AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FIDELITY LEASING, INC.
AND
FIRST UNION NATIONAL BANK
SEPTEMBER 30, 1998
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS AND INTERPRETATION........................................................................2
1.1 Terms Defined...............................................................................2
1.2 Accounting Principles......................................................................12
SECTION 2. THE LOANS............................................................................................12
2.1 Credit Facility - Description..............................................................12
2.2 Advances, Conversions and Payments.........................................................15
2.3 Preconditions to Advances and Assignment of Leases and Leased Property.....................17
2.4 Credit Facility Interest...................................................................19
2.5 Additional Interest Provisions.............................................................23
2.6 Fees.......................................................................................24
2.7 Prepayments................................................................................25
2.8 Use of Proceeds............................................................................27
2.9 Capital Adequacy...........................................................................27
SECTION 3. COLLATERAL...........................................................................................27
3.1 Description................................................................................27
3.2 Lien Documents.............................................................................27
3.3 Other Actions..............................................................................28
3.4 Searches...................................................................................28
3.5 Filing Security Agreement..................................................................29
3.6 Power of Attorney..........................................................................29
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES.........................................................29
4.1 Resolutions, Opinions, and Other Documents.................................................30
4.2 Absence of Certain Events..................................................................31
4.3 Warranties and Representations at Closing..................................................31
4.4 Compliance with this Agreement.............................................................31
4.5 Officers' Certificate......................................................................32
4.6 Closing....................................................................................32
4.7 Non-Waiver of Rights.......................................................................32
SECTION 5. REPRESENTATIONS AND WARRANTIES.......................................................................32
5.1 Corporate Organization and Validity........................................................32
5.2 Places of Business.........................................................................33
5.3 Pending Litigation.........................................................................33
5.4 Title to Collateral........................................................................34
5.5 Governmental Consent.......................................................................34
5.6 Taxes......................................................................................34
5.7 Financial Statements.......................................................................34
5.8 Full Disclosure............................................................................35
5.9 Subsidiaries...............................................................................35
5.10 Guarantees.................................................................................35
5.11 Government Regulations, etc................................................................35
5.12 Names......................................................................................36
5.13 Other Associations.........................................................................37
5.14 Environmental Matters......................................................................37
5.15 Capital Stock..............................................................................37
5.16 Solvency...................................................................................38
5.17 Leases and Leased Property.................................................................38
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS.....................................................................42
6.1 Payment of Taxes and Claims................................................................42
6.2 Maintenance of Properties and Corporate Existence..........................................42
6.3 Business Conducted.........................................................................44
6.4 Litigation.................................................................................44
6.5 Taxes......................................................................................44
6.6 Bank Accounts..............................................................................44
6.7 Warranties for Future Advances.............................................................44
6.8 Financial Covenants........................................................................45
6.9 Change of Ownership Interests..............................................................45
6.10 Financial and Business Information.........................................................46
6.11 Officers' Certificates.....................................................................47
6.12 Inspection.................................................................................48
6.13 Tax Returns and Reports....................................................................48
6.14 Material Adverse Developments..............................................................48
6.15 Places of Business.........................................................................48
6.16 Sale of Collateral.........................................................................48
SECTION 7. BORROWER'S NEGATIVE COVENANTS:.......................................................................49
7.1 Merger, Consolidation, Dissolution or Liquidation..........................................49
7.2 Liens and Encumbrances.....................................................................49
7.3 Negative Pledge............................................................................49
7.4 Transactions With Affiliates or Subsidiaries...............................................50
7.5 Guarantees.................................................................................50
7.6 Indebtedness...............................................................................50
7.7 Use of Lenders' Name.......................................................................50
SECTION 8. DEFAULT..............................................................................................51
8.1 Events of Default..........................................................................51
8.2 Cure.......................................................................................53
8.3 Rights and Remedies on Default.............................................................54
8.4 Nature of Remedies.........................................................................55
8.5 Set-Off....................................................................................55
9.1 Appointment and Authorization..............................................................56
9.2 General Immunity...........................................................................56
9.3 Consultation with Counsel..................................................................56
9.4 Documents..................................................................................56
9.5 Rights as a Bank...........................................................................57
9.6 Responsibility of Agent....................................................................57
9.7 Collections and Disbursements..............................................................58
9.8 Indemnification............................................................................59
9.9 Expenses...................................................................................59
9.10 No Reliance................................................................................60
9.11 Reporting..................................................................................60
9.12 Removal of Agent...........................................................................60
9.13 Action on Instructions of Lenders..........................................................61
9.14 Several Obligations........................................................................61
9.15 Consent of Banks...........................................................................61
9.16 Participations and Assignments.............................................................63
SECTION 10. MISCELLANEOUS.......................................................................................64
10.1 GOVERNING LAW..............................................................................64
10.2 Integrated Agreement.......................................................................64
10.3 Waiver.....................................................................................64
10.4 Time.......................................................................................65
10.5 Expenses of Agent..........................................................................65
10.6 Brokerage..................................................................................65
10.7 Notices....................................................................................65
10.8 Headings...................................................................................66
10.9 Survival...................................................................................66
10.10 Successors and Assigns.....................................................................67
10.11 Counterparts...............................................................................67
10.12 Modification...............................................................................67
10.13 Signatories................................................................................67
10.14 Third Parties..............................................................................67
10.15 Discharge of Taxes, Borrower's Obligations, Etc............................................67
10.16 Most Favored Lenders.......................................................................68
10.17 Consent to Jurisdiction....................................................................68
10.18 Waiver of Jury Trial.......................................................................68
10.19 Information to Participant.................................................................68
EXHIBIT LIST
Exhibit 2.1(b) -- Form of Revolving Credit Note
Exhibit 2.1(c) -- Form of Term Note
Exhibit 2.1(e) -- Form of Borrowing Base Certificate
Exhibit 2.3(b)(ii) -- Form of Assignment Agreement
Exhibit 5.1 -- Borrower's States of Qualifications
Exhibit 5.2 -- Places of Business
Exhibit 5.3 -- Judgments, Proceedings, Litigation and
Orders
Exhibit 5.9 -- Subsidiaries and Affiliates
Exhibit 5.10 -- Existing Guaranties, Investments and
Borrowings, Leases and Employment Agreements
Exhibit 5.12(a) -- Schedule of Names
Exhibit 5.12(b) -- Trademarks, Patents and Copyrights
Exhibit 5.13 -- Other Associations
Exhibit 5.14 -- Environmental Matters
Exhibit 5.15 -- Capital Stock
Exhibit 5.17 -- Form of Lease
Exhibit 6.11 -- Officers' Certificates
SCHEDULES
Schedule A -- Schedule and Addresses of Lenders
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement ("Agreement") is
dated this 30th day of September, 1998, by and among Fidelity Leasing, Inc., a
Pennsylvania corporation ("Borrower"), First Union National Bank, a national
banking association in its capacity as agent ("Agent") and as lender, and the
financial institutions listed on Schedule A attached hereto and made a part of
this Agreement (as such Schedule may be amended, modified or replaced from time
to time), in their capacity as lenders (singly, each is a "Lender" and
collectively, all are "Lenders").
BACKGROUND
A. On December 24, 1996, Borrower entered into a certain Loan and
Security Agreement among Borrower, CoreStates Bank, N.A. ("CoreStates"), as
agent and as a lender and First Union National Bank ("First Union") as co-agent
and as a lender, as amended from time to time ("Existing Loan Agreement") and
certain other instruments, documents and agreements related thereto, all as
amended from time to time (collectively with the Existing Loan Agreement,
"Existing Loan Documents") pursuant to which certain credit facilities were
extended by CoreStates and First Union to Borrower as set forth therein.
B. CoreStates has merged with First Union with First Union being the
surviving entity and the owner of all of the right, title and interest of the
lenders under the Existing Loan Documents.
C. First Union has agreed to assign to European American Bank a portion
of its interest in the Loans outstanding under the Existing Loan Documents as
well as a portion of its Pro Rata Percentage of the Credit Facility established
thereunder.
D. Borrower wishes, and Agent and Lenders agree, to hereby amend and
restate the Existing Loan Agreement. Lenders are willing to make loans and grant
extensions of credit to Borrower under the terms and provisions hereinafter set
forth.
E. The parties desire to define the terms and conditions of their
relationship to writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 Terms Defined: As used in this Agreement, the following terms have
the following respective meanings:
Account - Any right to payment for goods sold or leased or for
services rendered which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.
Adjusted Debt to Tangible Net Worth Ratio - At any time means
the ratio of (i) total Liabilities less Nonrecourse Debt to (ii) Borrower's
Tangible Net Worth less an amount equal to fifty percent (50%) of all restricted
cash, restricted receivables and other collateral pledged or sold in connection
with Securitization Transaction(s) (it being understood that for the purposes
hereof, the asset identified on Borrower's balance sheet as of June 30, 1998 as
$14,000,000 in notes secured by equipment leases shall not be considered
restricted receivables provided no additional assets shall be included therein).
Adjusted LIBOR Rate - As applied to a LIBOR Based Rate Loan,
for any LIBOR Interest Period, the rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) determined pursuant to the following formula:
Adjusted LIBOR Rate = LIBOR Rate
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(1 - Reserve Percentage)
For purposes hereof, "LIBOR Rate" shall mean the arithmetic average of the rates
of interest per annum (rounded upwards, if necessary to the next 1/16 of 1%) at
which the Agent is offered deposits of United States dollars in the London
Interbank market on or about eleven o'clock (11:00) a.m. London time two (2)
Business Days prior to the commencement of such LIBOR Interest Period on amounts
substantially equal to such LIBOR Based Rate Loan as to which the Borrower may
elect the LIBOR Based Rate to be applicable with a maturity of comparable
duration to the LIBOR Interest Period selected by the Borrower for such LIBOR
Based Rate Loan.
Administration Fee - Section 2.6(b).
Advance(s) - Any monies advanced or credit extended to
Borrower by any Lender under the Credit Facility.
Affiliate - As to any Person, each other Person that directly,
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, the Person in question.
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Agreement - This Amended and Restated Loan and Security
Agreement, as it may hereafter be amended, supplemented or replaced from time to
time.
Assignment Agreement - Section 2.3(b)(ii).
Authorized Officer - Any officer or partner of Borrower
authorized by specific resolution of Borrower to request Advances as set forth
in the incumbency certificate referred to in Section 4.1(d) of this Agreement.
Base Rate - On any date of determination, a per annum rate of
interest which is 225 basis points (in the case of Term Loans) or 175 basis
points (in the case of Revolving Credit Loans) in excess of the CD Rate, on such
date.
Base Rate Loans - Any portion of Loans on which interest
accrues at the Base Rate.
Books and Records - All of Borrower's original ledger cards,
payment schedules, credit applications, Contract Rights, liens, security
instruments, guarantees and other General Intangibles relating in any way to the
Leases or Leased Property.
Borrowing Base - As of any date of determination, an amount
equal to the lesser of:
(i) the Maximum Credit Limit, and
(ii) 80% of the sum of the gross Lease Receivable balance
corresponding to each Eligible Lease (net of any deposits or other advance cash
receipts).
Business Day - Any day that is not a Saturday or Sunday or day
on which Agent or any Lender is required or permitted to close.
CD Rate - On any date of determination, that rate quoted in
the Money Rate Section of The Wall Street Journal on such date, as the average
of top rates given by major New York banks on primary new issues of certificates
of deposit with a maturity of six (6) months. If for any reason The Wall Street
Journal is unavailable, a CD Rate shall be as quoted in another publication of
comparable standing.
Closing - Section 4.6.
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Closing Date - Section 4.6.
Collateral - All now or hereafter existing Leases and Leased
Property, Books and Records and all cash and noncash proceeds, thereof,
including insurance proceeds.
Contract Rights - All rights under contracts not yet earned by
performance.
Credit Facility - Section 2.1(a).
Current Term - The Initial Term during the period of the
Initial Term, and any renewal or extended term during the term thereof, if
Lenders elect, in their sole discretion, to renew or extend the Credit Facility.
Defaulted Lease - Any Lease where the Lease or Leased Property
associated therewith fails, at any time, to comply with all of the
representations and warranties set forth in Section 5.17 below.
Defaulting Lender - Section 2.2(b)(iii)(C).
Default Rate - Section 2.5(b).
Distribution -
(1) Dividends or other distributions on capital stock of
Borrower; and
(2) The redemption, repurchase or acquisition of such stock or
of warrants, rights or other options to purchase such stock.
Eligible Lease(s) - Each Lease which meets all of the
following specifications: (1) is not subject to any Lien, security interest or
prior assignment other than Agent's security interest for the benefit of Lenders
and the rights of the Lessees thereunder; (2) is a valid and enforceable Lease,
representing the undisputed obligation of the Lessee, with rentals due
thereunder not more than 61 days contractually past due; (3) is not subject to
any defense, set off, counterclaim, deduction, or allowance or adjustment; (4)
unless otherwise agreed to in writing by Agent, provides for the lease of Leased
Property with an aggregate invoice price of less than $1,000,000 except in the
case of Leases to Investment Grade Lessees which may provide for the lease of
Leased Property with an aggregate invoice price of up to $1,500,000; (5)
provides for the lease of Leased Property which has not been returned, rejected,
lost or damaged; (6) arose in the ordinary course of Borrower's business; (7)
Borrower has not received notice of bankruptcy, receivership, reorganization,
insolvency or material adverse change in the financial condition of the Lessee;
(8) the Lessee is not a Subsidiary or Affiliate of Borrower; (9) is not a
Defaulted Lease and complies with all general warranties set forth in Section
5.17 hereof; (10) does not have an initial stated term in excess of sixty (60)
months, provided, however, that lease(s) with an initial stated term of up to 72
months may be considered Eligible Leases so long as the aggregate Lease
Receivable(s) of all such Lease(s) shall, at no time, exceed an amount which is
ten (10%) percent of the outstanding principal balance of the Loans; (11) has
not, in the case of Revolving Credit Loans, been pledged to Agent and/or Lenders
for a period of more than twelve (12) months; (12) contains a provision whereby
the Lessee agrees not to assert any claim or reduction, counterclaim, setoff,
recoupment, or any other claim, allowance or adjustment against any assignee of
Borrower; and(13) is a Lease with a Lease Receivable, which together with all
other Lease Receivables owed by the same Lessee, does not exceed $1,000,000 in
the aggregate.
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Equipment - The meaning ascribed thereto in the Pennsylvania
Uniform Commercial Code.
ERISA - The Employee Retirement Income Security Act of 1974,
as the same may be amended, from time to time.
Event of Default - Section 8.1.
Expenses - Section 10.5.
Federal Funds Rate - means on any day, the effective rate of
interest charged by the Federal Reserve Bank of Philadelphia for overnight
Federal Funds in Philadelphia as reported by the Federal Reserve Bank in
Philadelphia for such day.
Financial Statements - The financial statements of Borrower
prepared in accordance with GAAP.
Fixed Charge Coverage Ratio - The ratio of Borrower's
operating cash flow (income before taxes, depreciation, amortization and
extraordinary items, plus interest expense) to the sum of (i) interest expense;
(ii) mandatory principal payments and (iii) an amount equal to twenty-five (25%)
percent of the average daily outstanding principal balance of the Revolving
Credit Loans.
GAAP - Generally accepted accounting principles as in effect
on the Closing Date, as may be amended from time to time.
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General Intangibles - The meaning ascribed thereto in the
Pennsylvania Uniform Commercial Code and shall include, but not be limited to,
all contract rights (including without limitation, all rights under remarketing
agreements), chattel paper, documents, instruments, books, records, ledgers,
journals, check books, print outs, blue prints, designs, computer programs,
computer tapes, punch cards, formulae, drawings, customer lists, choses in
action, claims, goodwill, designs and plans, licenses, license agreements, tax
and all other types of refunds, returned and unearned insurance premiums, rights
and claims under insurance policies, patents, patent application, trademarks,
trade names, trade styles, trademark applications and copyrights.
Good Business Day - Any Business Day when banks in
Philadelphia, Pennsylvania and London, England are open for business.
Guarantors - Resource America, Inc., Resource Leasing, Inc.,
FL Partnership Management, Inc. and FL Financial Services, Inc.
Guaranty - Section 4.1(l).
Hazardous Substance - Section 5.14.
Initial Term - Section 2.1(d).
Inventory - The meaning ascribed thereto in the Pennsylvania
Uniform Commercial Code and shall include all additions, improvements,
accessions, attachments, upgrades, replacements and substitutions thereto or
therefor.
