment Rate.
(b) PREPAYMENT AMOUNT. On the Prepayment Date, the Borrower shall pay
the Lender an amount, with respect to the Consolidated Loan to be prepaid (the
"PREPAYMENT AMOUNT"), equal to the sum of (i) the outstanding Loan Amount of
such Consolidated Loan on the Prepayment Date, (ii) all interest accrued and
unpaid on the Loan Amount of such Consolidated Loan from the immediately
preceding Payment Date through the Prepayment Date, if any, PLUS an additional
month of interest on such Loan Amount, (iii) all accrued and unpaid Scheduled
Monthly Credit Enhancement Obligation Payments due to the Prepayment Date, (iv)
if any Program Loan Deficiencies exist on the Prepayment Date, the lesser of (A)
the outstanding Credit Enhancement Amount and (B) the Program Credit Enhancement
Amount (the "Credit Enhancement Prepayment"), and (v) the Make Whole Premium.
(c) DEFINITIONS. For purposes of this Section 5, the following terms
have the following meanings:
"DISCOUNTED VALUE" means, with respect to each Consolidated Loan, the
amount calculated by discounting all Remaining Scheduled Monthly Loan Payments
from their respective scheduled due dates to the Prepayment Date, in accordance
with acceptable financial practice and at a discount factor (applied on a
monthly basis) equal to the Reinvestment Rate.
"MAKE WHOLE PREMIUM" means, with respect to each Consolidated Loan, a
premium equal to the excess, if any, of the Discounted Value over the
outstanding Loan Amount of such Consolidated Loan. The Make Whole Premium shall
in no event be less than zero.
"PROGRAM CREDIT ENHANCEMENT AMOUNT" means, with respect to each
Consolidated Loan, an amount equal to the product of (i) the ratio of (A) the
outstanding loan amount plus the outstanding credit enhancement amount on the
Prepayment Date of such prepaying Program Loan to (B) the outstanding loan
amounts plus the outstanding credit enhancement amounts of all Program Loans
that are not Delinquent Program Loans, multiplied by (ii) the sum (without
duplication) of (A) the Program Prepayment Amounts for all Delinquent
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Program Loans on the Prepayment Date plus (B) any other outstanding Program Loan
Deficiencies on the Prepayment Date.
"PROGRAM PREPAYMENT AMOUNT" means, with respect to any Delinquent
Program Loan, an amount equal to the sum of (i) the outstanding loan amount of
such Delinquent Program Loan on the Prepayment Date, (ii) all accrued and unpaid
interest on such Delinquent Program Loan to the Prepayment Date, (iii) all
accrued and unpaid Scheduled Monthly Credit Enhancement Obligation Payments on
such Delinquent Program Loan to the Prepayment Date, and (iv) the Make Whole
Premium with respect to such Delinquent Program Loan.
"REMAINING AVERAGE LIFE" means, with respect to each Consolidated
Loan, the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) the outstanding Loan Amount of such Consolidated Loan on the
Prepayment Date into (ii) the sum of the products obtained by multiplying (A)
the principal portion of each Remaining Scheduled Monthly Loan Payment by (B)
the number of years (calculated to the nearest one-twelfth year) which will
elapse between the Prepayment Date and the Loan Amount Repayment Date.
"REMAINING SCHEDULED MONTHLY LOAN PAYMENTS" means, with respect to
each Consolidated Loan, an amount equal to the sum of all Scheduled Monthly Loan
Payments that would be due during the period from the Prepayment Date to and
including the Loan Amount Repayment Date.
6. PAYMENT PROCEDURES.
(a) METHOD AND TIMING. The Borrower shall make each payment due
hereunder in one aggregate amount per calendar month, not later than 3:00 p.m.
(New York City time) on the day when due, in lawful money of the United States
of America (in freely transferable U.S. dollars and in immediately available
funds), at such place or places identified by Lender by Electronic Transfer of
Funds. BY WRITTEN NOTICE TO THE BORROWER, THE LENDER MAY REQUEST BORROWER TO
MAKE SUCH PAYMENTS AT OTHER PLACES AND BY OTHER METHODS AND BORROWER SHALL
THEREAFTER MAKE SUCH PAYMENTS IN ACCORDANCE WITH SUCH WRITTEN NOTICE FROM
LENDER.
(b) COMPUTATION OF TIME PERIODS. In this Credit Enhancement Note, in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including", the words "to" and "until"
each mean "to but excluding" and the word "through" means "to and including".
(c) CALCULATIONS. All calculations of the Monthly Enhancement Rebate,
the Make Whole Premium and other amounts due on prepayment or acceleration and
the amounts actually received by the Lender with respect to Delinquent Loans
will be made by the Lender. The Borrower agrees that all such calculations will
be conclusive and binding, absent manifest error.
(d) APPLICATION. The Lender shall apply timely payments made under
this Credit Enhancement Note in the following order with respect to each
Consolidated Loan: (i) to
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accrued and unpaid interest on the Loan Amount, (ii) to any late payment charges
due pursuant to Section 6(f), below, (iii) to accrued and unpaid Scheduled
Monthly Credit Enhancement Obligation Payments, (iv) to the Make Whole Premium,
if any, (v) to the Loan Amount, UNTIL THE OUTSTANDING LOAN AMOUNT IS ZERO, and
(vi) the balance, if any, to the Credit Enhancement Amount to the extent then
due and unpaid. Notwithstanding the foregoing, any payment (excluding
prepayments) made under this Credit Enhancement Note which is less than (A) the
aggregate of (1) the Scheduled Monthly Loan Payment on each Consolidated Loan
and (2) the Scheduled Monthly Credit Enhancement Obligation Payment on each
Consolidated Loan MINUS (B) the allocated Monthly Enhancement Rebate, if any,
shall be applied ratably among the Loans, in accordance with their respective
Ratable Shares.
(e) LATE PAYMENT CHARGE: If, on any Payment Date, the Lender has not
received the full Scheduled Monthly Loan Payment due on such Payment Date in
accordance with Section 6(a), above, the Borrower shall pay to the Lender,
promptly on demand, as liquidated damages, a late payment charge of *** per
Consolidated Loan.
7. CONCERNING THE GUARANTEE.
(a) Nature of the Guarantee. The Guarantee is absolute,
unconditional, irrevocable and continuing in nature. The Guarantee is a
guarantee of prompt and punctual payment and performance and is not merely a
guarantee of collection. The obligations of the Borrower under this Credit
Enhancement Note with respect to the Guarantee are direct and primary
obligations of the Borrower and are independent of the obligations (the "PROGRAM
OBLIGATIONS") of any Program Borrower or any other Person with respect to any
Program Note or any document or instrument relating thereto (each a "PROGRAM
LOAN DOCUMENT" and, collectively, the "PROGRAM LOAN DOCUMENTS"), and a separate
action or actions may be brought and prosecuted against the Borrower to enforce
the Guarantee, irrespective of whether any action is brought against any Program
Borrower or any other Person or whether any Program Borrower or any other Person
is joined in any such action or actions. The liabilities and obligations of the
Borrower under this Credit Enhancement Note shall be absolute and unconditional
notwithstanding any event or occurrence, including without limitation:
(i) any lack of validity or enforceability of any Program Loan
Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Program Obligations under any Program
Document, or any other amendment or waiver of or any consent to departure
therefrom including, without limitation, any increase in any Program Loan;
(iii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guarantee, for all or any of the Program Obligations;
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
C-7
(iv) any manner of application of any collateral, or proceeds
thereof, to all or any of the Program Obligations, or any manner of sale or
other disposition of any collateral or any other assets of the Program
Borrowers;
(v) any change, restructuring or termination of the structure or
existence of any Program Borrower;
(vi) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against the Lender, whether in
connection with the transactions contemplated by this Credit Enhancement Note
and the other Operative Documents or otherwise;
(vii) any impossibility or impracticality of performance,
illegality, FORCE MAJEURE, any act of government, or any other circumstance
which might otherwise constitute a defense available to, or a discharge of, any
Program Borrower or a guarantor, or any other circumstance or event or happening
whatsoever, whether foreseen or unforeseen and whether similar or dissimilar to
anything referred to above in this Section 7; or
(viii) any variation in the percentage amount of Aggregate Credit
Enhancement among Program Borrowers.
The Guarantee shall continue to be effective or be reinstated (at any
time, including, without limitation, after discharge or termination of any
Consolidated Loan or this Credit Enhancement Note), as the case may be, if at
any time any payment (or part thereof) of any of the Program Obligations is
rescinded or must otherwise be returned by the Lender upon the insolvency,
bankruptcy or reorganization of any Program Borrower, all as though such payment
had not been made.
(b) RELATIONSHIP TO OTHER AGREEMENTS. Nothing herein shall in any way
modify or limit the effect of terms or conditions set forth in any other
document, instrument or agreement executed by the Borrower or in connection with
the Program Obligations, but each and every term and condition hereof shall be
in addition thereto.
(c) CONSENTS AND WAIVERS. The Borrower acknowledges that the
obligations undertaken herein involve the guarantee of obligations of Persons
other than the Borrower and, in full recognition of that fact, consents and
agrees that the Lender may, at any time and from time to time, without notice or
demand, and without affecting the enforceability or continuing effectiveness
hereof: (i) supplement, modify, amend, extend, renew, accelerate or otherwise
change the time for payment or the terms of the Program Obligations or any part
thereof; (ii) supplement, modify, amend or waive, or enter into or give any
agreement, approval or consent with respect to, the Program Obligations or any
part thereof, or any of the Program Documents or any additional security or
guaranties, or any condition, covenant, default, remedy, right, representation
or term thereof or thereunder; (iii) accept new or additional instruments,
documents or agreements in exchange for or relative to any of the Program
Documents or the Program Obligations or any part thereof; (iv) accept partial
payments on the Program Obligations; (v) receive and hold additional security or
guaranties for the Program Obligations or any part thereof;
C-8
(vi) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate,
exchange, substitute, transfer and/or enforce any security or guaranties, and
apply any security and direct the order or manner of sale thereof as the Lender
in its sole and absolute discretion may determine; (vii) release any Person from
any personal liability with respect to the Program Obligations or any part
thereof; (viii) settle, release on terms satisfactory to the Lender or by
operation of applicable laws or otherwise liquidate or enforce any Program
Obligation and any security or guarantee therefor in any manner, consent to the
transfer of any security and bid and purchase at any sale; and/or (ix) consent
to the merger, change or any other restructuring or termination of the
partnership or corporate existence, as the case may be, of the Borrower, any
Program Borrower or any other Person, and correspondingly restructure the
Program Obligations, and any such merger, change, restructuring or termination
shall not affect the liability of the Borrower or the continuing effectiveness
hereof, or the enforceability hereof with respect to all or any part of the
Program Obligations. In addition to the foregoing, the Borrower consents and
agrees that Lender may add or delete Program Borrowers and Program Loans.
Borrower waives any defense to enforcement of this guarantee based upon
variation of risk in the addition or deletion of Program Borrowers or in adding
or deleting Program Loans before or after the date hereof.
The Borrower hereby waives promptness, diligence, notice of
acceptance, presentment, demand, notice of dishonor, protest and any other
notice with respect to any of the Program Obligations and the Guarantee and any
requirement that the Lender or any Program Borrower protect, secure, perfect or
insure any lien or any property subject thereto or exhaust any right or take any
action against any Program Borrower or any other Person or any collateral.
Borrower hereby waives any rights it may now or hereinafter have to an appraisal
of any security or collateral for the Program Obligations, including, without
limitation, any such rights provided by statute. BORROWER ALSO WAIVES ALL
DEFENSES THAT IT MAY BE ENTITLED TO UNDER SURETYSHIP LAW REGARDING THE
GUARANTEE.
(d) SUBROGATION.
(i) Except as set forth in subsection (ii), below, the Borrower
will not exercise any rights which it may acquire by way of subrogation under
the Guarantee, by any payment made hereunder or otherwise.
(ii) If the Borrower should make a payment under the Guarantee,
the Borrower's sole claim and recourse for repayment of amounts so paid shall be
to amounts actually received by the Lender in respect of Program Loan
Deficiencies and held by the Lender for credit against either the next Scheduled
Monthly Credit Enhancement Obligation Payment or the next Scheduled Monthly Loan
Payment due from the Borrower on each Consolidated Loan; PROVIDED, HOWEVER, that
if the Borrower prepays a Consolidated Loan and pays a Credit Enhancement
Prepayment, such Borrower is not entitled to any future recoveries with respect
to such Consolidated Loan. The Lender does not represent or warrant that (A) any
such amounts will be recovered on Delinquent Program Loans, (B) amounts
recovered on Delinquent Program Loans or other monies will be actually received
and held by the Lender for such credit, or (C) to the extent, if any, that such
monies are so received and held by the Lender,
C-9
such monies will be sufficient to reimburse or indemnify the Borrower for all
amounts paid under the Guarantee.
(e) LIABILITY. The liability of the Borrower hereunder is joint and
several and is independent of any other guaranties at any time in effect with
respect to all or any part of the Program Obligations, and the Borrower's
liability hereunder may be enforced regardless of the existence of any such
guaranties. Any termination by or release of any guarantor in whole or in part
shall not affect the continuing liability of the Borrower hereunder, and no
notice of any such termination or release shall be required.
(f) Borrower is entering into the Guarantee as a material inducement
to Lender to enter into the Program and to make the Lease Financing Loans and
Borrower acknowledges that Lender would not enter into the Program or make such
Lease Financing Loans absent the Guarantee.
8. SECURITY ARRANGEMENTS. This Credit Enhancement Note is entitled to the
benefits of and is secured by the pledge, liens, security title, rights and
security interests granted under the Agreement, the Pledge and Security
Agreement and the other Operative Documents, as the same may be amended,
supplemented or renewed, from time to time.
9. REMEDIES. If an Event of Acceleration occurs, the Lender may take (but
is not obligated to take) any or all of the following actions: (a) declare the
entire Note Amount, all interest, the Make Whole Premium on each Consolidated
Loan and any other amounts payable hereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower, (b) proceed
to enforce or cause to be enforced any remedies provided under any of the
Operative Documents or (c) exercise any other remedies available at law or in
equity. The Borrower agrees that upon the occurrence of an Event of
Acceleration, the Borrower shall pay all costs and expenses actually incurred by
Lender (including, without limitation, reasonable attorneys' fees and
disbursements) incident to the enforcement, collection, protection or
preservation of any right or claim of the Lender under the Operative Documents,
including any such fees or costs incurred in connection with any bankruptcy or
insolvency proceeding of Borrower.
10. UNDERSTANDINGS WITH RESPECT TO WAIVERS, AGREEMENTS AND CONSENTS: THE
BORROWER HEREBY MAKES AND ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS,
AGREEMENTS AND CONSENTS ("WAIVERS") SET FORTH IN THIS CREDIT ENHANCEMENT NOTE
BOTH AS BORROWER HEREUNDER AND AS GUARANTOR WITH RESPECT TO THE GUARANTEE, AND
THAT EACH AND ALL SUCH WAIVERS ARE BEING MADE KNOWINGLY, INTENTIONALLY,
VOLUNTARILY, WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF SUCH WAIVERS WITH ITS ATTORNEY. THE BORROWER FURTHER
ACKNOWLEDGES THAT THE GUARANTEE AND SUCH WAIVERS ARE A MATERIAL INDUCEMENT TO
THE LENDER TO ENTER INTO THE PROGRAM AND MAKE THE LEASE FINANCING
C-10
LOANS AND TO CONSOLIDATE THE LEASE FINANCING NOTES INTO THE CREDIT ENHANCEMENT
NOTES; THAT THE TERMS OF THE CONSOLIDATED LOANS ARE FAVORABLE TO BORROWER AND
THAT THE LENDER WOULD NOT HAVE ENTERED INTO THE PROGRAM OR HAVE ENTERED INTO THE
CONSOLIDATED LOANS ON SUCH TERMS WITHOUT SUCH GUARANTEE AND WAIVERS; AND THE
BORROWER HEREBY MAKES AND ACKNOWLEDGES THAT IT MAKES SUCH WAIVERS WITH RESPECT
TO EACH OTHER PROGRAM LOAN. THE BORROWER ACKNOWLEDGES AND AGREES THAT NEITHER
THE LENDER, NOR ANY OF ITS AFFILIATES, AGENTS OR REPRESENTATIVES HAS MADE AND NO
SUCH PERSON IS MAKING OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO THE GUARANTEE, INCLUDING ANY REPRESENTATION OR
WARRANTY CONCERNING ANY PROGRAM BORROWER'S PERFORMANCE, THE FINANCIAL CONDITION
OF ANY PROGRAM BORROWER, OR THE ABILITY OF ANY PROGRAM BORROWER TO PERFORM ITS
PROGRAM OBLIGATIONS. THE BORROWER ACKNOWLEDGES THAT IT HAS SUFFICIENT KNOWLEDGE
AND EXPERIENCE TO BE CAPABLE OF EVALUATING THE RISKS OF ITS CONSOLIDATED LOANS
AND GUARANTEE. IF ANY OF THE WAIVERS HEREIN ARE DETERMINED TO BE UNENFORCEABLE
UNDER APPLICABLE LAW, SUCH WAIVERS SHALL BE EFFECTIVE TO THE MAXIMUM EXTENT
PERMITTED BY SUCH LAW.
11. WAIVER OF TRIAL BY JURY. THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, AND THE LENDER BY ITS ACCEPTANCE OF THIS CREDIT
ENHANCEMENT NOTE IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THIS CREDIT ENHANCEMENT NOTE.
12. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, IN
NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST OR OTHER AMOUNTS PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS CREDIT
ENHANCEMENT NOTE, FROM TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM
RATE OR AMOUNT, IF ANY, SPECIFIED BY APPLICABLE LAW. IF ANY SUCH PAYMENT IS
FOUND TO BE USURIOUS, SUCH PORTION OF THE PAYMENT THAT IS CONSIDERED USURIOUS
SHALL BE TREATED AS A PRINCIPAL PAYMENT.
13. MISCELLANEOUS.
(a) AMENDMENT. Neither this Credit Enhancement Note nor any provision
hereof may be amended, altered, modified, changed, waived, discharged or
terminated, except by an instrument in writing signed by the Lender and its
assigns.
(b) ASSIGNMENT. This Credit Enhancement Note is freely assignable in
whole or in part, from time to time, by the Lender and the Lender may grant
participation interests
C-11
herein. Without limiting the foregoing, the Borrower understands and agrees that
the Lender intends to and may sell, pledge, grant a security interest in,
collaterally assign, transfer, deliver or otherwise dispose of this Credit
Enhancement Note and Borrower's other Operative Documents (or any interest
therein, or its rights and powers thereunder), from time to time, in connection
with a Securitization. The Borrower may only assign this Credit Enhancement Note
and the rights and obligations under this Credit Enhancement Note (including the
rights to rebates or credits as provided in Section 4(d)) in full but not in
part, (i) with the prior written consent of the Lender, (ii) to entities
qualified to be Program Borrowers and (iii) upon payment to Lender of (A) a fee
in an amount equal to *** of the outstanding Aggregate Loan Amount on the date
of any such assignment and (B) all expenses incurred by the Lender in connection
therewith (including attorneys fees and costs). For purposes of this Credit
Enhancement Note, a change in control of the Borrower (whether by stock sale,
issuance or otherwise) shall constitute an assignment of this Credit Enhancement
Note. This Credit Enhancement Note shall be binding upon Borrower, its heirs,
devises, administrators, executives, personal representatives, successors,
receivers, trustees, and permitted assignees, including all successors in
interest of the Borrower, and shall inure to the benefit of the Lender, and the
successors and assignees of the Lender.
(c) TIME OF THE ESSENCE. For all payments to be made and obligations
to be performed under this Credit Enhancement Note, time is of the essence.
(d) SEVERABILITY. Whenever possible this Credit Enhancement Note and
each provision hereof shall be interpreted in such manner as to be effective,
valid and enforceable under applicable law. If and to the extent that any such
provision shall be held invalid and unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provisions hereof, and any determination that the application of any
provision hereof to any person or under any circumstance is illegal and
unenforceable shall not affect the legality, validity and enforceability of such
provision as it may be applied to any other person or in any other circumstance.
(e) NO WAIVER; REMEDIES CUMULATIVE. No failure to exercise and no
delay in exercising on the part of the Lender of any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof, or the exercise of any other right, power or privilege. All
rights and remedies provided in this Credit Enhancement Note or any other Loan
Document or any law shall be available to Lender and shall be cumulative.
(f) HEADINGS DESCRIPTIVE. The headings of the various sections,
subsections and paragraphs of this Credit Enhancement Note are for convenience
of reference only, do not constitute a part hereof and shall not affect the
meaning or construction of any provision hereof.
(g) GOVERNING LAW. THIS CREDIT ENHANCEMENT NOTE AND ALL OPERATIVE
DOCUMENTS ARE ENTERED INTO IN THE STATE OF IDAHO, AND THE VALIDITY,
ENFORCEABILITY, CONSTRUCTION AND INTERPRETATION OF THIS CREDIT ENHANCEMENT NOTE
SHALL BE CONSTRUED, APPLIED, ENFORCED
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
C-12
AND GOVERNED UNDER AND BY THE LAWS OF THE STATE OF IDAHO WITHOUT GIVING EFFECT
TO PRINCIPLES OF CONFLICTS OF LAW.
14. LOAN POOL FLEXIBILITY. Lender shall have the right, at its sole and
absolute discretion upon written notice to Borrower, to transfer (a "Transfer"),
within eighteen (18) months from the effective date of this Credit Enhancement
Note, all or any of the Consolidated Loans and all Liens related to such
Consolidated Loans, from the Program to any other loan program formed by Lender.
Upon the occurrence of a Transfer, the applicable Operative Documents shall be
automatically amended and reclassified to reflect the Transfer. The Borrower
shall execute all amendments or other documents Lender deems necessary to
effectuate a Transfer.
THIS DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A
SEALED INSTRUMENT.
ATTESTED: eROOM SYSTEM SPE, INC.
