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EXHIBIT 10.09
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MASTER LOAN AND SECURITY AGREEMENT FORM
DATED AS OF JUNE 1,1998
BETWEEN
CCI/TRIAD FINANCIAL HOLDING CORPORATION
AS BORROWER
AND
NATIONSCREDIT COMMERCIAL CORPORATION
AS LENDER
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$5,000,000
DISCOUNT LOAN FACILITY
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LOANS SECURED BY
LEASE RECEIVABLES, LEASES, AND
LEASED EQUIPMENT
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This MASTER LOAN AND SECURITY AGREEMENT FORM is entered into as of the
Effective Date stated in the Schedule 1 document entered into between CCI/TRIAD
FINANCIAL HOLDING CORPORATION ("SPE"), a California corporation, as borrower,
and the entity shown in the Schedule 1 document, as Lender ("Lender").
INTRODUCTION
A. Both SPE and Triad Systems Financial Corporation ("TSFC"), a
California corporation are wholly owned subsidiaries of COOPERATIVE COMPUTING,
INC. dba TRIAD SYSTEMS CORPORATION ("CCI/Triad"), a Delaware corporation.
CCI/Triad manufactures and TSFC purchases from CCI/Triad and leases to TSFC's
customers computer systems and software, all in accordance with an Operating and
Support Agreement among CCI/Triad, TSFC, SPE and Lender.
B. TSFC has transferred by sale to SPE certain receivables due TSFC
under the leases and TSFC has by an agreement substantially in the form of the
Sales, Assignment and Security Interest Agreement attached hereto as Exhibit F
assigned to SPE certain of its rights and interests in the Leases, computer
systems, software and equipment.
C. Lender engages in the business of equipment lease financing.
D. Lender is willing to lend to SPE amounts equal to the discounted
value of payments receivable under certain of the customer leases of computer
systems and software, upgrades and add-ons or other equipment, and SPE is
willing to grant a security interest in the lease payments, the leased computer
systems and software or other equipment and the interest of TSFC in the leases,
all subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows;
1. DEFINITIONS
When used in capitalized form herein, the following terms shall have
the meanings indicated:
1.1. "Anniversary Date" - the date stated as the "Anniversary Date" in
the Schedule 1 document.
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1.2. "Business Day" - any day other than a Saturday, Sunday or a public
or bank holiday or the equivalent for banks generally under the laws of the
State of California.
1.3. "Closing Date" - with respect to any Loan, the date on which
Lender makes a Loan to SPE under this Agreement.
1.4. "Collateral" - as defined in Section 6.1.
1.5. "Discount Facility" - the credit facility provided by Lender to
SPE pursuant to Section 2.
1.6. "Discount Facility Loan" - a Loan made by Lender to SPE under the
Discount Facility.
1.7. "Discount Facility Rate" - with respect to a Discount Facility
Loan - will be determined from time to time by mutual agreement of SPE, and
Lender.
1.8. "Discount Facility Loan Value" - of a Lease at the time a Discount
Facility Loan is made, a percentage to be determined by mutual agreement between
the parties, of each payment of Rent remaining unpaid under the Lease at that
time (but excluding any past due Rent), discounted from the date each such
payment is due to such time at the Discount Facility Rate with respect to such
Discount Facility Loan.
1.9. "Effective Date" - the date of this Agreement.
1.10 "Eligible Equipment" - new or remanufactured Equipment, including
but not limited to, computer systems and related components, software and
accessories manufactured or sold by CCI/Triad or another manufacturer or seller,
having a Discount Facility Loan Value of not less than One Thousand Dollars
($1,000.00) subject to an Eligible Lease and not subject to a security interest
or other encumbrance in favor of any corporation, firm or other person other
than a security interest in favor of Lender arising under this Agreement or a
Security Supplement.
1.11 "Eligible Lease" - a full pay out net lease, substantially in the
form of Exhibit A-1, naming TSFC as lessor, that:
(a) has a noncancelable term of not less than 12
months nor more than 84 months excluding
renewals or extensions;
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(b) provides for (i) Rent and casualty payments
in amounts sufficient to repay to Lender the
Loan made in respect of such lease and
interest on such Loan at the Discount
Facility Rate, (ii) interest on late
payments under such lease at a rate not less
than the Late Payment Rate and (iii) all
payments to be made in United States
dollars;
(c) provides that the lessor's right to receive
payment is absolute and not contingent upon
the fulfillment of any condition whatsoever
other than the passage of time;
(d) covers only Eligible Equipment subject to a
security interest in favor of Lender and
includes all hardware and any other systems
required to operate any included software;
(e) is not subject to any conditions,
obligations of, or any right or offset,
counterclaim or defense by, the Lessee
thereunder;
(f) is a Lease under which the Lessee is not in
default, and;
(g) is in all other respects satisfactory to
Lender.
1.12 "Equipment" - any and all Eligible Equipment leased to a Lessee by
TSFC under a Lease, located in the United States and made subject to a security
interest in favor of Lender by the execution and delivery by SPE to Lender of a
Security Supplement specifically describing such Eligible Equipment, together
with (i) all accessions, replacements, parts, repairs, fixtures and accessories
incorporated therein or affixed thereto under the Lease, and (ii) all upgrades,
add-ons and additions incorporated therein or affixed thereto to the extent they
have been financed by Lender under this Agreement.
1.13 "Event of Default" - as defined in Section 11.1.
1.14 "Excess Proceeds" - of an item of Equipment - any excess of (i)
the Remarketing Proceeds thereof, over (ii) the outstanding Loan Repayment
Amount applicable to a Lease.
1.15 "Guaranty" - a guaranty, in the form of the guaranty which
comprises a part of Exhibit A-1, executed and delivered by a corporation, firm
or other person (a "Guarantor") satisfactory to Lender, assigned to Lender as
security by the execution and delivery by SPE of a Security Supplement
specifically describing such guaranty.
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1.16 "Invoice Price" - with respect to any Equipment - the aggregate
invoice prices of CCI/Triad, as manufacturer or seller, or any other
manufacturer or seller, net of taxes, transportation cost, delivery cost and any
acquisition or other fees payable by TSFC to CCI/Triad or any of its affiliates.
1.17 "Late Payment Rate" - with respect to a Discount Facility Loan -
two percent (2%) over the applicable Discount Facility Rate.
1.18 "Lease" - an Eligible Lease duly executed by the Lessee, approved
by Lender and assigned to Lender as security by the execution and delivery by
SPE to Lender of a Security Supplement specifically describing such Eligible
Lease.
1.19 "Lease Proceeds" - with respect to any Lease - all payments due
from or with respect to the Lessee, such Lease or the Equipment subject to such
Lease, including, but not limited to, all Rent and any security deposits held by
TSFC, all casualty, early termination, purchase option and indemnity payments,
and all insurance and sales or lease proceeds of and requisition payments for
the Equipment subject to such Lease.
1.20 "Lessee" - a United States-domiciled corporation, partnership or
sole proprietorship that is the obligor for payment of Rent under a Lease.
1.21 "Loan" - any advance of funds to SPE by Lender under this
Agreement as evidenced by a Security Supplement.
1.22 "Loan Repayment Amount" - with respect to a Loan at any time - the
aggregate unpaid principal of, and accrued interest (including any interest
accrued at the Late Payment Rate) on, such Loan.
1.23 "Loan Repayment Date" - with respect to any Loan - the twentieth
day of each calendar month, commencing with the first such day to occur after
the Closing Date for such Loan.
1.24 "Net Loss Pool" - as defined in Section 8.4.
1.25 "Obligations" - as defined in Section 6.1.
1.26 "Operating Agreement" - the Operating and Support Agreement
entered into among CCI/Triad, TSFC, SPE, and Lender, substantially in the form
of Exhibit "B" attached hereto.
1.27 "Operative Documents" - this Agreement, each Security Supplement
and the Operating Agreement.
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1.28 "Prepayment Fee" - a fee equal to two percent (2%) of then unpaid
principal amount due Lender under any Lease which is prepaid pursuant to Section
3.7.