Investment Grade Lessee - A Lessee with a public debt rating
from ▇▇▇▇▇'▇ Investor Service, Inc. of at least Baa or from Standard & Poor's
Rating Services of at least BBB or an equivalent rating as approved by Agent.
Lease(s) - All of Borrower's Accounts, Documents, General
Intangibles, Instruments and Chattel Paper arising in connection with each and
every equipment lease (whether a "true lease" or a lease intended as security)
and/or schedule to a master lease agreement, assigned to Lenders and/or Agent
for the benefit of Lenders, or now or hereafter designated on any schedule as
being assigned to Lenders and/or Agent for the benefit of Lenders. The term
"Lease" includes (i) all payments to be made thereunder, (ii) all rights of
Borrower therein, and (iii) any and all amendments, renewals, extensions or
guarantees thereof.
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Lease Receivable(s) - With respect to each Lease, the gross
value of the contractual firm term lease payments plus the absolute and
unconditional obligation, if any, of the corresponding Lessee to make a
payment(s) at the end of the stated Lease term.
Leased Property - Any personal property leased or to be leased
or financed by Borrower pursuant to a Lease; the term "Leased Property" includes
all of Borrower's Inventory or Equipment so leased and any and all additions,
improvements, accessions, attachments, upgrades, replacements and substitutions
thereto and therefor.
Lessee - The lessee(s) or obligor(s) responsible for payment
and/or performance under a Lease.
Liabilities - All liabilities of every kind of Borrower and
its Subsidiaries as would be shown on a consolidated financial statement of
Borrower prepared in accordance with GAAP, and all contingent and unmatured
obligations of Borrower and its Subsidiaries pursuant to any and all guarantee,
surety or similar type agreements relating to the debts of Persons outside of
the consolidated group.
LIBOR Based Rate - A rate of interest determined by reference
to the Adjusted LIBOR Rate.
LIBOR Based Rate Loan - Any portion of the Revolving Credit
Loans or any Term Loan on which interest accrues at the LIBOR Based Rate.
LIBOR Based Revolving Loan Rate - The Adjusted LIBOR Rate plus
150 basis points.
LIBOR Market Index Rate - For any day, is the rate (rounded to
the next higher 1/100 of 1%) for one (1) month U.S. dollar deposits as reported
on Telerate page 3750 as of 11:00 a.m. London time, for such day, provided if
such day is not a Good Business Day, the immediately preceding Good Business Day
(or if not so reported, then as determined by Agent from another recognized
source or Interbank quotation plus 150 basis points).
LIBOR Market Index Rate Loan - Any portion of the Revolving
Credit Loans or any Term Loan on which interest accrues at the LIBOR Market
Index Rate.
LIBOR Based Term Loan Rate - The Adjusted LIBOR Rate plus 225
basis points.
LIBOR Interest Period - Section 2.4(c)(i).
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Lien - Any interest of any kind or nature in property securing
an obligation owed to, or a claim of any kind or nature in property by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute, regulation or contract, and including, but not limited to,
a security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt, a lease, consignment or bailment for security
purposes, a trust, or an assignment.
Loans - All Revolving Credit Loans and Term Loans.
Loan Documents - This Agreement, the Revolving Credit Notes,
the Term Notes, the Guaranty and all agreements, instruments and documents
executed and/or delivered from time to time in connection therewith, as amended
or replaced from time to time.
Majority Lenders - At any time, Lenders holding Pro Rata
Percentages aggregating at least fifty-one (51%) percent of the aggregate amount
outstanding under the Credit Facility at such time; provided, however, that if
there is no outstanding amount under the Credit Facility, the Majority Lenders
shall be determined by those Lenders holding fifty-one(51%) percent of the
Maximum Credit Limit.
Maturity Date - The later of (i) March 31, 2000 or (ii) the
last day of the then Current Term.
Maximum Credit Limit - The sum of the Pro Rata Shares which at
the time of Closing equals Twenty Million Dollars ($20,000,000).
Net Income - The consolidated net income after taxes of
Borrower as such would appear on Borrower's consolidated statement of income,
prepared in accordance with GAAP.
Net Worth - At any time means the amount of stockholders
equity on a consolidated basis plus Borrower's Subordinated Indebtedness.
Nonrecourse Debt - All Liabilities of Borrower which are
non-recourse in nature and treated as non-recourse obligations on Borrower's
Financial Statements. Non-recourse Debt shall not include any Liabilities which
are partially recourse and may be off balance sheet.
Obligations - All existing and future liabilities and
obligations of every kind or nature at any time owing by Borrower to Lenders (or
any of them)and/or to Agent, whether joint or several, related or unrelated,
primary or secondary, matured or contingent, due or to become due, and whether
principal, interest, fees or Expenses, including, without limitation,
obligations in respect of the Revolving Credit Loans and Term Loans and any
extensions, modifications, substitutions, increases and renewals thereof, and
the payment of all reasonable amounts advanced by Agent (or any Lender after the
occurrence of an Event of Default) to preserve, protect and enforce rights
hereunder and in the Collateral and all Expenses incurred by Agent (or any
Lender after the occurrence of an Event of Default) in connection therewith.
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Pennsylvania Uniform Commercial Code or UCC - The Uniform
Commercial Code as enacted in Pennsylvania, as the same shall be amended from
time to time.
Person - An individual, partnership, corporation, limited
liability corporation, trust, unincorporated association or organization, joint
venture or any other entity.
Present Value - The value, from time to time, as of the date
of determination, of the remaining Lease Receivables due under a Lease,
discounted using the applicable interest rate as set forth herein.
Pro Rata Percentage - Section 2.1(a)(iii).
Pro Rata Share - Section 2.1(a)(iii).
Property - Any interest of Borrower in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
Regulation D - Regulation D of the Board of Governors of the
Federal Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.
Reserve Percentage - For a Lender, on any day, that percentage
(expressed as a decimal) which is in effect on such day, prescribed by the Board
of Governors of the Federal Reserve System (or any successor or any other
banking authority to which a Lender is subject, including any board or
governmental or administrative agency of the United States or any other
jurisdiction to which a Lender is subject), for determining the maximum reserve
requirement (including without limitation any basic, supplemental, marginal or
emergency reserves) for (a) deposits of United States dollars or (b)
Eurocurrency liabilities as defined in Regulation D, in each case used to fund a
LIBOR Based Rate Loan subject to a LIBOR Based Rate. The Adjusted LIBOR Rate
shall be adjusted automatically on and as of the effective day of any change in
the Reserve Percentage.
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Revolving Credit Loans - Section 2.1(a).
Revolving Credit Notes - Section 2.1(b).
Securitization Transaction - Any transaction for which Agent
has received 30 days prior written notice, using, in part, leases or leased
property to secure notes issued by Borrower or a special purpose subsidiary of
Borrower and in connection with which, Borrower will be subject to no recourse
or limited recourse arising out of a servicing agreement.
Stock Pledge Agreements - Section 4.1(m).
Subordinated Indebtedness - All indebtedness which is
subordinate in all respects to the Obligations pursuant to a subordination
agreement acceptable to Agent in its sole discretion.
Subordination Agreement - Section 4.1(n).
Subsidiary - Any corporation more than fifty percent (50%) of
whose voting stock is legally and beneficially owned by Borrower or owned by a
corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by Borrower.
SuperMajority Lenders - At any time, Lenders holding Pro Rata
Percentages aggregating at least sixty-six and two-thirds (66-2/3%) percent of
the aggregate amount outstanding under the Credit Facility at such time;
provided, however, that if there is no outstanding amount under the Credit
Facility, the SuperMajority Lenders shall be determined by those Lenders holding
sixty-six and two-thirds (66-2/3%) percent of the Maximum Credit Limit.
Tangible Net Worth - Borrower's Net Worth less assets which
would be classified as intangible on a balance sheet prepared in accordance with
GAAP including, without limitation, trademarks, goodwill, deferred closing
costs, loans to shareholders and Affiliates and "start-up" costs except Borrower
may include up to $300,000 worth of intangible assets representing certain
organizational costs and deferred taxes paid for by Borrower prior to September
30, 1996.
Term Loan - Section 2.1(a).
Term Notes - Section 2.1(c).
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Unmatured Event of Default - An event or condition which, with
the passage of time, the giving of notice, or both, would become an Event of
Default.
Unused Line Fee - Section 2.6(a).
1.2 Accounting Principles: Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except as otherwise expressly provided in this Agreement.
SECTION 2. THE LOANS
2.1 Credit Facility - Description:
(a) (i) Subject to the terms and conditions of this Agreement,
each Lender, severally, hereby establishes for the benefit of Borrower, a credit
facility (collectively referred to as "Credit Facility") which shall include
Advances extended by Lenders to or for the benefit of Borrower from time to time
hereunder in the form of revolving credit loans ("Revolving Credit Loans") or
term loans ("Term Loans"). The aggregate outstanding principal amount of all
Loans, at any time, shall not exceed the Borrowing Base. Subject to such
limitation, the outstanding balance of all Revolving Credit Loans may fluctuate
from time to time, to be reduced by repayments made by Borrower and to be
increased by future Revolving Credit Loans which may be made by Lenders. If the
aggregate outstanding amount of all Loans at any time exceeds the Maximum Credit
Limit, Borrower shall immediately repay such excess in full in accordance with
Section 2.7. If the aggregate outstanding amount of all Loans exceeds the
Borrowing Base, Borrower shall within ten (10) days of such occurrence, either
(x) repay such excess in full or (y) pledge additional Eligible Leases in
accordance with the terms hereof. The obligations of Borrower under the Credit
Facility and this Agreement shall at all times be absolute and unconditional.
Advances hereunder shall not exceed the lesser of (x) 95% of the original
invoice amount (net of Asoft costs) for the Leased Property being financed with
the proceeds of the applicable Advance or (y) $500,000 or, in the case of
Advances to finance Leases to Investment Grade Lessees, $1,000,000.
(ii) Subject to the terms and conditions of this
Agreement, and provided that no Event of Default or Unmatured Event of Default
has occurred hereunder, Borrower shall have the option to have any Advance under
the Credit Facility initially be a Revolving Credit Loan or a Term Loan and
Borrower may at any time, in accordance with the terms hereof, convert a
Revolving Credit Loan to a Term Loan. In no event shall the initial principal
amount of any Term Loan be less than $2,000,000 or any Revolving Credit Loan be
less than $500,000. At no time shall Borrower have more than five (5) Term Loans
outstanding.
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(iii) Subject to the terms and conditions of this
Agreement, each Lender severally agrees to lend to Borrower an amount equal to
such Lender's respective percentage (as to each Lender, the percentage of the
Credit Facility set forth opposite its name on Schedule "A" attached hereto and
made a part hereof and referred to as its "Pro Rata Percentage") of the Advance
requested by Borrower. The aggregate outstanding Loans by each Lender shall not
exceed the respective amounts ("Pro Rata Shares") set forth opposite such
Lender's name on Schedule "A".
(b) At Closing, Borrower shall execute and deliver its
promissory note to each Lender for the total principal amount of such Lender's
Pro Rata Share (collectively as may be amended, modified or replaced from time
to time, the "Revolving Credit Notes"). The Revolving Credit Notes shall
evidence Borrower's absolute and unconditional obligation to repay such
Lender(s) for all Revolving Credit Loans made by such Lender(s) under the Credit
Facility, with interest as herein and therein provided. Each and every Revolving
Credit Loan under the Credit Facility shall be deemed evidenced by the Revolving
Credit Notes, which are deemed incorporated herein by reference and made a part
hereof. All Revolving Credit Notes shall be substantially in the form set forth
in Exhibit "2.1(b)" attached hereto and made a part hereof.
(c) In the event Borrower requests any Advance to initially be
a Term Loan, or at any time a Revolving Credit Loan is converted to a Term Loan,
Borrower shall execute and deliver its promissory note to each Lender for the
total principal amount of such Lender's Pro Rata Percentage of such Term Loan
(collectively as may be amended, modified or replaced from time to time, the
"Term Notes"). The Term Notes shall evidence Borrower's absolute and
unconditional obligation to repay such Lender for the Term Loan made by such
Lender under the Credit Facility, with interest as herein and therein provided.
Each and every Term Loan under the Credit Facility shall be evidenced by
separate Term Notes, which shall be deemed incorporated herein by reference and
made a part hereof. All Term Notes shall be substantially in the form set forth
in Exhibit "2.1(c)" attached hereto and made a part hereof.
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(d) The term ("Initial Term") of the Credit Facility shall
expire on March 31, 2000. The Credit Facility may, nonetheless, be renewed at
the end of the then Current Term in Lenders' sole discretion, for additional
eighteen(18) month periods. Borrower's request for such renewal must be made at
least six (6) months prior to the expiration of the then Current Term. After the
Maturity Date, no further Advances shall be available from Lenders.
(e) Borrower shall deliver, at least monthly on the first
Business Day of each month, and with each borrowing request, unless Agent
requests more frequent delivery, a Borrowing Base Certificate in the form of
Exhibit 2.1(e) attached hereto and made a part hereof, executed by an Authorized
Officer, evidencing the availability under the Borrowing Base and compliance
with the respective sublimits.
(f) Borrower hereby confirms and acknowledges that, as of
September 28, 1998, the outstanding principal balance of all Loans, advances and
extensions of credit made by the Bank under the Existing Loan Documents is $0
($0 for Revolving Credit Loans and $0 for Term Loans) and such amount is owing
without defense, setoff, counterclaim, discount, recoupment or charge of any
kind by Borrower and shall be considered as Loans for all purposes hereunder as
though such Loans, advances and extensions of credit had been originally made
under this Agreement.
2.2 Advances, Conversions and Payments:
(a) Except to the extent otherwise set forth in this
Agreement, all payments of principal and of interest on the Credit Facility, the
Unused Line Fee, the Administration Fee, the Expenses, and all other charges and
any other Obligations of Borrower hereunder, shall be made to Agent at its main
Philadelphia banking office First Union National Bank, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ dollars, in immediately available
funds. Agent, on behalf of all Lenders, shall have the unconditional right and
discretion to make an Advance under the Credit Facility in the form of a
Revolving Credit Loan (subject to availability existing under the Borrowing
Base) to pay, and/or to charge Borrower's operating account with Agent for all
of Borrower's Obligations as they become due from time to time under this
Agreement including, without limitation, interest, principal, fees and
reimbursement of Expenses.
(b) (i) Advances which may be made by Lenders from time to
time under the Credit Facility shall be made available by crediting such
proceeds to Borrower's operating account with Agent.
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(ii) All Advances requested by Borrower and all requests
by Borrower to convert Revolving Credit Loans to Term Loans must be requested by
11:00 A.M. Eastern time, three (3) Business Days prior to the date of such
requested Advance or conversion. All requests or confirmation of requests for an
Advance or conversion are to be in writing and may be sent by telecopy or
facsimile transmission provided that Agent shall have the right to require that
receipt of such request not be effective unless confirmed via telephone with
Agent.
(iii) A. Upon receiving a request for an Advance or
conversion in accordance with subparagraph (ii) above, as soon as reasonably
practical thereafter, Agent shall notify all Lenders of the request. Each Lender
shall advance its applicable Pro Rata Percentage of the requested Advance to
Agent by remitting federal funds, immediately available, to Agent pursuant to
Agent's instructions prior to 11:00 A.M. Eastern Time on the scheduled date of
the Advance. Subject to satisfaction of the terms and conditions hereof, Agent
shall make the requested Advance available to Borrower by crediting such amount
to Borrower's operating account with Agent as soon as is reasonably practical
thereafter on the day the requested Advance is to be made. In lieu of the
foregoing, Agent may, in its discretion, fund the Pro Rata Percentage of such
Advance on behalf of any one or more Lenders (unconditionally and absolutely
obligating such affected Lender(s) to reimburse Agent in full without deduction
or setoffs for its portion of such Advance) with a settlement of the pro rata
percentages of such Advances of each Lender on the following Business Day under
such procedures as Agent may establish.
B. Neither Agent nor any other Lender shall be
obligated, for any reason whatsoever, to advance the share of any other Lender.
If such corresponding amount is not made available to Agent by such Lender on
the date the Advance is made and Agent elects (at its discretion, without any
obligation to do so) to make such Lender's Pro Rata Percentage of the Advance,
Agent shall be entitled to recover such amount on demand from such Lender
together with interest at the per annum rate equal to the Federal Funds Rate in
respect of the first two days and at the Base Rate in respect of each day
thereafter during the period commencing 2:00 P.M. Eastern Time on the date of
such Advance and ending on (but excluding) the date Agent recovers such amount.