By: By:
------------------------------- -------------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
---------------------------- ----------------------------
(SEAL) Address:
--------------------------
C-13
CORPORATE ACKNOWLEDGEMENT
STATE OF )
-----------------
) ss.
COUNTY OF )
-----------------
On the ____ day of __________________, 200__, before me a Notary Public
personally appeared ____________________, to me known to be the person named in
and who executed the foregoing instrument, who, being duly sworn, did depose and
say that he/she resides at _______________________________________________; that
he/she is the ________________ of __________________________, the corporation
described in and which executed the foregoing instrument; and that he/she signed
his/her name thereto by authority of the board of directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of office
this _____ day of ___________________, 200__.
-----------------------------------------
Notary Public
My commission expires:
------------------------
C-14
SCHEDULE I
SCHEDULE OF CONSOLIDATED LOANS
Credit Scheduled
Loan Enhancement Monthly Loan
Loan Number Date of Loan Amount Amount Payment Maturity Date Ratable Share
----------- ------------ ------ ------ ------- ------------- -------------
C-15
SCHEDULE II
CERTAIN DEFINITIONS
"[ ] PROGRAM" means the series of loans made by the Lender to
the Program Borrowers in an aggregate amount not to exceed *** and to be funded
by the Lender no later than __________ __, 200_.
"APPLICABLE INTEREST RATE" means a rate equal at any time to the weighted
average of the Interest Rates on the Consolidated Loans less *** per annum;
PROVIDED, HOWEVER, that if a Non-Production Event occurs, the Applicable
Interest Rate will automatically and retroactively be increased to the sum of
the *** (determined as of ____________) plus ***.
"CONSOLIDATION PAYMENT" means $____________, but will change if the Funding
Date is any day other than the date hereof.
"CREDIT ENHANCEMENT AMOUNT" means, as applicable, each of the credit
enhancement amounts set forth on Schedule I attached to the Credit Enhancement
Note. Among Program Borrowers the percentage of Credit Enhancement Amount to
Aggregate Loan Amount may vary and the percentage amount for each Program
Borrower is set by Lender in its sole and absolute discretion.
"INDEBTEDNESS" means the principal of, interest on, and any other amounts
due at any time under, this Credit Enhancement Note, the Operative Documents or
any other document delivered in connection with the Consolidated Loans,
including the Prepayment Amount; provided, that such amounts are related to the
Consolidated Loans.
"LOAN AMOUNT" means, as applicable, each of the loan amounts set forth on
Schedule I attached to the Credit Enhancement Note.
"LOAN DEFICIENCY" means a delinquency or default with respect to any Loan
or related Indebtedness.
"NOTE AMOUNT" means the Aggregate Credit Enhancement Amount PLUS the
Aggregate Loan Amount.
"RATABLE SHARE" means, with respect to each Consolidated Loan, the
fraction, expressed as a percentage, corresponding to such Consolidated Loan on
Schedule I attached to the Credit Enhancement Note. For a given Consolidated
Loan, its Ratable Share will equal the original Loan Amount (of said given loan)
divided by the original Aggregate Loan Amount of the Borrower.
"SCHEDULED MONTHLY LOAN PAYMENT" means, with respect to each Consolidated
Loan, the Scheduled Monthly Loan Payment corresponding to such Consolidated Loan
on Schedule I attached to the Credit Enhancement Note.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
C-16
"STATED MATURITY DATE" means, with respect to each Consolidated Loan, the
Maturity Date corresponding to such Consolidated Loan listed on Schedule I
attached to the Credit Enhancement Note.
C-17
Warehouse
ALLONGE
Allonge endorsement attached to the Note, in the stated principal amount of
$____________, executed by ________________ payable to the order of AMRESCO
LEASING CORPORATION, a Nevada corporation.
Pay to the order of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
custodian or trustee under the applicable custodian agreement or indenture, and
its successors and/or assigns, without recourse or warranty.
AMRESCO LEASING CORPORATION,
a Nevada corporation
By:
--------------------------
Name:
Title:
C-18
Securitization
ALLONGE
Allonge endorsement attached to the Credit Enhancement Note, in the stated
principal amount of $____________, executed by ________________ payable to the
order of AMRESCO LEASING CORPORATION, a Nevada corporation.
Pay to the order of AMRESCO COMMERCIAL FINANCE, INC., a Nevada corporation
without recourse or warranty.
AMRESCO LEASING CORPORATION,
a Nevada corporation
By:
--------------------------
Name:
Title:
Pay to the order of ACFI FUNDING CORP., a Delaware corporation without
recourse or warranty.
AMRESCO COMMERCIAL FINANCE, INC.,
a Nevada corporation
By:
--------------------------
Name:
Title:
Pay to the order of FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association, as custodian or trustee under the applicable
custodial or trust agreement, without recourse or warranty.
ACFI FUNDING CORP.,
a Delaware corporation
By:
--------------------------
Name:
Title:
C-19
EXHIBIT D
BORROWING NOTICE
THE AGREEMENT PURSUANT TO WHICH THIS NOTICE IS DELIVERED REQUIRES YOU TO MAKE
THE REQUESTED LEASE FINANCING LOAN, IF ALL CONDITIONS CONTAINED IN THE AGREEMENT
ARE SATISFIED AND OCCURRING ON A DATE SELECTED BY US, WHICH DATE SHALL BE NOT
MORE THAN SEVEN (7) BUSINESS DAYS AFTER YOUR RECEIPT OF THE BORROWING NOTICE (OR
ON SUCH OTHER DATE TO WHICH WE MAY AGREE).
--------------------, ------
VIA:
------------------------
AMRESCO Leasing Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: BORROWING NOTICE issued pursuant to Master Business Lease Financing
Agreement, dated May 11, 2000, by and among the undersigned (the
"BORROWER"), you, as lender (the "LENDER"), RoomSystems, Inc. and eRoom
System Technologies, Inc. (as amended from time to time, the "AGREEMENT")
Ladies and Gentlemen:
This constitutes an irrevocable Borrowing Notice pursuant to the terms of the
above-referenced Agreement.
SECTION 1. REQUEST. The Borrower hereby requests that the Lender issue a
Lease Financing Loan in accordance with the terms of the Agreement. Following is
the information required by the Agreement with respect to this Borrowing Notice:
(a) AMOUNT. The Loan Amount of the Lease Financing Loan shall be
$_______________ (minimum Loan Amount ***), which amount is equal to
the Refreshment Center Loan Amount for the Business Lease described
below.
(b) DESIGNATION AND TERM. The Lease Financing Loan is a: [Check one]
_____ Lease Financing Loan that has completed the Seasoning Period
(82 month term)
_____ Advance Funded Lease Financing Loan (84 month term)
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
D-1
(c) TYPE OF BUSINESS LEASE. The type of Business Lease (and the
calculation amounts) for the related Refreshment Centers is: [check
one]
_____ Threshold Plan
_____ Percentage Plan
_____ Platinum Plan
If the Platinum Plan, check one of the following:
_____ 100% Guarantee
_____ 10% Participation
_____ 25% Participation
(d) BUSINESS LEASE. The Business Lease relating to the Lease Financing
Loan is [Provide a general description of the Business Lease,
including the parties thereto, the date thereof, specific Equipment
related thereto and the location and type of property covered by such
Business Lease in reasonable detail].
(e) MATURITY DATE. The Maturity Date of the Lease Financing Loan is as
follows:
-----------------, ------.
(f) AMORTIZATION PERIOD. The principal of this Lease Financing Loan shall
be amortized over a period of: [Check one]:
____ 82 months (Seasoned Lease Financing Loan)
____ 84 months (Advance Funded Lease Finance Loan)
(g) ACCOMPANYING DOCUMENTS. All documents, instruments and certificates
required to be delivered pursuant to the conditions precedent
contained in Sections 5.1, 5.2 and 5.3 of the Agreement, including all
appropriate UCC financing statements will be delivered, and the
Borrower will have complied with all terms, covenants and conditions
of the Agreement, on or before the closing date.
(h) WIRING INFORMATION. Please wire the proceeds of the Lease Financing
Loan on or before the closing date into our account in accordance with
the following wiring information:
-------------------------------------------------
-------------------------------------------------
D-2
SECTION 2. OUTSTANDING LOAN AMOUNTS. The information contained in the
following table is true, correct and complete, to the undersigned's knowledge.
The undersigned acknowledges and agrees that the final determination of the
information shall be made by the Lender, in accordance with the terms of the
Agreement.
--------------------------------------------------------------------------------
Current outstanding amount of
all seasoned Lease Financing
Loans
--------------------------------------------------------------------------------
Current outstanding amount of
all Advance Funded Lease
Financing Loans
--------------------------------------------------------------------------------
Total current outstanding
amount of all Lease Financing
Loans
--------------------------------------------------------------------------------
Outstanding amount of all
seasoned Lease Financing Loans
after this proposed loan
--------------------------------------------------------------------------------
Outstanding amount of all
Advance Lease Financing Loans
after this proposed loan
--------------------------------------------------------------------------------
Outstanding total amount of
all Lease Financing Loans
after this proposed loan
--------------------------------------------------------------------------------
SECTION 3. CERTIFICATION. The Borrower hereby certifies that each of the
following requirements has been satisfied. [Indicate if waived by Lender]
1. The Business Leases related to all Lease Financing Loans funded under
the Program must have average revenues to the Borrower (after giving
effect to the revenue sharing allocations under the related Business
Leases) per installed Refreshment Center of at least *** per day for
each *** advanced by the Lender as Lease Financing Loans under the
Program.
2. There is no existing default on any indebtedness or equity obligations
of any of the eRoom Parties.
3. The eRoom Parties have and have maintained a Net Worth of at least ***
(determined on quarterly basis).
4. No more than *** of the Business Leases related to any Lease Financing
Loan (determined by reference to the total units of Refreshment
Centers subject to such Business Leases) are or have been more than
*** days delinquent in the payment of rents or other obligations
thereunder.
5. eRoom maintains working capital of at least *** (determined
quarterly).
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
D-3
6. The Lessee is not an Underperforming Property. *
7. None of the first *** rental payments under the related Business Lease
have been more than *** late. *
8. During the Term of this Agreement, the eRoom Parties must maintain a
liabilities to net worth ratio of no more than 3.0:1 (determined on a
quarterly basis.
SECTION 4. TRANSACTION SUBMISSION PACKAGE. Attached hereto is a Transaction
Submission Package for the proposed Lease Financing Loan, consisting of the
following items:
a. Deal summary;
b. Copies of all required UCC- 1 financing statements;*
c. Verification of business' *** (including dates received);*
d. ***
e. ***
f. Business Lease and all supporting documentation;*
g. Estoppel certificate signed by business/lessee;*
h. ACH authorization forms (unless declined by business);*
i. ▇▇▇▇ of Sale for Equipment from eRoom to the Borrower; and*
j. Licenses for Equipment Intellectual Property to the Borrower and
RSi;*
k. ***
l. ***
m. ***
n. The Average Gross Revenue during the Seasoning Period; and
o. Evidence that the business has been in operation for at least one
year.
*Not Required as part of initial Borrowing Notice.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
D-4
SECTION 5. CAPITALIZED TERMS. All capitalized terms used but not defined in
this Borrowing Certificate shall have the meanings ascribed to such terms in the
Agreement.
Sincerely,
eRoom System SPE, Inc.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
[SEAL]
D-5
EXHIBIT E
TRANSACTION APPROVAL FORM
Pursuant to Section 2.2 or 2.3 of that certain Master Business Lease
Financing Agreement dated May 11, 2000, among the undersigned (the "Lender"),
eRoom System SPE, Inc., as Borrower, RoomSystems, Inc. and eRoom System
Technologies Inc., the Lender hereby confirms its approval of the proposed Lease
Financing Loan described in the attached Borrowing Notice, with the following
terms.
Designation _____ Seasoned Lease Financing Loan - 82 month term
(Check One) _____ Advance Funded Lease Financing Loan - 84 month term
Loan Amount $
-----------------------
Term months
-------
Amortization Period 82 months
-----
84 months
-----
Closing Date no later than
---------------, -------
Dated:
--------------------, ------
AMRESCO LEASING CORPORATION
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
E-1
EXHIBIT F
FORM OF ACKNOWLEDGEMENT
AMRESCO Leasing Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Acknowledgement issued pursuant to Master Business Lease financing
Agreement dated as of May 11, 2000, by and among the undersigned (the
"Borrower"), you, as lender (the "Lender"), RoomSystems, Inc. and
eRoom System Technologies Inc. (as amended from time to time, the
"Agreement")
Ladies and Gentlemen:
This constitutes an Acknowledgement pursuant to Section 2.3(e) of the
Agreement.
We hereby acknowledge that the Transaction Submission Package submitted to
you on _______________, _____ and the representation and warranties set forth in
Section 4.1 of the Agreement are, and will, as of the date of the closing of the
Lease Financing Loan described below, be true and correct in all material
respects and that the Borrower has satisfied the Guidelines and all terms and
conditions of the Agreement.
Loan Amount $
-----------------------
Term months
-------
---------------, -------
Sincerely,
eROOM SYSTEM SPE, Inc.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Dated:
-----------
F-1
EXHIBIT H FORM OF CUSTODIAL AGREEMENT THIS CUSTODIAL AGREEMENT (this
"AGREEMENT") is made as of this ____ day of __________________, 2000, by and
among [ROOMSYSTEMS SPE], a Nevada [corporation] (the "BORROWER"), AMRESCO
LEASING CORPORATION, a Nevada corporation (the "LENDER"), NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association (the
"CUSTODIAN") and ROOMSYSTEMS, INC., a Nevada corporation (the "SERVICER").
W I T N E S S E T H:
WHEREAS, the Borrower is the lessor under certain Business Leases providing
for the leasing of Refreshment Centers and related Equipment to hotels and
timeshares located in the United States; and
WHEREAS, pursuant to the Master Business Lease Financing Agreement, dated
__________________, 2000, by and among the Lender, the Borrower and the other
parties named therein (the "MASTER AGREEMENT"), the Lender has agreed to provide
financing to the Borrower, in the form of Lease Financing Loans, secured by,
INTER ALIA, the related Business Leases and Pledged Assets; and
WHEREAS, the Borrower, the Lender, the Servicer [and the other parties
named therein] have entered into the Servicing Agreement, dated as of
______________ ____, 2000, in order to provide for the servicing of the Business
Leases; and
WHEREAS, the Lender and the Borrower wish to set forth the terms and
conditions pursuant to which the Custodian will (i) review the Business Leases,
(ii) take possession of, and exercise control over the Business Leases and
certain documents and instruments related thereto, and (iii) receive all
payments due under the Business Leases and distribute the Collected Funds
pursuant to the Master Agreement; and
WHEREAS, the Custodian has agreed to act as agent for the Borrower and the
Lender for the foregoing purposes, all upon the terms and conditions and subject
to the limitations set forth herein;
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
H-1
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Master Agreement. In
addition, the following capitalized terms shall have the meanings set forth
below:
"ACCOUNTS" shall mean, collectively, the Custodial Account, the Property
Tax Reserve Account and the Loss Reserve Account.
"CERTIFICATION" shall have the meaning assigned to such term in Section
2.2(b).
"CUSTODIAL FILE" shall mean, with respect to each Lease Financing Loan
financed under the Master Agreement, the related Business Lease securing such
Lease Financing Loan and all other documents and instruments necessary to obtain
payment from the Lessee of all amounts due under the Business Lease.
"CUSTODIAL ACCOUNT" shall mean the segregated trust account established and
maintained in accordance with Section 3.1(b) and entitled "Norwest Bank
Minnesota, National Association, as Custodian, Custodial Account - Loan Pool
#___," for the benefit of the Lender and the Borrower, as their interests may
appear.
"ITEMS" shall have the meaning assigned to such term in the UCC.
"LEASE SCHEDULE" shall have the meaning assigned to such term in Section
2.2(a).
"LOSS RESERVE ACCOUNT" shall mean the segregated trust account established
and maintained in accordance with Section 3.1(b) and entitled "Norwest Bank
Minnesota, National Association, as Custodian, Loss Reserve Account - Loan Pool
#___," for the benefit of the Lender and the Borrower, as their interests may
appear.
"PERMITTED INVESTMENTS" shall mean _____.
"PROPERTY TAX RESERVE ACCOUNT" shall mean the segregated trust account
established and maintained in accordance with Section 3.1(b) and entitled
"Norwest Bank Minnesota, National Association, as Custodian, Property Tax
Reserve Account - Loan Pool #____" for the benefit of the Lender and the
Borrower, as their interests may appear.
"REPRESENTATIVES" shall have the meaning assigned to such term in Section
3.1(a).
"REQUEST FOR RELEASE" shall have the meaning assigned to such term in
Section 2.3.
H-2
ARTICLE II
CUSTODY OF LEASE DOCUMENTS
Section 2.1 CUSTODIAN TO ACT AS AGENT; ACCEPTANCE OF CUSTODIAL FILES.
The Custodian, as the duly appointed agent of the Lender and the Borrower
for these purposes, hereby agrees that it shall hold each Business Lease and the
other documents constituting each Custodial File which are delivered to the
Custodian, as agent of the Lender and the Borrower, in trust, for the use and
benefit of the Lender and the Borrower, as their interests may appear. The
Custodian undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.3, no Business Lease or other document constituting a
part of a Custodial File shall be delivered by the Custodian to the Lender, the
Borrower, or any other person or shall be otherwise released from the possession
of the Custodian.
Section 2.2 DELIVERY AND REVIEW OF CUSTODIAL FILES.
(a) Not less than ___ Business Days after the Borrowing Date of
each Transaction closed under the Master Agreement, the Lender shall deliver
to the Custodian the Custodial Files containing the Business Leases and
related documents submitted by the Borrower to the Lender in each Transaction
Submission Package. The Lender shall provide the Custodian a schedule and an
electronic file (the "LEASE SCHEDULE") of Business Leases, containing the
information set forth in Schedule I attached hereto for each Business Lease.
The Custodian shall be entitled to rely upon the Business Leases and the
Lease Schedules provided by the Lender as the conclusive schedules in its
review, pursuant to paragraph (b) below.
(b) The Custodian agrees, for the benefit of the Lender and the
Borrower, to maintain physical possession of the Custodial Files, and to
review each Custodial File delivered to the Custodian by the Lender pursuant
to paragraph (a) above, to verify whether they are complete on their face and
whether each Business Lease is an original. Such review will be performed by
the Custodian in accordance with acceptable review procedures. Within ___
Business Days after the delivery to the Custodian of such Custodial Files (or
within such other period of time as the Custodian, the Lender and the
Borrower shall agree), the Custodian shall deliver to the Lender and the
Borrower a certificate (the "CERTIFICATION"), in substantially the form
annexed hereto as EXHIBIT B. If in performing the review required by this
Section 2.2(b), the Custodian finds any document or documents constituting a
part of the Custodial File to be missing or defective in any material
respect, the Custodian shall promptly so notify the Lender and the Borrower.
Section 2.3 CUSTODIAN TO COOPERATE; RELEASE OF CUSTODIAL FILES. Upon the
receipt by the Custodian of a request for release of a Custodial File (the
"REQUEST FOR RELEASE"), in substantially the form annexed hereto as EXHIBIT C,
executed by the
H-3
Borrower and acknowledged by the Lender and certifying with respect to the
Business Lease related to such Custodial File that (i) all payments due from the
Lessee under the Business Lease have been paid to the Custodial Account, (ii)
the Lender and the Borrower intend to dispose of the Business Lease or the
related Lease Financing Loan through a Securitization or otherwise, or (iii) the
Lender has agreed to release its security interest in the Business Lease after
repayment of the entire Loan Amount of the Lease Financing Loan secured by such
Business Lease, the Custodian shall promptly release the related Custodial File
to the Borrower.
ARTICLE III
ACCOUNTS, COLLECTIONS AND DISBURSEMENTS
SECTION 3.1 ESTABLISHMENT OF ACCOUNTS.
(a) Concurrently with the execution of this Agreement, the
Custodian shall establish and maintain with the Custodian's corporate trust
department the Custodial Account for the purpose of collecting directly from
each Lessee all payments due under the Business Leases. The Custodial Account
shall be in the name of the Custodian, as agent of the Lender and the
Borrower, for the use and benefit of the Lender and the Borrower, as their
interests may appear. The Lender and the Borrower acknowledge and agree that
only the Custodian and/or the employees, designated representatives and
agents of the Custodian (the "REPRESENTATIVES") shall have access to the
Custodial Account, and hereby grant to the Custodian and its Representatives
exclusive and unrestricted access to the Custodial Account.
(b) Concurrently with the execution of this Agreement, the
Custodian shall also establish and maintain with the Custodian's corporate
trust department the Property Tax Reserve Account and the Loss Reserve
Account. On each Disbursement Date, the Custodian shall make deposits and
disbursements to and from the foregoing accounts, as described in Section
3.5(a).
(c) The Custodian shall hold amounts deposited in the Accounts
in trust for Lender and the Borrower, as their interests may appear, and
shall not commingle such amounts either between Accounts or with any other
amounts held by the Custodian on behalf of the Lender, the Borrower or any
other Person.
(d) The Custodian shall invest amounts held in the Accounts in
Permitted Investments, at the written direction of [the Lender]. All earnings
on Permitted Investments shall be credited to the related Account.
SECTION 3.2 APPOINTMENT OF ATTORNEY-IN-FACT. The Borrower hereby makes,
constitutes and appoints the Custodian as its true and lawful attorney-in-fact,
with full power of substitution: (a) to receive and open all mail addressed to
the Borrower, its agents or its employees, at the Custodial Account; (b) to
remove therefrom any notes, checks, acceptances, drafts, money orders or other
instruments under the terms of this
H-4
Agreement, with full power to endorse the name of the Borrower and its agents
and employees upon any such notes, checks, acceptances, drafts, money orders,
instruments or other documents, and to effect the deposit and collection
thereof to the Custodial Account; (c) to sign the name of the Borrower and
its agents and employees on drafts against its debtors, on notices to such
debtors, on assignments and notices of assignments, financing statements or
other public records or notices and on all other instruments and documents;
and (d) to do any and all things necessary or take such action in the name
and on behalf of the Borrower to carry out the intent of this Agreement. The
Borrower agrees that neither the Custodian nor any of its Representatives
shall be liable for any acts of commission or omission or for any error or
judgment or mistake of fact or law in respect to the exercise of this power
of attorney, except for the gross negligence and willful misconduct of the
Custodian, and/or its Representatives. This power of attorney shall be
irrevocable during the term of this Agreement.