1.29 "Proceeds" - of an item of Equipment - the sum of (i) the (a)
gross cash proceeds of sale of such item or (b) aggregate Rent obligation under
a re-lease of such item discounted at the applicable Discount Facility Rate, as
the case may be, plus (ii) any past due Rent and any other termination amount
paid by the Lessee, or by SPE on behalf of the Lessee, plus (iii) any security
deposit held by TSFC that reduces the Lessee's lease termination payment.
1.30 "Remarketing Expenses" - with respect to an item of Equipment -
the sum of (i) costs of repossessing, transporting, refurbishing and remarketing
the item pursuant to Section 10, plus (ii) any applicable sales, use or similar
taxes imposed in connection with the sale or re-lease of such item and not paid
by the purchaser or lessee, plus (iii) in the case of a Lease default,
enforcement and collection costs.
1.31 "Remarketing Proceeds" - with respect to an item of Equipment -
the Proceeds minus the Remarketing Expenses.
1.32 "Rent" - under a Lease, the periodic charges specified in the
Lease for the use of the Equipment, excluding casualty or early termination,
purchase option and indemnity payments and any amounts a Lessee may be required
to pay for taxes, license fees, assessments or maintenance.
1.33 "Security Supplement" - a supplement hereto substantially in the
form of Exhibit "C", executed and delivered to Lender by SPE, describing
Equipment and Leases and subjecting the same to the security interest in favor
of Lender arising under Section 6.
1.34 "Standard Cost" - with respect to an item of Equipment at any time
- an amount equal to fifty percent (50%) of the Loan Repayment Amount of the
Lease calculated on the Loan Repayment Date.
1.35 "Tangible Net Worth" of TSFC - the gross book value of TSFC's
consolidated tangible assets less (a) reserves applicable thereto and (b) all of
TSFC's consolidated liabilities (including accrued and deferred income taxes)
other than indebtedness subordinated, in a manner satisfactory to Lender, to
TSFC's indebtedness to Lender. All determinations of the characterization of
assets and of the values comprising "Tangible Net Worth" shall be made in
accordance with generally accepted accounting principles consistently applied.
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1.36 "CCI/Triad" - Cooperative Computing, Inc. ("CCI/Triad"), a
Delaware corporation, or any successor entity resulting from the sale or
transfer of the stock of CCI/Triad to another corporation as a result of the
merger, acquisition, consolidation, or dissolution of CCI/Triad or resulting
from the transfer of all or substantially all of the assets of CCI/Triad.
2. THE DISCOUNT FACILITY
2.1 Total Facility. Subject to the terms and conditions hereof, from
time to time, from (and including) the Effective Date to and excluding the
Anniversary Date, Lender may with respect to each Lease, make a Loan to SPE in a
principal amount equal to the Discount Facility Loan Value; provided, however,
the aggregate principal amount of all Loans outstanding at any time shall not
exceed the "Aggregate Maximum Loan Amount" stated in the Schedule 1 document,
and provided further that none of TSFC, SPE nor CCI/Triad suffer a material
adverse financial change in its business or financial condition during the term
of this Agreement.
2.2 Interest Calculation. Interest on the Discount Facility Loans shall
be computed on the basis of a 360-day year of 12-30 day months.
2.3 Minimum Loan. The aggregate principal amount of the Loans made on
any Closing Date shall be not less than the "Minimum Loan Amount" stated in the
Schedule 1 document
2.4 Payments. Lender shall pay the proceeds of the Loans in immediately
available funds on the Closing Dates for such Loans. SPE shall make each payment
due under this Agreement to Lender or Lender's assignee in immediately available
funds to the account or address specified by Lender or such assignee.
3. THE LOANS
3.1 Requests for Loans. No later than ten (10) Business Days before the
Closing Date relating to a Discount Facility Loan requested by SPE, SPE shall
submit to Lender Eligible Leases together with lease schedules and other
supporting documentation, and the following:
(a) the name of each Lessee under such Eligible
Leases, together with (i) unless previously
submitted to Lender, financial statements,
to the extent available, of each such
Lessee, if the equipment value is over Fifty
Thousand Dollars ($50,000.00), as of the end
of such
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Lessee's most recent fiscal year, and any
interim financial statements of such Lessee
readily available to TSFC, SPE or CCI/Triad,
all in form and substance satisfactory to
Lender, (ii) the payment history of such
Lessee under other leases entered into
between such Lessee and TSFC, and (iii) such
additional financial information pertaining
to any Lessee as Lender may request;
(b) the Rent schedule for each such Eligible
Lease; and
(c) such other relevant information as Lender
shall reasonably require.
3.2 Approvals. Within ten (10) Business Days of receipt of all
information required to be submitted pursuant to Section 3.1, Lender shall
advise SPE in writing if, in its sole and unlimited discretion, Lender approves
the proposed Eligible Lease and, if Lender requires the credit support of a
Guarantor, the credit of the proposed Guarantor. If Lender fails to give such
advice within such ten (10) day period, Lender shall be deemed to have declined
such credit. Lender may revoke any credit approval prior to making the Discount
Facility Loan relating to a proposed Lease if, in Lender's judgment, the
proposed Lessee or Guarantor suffers a material adverse change in its business
or financial condition. Lender shall promptly return all credit packages to SPE
relative to any rejected lease transactions.
3.3 Disbursement of Discount Facility Loan. Subject to satisfaction of
the conditions precedent set forth in Section 4 and Section 5, Lender shall make
Discount Facility Loans on the Closing Date proposed in accordance with this
Section 3. The Discount Facility Loans made on the Closing Date shall be in an
aggregate principal amount equal to the aggregate Discount Facility Loan Values
of the Eligible Leases submitted by SPE pursuant to Section 3.1 and approved by
Lender pursuant to Section 3.2. If, for any reason, a Discount Facility Loan is
not made on a proposed Closing Date notwithstanding compliance by SPE with
Section 3.1, the Closing Date may be rescheduled to a date, within ten (10)
Business Days of such Closing Date, mutually agreed upon in writing by Lender
and SPE .
3.4 Loan Payments and Amortizations. Each Discount Facility Loan shall
bear interest at the Discount Facility Rate determined for such Loan and shall
be evidenced by a Security Supplement which shall set forth the repayment terms
with respect to such Discount Facility Loan in a manner satisfactory to Lender
and shall identify the Lease(s) with respect to which such Discount Facility
Loan is made. Principal of, and accrued interest on, the Discount Facility Loans
shall be payable in accordance with the Security
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Supplement for such Discount Facility Loan. Each Discount Facility Loan shall be
amortized by the Lease Proceeds received by Lender with respect to the Leases
financed by such Loan, with such Lease Proceeds applied first to accrued and
unpaid interest, then to any other amounts due under such Loan, and then to
principal.
3.5 Upgrades and Additions. TSFC may, from time to time, agree with a
Lessee under a Lease that the Equipment subject to such Lease shall be upgraded
or that additional Eligible Equipment should be added to such Lease. If TSFC and
such Lessee amend such Lease to increase the Rent payable thereunder in
consideration of such upgrade or addition, SPE may request that Lender finance
the additional Lease Proceeds arising under such amendment ( the "Lease
Amendment") attributable to such increase in Rent. Not later than ten (10)
Business Days after such request, Lender shall give SPE written advice as to
whether Lender, in its sole discretion, has elected to finance such additional
Lease Proceeds. If Lender fails to give such advice within such ten (10) day
period, Lender shall be deemed to have declined to finance such additional Lease
Proceeds and shall so advise SPE in writing. If Lender agrees to finance such
additional Lease Proceeds, Lender shall, subject to satisfaction of the
conditions precedent set forth in Sections 4 and 5, make a Discount Facility
Loan in an amount equal to the aggregate increase in Rent effected by the Lease
Amendment which remains unpaid as of the applicable Closing Date, but excluding
any such increase in Rent which is past due, discounted at the Discount Facility
Rate determined on the applicable Closing Date. The Closing Date with respect to
such Discount Facility Loan shall be a date agreed upon in writing by Lender and
SPE. If Lender agrees to make such a Discount Facility Loan, the Lease Amendment
shall be considered a "Lease" for all purposes of this Agreement (including,
without limitation, Section 5). If SPE finances such upgrades or additions
through a source other than Lender and does not prepay in accordance with
Section 3.6, SPE agrees that any security interest granted to a source other
than Lender shall not conflict with Lender's security interest.