Agent shall also be entitled to recover any and all losses and damages
(including, without limitation, attorneys' fees and costs) from any Lender
failing to so advance upon demand of Agent. Agent may set off the obligations of
a Lender under this paragraph against any distributions or payments of the
Obligations which Agent would otherwise make available to such Lender.
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C. To the extent and during the time period in which
any Lender fails to provide or delays providing its respective payment to Agent
pursuant to subsections A or B above (any such Lender being referred to, during
such period, as a "Defaulting Lender"), such Lender's percentage of all payments
of the Obligations (but not its Pro Rata Percentage of future Advances required
to be funded by such Lender) shall decrease to reflect the actual percentage
which its actual outstanding Loans bear to the total outstanding Loans of all
Lenders. In addition, notwithstanding any definition or other provision of this
Agreement to the contrary, during any period in which a Lender is a Defaulting
Lender, all calculations for voting purposes among the Lenders shall be made as
if the Defaulting Lender were not a Lender and not a party to this Agreement.
2.3 Preconditions to Advances and Assignment of Leases and Leased
Property
(a) Before Lenders will make any Advance:
(i) Borrower will deliver to Agent the following (dated
and signed) in form and substance satisfactory to Agent and its counsel:
A. A borrowing request setting forth the requested
date of the Advance (but no sooner than three (3) Business Days after Agent
receives the request), the requested advance amount, the applicable interest
rate and whether the request is for a Term Loan or a Revolving Credit Loan, a
Borrowing Base Certificate in the form attached hereto as Exhibit "2.1(e)"
setting forth the availability under the Borrowing Base, any information
required by this Agreement and such other information as Agent shall reasonably
request. A borrowing request may be made orally, provided that Borrower confirms
the request in writing within two (2) days thereafter, provided further however,
that Lenders need not make any Advances until Agent receives actual written
confirmation and a Borrowing Base Certificate,
B. Such financial information concerning any of the
Leases, Borrower or any Lessee as Lenders may reasonably request, and
C. Such other instruments, agreements and documents
as Agent reasonably requests to carry out the intent of the parties to this
Agreement.
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(ii) No Event of Default or Unmatured Event of
Default shall have occurred hereunder.
(b) In order to increase the Borrowing Base, Borrower shall
deliver to Agent for the benefit of Lenders the following items:
(i) A description of the collateral package, which
shall include, identification of the Lessee, a description of the Leased
Property, the net cost of the Leased Property, the net remaining principal
balance under the Lease(s), and the terms of and rentals owed under each Lease,
and such other information which Agent or Lenders shall reasonably request,
(ii) An Assignment Agreement signed by Borrower
assigning Borrower's right, title and interest in and to the Leased Property and
Leases to Agent for the benefit of Lenders, in the form attached hereto as
Exhibit "2.3(b)(ii)" ("Assignment Agreement"),
(iii) Invoices showing the true cost of the Leased
Property net of any servicing or maintenance charges, brokers' fees or similar
types of "soft costs",
(iv) If requested by Agent, additional Uniform
Commercial Code ("UCC") financing statements covering, inter alia, the Leased
Property and the Leases listing Agent for the benefit of Lenders, as secured
party and Borrower as debtor, to be filed in locations reasonably required by
Agent,
(v) Copies of all UCC-1 financing statements filed by
Borrower against Lessee(s) and any acknowledgment copies or recording
information Borrower has received back from the recording offices, provided,
however, that Borrower shall not be required to furnish evidence of the filing
of UCC-1 financing statements covering Leased Property leased pursuant to
Lease(s) having an outstanding Lease Receivable value of under $16,000.
(vi) The sole original of each Lease along with all
schedules duly assigned to Agent for the benefit of Lenders,
(vii) For each item of Leased Property with a Lease
Receivable in excess of $20,000, evidence that such item of Leased Property is
insured against such risks, in such amounts, with such insurance, and on such
terms and conditions as shall be satisfactory to Lenders ("Insurance Coverage"),
(viii) A certificate of acceptance or other document
evidencing, or other evidence of oral confirmation, that the Lessee has received
and accepted the Leased Property,
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(ix) Where the initial cost of the Leased Property is
in excess of $100,000 and such Leased Property is to be affixed to real estate
in such a manner as, under applicable law, to become a fixture, a landlord or
mortgagee waiver from all persons having an interest in the real estate on which
the Leased Property will be located, and
(x) An undated notice signed by the Borrower
directing each Lessee to pay all sums due or to become due under each Lease
directly to Agent for the benefit of Lenders ("Lessee Notice") to be used only
following the occurrence of an Event of Default. Agent will hold the Lessee
Notices in escrow and will not release them, unless and until an Event of
Default shall have occurred.
2.4 Credit Facility Interest:
(a) Revolving Credit Loans: The unpaid principal balance of
all or a portion of the Revolving Credit Loans shall bear interest at either the
LIBOR Based Revolving Loan Rate or the LIBOR Market Index Rate. Interest on all
Revolving Credit Loans shall be due and payable monthly in arrears on the first
day of each month and on the last day of the applicable LIBOR Interest Period
with respect to LIBOR Based Rate Loans.
(b) Term Loans: The unpaid principal balance of all or a
portion of the Term Loans shall bear interest at the LIBOR Based Term Loan Rate.
In addition Borrower may request that a Term Loan be converted to a fixed rate
loan for the remaining term of such Term Loan at a rate quoted at the time of
request by Agent and Co-Agent and acceptable to all Lenders. Interest on all
Term Loans shall be due and payable monthly in arrears on the first day of each
month.
(c) (i) LIBOR Based Rate Loans: LIBOR Based Rate Loans shall
be selected for a period of either one (1), two (2), or three (3) months'
duration, as Borrower may elect, during which a LIBOR Based Rate is applicable
("LIBOR Interest Period"); provided, however, that (a) if the LIBOR Interest
Period would otherwise end on a day which shall not be a Good Business Day, such
LIBOR Interest Period shall be extended to the next succeeding Good Business
Day, unless such Good Business Day falls in another calendar month, in which
case such LIBOR Interest Period shall end on the next preceding Good Business
Day subject to clause (c) below; (b) interest shall accrue from and including
the first day of each LIBOR Interest Period to, but excluding, the day on which
any LIBOR Interest Period expires; and (c) with respect to any LIBOR Interest
Period which begins on the last Good Business Day of a calendar month (or on a
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day for which there is no numerically corresponding day in the calendar month at
the end of such LIBOR Interest Period), the LIBOR Interest Period shall end on
the last Good Business Day of a calendar month. All accrued and unpaid interest
on a LIBOR Based Rate Loan must be paid in full on the day the applicable LIBOR
Interest Period expires. No LIBOR Interest Period may end after the Maturity
Date. Subject to all of the terms and conditions applicable to a request that a
new Advance be a LIBOR Based Rate Loan, Borrower may extend LIBOR Based Rate
Loans as of the last day of the applicable LIBOR Interest Period to a new LIBOR
Based Rate Loan. If Borrower does not notify Agent of its desire to extend a
LIBOR Based Rate Loan or repay such Advance prior to the expiration of the
applicable LIBOR Interest Period, such Advance shall automatically be converted
to a LIBOR Market Index Rate Loan.
(ii) The Adjusted LIBOR Rate may be automatically
adjusted by Agent on a prospective basis to take into account the additional or
increased cost of maintaining any necessary reserves for Eurodollar deposits or
increased costs due to changes in applicable law or regulation or the
interpretation thereof occurring subsequent to the commencement of the then
applicable LIBOR Interest Period, including but not limited to changes in tax
laws and changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), excluding any such changes
that have resulted in a payment pursuant to Section 2.9 hereof, that increase
the cost to Lenders of funding the LIBOR Based Rate Loan. Agent shall promptly
give the Borrower and each Lender notice of such a determination and adjustment,
which determination shall be conclusive, absent manifest error, as to the
correctness of the fact and the amount of such adjustment. Agent shall furnish
to Borrower a statement setting forth the basis for adjusting such LIBOR Based
Rate and the method for determining the amount of such adjustment.
(iii) In the event that Agent shall have reasonably
determined that Eurodollar deposits equal to the amount of the principal of the
requested LIBOR Based Rate Loan and for the LIBOR Interest Period specified are
unavailable, impractical or unlawful, or a LIBOR Based Rate or a LIBOR Market
Index Rate will not adequately and fairly reflect the cost of making or
maintaining the principal amount of the requested LIBOR Based Rate Loan or LIBOR
Market Index Rate Loan specified by Borrower, or that by reason of circumstances
affecting Eurodollar markets, adequate and reasonable means do not exist for
ascertaining the rate based on the Adjusted LIBOR Rate or the LIBOR Market Index
Rate, Agent shall promptly give notice of such determination to the Borrower
that rates based on the Adjusted LIBOR Rate or the LIBOR Market Index Rate are
not available. A determination by Agent hereunder shall be prima facie evidence
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of the correctness of the fact and amount of such additional costs or
unavailability. Upon such a determination, (i) the right of Borrower to select,
convert to, or maintain a LIBOR Based Rate Loan at the rate based on the
Adjusted LIBOR Rate or a LIBOR Market Index Rate Loan at the rate based on the
LIBOR Market Index Rate shall be suspended until Agent shall have notified the
Borrower that such conditions shall have ceased to exist, and (ii) the LIBOR
Based Rate Loans and LIBOR Market Index Rate Loans shall accrue interest at the
Base Rate.
(iv) In the event that, as a result of any changes in
applicable law or regulation or the interpretation thereof, it becomes unlawful
for a Lender to maintain Eurodollar liabilities sufficient to fund any LIBOR
Based Rate Loan subject to the LIBOR Based Rate, then such Lender shall
immediately notify Agent who shall immediately notify the other Lenders and
Borrower thereof, and such Lender's obligation to make, convert to, or maintain
a LIBOR Based Rate Loan at a LIBOR Based Rate shall be suspended until such time
as such Lender may again cause the LIBOR Based Rate to be applicable to its
share of any LIBOR Based Rate Loans and such Lender's share of the Loans subject
to the LIBOR Based Rate shall accrue interest at the Base Rate. If it becomes
unlawful for a Lender to maintain a LIBOR Based Rate Loan, such Lender may
require that Borrower immediately prepay such Lender's LIBOR Based Rate Loans or
convert such Loans to Base Rate Loans or LIBOR Market Index Rate Loans. Promptly
after becoming aware that it is no longer unlawful for such Lender to maintain
such Eurodollar liabilities, such Lender shall notify Agent who will notify
Borrower thereof and such suspension shall cease to exist. In the event it
becomes unlawful for a Lender to maintain Eurodollar liabilities, Borrower may
seek to have such Lender replaced with a lender for whom maintenance of
Eurodollar liabilities is not unlawful so long as such replacement lender is
satisfactory to Agent and the SuperMajority Lenders (without giving effect to
the potentially replaced Lender), in their sole and absolute discretion.
(v) In the event Borrower prepays (voluntarily or
involuntarily) or converts a LIBOR Based Rate Loan prior to the last day of the
applicable Interest Period, Borrower shall also pay to Agent for the account of
Lenders, on demand, the additional amount, as specified by Agent in a
certificate setting forth the basis of such computation, equal to the amount of
any reasonable fees, costs, expenses or other charges, plus the present value of
an amount which is the difference (if a positive number) between (y) the
aggregate interest which would have been payable to the last day of such
Interest Period on such prepaid amount, and (z) the aggregate interest the
Lenders could expect to earn on such prepaid amount if such amount were invested
for the period from the date of such prepayment to the last day of such Interest
Period in United States Treasury obligations maturing on or closest to the last
day of such Interest Period. Such certificate shall be conclusive except for
manifest error.
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(d) LIBOR Market Index Rate Loan: Up to $5,000,000 in
aggregate principal amount of Revolving Credit Loans and Term Loans may bear
interest from time to time at the LIBOR Market Index Rate provided that no
Revolving Credit Loan or portion of any Term Loan shall bear interest at the
LIBOR Market Index Rate for a period of more than 21 days. Upon or prior to the
expiration of such 21-day period, and subject to all the terms and conditions
applicable to the making of LIBOR Based Rate Loans hereunder, Borrower shall
cause any such Loan(s) to be converted to LIBOR Based Rate Loan(s). If Borrower
does not notify Agent of its desire to extend the applicable LIBOR Market Index
Rate Loan as a LIBOR Based Rate Loan, Borrower will repay such Loan prior to the
expiration of such 21-day period, or such Loan shall automatically be converted
to a LIBOR Based Rate Loan with a one month LIBOR Interest Period (unless such
LIBOR Interest Period would extend beyond the Maturity Date, in which case, the
LIBOR Market Index Rate Loan shall be continued as a LIBOR Market Index Rate
Loan until the Maturity Date). Interest on all LIBOR Market Index Rate Loans
shall be payable monthly, in arrears, on the first day of each calendar month.
The calculation and determination of the LIBOR Market Index Rate shall be made
daily by the Agent and such determination shall, absent manifest error, be
final, conclusive and binding upon all parties hereto. Changes in the LIBOR
Market Index Rate shall become effective on the same day as the Agent determines
a change in such LIBOR Market Index Rate has occurred.
2.5 Additional Interest Provisions.
(a) Calculation of Interest: Interest on the Loans, regardless
of the applicable interest rate, shall be based on a three hundred sixty (360)
day year and charged for the actual number of days elapsed.
(b) Default Rate: After the occurrence and during the
continuance of an Event of Default hereunder and following notice from Agent to
Borrower of the Lenders' intention to apply the Default Rate to the Loans, the
per annum effective rate of interest on all Loans outstanding under the Credit
Facility shall be increased to a per annum rate equal to two (2%) percentage
points in excess of the applicable interest rate ("Default Rate").
(c) Continuation of Interest Charges: All contractual rates of
interest chargeable on outstanding Loans, regardless of the then applicable
interest rate, shall continue to accrue and be paid even after default,
maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind
or the happening of any event or occurrence similar or dissimilar.
-20-
(d) Applicable Interest Limitations: In no contingency or
event whatsoever shall the aggregate of all amounts deemed interest hereunder
and charged or collected pursuant to the terms of this Agreement exceed the
highest rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event that such
court determines Lenders have charged or received interest hereunder in excess
of the highest applicable rate, Agent, on behalf of Lenders, shall in its sole
discretion, apply and set off such excess interest received by Lenders against
other Obligations due or to become due and such rate shall automatically be
reduced to the maximum rate permitted by such law.
(e) Limitation on LIBOR Based Rate Loans and LIBOR Market
Index Rate Loans: Upon the occurrence of an Event of Default, and following
written notice from Agent to Borrower, Agent may in its sole discretion, or upon
the instructions of Supermajority Lenders Agent shall, eliminate the
availability of LIBOR Based Rate Loans and LIBOR Market Index Rate Loans.
2.6 Fees:
(a) Unused Line Fee: So long as the Credit Facility is
outstanding and has not been terminated, Borrower shall unconditionally pay to
Agent, for the benefit of Lenders in accordance with their respective Pro Rata
Percentages, a non-refundable fee ("Unused Line Fee") equal to one-quarter of
one percent (1/4%) per annum of the average daily unused portion of the Credit
Facility (which shall be calculated as the Maximum Credit Limit minus the
average daily outstanding balance of all Loans during the quarter for which such
calculation is made). The Unused Line Fee shall be computed and paid on a
quarterly basis, in arrears, on the first day of each January, April, July and
October for the previous quarter for which such computation is made by Agent,
beginning on the first day of October, 1998.
(b) Administration Fee: So long as the Credit Facility is
outstanding and has not been terminated, Borrower shall unconditionally pay to
Agent, for Agent's account, a non-refundable fee ("Administration Fee") equal to
three eighths of one percent (3/8%) per annum of the average daily outstanding
principal balance of all Loans during the quarter for which such calculation is
made). The Administration Fee shall be computed and paid on a quarterly basis,
in arrears, on the first day of each January, April, July and October for the
previous quarter for which such computation is made by Agent, beginning on the
first day of October, 1998.
-21-
2.7 Prepayments:
(a) (i) Base Rate Loans and LIBOR Market Index Rate Loans:
Base Rate Loans and LIBOR Market Index Rate Loans may be prepaid at any time and
from time to time, in whole or in part, without premium or penalty upon no less
than two (2) Business Days notice to Agent. All partial prepayments shall be
applied first to accrued and unpaid interest, fees and Expenses related to such
prepaid Loan and then to the outstanding principal balance of the Loan so
prepaid.