SECTION 3.3. RECEIPT OF RENTS. On or before the Borrowing Date with
respect to a Lease Financing Loan, the Borrower shall instruct all Lessees in
writing to send all payments due under the Business Leases to the Custodial
Account by delivering to each Lessee, by certified mail, return receipt
requested, a letter substantially in the form of EXHIBIT A attached hereto.
The Borrower shall not collect any payments due under the Business Leases in
any other manner. Cash receipts and other payments received on account of the
Business Leases will be deposited in the Custodial Account by direct mail or
a third-party messenger. If the Borrower receives any rent payments or any
other payment in respect of a Business Lease, outside of the Custodial
Account arrangement described herein, the Borrower shall immediately transmit
such payments to the Custodial Account, properly endorsed to the Custodian.
SECTION 3.4 CREDIT TO CUSTODIAL ACCOUNT. Credit and collections of the
money deposited to the Custodial Account shall be subject to the Custodian's
standard collection and credit procedure for similar deposits received by the
Custodian through other channels. The Borrower hereby agrees to indemnify and
hold the Custodian harmless against any loss, cost, attorneys' fees, claims,
interest expense or suit suffered by the Custodian and arising out of or in
connection with its receiving, processing or depositing of checks, drafts or
other payment items pursuant to this Agreement, other than such arising out of
the Custodian's gross negligence or willful misconduct.
Section 3.5 DISBURSEMENTS FROM CUSTODIAL ACCOUNT.
(a) On each Disbursement Date, the Custodian shall disburse the
Collected Funds held on deposit in the Custodial Account to the parties or
accounts indicated in the following priorities (to the extent of funds
available therefor):
(i) to the Servicer, the Servicing Fee for such
Disbursement Date;
(ii) to the Property Tax Reserve Account, the Property Tax
Reserve Amount for such Disbursement Date;
H-5
(iii) to the Lender, an amount equal to (x) the Monthly
Payment Amount for such Disbursement Date, (y) the Carry Forward Amount and
(z), if applicable, the Accelerated Loan Amount for such Disbursement Date
with respect to all Lease Financing Loans;
(iv) to the Loss Reserve Account, the Loss Reserve Amount
for such Disbursement Date;
(v) to the Residual Profits Collection Account, if
necessary to cover a shortfall in funds available to pay items (i) - (iv) of
Section 2.8(c) of any other Loan Pools; and
(vi) to the Borrower, the Residual Profits for such
Disbursement Date.
(b) Notwithstanding the foregoing, to the extent that Collected
Funds for any Disbursement Date are insufficient to make a full payment of
the amounts required in clauses (i) - (iii) above, the Custodian shall, to
the extent of funds available therefor, withdraw amounts (x) first, from the
Loss Reserve Account and (y) second, the Residual Profits Collection Account
and disburse such amounts in accordance with the priorities set out in such
clauses (i) -(iii).
(c) Notwithstanding clause (b) above, to the extent that
Collected Funds for any Disbursement Date are insufficient to make a full
payment to the Loss Reserve Account pursuant to clause (a)(iv) above, the
Custodian shall, to the extent of funds available therefor, withdraw amounts
from the Residual Profits Collection Account and distribute such amounts to
the Loss Reserve Account pursuant to clause (a)(iv) above.
(d) On the Disbursement Date in [January] of each year, any
amounts remaining in the Property Tax Reserve Account, after the payment of
all applicable taxes for the prior calendar year, will be applied as payments
in accordance with the priorities set out in clauses (iii) - (vi) of Section
3.5(a).
ARTICLE IV
REPORTS, DOCUMENTS AND OTHER INFORMATION
SECTION 4.1 MAINTENANCE OF RECORDS. The Custodian will maintain a record of
all checks and other negotiable Items forwarded to the Custodial Account to
facilitate reconstruction of a deposit should the need arise and the request be
made. On each Disbursement Date, the Custodian will provide each of the
Borrower, the Lender and the Servicer with an accounting of the disbursements
and allocations of Collected Funds for each Disbursement Date. The Custodian
shall, on or before the _________ (____) day of each month, provide the Lender,
the Borrower and the Servicer with copies of all payments and correspondence
received from Lessees, including checks, invoices, advances and any
H-6
other correspondence and information regarding withdrawals, forwarded to the
Custodial Account during the previous calendar month. The Custodian shall not be
liable, however, for any failure to make and/or provide such a record due to
clerical error, unexpected film or equipment failure, inability to obtain film
or equipment or otherwise. The Servicer shall monitor the activities in the
Custodial Account by direct, on-line computer access to account balance and
activity information and by receiving and reconciling monthly reports from the
Custodian, with respect to deposits and withdrawals from the Custodial Account.
SECTION 4.2 [RIGHT TO INSPECT. The Custodian shall endeavor, but shall not
be obligated or required to inspect all Items forwarded to the Custodial Account
to identify Items which bear a restrictive notation, such as "paid in full" or
similar language, and if such statements are identified, shall notify the
Borrower [and the Servicer] of Items bearing such restrictions. If the Borrower
disputes such restrictive statement, the Borrower, within _______ (__) days from
the date of notice from the Custodian, shall use its best efforts to obtain a
replacement Item without such restriction from its maker or substitute its own
Item, or if a substitute is not provided within ______ (__) days, the Lender may
deposit in the Custodial Account such Item bearing the restrictive statement.
The Borrower agrees that the Custodian shall not have any liability in the event
it processes any Item bearing such restriction, except in instances of willful
misconduct.]
SECTION 4.3 CUSTODIAN TO PROVIDE ACCESS TO INFORMATION. The Lender and the
Borrower shall be provided by the Custodian such access to the books and records
of the Custodian relating to the Custodial Files and to the operations of the
Custodian respecting the administration of the Custodial Files (such access to
be during business hours and to be upon reasonable advance notice) as shall be
reasonably necessary to permit the Lender and the Borrower to take all necessary
action to ensure the compliance by the Custodian with the terms and conditions
of this Agreement. In addition, the Custodian shall comply with all reasonable
requests for information by the Lender and the Borrower, from time to time,
relating to the subject matter of this Agreement.
ARTICLE V
CONCERNING THE CUSTODIAN
Section 5.1 CUSTODIAN'S FEES AND EXPENSES. The [Servicer/Borrower]
covenants and agrees to pay to the Custodian from time to time, and the
Custodian shall be entitled to, reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the [Servicer/Borrower] will pay or reimburse
the Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its gross negligence or willful misconduct.
H-7
The Custodian shall be authorized to charge for Items returned to it, including
returned checks, in accordance with the Custodian's usual and customary banking
procedures.
SECTION 5.2 REPLACEMENT OF CUSTODIAN.
(a) No resignation or removal of the Custodian and no
appointment of a successor Custodian shall become effective until the
acceptance of appointment by the successor Custodian pursuant to this
Section. The Lender and the Borrower may agree to remove the Custodian by so
notifying the Custodian and appointing a successor Custodian. The Custodian
may resign from the obligations and duties hereby imposed upon it upon giving
sixty (60) days written notice to the Lender and the Borrower.
(b) Either the Lender or the Borrower may remove the Custodian
if (i) the Custodian fails to comply with Section 5.4, (ii) the Custodian is
adjudged a bankrupt or insolvent, (iii) a receiver or other public officer
takes charge of the Custodian or its property, or (iv) the Custodian
otherwise becomes incapable of acting.
(c) If the Custodian resigns or is removed, or if a vacancy
exists in the office of the Custodian for any reason, the Lender shall
promptly appoint (with the consent of the Borrower - such consent not to be
unreasonable withheld) a successor Custodian by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Custodian and one copy to the successor Custodian. If no successor Custodian
shall have been so appointed, the Lender or the resigning Custodian may
petition any court of competent jurisdiction for the appointment of a
successor Custodian.
(d) The Custodian hereby agrees that it shall take all actions
reasonably necessary and shall cooperate with the Lender and the Borrower to
facilitate any transfer of the Custodial Files and all of its obligations,
duties and rights hereunder. Any successor Custodian shall be a depository
institution subject to supervision or examination by federal or state
authority and shall be able to satisfy the other requirements contained in
Section 5.4.
SECTION 5.3 MERGER OR CONSOLIDATION OF CUSTODIAN. Any Person into which the
Custodian may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Custodian shall be a party, or any Person succeeding to the business of the
Custodian, shall be the successor of the Custodian hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
SECTION 5.4 REPRESENTATIONS OF CUSTODIAN. The Custodian hereby represents
that it is a depository institution subject to supervision or examination by a
federal or state authority, has a combined capital and surplus of at least ***,
is qualified to do business in the jurisdiction in which it will establish the
Accounts and hold any Custodial File and has corporate trust powers acting in
its fiduciary capacity.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
H-8
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address as follows:
(1) If to the Borrower:
[RoomSystems SPE]
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(2) If to the Lender:
AMRESCO Leasing Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
(3) If to the Custodian:
Norwest Bank Minnesota, National Association
[Address]
Attention: Corporate Trust Department
(4) If to the Servicer:
RoomSystems, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇.
▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 6.2 OTHER AGREEMENTS. Except as expressly herein provided, nothing
contained in this Agreement shall in any way supersede, limit or otherwise
modify any obligations of the Borrower or act as a waiver of the rights of the
Lender under the Master Agreement or any document or instrument referenced
therein or entered into in connection therewith, including without limitation
the Stock Pledge Agreement, or any right or remedy available to the Lender at
law or in equity.
H-9
SECTION 6.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement (and with respect
to the relationship between the Lender and the Borrower, this Agreement, the
Master Agreement and the other documents and instruments referenced therein and
delivered pursuant thereto) constitute the full and entire understanding and
agreement between the parties with respect to the subject matter hereof and
supersede, merge, and replace, all prior negotiations, offers, promises,
representations, warranties, agreements and writing with respect to such subject
matter, both written and oral. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated,
except by a written instrument signed by the parties hereto.
SECTION 6.4 ASSIGNMENTS. The Borrower shall not assign its rights or
obligations under this Agreement without the prior written consent of the
Lender, which consent may be withheld in the Lender's sole discretion. The
Lender may assign any or all of its rights, title, interests or duties, in whole
or in part, hereunder without the prior written consent of the Borrower. The
Lender shall notify the Borrower of any such assignment within ten (10) days of
such assignment taking effect.
SECTION 6.5 WAIVER. Any party may waive the performance of any obligation
owed to it by any other party or parties hereunder or for the satisfaction of
any condition precedent to the waiving party's duty to perform any of its
covenants. Any such waiver shall be valid only if contained in a writing signed
by the party to be charged.
SECTION 6.6 BORROWER REMAINS LIABLE. Neither the Custodian nor the Lender
shall not, by reason of this Agreement, have any obligation or liability under
the Business Leases, nor shall the Custodian and the Lender be obligated to
perform any of the obligations or duties of the Borrower thereunder, all of
which shall remain the sole and exclusive obligations of the Borrower.
SECTION 6.7 INDEPENDENT CONTRACTOR. In connection with any actions that the
Borrower may take under this Agreement in connection with any Refreshment
Center, Equipment, Business Lease or the related Collected Funds, the Borrower
is, and shall act as, an independent contractor and shall not have any authority
to make any commitments, statements or representations, or incur any
obligations, or behalf of the Lender, or to bind or commit the Lender in any
manner, to make, alter, or execute any document or agreement on behalf of the
Lender. The Borrower shall not use any name or ▇▇▇▇ of the Lender or any
affiliate of the Lender in any way unless it has the Lender's prior written
approval. The Borrower shall not accept service of any legal process in any
action that may be brought against the Lender, or employ attorneys to defend
without the Lender's prior written approval.
SECTION 6.8 INDEMNIFICATION. Neither the Lender nor the Custodian (each, an
"INDEMNITEE") shall be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including acts, omissions, errors or mistakes in
connection with
H-10
the Business Leases and the Collected Funds, except for gross negligence or
willful misconduct of such Indemnitee.
The Borrower agrees to indemnify, defend and hold each Indemnitee harmless
from and against any and all claims, demands, loss, liability or expenses
(including reasonable attorneys' fees) arising out of (i) such Indemnitee's
compliance with the terms of this Agreement, (ii) the following by the
Indemnitee of any instructions given by the Borrower relating to any claim by
any third party that the deposit or processing of any Item was unauthorized or
improper, or (iii) any claim by any third party that the Borrower failed to
perform any condition precedent to the negotiation of any Item. This
indemnification and hold harmless agreement shall not apply to any claim arising
out of the gross negligence or willful misconduct of such Indemnitee.
SECTION 6.9 GOVERNING LAW; ATTORNEYS' FEES.
(a) GOVERNING LAW AND VENUE. This Agreement shall be
governed by, construed, interpreted and applied in accordance with the laws
of the State of Idaho, without giving effect to any conflict of laws rules
that would refer the matter to the laws of another jurisdiction. In the event
any action or dispute is initiated hereunder, each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the courts of the State
of Idaho in Ada County, for the purposes of any action arising out of this
Agreement, or the subject matter hereof or thereof. To the extent permitted
by applicable law, each party hereby waives and agrees not to assert, by way
of motion, as a defense or otherwise in any such action, any claim (i) that
it is not subject to the jurisdiction of the above-named courts, (ii) that
the action is brought in an inconvenient forum, (iii) that it is immune from
any legal process with respect to itself or its property, (iv) that the venue
of the suit, action or proceeding is improper or (v) that this Agreement, or
the subject matter hereof, may not be enforced in or by such courts.
(b) ATTORNEYS' FEES. The prevailing party in any action or
proceeding relating to this Agreement shall be entitled to recover from the
non-prevailing parties, reasonable attorneys' fees and other costs incurred
with or without trial, in bankruptcy or on appeal, in addition to any other
relief to which such prevailing party may be entitled.
SECTION 6.10 PARTIES IN INTEREST. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective heirs, executors, administrators, personal representatives,
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligations or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
SECTION 6.11 TIME OF ESSENCE. Time is of the essence of each and every
provision of this Agreement.
H-11
SECTION 6.12 SEVERABILITY. The provisions of this Agreement are severable,
and if any clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision in this Agreement in any
jurisdiction. Each of the covenants, agreements and conditions contained in this
Agreement is independent and compliance by the Borrower with any of them shall
not excuse noncompliance by the Borrower with any other. The Borrower shall not
take any action the effect of which shall constitute a breach or violation of
any provision of this Agreement.
SECTION 6.13 TERMINATION. This Agreement shall terminate upon termination
of the Master Agreement, and the final remittance of all funds due to the Lender
thereunder, or at such earlier time as the Lender and the Borrower may mutually
agree.
SECTION 6.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. Any counterpart may be delivered
by facsimile; PROVIDED, HOWEVER, that attachment thereof shall constitute the
representation and warranty of the person delivering such signature that such
person has full power and authority to attach such signature and to deliver this
Agreement. Any facsimile signature shall be replaced with an original signature
as promptly as practicable.
H-12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
[eROOMSYSTEMS SPE], as Borrower
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
AMRESCO LEASING CORPORATION, as
Lender
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Custodian
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ROOMSYSTEMS, INC., as Servicer
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
H-13
SCHEDULE I
LEASE SCHEDULE
For each Business Lease, the Lender shall provide the following
information:
(a) the account number;
(b) each Lessee's name and address;
(c) the location (street address, city, state and zip code) of leased
Equipment;
(d) the term of the Business Lease;
(e) the beginning date and ending date of the Business Lease; and
(f) the amount and frequency of rental payments.
H-14
EXHIBIT A TO
CUSTODIAL AGREEMENT
LETTER TO LESSEES
(Date)
(Name and Address of Lessee)
Ladies and Gentlemen:
This letter is to inform you that, pursuant to [RoomSystems SPE's]
financing arrangements relating to Business Leases, all future amounts payable
under your Business Lease should be forwarded to a Custodial Account at the
following address:
Norwest Bank Minnesota, National Association
[RoomSystems SPE/ALC] Custodial Account Number ___
[Address]
PLEASE DO NOT SEND ANY FUTURE PAYMENTS UNDER THE BUSINESS LEASE DIRECTLY TO
[ROOMSYSTEMS SPE]. All amounts due and payable should be sent to the address
sent forth above.
If you have any questions, please contact _____________ at [RoomSystems
SPE], phone number: (___) ________.
Very truly yours,
[RoomSystems SPE]
By:
------------------------------
A-1
EXHIBIT B TO
CUSTODIAL AGREEMENT
CERTIFICATION
(Date)
AMRESCO Leasing Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
[RoomSystems SPE]
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇.
▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Re: Custodial Agreement, dated as of ____________, __, 2000 (the
"Custodial Agreement"), among AMRESCO Leasing Corporation (the
"Lender"), [RoomSystems SPE] (the "Borrower"), RoomSystems, Inc. (the
"Servicer") and Norwest Bank Minnesota, National Association (The
"Custodian")
Ladies and Gentlemen:
In accordance with the provisions of Section 2.2(b) of the Custodial
Agreement, the undersigned, as Custodian, hereby certifies that except as noted
in the attached Exception Report, it has received a Custodial File with respect
to each Business Lease identified on the Lease Schedule. Attached to this
Certification is the Exception Report, which indicates the document exceptions.
The undersigned has made no independent examination of any documents contained
in any Custodial File beyond the review specifically required by Section 2.2(b)
of the Custodial Agreement in accordance with acceptable review procedures.
Other than the review required by Section 2.2(b) of the Custodial Agreement in
accordance with acceptable review procedures, the undersigned makes no
representations as to: (i) the validity, legality, sufficiency, collectability,
effectiveness, recordability, enforceability or genuineness of any of the
documents contained in any Custodial File or the Lease Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Business
Lease.
B-1
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Custodian
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
B-2
EXHIBIT C TO
CUSTODIAL AGREEMENT
REQUEST FOR RELEASE
(Date)
Norwest Bank Minnesota,
National Association, as Custodian
[Address]
Re: Custodial Agreement, dated as of ____________ __, 2000 (the "Custodial
Agreement"), among AMRESCO Leasing Corporation (the "Lender"),
[RoomSystems SPE] (the "Borrower"), RoomSystems, Inc. (the "Servicer")
and Norwest Bank Minnesota, NATIONAL ASSOCIATION (THE "CUSTODIAN")
In connection with the administration of the Business Leases held by you as
the Custodian, we request the release of the Custodial File for the Business
Lease described below, for the reason indicated.
Lessee's Name, Address & Zip Code:
Business Lease Number:
Reason for Requesting Documents (check one)
1. Final Payment due under Business Lease Received
2. Securitization of Business Lease/Lease Financing Loan
3. Lease Financing Loan secured by Business Lease Paid in Full
4. Other (explain)
C-1
[RoomSystems SPE], as Borrower
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Date:
----------------------------------
ACKNOWLEDGED:
AMRESCO Leasing Corporation, as Lender
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Date:
----------------------------------
C-2
EXHIBIT I
FORM OF LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "AGREEMENT"), dated this 11th day of May,
2000, is by and among eRoom System Technologies, Inc., a Nevada corporation
("LICENSOR") and eRoom System SPE, Inc., a Nevada corporation ("eROOM SPE") and
RoomSystems Inc., a Nevada corporation ("RSi," and collectively with eRoom SPE,
"LICENSEE").
W I T N E S S E T H:
WHEREAS, eRoom SPE desires to purchase certain Equipment and the related
Business Leases from Licensor and to use certain intellectual property assets
owned by Licensor in connection with that certain Master Business Lease
Financing Agreement dated May 11, 2000 (the "MASTER AGREEMENT"), among RSi,
eRoom SPE, as borrower, Licensor and AMRESCO Leasing Corporation (the "LENDER").
Capitalized terms used in this Agreement and not defined therein have the
meanings given to such terms in the Master Agreement;
WHEREAS, RSi desires to service certain Equipment and the related Business
Leases and to sublicense and use certain intellectual property assets owned by
Licensor in connection with the Master Agreement and each Servicing Agreement;
and
WHEREAS, Licensor is willing to license the use of such intangible assets
to Licensee in accordance with the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency is hereby acknowledged,
Licensor and Licensee agree as follows:
1. AGREEMENT AND TERM. The parties agree that the terms and conditions of
this Agreement apply to the license of the Intangible Assets (as defined in
Section 2 of this Agreement) to Licensee by Licensor. The term of this Agreement
commences on date of execution of the Master Agreement and this Agreement shall
continue to be in effect until all obligations of RSi and eRoom SPE to the
Lender under the Master Agreement and the Operative Documents have been
satisfied in full.
2. INTANGIBLE ASSETS. "INTANGIBLE ASSETS" shall mean those Intellectual
Property and other intangible assets identified in Exhibit A attached hereto and
all other Equipment Intellectual Property. For the purposes of this Agreement,
Intangible Assets shall also include all enhancements, modifications and
derivative works thereof created by Licensor or Licensee in the ordinary course
of business.
3. GRANT AND CONDITIONS OF LICENSE. Licensor hereby grants Licensee a
perpetual, worldwide, non-transferable, nonexclusive, fully paid, royalty-free
license (the "LICENSE") to use the Intangible Assets in accordance with the
terms and conditions of
I-1
this Agreement. The License granted under this Agreement provides the Licensee
the unrestricted and unqualified right to use the Intangible Assets and such
License shall include the right of Licensee to sublicense its rights in the
Intangible Assets to certain third parties, with the express consent of
Licensor, which consent will not be unreasonably withheld.
4. PROPRIETARY MARKINGS. Licensee shall not remove or destroy any
proprietary markings or proprietary legends placed upon or contained within the
Intangible Assets. Licensee may duplicate certain documentation associated with
the Intangible Assets, at no additional charge, for Licensee's use in connection
with the provision of Intangible Assets so long as all required proprietary
markings are retained on all duplicate copies.