3.6 Optional Prepayment: Lender Refusal to Finance Upgrades or
Additions. If Lender elects not to finance increased Lease Proceeds related to
upgrades or additions pursuant to Section 3.5, SPE may give Lender not less than
ten (10) days prior written notice of its intention to prepay the Discount
Facility Loan made to finance the Lease in respect of which an upgrade or
addition has been made. On the first Loan Repayment Date to occur after the ten
(10) day notice period has elapsed, SPE shall (i) prepay the outstanding
principal balance of such Discount Facility Loan made to finance such Lease and
(ii) pay all accrued and unpaid interest on such Discount Facility Loan to the
date of prepayment. No Prepayment Fee shall be payable in respect of an optional
prepayment made pursuant to this Section 3.6.
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3.7 Mandatory Prepayment: Termination of Lease. If a Lessee voluntarily
terminates a Lease before its scheduled expiration, SPE shall prepay the
Discount Facility Loan made to finance such Lease on the Loan Repayment Date
immediately following such termination. On such Loan Repayment Date, SPE shall
pay to Lender (i) the Loan Repayment Amount with respect to the Loan made to
finance such Lease and (ii) the Prepayment Fee.
3.8 Mandatory Prepayment: Casualty. If any Equipment subject to a Lease
is lost or damaged, and cannot be repaired or replaced with substantially
similar Equipment by the first Loan Repayment Date occurring not less than
thirty (30) days after such loss or damage, SPE shall prepay the Discount
Facility Loan made to finance such Lease on such Loan Repayment Date. On such
Loan Repayment Date, SPE shall pay to Lender the Loan Repayment Amount with
respect to the Loan made to finance such Lease. No Prepayment Fee shall be
payable in respect to a mandatory prepayment made pursuant to this Section 3.8.
3.9 Mandatory Prepayment: Rent Default. If any Rent under any Lease
financed or refinanced by a Discount Facility Loan shall remain unpaid for a
period of ninety (90) days from the date when due, SPE shall prepay such Loan up
to the Net Loss Pool in accordance with Section 8.4. No Prepayment Fee shall be
payable in respect to a mandatory prepayment made pursuant to this Section 3.9.
3.10 No Other Prepayments Permitted. No Discount Facility Loan may be
prepaid except as otherwise expressly provided in the Agreement unless SPE pays
together with the Loan Repayment Amount for such Discount Facility Loan the
Prepayment Fee.
3.11 Limited Recourse. Lender agrees that, except as provided in this
Section 3.11, Section 3.9, Section 3.12, Section 8, and Section 10 with respect
to Remarketing Expenses and Section 11, each Discount Facility Loan is
nonrecourse to SPE and that the repayment of each Discount Facility Loan shall
be obtained solely from the Lease Proceeds of the Leases, Proceeds of the
Equipment and the other collateral in which Lender has been granted a security
interest pursuant to Section 6; provided, however, that SPE shall be jointly and
severally liable (without any limitation on recourse) with TSFC (i) if (a)
either TSFC or SPE shall fail to pay over to Lender any Lease Proceeds received
by TSFC or SPE and due Lender hereunder, in which case SPE shall be liable for
the amount of the Lease Proceeds not so paid over plus interest accrued thereon
at the Late Payment Rate from the date the Lease Proceeds were required to be
paid over to Lender, or (b) the fees and payments paid by a Lessee to SPE or
TSFC upon termination of a Lease are less than the Loan Repayment Amount
relating to such Lease and (ii) for all payments required to be made pursuant to
Section 3.8, whether or not insurance proceeds received by SPE or TSFC are at
least equal to such payments.
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3.12 Full Recourse. Notwithstanding anything set forth herein,
including, without limitation, any limitation on recourse against SPE, Discount
Facility Loans in the aggregate principal amount of the "Maximum Full Recourse
Amount" stated in the Schedule 1 document at any one time outstanding may be
with recourse to SPE. Such Loans shall be secured by Leases which are Eligible
Leases except that the creditworthiness of the Lessee may not otherwise be
acceptable to Lender. A Discount Facility Loan with recourse shall be designated
as such by mutual written agreement of Lender and SPE, as the case may be, prior
to the Closing Date of such Loans. Upon occurrence at any time of any default
under such Leases, SPE shall repay the Discount Facility Loan made to finance
such Leases on the Loan Repayment Date occurring not more than thirty (30) days
after such default. On such Loan Repayment Date, SPE shall pay (i) the
outstanding principal balance of the Discount Facility Loan made to finance such
Leases, and (ii) all accrued and unpaid interest on such Discount Facility Loan
to the date of payment. No Prepayment Fee shall be payable in respect of any
such prepayment. The amounts paid to Lender by SPE pursuant to this paragraph
shall not be charged against the First Loss Provision defined in Section 8.4.
4. CONDITIONS PRECEDENT TO THE INITIAL LOAN
Lender will not make the initial Loan hereunder until it has received
all of the following, in form and substance satisfactory to Lender:
4.1 Evidence of Authority of SPE. Certified resolutions of the Board of
Directors of SPE, authorizing the execution, delivery and performance of each of
the Operative Documents to which SPE is a party and any other document required
hereunder together with an incumbency certificate with respect to the officer or
officers of SPE executing any of such Operative Documents and any document
required hereunder.
4.2 Evidence of Authority of CCI/Triad. Certified resolutions of the
Board of Directors of CCI/Triad authorizing the execution, delivery and
performance of the Operating Agreement and any other document required
thereunder together with an incumbency certificate with respect to the officer
or officers of CCI/Triad executing the Operating Agreement and any document
required thereunder.
4.3 Operating Agreement. The Operating Agreement, duly executed by
CCI/Triad, TSFC, SPE, and Lender.
4.4 Financial Statements. The most recent consolidated financial
statements of CCI/Triad and TSFC.
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4.5 SPE Officer's Certificate. A certificate from a duly authorized
officer of SPE, dated as of the first Closing Date, stating that:
(a) all representations and warranties made by
SPE under this Agreement and under the
Operating Agreement are true and correct as
of the date of the certificate;
(b) SPE is in compliance with all covenants made
under this Agreement; and
(c) no event has occurred and is continuing that
is, or with the passage of time or giving of
notice would be, an Event of Default or a
default under or breach of the Operating
Agreement; and containing an express
undertaking by SPE to give immediate notice
to Lender if at any time prior to the
Anniversary Date if any of the above
statements are no longer true.
4.6 CCI/Triad Officer's Certificate. A certificate from a duly
authorized officer of CCI/Triad, dated as of the first Closing Date, stating
that:
(a) all representations and warranties made by
CCI/Triad under the Operating Agreement are
true and correct as of the date of the
certificate;
(b) CCI/Triad is in compliance with all
covenants made under the Operating
Agreement;
(c) no event has occurred and is continuing that
is, or with the passage of time and/or
giving of notice would be, a default under
or breach of the Operating Agreement; and
(d) containing an express undertaking by
CCI/Triad to give immediate written notice
to Lender if at any time prior to the
Anniversary Date if any of the above
statements is no longer true.
4.7 Insurance. Evidence of the insurance required by Section 8.3.
4.8 Agreement of Admission of Additional Secured Parties. Evidence that
the Agreement of Admission of Additional Secured Parties, in the form previously
executed by Lender has been duly executed and delivered by all of the other
parties thereto.
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5. CONDITIONS PRECEDENT TO ALL LOANS
Lender will not make any Loan hereunder (including the initial Loan)
unless on the date thereof:
5.1 Notice. SPE shall have given Lender verbal notice of each Closing
Date no later than five (5) Business Days prior to such Closing Date.
5.2 Operating Agreement. The Operating Agreement shall be in full force
and effect and no defaults or breaches shall exist thereunder as of the
applicable Closing Date.