(ii) LIBOR Based Rate Loans: LIBOR Based Rate Loans may
not be prepaid on any date other than the last day of the selected Interest
Period unless Borrower gives Agent written notice of such intention prior to
1:00 p.m. on a Business Day which is no less than two (2) Business Days prior to
the date it intends to make such prepayment (unless such prepayment must be
immediate because of the illegality of LIBOR Based Rate Loans as set forth in
Section 2.4(c)(iv) hereof, in which case Borrower shall not be required to
provide such notice) and pays a prepayment fee in accordance with Section
2.4(c)(v) above. All such prepayments must be of the full amount of the
applicable LIBOR Based Rate Loan plus all accrued but unpaid interest, fees and
Expenses related to such prepaid Loan. Borrower agrees that this fee is an
estimate of Lender's damages and not a penalty.
(iii) Fixed Rate Term Loans: Term Loans bearing interest
at a fixed rate pursuant to Section 2.4(b) hereof may not be prepaid unless
Borrower pays a prepayment fee equal to (the amount of any applicable fees,
costs, Expenses or other charges, plus the present value of an amount which is
the difference (if a positive number) between (y) the aggregate interest which
would have been payable to the last day of such Term Loan on such prepaid
amount, and (z) the aggregate interest Lenders could expect to earn on such
prepaid amount if such amount were invested for the period from the date of such
prepayment to the maturity date of the Term Loan in United States Treasury
obligations maturing on or closest to such maturity date. Borrower agrees that
this fee is our estimate of Lenders' damages and not a penalty. All such
prepayments shall be applied to the prepaid Term Loan, first against all accrued
and unpaid interest, fees and Expenses related to such prepaid Term Loan and
then to installments of the outstanding principal balance of the Term Loan so
prepaid in the inverse order of maturity.
-22-
(b) Proceeds of Collateral: Prior to the occurrence of an
Event of Default, proceeds from Collateral comprising a portion of the Borrowing
Base, to the extent that the aggregate outstanding amount of all Loans exceeds
the Borrowing Base, shall promptly be paid to Agent for the benefit of Lenders
and be first applied to accrued but unpaid interest, fees, costs and Expenses
related to the Credit Facility, and then to the outstanding balance of the
Revolving Credit Loans, the Term Loan and then to Borrower's other Obligations
in such order as Agent may elect in its sole discretion. Following the
occurrence of an Event of Default, all proceeds from the Collateral shall be
immediately delivered to Agent and Agent may apply such proceeds to any of
Borrower's Obligations in such order as Lenders may decide in their sole
discretion.
(c) Mandatory Prepayment: In the event the aggregate
outstanding amount of all Loans at any time exceeds the Maximum Credit Limit,
Borrower shall immediately repay such excess in full and if the aggregate
outstanding amount of all Revolving Credit Loans exceeds the Borrowing Base,
Borrower shall within ten (10) days either (i) repay such excess in full or (ii)
pledge additional Eligible Leases in accordance with the terms hereof. Any such
payments shall first be applied to accrued but unpaid interest, fees, costs and
Expenses related to the Credit Facility, and then to the outstanding balance of
the Revolving Credit Loans, the Term Loans and then to Borrower's other
Obligations in such order as Agent may elect in its sole discretion. Prepayments
of the Term Loans shall be applied against the remaining principal installments
in the inverse order of maturity.
2.8 Use of Proceeds: The extensions of credit under and proceeds of the
Credit Facility shall be used to enable Borrower to purchase Leased Property and
finance Leases associated with such Leased Property.
2.9 Capital Adequacy: If any present or future law, governmental rule,
regulation, policy, guideline, directive or similar requirement (whether or not
having the force of law) imposes, modifies, or deems applicable any capital
adequacy, capital maintenance or similar requirement which affects the manner in
which Commercial banks generally allocate capital resources to their commitments
(including any commitments hereunder), and as a result thereof, in the opinion
of a Lender, the rate of return on such Lender's capital with regard to the
Loans is reduced to a level below that which such Lender could have achieved but
for such circumstances, then in such case and upon notice from Agent and/or such
Lender to Borrower, from time to time, Borrower shall pay such Lender such
additional amount or amounts as shall compensate such Lender for such reduction
in its rate of return. Such notice shall contain the statement of such Lender
with regard to any such amount or amounts which shall, in the absence of
manifest error, be binding upon Borrower. In determining such amount, such
Lender may use any reasonable method of averaging and attribution that it deems
applicable.
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SECTION 3. COLLATERAL
3.1 Description: As security for the payment of the Obligations, and
satisfaction by Borrower of all covenants and undertakings contained in this
Agreement and the other Loan Documents, Borrower hereby grants to Agent, for the
benefit of Lenders, a continuing first lien on and security interest in, upon
and to the Collateral.
3.2 Lien Documents: At Closing and thereafter as Agent deems necessary,
Borrower shall execute and deliver to Agent, or have executed and delivered (all
in form and substance reasonably satisfactory to Agent):
(a) Financing Statements - Financing statements pursuant to
the UCC, which Agent, on behalf of Lenders, may file in any jurisdiction where
any Collateral is or may be located and where Borrower maintains its chief
executive office; and
(b) Other Agreements - Any other agreements, documents,
instruments and writings, including, without limitation, security agreements and
Assignment Agreements, reasonably required by Agent to evidence, perfect or
protect Agent's and/or Lenders' liens and security interest in the Collateral or
as Agent may reasonably request from time to time.
3.3 Other Actions: In addition to the foregoing, Borrower shall do
anything further that may be lawfully and reasonably required by Agent to secure
Lenders and effectuate the intentions and objects of this Agreement, including,
but not limited to, the execution and delivery of lockbox agreements,
continuation statements, amendments to financing statements, security
agreements, contracts and any other documents required hereunder. Borrower shall
also immediately deliver (with execution by Borrower of all necessary documents
or forms to reflect Agent's Lien for the benefit of Lenders thereon) to Agent as
bailee for Lenders, all items for which Agent and/or Lenders must or may receive
possession to obtain a perfected security interest, including without
limitation, all Leases, notes, certificates and documents of title, chattel
paper, warehouse receipts, instruments, and any other similar instruments
constituting Collateral.
3.4 Searches: Agent shall, prior to or at Closing, and thereafter as
Agent may determine from time to time, at Borrower's sole expense, obtain the
following searches (the results of which are to be consistent with the
warranties made by Borrower in this Agreement):
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(a) UCC Searches: UCC searches with the Secretary of State and
local filing office of each state where Borrower maintains its executive office,
a place of business, or assets;
(b) Judgments, Etc.: Judgment, federal tax lien and corporate
tax lien searches, in all applicable filing offices of each state searched under
subparagraph (a) above.
Borrower shall, prior to or at Closing and at its expense,
obtain and deliver to Agent good standing certificates showing Borrower to be in
good standing in its state of incorporation and in each other state or foreign
country in which it is doing and presently intends to do business for which
Borrower's failure to be so qualified might have material adverse effect on
Borrower's business, financial condition, Property or Agent's and/or Lenders'
rights hereunder.
3.5 Filing Security Agreement: A carbon, photographic or other
reproduction or other copy of this Agreement or of a financing statement is
sufficient as and may be filed in lieu of a financing statement.
3.6 Power of Attorney: Each of the officers of Agent is hereby
irrevocably made, constituted and appointed (such appointment being coupled with
an interest) the true and lawful attorney for Borrower (without requiring any of
them to act as such) with full power of substitution to do the following: (1)
endorse the name of Borrower upon any and all checks, drafts, money orders and
other instruments for the payment of monies that are payable to Borrower and
constitute collections on the Collateral; (2) execute in the name of Borrower
any financing statements, schedules, assignments, instruments, documents and
statements that Borrower is obligated to give Agent hereunder or is necessary to
perfect Agent's and/or Lenders' security interest or Lien in the Collateral,
including without limitation, execute in its own name or in the name of
Borrower, all documentation necessary to have Agent's Lien for the benefit of
Lenders noted on all vehicle titles, to prepare and sign any and all
applications for vehicle titles relating to Leased Property and any registration
documentation with respect to such Leased Property; (3) to verify validity,
amount or any other matter relating to the Collateral by mail, telephone,
telecopy or otherwise; and (4) upon the occurrence of an Event of Default, do
such other and further acts and deeds in the name of Borrower that Agent may
reasonably deem necessary or desirable to enforce any Account or perfect its
liens on, or to protect its interest in, any other Collateral.
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SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement is subject to the following conditions
precedent (all documents to be in form and substance satisfactory to Agent and
its counsel):
4.1 Resolutions, Opinions, and Other Documents: Borrower shall have
delivered to Agent the following:
(a) this Agreement and the Revolving Credit Notes all properly
executed;
(b) each document and agreement required to be executed under
any provision of this Agreement or any related agreement;
(c) certified copies of (i) resolutions of Borrower's board of
directors authorizing the execution of this Agreement, the Revolving Credit
Notes and the Term Notes to be issued hereunder and each document, instrument
and agreement required to be delivered by any Section hereof and resolutions of
each Guarantor's board of directors authorizing the execution and delivery of
the Guaranty and (ii) Borrower's and each Guarantor's Articles of Incorporation
and By-laws;
(d) an incumbency certificate identifying all Authorized
Officers of Borrower and each signatory of the Guaranty on behalf of each
Guarantor authorizing the execution and delivery of the Guaranty, with specimen
signatures;
(e) a written opinion of Borrower's and each Guarantor's
independent counsel addressed to Agent for the benefit of all Lenders;
(f) certification by Borrower's chief financial officer that
there has not occurred any material adverse change in the operations and
condition (financial or otherwise) of Borrower since June 30, 1998;
(g) payment by Borrower of all Expenses associated with the
Credit Facility incurred to the Closing Date;
(h) Uniform Commercial Code, judgment, federal and state tax
lien searches against Borrower, at Borrower's expense, showing that the
Collateral is not subject to any Liens, together with Good Standing and
Corporate Tax Lien Search Certificates showing no tax Liens on Borrower's
Property and showing Borrower to be in good standing in each jurisdiction where
the failure to so qualify might have a material adverse affect on Borrower's
business, financial condition, Property or Agent's and/or Lenders' rights
hereunder;
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(i) An initial borrowing base certificate dated the Closing
Date evidencing Borrower's minimum borrowing availability under the Borrowing
Base as of the Closing Date;
(j) UCC-1 Financing Statements naming Borrower as debtor and
Agent as secured party, to be filed in all locations satisfactory to Agent;
(k) A Guaranty Agreement executed by each of the Guarantors
("Guaranty");
(l) Stock Pledge Agreements for the shares of Borrower and
Resource Leasing, Inc. executed by Resource Leasing, Inc. and Resource America,
Inc. respectively (collectively "Stock Pledge Agreements); and
(m) A subordination agreement ("Subordination Agreement")
among Resource Leasing, Inc., Agent and Borrower whereby Resource Leasing, Inc.
agrees to subordinate all indebtedness owing from Borrower to Resource Leasing,
Inc., on terms and conditions satisfactory to Agent.
4.2 Absence of Certain Events: At the Closing Date, no Event of Default
or Unmatured Event of Default hereunder shall have occurred and be continuing.
4.3 Warranties and Representations at Closing: The warranties and
representations contained in Section 5 as well as any other Section of this
Agreement and any other Loan Document shall be true and correct in all material
respects on the Closing Date with the same effect as though made on and as of
that date. Borrower shall not have taken any action or permitted any condition
to exist which would have been prohibited by any Section hereof.
4.4 Compliance with this Agreement: Borrower shall have performed and
complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, and
any other Loan Document, which are required to be performed or complied with by
Borrower before or at the Closing Date.
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4.5 Officers' Certificate: Agent shall have received a certificate
dated the Closing Date and signed by an Authorized Officer of Borrower
certifying that all of the conditions specified in this Section have been
fulfilled.
4.6 Closing: Subject to the conditions of this Section 4, the Credit
Facility shall be made available on the date ("Closing Date") this Agreement is
executed and all of the conditions contained in Section 4.1 hereof are completed
(the "Closing").
4.7 Non-Waiver of Rights: By completing the Closing hereunder, or by
making advances hereunder, Agent and Lenders do not thereby waive a breach of
any warranty, representation or covenant made by Borrower hereunder or any
agreement, document, or instrument delivered to Agent or otherwise referred to
herein, including without limitation, the Existing Loan Documents, and any
claims and rights of Agent and/or Lenders resulting from any breach or
misrepresentation by Borrower are specifically reserved by Agent for the benefit
of Lenders.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce Lenders to complete the Closing and make the initial Advances
under the Credit Facility to Borrower, Borrower warrants and represents to Agent
and Lenders that:
5.1 Corporate Organization and Validity:
(a) Borrower is a corporation duly organized and validly
existing under the laws of its state of incorporation, is duly qualified, is
validly existing and in good standing and has lawful power and authority to
engage in the business it conducts in each state and other jurisdiction where
the nature and extent of its business requires qualification, except where the
failure to so qualify would not have a material adverse effect on Borrower's
business, financial condition, Property or prospects. A list of all states and
other jurisdictions where Borrower is qualified to do business is attached
hereto as Exhibit "5.1" and made a part hereof.
(b) The making and performance of this Agreement and related
agreements, and each document required by any Section hereof will not violate
any law, government rule or regulation, or the charter, minutes or bylaw
provisions of Borrower or violate or result in a default (immediately or with
the passage of time) under any contract, agreement or instrument to which
Borrower is a party, or by which it is bound. Borrower is not in violation of,
nor has knowingly caused any Person to violate, any term of any agreement or
instrument to which it or such Person is a party or by which it may be bound or
of its charter, minutes or bylaws which violation could have a material adverse
effect on Borrower's business, financial condition, Property or prospects.
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(c) Borrower has all requisite corporate power and authority
to enter into and perform this Agreement and to incur the obligations herein
provided for, and has taken all proper and necessary corporate action to
authorize the execution, delivery and performance of this Agreement, and the
documents and related agreements required hereby.
(d) This Agreement, the Revolving Credit Notes and the Term
Notes to be issued hereunder, and all related agreements and documents required
to be executed and delivered by Borrower hereunder, when delivered, will be
valid and binding upon Borrower and enforceable in accordance with their
respective terms.
5.2 Places of Business: The only places of business of Borrower, and
the places where it keeps and intends to keep copies of the Leases and its Books
and Records concerning the Collateral, are at the addresses listed in Exhibit
"5.2" attached hereto and made a part hereof. The name of the record owner of
each property is also set forth on Exhibit "5.2".
5.3 Pending Litigation: There are no judgments or judicial or
administrative orders, proceedings or investigations (civil or criminal)
pending, or to the knowledge of Borrower, threatened, against Borrower in any
court or before any governmental authority or arbitration board or tribunal
except as shown in Exhibit "5.3" attached hereto and made a part hereof, none of
which may materially and adversely affect the business, financial condition,
Property or prospects of Borrower, or the ability of Borrower to perform under
this Agreement. Borrower is not in default with respect to any order of any
court, governmental authority, regulatory agency or arbitration board or
tribunal, the effect of which would materially and adversely affect the
business, financial condition, Property or prospects of Borrower. No shareholder
or executive officer of Borrower has been indicted or convicted in connection
with or is engaging in any criminal conduct, or is currently subject to any
lawsuit or proceeding or under investigation in connection with any
anti-racketeering or other conduct or activity.
5.4 Title to Collateral: Borrower has good and marketable title in fee
simple (or its equivalent under applicable law) to all the Collateral it
respectively purports to own, free from Liens, except those of Agent for the
benefit of Lenders and free from the claims of any other Person other than the
leasehold interests of the Lessees.
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5.5 Governmental Consent: Neither the nature of Borrower or of its
business or Property, nor any relationship between Borrower and any other
Person, nor any circumstance affecting Borrower in connection with the issuance
or delivery of the Revolving Credit Notes or the Term Notes, is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of Borrower in
connection with the execution and delivery of this Agreement or the issuance or
delivery of the Revolving Credit Notes or the Term Notes or other documents
contemplated hereby.
5.6 Taxes: All tax returns required to be filed by Borrower in any
jurisdiction have in fact been filed, and all taxes, assessments, fees and other
governmental charges upon Borrower, or upon any of its Property, income or
franchises, which are shown to be due and payable on such returns have been
paid, except for those taxes being contested in good faith with due diligence by
appropriate proceedings for which appropriate reserves have been maintained
under GAAP.
5.7 Financial Statements: Borrower's annual consolidated audited
balance sheet as of September 30, 1997 and its quarterly consolidated balance
sheet as of March 31, 1998 and the related income statements and statements of
cash flows as of such dates, all accompanied by reports thereon from Borrower's
independent certified public accountants with respect to the annual statements
(complete copies of which have been delivered to Agent), have been prepared in
accordance with GAAP and present fairly, accurately and completely the financial
position of the Borrower as of such dates and the results of its operations for
such periods. The fiscal year for Borrower currently ends on September 30.