5. OWNERSHIP/GOODWILL. Licensor hereby acknowledges that it is the sole and
exclusive owner of all of the right, title and interest in and to the Intangible
Assets and any modifications, enhancements and derivative works of the
Intangible Assets (whether created by Licensor or Licensee), and Licensee agrees
that it will not at any time do or cause to be done any act or thing in any way
impairing or tending to impair any part of such right, title and interest.
Licensor further represents and warrants to Licensee that the Intangible Assets
do not directly or indirectly violate or infringe upon any copyright, trademark,
service ▇▇▇▇, patent, trade secret, or other proprietary or intellectual
property right of any third party or contribute to such violation or
infringement ("INFRINGEMENT"). Licensee shall not in any manner represent that
it has any ownership in the Intangible Assets or any registrations associated
therewith, and Licensee acknowledges that use of the Intangible Assets shall not
create in Licensee's favor any right, title or interest in the Intangible
Assets, other than in the License. Licensee further acknowledges that all
goodwill arising from use of the Intangible Assets by Licensee shall inure to
the benefit of Licensor.
6. QUALITY CONTROL. Licensee agrees to maintain the quality of all products
and/or services associated with the Intangible Assets at levels consistent with
the high quality of products and/or services that have been associated with the
Intangible Assets in the past. Upon at least fifteen (15) days prior written
notice, Licensor shall have the right during the term of this Agreement to
conduct reasonable reviews of the use of the Intangible Assets by Licensee from
time to time during each calendar year, but not more than two (2) times per
calendar year.
7. INFRINGEMENT/UNAUTHORIZED USE OF THE ▇▇▇▇. Licensee shall indemnify and
hold Licensor and its successors, officers, directors and assigns harmless from
and against any and all actions, claims, damages, liabilities, costs and
expenses (including reasonable attorneys' fees) resulting from or arising out of
or based upon any claim of Infringement or any unauthorized or unlawful use of
the Intangible Assets by Licensee. The parties agree to notify each other
promptly in the event either party believes any of the Intangible Assets are
being infringed or adversely affected by any unauthorized and/or unlawful use by
third parties. The parties agree to cooperate with each other in the protection
and enforcement of the rights of the Intangible Assets against any unauthorized
and/or unlawful use by third parties. Licensor may take all actions
I-2
reasonably necessary to prevent infringement and/or unauthorized use of the
Intangible Assets, and any and all recoveries from such actions will be the sole
and exclusive property of Licensor.
8. DISCLAIMER OF WARRANTY. Other than as specifically stated herein,
Licensor disclaims all warranties of any kind, including without limitation, any
statutory, or implied or otherwise arising from course of dealing or usage of
trade, as to the Intangible Assets in any manner whatsoever, or in particular,
any warranties of merchantability or fitness for a particular purpose.
9. TAXES. Unless Licensee provides Licensor with a valid tax exemption
number, Licensee shall pay directly or reimburse Licensor for all taxes,
assessments, permits and fees, however designated, which are levied upon
Licensee's rights to use the Intangible Assets as provided hereunder, excluding
personal property taxes, franchise taxes and taxes based upon Licensor's income.
10. BINDING NATURE AND ASSIGNMENT. This Agreement shall be binding on the
parties and their respective successors and assigns, but Licensee shall not have
the power to assign this Agreement without obtaining the prior written consent
of Licensor, provided, however, that a merger or a sale of all or substantially
all of Licensee's assets shall not be deemed an assignment subject to this
Section 10. If Licensee subcontracts or delegates any of its duties or
obligations of performance in this Agreement to any third party, Licensee shall
remain fully responsible for complete performance of all of Licensee's
obligations set forth in this Agreement and for any such third party's
compliance with the provisions set forth in this Agreement.
11. CONFIDENTIALITY. The parties acknowledge that in the course of
performance of their obligations pursuant to this Agreement, the parties may
obtain confidential and/or proprietary information of the other or its
affiliates or customers. Each party hereby agrees that all information
communicated to it by the other party, shall be and was received in strict
confidence, shall be used only for purposes of this Agreement, and shall not be
disclosed without the prior written consent of the other party, except as may be
necessary by reason of legal, accounting or regulatory requirements beyond the
reasonable control of the parties, so long as each party provides the other with
timely prior notice of such requirement.
12. INJUNCTIVE RELIEF. Each party acknowledges and agrees that in the event
of a breach by it of this Agreement, the other party shall have the nonexclusive
right to apply for and receive the issuance of injunctive relief, including,
without limitation, an ex parte or other temporary restraining order, a
temporary or preliminary injunction and a permanent injunction to enforce the
terms, provisions, covenants, obligations, duties and conditions described
herein.
13. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if and when delivered personally or
transmitted by telex, facsimile (receipt confirmed) or telegram, mailed by
registered or certified mail (return receipt requested) or sent by a recognized
next business day courier to the
I-3
following persons at the following addresses (or such other address for a party
as shall be specified by like notice):
In the case of Licensor:
eRoom System Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
In the case of Licensee:
Room Systems, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇.
▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
eRoom System SPE, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Either party may from time to time change its address for notification
purposes by giving the other party written notice of the new address
and the date upon which it will become effective; first class, postage
prepaid, mail shall be acceptable for provision of change of address
notices.
14. RELATIONSHIP OF PARTIES. Licensee is performing pursuant to this
Agreement only as an independent contractor. Licensee shall not act or attempt
to act or represent itself, directly or by implication, as an agent of Licensor
or its affiliates or in any manner assume or create, or attempt to assume or
create, any obligation on behalf of, or in the name of, Licensee or its
affiliates.
15. SEVERABILITY. If any provision of this Agreement is declared or found
to be illegal, unenforceable, or void, then the obligations arising under such
provision shall be null and void and each provision not so affected shall be
enforced to the full extent permitted by law.
16. WAIVER. No delay or omission by either party hereto to exercise any
right or power hereunder shall impair such right or power or be construed to be
a waiver thereof. No change, waiver or discharge hereof shall be valid unless in
writing and signed by an authorized representative of the party against whom
such change, waiver or discharge is sought to be enforced.
17. REMEDIES. All remedies set forth in this Agreement shall be cumulative
and not alternative to any other remedies available to either party at law, in
equity or otherwise, and may be enforced concurrently or from time to time.
18. SURVIVAL OF TERMS. Termination or expiration of this Agreement for any
reason shall not release either party from any liabilities or obligations set
forth in this
I-4
Agreement which (i) the parties have expressly agreed shall survive any such
termination or expiration, or (ii) remain to be performed or by their nature
would be intended to be applicable following any such termination or expiration.
19. GOVERNING LAW; VENUE; ATTORNEYS' FEES. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE STATE OF
IDAHO WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS. VENUE FOR ANY ACTION
SHALL LIE SOLELY IN ADA COUNTY, IDAHO, AND THE PARTIES HEREBY SUBMIT AND CONSENT
TO THE EXCLUSIVE PERSONAL JURISDICTION IN THE FEDERAL AND STATE COURTS OF ADA
COUNTY, IDAHO FOR ANY ACTION OR DISPUTE THAT MAY ARISE IN CONNECTION WITH OR OUT
OF THIS AGREEMENT. IN ANY SUCH ACTION, THE PREVAILING PARTY SHALL BE ENTITLED TO
RECOVER ALL EXPENSES INCURRED IN CONNECTION WITH THE ACTION, AND ANY APPEAL
THEREOF, INCLUDING BUT NOT LIMITED TO, ITS COSTS AND REASONABLE ATTORNEYS' FEES.
THE TERMS OF THIS SECTION WILL SURVIVE ANY TERMINATION OF THIS AGREEMENT.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire and exclusive
statement of the agreement between the parties with respect to its subject
matter and there are no oral or written representations, understandings or
agreements relating to this Agreement which are not fully expressed or
referenced in this Agreement. This Agreement shall not be amended except by a
written agreement signed by both parties. All exhibits and documents referenced
in this Agreement or attached to this Agreement are an integral part of this
Agreement. In the event of any conflict between the terms and conditions of this
Agreement and any such exhibits or documents, the terms of this Agreement shall
be controlling, unless specifically otherwise stated or agreed.
21. THIRD PARTY BENEFICIARY. The parties hereto acknowledge that the Lender
is an express intended third party beneficiary hereof entitled to enforce all
rights of Licensee hereunder as if it were actually a party hereto.
22. NO TERMINATION. This Agreement cannot be terminated by the parties
hereto at any time or for any reason prior to the satisfaction in full of all
Obligations of the eRoom Parties to the Lender under the Master Agreement.
23. GRANT OF LIEN. The Licensor hereby acknowledges that the Licensee shall
be permitted to grant, and the Licensor hereby waives any rights it may have to
prevent, hinder or otherwise obstruct the Licensee from granting, a lien and
security interest in this Agreement and all rights of the Licensee to use the
Intangible Assets to the Lender.
I-5
IN WITNESS WHEREOF, Licensor and Licensee acknowledge that each of the
provisions of this Agreement were expressly agreed to and have each caused this
Agreement to be signed and delivered by its duly authorized officer or
representative, as of the Effective Date.
eROOM SYSTEM TECHNOLOGIES, INC.
By:________________________________
Name:______________________________
Title:_____________________________
ROOMSYSTEMS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
eROOM SYSTEM SPE, INC.
By:________________________________
Name:______________________________
Title:_____________________________
I-6
EXHIBIT A
INTANGIBLE ASSETS
I-7
EXHIBIT J
FORM OF BUSINESS LEASE AND EQUIPMENT
PURCHASE AND SALE AGREEMENT
THIS BUSINESS LEASE AND EQUIPMENT PURCHASE AND SALE AGREEMENT (this
"AGREEMENT"), is made and entered into as of this 11th day of May, 2000, by and
between eRoom System Technologies, Inc., a Nevada corporation (the "SELLER") and
eRoom System SPE, Inc., a Nevada corporation (the "PURCHASER").
RECITALS
WHEREAS, the Seller, the Purchaser, RoomSystems Inc. ("RSi") and AMRESCO
Leasing Corporation ("ALC") are parties to the Master Business Lease Financing
Agreement dated as of May 11, 2000 (the "MASTER AGREEMENT") which provides for
the creation of a program (the "PROGRAM") which will consist of the following
elements: (i) the Seller will originate Business Leases of Equipment to hotels
and timeshares located in the United States, (ii) the purchase by the Purchaser
from the Seller of the Business Leases and Equipment pursuant to this Purchase
Agreement, (iii) the grant of a License by the Seller to the Purchaser to use
the Equipment Intellectual Property pursuant to the License Agreement, (iv) the
servicing of the Business Leases and Equipment by RSi pursuant to the Servicing
Agreement, (v) the making of Lease Financing Loans by ALC to the Purchaser
secured by the Pledged Assets to finance (i) - (iii) above and (vi) the
disposition of the Business Leases or Lease Financing Loans through
Securitizations. Capitalized terms used herein and not defined herein have the
meanings assigned to such terms in the Master Agreement; and
WHEREAS, pursuant to this Agreement, the Seller will, from time to time,
sell, assign, transfer, set over and otherwise convey without recourse to the
Purchaser, each Business Lease (other than the right to service such Business
Lease) related to a Lease Financing Loan and each piece of Equipment related to
such Business Lease.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties hereto mutually covenant and agree as
follows:
1. OFFER TO SELL; ACCEPTANCE.
(a) From time to time, the Seller shall submit an offer (an "OFFER")
to sell one or more Business Leases and the Equipment related
thereto (but not the right to service such Business Leases and
Equipment) that meet the requirements set out in the Master
Agreement to the Purchaser.
(b) Each Offer shall be sent by the Seller to the Purchaser (with a
copy to ALC) in the form attached hereto as Exhibit A.
J-1
(c) Provided that the Offer meets the requirements set out in the
Master Agreement and this Agreement (as determined by ALC
pursuant to the Master Agreement), the Purchaser shall indicate
its acceptance of the Offer by countersigning the Offer and
returning such countersigned Offer to the Seller (with a copy to
ALC).
2. SALE AND PURCHASE OF BUSINESS LEASES AND THE EQUIPMENT LEASED
THEREUNDER. From time to time on a Purchase Date the Seller shall
sell, assign, transfer, set over and otherwise convey Business Leases
and the Equipment leased thereunder and related to Lease Financing
Loans to the Purchaser, free and clear of all liens, claims,
liabilities and encumbrances, in consideration of the Purchase Price
therefor (as defined in Section 3 herein), and on the terms and
subject to the conditions contained in this Purchase Agreement and
Master Agreement.
3. PURCHASE PRICE. The Business Leases and the Equipment leased
thereunder shall be sold, transferred and assigned to the Purchaser in
consideration of the payment by the Purchaser to the Seller in an
amount equal to the Loan Amount for the Lease Financing Loan related
to such Business Lease (the "PURCHASE PRICE"), which sum the Purchaser
shall remit to the Seller in immediately available funds at the
Closing of such sale.
4. SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller represents and
warrants to the Purchaser as follows:
(a) TITLE TO BUSINESS LEASES AND THE EQUIPMENT. The Seller has good
and marketable title to the Business Leases and the Equipment
related thereto, free and clear of all mortgages, liens, security
interests, charges, options, rights, claims or other
encumbrances.
(b) CONDITION OF ASSETS. The Equipment is free from material defects,
either patent or latent, and has been maintained in accordance
with normal industry practice, and is in good operating condition
and repair and are suitable for the purposes for which such
assets are currently used.
(c) DUE ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state
of Nevada, with full power and authority to own its properties
and to carry on its business as it is now being conducted.
(d) AUTHORITY TO EXECUTE AGREEMENT. The execution, delivery and
performance of this Agreement have been duly authorized, adopted
and approved by the board of directors of the Seller. The Seller
has taken all necessary corporate action and has all of the
necessary corporate power to enter into and perform this
Agreement.
(e) ENFORCEABILITY OF AGREEMENT. This Agreement constitutes the valid
and binding obligation of the Seller enforceable against the
Seller in
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accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar
laws affecting creditors' rights generally and by general
principles of equity, whether considered in a proceeding at law
or in equity.
(f) NO CONFLICT WITH CHARTER DOCUMENTS OR MATERIAL CONTRACTS. The
execution, delivery and performance of this Agreement will not
(a) result in the violation of the provisions of the Seller's
Articles of Incorporation or Bylaws or any statute, law,
ordinance, rule, regulation, permit, order, writ, judgment,
injunction, decree or award issued, enacted or promulgated by any
governmental entity or any arbitrator, (b) conflict with or
result in a breach or violation of any term or provision of any
material agreement to which the Seller is a party or by which the
Seller is bound or affected or to which any of the Seller's
properties or assets are bound or affected, or (c) otherwise
adversely affect the contractual or other legal rights or
privileges of the Seller.
(g) BUSINESS OPERATED IN COMPLIANCE WITH LAW IN ALL MATERIAL
RESPECTS; LITIGATION. To the Seller's knowledge, there are no
violations by the Seller of any laws, statutes, ordinances,
rules, regulations, orders, or requirements of any governmental
agency or body having jurisdiction over the Seller, the Business
Leases or the Equipment, the compliance or noncompliance with
which could have a material adverse effect on the Seller. There
are no actions, suits or proceedings pending or threatened,
governmental or otherwise, against the Seller relating to the
Business Leases or the Equipment or which would prevent or
interfere with the execution and performance of this Agreement.
5. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser hereby
represents, warrants and covenants to the Seller as follows:
(a) DUE ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the state
of Nevada, with full power and authority to own its properties
and to carry on its business as it is now being conducted.
(b) AUTHORITY TO EXECUTE AGREEMENT. The execution, delivery and
performance of this Agreement have been duly authorized, adopted
and approved by the board of directors of the Purchaser. The
Purchaser has taken all necessary corporate action and has all of
the necessary corporate power to enter into and perform this
Agreement.
(c) ENFORCEABILITY OF AGREEMENT. This Agreement constitutes the valid
and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms, EXCEPT as enforceability
may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting
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creditors' rights generally and by general principles of equity,
whether considered in a proceeding at law or in equity.
6. COVENANTS OF THE SELLER. Prior to the Closing, the Seller shall:
(a) obtain all consents or approvals required in order to permit the
consummation of the transaction contemplated by this Agreement
and the Master Agreement;
(b) provide for and undertake to deliver Business Leases to the
Borrower; and
(c) perform all of its obligations under this Agreement and the
Master Agreement in a timely manner.
7. COVENANT OF THE PURCHASER. The Purchaser will perform all of its
obligations under this Agreement and the Master Agreement in a timely
manner.
8. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of the Seller
to consummate the transactions contemplated by this Agreement and the
Master Agreement is subject to the satisfaction of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in this Agreement and the
Master Agreement shall be true and correct in all respects on the
date of this Agreement and on the related Purchase Date as though
made on and as of the related Purchase Date, if the related
Purchase Date is not the date of this Agreement.
(b) PERFORMANCE OF OBLIGATIONS OF THE PURCHASER. Prior to or on the
related Purchase Date, the Purchaser shall have performed or
complied with in all respects all covenants and agreements
required to be performed or complied with by or under this
Agreement and the Master Agreement.
(c) AUTHORIZATION. All action necessary to authorize the execution,
delivery and performance of this Agreement by the Purchaser and
the consummation of the transaction contemplated hereby shall
have been duly and validly taken by the Purchaser.
(d) PAYMENT OF PURCHASE PRICE. The Purchaser shall have caused the
Purchase Price to be paid, and have delivered, or caused to be
delivered all closing documents, as set forth in Section 11
herein, at the Closing.
9. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligation of the
Purchaser to consummate the transactions contemplated by this
Agreement and the Master Agreement is subject to the satisfaction of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller contained in this Agreement and the
Master Agreement shall be true
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and correct in all respects on the date of this Agreement and on
the related Purchase Date as though made on and as of the related
Purchase Date, if the related Purchase Date is not the date of
this Agreement.
(b) PERFORMANCE OF OBLIGATIONS OF THE SELLER. The Seller shall have
performed or complied with in all respects all covenants and
agreements required to be performed or complied with by it under
this Agreement and the Master Agreement prior to or at the
Closing.
(c) AUTHORIZATION. All action necessary to authorize the execution,
delivery and performance of this Agreement by the Seller and the
consummation of the transactions contemplated hereby shall have
been duly and validly taken by the Seller.
10. MUTUAL CONDITION. The obligations of the Seller and the Purchaser to
consummate the transaction contemplated by this Agreement are subject
to the satisfaction of the mutual condition that, on each Purchase
Date, no action, suit or proceeding shall be pending or threatened
before any court or governmental agency in which damages or other
relief in connection with this Agreement or the consummation of the
transaction contemplated hereby is sought from the Seller or the
Purchaser.
11. CLOSING.
(a) TIME. Unless this Agreement has been terminated in accordance
with its terms, the Closing for the consummation of the
transaction contemplated by this Agreement (the "CLOSING") shall
take place on the date hereof or as soon thereafter as
practicable. The date specified for the sale of a Business Lease
and related Equipment in an Offer is the "PURCHASE DATE" for such
Business Loan and related Equipment.
(b) CLOSING DOCUMENTS TO THE PURCHASER. On each Purchase Date, the
Seller shall have duly executed a ▇▇▇▇ of sale in substantially
the form of Exhibit B hereto transferring to the Purchaser all of
the Seller's right, title and interest in the related Business
Lease and Equipment related thereto.
(c) CLOSING DOCUMENTS TO THE SELLER. On each Purchase Date, the
Purchaser shall deliver to the Seller payment, in immediately
available funds, in the amount of the Purchase Price.
12. TERMINATION. This Agreement may be terminated by either party hereto
prior to the Closing upon the mutual written consent of the parties
hereto or upon written notice to the other party if:
(a) Any of the representations or warranties of the other party
contained herein is inaccurate in any material respect;
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(b) Any obligation to be performed by the other party is not
performed during the period specified, or at or prior to the date
specified herein for such performance; or
(c) Any condition to the obligation to perform this Agreement of the
party seeking to terminate the same has not been satisfied or
complied with by the related Purchase Date or the date specified
herein for such satisfaction or compliance; and
any such inaccuracy, failure of performance or non-satisfaction of or
non-compliance with a condition, (i) if it is capable of being cured,
has not been cured within fifteen (15) days after written demand
therefor, or (ii) has not been waived by the party seeking to terminate
this Agreement.
13. MISCELLANEOUS.
(a) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants in this Agreement shall
survive investigation by the parties hereto as well as the
Closing contemplated hereby.
(b) NO WAIVER. The failure or delay of either party to exercise its
rights under this Agreement or to complain of any act, omission
or default on the part of the other party, no matter how long the
same may continue, or to insist upon the strict performance of
any of the terms or provisions herein, shall not be deemed or
construed to be a waiver by such party of its rights under this
Agreement or a waiver of any subsequent breach or default of the
terms or provisions of this Agreement.
(c) HEADINGS. The headings or captions of each section herein have
been inserted for the purpose of convenience of reference only,
and such headings or captions are not a part of this Agreement
and shall not be deemed in any manner to modify, explain, enlarge
or restrict any of the provisions of this Agreement.
(d) SEVERABILITY. If any provision or provisions of this Agreement,
or any portion of any provision hereof or thereof, shall be
deemed invalid or unenforceable pursuant to a final determination
of any arbitrator or court of competent jurisdiction, or as a
result of future legislative action, such determination or action
shall be construed so as not to affect the validity or effect of
any other portion hereof or thereof, unless, as a result of such
determination or action, the consideration to be received or
enjoyed by any party hereto would be materially impaired or
reduced.
(e) NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto shall be in writing and
delivered personally, by facsimile transmission, or sent by
commercial expedited delivery service or registered or certified
mail, addressed as follows:
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IF TO THE SELLER:
eRoom System Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE PURCHASER:
eRoom System SPE, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
(f) GOVERNING LAW; WAIVER OF JURY TRIAL; CONSTRUCTION; CONSENT TO
JURISDICTION. The provisions of Section 12.3 and 12.8 of the
Master Agreement are hereby incorporated into this Agreement by
reference to the fullest extent as if such Sections were set
forth in their entirety herein.