5.3 Receipt of Certain Documents. Lender shall have received the
following, in form and substance satisfactory to Lender:
(a) Lease. (i) A signed fax copy or original,
manually executed counterparts in the
possession of CCI/Triad or TSFC on such
Closing Date of each Lease financed on such
Closing Date and the related Lease Schedule
substantially in the form contained in
Exhibit "A-1", in each case duly executed by
TSFC as lessor and by the Lessee thereunder;
(b) Guaranty. If required by Lender, signed fax
copy or original, manually executed
counterparts in the possession of CCI/Triad
or TSFC on such Closing Date of each
Guaranty duly executed by the Guarantor;
(c) Financing Statements Filed Against Lessees.
Except in the case of Leases of Equipment
having an aggregate Invoice Price less than
Thirty-five Thousand Dollars ($35,000.00),
evidence of electronic filing receipts, a
search report (from Dun and Bradstreet or
comparable reporting entity) confirming the
existence or copies (any of such
documentation with filing numbers and filing
dates) of duly executed and filed Uniform
Commercial Code financing statements on form
UCC-1 naming TSFC as secured party and the
Lessees under the Leases to be financed on
the Closing Date as debtors, identifying as
collateral the Equipment subject to such
Leases.
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(d) Financing Statements to be Filed Against
SPE. Copies of duly executed Uniform
Commercial Code financing statements on form
UCC-1, naming SPE as debtor and Lender, as
secured party, and identifying as collateral
the Leases and any Guaranties and Equipment
to be assigned in sufficient number to be
filed in all jurisdictions as may be
necessary, in Lender's judgment, to perfect
Lender's security interest in such
collateral, including, without limitation,
jurisdictions where SPE has its chief
executive offices and maintain its records
in respect to the Leases;
(e) Supplement. A Security Supplement, duly
executed by SPE relating to and describing
the Lease, any Guaranty and the Equipment
covered thereby;
(f) Notice of Assignment. An original notice to
the relevant Lessee of the assignment to
Lender of the relevant Lease, signed by
TSFC, substantially in the form of Exhibit
"D";
(g) Acceptance Supplement. A copy of the
original executed counterpart of the
delivery and acceptance certificate with
respect to each Lease where the Invoice
Price exceeds Fifty Thousand Dollars
($50,000.00) ( substantially in the form
contained in Exhibit "A-1") containing a
complete description of the Equipment, duly
executed by the Lessee thereunder; and
(h) Other Documents. Such other documents,
instruments or agreements as Lender may
reasonably request.
6. SECURITY AGREEMENT
6.1 Granting Clause. In order to induce Lender to make Loans from time
to time to SPE, and in order to secure (i) the prompt repayment of the Loans and
payment of all interest accrued thereon and any applicable Prepayment Fee if
any, (ii) the strict performance and observance by SPE of the obligations to be
performed by it hereunder and (iii) all costs of litigation, collection,
reasonable attorneys' fees and other costs expended or incurred in connection
with the enforcement of Lender's rights hereunder and with respect to the Leases
and the Equipment (the obligations referred to in clauses (i) through (iii)
being collectively referred to as the "Obligations"), SPE hereby assigns,
pledges and grants a continuing security interest to Lender in all of its
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right, title and interest in and to the following described properties, assets
and rights (such properties, assets and rights collectively called the
"Collateral"):
(a) each Lease and all of SPE's rights
thereunder including the right to receive
payments (including Rent and security
deposits) due to SPE thereunder and the
right to exercise rights and remedies upon
default;
(b) every item or component of Equipment subject
to Leases, together with (i) all accessions,
replacements and substitutions thereto and
therefor and (ii) all upgrades, add-ons and
additions thereto and therefor to the extent
they have been financed by Lender under this
Agreement, and (iii) all of its rights in
the software and licenses related thereto;
(c) each and every Guaranty, security interest,
mortgage or other security securing the
payment and performance of the Lessee's
obligations under the Leases;
(d) all Lease Proceeds and Proceeds of items or
components of Equipment;
(e) all warranty and other rights SPE may have
with respect to the Leases against the
manufacturer of the Equipment, and
(f) the proceeds (whether cash or non-cash
proceeds), and products of all the
properties, assets and rights described in
paragraphs (a), (b),(c), (d) and (e) above
including without limitation, all insurance
payments, whether or not Lender is the loss
payee thereof; in each case whether now
owned or hereafter acquired.
6.2 Appointment of Lender. If Lender assumes administration of
collection of Rent pursuant to Section 11.2, SPE irrevocably appoints the Lender
as its attorney-in-fact (such power being coupled with an interest) to do, in
its sole and unlimited discretion, any or all of the following:
(a) to endorse or sign SPE's name on all checks,
collections receipts, UCCs or other
documents related to the Leases;
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(b) to take possession of and open mail
addressed to SPE or TSFC relating to such
collection and remove Rent and proceeds and
products of the Collateral;
(c) to ask, demand, collect, receive, ▇▇▇ for,
compound and give acquittance for any and
all payments assigned hereunder;
(d) to settle, adjust or compromise any claim
thereunder as fully as it could itself;
(e) to endorse its name on all checks and other
commercial paper given in payment or in part
payment thereof; and
(f) in its discretion, to file any claim or take
any other action or proceeding, either in
Lender's own name or in its name, or
otherwise, that Lender may deem necessary or
appropriate to collect any and all sums that
may be or become due or payable under the
Leases or that may be necessary or
appropriate to protect the right, title and
interest of Lender in and to the Collateral
and the security intended to be afforded
thereby and hereby.
6.3 Further Assurances. SPE will upon written direction from Lender and
at the expense of SPE, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, instruments, transfers and assurances
reasonably necessary or proper for the better assuring, conveying, assigning and
confirming unto Lender all of the Collateral, whether now owned or hereafter
acquired and shall not provide further assurances to any other lender which may
conflict with Lender's security interest or provide such lender with a security
interest superior to Lender's without first giving to Lender the same further
assurances.
6.4 No Obligations Assumed by Lender. Lender does not assume, and its
interest herein shall not be subject to, any obligation or liability of TSFC
under any Lease or any other agreement between SPE, TSFC or CCI/Triad and a
lessee, any duty to collect money due thereunder or to enforce collection
thereof. Lender assumes no responsibility, obligation or liability for any
representation, warranty or obligation, express or implied, made by any agent or
employee of SPE, TSFC, or CCI/Triad to a Lessee in connection with any Lease.
6.5 Release of Security Interest. Upon payment in full of all amounts
due on a Loan and provided no Event of Default shall have occurred
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and be continuing, Lender agrees to (i) release its security interest in the
Lease financed by such Loan and the Equipment subject thereto; (ii) deliver to
SPE such other documents relating to released Leases and Equipment prepared by
SPE as SPE may reasonably request, and (iii) deliver the foregoing items within
ten (10) days to SPE after receipt of termination payment.
6.6 Final Release by Lender. Upon repayment in full to Lender of all
Loans, and performance of all other Obligations, Lender will release its
security interest in the Collateral in the manner provided in Section 6.5.
7. ADMINISTRATION
7.1 Authorization to Collect Rent. Until such time as there is an Event
of Default hereunder or SPE's authority to collect Rent is terminated pursuant
to Section 11, SPE is authorized to and shall collect Rent from Lessees.
7.2 Collections. SPE will undertake such collections as an independent
contractor and not as Lender's agent, and in connection therewith will at its
sole cost and expense, diligently perform all billing and collecting for Rent
due and to become due with respect to Leases and Equipment financed under
Discount Facility Loans. SPE shall ▇▇▇▇ Lessees in accordance with a standard
billing procedures provided that each invoice sent with respect to any Lease
subject to this Agreement shall segregate the amount due thereunder for rent,
taxes and any other amounts due.
7.3 Remittances. SPE shall, on or before the Loan Repayment Date of
each month, make payment to Lender of the amount due on each Discount Facility
Loan on such date regardless of whether or not any Rent under applicable Leases
shall have been collected by SPE. SPE's obligation to make remittances pursuant
to this Section 7.3 shall cease and be of no further effect at such time as SPE
shall have no further liability under the provisions of Section 8.4 of this
Agreement.
7.4 Financial Statements; Lease Receivables Statements. SPE shall
provide Lender with monthly financial statements relating to the immediately
preceding month. As soon as available, but no later than the twentieth day of
each month, SPE shall cause TSFC to deliver to Lender a list of all Leases then
outstanding, and a statement showing the aging of receivables under, payments
and collections received under, such Leases, both being complete and correct.