Borrower's federal tax identification number is ▇▇-▇▇▇▇▇▇▇.
5.8 Full Disclosure: Neither the financial statements referred to in
Section 5.7, nor this Agreement or related agreements and documents or any
written statement furnished by Borrower to Agent in connection with the
negotiation of the Credit Facility and contained in any financial statements or
documents relating to Borrower contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading.
5.9 Subsidiaries: Borrower has no Subsidiaries or Affiliates, except as
listed on Exhibit "5.9" attached hereto and made a part hereof.
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5.10 Guarantees:
Borrower does not own nor hold equity or long term debt
investments in, has any outstanding advances to, or serves as guarantor, surety
or accommodation maker for the obligations of, or has any outstanding borrowings
from, any Person except as described in Exhibit "5.10", attached hereto and a
made part hereof.
5.11 Government Regulations, etc.:
(a) The use of the proceeds of and Borrower's issuance of the
Revolving Credit Notes and the Term Notes will not directly or indirectly
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended or Regulations U, T or X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. Borrower does not own or intend
to carry or purchase any "margin stock" within the meaning of said Regulation U.
(b) Borrower has obtained all licenses, permits, franchises or
other governmental authorizations necessary for the ownership of its Property
and for the conduct of its business, where the failure to obtain would have a
material adverse effect on the business, financial condition, Property or
prospects of Borrower or Agent's and/or Lenders' rights with respect to the
Collateral.
(c) Borrower is not in violation of, has not received written
notice that it is in violation of, or has knowingly caused any Person to
violate, any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or of any other
jurisdiction, or of any agency, or department thereof, (including without
limitation, environmental laws and regulations), which may materially and
adversely affect its business, financial condition, Property or prospects or
Agent's and/or Lenders' rights with respect to the Collateral.
(d) Borrower is current with all reports and documents
required to be filed with any state or federal securities commission or similar
agency and is in full compliance in all material respects with all applicable
rules and regulations of such commissions.
5.12 Names:
(a) Within five (5) years prior to the Closing Date, Borrower
has not conducted business under or used any other name (whether corporate or
assumed) except for the names shown on Exhibit "5.12(a)", attached hereto and
made a part hereof. Borrower is the sole owner of all names listed on such
Exhibit "5.12(a)" and any and all business done and all invoices issued in such
trade names are Borrower's sales, leases, business and invoices. Each trade name
of Borrower represents a division or trading style of Borrower and not a
separate corporate subsidiary or affiliate or independent entity.
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(b) All trademarks, patents or copyrights which Borrower uses,
plans to use or has a right to use are listed on Exhibit "5.12(b) attached
hereto and made a part hereof. Borrower is the sole owner of such Property
except to the extent any other Person has claims or rights in such Property, as
such claims and rights are described on such Exhibit "5.12(b)." To the best of
Borrower's knowledge, Borrower is not in violation of any rights of any other
Person with respect to such Property.
5.13 Other Associations: Borrower is not engaged and has no interest in
any joint venture or partnership with any other Person except as described on
Exhibit "5.13" hereto and made a part hereof.
knowledge:
(a) of the presence of any Hazardous Substances on any of the
real property where Borrower conducts operations or has its personal property,
or
(b) of any on-site spills, releases, discharges, disposal or
storage of Hazardous Substances that have occurred or are presently occurring on
any of such real property or where any Collateral is located, or
(c) of any spills, releases, discharges or disposal of
Hazardous Substances that have occurred, are presently occurring on any other
real property as a result of the conduct, action or activities of Borrower.
As used herein, the term "Hazardous Substances" means any substances defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance or similar term, by any environmental statute, rule or
regulation of any governmental entity presently in effect and applicable to such
real property.
5.15 Capital Stock: The authorized and outstanding shares of capital
stock of Borrower is as set forth on Exhibit "5.15" attached hereto and made a
part hereof. All of the capital stock of Borrower has been duly and validly
authorized and issued and is fully paid and non-assessable and has been sold and
delivered to the holders thereof in compliance with, or under valid exemption
from, all Federal and state laws and the rules and regulations of all regulatory
bodies thereof governing the sale and delivery of securities. Except for the
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rights and obligations set forth in Exhibit "5.15", there are no subscriptions,
warrants, options, calls, commitments, rights or agreements by which Borrower or
any of the shareholders of Borrower is bound relating to the issuance, transfer,
voting or redemption of shares of its capital stock or any pre-emptive rights
held by any Person with respect to the shares of capital stock of Borrower.
Except as set forth in Exhibit "5.15", Borrower has not issued any securities
convertible into or exchangeable for shares of its capital stock or any options,
warrants or other rights to acquire such shares or securities convertible into
or exchangeable for such shares.
5.16 Solvency: Borrower is solvent, able to pay its debts as they
become due, and has capital sufficient to carry on its business and all business
in which it is about to engage, and now owns Property having a value both at
fair valuation and at present fair salable value greater than the amount
required to pay its debts. Borrower will not be rendered insolvent by the
execution and delivery of this Agreement or any of the other documents executed
in connection with this Agreement or by the transactions contemplated hereunder
or thereunder.
5.17 Leases and Leased Property: Each Lease reported to Agent and
Lenders as an Eligible Lease and the Leased Property associated therewith shall,
at all times when such Leases are included in the Borrowing Base calculation, be
in compliance with all of the following representations:
(a) Each Lease is in substantially the same form as that
attached as Exhibit 5.17 hereto or has been otherwise approved by Agent in its
reasonable discretion and is genuine, based on contracts that are enforceable in
accordance with its terms against the Lessee and the Leased Property named and
referenced therein, constitutes the entire agreement for the leasing of the
Leased Property thereby covered, has not been altered or amended, except as set
forth in the related schedules, and Borrower's Books and Records relating
thereto are accurate, complete and genuine;
(b) The sole original of each Lease has been delivered to
Agent, and all other counterparts of each Lease shall contain a legend stating
that the Lease has been assigned to First Union National Bank, As Agent,
pursuant to that certain Amended and Restated Loan and Security Agreement dated
September 30, 1998, or contain similar language specifying that such counterpart
is not an original for "chattel paper" purposes under the UCC;
(c) Where the Lease consists of a Master Lease Agreement and
specific schedules which describe the terms of any specific items to be leased
pursuant to such schedule, the sole original schedule shall constitute the sole
original Lease, provided that the terms of the Master Lease Agreement and the
schedule make it clear that the sole original schedule is a separate lease for
"Chattel Paper" purposes under the UCC and that possession of such schedule
constitutes possession of "Chattel Paper" under the UCC;
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(d) Except as otherwise consented to by Agent in writing, the
aggregate amount of Leases with the same Lessee (or its Affiliates) is not in
excess of $250,000;
(e) The original amount and unpaid balance of each Lease shown
on Borrower's Books and Records and on any statement or schedule delivered to
Agent in connection therewith is the true and correct amount actually owed to
Borrower, no portion of which, except as specifically provided for in the Lease,
has been prepaid;
(f) The amount due under each Lease is not subject to, and the
terms of the Lease provide that the Lessee may not assert, any claim or
reduction, counterclaim, setoff, recoupment, or any other claim, allowance or
adjustment and no Lease has been re-negotiated, restructured or compromised
except as renewed in the ordinary course of business;
(g) All security agreements, title retention instruments and
other documents and instruments which are security for any Lease, and/or each
Lease, contain a correct and sufficient description of the Leased Property
covered thereby and all security interests granted therein to Borrower (either
directly or as assignee), if applicable, have been properly perfected and
assigned to Agent for the benefit of Lenders;
(h) Borrower has not and will not enter into any agreement
with a Lessee of any Leased Property which provides, directly or indirectly, for
the crediting of any obligation or liability of Borrower to such Lessee against
future rentals accruing under the Lease;
(i) Each item of Leased Property has been delivered to and, in
all instances, accepted by the Lessee and is in good condition, ordinary wear
and tear excepted, has not been returned, rejected, lost, stolen, destroyed or
damaged and has not been removed from service;
(j) Each Lease has been duly executed by Borrower and each
Lessee, is a valid, legal and binding obligation of Borrower, and such Lessee,
and is enforceable against Borrower and such Lessee in accordance with its
terms. Borrower is the sole owner of each of the Leases and has the authority to
assign all of its right, title and interest therein upon the terms herein set
forth;
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(k) Each of the Leases and all Leased Property which is the
subject matter thereof at the time of its assignment to Agent for the benefit of
Lenders and at all times thereafter, will be free and clear of any and all
assignments, options, rights, or other Liens whatsoever except Lenders' and/or
Agent's and residual sharing arrangements;
(l) Borrower has made its usual credit investigation of each
Lessee and has determined that the credit is satisfactory;
(m) All costs, fees, and expenses incurred in making and
closing each of the Leases has been paid and each Lease is and will be current
at the time of the assignment thereof to Lenders. No default exists or event
exists which with the giving of notice or the passage of time or both, will
result in the occurrence of a default of any obligation, as expressed in any
Lease;
(n) All rentals, fees, costs, expenses and charges paid or
payable by the Lessee under any Lease, including without limitation, any
brokerage and other fees paid to Borrower do not violate any laws relating to
the maximum fees, costs, expenses or charges that can be charged in any state in
which any Leased Property is located or in which the corresponding Lessee is
located, or in which a transaction was consummated, or in any other state which
may have jurisdiction with respect to any such Leased Property, Lease or Lessee;
(o) Agent, for the benefit of Lenders, has a first perfected
lien and security interest in the Collateral (including without limitation each
Lease and the Leased Property) subject to no other Lien. Borrower has taken and
in the future, shall take all steps necessary to maintain Agent's first
perfected lien and security interest in the Collateral, including, if required,
perfecting Borrower's security interest (in the event the Lease is not a "true
lease") through filing financing statements, amendments thereto, or assignments
and/or continuations thereof and recording of the documentation necessary to
perfect Borrower's lien;
(p) For each Lease, with a Lease Receivable in excess of
$16,000, Borrower has either (i) listed Agent for the benefit of Lenders, as
assignee on the UCC-1 Financing Statement so filed, or (ii) after Borrower has
received acknowledgment copies of UCC-1s, deliver to Agent executed UCC-3
Financing Statements naming Agent for the benefit of Lenders as assignee of
Borrower's security interest. Agent agrees not to file the UCC-3 Financing
Statements until such time as an Event of Default or Unmatured Event of Default
occurs under this Agreement, and Agent will return such UCC-3 Financing
Statements to Borrower if such Leases are ultimately sold or refinanced on a
permanent basis with another lender;
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(q) Each Lease is valid and enforceable and presents the
undisputed obligation of the Lessee named therein and is not more than sixty-one
(61) days contractually past due;
(r) Each item of Leased Property leased pursuant to a Lease
with a Lease Receivable in excess of 20,000 has been insured in the ordinary
course of Borrower's or the corresponding Lessee's business;
(s) Borrower has not received notice of a bankruptcy,
receivership, reorganization or insolvency of any Lessee;
(t) No Lessee is a Subsidiary or Affiliate of Borrower, or is
an officer or employee of Borrower;
(u) Each Lease contains a provision whereby the Lessee agrees
not to assert any claim or reduction, counterclaim, setoff, recoupment or any
other claim, allowance or adjustment against any assignee of Borrower; and
(v) The Lessee is not otherwise in default under the
corresponding Lease.
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants that until all of Borrower's Obligations under or in
connection with this Agreement to Lenders and Agent are paid and satisfied in
full and the Revolving Credit has been terminated:
6.1 Payment of Taxes and Claims: Borrower shall pay, before they become
delinquent, all taxes, assessments and governmental charges or levies imposed
upon it or upon Borrower's Property, except for those taxes being contested in
good faith with due diligence by appropriate proceedings for which appropriate
reserves have been maintained pursuant to GAAP.
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6.2 Maintenance of Properties and Corporate Existence:
(a) Property Insurance - Borrower shall maintain or caused to
be maintained insurance on the Collateral against fire, flood, casualty and such
other hazards in such amounts, with such deductibles and with such insurers as
are customarily used by companies operating in the same industry as Borrower or
the corresponding Lessee. At or prior to Closing, Borrower shall furnish Agent
with copies of original insurance binders certified as true and correct and
being in full force and effect as of the Closing Date or such other evidence of
insurance as Agent may require. In the event Borrower fails to procure or cause
to be procured any such insurance or to timely pay or cause to be paid the
premium(s) on any such insurance, Agent (on behalf of Lenders) may do so for
Borrower, but Borrower shall continue to be liable for the same. The policies of
all such casualty insurance shall contain standard Lender's Loss Payable Clauses
issued in favor of Agent (on behalf of Lenders) under which all losses
thereunder shall be paid to Agent (on behalf of Lenders) as Agent's interest may
appear. Such policies shall expressly provide that the requisite insurance
cannot be altered or canceled without thirty (30) days prior written notice to
Agent and shall insure Lenders notwithstanding the act or neglect of Borrower.
Borrower hereby appoints Agent as Borrower's attorney-in-fact, exercisable at
Agent's option to endorse any check which may be payable to Borrower in order to
collect the proceeds of such insurance and any amount or amounts collected by
Agent pursuant to the provisions of this paragraph may be applied by Agent to
Borrower's Obligations. Borrower further covenants that all insurance premiums
owing under its current casualty policy have been paid. Borrower also agrees to
notify Agent, promptly, upon Borrower's receipt of a notice of termination,
cancellation, or non-renewal from its insurance company of any such policy.
(b) Public and Products Liability Insurance - Borrower shall
maintain, and shall deliver to Agent upon Agent's request evidence of, public
liability, products liability and business interruption insurance in such
amounts as is customary for companies in the same or similar businesses located
in the same or similar area.
(c) Financial Records - Borrower shall keep current and
accurate books of records and accounts in which full and correct entries will be
made of all of its business transactions, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP. Borrower shall not change its respective fiscal year end date without
the prior written consent of Agent.
(d) Corporate Existence and Rights - Borrower shall do (or
cause to be done) all things necessary to preserve and keep in full force and
effect its existence, good standing, rights and franchises.
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(e) Compliance with Laws - Borrower shall be in compliance
with any and all laws, ordinances, governmental rules and regulations, and court
or administrative orders or decrees to which it is subject, whether federal,
state or local, (including without limitation environmental or
environmental-related laws, statutes, ordinances, rules, regulations and notices
and all applicable consumer sale and/or leasing laws and regulations), and shall
obtain and maintain any and all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its Property or to the
conduct of its businesses, which violation or failure to obtain may materially
adversely affect the business, Property, financial conditions or prospects of
Borrower.
6.3 Business Conducted: Borrower shall continue in the business
presently operated by it using its best efforts to maintain its customers and
goodwill. Borrower shall not engage, directly or indirectly, in any material
respect in any line of business substantially different from the businesses
conducted by it immediately prior to the Closing Date, unless such line of
business is reasonably related to such business so conducted prior to the
Closing Date.
6.4 Litigation: Borrower shall give prompt notice to Agent of any
litigation claiming in excess of $100,000 from Borrower, or which may otherwise
have a material adverse effect on the business, financial condition, Property or
prospects of Borrower.
6.5 Taxes:
(a) Borrower shall pay all taxes (other than taxes based upon
or measured by any Lender's income or revenues), if any, in connection with the
Loans and/or the recording of any Lien Documents. The obligations of Borrower
under this section shall survive the payment of Borrower's Obligations under
this Agreement and the termination of this Agreement. Borrower shall cause to be
paid all taxes incurred in connection with any of the Leases or the acquisition,
sale or lease of any of the Leased Property.
6.6 Bank Accounts: Borrower shall maintain its major depository and
disbursement account(s) with
Agent.
6.7 Warranties for Future Advances: Each request by Borrower for an
Advance under the Credit Facility in any form following the Closing Date shall
constitute an automatic representation and warranty by Borrower to the effect
that:
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(a) There has been no material adverse change in Borrower's
operations or condition (financial or otherwise) since the date of delivery of
Borrower's most recent Financial Statements.
(b) No Event of Default which has not been cured or waived, or
Unmatured Event of Default, then exists;
(c) Each Advance is within and complies with the terms and
conditions of this Agreement including without limitation the notice provisions
contained in Section 2.3 hereof;
(d) No Lien, including, without limitation, any federal tax
Lien, has been imposed on Borrower which may, in any way, take priority over
Agent's and/or Lenders' security interests in or Liens on any Collateral; and
(e) Each representation and warranty set forth in Section 5 of
this Agreement is then true and correct in all material respects.