(g) FURTHER ASSURANCES. The Seller and the Purchaser each agree to
execute and deliver at or after the Closing such other
instruments and documents as shall be reasonably necessary for
the implementation and consummation of the transactions
contemplated by this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but both of which shall
constitute one agreement.
(i) ARM'S LENGTH CONTRACT. This Agreement has been negotiated "at
arms length" by the parties hereto, each represented by counsel
of its choice and each having an equal opportunity to participate
in the drafting of the provisions hereof. Accordingly, in
construing the provisions of this Agreement neither party shall
be presumed or deemed to be the "drafter" or "preparer" of the
same.
14. THIRD PARTY BENEFICIARIES. The parties hereto acknowledge that ALC is
an express intended third party beneficiary hereof entitled to enforce
all rights of any party hereto hereunder as if it were actually a
party hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Seller and the Purchaser have duly executed this
Agreement as of the day and year first above written.
eROOM SYSTEM TECHNOLOGIES, INC.
By:___________________________________
Its:
eROOM SYSTEM SPE, INC.
By:___________________________________
Its:
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EXHIBIT A
FORM OF OFFER
eRoom System SPE, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Re: Offer to Sell Business Leases and Equipment
Ladies and Gentlemen:
This is an Offer, as defined in the Business Lease and Equipment Purchase
and Sale Agreement, dated May 11, 2000 between eRoom System SPE, Inc. (the
"Purchaser") and eRoom System Technologies, Inc. (the "Seller").
We hereby offer to sell to you the Business Leases and Equipment (but not
the right to service such Business Leases and Equipment) listed on the attached
schedule.
The Purchase Price for the Business Leases and Equipment subject to this
Offer is $______ (the Loan Amount for the Lease Financing Loan related to such
Business Leases as provided in the Master Business Lease Financing Agreement,
dated May 11, 2000, among the Purchaser, the Seller, AMRESCO Leasing Corporation
and RoomSystems, Inc.).
Please indicate your acceptance of this Offer by countersigning the Offer
at the space indicated below.
Sincerely,
eRoom System Technologies, Inc.
By:_____________________________________
Name:
Title:
ACKNOWLEDGED AND ACCEPTED:
eRoom System SPE, Inc.
By:_____________________________________
Name:
Title:
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cc: AMRESCO Leasing Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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EXHIBIT B
FORM OF ▇▇▇▇ OF SALE
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EXHIBIT L
FORM OF STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT dated as of May 11, 2000 (the
"AGREEMENT") by and among eRoom System Technologies, Inc., a Nevada corporation
having an office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("eROOM"), RoomSystems, Inc., a Nevada corporation with its business located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("RSi") and AMRESCO Leasing Corporation,
a Nevada corporation (the "LENDER").
W I T N E S S E T H:
To secure the obligations of the Borrower under Loan Pool #____ created
under that certain Master Business Lease Financing Agreement dated as of May 11,
2000 (the "MASTER AGREEMENT") among RSi, the Lender, eRoom System SPE, Inc. (the
"BORROWER") and eROOM, eROOM hereby grants and conveys to the Lender a security
interest in and to all of the issued and outstanding shares of the common stock
of RSi now owned or hereafter acquired by eROOM, including without limitation,
the shares described in EXHIBIT "A" hereto, together with any and all proceeds
or other sums arising from or by virtue of, and all dividends and distributions
(cash or otherwise) payable and/or distributable with respect to, all or any of
the shares described above; and all cash, securities, dividends, and other
property at any time and from time to time receivable or otherwise distributed
in respect of or in exchange for any or all of the shares described above and
any other property substituted or exchanged therefor (collectively, the "STOCK
COLLATERAL"). Capitalized items used herein and not defined herein shall have
the respective meanings assigned to such terms in the Master Agreement.
1. GRANT. eRoom hereby grants and conveys to the Lender a security
interest in all of the Stock Collateral (the "SECURITY INTEREST").
2. WARRANTY; PARI PASSU. eRoom hereby warrants and represents that except
for the security interest granted hereby, the Stock Collateral is legally and
equitably owned by eRoom free and clear of any and all liens, security
interests, claims, charges and other encumbrances whatsoever other than any of
the security interest granted by eRoom to the Lender pursuant to similar Stock
Pledge and Security Agreements relating to the other Loan Pools with which the
security interest created hereby shall be considered to be PARI PASSU in right
with all other such pledges and security interests.
3. REPRESENTATIONS AND WARRANTIES; RELATED COVENANTS. eRoom represents,
warrants, covenants and agrees to and with the Lender that: (a) eRoom is the
legal and beneficial owner of the Stock Collateral issued by RSi and at the time
of creation or acquisition of any additional shares, eRoom will be the legal and
beneficial owner of such additional shares; (b) the Stock Collateral currently
issued by RSi is duly authorized and issued, fully paid and non-assessable, and
all documentary, stamp or other taxes or fees owing in connection with the
issuance, transfer
L-1
and/or pledge thereof have been paid; (c) no dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the Stock
Collateral; (d) the Stock Collateral is free and clear of all liens, mortgages,
pledges, charges, security interests or other encumbrances, options, warrants,
puts, calls and other rights of third persons, and restrictions, other than (i)
the Security Interest, and (ii) restrictions on transferability imposed by
applicable state and federal securities laws; (e) eRoom has full right and
authority to pledge the Stock Collateral for the purposes and upon the terms set
out herein, and the execution, delivery and performance of this Agreement are
not in contravention of any indenture, agreement or undertaking to which eRoom
is a party or by which eRoom is bound; (f) certificates representing the Stock
Collateral issued by RSi have been delivered to Lender, together with a duly
executed blank stock power with signatures guaranteed, for each certificate; (g)
the Stock Collateral described on EXHIBIT "A" constitutes all of the issued and
outstanding capital stock of RSi; (h) RSi has not issued, and there are not
outstanding, any options, warrants or other rights in favor of eRoom to acquire
capital stock of RSi.
4. STOCK COLLATERAL COVENANTS. Until such time as all the Notes issued
under the Master Agreement are repaid in full, eRoom covenants and agrees as
follows:
(a) To pay and perform and cause the Borrower to pay and perform, all
of their obligations under the Master Agreement according to its terms.
(b) To defend all right and title to the Stock Collateral against any
and all claims and demands whatsoever.
(c) To retain legal and beneficial ownership of the Stock Collateral
and not to sell, exchange, assign, loan, deliver, pledge, hypothecate or
otherwise dispose of the Stock Collateral or any portion thereof without the
prior written consent of the Lender.
(d) To keep the Stock Collateral free and clear of all liens,
charges, encumbrances, taxes and assessments, and to pay when due all taxes,
payments, and/or assessments in any way relating to the Stock Collateral or any
part thereof.
5. ADDITIONAL COVENANTS.
(a) Further Acts, Assurances. eRoom covenants and agrees to, from
time to time, promptly execute and deliver to the Lender all such other
assignments, certificates, supplemental writings and financing statements as the
Lender requests in order to perfect or evidence the Security Interest. eRoom
further agrees that if eRoom shall at any time acquire any additional shares of
the capital stock of any class of RSi, and whether such acquisition shall be by
purchase, exchange, reclassification, dividend or otherwise eRoom shall
forthwith (and without the necessity for any request or demand by the Lender)
deliver the certificates representing such shares to the Lender, in the same
manner and with the same effect as described herein. Upon delivery, such shares
shall thereupon constitute Stock Collateral and shall be subject to the Security
Interest herein
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created, for the purposes and upon the terms and conditions set forth in this
Agreement, the Master Agreement, the Notes and the other Operative Documents.
(b) Inspection. eRoom shall allow the Lender to inspect all records
of eRoom and RSi relating to the Stock Collateral, and to make and take away
copies of such records during normal business hours.
(c) Changes. eRoom and RSi shall promptly notify the Lender of any
material change in any fact or circumstance warranted or represented by eRoom in
this Agreement or in any other writing furnished by eRoom to the Lender in
connection with the Stock Collateral.
(d) Claims. eRoom and RSi shall promptly notify the Lender of any
claim, action or proceeding affecting title to the Stock Collateral, or any part
thereof, or the Security Interest, and at the request of the Lender, shall
appear in and defend, at it or their expense, any such action or proceeding.
(e) Costs. eRoom and RSi shall promptly pay to the Lender the amount
of all reasonable costs and expenses of the Lender (or its assigns), including,
but not limited to, attorneys' fees, incurred by the Lender (or its assigns) in
connection with this Agreement and the enforcement of the rights of the Lender
hereunder.
(f) No Other Stock. RSi shall not issue any other shares of common or
other stock of RSi to any party.
6. CONVERSIONS; ETC. Should the Stock Collateral, or any part thereof,
ever be in any manner converted by RSi into another property of the same or
another type or any money or other proceeds ever be paid or delivered to eRoom
as a result of eRoom's rights in the Stock Collateral, then in any such event
(except as otherwise provided herein), all such property, money and other
proceeds shall be and/or become part of the Stock Collateral, and eRoom
covenants forthwith to pay or deliver to the Lender all of the same which is
susceptible of delivery; and at the same time, if the Lender deems it necessary
and so requests, eRoom will properly endorse or assign the same to the Lender.
Without limiting the generality of the foregoing, eRoom hereby agrees that the
shares of capital stock of the surviving corporation in any merger or
consolidation involving RSi or any of the Stock Collateral shall be deemed to
constitute the same property as the Stock Collateral. With respect to any such
property of a kind requiring an additional security agreement, financing
statement or other writing to perfect a security interest therein in favor of
the Lender, eRoom will forthwith execute and deliver to the Lender whatever the
Lender shall deem necessary or proper for such purpose.
7. EVENTS OF DEFAULT. For the purposes of this Agreement, each of the
following shall constitute a "STOCK PLEDGE AGREEMENT EVENT OF DEFAULT" by eRoom:
(a) The occurrence of an Event of Default or an Event of Acceleration
under the Master Agreement.
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(b) Failure by eRoom to comply with or perform any provision of this
Agreement.
(c) Subjection of all or any part of the Stock Collateral to levy of
execution or other judicial process.
8. REMEDIES UPON DEFAULT. Upon the occurrence of any Stock Pledge
Agreement Event of Default and at the option of the Lender, in addition to any
rights, remedies and privileges which the Lender may have under the Master
Agreement, the Lender also shall have all of the rights, remedies and privileges
with respect to repossession, retention and sale of the Stock Collateral and
disposition of the proceeds as are accorded to the Lender by the applicable
sections of the UCC.
9. EXERCISING SHAREHOLDER RIGHTS AFTER THE OCCURRENCE OF A STOCK PLEDGE
AGREEMENT EVENT OF DEFAULT. Upon the occurrence and during the continuance of a
Stock Pledge Agreement Event of Default, the Lender, without the consent of
eRoom, may;
(a) At any time vote or consent in respect of any of the Stock
Collateral and authorize any Stock Collateral to be voted and such consents to
be given, ratify and waive notice of any and all meetings, and take such other
action as shall seem desirable to the Lender, in its discretion, to protect or
further the interest of the Lender in respect of any of the Stock Collateral as
through it were the outright owner thereof, and, RST hereby irrevocably
constitutes and appoints the Lender its sole proxy and attorney-in-fact, with
full power of substitution to vote and act with respect to any and all Stock
Collateral standing in the name of eRoom or with respect to which eRoom is
entitled to vote and act. The proxy and power of attorney herein granted are
coupled with interest, are irrevocable, and shall continue throughout the term
of this Agreement;
(b) In respect of any Stock Collateral, join in and become a party to
any plan of recapitalization, reorganization or readjustment (whether voluntary
or involuntary) as shall seem desirable to the Lender in respect of any such
Stock Collateral, and deposit any such Stock Collateral under any such plan;
make any exchange, substitution, cancellation or surrender of such Stock
Collateral required by any such plan and take such action with respect to any
such Stock Collateral as may be required by any such plan or for the
accomplishment thereof; and no such disposition, exchange, substitution,
cancellation or surrender shall be deemed to constitute a release of Stock
Collateral from the Security Interest of this Agreement;
(c) Receive all payments of whatever kind made upon or with respect
to any Stock Collateral; and
(d) Transfer into its name, or into the name or names of its nominee
or nominees, all or any of the Stock Collateral.
10. GENERAL PROVISIONS.
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(a) The Lender may exercise its rights with respect to the Stock
Collateral held hereunder without being obligated to consider or take notice of
any right of contribution, reimbursement, subrogation or marshaling of assets
which any of the RSi Parties may have or claim to have against any person or
persons or with respect to any other collateral. No delay or omission on the
part of the Lender in exercising any right hereunder shall operate as a waiver
of such right or any other right under this Agreement. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right and/or remedy
on any future occasion.
(b) The Lender shall have no duty as to the collection or protection
of the Stock Collateral held hereunder or of any income thereon, or as to the
preservation of any rights pertaining thereto, beyond the safe custody of the
Stock Collateral.
(c) The Lender may assign this Agreement and, if assigned, the
assignee shall be entitled to performance of all of eRoom's and RSi's
obligations and agreements hereunder, and the assignee shall also be entitled to
all of the rights and remedies of the Lender hereunder.
(d) The terms, warranties and agreements contained in this Agreement
shall bind and inure to the benefit of the respective parties hereto, and their
respective legal representatives, successors and assigns.
(e) This Agreement may not be changed orally, but may be changed only
by an agreement in writing signed by the parties against whom enforcement of any
waiver, change, modification or discharge is sought.
(f) The provisions of Sections 12.3 and 12.8 of the Master Agreement
are hereby incorporated into this Agreement by this reference to the fullest
extent as if such Sections were set forth in their entirety herein.
(g) Notices to either party shall be in writing and shall be
delivered personally or by mail addressed to the party at the address herein set
forth or otherwise designated in writing.
11. WAIVERS. Except for any notices required under the Master Agreement,
eRoom hereby waives diligence, presentment, demand, protest and notice of any
kind whatsoever in respect of the Notes (including, without limitation, notice
of intent to accelerate and of acceleration), as well as any requirement that
the Lender or any other holder of the Notes exhaust any right or remedy or take
any action in connection with the Notes or any of the other Operative Documents
before exercising any right or remedy under this Agreement. The obligations of
eRoom hereunder shall not be affected or impaired by reason of the happening
from time to time of any of the following, although without notice to or the
consent of eRoom:
(a) the renewal or extension of the maturity of or the acceptance of
partial payments with respect to any and all amounts due and owing under the
Notes or any other Operative Document, or any part thereof;
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(b) the alteration in any manner of the terms of any of the Notes,
Operative Documents or any part thereof either as to the maturities thereof,
rates of interest, methods of payment, parties thereto or otherwise;
(c) the waiver by the Lender or any other holder of the Notes of the
performance or observance by any of the RSi Parties of any of their agreements,
covenants, terms or conditions contained in the Notes or in any of the other
Operative Documents;
(d) the voluntary or involuntary liquidation, dissolution, sale of
all or substantially all of the assets, marshalling of assets and liabilities,
receivership, conservatorship, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, winding up, or other similar
proceedings affecting any RSi Party;
(e) the release by operation of law or otherwise of any of the other
obligors from the performance or observance of any of the agreements, covenants,
terms or conditions contained in the Notes or in any of the other Operative
Documents; or
(f) the release of any security for the Notes, whether under the
Master Agreement, this Agreement or any of the other Operative Documents.
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IN WITNESS WHEREOF, the parties have respectively signed these presents as
of the day and year first above written.
eROOM SYSTEM TECHNOLOGIES, INC.,
By: ___________________________
Name:
Its:
ROOMSYSTEMS, INC.
By: ___________________________
Name:
Its:
AMRESCO LEASING CORPORATION
By: ___________________________
Name:
Its:
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EXHIBIT A
LIST OF STOCK COLLATERAL
NUMBER OF SHARES CLASSIFICATION CERTIFICATE NO.
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EXHIBIT M
FORM OF PLEDGE AND SECURITY AGREEMENT
================================================================================
PLEDGE AND SECURITY AGREEMENT
by and among
eRoom System SPE, Inc.,
eRoom System Technologies, Inc.
and
RoomSystem, Inc.
in favor of
AMRESCO LEASING CORPORATION,
as Secured Party
================================================================================
PLEDGE AND SECURITY AGREEMENT (this "SECURITY AGREEMENT"), dated May 11,
2000, by eRoom System SPE, Inc. (the "BORROWER"), eRoom System Technologies,
Inc. ("eRoom") and RoomSystem, Inc. ("RSi"; and collectively with eRoom and the
Borrower, the "eROOM PARTIES"), in favor of AMRESCO LEASING CORPORATION, a
Nevada corporation (together with its successors and assigns, the "SECURED
PARTY").
PRELIMINARY STATEMENTS
A. During the life of Loan Pool #____ created on the date hereof, the
Secured Party will make certain lease financing loans (each a "LEASE FINANCING
LOAN" and, collectively, the "LEASE FINANCING LOANS") to the Borrower reflected
in the Lease Financing Notes to the Secured Party (the "LEASE FINANCING NOTES"),
in a form prepared by and acceptable to Secured Party, which Lease Financing
Notes will evidence the Borrower's obligation, INTER ALIA, (i) to repay the
Lease Financing Loans and (ii) to pay interest and other amounts as set forth
therein.
B. It is a condition to the making of the Lease Financing Loans, that the
Borrower shall have executed and delivered this Security Agreement whereby the
Borrower, in order to provide security for the full payment when due of all
amounts payable under the Lease Financing Notes related to the Loan Pool, shall
pledge and grant to the Secured Party a security interest in the collateral
described herein.
C. The Parties hereto anticipate that the Lease Financing Notes, may, at
some time in the future, be amended, restated and consolidated into a Credit
Enhancement Note pursuant to Section 2.15 of the Master Agreement. The Parties
acknowledge and agree that following such amendment, restatement and
consolidation, the security interest in the collateral described herein shall
continue to provide security for the full payment of all amounts payable under
such Credit Enhancement Note.
NOW THEREFORE, in consideration of the foregoing and in order to induce the
Secured Party to make the Lease Financing Loans available to the Borrower and
for other good and valuable consideration, the receipt and sufficiency of which
the eRoom Parties hereby acknowledge, the eRoom Parties and the Secured Party
agree as follows:
ARTICLE I
DEFINITIONS AND OTHER TERMS
Section 1.1 DEFINED TERMS. The following terms shall have the meanings
herein specified unless the context otherwise requires. All terms not otherwise
defined herein shall have the meaning accorded to such terms in the Master
Business Lease Financing Agreement dated as of May 11, 2000, among the Secured
Party, the Borrower, eRoom and RSi (the "MASTER AGREEMENT"). All terms defined
in the singular will have the same meaning when used in the plural and vice
versa.
"CODE" means the Internal Revenue Code of 1986 as amended.
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"COLLATERAL" has the meaning ascribed to such term in Section 2.1.
"DEFAULT RATE" has the meaning ascribed to such term in the related
Note.
"FINANCING STATEMENTS" means the UCC financing statements, prepared by
Secured Party, and delivered to Borrower and which Borrower must execute and
deliver to Secured Party as a condition under the Loan Documents.
"LEASE FINANCING LOAN" and "LEASE FINANCING LOANS" have the meanings
ascribed to such terms in the preliminary statements of this Security Agreement.
"LOAN DOCUMENTS" means the Notes, this Security Agreement and any
guarantee, mortgage, deed of trust or other instrument, agreement, certificate
or other writing, now or hereafter executed and delivered in connection with the
Notes or the Obligations.
"MASTER AGREEMENT" shall have the meaning set out in the preamble to
this Section 1.1.
"OBLIGATIONS" means each and every obligation, covenant, agreement,
indebtedness and liability of the Borrower to the Secured Party evidenced by,
arising under or in connection with any of the Notes related to the Loan Pool
(including, without limitation, indebtedness, obligations and liabilities in
respect of principal, interest, the Make Whole Premium, the Credit Enhancement
Amount and the Scheduled Monthly Credit Enhancement Obligation Payments for each
of the related Lease Financing Loans), this Security Agreement, or any other
Loan Document, and any future advances thereon, renewals, extensions,
modifications, amendments, substitutions and consolidations thereof, including
the Borrower's obligations to pay (or reimburse the Secured Party for) all costs
and expenses (including attorneys fees and disbursements) incurred by the
Secured Party in obtaining, maintaining, protecting and preserving its interest
in the Collateral or its security interest therein, foreclosing, retaking,
holding, preparing for sale or lease, selling or otherwise disposing or
realizing on the Collateral or in exercising its rights hereunder or as a
secured party under the UCC, any other applicable law, regulation or rule or
this Security Agreement, including interest on such costs and expenses which
shall accrue at the rate of eight percent (8%) per annum, and all other
indebtedness, obligations and liabilities of any kind of the Borrower to the
Secured Party, now or hereafter existing (including future advances whether or
not pursuant to commitment), arising directly between the Borrower and the
Secured Party relating to the Loan Documents, whether absolute or contingent,
joint and/or several, secured or unsecured, due or not due, contractual or
tortious, liquidated or unliquidated, arising by operation of law or otherwise,
or direct or indirect, and whether incurred by the Borrower as principal,
surety, endorser, guarantor, accommodation party or otherwise.
"PROCEEDS" shall mean "proceeds" as such term is defined in the UCC or
under other relevant law and shall include, but shall not be limited to, (a) any
and all proceeds of any insurance (insuring the Collateral or otherwise required
to be maintained hereunder, including return of unearned premium), indemnity,
warranty or guaranty
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payable to the Secured Party or Borrower from time to time, and claims for
insurance, indemnity, warranty or guaranty effected or held for the benefit of
the Borrower, with respect to any of the Collateral, (b) any and all payments
(in any form whatsoever) made or due and payable to the Borrower from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority) and (c) any and all
interest, income, dividends, distributions and earnings on the Collateral or
other monies, revenues or other amounts derived from the Collateral.
"UCC" means the Uniform Commercial Code (or any comparable law) in
effect in any relevant jurisdiction the laws of which govern the perfection of
security interests hereunder.