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7.5 First Loss Provision Statements. On the last Business Day of each
January, April, July and October, SPE shall cause TSFC to provide Lender with a
quarterly statement as of such date of the First Loss Provision described in
Section 8.4, in the form attached hereto as Exhibit E
7.6 Account Status Statements. As soon as available, SPE shall cause
TSFC to deliver to Lender any changes in account status for any Leases then
outstanding that TSFC becomes aware of from time to time. Account status shall
be defined, but not limited to, changes in Lessee billing address, equipment
locations, equipment, and/or legal name.
8. INDEMNITIES, INSURANCE, FIRST LOSS
8.1 Indemnities. Notwithstanding anything set forth herein, including,
without limitation, any limitation on recourse against SPE, SPE shall indemnify
Lender and hold it safe and harmless from and against any and all losses,
claims, actions, suits, proceedings, costs, expenses, damages and liabilities
("Indemnified Amount") (other than Indemnified Amounts arising from or
pertaining to the negligence or misconduct by Lender) that may at any time be
made, brought, incurred, assessed or adjudged against Lender arising from or
pertaining to:
(a) the use, maintenance or operation of the
Equipment;
(b) breach of any covenant or warranty made by
SPE, TSFC, or CCI/Triad relating to any
Equipment or Lease or maintenance of any
Equipment, including qualification of any
Equipment for any tax benefit;
(c) any claim, action or proceeding involving
patent or trademark infringement or
copyright or trade secret violations
relating to the Equipment (including any
interest or penalty) whether or not such
claim, action or proceeding involves a claim
of infringement or a combination or design
patent;
(d) failure of Lender, for whatever reason, to
have obtained a first priority perfected
purchase money security interest in and lien
on the Collateral, including, without
limitation, the Leases and the Equipment
whether or not (i) the Equipment is deemed
to be an asset of a Lessee as the result of
a Lease being held to be a security
agreement rather than a true lease or (ii)
Uniform Commercial Code financing statements
on form UCC-1 were filed against a Lessee
with respect to the Equipment under Section
5.3 (c);
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(e) any misrepresentation made by any agent or
employee of SPE, TSFC or CCI/Triad in the
course of negotiations regarding any Lease
or Equipment;
(f) any breach of any warranty or covenant, or
any misrepresentation, of SPE, TSFC or
CCI/Triad in any Lease, any Operative
Document or any certificate of an officer of
SPE, TSFC or CCI/Triad delivered in
accordance therewith;
(g) failure of any lease or Equipment to comply
with applicable laws, regulations or
contractual specifications or warranties, or
to be an Eligible Lease or Eligible
Equipment, as the case may be;
(h) any dispute, claim, offset, or defense of
any Lessee (other than payment by, or
discharge in bankruptcy of, such Lessee) to
the payment of any Rent;
(i) Lender having received from TSFC only a fax
copy (rather than the original, manually
executed copy) of any Lease or any Guaranty;
(j) failure of SPE, TSFC or CCI/Triad to pay
when due any taxes for which any of them is
liable; and
(k) any wrongful or negligent acts or omissions
of SPE, its agents or assigns, in carrying
out SPE's obligations under Section 7 or
Section 10.
All of the indemnities set forth in this Section 8.1 shall survive the
cancellation or termination of this Agreement.
8.2 Indemnity Payment. Upon the occurrence of any of the events set
forth in Section 8.1, SPE unconditionally agrees to pay Lender, upon written
demand, the Indemnified Amount.
8.3 Insurance. With respect to all Equipment, SPE shall cause TSFC to
maintain in full effect, and shall deliver to Lender evidence of, (a) liability
insurance, including all-risk insurance, with a combined single limit of at
lease Five Hundred Thousand Dollars ($500,000.00) per occurrence, naming Lender
as additional insured, (b) property damage insurance on all Equipment, naming
Lender as a loss payee, in an amount equal to actual cash value or
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replacement value, with a deductible of not more than Two Hundred Thousand
Dollars ($200,000.00) per year for all Equipment and (c) such other insurance as
is usual in the business carried on by SPE, TSFC and CCI/Triad which insurance
shall be satisfactory to Lender as to amount, form, nature and carrier.
8.4 First Loss Provision. If any Rent under any Lease financed or
refinanced by a Discount Facility Loan shall remain unpaid for a period of
ninety (90) days from the date when due, SPE shall, on the next succeeding Loan
Repayment Date, upon written demand by Lender, pay to Lender the Loan Repayment
Amount of such Discount Facility Loan. The liability of SPE under this Section
8.4 on any Loan Repayment Date shall not exceed (i) ten percent (10%) of the
aggregate initial principal amount of Loans made under this Agreement as of such
Loan Repayment Date plus (ii) the aggregate Standard Cost of all Equipment
remarketed pursuant to Section 10 as of such Loan Repayment Date minus (iii) the
aggregate Loan Repayment Amounts paid by SPE to Lender pursuant to this Section
8.4 with respect to Discount Facility Loans as of such Loan Repayment Date minus
(iv) the aggregate of all cure amounts paid by SPE to Lender on behalf of
Lessees with respect to Leases financed by Discount Facility Loans which Lender
has demanded to be repaid under this Section 8.4 on such Loan Repayment Date to
the extent SPE has been unable to collect such amounts from such Lessees as of
such Loan Repayment Date ( the "Net Loss Pool"). The method of determining this
amount is described in Exhibit "E". Lender's rights under this Section 8.4 shall
be cumulative and in addition to all other rights to receive payment of the
Discount Facility Loans pursuant to this Agreement. If, at any time, SPE's
liability under this Section 8.4 with respect to Leases financed by a Discount
Facility Loan shall have been reduced to zero, SPE shall thereafter have no
liability under this Section 8.4 with respect to that Discount Facility Loan.
8.5 Excess Proceeds. If, on any Loan Repayment Date, all or any portion
of any Loan Repayment Amount shall not have been paid to Lender pursuant to
Section 8.4 due to the limitation on the liability of SPE set forth in that
Section and SPE thereafter realizes Excess Proceeds with respect to any
Equipment, the previously unpaid portion of all such Loan Repayment Amounts
shall be promptly paid by SPE to Lender to the extent of such Excess Proceeds.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS
SPE represents, warrants and covenants that:
9.1 Due Organization. Both SPE and TSFC are a corporations duly
organized and validly existing in good standing under the laws of California,
and each is duly qualified or otherwise authorized to do business wherever
necessary to carry on its present business and operations and to perform its
respective obligations under each Operative Document and each Lease.
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9.2 Authority. Both SPE and TSFC have the full power, authority and
legal right to enter into and perform its obligations under each Operative
Document.
9.3 Principal Place of Business. As to each of SPE and TSFC,
respectively, its chief executive office and the office where it maintains its
records concerning payments under the Leases is in Livermore, California, and it
will not change such principal place of business or remove therefrom such
records, or any other records relating to the Collateral or any Loan, without at
least thirty (30) days prior written notice to Lender.
9.4 Binding Obligations. Each Operative Document has been duly
authorized and upon execution and delivery will constitute legal, valid and
binding obligations, enforceable against it, TSFC and CCI/Triad in accordance
with the terms thereof.
9.5 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval or license by, exemption from or registration
with, any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery and performance of obligations other than Lender's under the
Operative Documents, and no consent of any owner, lessor or mortgagee of
premises where any Equipment is located is needed to permit Lender or the lessor
to enforce the rights of the lessor under the Leases or, if required, the same
have been obtained and certified copies have been delivered to Lender.
9.6 Compliance with Laws. There is no law, governmental rule,
regulation, judgment, decree or order binding on it that would be contravened by
the execution and delivery of, and performance under, the Operative Documents.
It will at all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business which would materially
have an adverse impact upon SPE's business.