6.8 Financial Covenants: Borrower shall maintain and comply with the
following financial covenants as reflected on and computed from their Financial
Statements:
(a) Adjusted Debt to Tangible Net Worth Ratio: Borrower shall
have and maintain at all times an Adjusted Debt to Tangible Net Worth Ratio on a
consolidated basis, measured quarterly as of the last day of each fiscal quarter
during each fiscal year, of not more than 5.5 to 1.
(b) Tangible Net Worth: Borrower shall have and maintain a
Tangible Net Worth of not less than $8,000,000 as of June 30, 1998. As of the
last day of each fiscal quarter thereafter, Borrower shall have a Tangible Net
Worth of not less than the amount required hereby for the immediately preceding
fiscal quarter plus an amount equal to 75% of the Borrower's Net Income for the
immediately preceding fiscal quarter (for the purposes of such step-up, Net
Income shall never be less than zero). The amount of Tangible Net Worth required
to be maintained by Borrower pursuant to this Section 6.8(b) shall be adjusted
upon receipt by Borrower of the net proceeds of any capital contribution by an
amount to be agreed upon by Borrower and Agent.
(c) Fixed Charge Coverage Ratio: Borrower shall have and
maintain as of the end of each fiscal quarter, based on financial information
for the twelve-month period ending as of the end of such fiscal quarter, on a
consolidated basis, a Fixed Charge Coverage Ratio of not less than 1.50 to 1.
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6.9 Change of Ownership Interests/Management: Resource America, Inc.
and/or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall at all times own 51% of the aggregate voting
interests of all classes of capital stock of Borrower entitled to vote generally
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall at all times remain as Chief Executive Officer of
Borrower and have a substantial equity interest (including options) in Borrower.
6.10 Financial and Business Information: Borrower shall deliver to
Agent and each Lender the following:
(a) Financial Statements and Collateral Reports: such data,
reports, statements and information, financial or otherwise, as Agent may
reasonably request, including, without limitation:
(i) within one hundred twenty (120) days after the end
of each fiscal year of Borrower, Financial Statements of Borrower for such year
including the balance sheet of Borrower as at the end of such fiscal year and a
statement of cash flows and income statement for such fiscal year, all on a
consolidated and consolidating basis, setting forth in the consolidated
statements in comparative form, the corresponding figures as at the end of and
for the previous fiscal year, all in reasonable detail, including all supporting
schedules, and audited and certified by independent public accountants of
recognized standing, selected by Borrower and satisfactory to the Agent (▇▇▇▇▇
▇▇▇▇▇▇▇▇ being deemed satisfactory to Agent), to have been prepared in
accordance with GAAP, and such independent public accountants shall also provide
an unqualified opinion that the Financial Statements present fairly the
Borrower's financial condition. Such independent accountants shall also provide
a statement certifying that nothing has come to their attention to cause them to
believe that calculations contained in the compliance certificate are
inaccurate.
(ii) within fifteen (15) days of the end of each
calendar month, Borrower's Lease receivables aging report, covenant compliance
certificate and such other reports as Agent reasonably deems necessary,
certified by Borrower's chief financial officer or other officer acceptable to
Agent as true and correct, all in form and substance satisfactory to Agent;
(iii) within fifteen (15) days after the end of each
month, Borrower's internally prepared monthly consolidated and consolidating
Financial Statements, including balance sheet, income statement and statements
of cash flows.
(b) Notice of Event of Default - promptly upon becoming aware
of the existence of any condition or event which constitutes a default or an
Event of Default or Unmatured Event of Default under this Agreement, a written
notice specifying the nature and period of existence thereof and what action
Borrower is taking (and proposes to take) with respect thereto;
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(c) Notice of Claimed Default - promptly upon receipt by
Borrower, notice of default, oral or written, given to Borrower by any creditor
for borrowed money in excess of $50,000;
(d) Securities and Other Reports - if Borrower or any
Affiliate shall be required to file reports with the Securities and Exchange
Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended, promptly upon its becoming available, one copy of each
financial statement, report, notice or proxy statement sent by Borrower or such
Affiliate to stockholders generally, and, a copy of each regular or periodic
report, and any registration statement, or prospectus in respect thereof, filed
by Borrower with any securities exchange or with federal or state securities and
exchange commissions or any successor agency.
6.11 Officers' Certificates: Along with the set of Financial Statements
delivered to Agent and each Lender at the end of each fiscal quarter and fiscal
year pursuant to Section 6.9(a) hereof, deliver to Agent and each Lender a
certificate (in the form of Exhibit "6.11" attached hereto and made a part
hereof) from the chief financial officer or other officer of Borrower acceptable
to Agent (and as to certificates accompanying the annual statements of Borrower,
also certified by Borrower's independent certified public accountant) setting
forth:
(a) Covenant Compliance - the information (including detailed
calculations) required in order to establish whether Borrower is in compliance
with the requirements of Sections 6.8 as of the end of the period covered by the
financial statements then being furnished (and any exhibits appended thereto)
under Section 6.10; and
(b) Event of Default - that the signer, in his capacity as an
officer of Borrower, has reviewed the relevant terms of this Agreement, and has
made (or caused to be made under his supervision) a review of the transactions
and conditions of Borrower from the beginning of the accounting period covered
by the Financial Statements being delivered therewith to the date of the
certificate, and that such review has not disclosed the existence during such
period of any condition or event which constitutes an Event of Default or
Unmatured Event of Default or if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Borrower
has taken or proposes to take with respect thereto.
6.12 Inspection: Borrower will permit any of Agent's officers or other
representatives to visit and inspect any of Borrower's locations or where any
Collateral is kept during regular business hours, to examine and audit all of
Borrower's books of account, records, reports and other papers, to make copies
and extracts therefrom and to discuss its affairs, finances and accounts with
its officers, employees and independent certified public accountants. Agent will
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notify Lenders within a reasonable time of each scheduled field examination and
to the extent reasonably practicable, representatives of each Lender may
accompany Agent during each such field examination. Prior to the occurrence of
an Event of Default, up to two (2) such (and after the occurrence of an Event of
Default, all such) examinations shall be at Borrower's expense at the standard
rates charged by the Agent or an outside firm engaged to perform such services,
for such activities (plus the Agent's or such outside firm's out-of-pocket
expenses).
6.13 Tax Returns and Reports: At Agent's or any Lender's request from
time to time, Borrower shall promptly furnish Agent and each Lender with copies
of the annual federal and state income tax returns of Borrower.
6.14 Material Adverse Developments: Borrower agrees that immediately
upon becoming aware of any development or other information which would
reasonably be expected to materially and adversely affect its businesses,
financial condition, Property, prospects or its ability to perform under this
Agreement, it shall give to Agent telephonic or telegraphic notice specifying
the nature of such development or information and such anticipated effect. In
addition, such verbal communication shall be confirmed by written notice thereof
to Agent on the next business day after such verbal notice is given.
6.15 Places of Business: Borrower shall give thirty (30) days prior
written notice to Agent of any changes in the location of any of its respective
places of business, of the places where Books and Records are kept, or the
establishment of any new, or the discontinuance of any existing place of
business.
6.16 Sale of Collateral: Borrower shall ▇▇▇▇ its Books and Records to
indicate Agent's security interest in the Collateral for the benefit of Lenders,
including the Leases and Leased Property and, unless Agent consents otherwise in
writing, Borrower shall retain title at all times to the Leased Property;
provided however, that so long as no Event of Default or Unmatured Event of
Default has occurred, Borrower may, subject to the prepayment provisions set
forth herein, sell (i) Leases and Leased Property pursuant to Securitization
Transactions or other Nonrecourse Financing of Borrower. So long as no Event of
Default or Unmatured Event of Default has occurred, upon receipt of the proceeds
(if required) from the sale of such Leases and/or Leased Property, Agent shall
execute such documentation as is reasonably necessary to release its security
interest in such Leases and/or Leased Property.
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SECTION 7. BORROWER'S NEGATIVE COVENANTS:
Borrower covenants that until all of Borrower's Obligations under or in
connection with this Agreement to Lenders are paid and satisfied in full and the
Credit Facility has been terminated, that:
7.1 Merger, Consolidation, Dissolution or Liquidation:
(a) Borrower shall not sell, lease, license, transfer or
otherwise dispose of more than 10% of Borrower's aggregate assets during any 12
consecutive month period except in the ordinary course or ordinary operation of
Borrower's business and in Securitization Transactions or other non-recourse
financing.
(b) Borrower shall not enter into any merger, consolidation,
reorganization or recapitalization or acquire all or substantially all of the
assets of any other Person or entity except for a merger, consolidation or
acquisition in which properties and assets of Borrower are transferred to or
combined with, as a single entity, any one Person, so long as (A) no Event of
Default or Unmatured Event of Default has occurred hereunder and that after
giving effect to such merger, consolidation or acquisition, no Event of Default
or Unmatured Event of Default shall have occurred, and (B) Borrower shall be the
surviving corporation.
7.2 Liens and Encumbrances: Borrower shall not: (i) execute a negative
pledge agreement with any Person covering any of the Collateral, or (ii) cause
or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the Collateral, whether now owned or
hereafter acquired, to be subject to a Lien;
7.3 Negative Pledge: Borrower shall not pledge, grant or permit any
Lien to exist on the common stock of its Subsidiaries nor on any Leases or
Leased Property (except those liens and assignments granted to Agent for the
benefit of Lenders).
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7.4 Transactions With Affiliates or Subsidiaries:
(a) Borrower shall not enter into any transaction with any
Subsidiary or other Affiliate including, without limitation, the purchase, sale,
lease or exchange of Property, or the loaning or giving of funds to any
Affiliate or any Subsidiary (other than a sale to a special purpose Subsidiary
in connection with a Securitization Transaction or other non-recourse sale),
unless (i) such Subsidiary or Affiliate is engaged in a business substantially
related to the business conducted by Borrower and the transaction is in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon terms substantially the same and no less favorable to Borrower
as it would obtain in a comparable arm's-length transactions with any Person not
an Affiliate or a Subsidiary, and (ii) so long as such transaction is not
otherwise prohibited hereunder.
(b) Subject in any event to the limitations of Section 7.4(a)
above, Borrower shall not create or acquire any Subsidiary unless such
Subsidiary engages in a business substantially related to the business of
Borrower as conducted immediately prior to the Closing Date.
7.5 Guarantees: Excepting the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection, Borrower shall not
become or be liable, directly or indirectly, primary or secondary, matured or
contingent, in any manner, whether as guarantor, surety, accommodation maker, or
otherwise, for the existing or future indebtedness of any kind of any Person.
7.6 Indebtedness: Borrower shall not incur or assume any indebtedness
for money borrowed or become a surety, guarantor of, or otherwise responsible or
liable in any manner with respect to, directly or indirectly, the indebtedness
of any Person except for: (i) Subordinated Indebtedness; (ii) trade debt
incurred in the ordinary course of Borrower's business; (iii) Non-Recourse Debt;
and (iv) unsecured intercompany Indebtedness to Affiliates to the extent the
outstanding principal balance thereof is at all times less than three (3) times
the then outstanding principal amount of Borrower's Subordinated Indebtedness.
7.7 Use of Lenders' Name: Borrower shall not use any Lender's name (or
the name of any of any Lender's Affiliates) or Agent's name in connection with
any of its business operations except to identify the existence of the Credit
Facility and the names of the Lenders and Agent in the ordinary course of
Borrower's business. Nothing herein contained is intended to permit or authorize
Borrower to make any contract on behalf of any Lender or Agent.
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SECTION 8. DEFAULT
8.1 Events of Default: Each of the following events shall constitute an
event of default ("Event of Default") and Agent shall thereupon have the option,
and the SuperMajority Lenders shall have the right to cause Agent, to declare
the Obligations immediately due and payable, all without demand, notice,
presentment or protest or further action of any kind (it also being understood
that the occurrence of any of the events or conditions set forth in
subparagraphs (j), (k) or (l) shall automatically cause an acceleration of the
Obligations):
(a) Payments - if Borrower fails to make any payment of
principal or interest under the Credit Facility within two days after Agent has
given notice that such payment was due; or
(b) Other Charges - if Borrower fails to pay any other
charges, fees, Expenses or other monetary obligations owing to any Lender or
Agent arising out of or incurred in connection with this Agreement within two
days after Agent has given notice that such payment is due and payable; or
(c) Particular Covenant Defaults - if Borrower fails to
perform, comply with or observe any covenant or undertaking contained in this
Agreement, provided, however, that in the case of Borrower's failure to perform,
comply with or observe the covenants contained in Sections 6.1, 6.2, 6.5, 6.10
or 6.11 ("Curable Covenant"), Borrower shall have five (5) days from the date on
which Borrower became aware or should have become aware of its failure to
perform, comply with or observe any such Curable Covenant to cure such
nonperformance or compliance to the satisfaction of Agent; or
(d) Financial Information - if any statement, report,
financial statement, or certificate made or delivered by Borrower or any of its
officers, employees or agents, to Agent or any Lender, is not true and correct,
in all material respects, when made; or
(e) Uninsured Loss - if there shall occur any uninsured damage
to or loss, theft, or destruction in excess of $100,000 with respect to any
portion of any Collateral; or
(f) Warranties or Representations - if any warranty,
representation or other statement by or on behalf of Borrower or any Guarantor
or pledgor contained in or pursuant to this Agreement, or in any document,
agreement or instrument furnished in compliance with, relating to, or in
reference to this Agreement, is false, erroneous, or misleading in any material
respect when made; or
(g) Agreements with Others - if Borrower shall default beyond
any grace period under any agreement with any creditor for borrowed money or in
connection with any Securitization Transaction, each in an amount equal to or
greater than $250,000 and (i) such default consists of the failure to pay any
principal, premium or interest with respect to such indebtedness or (ii) such
default consists of the failure to perform any covenant or agreement with
respect to such indebtedness, if the effect of such default is to cause
Borrower's obligations which are the subject thereof to become due prior to its
maturity date or prior to its regularly scheduled date of payment or would
entitle such creditor to accelerate such obligations; or
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(h) Other Agreements with Lenders - if Borrower breaches or
violates the terms of, or if a default or an Event of Default, occurs under, any
other existing or future agreement (related or unrelated) between or among
Borrower and Agent or any Lender or all Lenders, except with respect to
Non-Recourse Debt; or
(i) Judgments - if any final judgment for the payment of money
in excess of $250,000 which is not fully and unconditionally covered by
insurance shall be rendered; or
(j) Assignment for Benefit of Creditors, etc. - if Borrower
makes or proposes an assignment for the benefit of creditors generally, offers a
composition or extension to creditors, or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter owned or conducted by
Borrower which might materially and adversely affect Borrower; or
(k) Bankruptcy, Dissolution, etc. - upon the commencement of
any action for the dissolution or liquidation of Borrower, or the commencement
of any proceeding to avoid any transaction entered into by Borrower, or the
commencement of any case or proceeding for reorganization or liquidation of
Borrower's debts under the Bankruptcy Code or any other state or federal law,
now or hereafter enacted for the relief of debtors, whether instituted by or
against Borrower; provided, however, that Borrower shall have sixty (60) days to
obtain the dismissal or discharge of involuntary proceedings filed against it,
it being understood that during such sixty (60) day period, no Lender shall be
obligated to make Advances hereunder and Agent may seek adequate protection in
any bankruptcy proceeding; or
(l) Receiver - upon the appointment of a receiver, liquidator,
custodian, trustee or similar official or fiduciary for Borrower or for any of
Borrower's Property; or
(m) Execution Process, Seizure, etc. - the issuance of any
execution or distraint process against Borrower, or any Property of Borrower is
seized by any governmental entity, federal, state or local; or
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(n) Termination of Business - if Borrower ceases any material
portion of its business operations as presently conducted; or
(o) Pension Benefits, etc. - if Borrower fails to comply with
ERISA, so that grounds exist to permit the appointment of a Trustee under ERISA
to administer Borrower's employee plans or to allow the pension benefit
guarantee corporation to institute a proceeding to appoint a trustee to
administer such plan(s), or to permit the entry of a Lien to secure any
deficiency or claim; or
(p) Investigations - any indication or evidence received by
Agent or any Lender that reasonably leads it to believe Borrower may have
directly or indirectly been engaged in any type of activity which, would be
reasonably likely to result in the forfeiture of any Property of Borrower to any
governmental entity, federal, state or local; or
(q) Guarantor Default - Any Guarantor shall default under,
terminate, or disclaim liability under its Guaranty Agreement; or
(r) Stock Pledgor Default - Resource Leasing, Inc. or Resource
America, Inc. shall, default under their respective Stock Pledge Agreement; or
(s) Default under Subordination Agreement - Resource Leasing,
Inc. or Borrower shall default under the terms of the Subordination Agreement.