Section 1.2 RULES OF CONSTRUCTION. When used in this Security Agreement:
(a) "or" is not exclusive; (b) a reference to a law includes any amendment or
modification of such law; (c) a reference to a Person includes its permitted
successors and permitted assigns; and (d) a reference to an agreement,
instrument or document shall -, include such agreement, instrument or document
as the same may be amended, modified or supplemented from time to time in
accordance with its terms.
ARTICLE II
SECURITY INTERESTS
Section 2.1 PLEDGE AND GRANT OF SECURITY INTEREST. As collateral security
for the prompt and complete payment and performance when due of all of the
Obligations, the Borrower hereby pledges and grants to the Secured Party, a
continuing security interest in, and Lien on, all of the Borrower's right, title
and interest in and to all of the Pledged Assets related to the Loan Pool
including (without limitation) the following (collectively, the "COLLATERAL"):
(a) any and all Business Leases included in all Transaction
Submission Packages submitted to the Secured Party pursuant to the Master
Agreement and related to the Loan Pool and all of the Borrower's right, title
and interest in, to and under any contracts, including any security agreements,
or other documents executed by, or in favor of, the Borrower in connection
therewith;
(b) any and all Refreshment Centers and Equipment related to any of
the Business Leases related to the Lease Financing Loans in such Loan Pool;
(c) the Collected Funds, the Custodial Account, the Loan Payment
Account, the Loss Reserve Account, the Property Tax Reserve Account and any
other bank or similar accounts related to the Loan Pool in the name, or held for
the benefit of, the Borrower or the Secured Party and all amounts on deposit
therein;
(d) the Licenses;
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(e) all additions, accessions, replacements, substitutions and
improvements to any of the foregoing; and
(f) any and all Proceeds of the foregoing, including all insurance
payments (whether or not the Secured Party is the loss payee thereof).
Without limiting the generality of the foregoing, (x) this Agreement also
secures the payment of all amounts which constitute part of the Obligations and
would be owed by the Borrower to the Secured Party but for the fact they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower and (y) the Liens
created hereby with respect to the Licenses shall be pari passu with the Lien
granted to the Secured Party on such Licenses in connection with other Loan
Pools.
Section 2.2 SECURITY INTEREST ABSOLUTE. All rights of the Secured Party and
the security interests hereunder shall be absolute and unconditional
irrespective of:
(a) any change in the time, manner, amount or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Notes or any other Loan
Document;
(b) any exchange, release or nonperfection of all or any part of the
Collateral or any other collateral, or any release from, amendment to, waiver of
or consent to departure from any guaranty, for all or any of the Obligations; or
(c) to the fullest extent permitted by law, any other circumstances
which might otherwise constitute a defense available to, or a discharge of, the
Borrower or a third party pledgor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1 REPRESENTATIONS AND WARRANTIES. Each of the eRoom Parties
hereby represents and warrants that the representations and warranties of such
eRoom Party set out in the Master Agreement are true and correct in all material
respects as of the date hereof and each eRoom Party hereby restates such
representations and warranties in full.
Section 3.2 CHIEF EXECUTIVE OFFICE; LOCATION.
(a) The chief executive office of the Borrower is located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
(b) The Borrower will neither change its name, federal tax payor
identification number, or its chief executive office, nor the location of its
business, property or assets (including the Collateral), nor assume a different
name, nor conduct its
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business or affairs under any other name or in any other location, nor merge,
consolidate, or change its corporate structure (whether by stock sale, issuance,
purchase or otherwise), nor change its use of any item of Collateral, without in
each instance providing the Secured Party with not less than ten (10) days prior
written notice of the proposed action and specifying within such notice and with
reasonable clarity and particularity the timing and nature of such proposed
action. Additionally, the Borrower shall provide such other information in
connection with the proposed action as the Secured Party may reasonably request
and shall have taken all action, reasonably satisfactory to the Secured Party,
to maintain the security interest of the Secured Party in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
Section 3.3 NO CONSENT REQUIRED. Except for the filing of the Financing
Statements in the locations set forth on Exhibit A hereto, no consent of any
other Person and no authorization, approval or other action by and no notice to
or filing with, any court, government, agency or regulatory authority is
required (a) for the grant by the Borrower of the pledge and security interest
granted hereby or for the execution, delivery or performance of this Security
Agreement, the Notes and other Loan Documents or (b) for validity, perfection or
maintenance of the pledge, lien and security interest created hereby.
Section 3.4 TITLE TO THE COLLATERAL. The Borrower has and will maintain
good and marketable title to the Collateral (excluding the stock of RSi pledged
by eRoom to the Secured Party pursuant to the Stock Pledge Agreement), free of
all Liens (other than Permitted Liens and the security interest granted to the
Secured Party hereunder).
Section 3.5 NO LIENS. With respect to each Lease Financing Loan, there is
no Lien (including any federal or state tax lien), suit (including any action,
proceeding, or other litigation pending, or to the Borrower's knowledge,
threatened) or judgment (including any award, injunction, order) filed with,
registered, indexed or recorded in any public office, court, arbitration panel,
administrative agency or regulatory authority (or intended so to be), directly
or indirectly, identifying or encumbering or covering or involving the
Collateral or which could have a material adverse effect on the Borrower or the
Borrower's ability to perform its Obligations other than Permitted Liens or
Liens that will be removed on or prior to the Funding Date of such Lease
Financing Loan. Other than the security interest granted to the Secured Party
hereunder and the Permitted Liens, the Borrower has not and, without the prior
written consent of the Secured Party, will not enter into any agreement or
understanding or take, permit or suffer to exist any action (including the
filing of a financing statement, agreement, pledge, mortgage, notice or
registration) or event (whether by operation of law or otherwise) for the
purpose of, or that may have the effect of, directly or indirectly, (a) granting
a Lien on (including any state of federal tax Lien), pledging, transferring,
assigning, selling, disposing of, or encumbering any Collateral, any interest
therein or rights pertaining thereto or involving the Borrower, or (b) changing,
modifying, supplementing, or increasing the amount of credit, loans,
indebtedness or value secured by the Permitted Liens, if any, or the amount,
property or assets encumbered thereby.
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Section 3.6 MAINTENANCE OF COLLATERAL AND BUSINESS. At the Borrower's sole
cost and expense, the Borrower shall (a) keep, use, operate and maintain the
Collateral and (b) not do or suffer to be done any act whereby the value of the
Collateral or any part or interest therein may be lessened in any material
respect. The Borrower shall notify the Secured Party promptly of any actual or
threatened destruction or material damage or impairment of any component of the
Collateral or if Borrower receives a notice of violation from any governmental
entity or agency.
Section 3.7 PERFECTED SECURITY INTEREST. This Security Agreement and the
grant and transfer of the Collateral hereunder creates a valid and enforceable
security interest in the Collateral. Upon filing of the Financing Statements in
the locations set forth on Exhibit A hereto, such security interest will be
perfected and subject to no prior or equal security interest other than and only
to the extent of the Permitted Liens. The execution and filing of the Financing
Statements has been duly authorized by all appropriate action on the part of the
Borrower (and any other Person named as debtor therein) and the Borrower (and
any other Person named as debtor therein) has duly executed the Financing
Statements.
Section 3.8 NO VIOLATION; INDEMNITY. The Borrower has not and shall not
acquire, obtain, make, manufacture, produce, operate, hold, possess, maintain,
use, sell, transfer, grant, pledge, or dispose of (for purposes of this Section
3.8, collectively "the Borrower's use") any of its securities, property or
assets (including any proceeds of the Lease Financing Loans and the Collateral)
in violation of any statute, law, rule, ordinance, regulation, policy,
procedure, injunction, award, decree, judgment, contract, agreement,
understanding, or right or interest of any other Person (for purposes of this
Section 3.8, each such event a "violation"), and to the Borrower's knowledge no
such violation has been made by any other Person and no basis for a claim of any
such violation exists. The Borrower shall indemnify and hold the Secured Party
harmless from and against any such violation, and any other loss, liability,
damage, cost or expense whatsoever (including attorneys' fees and disbursements)
arising out of or in connection with the Borrower's use of any of its
securities, property or assets (including any proceeds of the Lease Financing
Loans and the Collateral).
Section 3.9 INSPECTION. The Borrower shall allow the Secured Party, its
agents and representatives, from time to time, to inspect the Collateral and the
Borrower's books and records pertaining thereto and the Borrower will assist
(and permit abstracts and photocopies of the Borrower's books and records to be
taken and retained by) the Secured Party, its agents and representatives in
making any such inspection.
Section 3.10 INSURANCE. At the Borrower's sole cost and expense, the
Borrower shall maintain the insurance required in the Master Agreement. In
addition to the foregoing, the Borrower shall:
(a) (i) keep the Collateral insured against loss or damage by fire,
theft, collision and other hazards as may be required by the Secured Party and
by policies of fire, extended coverage and other insurance with such company or
companies, in such amounts (and, with respect to policies required for property,
fire and flood insurance in
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an amount not less than the lesser of (A) the replacement value of new Equipment
that is substantially similar to the Equipment lost or damaged, and (B) the Loan
Amount payable under the Note, as may be required by the Secured Party, but in
no event less than the minimum amount required to prevent the imposition of any
coinsurance requirement on the insured, (ii) maintain liability insurance of not
less than one million dollars, and (iii) maintain business interruption
insurance with scope and coverage reasonably satisfactory to the Secured Party;
(b) cause all insurance policies required hereunder or under the
Master Agreement (i) to be maintained by providers either (A) having ratings of
not less than B++ from A.M. Best Company Inc. (or comparable ratings from a
comparable rating agency) or (B) who, if not so rated, have been approved by the
Secured Party and (ii) to contain a standard lender's loss payable endorsement
or mortgagee's endorsement providing for payment directly to the Secured Party
and/or its designees and to provide for a minimum of thirty (30) days notice to
the Secured Party prior to cancellation or modification or nonrenewal;
(c) timely pay all premiums, fees and charges required in connection
with all of its insurance policies and otherwise continue to maintain such
policies in full force and effect;
(d) promptly deliver the insurance policies, certificates (and
renewals) thereof or other evidence of compliance herewith to the Secured Party;
and
(e) promptly notify the Secured Party of any loss covered by such
insurance policies and allow the Secured Party to join the Borrower in adjusting
any loss in excess of $20,000.
Section 3.11 ACCURACY OF INFORMATION. All information, reports, statements
and financial and other data furnished (or hereafter furnished) by the Borrower
to the Secured Party, its agents or representatives hereunder or in connection
with the Borrower's application for the Lease Financing Loans and the
Obligations, are (and shall be on the date so furnished) true, complete and
correct. Borrower hereby authorizes Secured Party to request credit bureau
reports while any of the Obligations are outstanding.
ARTICLE IV
SPECIAL PROVISION CONCERNING RIGHTS AND
DUTIES WHILE IN POSSESSION OF COLLATERAL
Section 4.1 BORROWER'S POSSESSION. Upon and during the continuance of an
Event of Default or an Event of Acceleration, to the extent the same shall, from
time to time, be in the Borrower's possession, the Borrower will hold all
securities, instruments, chattel paper, documents, certificates and money and
other writings evidencing or relating to the Collateral in trust for the Secured
Party and, upon request or as otherwise
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provided herein, promptly deliver the same to the Secured Party in a form
received and at a time and in a manner satisfactory to the Secured Party. With
respect to the Collateral in the Borrower's possession the Borrower shall at the
Secured Party's request take such action as the Secured Party in its discretion
deems necessary or desirable to create, perfect and protect the Secured Party's
security interest in any of the Collateral.
Section 4.2 SECURED PARTY'S POSSESSION. With respect to all of the
Collateral delivered or transferred to, or otherwise in the custody or control
of (including any items in transit to or set apart for) the Secured Party or any
of its agents, associates or correspondence in accordance with this Security
Agreement, the Borrower agrees that: (a) such Collateral will be, and is deemed
to be in the sole possession of the Secured Party; (b) the Borrower has no right
to withdraw or substitute any such Collateral without the consent of the Secured
Party, which consent may be withheld or delayed in the Secured Party's sole
discretion; (c) the Borrower shall not take or permit any action, or exercise
any voting and other rights, powers and privileges in respect of the Collateral
inconsistent with the Secured Party's sole possession thereof; and (d) the
Secured Party may in its sole discretion and without notice, without obligation
or liability except to account for property actually received by it, and without
affecting or discharging the Obligations, (i) further transfer and segregate the
Collateral in its possession; (ii) subject to its obligations under the Master
Agreement, receive Proceeds and hold the same as part of the Collateral and/or
apply the same as hereinafter provided; and (iii) exchange any of the Collateral
for other property upon reorganization, recapitalization or other readjustment.
Following the occurrence of an Event of Default or Event of Acceleration, the
Secured Party is authorized (A) to exercise or cause its nominee to exercise all
or any rights, powers and privileges (including to vote) on or with respect to
the Collateral with the same force and effect as an absolute owner thereof; (B)
whether any of the Obligations be due, in its name or in the Borrower's name or
otherwise, to demand, ▇▇▇ for, collect or receive any money or property at any
time payable or receivable on account of or in exchange for, or make any
compromise or settlement the Secured Party deems desirable with respect to, any
of the Collateral; and (C) to extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any of the
Collateral. Notwithstanding the rights accorded the Secured Party with respect
to the Collateral and except to the extent provided below or required by the UCC
or other applicable law (which requirement cannot be modified, waived or
excused), the Secured Party's sole duty with respect to the Collateral in its
possession (with respect to custody, preservation, safekeeping or otherwise)
will be to deal with it in the same manner that the Secured Party deals with
similar property owned and possessed by it. Without limiting the foregoing, the
Secured Party, and any of its officers, directors, partners, trustees, owners,
employees and agents, to the extent permitted by law (1) will have no duty with
respect to the Collateral or the rights granted hereunder; (2) will not be
required to sell, invest, substitute, replace or otherwise dispose of the
Collateral; (3) will not be required to take any steps necessary to preserve any
rights against prior parties to any of the Collateral; (4) will not be liable
for (or deemed to have made an election of or exercised any right or remedy on
account of) any delay or failure to demand, collect or realize upon any of the
Collateral; and (5) will have no obligation or liability in connection with the
Collateral or arising under this Security Agreement. The Borrower agrees that
such standard of care is reasonable and appropriate under the circumstances.
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ARTICLE V
EVENTS OF DEFAULT AND
EVENT OF ACCELERATION
Section 5.1 EVENT OF DEFAULT AND EVENT OF ACCELERATION. The occurrence of
any Event of Default or Event of Acceleration under the Master Agreement shall
be considered an Event of Default or an Event of Acceleration, respectively,
hereunder.
ARTICLE VI
REMEDIES UPON OCCURRENCE
OF EVENT OF DEFAULT OR EVENT OF ACCELERATION
Section 6.1 RIGHTS AND REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT. If an
Event of Default shall have occurred and be continuing, the Secured Party (and
its successors and assigns) shall have the right (but not the obligation),
itself or through any of its agents (including the Borrower), with or without
notice to the Borrower (as provided below), as to any or all of the Collateral,
by any available judicial procedure, or without judicial process (PROVIDED,
HOWEVER, that it is in compliance with the UCC), to take possession of the
Collateral and without liability to the eRoom Parties for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral, and, generally, to exercise any and
all rights afforded to a secured party under the UCC or other applicable law.
Without limiting the generality of the foregoing, the Borrower agrees that the
Secured Party shall have the right to sell, lease, or otherwise dispose of all
or any part of the Collateral, whether in its then condition or after further
preparation or processing, either at public or private sale or any broker's
board, in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such terms and conditions, all as the Secured Party in
its sole discretion may deem advisable, and it shall have the right to purchase
at any such sale; and, if any Collateral shall require rebuilding, repairing,
maintenance, preparation, the Secured Party shall have the right, at its option,
to do such rebuilding or repairing for the purpose of putting the Collateral in
such salable or disposable form as it shall deem appropriate. At the Secured
Party's request, the Borrower shall assemble the Collateral and make them
available to the Secured Party at places which the Secured Party shall select,
whether at Borrower's premises or elsewhere, and make available to the Secured
Party, without rent, all of Borrower's premises and facilities for the purpose
of the Secured Party's taking possession of, removing or putting the Collateral
in saleable or disposable form. The proceeds of any such sale, lease or other
disposition of the Collateral shall be applied, first to the expenses of
retaking, holding, storing, processing and preparing for sale, selling, lease,
leasing and the like, and to the reasonable attorneys' fees and legal expenses
incurred by the Secured Party and to the payment of any other amounts required
by applicable law. To the extent permitted by applicable law, the Borrower
waives all claims, damages and demands against the Secured Party arising out of
the repossession, removal, retention or sale or lease of the Collateral.
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Section 6.2 RIGHTS AND REMEDIES UPON OCCURRENCE OF EVENT OF ACCELERATION.
If an Event of Acceleration shall have occurred and be continuing, the Secured
Party (and its successors and assigns) shall have the right (but not the
obligation), itself or through any of its agents (including the Borrower), with
or without notice to the Borrower (as provided below), as to any or all of the
Collateral related to such Loan Pool, by any available judicial procedure, or
without judicial process (PROVIDED, HOWEVER, that it is in compliance with the
UCC), to take possession of the Collateral related to such Loan Pool and without
liability for trespass to enter any premises where the Collateral related to
such Loan Pool may be located for the purpose of taking possession of or
removing the Collateral related to such Loan Pool, and, generally, to exercise
any and all rights afforded to a secured party under the UCC or other applicable
law. Without limiting the generality of the foregoing, the Borrower agrees that
the Secured Party shall have the right to sell, lease, or otherwise dispose of
all or any part of the Collateral related to such Loan Pool, whether in its then
condition or after further preparation or processing, either at public or
private sale or any broker's board, in lots or in bulk, for cash or for credit,
with or without warranties or representations, and upon such terms and
conditions, all as the Secured Party in its sole discretion may deem advisable,
and it shall have the right to purchase at any such sale; and, if any Collateral
related to such Loan Pool shall require rebuilding, repairing, maintenance,
preparation, the Secured Party shall have the right, at its option, to do such
rebuilding or repairing for the purpose of putting the Collateral related to
such Loan Pool in such salable or disposable form as it shall deem appropriate.
At the Secured Party's request, the Borrower shall assemble the Collateral
related to such Loan Pool and make them available to the Secured Party at places
which the Secured Party shall select, whether at Borrower's premises or
elsewhere, and make available to the Secured Party, without rent, all of
Borrower's premises and facilities for the purpose of the Secured Party's taking
possession of, removing or putting the Collateral related to such Loan Pool in
saleable or disposable form. The proceeds of any such sale, lease or other
disposition of the Collateral related to such Loan Pool shall be applied, first
to the expenses of retaking, holding, storing, processing and preparing for
sale, selling, lease, leasing and the like, and to the reasonable attorneys'
fees and legal expenses incurred by the Secured Party and to the payment of any
other amounts required by applicable law. To the extent permitted by applicable
law, the Borrower waives all claims, damages and demands against the Secured
Party arising out of the repossession, removal, retention or sale or lease of
the Collateral related to such Loan Pool.
Section 6.3 ADDITIONAL RIGHTS OF THE SECURED PARTY. Upon the occurrence of
an Event of Default or an Event of Acceleration, the Secured Party may, from
time to time, in its discretion, and without the assent of any of the eRoom
Parties, without advertisements or notices of any kind (except for the notice
specified in Section 6.5 below regarding notice required in connection with a
public or private sale), or demand of performance or other demand, or obligation
or liability (except to account for amounts actually received) to or upon any of
the eRoom Parties or any other person (all such advertisements, notices and
demands, obligations and liabilities, if any, hereby being expressly waived and
discharged to the extent permitted by law), forthwith, directly or through its
agents or representatives, (a) disclose such default and other matters
(including the name, address and telephone number of the Borrower) in connection
therewith in the Secured Party's reasonable discretion (and eRoom Parties each
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understand that the Secured Party intends to make such disclosure, from time to
time); (b) to the extent permitted by applicable law enter any premises, with or
without the assistance of other persons or legal process; (c) require the
relevant eRoom Party to account for (including accounting for any products and
Proceeds of any Collateral), segregate, assemble, make available and deliver to
the Secured Party, its agents or representatives, the Collateral; (d) take
possession of, operate, render unusable, collect, transfer and receive, recover,
appropriate, foreclose, extend payment of, adjust, compromise, settle, release
any claims included in, and do all other acts or things necessary or, in the
Secured Party's sole discretion appropriate, to protect, maintain, preserve and
realize upon, the Collateral and any products and proceeds thereof, in whole or
in part; and (e) exercise all rights, powers and interests with respect to any
and all Collateral, and sell, assign, lease, license, pledge, transfer,
negotiate (including endorse checks, drafts, orders, or instruments), deliver or
otherwise dispose (by contract, option(s) or otherwise) of the Collateral or any
part thereof. Any such disposition may be in one or more public or private
sales, at such price, for cash or credit (or for future delivery without credit
risk) and upon such other terms and conditions as it deems appropriate, with the
right of the Secured Party to the extent permitted by law upon any cash sale or
sales, public or private, to purchase the whole or any part of said Collateral,
free of any right, claim or equity of redemption of or in any of the eRoom
Parties (such rights, claims and equity or redemption, if any, hereby being
expressly waived). Without limiting the foregoing, upon the eRoom Parties'
failure to abide by and comply with their obligations hereunder, in addition to
its other rights and remedies, the Secured Party may (but is not required to),
in its sole discretion and to the extent it deems necessary, advisable or
appropriate, take or cause to be taken such actions or things to be done
(including the payment or advancement of funds, or requiring advancement of
funds to be held by the Secured Party to fund such obligations, including taxes
or insurance) as may be required hereby (or necessary or desirable in connection
herewith) to correct such failure (including causing the Collateral to be
maintained or insurance protection required hereby to be procured and
maintained) and any and all costs and expenses incurred (including attorney's
fees and disbursements) in connection therewith shall be included in the
Obligations and shall be immediately due and payable and bear interest at the
Default Rate.