9.7 Clear Ownership. The interests of SPE and TSFC combined are, and
will continue to be, the record and beneficial ownership of 100% of each Lease
and all Equipment subject to Leases in which TSFC is named as Lessor, free and
clear of all mortgages, deeds of trust, pledges and other liens, security
interests, charges or encumbrances, except for liens for taxes due but not yet
payable and liens in favor of Lender, and shall promptly deliver to Lender any
executed counterparts of Leases which were not delivered to Lender pursuant to
Section 5.3(a) and which have subsequently come into
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TSFC's or CCI/Triad's possession. Notwithstanding the foregoing, TSFC and SPE
shall be entitled to transfer to CCI/Triad or a subsidiary corporation of
CCI/Triad record and beneficial ownership of any Equipment subject to Leases in
which TSFC is named as Lessor, provided that:
(a) SPE remains fully bound under this Agreement
with respect to all Obligations, including
the Obligations assumed by the assignee;
(b) the assignee assumes in writing the
Obligations of SPE under this Agreement and
recognizes the continuing validity and
priority of the lien of Lender in the
Equipment; and
(c) the assignee executes any documentation
reasonably required by Lender to facilitate
the foregoing provisions of this Section 9.7
and the Operating Agreement.
9.8 Filings. This Agreement and the Uniform Commercial Code filings
made pursuant hereto create in favor of Lender a valid and perfected first
priority security interest in the Collateral securing the Obligations.
9.9 Actions. There are no actions, suits, proceedings, claims or
disputes pending or, to its knowledge, threatened against or affecting it or
TFSC or their respective properties before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that,
if determined adversely to either of them, would have a material adverse effect
on their respective condition (financial or other), business performance,
operations, properties or prospects, their respective ability to perform their
respective obligations under the Operative Documents or the Leases or Lender's
security interest in the Collateral.
9.10 Payment of Taxes. It has filed and will file all tax returns
(federal, state and local) required to be filed and has paid all taxes shown
thereon to be due, including interest and penalties, unless it is contesting the
payment of certain taxes in good faith and has established adequate reserves
therefore.
9.11 Notices. It will send to Lender copies of all significant notices,
including, but not limited to, any notices with respect to the terms of any
Lease, and other instruments or communications required or permitted to be given
by the Lessee under any Lease.
9.12 Further Assurances; Enforcement of Leases. TSFC will: (a) preserve
and maintain its corporate existence and all rights, privileges and
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franchises now enjoyed and conduct its business in an orderly, efficient and
customary manner; and (b) from time to time, at its own expense, take all
actions reasonably necessary to establish, preserve, protect and perfect the
rights created by this Agreement, including, without limitation, (i) the full
and punctual performance of all of its obligations under the Leases; (ii) the
enforcement of the Leases without waiver, amendment or modification; and (iii)
the exercise of any and all rights of the lessor under the Leases as may be
necessary or advisable to assure full compliance with the terms and provisions
thereof and to protect Lender's security interest in the Collateral.
9.13 Validity and Enforceability of Leases and Guaranties. Each
Eligible Lease and Guaranty submitted to Lender pursuant to Section 5.3 is
genuine, valid and enforceable and is not subject to any offset, deduction,
counterclaim or lien.
9.14 Leases Duly Entered Into. All parties to each Lease and Guaranty
have full authority and capacity to execute and deliver such Lease or Guaranty,
as the case may be. The entire agreement with each Lessee is embodied solely in
the executed counterparts of the applicable Lease and other documentation
furnished to Lender with respect to such Lease.
9.15 Equipment Description. Each Lease describes the Equipment leased
to the Lessee named in such Lease, the Rent required for such Equipment and any
applicable early termination payments.
9.16 Leases Comply with Laws. Each Lease complies with and does not
violate applicable laws, regulations or contractual specifications or
warranties, including without limitation, any applicable laws relating to
maximum rates of interest (whether or not imputed) or similar charges and all
required disclosures have been made with respect thereto under federal
truth-in-lending and truth-in-leasing regulations to the extent applicable.
9.17 No Impairment of Value or Rights. It will not do anything that
might impair the value of any Lease or Equipment or any of the rights or
obligations of the parties hereto under any Lease.
9.18 No Lessor Liens. No Lease submitted to Lender pursuant to Section
5.3, or any Equipment subject thereto, or any other of its rights therein, has
been assigned to, or be subject to, any lien or security interest in favor of,
any person other than Lender.
9.19 Notifications. It will promptly notify Lender of:
(a) any Event of Default or event which, upon
the lapse of time or giving of notice, or
both, would become an Event of Default, or
any event which is, or upon the lapse of
time or giving of notice, or both, would
become a default under or breach of the
Operating Agreement;
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(b) any and all litigation or other matters or
events concerning it or any Lessee that has
a reasonable possibility of materially and
adversely affecting its or any Lessee's
financial or other condition, its business
performance, operations, properties or
prospects or adversely affecting or Lender's
security interest in the Collateral.
9.20 Books and Records Financial and Other Information. SPE shall for
itself, and as to TSFC, shall cause TSFC to:
(a) maintain adequate books, accounts and
records and prepare all financial statements
required hereunder in accordance with
generally accepted accounting principles and
practices consistently applied and in
compliance with the regulations of any
governmental regulatory body having
jurisdiction over it;
(b) give Lender and its representatives, at all
reasonable times and upon reasonable notice,
access to all records, files and books of
accounting pertaining to all transactions
subject to this Agreement, and permit Lender
and its representatives to inspect, audit
and make extracts therefrom;
(c) upon the occurrence of an Event of Default
or an event which, upon the lapse of time or
giving of notice, or both, would become an
Event of Default, permit Lender to exercise
the inspection rights of TSFC under the
Leases, on a non-exclusive basis;
(d) deliver to Lender in form and detail
satisfactory to Lender, and in such
reasonable number of copies as Lender may
request:
(i) as soon as available, but no later
than thirty (30) days after the end
of each fiscal quarter, a quarterly
financial statement;
(ii) the lists of Lease receivables and
statements showing the aging of
receivables as required by Section
7.4;
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(iii) the statement of first loss
provision required by Section 7.5;
(iv) such other information as Lender
may reasonably request; and
(e) Deliver to Lender, in such reasonable number
of copies as Lender may request, as soon as
available, but no later than ninety (90)
days after the end of each fiscal year, (I)
the audited annual financial statements of
CCI and (ii) the annual financial statements
of TSFC, audited or reviewed if available,
or unaudited but signed by the principal
financial officer of TSFC.
9.21 Audit. It shall permit Lender, from time to time, upon reasonable
request and at Lender's sole expense, to conduct an audit of SPE's and/or TSFC's
accounting and operating procedures as they relate to the Leases, provided such
audit does not unreasonably interfere with SPE's or TSFC's normal business
operation.
9.22 Charges and Taxes. SPE shall make or arrange for all filings in
respect of and pay (or reimburse Lender for, upon presentation of an invoice)
all charges and local, state or federal taxes (other than net income taxes of
the Lender or franchise taxes levied upon Lender's net income), license fees, or
other assessments, charges, fines and penalties, together with interest payable
with respect thereto, levied or imposed upon or in connection with this
Agreement, the Leases, the Equipment, the Rent and the Proceeds. Upon request of
Lender, SPE shall cause TSFC to furnish Lender written evidence of such payment.
9.23 Financial Covenants.
(a) the Tangible Net Worth of TSFC shall at all
times at or prior to the Anniversary Date be
at least $17,500,000.00;
(b) the ratio of TSFC's total consolidated debt
(including subordinated debt) to TSFC's
Tangible Net Worth shall at all times at or
prior to the Anniversary Date be no greater
than 3 to 1;
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Compliance with Section 9.23 shall be made in accordance with generally
accepted accounting principles, consistently applied, as to both classification
and amounts.
9.24 Maximum Requests for Loans Per Month. It will make no more than a
combined total of three (3) requests for Loans, under Section 3.1, during each
thirty day period.