8.2 Cure - Nothing contained in this Agreement or the Loan Documents
shall be deemed to compel Agent and/or Lenders to accept a cure of any Event of
Default hereunder.
8.3 Rights and Remedies on Default:
(a) In addition to all other rights, options and remedies
granted or available to Agent or Lenders under this Agreement or the Loan
Documents, or otherwise available at law or in equity, upon or at any time after
the occurrence and during the continuance of an Event of Default or Unmatured
Event of Default, Agent may, in its discretion, and the SuperMajority Lenders
shall have the right to cause Agent to, withhold or cease making Advances under
the Credit Facility.
(b) In addition to all other rights, options and remedies
granted or available to Agent under this Agreement or the Loan Documents (each
of which is also then exercisable by Agent), Agent may, in its discretion, and
the SuperMajority Lenders shall have the right to cause Agent to, upon or at any
time after the occurrence and during the continuance of an Event of Default,
terminate the Credit Facility.
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(c) In addition to all other rights, options and remedies
granted or available to Agent under this Agreement or the Loan Documents (each
of which is also then exercisable by Agent), Agent may, upon or at any time
after the occurrence of an Event of Default, exercise all rights under the UCC
and any other applicable law or in equity, and under all Loan Documents
permitted to be exercised after the occurrence of an Event of Default, including
the following rights and remedies (which list is given by way of example and is
not intended to be an exhaustive list of all such rights and remedies):
(i) The right to take possession of, and notify all
Lessees of the Agent's and Lenders' security interest in the Collateral and
require payment under the Leases to be made directly to Agent for the benefit of
Lenders and Agent may, in its own name or in the name of Borrower, exercise all
rights of lessor under the Leases and collect, ▇▇▇ for and receive payment on
all Leases, and settle, compromise and adjust the same on any terms as may be
satisfactory to Agent, in its sole and absolute discretion for any reason or
without reason and Agent may do all of the foregoing with or without judicial
process (including without limitation notifying the United States postal
authorities to redirect mail addressed to Borrower to an address designated by
Agent); or
(ii) By its own means or with judicial assistance, subject
to the rights of the Lessees, enter Borrower's premises or location of
Collateral and take possession of the Collateral, or render it unusable, or
dispose of the Collateral on such premises in compliance with subsection (e)
below, without any liability for rent, storage, utilities or other sums, and
Borrower shall not resist or interfere with such action; or
(iii) Require Borrower, at Borrower's sole expense,
subject to the rights of the Lessees, to assemble all or any part of the
Collateral and make it available to Agent at any place designated by Agent; or
(iv) The right to reduce or modify the Maximum Credit
Limit, Borrowing Base or any portion thereof or the advance rates or to modify
the terms and conditions upon which Agent, on behalf of Lenders, may be willing
to consider making Advances under the Credit Facility or to take additional
reserves in the Borrowing Base for any reason.
(e) Borrower hereby agrees that a notice received by it at
least five (5) days before the time of any intended public sale or of the time
after which any private sale or other disposition of the Collateral is to be
made, shall be deemed to be reasonable notice of such sale or other disposition.
If permitted by applicable law, any Collateral which threatens to speedily
decline in value or which is sold on a recognized market may be sold immediately
by Agent without prior notice to Borrower. Borrower covenants and agrees not to
interfere with or impose any obstacle to Agent's exercise of its rights and
remedies with respect to the Collateral, after the occurrence of an Event of
Default hereunder.
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8.4 Nature of Remedies: All rights and remedies granted Agent or
Lenders hereunder and under the Loan Documents, or otherwise available at law or
in equity, shall be deemed concurrent and cumulative, and not alternative
remedies, and Agent may proceed with any number of remedies at the same time
until all Obligations under or in connection with this Agreement are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and Agent, upon or at any time after the
occurrence of an Event of Default, may proceed against Borrower, at any time,
under any agreement, with any available remedy and in any order.
8.5 Set-Off: If any bank account of Borrower with Agent or any Lender
or any participant is attached or otherwise liened or levied upon by any third
party, Agent or such Lender, as applicable, (and such participant) as agent for
Lenders shall have and be deemed to have, without notice to Borrower, the
immediate right of set-off and may apply the funds or amount thus set-off
against any of Borrower's Obligations hereunder.
SECTION 9. AGENT
As between the Agent, on one hand, and the Lenders, on the other hand,
the Agent and each of the Lenders, who are now or shall become parties to this
Agreement, agree as follows (with the consent and approval of Borrower):
9.1 Appointment and Authorization. Each Lender, and each subsequent
holder of any of the Revolving Credit Notes or Term Notes by its acceptance
thereof, hereby irrevocably appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. Except as may be otherwise expressly provided
herein, Borrower is hereby authorized by the Lenders to deal solely with the
Agent in all transactions which affect the Lenders under this Agreement and the
Loan Documents. Provided, however, nothing herein shall prohibit any Lender from
communicating directly with Borrower concerning any matters related to the Loans
or Loan Documents. The rights, privileges and remedies accorded to the Agent
hereunder shall be exercised by the Agent on behalf of all of the Lenders.
9.2 General Immunity. Subject to the provisions of this Agreement, the
Agent will handle all transactions relating to the Loans and all other
Obligations, including, without limitation, all transactions with respect to
this Agreement, the Loan Documents and all related documents in accordance with
their usual banking practices. In performing its duties as Agent hereunder, the
Agent will take the same care as it takes in connection with loans in which it
alone is interested. However, neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them hereunder or in connection herewith except for its or
their own gross negligence or willful misconduct.
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9.3 Consultation with Counsel. The Agent may consult with legal counsel
and any other professional advisors or consultants deemed necessary or
appropriate and selected by Agent and shall not be liable for any action taken
or suffered in good faith by it in accordance with the advice of such counsel.
9.4 Documents. The Agent shall not be under a duty to examine into or
pass upon the effectiveness, genuineness or validity of this Agreement or any of
the Revolving Credit Notes, Term Notes, or any other instrument or document
furnished pursuant hereto or in connection herewith, and the Agent shall be
entitled to assume that the same are valid, effective and genuine and what they
purport to be. In addition, the Agent shall not be liable for failing to make
any inquiry concerning the accuracy, performance or observance of any of the
terms, provisions or conditions of such instrument or document.
9.5 Rights as a Bank. With respect to its applicable Pro Rata
Percentage of the Credit Facility, the Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. Subject to
the provisions of this Agreement, the Agent may accept deposits from, lend money
to, and generally engage in any kind of banking or trust business with Borrower
and its Affiliates as if it were not the Agent.
9.6 Responsibility of Agent. It is expressly understood and agreed that
the obligations of the Agent hereunder are only those expressly set forth in
this Agreement and that the Agent shall be entitled to assume that no Event of
Default and no Unmatured Event of Default has occurred and is continuing, unless
the Agent has actual knowledge of such fact. Except to the extent Agent is
required by the Lenders pursuant to the express terms hereof to take a specific
action, the Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
by, or with respect to taking or refraining from taking any action or actions
that it may be able to take under or in respect of, this Agreement and the Loan
Documents. The Agent shall not incur any liability under or in respect of this
Agreement and the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that either of them may do or refrain from doing in the reasonable
exercise of its judgment, or that may seem to them to be necessary or desirable
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under the circumstances. It is agreed among the Agent and the Lenders that the
Agent shall not have any responsibility to carry out field examinations or
otherwise examine the books and records or properties of Borrower, except as the
Agent, in its sole discretion, deems appropriate. The relationship between the
Agent and each Lender is and shall be that of agent and principal only and
nothing herein shall be construed to constitute the Agent a joint venturer with
any Lender, a trustee or fiduciary for any of the Lenders or for the holder of a
participation therein nor impose on the Agent duties and obligations other than
those set forth herein.
9.7 Collections and Disbursements.
(a) The Agent will have the right to collect and receive all
payments of the Obligations, together with all fees, charges and other amounts
due under this Agreement and the Loan Documents, and the Agent will remit to
each Lender according to applicable Pro Rata Percentages all such payments
actually received by Agent (subject to any required clearance procedures) on the
same Business Day of receipt thereof (but if such payments shall not have been
received by the Agent prior to 12:00 noon Eastern Time on such Business Day
then, on the next Business Day).
(b) On the Business Day for which notice is given Lenders by
Agent with respect to requested Advances (which notice shall state the date and
amount of such payment), each Lender shall remit to the Agent its Pro Rata
Percentage of the payment in respect to such Advance. The obligations of Lenders
hereunder are unconditional, not subject to set-off, and irrevocable and may not
be terminated at any time.
(c) If any such payment received by the Agent is rescinded,
determined to be unenforceable or invalid or is otherwise required to be
returned for any reason at any time, whether before or after termination of this
Agreement and the Loan Documents, each Lender will, upon written notice from the
Agent, promptly pay over to the Agent its Pro Rata Percentage of the amount so
rescinded, held unenforceable or invalid or required to be returned, together
with interest and other fees thereon if also required to be rescinded or
returned.
(d) All payments by the Agent and the Lenders to each other
hereunder shall be in immediately available funds. The Agent will at all times
maintain proper books of account and records reflecting the interest of each
Lender in the Credit Facility, in a manner customary to the Agent's keeping of
such records, which books and records shall be available for inspection by each
Lender at reasonable times during normal business hours, at such Lender's sole
expense. In the event that any Lender shall receive any payments in reduction of
the Obligations in an amount greater than its applicable Pro Rata Percentage in
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respect of indebtedness to the Lenders evidenced hereby (including, without
limitation amounts obtained by reason of setoffs), such Lender shall hold such
excess in trust for Agent (on behalf of all other Lenders) and shall promptly
remit to the Agent such excess amount so that the amounts received by each
Lender hereunder shall at all times be in accordance with its applicable Pro
Rata Percentage. To the extent necessary for each Lender's actual percentage of
all outstanding Loans to equal its applicable Pro Rata Percentage, the Lender
having a greater share of any payment(s) than its applicable Pro Rata Percentage
shall acquire a participation in the applicable outstanding balances of the Pro
Rata Shares of the other Lenders as determined by Agent.
9.8 Indemnification. The Lenders hereby each indemnify the Agent
ratably according to their respective Pro Rata Percentages, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement or any other Loan Document
or any action taken or omitted by the Agent under or related to this Agreement
or the other Loan Documents or the Loans, provided that no Lender shall be
liable to Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. Agent
shall have the right to deduct, from any amounts to be paid by Agent to any
Lender hereunder, any amounts owing to Agent by such Lender by virtue of this
paragraph. Provided all of the Obligations have been satisfied in full, if Agent
shall have received any sums from any of the Lenders pursuant to the terms of
this Section and the indemnified Agent receives additional payments from the
Collateral or elsewhere which could be used by such party pursuant to the terms
of this Agreement, the other Loan Documents, at law or in equity to satisfy the
liability, for which such party was indemnified, such additional payments shall
be applied against the liabilities for which such party was reimbursed and an
equal amount shall be reimbursed to the Lenders on a pro-rata basis based on the
respective amounts of their payments to the Agent made under this Section.
9.9 Expenses.
(a) All out-of-pocket costs and out-of-pocket expenses
incurred by Agent and not reimbursed on demand by Borrower, in connection with
the creation, amendment, administration, termination and enforcement of the
Loans (including, without limitation, field examination expenses, reasonable
counsel fees and expenditures to protect, preserve and defend Agent's and any
Lender's rights and interest under the Loan Documents) shall be shared and paid
on demand by Lenders pro rata, based on their applicable Pro Rata Percentage.
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(b) Agent may deduct from payments or distributions to be made
to Lenders such funds as may be necessary to pay or reimburse Agent for such
costs or expenses.
9.10 No Reliance. By execution of or joining in this Agreement, each
Lender acknowledges that it has entered into this Agreement and the Loan
Documents solely upon its own independent investigation and is not relying upon
any information supplied by or any representations made by Agent. Each Lender
shall continue to make its own analysis and evaluation of Borrower. Agent makes
no representation or warranty nor assumes any responsibility with respect to the
financial condition or Property of Borrower, any Lessee or any Collateral; the
accuracy, sufficiency or currency of any information concerning the financial
condition, prospects or results of operations of Borrower; or for sufficiency,
authenticity, legal effect, validity or enforceability of the Loan Documents.
Agent assumes no responsibility or liability with respect to the collectibility
of the Obligations or the performance by Borrower of any obligation under the
Loan Documents.
9.11 Reporting. During the term of this Agreement, Agent will promptly
furnish each Lender such financial statements and reports as any Lender may
reasonably request. Agent will notify Lenders within a reasonable period of time
(not to exceed ten (10) Business Days) after it receives actual knowledge of any
Event of Default under the Loan Documents.
9.12 Removal of Agent. The Agent may resign at any time upon giving
thirty (30) days prior written notice thereof to Lenders and Borrower. The Agent
may be removed as Agent hereunder upon the written direction of all Lenders
exclusive of the Agent upon the following: (i) willful misconduct in the
performance of Agent's duties or responsibilities under this Agreement; or (ii)
if a receiver, trustee or conservator is appointed for Agent or any state or
federal regulatory authority assumes management or control of Agent or if, under
applicable law, the administrative or discretionary duties and responsibilities
of Agent hereunder become controlled by or subject to the approval of any state
or federal regulatory authority. Upon any resignation or permitted removal of
Agent, the Lenders shall have the right to appoint a successor Agent by majority
vote of the other Lenders (based upon the percentages of the total Pro Rata
Shares of the Lenders other than the Lender which is the Agent). Upon the
acceptance of the appointment as a successor Agent hereunder by such successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all rights, powers, obligations and duties of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations hereunder.
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9.13 Action on Instructions of Lenders. With respect to any provision
of this Agreement, or any issue arising thereunder, concerning which the Agent
is authorized to act or withhold action by direction of one or more Lenders, the
Agent shall in all cases be fully protected in so acting, or in so refraining
from acting, hereunder in accordance with written instructions signed by the
requisite Lenders. Such instructions and any action taken or failure to act
pursuant thereto shall be binding on all Lenders and on all holders of the
Revolving Credit Notes and Term Notes.
9.14 Several Obligations. The obligation of each Lender is several, and
neither the Agent nor any other Lender shall be responsible for any obligation
or commitment hereunder of any other Lender.
9.15 Consent of Banks.
(a) Subject to this Section 9.15, Agent shall have the sole
and exclusive right to service, administer and monitor the Loans and the Loan
Documents, including without limitation, the right to exercise all rights,
remedies, privileges and options under the Loan Documents.
(b) Notwithstanding anything to the contrary contained in
subparagraph (a) above, Agent shall not, without the prior written consent of
all Lenders: (i) extend or renew the Current Term or, any payment date under the
Credit Facility, (ii) decrease any interest rate on the Credit Facility, (iii)
compromise or settle all or a portion of the Obligations, (iv) release any
obligor from the Obligations except in connection with termination of the Credit
Facility and full payment and satisfaction of all Obligations, (v) increase the
Borrowing Base advance rate, (vi) modify Section 9.15(b) or (c), or (vii)
increase the Maximum Credit Limit; provided however that Agent may increase the
Maximum Credit Limit by first offering the amount of any such increase to each
of the Lenders in accordance with their respective Pro Rata Percentage. To the
extent any Lender(s) may choose not to increase its/their respective Pro Rata
Shares by the amount attributable to its/their Pro Rata Percentage of such
increase, such amount will be offered to the other Lenders on such sharing basis
as Agent may reasonably establish. After each Lender choosing to increase its
Pro Rata Share has agreed to do so, and in conjunction with the modification of
this Agreement to reflect such increase executed by those Lenders sharing in the
increase of the Credit Facility, the Lenders' Pro Rata Percentages will be
adjusted accordingly and all Lenders (whether or not sharing in such increase)
shall be bound by such modification.
(c) Notwithstanding anything to the contrary contained in
subparagraph (a) above and subject to the terms of subparagraph (b) above, Agent
shall not, without the prior written consent of all Lenders: (i) enter into any
written amendment to any of the Loan Documents; (ii) waive Borrower's compliance
with the terms and conditions of the Loan Documents or any Event of Default
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hereunder or thereunder; (iii) consent to Borrower taking any action which, if
taken, would constitute an Event of Default under this Agreement or under any of
the Loan Documents; or (iv) release any Collateral other than Collateral which
Borrower seeks to have released from the Agent's lien (for the benefit of
Lenders) in the ordinary course of Borrower's business.