Section 6.4 APPLICATION OF PROCEEDS. The Secured Party may apply the net
proceeds, if any, of any collection, receipt, recovery, appropriation,
foreclosure or realization, or from any use, operation, sale, assignment, lease,
pledge, transfer, delivery or disposition of all or any of the Collateral, after
deducting all reasonable costs and expenses (including attorneys fees, court
costs and legal expenses) incurred in connection therewith or with respect to
the care, safekeeping, custody, maintenance, protection, administration or
otherwise of any and all of said Collateral or in any way relating to the rights
of the Secured Party under this Security Agreement, (a) first, to the
satisfaction of the Obligations, in whole or in part, in such order as the
Secured Party may, in its discretion, elect; (b) second, to the payment,
satisfaction or discharge of any of other Indebtedness or obligation as required
by any law, rule or regulation; and (c) lastly, the surplus, if any, to the
Borrower.
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Section 6.5 REQUIRED NOTICE OF SALE. In exercising its rights, powers and
remedies as secured party, the Secured Party agrees to give the Borrower five
(5) days notice of the time and place of any public sale of Collateral or of the
time after which any private sale of Collateral may take place, unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market. The Borrower agrees that such
period and notice is commercially reasonable under the circumstances.
ARTICLE VII
POST-DEFAULT POWER OF ATTORNEY
Section 7.1 POST-DEFAULT POWER OF ATTORNEY. Each of the eRoom Parties
hereby irrevocably constitutes and appoints, effective on and after the
occurrence of an Event of Default or Event of Acceleration, the Secured Party
acting through any officer or agent thereof, with full power of substitution, as
such eRoom Party's true and lawful attorney-in-fact with full irrevocable power
and authority in such eRoom Party's place and stead and in the such eRoom
Party's name or in its own name, from time to time in the Secured Party's
discretion, to receive, open and dispose of mail addressed to the eRoom Parties,
to take any and all action, to do all things, to execute, endorse, deliver and
file any and all writings, documents, instruments, notices, statements
(including financing statements, and writings to correct any error or ambiguity
in any Loan Document), applications and registrations (including registrations
and Licenses), checks, drafts, acceptances, money orders, or other evidence of
payment or proceeds, which may be or become necessary or desirable in the sole
discretion of the Secured Party to accomplish the terms, purposes and intent of
this Security Agreement and the other Loan Documents, including the right to
appear in and defend any action or proceeding brought with respect to the
Collateral, and to bring any action or proceeding, in the name and on behalf of
the eRoom Parties, which the Secured Party, in its discretion, deems necessary
or desirable to protect its interest in the Collateral. Said attorney or
designee shall not be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law, unless and then only to the extent
that the same constitutes its gross negligence or willful misconduct. This power
is coupled with an interest and is irrevocable. THIS POWER DOES NOT AND SHALL
NOT BE CONSTRUED TO AUTHORIZE ANY CONFESSION OF JUDGMENT.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 INDEMNIFICATION. Each of the eRoom Parties agree to indemnify
(jointly and severally) the Secured Party and hold the Secured Party harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Secured Party in any way relating, in any
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way arising out of or in connection with any actual or attempted sale, lease or
other disposition of, and any exchange, enforcement, collection, compromise or
settlement of any of the Collateral and receipt of the Proceeds thereof, and for
the care of the Collateral and defending or asserting the rights and claims of
the Secured Party in respect thereof, and for the care of the Collateral and
defending or asserting the rights and claims of the Secured Party in respect
thereof, by litigation or otherwise, including expense of insurance, and all
such expenses shall be Obligations hereunder.
ARTICLE IX
OBLIGATIONS ABSOLUTE
Section 9.1 OBLIGATIONS ABSOLUTE. The Obligations will be absolute,
unconditional and irrevocable and will be paid or satisfied strictly in
accordance with their respective terms under all circumstances whatsoever,
including: (a) the invalidity or unenforceability of all or any of, or any part
of, this Security Agreement, the Note or any other Loan Document, or any
consent, waiver, amendment or modification thereof; (b) the existence of any
claim, setoff, defense or other right which the eRoom Parties may have at any
time against the Secured Party, or any other Person, whether in connection with
this Security Agreement, any other Loan Documents, the transactions contemplated
hereby, thereby or otherwise all of which each of the eRoom Parties hereby
waives to the maximum extent permitted by law; or (c) the loss, theft, damage,
destruction or unavailability of the Collateral to the eRoom Parties for any
reason whatsoever, it being understood and agreed that the eRoom Parties retains
all liability and responsibility with respect to the Collateral.
ARTICLE X
ASSIGNMENT AND DISSEMINATION OF INFORMATION
Section 10.1 ASSIGNMENT. This Security Agreement is freely assignable, in
whole or in part, by the Secured Party and, to the extent of any such
assignment, the Secured Party shall be fully discharged from all responsibility.
The eRoom Parties understand and agree that the Secured Party intends to and
may, from time to time, sell, pledge, grant a security interest in and
collaterally assign, transfer and deliver or otherwise encumber or dispose of
the Notes, this Security Agreement and the other Loan Documents and its rights
and powers hereunder and thereunder, in whole or in part, in connection with the
Securitization or any other assignment or other disposition of the Notes. The
eRoom Parties may not, in whole or in part, directly or indirectly, assign this
Security Agreement or any Loan Document or their rights hereunder or thereunder
or delegate their duties hereunder without, in each instance, the specific prior
written consent of the Secured Party, which consent may be withheld or delayed
in the Secured Party's sole discretion.
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Section 10.2 DISSEMINATION OF INFORMATION. If Secured Party determines at
any time to sell, transfer or assign the Notes, Security Agreement, or other
Loan Documents, and any or all servicing rights with respect thereto, or to
otherwise issue a Securitization involving the Loan Documents, Secured Party may
forward TO each purchaser, transferee, assignee, investor or their perspective
successors in such Securitization or any rating agency rating such
Securitization and each prospective investor, all documents and information
which Secured Party now has or may hereafter acquire relating to the Loan
Document and the eRoom Parties, as Secured Party determines necessary or
desirable.
ARTICLE XI
FURTHER ASSURANCE
Section 11.1 FURTHER ASSURANCE. The Borrower agrees at any time and from
time to time, at the Borrower's sole cost and expense, to obtain, procure,
execute and deliver, file and affix such further agreements, bills of sale and
assignments, instruments, documents, warehouse receipts, bills of lading,
vouchers, invoices, notices, statements, writings, (including financing
statements, and writings to correct any error or ambiguity in any Loan
Document), powers (including stock and bond powers, and powers of attorney), tax
stamps and information, and to do or cause to be done all such further acts and
things (including the execution, delivery and filing of financing statements on
Form UCC- 1, payment of filing fees and transfer, gains and recording taxes) as
the Secured Party may reasonably request, from time to time, in its discretion.
Without limiting the foregoing, the Borrower authorizes the Secured Party to the
extent permitted under the UCC to execute and file, or file without the
Borrower's signature, any and all financing statements, amendments thereto and
continuations thereof as the Secured Party deems necessary or appropriate and
the Borrower shall pay and indemnify the Secured Party for and hold the Secured
Party harmless from any and all costs and expenses in connection therewith. The
Borrower agrees that it will promptly notify the Secured Party of and agree to
correct any defect, error or omission in the contents of any of the Loan
Documents or in the execution, delivery or acknowledgement thereof. The Borrower
further agrees to execute, prior to or within three months following closing, a
Form 4506 REQUEST FOR COPY OR TRANSCRIPT OF TAX FORM, which form will be
provided by Secured Party.
ARTICLE XII
TERM, PARTIAL RELEASE AND REINSTATEMENT
Section 12.1 TERM. This Security Agreement shall be immediately in full
force and effect upon the parties' execution below. Upon indefeasible payment in
full of all of the Obligations, this Security Agreement and the security
interest granted hereunder shall terminate and the Secured Party, at the
Borrower's expense, will execute and deliver to the Borrower the proper
instruments (including UCC termination statements) acknowledging the termination
of such security interest, and will duly assign, transfer and
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deliver (without recourse, representation or warranty) such Collateral as may be
in the Secured Party's possession, and not to be retained, sold, or otherwise
applied or released pursuant to this Security Agreement, to the Borrower, except
that the obligations of the eRoom Parties under Articles 8, 9, 11 and 13 shall
survive indefinitely.
Section 12.2 PARTIAL RELEASE. Upon the indefeasible payment in full of any
Lease Financing Loan (including, without limitation, any Make Whole Premium or
other amounts payable by the Borrower with respect to such Lease Financing Loan)
in accordance with the provisions of the related Note, the security interest
hereunder with respect to the relevant Collateral shall terminate, and the
Secured Party, at the expense of the Borrower, will execute and deliver to the
Borrower the proper instruments (including UCC partial release statements)
acknowledging the termination of such security interest, and will duly assign,
transfer and deliver (without recourse, representation or warranty) such of the
relevant Collateral as may be in the possession of the Secured Party and has not
theretofore been sold or otherwise applied or released pursuant to this Security
Agreement, to the Borrower, and shall take such other action as the Borrower may
reasonably request to effectuate the foregoing.
Section 12.3 REINSTATEMENT. This Security Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Secured Party in respect of the Obligations is rescinded or must
otherwise be restored or returned by the Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or upon
the appointment of any intervenor or conservator of, or trustee or similar
official for, the Borrower or any substantial part of the Borrower's assets, or
otherwise, all as though such payments had not been made.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 AMENDMENTS, CONSENTS, AUTHORIZATIONS. None of the terms or
provisions of this Security Agreement or any other Loan Document may be waived,
altered, modified, or amended except in each instance by a specific written
instrument duly executed by the Secured Party. Without limiting the foregoing,
no action or omission to act shall be deemed to be a consent, authorization,
representation or agreement of the Secured Party, under the UCC or otherwise,
unless, in each instance, the same is in a specific writing signed by the
Secured Party. The inclusion of Proceeds in the Collateral does not and shall
not be deemed to authorize the Borrower to sell, exchange or dispose of the
Collateral or otherwise use the Collateral in any manner not otherwise
specifically authorized herein.
Section 13.2 NOTICES. All notices and other communications given pursuant
to or in connection with this Security Agreement shall be in duly executed
writing delivered to the parties at the addresses set forth below (or such other
address as may be provided by one party in a notice to the other party):
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If to the Secured Party:
AMRESCO LEASING CORPORATION RoomSystems, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
eRoom System Technologies, Inc., eRoom System SPE, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ 3770 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Parkway, Suite 175
Las Vegas, Nevada 89109 ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Notice delivered in accordance with the foregoing shall be effective (a)
when delivered, if delivered personally or by receipted-for telex, telecopier,
or facsimile transmission, (b) two (2) days after being delivered in the United
States (properly addressed and all fees paid) for overnight delivery service to
a courier (such as Federal Express) which regularly provides such service and
regularly obtains executed receipts evidencing delivery or (c) five (5) days
after being deposited (properly addressed and stamped for first-class delivery)
in a daily serviced United States mail box.
Section 13.3 REASONABLENESS. If at any time the Borrower believes that the
Secured Party has not acted reasonably in granting or withholding any approval
or consent under the Notes, this Security Agreement, or any other Loan Document
or otherwise with respect to the Obligations, as to which approval or consent
either the Secured Party has expressly agreed to act reasonably, or absent such
agreement, a court of law having jurisdiction over the subject matter would
require the Secured Party to act reasonably, then the Borrower's sole remedy
shall be to seek injunctive relief or specific performance and no action for
monetary damages or punitive damages shall in any event or under any
circumstance be maintained by the Borrower against the Secured Party.
Section 13.4 RECOVERY OF SUMS REQUIRED TO BE PAID. The Secured Party shall
have the right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of the Secured Party thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by the Borrower
existing at the time such earlier action was commenced.
Section 13.5 WAIVERS. EACH OF THE eROOM PARTIES HEREBY MAKES AND
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS SET
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FORTH IN THIS SECURITY AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS
KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS, AND ONLY AFTER EXTENSIVE
CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH ITS ATTORNEY; EACH OF
THE eROOM PARTIES FURTHER ACKNOWLEDGES THAT SUCH WAIVERS ARE A MATERIAL
INDUCEMENT TO THE SECURED PARTY TO MAKE THE LEASE FINANCING LOANS TO THE
BORROWER AND THAT THE SECURED PARTY WOULD NOT HAVE MADE THE LEASE FINANCING
LOANS WITHOUT SUCH WAIVERS; AND EACH OF THE eROOM PARTIES HEREBY MAKES AND
ACKNOWLEDGES THAT IT MAKES SUCH WAIVERS WITH RESPECT TO EACH OTHER LEASE
FINANCING LOAN IN THE PROGRAM.
Section 13.6 WAIVER OF TRIAL BY JURY. EACH OF THE eROOM PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND THE SECURED PARTY BY ITS ACCEPTANCE
OF THE NOTES AND THIS SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS IRREVOCABLY
AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO
THE NOTES, THIS SECURITY AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR THE
OBLIGATIONS.
Section 13.7 RELATIONSHIP. The relationship of the Secured Party to the
Borrower hereunder is strictly and solely that of secured lender on the one hand
and borrower on the other and nothing contained in the Notes, the Master
Agreement or the Operative Documents, this Security Agreement or any other Loan
Document or otherwise in connection with the Obligations is intended to create,
or shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between the Secured Party and the Borrower
other than as secured lender on the one hand and borrower and guarantor on the
other.
Section 13.8 TIME IS OF THE ESSENCE. For all payments to be made and all
obligations to be performed under the Loan Documents, time is of the essence.
Section 13.9 GOVERNING LAW; BINDING EFFECT. THIS SECURITY AGREEMENT AND ALL
LOAN DOCUMENTS ARE ENTERED INTO IN THE STATE OF IDAHO, SECURED PARTY'S CHIEF
EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS IS LOCATED IN THE STATE OF
IDAHO, AND ALL NOTICES AND SUMS PAYABLE UNDER THE LOAN DOCUMENTS RELATING TO
THIS SECURITY AGREEMENT WILL BE SENT TO THE SECURED PARTY IN THE STATE OF IDAHO.
BORROWER AND SECURED PARTY AGREE THAT THE VALIDITY, ENFORCEABILITY, CONSTRUCTION
AND INTERPRETATION OF THIS SECURITY AGREEMENT, AND OF ALL TRANSACTIONS AND
DOCUMENTS UNDER OR RELATING TO IT, WILL BE CONSTRUED, APPLIED, ENFORCED AND
GOVERNED UNDER THE LAWS OF THE STATE OF IDAHO (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW), PROVIDED HOWEVER, THAT WITH RESPECT TO THE
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CREATION, ATTACHMENT, PERFECTION, PRIORITY AND ENFORCEMENT OF ANY LIENS CREATED
BY THIS SECURITY AGREEMENT, THE LAWS OF THE STATE WHERE THE APPLICABLE PROPERTY
IS LOCATED SHALL APPLY. This Security Agreement shall be binding upon the
Borrower, and the heirs, devises, administrators, executives, personal
representatives, successors, receivers, trustees, and (without limiting Section
10.1 hereof) assignees, including all successors in interest of the Borrower in
and to all or any part of the Collateral, and shall inure to the benefit of the
Secured Party, and the successors and assignees of the Secured Party.
Section 13.10 SEVERABILITY. Whenever possible this Security Agreement, the
Note and each Loan Document and each provision hereof and thereof shall be
interpreted in such manner as to be effective, valid and enforceable under
applicable law. If and to the extent that any such provision shall be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof or
thereof, and any determination that the application of any provision hereof or
thereof to any person or under any circumstance is illegal and unenforceable
shall not affect the legality, validity and enforceability of such provision as
it may be applied to any other person or in any other circumstance.
Section 13.11 HEADINGS DESCRIPTIVE. The headings, titles and captions used
herein are for convenience only and shall not affect the construction of this
Security Agreement or any term or provision hereof.
Section 13.12 COUNTERPARTS. This Security Agreement may be executed in a
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original; and all such counterparts shall together constitute
but one and the same agreement.
Section 13.13 ACKNOWLEDGEMENT. With respect to the amendment, restatement
and consolidation of the Lease Financing Notes into the Credit Enhancement Note
and the credit enhancement features contained therein, each of the eRoom Parties
acknowledges that Secured Party's underwriting guidelines and standards are
applied on a case by case basis and that waivers may be granted in any
particular case (including in the case of a borrower to be included in a pool
with Borrower). Each of the eRoom Parties further acknowledges that Secured
Party's underwriting guidelines or standards may be modified at any time by
Secured Party without notice to the eRoom Parties.
Section 13.14 ATTORNEYS FEES AND COSTS. Each of the eRoom Parties agrees
that upon the occurrence of an Event of Default or an Event of Acceleration, the
Borrower shall pay all costs and expenses actually incurred by Secured Party
(including without limitation attorney's fees and disbursements) incident to the
enforcement, collection, protection or preservation of any right or claim of
Secured Party under the Loan Documents, including any such fees or costs
incurred in connection with any bankruptcy or insolvency proceeding of Borrower.
Section 13.15 LOAN POOL FLEXIBILITY. Following the amendment, restatement
and consolidation of the Lease Financing Notes into the Credit Enhancement Note,
the
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Secured Party shall have the right, at its sole and absolute discretion upon
written notice to Borrower, to transfer (a "Transfer"), within eighteen (18)
months from the effective date of this Security Agreement, all or any of the
Lease Financing Loans and all Liens related to such Lease Financing Loans, from
the related AMRESCO Securitization Program (as described in the related Credit
Enhancement Note) to any other loan pool program formed by Secured Party. Upon
the occurrence of a Transfer, the Loan Documents shall be automatically amended
and reclassified to reflect the Transfer. The Borrower shall execute all
amendments or other documents Secured party deems necessary to effectuate a
Transfer.
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IN WITNESS WHEREOF, the eRoom Parties have executed and entered into this
Security Agreement and delivered it to the Secured Party on and as of the date
set forth below. This document is executed under seal and intended to take
effect as a sealed instrument.
eROOM SYSTEM SPE, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
eROOM SYSTEM TECHNOLOGIES, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
ROOMSYSTEMS INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
AMRESCO LEASING CORPORATION
By:______________________________________
Name:____________________________________
Title:___________________________________
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INDIVIDUAL ACKNOWLEDGEMENT
STATE OF _________________ )
)ss.
COUNTY OF ________________ )
On the __ day of ___________, 200__, before me a Notary Public personally
appeared ______________, to me known to be the person named in and who executed
the foregoing instrument, who, being duly sworn, did depose and say that he/she
resides at _____________________ and acknowledged that he/she executed the same
by his/her voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of office
this ____ day of _____________, 200__.
_____________________________
Notary Public
My commission expires:
__________________________
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CORPORATE ACKNOWLEDGEMENT
STATE OF _________________ )
)ss.
COUNTY OF ________________ )
On the _____ day of ___________, 2000, before me a Notary Public personally
appeared ______________________, to me known to be the person named in and who
executed the foregoing instrument, who, being duly sworn, did depose and say
that he/she resides at _______________________________________; that he/she is
the _______________ of AMRESCO Leasing Corporation, the corporation described in
and which executed the foregoing instrument; and that he/she his/her name
thereto by authority of the board of directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of office
this ____ day of _________________, 200__.
_____________________________
Notary Public
My commission expires:
__________________________
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CORPORATE ACKNOWLEDGEMENT
STATE OF _________________ )
) ss.
COUNTY OF ________________ )
On the _____ day of ___________, 2000, before me a Notary Public personally
appeared ______________________, to me known to be the person named in and who
executed the foregoing instrument, who, being duly sworn, did depose and say
that he/she resides at _______________________________________; that he/she is
the _______________ of eRoom System SPE, Inc., the corporation described in and
which executed the foregoing instrument; and that he/she his/her name thereto by
authority of the board of directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of office
this ____ day of _____________, 200__.
_____________________________
Notary Public
My commission expires:
__________________________
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CORPORATE ACKNOWLEDGEMENT
STATE OF _________________ )
) ss.
COUNTY OF ________________ )
On the _____ day of ___________, 2000, before me a Notary Public personally
appeared ______________________, to me known to be the person named in and who
executed the foregoing instrument, who, being duly sworn, did depose and say
that he/she resides at _______________________________________; that he/she is
the _______________ of eRoom System Technologies, Inc., the corporation
described in and which executed the foregoing instrument; and that he/she
his/her name thereto by authority of the board of directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of office
this ____ day of _________________, 200__.
_____________________________
Notary Public
My commission expires:
__________________________
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CORPORATE ACKNOWLEDGEMENT
STATE OF _________________ )
)ss.
COUNTY OF ________________ )
On the _____ day of ___________, 2000, before me a Notary Public personally
appeared ______________________, to me known to be the person named in and who
executed the foregoing instrument, who, being duly sworn, did depose and say
that he/she resides at _______________________________________; that he/she is
the _______________ of RoomSystems, Inc., the corporation described in and which
executed the foregoing instrument; and that he/she his/her name thereto by
authority of the board of directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of office
this ____ day of _________________, 200__.
_____________________________
Notary Public
My commission expires:
__________________________
M-25
EXHIBIT A
LIST OF FINANCING STATEMENTS
JURISDICTION DESCRIPTION OF FILING
M-26
EXHIBIT N
FORM OF OPINION OF COUNSEL TO THE eROOM PARTIES
[Date]
AMRESCO Leasing Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Master Business Lease Financing Agreement dated as of May 11,
2000 among AMRESCO Leasing Corporation, eRoom System SPE, Inc.,
RoomSystems, Inc and eRoom System Technologies, Inc.
Ladies and Gentlemen:
We have acted as [special] counsel to eRoom System SPE, Inc., a Nevada
corporation (the "BORROWER"), RoomSystems, Inc., a Nevada corporation ("RSi")
and eRoom System Technologies, Inc. ("eROOM" and collectively with the Borrower
and RSi, the "eROOM PARTIES") in connection with the transactions contemplated
by that certain Master Lease Financing Agreement dated as of May 11, 2000 among
AMRESCO Leasing Corporation ("AMRESCO") and the eRoom Parties (the "AGREEMENT").
This opinion is rendered at the request of the eRoom Parties pursuant to Section
5.1 of the Agreement. All capitalized terms used in this letter, without
definition, have the meanings assigned to them in the Agreement.