10. REPOSSESSION AND REMARKETING
10.1 Request to Repossess; Remarketing. In the event that SPE does not
perform its obligations under Section 8.4 by reason of the limitation on its
liability set forth therein, upon Lender's determination that a default exists
under a Lease financed or refinanced by a Discount Facility Loan, either through
notification by SPE or TSFC pursuant to Section 9.19 or otherwise, and that such
default remains uncured within the time, if any, for curing the same permitted
by the Lease, Lender, as secured party under this Agreement, may request SPE to
cause TSFC to act as Lender's agent, and upon such request TSFC will, as such
agent, use diligent efforts to repossess the Equipment subject to such Lease as
promptly and efficiently as is legally permissible. Thereafter TSFC will
refurbish and update, as needed, and, for a period of one hundred twenty (120)
days or such other period as TSFC and Lender may agree upon in writing from the
date the Equipment is repossessed (the "Remarketing Period"), attempt to sell or
release such Equipment on a non-priority (but non-discriminatory) basis and on
such terms and conditions as reflect fair market value for similar equipment and
are acceptable to Lender, in its sole discretion. SPE shall cause TSFC to give
no less priority to remarketing Equipment pursuant to this Section 10.1 than it
would similar equipment owned, leased or managed by TSFC. The obligations of
TSFC to remarket such Equipment for sale or lease shall include, but not be
limited to, efforts to sell such Equipment, preparation and supervision of the
documentation of each transaction and an accounting of the activities referred
to in this Section 10.1, including information relative to the status of
negotiations for offers made in respect of such Equipment.
If TSFC has not remarketed any Equipment at the conclusion of the
Remarketing Period, upon notice from Lender, TSFC's exclusive right to remarket
shall terminate and Lender shall have the right to remarket such Equipment on
terms and conditions satisfactory to it. If Lender remarkets the Equipment, it
shall retain Proceeds in an amount equal to the Loan Repayment Amount applicable
to the Loan financing the Lease to which such Equipment was subject and any
Remarketing Expenses incurred by Lender and shall remit the Excess Proceeds to
SPE.
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Nothing contained in this Section 10.1 shall be deemed to constitute a
release by Lender of its security interest in any of the Collateral. Lender
shall release its security interest in Equipment which has been sold pursuant to
this Section 10.1.
10.2 Remarketing Expenses. Remarketing Expenses shall be for the
account of the party incurring such expenses and shall be recoverable from
Proceeds of such remarketing realized by the party remarketing the Equipment.
10.3 Assignment. The rights and obligations of any party under this
Section 10 may be assigned only with the written consent of all parties.
10.4 No Guaranty. Notwithstanding anything contained herein to the
contrary, the obligations and duties of SPE contained in this Section 10 shall
not be construed to include a guarantee by SPE that the Remarketing Proceeds
with respect to any Equipment will equal or exceed the Loan Repayment Amount
relating to such Equipment.
11. EVENTS OF DEFAULT, REMEDIES
11.1 Events of Default. Any one of the following events shall
constitute an "Event of Default" hereunder:
(a) SPE shall fail to remit to Lender when due
any Lease Proceeds or Proceeds of an item of
Equipment received by SPE or TSFC, or shall
fail to make any payment required hereunder,
in each case within five (5) days of the
date due thereof;
(b) SPE shall fail to observe or perform any
other obligation hereunder, or under any
other agreement between Lender and SPE,
which is not corrected or in the process of
being corrected within thirty (30) days of
written notice thereof from Lender;
(c) any covenant, representation or warranty
made by SPE, TSFC or CCI/Triad to Lender in
any Operative Document or in any certificate
delivered pursuant thereto shall be untrue
in any material respect when made or during
any period of time for which it is
enforceable or shall be breached by SPE,
TSFC or CCI/Triad. Notwithstanding the
foregoing, to the extent that such a breach
occurs, and such breach relates to an
individual Lease, SPE shall have thirty (30)
days from receipt of demand by Lender to
repurchase the
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Lease pursuant to the terms of the Mandatory
Prepayment clause set forth at Paragraph 3.7
herein. SPE's failure to repurchase such a
Lease within said thirty (30) day period
shall then constitute an Event of Default
under this subparagraph (c).
(d) an injunction, attachment or other legal
process shall issue against any material
part of SPE's or TSFC's property or a
material judgment or lien shall be filed
against SPE or TSFC which is not stayed,
vacated, bonded, or otherwise discharged
within ninety (90) days after the date of
entry thereof;
(e) SPE, TSFC or CCI/Triad shall cease to do
business as a going concern, shall become
bankrupt, shall make an assignment for the
benefit of creditors or otherwise take
advantage of the bankruptcy or any other law
for the relief of debtors; a trustee or
receiver for SPE, TSFC or CCI/Triad shall be
appointed or there shall be filed by or
against SPE, TSFC or CCI/Triad any petition
under any provision of the Federal
Bankruptcy Code, as amended, and such
petition shall not be dismissed, withdrawn,
or otherwise eliminated within ninety (90)
days after the filing thereof;
(f) any ERISA plan of CCI/Triad, SPE or TSFC
shall terminate, or CCI/Triad, SPE or TSFC
shall fully or partially withdraw from such
a plan or plan which could result in
liability of CCI/Triad, TSFC or SPE to the
Pension Benefit Guaranty Corporation or to
such plan or plans in the Aggregate amount
of One Million Dollars ($1,000,000) or more
(in excess of any applicable insurance).
11.2 Remedies. (a) If an Event of Default shall have occurred, and such
Event of Default had not been cured within an applicable cure period, and
further upon notice of such Event of Default to SPE ,Lender shall have the right
to do any or all of the following:
(i) complete and deliver to the Lessees
the notices received by Lender from
SPE pursuant to Section 5.3(f) and
to commence direct collection of
the Rents until such time as Lender
has received the total Loan
Repayment Amount of all Loans due
under the Agreement;
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(ii) (1) exercise of any of the Lessor's
rights under any of the Leases, or
(2) by written notice, require SPE
to exercise on behalf of Lender as
secured party under this Agreement
any and all of the rights available
to the Lessor under any Lease to
the extent not already exercised by
SPE, whereupon SPE shall
immediately take all requested
action;
(iii) discontinue making Loans; or
(iv) proceed against SPE, TSFC,
CCI/Triad or all of them, for all
rights and remedies Lender may have
in law or in equity under this
Agreement and/or the Operating
Agreement.
(b) Upon the occurrence of an Event of Default, or upon the failure of
a Lessee to perform its obligation under a Lease, Lender shall have and may
exercise all the rights and remedies of a secured party under the California
Uniform Commercial Code (expressly including, but not limited to, those granted
under 9-502(1) and 9-306 dealing with retention of cash proceeds); and any other
applicable laws (including but not limited to the right to assume direct
collection of any and all Leases and retain any and all cash proceeds collected
under the leases until such time that Lender has received the total Loan
Repayment Amount of all Loans due under this Agreement); provided, however, that
so long as Lessee under a Lease is not in default thereunder, Lender shall not
take any action or exercise any right that would disturb such Lessee's full and
quiet enjoyment of all of such Lessee's rights under that Lease. Lender will
give SPE reasonable notice of the time and place of any public sale of any
Collateral or of the time after which any public or private sale of such
Collateral or any other intended disposition thereof is to be made. Unless
otherwise provided by law, the requirement of reasonable notice shall be met if
such notice is delivered at least ten (10) days before or mailed, postage
prepaid, to SPE, at least twenty (20) days before the time of such sale or
disposition. Subject to applicable provisions of this Agreement, Collateral
proceeds including, but not limited to, the proceeds of any sale or disposition
of Collateral shall be applied: first, to the expense of settling all liens and
claims against such Collateral and all reasonable costs, charges and expenses
incurred by Lender in connection with the Event of Default, Lender's exercise of
remedies under this Section 11.2 (including without limitation those described
in Section 12.4), and in taking, removing, holding, preparing for sale and
selling the Equipment; second, to the payment of the remaining total Loan
Repayment Amount of all Loans; third, to any other unpaid obligations of SPE
hereunder; or of TSFC, or CCI/Triad under the Operating Agreement and fourth,
any remaining proceeds shall be paid to SPE.
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(c) Notwithstanding the foregoing, Lender shall have the right to
discontinue making Loans at any time in its sole discretion, whether or not an
Event of Default has occurred.
(d) Nothing contained in this Section 11.2 shall entitle Lender to
recourse against SPE with respect to payment of the Loans which is not expressly
granted to Lender by this Agreement.