(d) After an acceleration of the Obligations, Agent shall have
the sole and exclusive right, with communication (to the extent reasonably
practicable under the circumstances) with all Lenders, to exercise or refrain
from exercising any and all rights, remedies, privileges and options under the
Loan Documents and available at law or in equity to protect and enforce the
rights of the Lenders and collect the Obligations, including, without
limitation, instituting and pursuing all legal actions against Borrower or to
collect the Obligations, or defending any and all actions brought by Borrower or
other Person; or incurring Expenses or otherwise making expenditures to protect
the Loans, the Collateral or Lenders' rights or remedies.
(e) To the extent Agent is required to obtain or otherwise
elects to seek the consent of the other or Lenders to an action Agent desires to
take, if Agent or any Lender fails to notify such Person, in writing, of its
consent or dissent to any request of Agent hereunder within seven (7) Business
Days of such Person's actual receipt of such request, the Person whose consent
is sought, shall be deemed to have given its consent thereto.
(f) No provision in Section 9 of this Agreement may be amended
without Agent's prior written consent.
9.16 Participations and Assignments: Borrower hereby acknowledges
and agrees that a Lender may at any time:
(a) grant participations in up to forty-nine percent (49%) (up
to 100% to an Affiliate of such Lender) of its Pro Rata Percentage and Pro Rata
Share or of its right, title and interest therein or in or to this Agreement
(collectively, "Participations") or to any other bank, lending institution or
other entity which the granting Lender reasonably determines has the requisite
sophistication to evaluate the merits and risks of investments in participations
("Participants"); provided, however, that: (i) all amounts payable by the
Borrower to each Lender hereunder shall be determined as if such Lender had not
granted such Participation; and (ii) any agreement pursuant to which any Lender
may grant a Participation: (A) shall provide that such Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provisions of this Agreement; (B) such
participation agreement may provide that such Lender will not agree to any
modification, amendment or waiver of this Agreement without the consent of the
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Participant if such amendment, modification or waiver would reduce the principal
of or rate of interest on the Loans, increase the amount of the Maximum Credit
Limit, postpone the date fixed for any scheduled payment of principal of or
interest on the Loans or release Collateral for the Loans, subject to Section
9.15 hereof; and (C) shall not relieve such Lender from its obligations, which
shall remain absolute, to make Advances hereunder; and
(b) assign all or any portion of its Pro Rata Share (together
with its rights and obligations with respect thereto), and its right, title and
interest therein or in and to this Agreement and the other Loan Documents to a
Lender or any affiliate of a Lender; or to any other bank or financial
institution, in each case with thirty (30) days prior written notice to Agent
and subject to the prior written consent of the Agent which consent shall not be
unreasonably withheld; provided however that (i) such assignment shall not
result in either the assigning or acquiring Lender having a Pro Rata Share of
less than $5,000,000 and (ii) the parties to such assignment shall execute such
assignment or other documents reasonably requested by Agent and Borrower shall
execute such replacement Revolving Credit Notes as may be requested by Agent,
and (iii) the parties to the assignment shall pay Agent a processing fee of
$2,500 in conjunction with such assignment. All Participations and assignments
hereunder shall be of the Pro Rata Percentage or Pro Rata Share of the Lender
making the assignment or granting the Participation. Notwithstanding the
foregoing or anything else contained in this Agreement or any of the other Loan
Documents, any Lender may assign or pledge all or any portion of its Pro Rata
Share (including, without limitation, its rights with respect thereto), and its
right, title and interest therein or in and to this Agreement and the other Loan
Documents to a Federal Reserve Bank in support of borrowings made by such Lender
from such Federal Reserve Bank.
SECTION 10. MISCELLANEOUS
10.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND
DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN
ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL
CONTINUE IN FULL FORCE AND EFFECT.
10.2 Integrated Agreement: The Revolving Credit Notes, the Term Notes,
the other Loan Documents, all related agreements, and this Agreement shall be
construed as integrated and complementary of each other, and as augmenting and
not restricting Lenders' and Agent's rights and remedies. If, after applying the
foregoing, an inconsistency still exists, the provisions of this Agreement shall
constitute an amendment thereto and shall control.
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10.3 Waiver:
(a) No omission or delay by Agent or Lenders in exercising any
right or power under this Agreement or any related agreements and documents will
impair such right or power or be construed to be a waiver of any default, or
Event of Default or an acquiescence therein, and any single or partial exercise
of any such right or power will not preclude other or further exercise thereof
or the exercise of any other right, and as to Borrower no waiver will be valid
unless in writing and signed by Agent and then only to the extent specified.
(b) Borrower releases and shall indemnify, defend and hold
harmless Agent and Lenders, and their respective officers, employees and agents,
of and from any claims, demands, liabilities, obligations, judgments, injuries,
losses, damages and costs and expenses (including, without limitation,
reasonable legal fees) resulting from (i) acts or conduct of Borrower or under,
pursuant or related to this Agreement and the other Loan Documents, (ii)
Borrower's breach or violation of any representation, warranty, covenant or
undertaking contained in this Agreement or the other Loan Documents, and (iii)
Borrower's failure to comply with any or all laws, statutes, ordinances,
governmental rules, regulations or standards, whether federal, state or local,
or court or administrative orders or decrees, (including without limitation
environmental laws, etc.) and all costs, expenses, fines, penalties or other
damages resulting therefrom, unless resulting solely from acts or conduct of
Lenders constituting willful misconduct or gross negligence.
10.4 Time: Whenever Borrower shall be required to make any payment, or
perform any act, on a day which is not a Business Day, such payment may be made,
or such act may be performed, on the next succeeding Business Day. Time is of
the essence in Borrower's performance under all provisions of this Agreement and
all related agreements and documents.
10.5 Expenses of Agent and Lenders: At Closing and from time to time
thereafter, Borrower will pay all reasonable expenses of Agent (and after the
occurrence of an Event of Default, all expenses of Lenders and Agent, or any of
them) on demand (including, without limitation, search costs, audit fees,
appraisal fees, environmental fees and the fees and expenses of legal counsel
for Agent and Lender(s), if applicable) relating to this Agreement, and all
related agreements and documents, including, without limitation, expenses
incurred in the analysis, negotiation, preparation, closing, administration and
enforcement of this Agreement and the other Loan Documents, the enforcement,
protection and defense of the rights of Agent and Lenders in and to the Loans
and Collateral or otherwise hereunder, and any expenses relating to extensions,
amendments, waivers or consents pursuant to the provisions hereof, or any
related agreements and documents or relating to agreements with other creditors,
or termination of this Agreement (collectively, the "Expenses").
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10.6 Brokerage: This transaction was brought about and entered into by
Agent, Lenders and Borrower acting as principals and without any brokers, agents
or finders being the effective procuring cause hereof. Borrower represents that
it has not committed Agent or any Lender to the payment of any brokerage fee,
commission or charge in connection with this transaction.
10.7 Notices:
(a) Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed given if delivered in person
or if sent by telecopy or by nationally recognized overnight courier, or via
first class, Certified or Registered mail, postage prepaid, as follows, unless
such address is changed by written notice hereunder:
If to Agent to: First Union National Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President
Telecopy No.: 215/786-7704
With copies to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, Esquire
Telecopy No.: 215/569-5522
If to Borrower to: Fidelity Leasing, Inc.
▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: 215/619-2830
With copies to: ▇▇▇▇▇▇▇ Abt, Esquire
Ledgewood Law Firm, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: 215/735-2513
If to Lenders: to the addresses set forth on Schedule A
(b) Any notice sent by Agent, any Lender or Borrower by any of
the above methods shall be deemed to be given when so received.
(c) Agent shall be fully entitled to rely upon any facsimile
transmission or other writing purported to be sent by any Authorized Officer
(whether requesting an Advance or otherwise) as being genuine and authorized.
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10.8 Headings: The headings of any paragraph or Section of this
Agreement are for convenience only and shall not be used to interpret any
provision of this Agreement.
10.9 Survival: All warranties, representations, and covenants made by
Borrower herein, or in any agreement referred to herein or on any certificate,
document or other instrument delivered by it or on its behalf under this
Agreement, shall be considered to have been relied upon by Agent and Lenders,
and shall survive the delivery to Lenders of the Notes, regardless of any
investigation made by Lenders or on their behalf. All statements in any such
certificate or other instrument prepared and/or delivered for the benefit of
Agent and any and all Lenders shall constitute warranties and representations by
Borrower hereunder. Except as otherwise expressly provided herein, all covenants
made by Borrower hereunder or under any other Loan Document shall be deemed
continuing until all Obligations under or in connection with this Agreement are
satisfied in full.
10.10 Successors and Assigns: This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties.
Borrower may not transfer, assign or delegate any of its duties or obligations
hereunder.
10.11 Counterparts: Two or more duplicate originals of this Agreement
may be signed by the parties, each of which shall constitute an original but all
of which together shall constitute one and the same instrument. This Agreement
may be executed in counterparts, all of which counterparts taken together shall
constitute one completed fully executed document.
10.12 Modification: No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed by Borrower,
Agent and the Lenders and except as provided in Section 9 hereof. Any
modification in accordance with the terms hereof shall be binding on all parties
hereto, whether or not each is a signatory thereto.
10.13 Signatories: Each individual signatory hereto represents and
warrants that he is duly authorized to execute this Agreement on behalf of his
principal and that he executes the Agreement in such capacity and not as a
party.
10.14 Third Parties: No rights are intended to be created hereunder, or
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of Borrower. Nothing contained in this
Agreement shall be construed as a delegation to Agent or any Lender of
Borrower's duty of performance, including, without limitation, Borrower's duties
under any Lease, account or contract with any other Person.
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10.15 Discharge of Taxes, Borrower's Obligations, Etc.: Agent, in its
sole discretion, shall have the right at any time, and from time to time, with
prior notice to Borrower, if Borrower fails to do so five (5) Business Days
after requested in writing to do so by Agent, to: (a) pay for the performance of
any of Borrower's obligations hereunder, and (b) discharge taxes or Liens, at
any time levied or placed on any of Borrower's Property in violation of this
Agreement unless Borrower is in good faith with due diligence by appropriate
proceedings contesting such taxes or Liens and maintaining proper reserves
therefor in accordance with GAAP. Expenses and advances shall be added to the
Revolving Credit, bear interest at the same rate applied to the Revolving
Credit, until reimbursed to Agent. Such payments and advances made by Agent
shall not be construed as a waiver by Agent or Lenders of an Event of Default
under this Agreement.
10.16 Most Favored Lenders: Borrower agrees to promptly notify Agent in
writing if any agreement for borrowed money to which Borrower is a party,
contains or is amended to contain, financial or performance covenants more
restrictive than those contained herein and upon Agent's request, Borrower
agrees to amend this Agreement accordingly so that covenants contained herein
are substantially the same as those contained in such other agreements for
borrowed money so long as such covenants remain applicable to Borrower pursuant
to such other agreements.
10.17 Consent to Jurisdiction: Borrower and each Lender hereby
irrevocably consents to the jurisdiction of the Courts of Common Pleas of
Philadelphia, Commonwealth of Pennsylvania or the United States District Court
for the Eastern District of Pennsylvania in any and all actions and proceedings
whether arising hereunder or under any other agreement or undertaking and
irrevocably agree to service of process by certified mail, return receipt
requested to the address of the appropriate party set forth herein.
10.18 Waiver of Jury Trial: EACH OF BORROWER, LENDERS AND AGENT HEREBY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY
LITIGATION COMMENCED BY OR AGAINST AGENT OR ANY LENDER OR LENDERS WITH RESPECT
TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS.
10.19 Information to Participant: Agent and each Lender may divulge to
any participant, co-lender or assignee or prospective participant, co-lender or
assignee it may obtain in the Credit Facility, or any portion thereof, all
information, and furnish to such Person copies of any reports, financial
statements, certificates, and documents obtained under any provision of this
Agreement, or related agreements and documents; provided, however that any
potential participant, co-lender or assignee agrees to hold in confidence all
confidential or proprietary information provided to them by Borrower, Agent or
such Lender except (a) to the extent that the production of such information is
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required pursuant to any statute, ordinance, regulation, rule or order or any
subpoena or any governmental inquiry or by reason of any bank regulation in
connection with any bank examination, and (b) such potential participant,
co-lender or assignee shall not be prohibited from disclosing any such
information to any of their agents, officers, employees, attorneys, accountants
or consultants who shall be informed of this provision.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement the day and year first above written.
FIDELITY LEASING, INC.
By:________________________________
Title:
Attest:____________________________
(Corporate Seal)
FIRST UNION NATIONAL BANK, as Agent and Lender
By:________________________________
Title:
EUROPEAN AMERICAN BANK, as Lender
By:________________________________
Title:
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SCHEDULE A
Pro Rata
Lenders Pro Rata Share Percentage
------- -------------- ----------
European American Bank $ 7,500,000 37.5%
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
First Union National Bank $12,500,000 62.5%
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President
Telecopy No.: 215/786-7704
Exhibit 2.3(b)(ii)
ASSIGNMENT AGREEMENT
Fidelity Leasing, Inc. (hereinafter "Assignor"), does hereby assign to
FIRST UNION NATIONAL BANK, as Agent, for the benefit of the Lenders (as defined
below) (hereinafter "Assignee"), its successors and assigns, all of the right,
title and interest of Assignor in and to (i) the Leases, as identified on the
Schedule "A" attached hereto and made a part hereof, the Leased Property which
is the subject matter of such Leases, and all proceeds thereof; and (ii) all of
the interest of Assignor as loss payee or beneficiary under any insurance
policies issued in connection with any Lease or any Leased Property which is the
subject matter of any Lease.
This Assignment is entered into and delivered in accordance with and is
subject to that certain Loan and Security Agreement dated July __, 1998 among
Assignor, Assignee and the lenders now or hereafter shown on the signature pages
thereof (collectively "Lenders") (hereinafter "Agreement"). Assignee shall have
the right to ▇▇▇ for, collect, and receive all payments due or to become due
under the Leases, in accordance with the Agreement, with power to enforce in its
own name or in Assignor's name any and all rights given to Assignor thereunder.
All capitalized terms not otherwise defined herein shall have the meaning set
forth in the Agreement.
This Assignment and the subject matter hereof, is hereby given as
security for all of Assignor's Obligations.
Delivered herewith are the sole originals of all Leases referred to on
Schedule "A" attached hereto and made a part hereof.
Assignor agrees that Assignee shall not assume any of Assignor's
obligations or liabilities to the lessee/renter under any Leases.
All of the representations and warranties contained in the Agreement
with respect to Assignor, the Leases and the Leased Property are true, correct
and complete as of the date of this Assignment and no Event of Default has
occurred under the Agreement.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed by its duly authorized officer this _____ day of _____________________,
19___.
FIDELITY LEASING, INC.
Attest:_____________________ By:___________________________
Title:________________________
- 2 -
Exhibit 2.1(e)
First Union National Bank, as Agent
Computation of Borrowing Base Availability
for the ________________, 19___ for
Fidelity Leasing, Inc.
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1. Total Eligible Lease Receivables
Currently Pledged to Agent $___________________
2. Additional Eligible Lease
Receivables Pledged to Agent
$________ Date:__________
$________ Date:__________ $___________________
3. Aggregate Sales Of Eligible
Lease Receivables To Date
During This Month
$________ Date:__________
$________ Date:__________ $___________________
4. Total Eligible Lease Receivables
Pledged To Agent (Line 1,
plus line 2, minus 3) $___________________
5. 80% of the sum of the gross
Lease Receivables balance
corresponding to Eligible Leases
pledged to Agent. $___________________
6. Aggregate Revolving Credit $___________________
Note Balances
7. Excess Of Total Eligible Lease
Receivables Over Revolving Credit
Note Balances (Line 5, minus line 6) $___________________
8. Maximum Availability $ 10,000,000
9. Availability Under Facility
(lesser of (i) line 8, minus
line 6 or (ii) line 7) $___________________
10. Amount Of Borrowing Request $___________________
11. Net Availability (Line 9, minus
line 10) $___________________
Borrower submits this computation pursuant to a certain Loan and Security
Agreement dated September 30, 1998 among Borrower, Agent and the Lenders now or
hereafter identified on the signature pages thereof, as amended from time to
time ("Loan Agreement") and certifies that all information contained herein and
representations and warranties made in the Loan Agreement are true and correct
as of the date hereof.
FIDELITY LEASING, INC.
DATE:_______________ BY:__________________________________