In connection with this letter, we have examined executed originals or
copies of executed originals of each of the following documents, each of which
is dated the date hereof or as of the date hereof, unless otherwise noted
(collectively, the "OPERATIVE DOCUMENTS"): (a) the Agreement; (b) the form of
Lease Financing Note, which is not dated; (c) the form of Credit Enhancement
Note, which is not dated; (d) the License Agreement; (e) the Purchase Agreement;
(f) the Stock Pledge Agreement; (g) the form of Pledge and Security Agreement;
and (h) the Confidentiality Agreement. In addition, we have examined the
following documents (collectively, the "DUE DILIGENCE DOCUMENTS"): [insert a
list of all the documents, including certificates of good standing, articles of
incorporation, bylaws, corporate records and certificates and documents of
public officials examined in order to give the opinion.]
We have examined originals or certified copies of such corporate records of
each of the eRoom Parties and other certificates and documents of officials of
the eRoom Parties, public officials and others as we have deemed appropriate for
purposes of this letter. As to various questions of fact relevant to this
letter, we have relied, without independent investigation, upon the Due
Diligence Documents and certificates of public officials, certificates of
officers of the
AMRESCO Leasing Corporation
[Date]
Page 2
RSi Parties and representations and warranties of each of the eRoom Parties in
the Operative Documents, all of which we assume to be true, correct and
complete.
We have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to authentic original
documents of all copies submitted to us as conformed, certified or reproduced
copies. We have assumed the legal capacity of all natural persons. We have
assumed the due authorization, execution and delivery of the Agreement by
AMRESCO and that the Agreement and each of the Operative Documents to which it
is a party constitutes the legal, valid and binding obligation of AMRESCO,
enforceable against AMRESCO in accordance with its terms.
Based upon the foregoing and subject to the assumptions, exceptions,
qualifications and limitations set forth hereinafter, we are of the opinion
that:
1. Each of the eRoom Parties is validly existing as a corporation in good
standing under the laws of the State of Nevada, the jurisdiction in
which each is organized, and is duly qualified and in good standing as
a foreign corporation in all other jurisdictions in which it conducts
business.
2. Each of the eRoom Parties has obtained all necessary licenses and
approvals in all jurisdictions in which its business requires such
licenses and approvals, except where the failure to have obtained such
licenses or approvals would not have a material adverse effect on the
transactions contemplated by the Operative Documents. Each eRoom Party
has corporate power to enter into the Agreement and any other
Operative Document to which it is a party.
3. (a) The execution and delivery of the Agreement by the respective
eRoom Parties and the performance by each eRoom Party of its
obligations thereunder have been duly authorized by all necessary
corporate action on the part of such eRoom Party; (b) the Agreement
has been duly and validly executed and delivered by each eRoom Party;
and (c) the Agreement constitutes the valid and binding obligation of
each eRoom Party, enforceable against each such party in accordance
with its terms.
4. The execution and delivery of the Agreement by the respective eRoom
Parties, do not, and the performance by each eRoom Party of its
obligations under the Agreement will not, result in any violation of
any law, rule or regulation of any Included Law (defined below) or any
order, writ, judgment or decree.
5. The execution and delivery of the Agreement by the respective eRoom
Parties do not, and the performance by the eRoom Parties of their
respective obligations under the Agreement will not, (a) result in a
violation of the Articles of Incorporation or By-Laws of such eRoom
Party or (b) breach or result in a default or result in the
AMRESCO Leasing Corporation
[Date]
Page 3
acceleration of or entitle any party to accelerate under any agreement
or instrument to which any eRoom Party is bound.
6. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body
(each, a "FILING") is required under any of the Included Laws for
the due execution and delivery of the Agreement by any of the
eRoom Parties and the performance by the eRoom Parties of their
respective obligations under the Agreement.
7. None of the eRoom Parties is a party to any adversial action,
suit, or proceeding pending or, to the best of our knowledge,
threatened, or before any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality.
The opinions and other matters in this letter are qualified in their
entirety and subject to the following:
A. We express no opinion as to the laws of any jurisdiction other than the
Included Laws. We have made no special investigation or review of any
published constitutions, treaties, laws, rules or regulations or judicial
or administrative decisions ("LAWS"), other than a review of (i) the Laws
of the State of Idaho, (ii) Chapter 78 of the Nevada Revised Statutes and
(iii) the Federal Laws of the United States of America. For purposes of
this opinion, the term "INCLUDED LAWS" means the items described in clauses
(i), (ii) and (iii) of the preceding sentence that are, in our experience,
normally applicable to transactions of the type contemplated in the
Agreement.
B. This opinion letter is limited to the matters expressly stated herein and
no opinions are to be inferred or may be implied beyond the opinions
expressly set forth herein.
C. The matters expressed in this letter are subject to and qualified and
limited by (i) applicable bankruptcy, insolvency, fraudulent transfer and
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally; and (ii) general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in equity).
D. We have assumed that no fraud, dishonesty, forgery, coercion, duress or
breach of fiduciary duty exists or will exist with respect to any of the
matters relevant to the opinions expressed in this letter.
E. We express no opinion as to the compliance of the transactions contemplated
by the Agreement with any regulations or governmental requirements
applicable to any party other than the eRoom Parties.
F. This letter is solely for your benefit and no other Persons shall be
entitled to rely upon this letter. Without our prior written consent, this
letter may not be quoted in whole or in part or
AMRESCO Leasing Corporation
[Date]
Page 4
otherwise referred to in any document and may not be furnished or otherwise
disclosed to or used by any other Person, except for (i) delivery of copies
hereof to counsel for the addressees hereof, (ii) inclusion of copies
hereof in a closing file, and (iii) use hereof in any legal proceeding
arising out of the transactions contemplated by the Agreement filed by an
addressee hereof against this law firm or in which any addressee hereof is
a defendant.
Very truly yours,
EXHIBIT O
eROOM (OR BORROWER) DOMESTIC PRICE AND PRODUCT SCHEDULE
(1) (2) (3) (4) (5) (6) (7)
--------------------------------------------------------------------------------------------------------------------------------
Desc. Height Width Depth Ship Wt. Selection Cubic Feet
Capacity
--------------------------------------------------------------------------------------------------------------------------------
RS 500M 20" 20" 21" 50 lbs 10 1.8
--------------------------------------------------------------------------------------------------------------------------------
RS 1000 25 1/4" 19" 20" 60 lbs 10 2.3
--------------------------------------------------------------------------------------------------------------------------------
RS 2000 22 1/2" 19 1/4" 21" 64 lbs 19 1.8
--------------------------------------------------------------------------------------------------------------------------------
RS 3000 22" 19" 17" 59 lbs 19 1.9
--------------------------------------------------------------------------------------------------------------------------------
RS 5000 27 1/2" 19" 20" 73 lbs 22 2.4
--------------------------------------------------------------------------------------------------------------------------------
RS 6000 27 7/8" 19" 17" 69 lbs 22 2.3
--------------------------------------------------------------------------------------------------------------------------------
Glass Door Depends on Unit Depends on Unit Depends on Unit 8 lbs N/A 1.8 to 1.9
--------------------------------------------------------------------------------------------------------------------------------
Glass Door Depends on Unit Depends on Unit Depends on ▇▇▇▇ ▇▇ lbs N/A 2.3 to 2.4
--------------------------------------------------------------------------------------------------------------------------------
Depends on Unit Depends on Unit Depends on Unit N/A 8 N/A
Module Tray
--------------------------------------------------------------------------------------------------------------------------------
Laminate Front Depends on Unit Depends on Unit Depends on Unit N/A N/A N/A
Panel
--------------------------------------------------------------------------------------------------------------------------------
RoomSafe RSS 10_ 6" Depends on Unit Depends on ▇▇▇▇ ▇▇ lbs N/A 1.2
LowBoy
--------------------------------------------------------------------------------------------------------------------------------
RoomSafe RSS 10_ Depends on Unit 8" Depends on Unit 52 lbs N/A 2.5
HighBoy
--------------------------------------------------------------------------------------------------------------------------------
RSC Classic Depends on Unit Depends on Unit Depends on Unit 60 lbs N/A N/A
(Cabinet)
--------------------------------------------------------------------------------------------------------------------------------
CCC- Classic Depends on Unit Depends on Unit Depends on Unit 80 lbs N/A N/A
Cabinet
--------------------------------------------------------------------------------------------------------------------------------
(1) (8) (9) (10)
--------------------------------------------------------------------------
Percentage Plan Platinum Plan Threshold Plan
Desc. (always (fixed payment ***, then ***
includes a Safe) plans) after threshold
--------------------------------------------------------------------------
RS 500M *** *** ***
--------------------------------------------------------------------------
RS 1000 *** *** ***
--------------------------------------------------------------------------
RS 2000 *** *** ***
--------------------------------------------------------------------------
RS 3000 *** *** ***
--------------------------------------------------------------------------
RS 5000 *** *** ***
--------------------------------------------------------------------------
RS 6000 *** *** ***
--------------------------------------------------------------------------
Glass Door *** *** ***
--------------------------------------------------------------------------
Glass Door *** *** ***
--------------------------------------------------------------------------
*** *** ***
Module Tray
--------------------------------------------------------------------------
Laminate Front *** *** ***
Panel
--------------------------------------------------------------------------
RoomSafe RSS 10_ *** *** ***
LowBoy
--------------------------------------------------------------------------
RoomSafe RSS 10_ *** *** ***
HighBoy
--------------------------------------------------------------------------
RSC Classic N/A *** ***
(Cabinet)
--------------------------------------------------------------------------
CCC- Classic Safe Fee Split *** ***
Cabinet ***
--------------------------------------------------------------------------
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
O-1
Notes:
1. Revenue splits: the first number in the fraction indicates eRoom's (or
Borrower's) share. (Ex: *** would mean eRoom (or Borrower) receive *** of
revenues).
2. Relative to the Percentage Plan:
a. The percentages for Lessees under *** rooms will be as follows:
instead of *** on Refreshment Center revenue, it will be ***; and
instead of *** on fees for room safes, it will be ***.
b. If a cabinet is ordered for the Refreshment Center, the *** split on
the Refreshment Center revenue will remain the same; however, the
revenue from the room safe will be split *** (under ***-room
properties will be ***).
c. For room safes, "*** fee ***" means that the Lessee must charge each
guest a fee of *** for safe usage and this fee will be split *** to
eRoom (or Borrower), *** to the Lessee.
3. Relative to the Platinum Plan:
a. There are three options for each Refreshment Center model. For
example, the RS 5000 allows i) a fixed payment of *** per room per
day, ii) a fixed payment of *** per room per day with *** of all
revenues paid to eRoom (or Borrower) and iii) a fixed payment of ***
per room per day with *** of all revenues paid to eRoom (or Borrower).
b. *** will be added to the Refreshment Center thresholds of any property
under *** rooms. (Example: The threshold for the RS 5000 would
increase from *** to ***.)
4. Relative to the Threshold Plan:
a. For purposes of calculating the payment split to eRoom (or Borrower),
the monthly Refreshment Center revenue is calculated. Then, the
average revenue per room per day is calculated and this number is then
applied to the applicable threshold.
b. eRoom (or Borrower) receives *** up to the threshold amount and then
*** thereafter. *** For example, the RS 5000 provides that eRoom (or
Borrower) receives *** of the first *** cents per room per day and
then *** of any revenue over *** with *** by eRoom (or Borrower) ***.
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
O-2
EXHIBIT P
THRESHOLD PLAN CALCULATION
GENERAL ASSUMPTIONS:
# of hotel rooms ***
# of days in current month ***
Total Refreshment Center revenue in current month ***
Threshold ***
Refreshment Center model ***
Threshold Plan Revenue Split - *** (*** to Lessee) up to Threshold,
then, *** (*** to Lessee) after Threshold where eRoom (or borrower)
pays *** of *** to Lessee's corporate franchisor (if applicable).
STEP 1: AVERAGE DAILY eROOM THRESHOLD PLAN REVENUE CALCULATED PURSUANT TO THE
THRESHOLD CALCULATION
Step 1 Unique Assumptions:
Hotel occupancy during Seasoning Period ***
# of occupied room days in current month (***) ***
Average revenue per room per day in current month (***) ***
AVERAGE DAILY eROOM THRESHOLD PLAN REVENUE=***CENTS
*** + [(***) x (***)] = ***
STEP 2: AVERAGE DAILY eROOM THRESHOLD PLAN REVENUE CALCULATED PURSUANT TO THE
RECALCULATED THRESHOLD CALCULATION
Step 2 Unique Assumptions:
Hotel occupancy for previous *** month period ***
Adjusted # of occupied room days in current month (***) ***
Adjusted total Refreshment Center Revenue in current month ***
(*** x ***)
Adjusted average revenue per room per day (***) ***
AVERAGE DAILY eROOM THRESHOLD PLAN REVENUE=*** CENTS
(*** x ***) + [(***) x (***)] = ***
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
P-1
EXHIBIT Q
PERCENTAGE PLAN CALCULATION
GENERAL ASSUMPTIONS:
# of hotel rooms ***
# of days in current month ***
Refreshment Center revenue (excluding room safe) in current month ***
Daily charge for room safe ***
Refreshment Center model RS 5000 with LowBoy room safe
Percentage Plan Revenue Split: RS 5000 revenues *** (*** to Lessee)
LowBoy revenues *** (*** to Lessee)
STEP 1: AVERAGE DAILY eROOM PERCENTAGE PLAN REVENUE CALCULATED PURSUANT TO THE
PERCENTAGE CALCULATION
Step 1 Unique Assumptions:
Hotel occupancy ***
# of room days in current month (***) ***
Revenue from room safe in current month (***) ***
eRoom (or Borrower) share of RS 5000 revenue (***) ***
eRoom (or Borrower) share of LowBoy room safe revenue (***) ***
eRoom (or Borrower) total monthly revenue share ***
AVERAGE DAILY eROOM PERCENTAGE PLAN REVENUE = ***
(*** hotel rooms/*** days per month)
STEP 2: AVERAGE DAILY eROOM PERCENTAGE PLAN REVENUE CALCULATED PURSUANT TO THE
RECALCULATED PERCENTAGE CALCULATION
Step 2 Unique Assumptions:
Hotel occupancy for previous *** month period ***
Adjusted # of room days in current month (***) ***
Adjusted total RS 5000 revenue in current month (***) ***
Adjusted total LowBoy revenue in current month (***) ***
eRoom (or Borrower) share of RS 5000 revenue (***) ***
eRoom (or Borrower) share of LowBoy revenue (***) ***
eRoom (or Borrower) total monthly revenue share ***
AVERAGE DAILY eROOM PERCENTAGE PLAN REVENUE=*** CENTS
(*** hotel rooms/*** days per month)
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
Q-1
EXHIBIT R
PLATINUM PLAN CALCULATION
GENERAL ASSUMPTIONS:
# of hotel rooms ***
# of days in current month ***
Total Refreshment Center Revenue in current month ***
Refreshment Center model RS 5000
Platinum Plan Revenue Split - ***fixed payment guarantee
Then, *** to eRoom (or Borrower) with *** to Lessee
AVERAGE DAILY eROOM PLATINUM PLAN REVENUE CALCULATED PURSUANT TO
THE PLATINUM CALCULATION
Step 1 Unique Assumptions:
Hotel occupancy ***
# of room days in current month (***) ***
Average revenue per room per day in current month (***) ***
AVERAGE DAILY eROOM PLATINUM PLAN REVENUE=*** CENTS
(*** fixed payment + ***)
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
R-1
EXHIBIT S
[ACTUAL COST OF GOODS SOLD]
For purposes of this Agreement, the "Actual Cost of Goods Sold" shall be
calculated for the models listed herein as set out herein and for all models not
listed herein, in a manner substantially similar to that set out herein.
--------------------------------------------------------------------------------
COST OF GOODS
--------------------------------------------------------------------------------
Refreshment Centers RS 5000 RS 3000 RS 500M
--------------------------------------------------------------------------------
Manufacturing Cost
--------------------------------------------------------------------------------
Rack Assembly *** *** ***
--------------------------------------------------------------------------------
Electronic Tray *** *** ***
--------------------------------------------------------------------------------
Communication Module *** *** ***
--------------------------------------------------------------------------------
Refrigerators *** *** ***
--------------------------------------------------------------------------------
Glass Doors
--------------------------------------------------------------------------------
Miscellaneous Parts *** *** ***
--------------------------------------------------------------------------------
Labor Hours for Assembly *** *** ***
--------------------------------------------------------------------------------
Hourly Labor Cost *** *** ***
--------------------------------------------------------------------------------
Adjustment for Labor Inefficiency *** *** ***
--------------------------------------------------------------------------------
Material Shrinkage Adjustment *** *** ***
--------------------------------------------------------------------------------
Total Manufacturing Cost *** *** ***
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shipping Cost
--------------------------------------------------------------------------------
Unallocated Inbound Freight *** *** ***
--------------------------------------------------------------------------------
Outbound Freight *** *** ***
--------------------------------------------------------------------------------
Total Shipping Cost *** *** ***
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Commission *** *** ***
--------------------------------------------------------------------------------
Installation Cost *** *** ***
--------------------------------------------------------------------------------
FULLY BURDENED COST *** *** ***
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Safes Low Boy High Boy
--------------------------------------------------------------------------------
Manufacturing Cost
--------------------------------------------------------------------------------
Safe Bracket Assembly *** ***
--------------------------------------------------------------------------------
Safe Box *** ***
--------------------------------------------------------------------------------
Miscellaneous Parts *** ***
--------------------------------------------------------------------------------
Labor Hours for Assembly *** ***
--------------------------------------------------------------------------------
Hourly Labor Cost *** ***
--------------------------------------------------------------------------------
Adjustment for Labor Inefficiency *** ***
--------------------------------------------------------------------------------
Material Shrinkage Adjustment *** ***
--------------------------------------------------------------------------------
Total Manufacturing Cost *** ***
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shipping Cost
--------------------------------------------------------------------------------
Unallocated Inbound Freight *** ***
--------------------------------------------------------------------------------
Outbound Freight *** ***
--------------------------------------------------------------------------------
Total Shipping Cost *** ***
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Commission *** ***
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FULLY BURDENED COST *** ***
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
S-2
EXHIBIT T
FORM OF CONFIDENTIALITY AGREEMENT
THIS AGREEMENT is made and entered into as of the _____ day of
______________, 2000, by and among eRoom System Technologies, Inc. ("eRoom"),
RoomSystems Inc. ("RSi") and eRoom System SPE, Inc. (the "BORROWER"; and
collectively with eRoom and RSi, the "eROOM PARTIES," and AMRESCO Leasing
Corporation, a Nevada corporation (hereinafter referred to as "ALC").
WHEREAS, the eRoom Parties and ALC intend to engage in a loan program
in which ALC will make Lease Financing Loans to the Borrower, during the course
of which ALC may have access to, receive or inspect, certain documents from the
eRoom Parties that contain information including, but not limited to,
information relating to eRoom Parties and their business, assets, strategies or
plans, operations, trade secrets, processes, research, innovations, intellectual
property, pricing policies, prospects, customer information, trademarks,
products, administration, marketing methods or plans, financial condition or
manufacturing activities. All such information that is in written form and
marked "Confidential" shall be considered by ALC to be proprietary and
confidential (the "Confidential Information"). Confidential Information shall
not include and this Agreement shall not apply to any information which (a) is
or becomes generally available to the public without violation of any obligation
of confidentiality by ALC or its representatives or, (b) was available to ALC on
a non-confidential basis prior to its disclosure by the eRoom Parties.
NOW, THEREFORE, based upon the mutual covenants herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Confidential Information obtained from the eRoom Parties shall not be
disclosed by ALC without prior permission of the eRoom Parties, except on a
confidential basis to those directors, officers, representatives (including
its accountants, attorneys and agents) and employees of ALC or any of its
affiliates who are engaged or involved in the Program or to other parties
which are or may be involved in a securitization or whole loan sale of the
potential financing which is the subject of such program, including but not
limited to rating agencies, investors, monoline insurance providers,
investment bankers, equipment leasing or finance companies, conduit
purchasers, warehouse credit providers and other potential sources of
capital (any and all such parties referred to in this sentence shall
hereinafter be referred to as "Permitted Recipients"). In furtherance of
such undertaking, ALC agrees that it will not distribute any Confidential
Information to anyone, other than Permitted Recipients. ALC further agrees
not to exploit or make use of the Confidential Information in any manner
that will compete with the current business of the eRoom Parties.
2. Notwithstanding any other provision of this Agreement, ALC may disclose
such information as may be required (a) by court order, subpoena or similar
process issued by a court of competent jurisdiction or by a governmental
body, (b) in any report, statement or testimony submitted to any municipal
state, federal or other regulatory body having
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
T-1
jurisdiction over ALC or (c) in order to comply with any law, order,
regulation or ruling applicable to ALC.
3. ALC specifically acknowledges that the eRoom Parties shall be entitled to
injunctive relief in the event ALC violates the terms of Section 1 of this
Agreement.
4. ALC shall cause the Permitted Recipients, to observe the terms of this
Agreement to the same extent that ALC is required to do so.
5. Upon request of the eRoom Parties, ALC shall within fifteen (15) days,
destroy or return to the eRoom Parties all original Confidential
Information it has in its possession with the exception of (i) retaining
one copy of such information solely for legal and regulatory purposes and
(ii) retaining that portion of the Confidential Information which consists
of analyses, compilations, forecasts, studies, or other documents prepared
by ALC or the Permitted Recipients.
6. This Agreement is binding upon all parties, their successors, and assigns,
and any amendment or modification must be in writing and signed by both
parties.
7. This Agreement may not be assigned by either party without the prior
written consent of the other.
AMRESCO LEASING CORPORATION eROOM SYSTEM SPE, INC.
By: By:
----------------------------- -----------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
----------------------------- -----------------------------
eROOM SYSTEM TECHNOLOGIES, INC. ROOMSYSTEMS, INC.
By: By:
----------------------------- -----------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
----------------------------- -----------------------------
CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
T-2