12. MISCELLANEOUS
12.1 General. Waiver of any particular default shall not be a waiver of
any other default. All Lender's rights are cumulative and not alternative. No
waiver or change modification or amendment in this Agreement shall bind Lender
or SPE unless an officer of Lender and SPE, has agreed to such waiver or change
modification or amendment in writing. Any provision of this Agreement contrary
to, prohibited by or invalid under applicable laws or regulations shall be
inapplicable and deemed omitted herefrom, but shall not invalidate the remaining
provisions hereof. No oral agreement, guaranty or warranty shall be binding.
This Agreement shall be governed by the laws of California.
12.2 Notices. All notices, demands, directions, consents and approvals
hereunder shall be in writing and shall be delivered in person, by telecopy, by
overnight courier or by prepaid certified mail, addressed to the party for whom
it is intended, if to
CCI/Triad Financial Holding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to Corporate Counsel;
if to Lender, the party stated in Section E. Of the Schedule 1 document,
and shall be deemed delivered on the day of actual receipt. Either
party may change its' address for the receipt of notices, demands, directions,
consents, and approvals by notice duly given to the other party pursuant to this
Section 12.2.
Notices may also effectively be given by transmitting over electronic
devices such as facsimile machine, if either party to whom such notice
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is being sent has such device in its office. Notices given by electronic
transmitting devices shall be deemed effective on the date of transmission.
12.3 Waivers. Lender and SPE hereby respectively waives demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of acceptance hereof, and all other demands and notices of any
description, except as expressly provided herein. No delay or omissions on the
part of either party in exercising any right, remedy, option, or notice of
default, except as any pertinent statute of limitations which may apply, on any
one occasion, shall be construed as a bar to or waiver of any other default,
right, remedy or option, or the same default, right, remedy or option on any
future occasion.
12.4 Costs and Expenses. In any case where Lender or SPE is entitled
hereunder to reimbursement of costs and expenses, such costs and expenses shall
include interest on any judgment and court costs, reasonable legal fees and
expenses (including allocated fees of internal counsel).
12.5 Successors; Assigns. This Agreement shall inure to the benefit of
and be binding upon Lender and SPE and their respective successors and permitted
assigns. Neither party may assign this Agreement without the other party's
consent, unless such assignment is to any wholly owned subsidiary, parent or
affiliate of the assigning party. If either party does not consent to such
proposed assignment, SPE shall have the option to prepay the outstanding
aggregate Loan Repayment Amount to Lender at a price to be determined by mutual
agreement of the parties.
12.6 Entire Agreement. The terms and conditions herein contained
constitute the entire agreement between Lender and SPE with respect to the
subject matter hereof, except to the extent other agreements are referred to
herein or contemplated hereby or executed contemporaneously herewith, and
supersede all previous communications whether oral or written between Lender and
SPE with respect to such subject matter. No agreement or understanding varying
or extending any rights or obligations hereunder of either of the parties shall
be binding unless in a writing signed by a duly authorized officer or
representative of the party against which such variance or extension is sought
to be enforced.
12.7 Headings; Titles. The cover, table of contents and titles for
Sections used in this Agreement are intended to be descriptive only and shall
not be deemed to limit, extend or in any way modify the meaning of the text of
this Agreement. References to integral sections without decimals include all
decimal sections within such integral sections.
12.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute but one and the same instrument.
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SCHEDULE 1.
-------------------------------------------------------------
LOAN AND SECURITY AGREEMENT
DATED AS OF JUNE 1, 1999
BETWEEN
CCI/TRIAD FINANCIAL HOLDING CORPORATION
AS BORROWERS
AND
NATIONSCREDIT COMMERCIAL CORPORATION
AS LENDER
-------------------------------------------------------------
$5,000,000
DISCOUNT LOAN FACILITY
-------------------------------------------------------------
LOANS SECURED BY LEASES,
LEASE RECEIVABLES AND
LEASED EQUIPMENT
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SCHEDULE 1.
This LOAN AND SECURITY AGREEMENT is entered between CCI/TRIAD FINANCIAL
HOLDING CORPORATION ("SPE"), a California corporation, as borrower, and
NATIONSCREDIT COMMERCIAL CORPORATION ("Lender"), a Delaware corporation, as
Lender.
A. The "Anniversary Date" as defined in Section 1.1 shall be June 1, 1999.
B. The "Aggregate Maximum Loan Amount" of all loans, in accordance with Section
2.1, shall be Five Million Dollars ($5,000,000.).
C. Notices to Lender in accordance with Section 12.2 shall be addressed as
follows:
Nationscredit Commercial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President
Wholesale Business Development
All the Terms and Conditions of THE MASTER LOAN AND SECURITY AGREEMENT FORM are
hereby incorporated by reference and made a part of this AGREEMENT, provided,
however the following Special Terms and Conditions (which supplement said MASTER
LOAN AND SECURITY AGREEMENT FORM Terms and Conditions) shall supersede and
replace any conflicting Terms and Conditions in THE MASTER LOAN AND SECURITY
AGREEMENT FORM. All Section numbers and references in this Schedule 1 document,
refer to (or supplement) section numbers and references in THE MASTER LOAN AND
SECURITY AGREEMENT FORM.
SPECIAL TERMS AND CONDITIONS
1. Notwithstanding the PROVISIONS OF Section 3.5 or any other provisions of
this agreement, SPE will not finance any additions or upgrades on or to any
Equipment with any person other than Lender. If Lender does not wish to
finance the same, SPE will either not finance the same or will first prepay
the applicable Discount Facility Loan pursuant to Section 3.6.
2. The lead-in phrase of Section 3.8 is hereby amended to read as follows: "If
any Equipment subject to a Lease is lost or damaged, and is not repaired or
replaced with similar Equipment of no less value, in which Lender has a
first priority security interest to secure all of the Obligations, by the
first Loan Repayment Date occurring not less than thirty (30) days after
such loss or damage,"
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3. Notwithstanding the provisions of Section 5.3, it shall be a condition
precedent to Lender's obligation to make any Loan that
(a) Lender shall have received at least one original manually
executed counterpart of the applicable Lease and Lease Schedules,
and all of the other counterparts in the possession, custody or
control of CCI/Triad, TSFC, the SPE, or any affiliate of any of
them; except that with respect to loans of $35,000 or less,
Lender will require only a faxed copy of the applicable Lease
Schedule, with the Lessee's faxed signature and Lessor's original
signature. In such case SPE will employ its best efforts to
deliver such original manually executed copy or copies to Lender
within 30 days after the applicable Loan is made.
1. The phrase "to the extent they have been financed by Lender under this
Agreement" is deleted from Section 6.1 (b) (ii).
2. The phrase "without first giving to Lender the same further assurances" is
deleted from Section 6.3.
3. The word "obtained" is deleted from Section 8.1 (d).
4. The following sentence is added to the end of Section 8.5: "Any amounts
recovered from a defaulting Lessee shall be disbursed in the same manner as
the Excess Proceeds."
5. The first four lines of Section 9.7 are hereby amended to read as follows:
"SPE has and will continue to have good and marketable title to each Lease
and, as to TSFC, a valid and perfected first security interest in all
Equipment, free and clear of all mortgages, deeds of trust, pledges"
6. A new subsection is added to Section 9.7, to read as follows: (d) Lender
shall be given at least 30 days prior written notice of any such transfer.
7. The phrase "or in the process of being corrected" is deleted from Section
11.1 (b).
8. SPE's representations and warranties shall be deemed to be remade each time
proceeds of a Loan are received by it and will survive the execution and
delivery of this Agreement and the making of such Loans.
9. This agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts to be performed
therein. Each party hereto consents to the jurisdiction of any state or
federal court located in the City of New York, agrees not to object to any
such forum and agrees that, to the extent permitted by law, service of
process may be made in the manner for the giving of notices herein. Each
party hereby waives the right to trial by jury in any action relating to
this Agreement.
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This LOAN AND SECURITY AGREEMENT is effective as of June 1, 1998.
CCI/TRIAD FINANCIAL HOLDING CORPORATION ("SPE"),
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title:
NATIONSCREDIT COMMERCIAL CORPORATION
a Delaware Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President