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EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
DATED AS OF AUGUST 24, 2001
BETWEEN
▇▇▇▇▇▇▇ BANK
AS LENDER
AND
GOLDEN EAGLE LEASING, INC.
AS BORROWER
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INDEX OF EXHIBITS AND SCHEDULES
Schedule A - Cash Management System
Disclosure Schedule (3.1(m)) - Open Credit Facilities
Disclosure Schedule (4.2) - Places of Business; Corporate Names
Disclosure Schedule (4.6) - Real Estate
Disclosure Schedule (4.7) - Stock; Affiliates
Disclosure Schedule (4.10) - Taxes
Disclosure Schedule (4.12) - ERISA
Disclosure Schedule (4.13) - Litigation
Disclosure Schedule (4.14) - Intellectual Property
Disclosure Schedule (4.16) - Environmental Matters
Disclosure Schedule (4.17) - Insurance
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Intentionally Blank
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Lease Certificate
Exhibit E - Intentionally Blank
Exhibit F - Form of Revolving Credit Note
Exhibit G - Intentionally Blank
Exhibit H Form of Compliance Certificate
Exhibit I - Form of Secretarial Certificate
Exhibit J - Form of Power of Attorney
Exhibit K - Intentionally Blank
Exhibit L - Form of Trust Agreement
Exhibit M - Intentionally Blank
Exhibit N - Form of Guaranty
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This LOAN AND SECURITY AGREEMENT is dated as of August __, 2001 and agreed to by
and between GOLDEN EAGLE LEASING, INC., an Arizona corporation ("Borrower"), any
other Credit Party executing this Agreement, and ▇▇▇▇▇▇▇ BANK, a federally
chartered savings bank ("Lender").
RECITALS
A. The purpose of this Agreement is to provide to Borrower revolving
credit loans (the "Loan") having the following general description:
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
REVOLVING CREDIT LOAN
Maximum Amount: $10,000,000
Term: Expires on August __, 2002
Revolving Credit Rate: The Wall Street Journal Prime Rate plus one and three quarters percent
(1.75%) or 30 day LIBOR plus four hundred seventy (470) basis points
Borrowing Base: 65% of the net present value of Borrower's Eligible Lease Receivables.
The Loan described generally here is established and governed by the terms and
conditions set forth below in this Agreement and the other Loan Documents, and
if there is any conflict between this general description and the express terms
and conditions below or elsewhere in the Loan Documents, such other express
terms and conditions shall control.
B. Borrower desires to obtain the Loan and other financial accommodations
from Lender and Lender is willing to provide the Loan and accommodations all in
accordance with the terms of this Agreement.
C. Capitalized terms used herein shall have the meanings assigned to them
herein and, for purposes of this Agreement and the other Loan Documents, the
rules of construction set forth herein shall govern. All Schedules, Disclosure
Schedules, Attachments, Addenda and Exhibits (collectively, "Appendices")
hereto, or expressly identified to this Agreement, are incorporated herein by
reference, and taken together with this Agreement, constitute but a single
agreement. These Recitals shall be construed as part of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents
shall have (unless otherwise provided elsewhere in this Agreement or in the
other Loan Documents) the following respective meanings:
(a) "Account Debtor" shall mean any Person who is or may become
obligated with respect to, or on account of, a Lease or an Account.
(b) "Accounts" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by any Person, including: (i) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments), whether arising out of goods sold or services
rendered or from any other transaction (including any such obligations which may
be characterized as an account or contract right under the Code); (ii) all of
such Person's rights in, to and under all purchase orders or receipts for goods
or services; (iii) all of such Person's rights to any goods represented by any
of the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to
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returned, reclaimed or repossessed goods); (iv) all moneys due or to become due
to such Person under all purchase orders and contracts for the sale of goods or
the performance of services or both by such Person or in connection with any
other transaction (whether or not yet earned by performance on the part of such
Person), including the right to receive the proceeds of said purchase orders and
contracts; and (v) all collateral security and guarantees of any kind given by
any other Person with respect to any of the foregoing.
(c) "Affiliate" shall mean, with respect to any Person: (i) each
other Person that, directly or indirectly, owns or controls, whether
beneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or
more of the Stock having ordinary voting power for the election of directors of
such Person; (ii) each other Person that controls, is controlled by or is under
common control with such Person or any Affiliate of such Person; or (iii) each
of such Person's officers, directors, joint venturers and partners. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
(d) "Agreement" shall mean this Agreement including all Appendices
attached or otherwise identified thereto, restatements and modifications and
supplements thereto, and any appendices, exhibits or schedules to any of the
foregoing, and shall refer to this Agreement as the same may be in effect at the
time such reference becomes operative; provided, that except as specifically set
forth in this Agreement, any reference to the Disclosure Schedules to this
Agreement shall be deemed a reference to the Disclosure Schedules as in effect
on the Closing Date or in a written amendment thereto executed by Borrower and
Lender.
(e) "Appendices" shall have the meaning assigned to it in the
Recitals of this Agreement.
(f) "Books and Records" shall mean all books, records, board
minutes, contracts, licenses, insurance policies, environmental audits, business
plans, files, computer files, computer discs and other data and software storage
and media devices, accounting books and records, financial statements (actual
and pro forma), filings with Governmental Authorities and any and all records
and instruments relating to the Collateral.
(g) "Borrower" shall mean the Person identified as such in the
preamble of this Agreement.
(h) "Borrowing Availability" shall mean, at any time, the lesser
of (i) the Maximum Amount or (ii) the Borrowing Base, in each case less reserves
established by Lender from time to time.
(i) "Borrowing Base" shall mean at any time an amount equal to (i)
the sum at such time of sixty five percent (65%) of the present value (as
determined by Lender) of Borrower's Eligible Lease Receivables, reduced by (ii)
the Credit Rating Deficiency Amount, if any. Initially, Lender may, but shall
not be required to, determine the present value of Eligible Lease Receivables by
utilizing the Revolving Credit Rate as the discount rate. However, the Bank
reserves the right at any time to utilize such discount rate and such method of
determining present value as the Bank in its sole discretion determines
appropriate.
(j) "Borrowing Base Certificate" shall mean a certificate in the
form of Exhibit C or in such other form as Lender shall reasonably request,
certified as being complete and correct by Golden Eagle Leasing, Inc.'s chief
financial officer or president.
(k) "Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of Connecticut.
(l) "Capital Expenditures" shall mean all payments or accruals
(including Capital Lease Obligations) for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
(m) "Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise
would be disclosed as such in a note to such balance sheet, other than, in the
case of Borrower, any such lease under which Borrower is the lessor.
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(o) "Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.
(p) "Change of Control" shall mean, with respect to any Person on
or after the Closing Date (i) that any Person or "group" shall increase its
"beneficial ownership" (as such terms are defined under Section 13d-3 of and
Regulation 13D under the Securities Exchange Act of 1934) either directly or
indirectly, by more than ten percent (10%) of the outstanding shares of Stock of
such Person having the right to vote for the election of directors of such
Person under ordinary circumstances, (ii) that any change in the composition of
its stockholders as of the Closing Date shall occur which would result in any
stockholder or group acquiring 49.9% or more of any class of Stock of such
Person, or (iii) that any Person (or group of Persons acting in concert) shall
otherwise acquire the power to direct the management or affairs of such Person
by obtaining proxies, entering into voting agreements or trusts, acquiring
securities or otherwise.
(q) "Charges" shall mean all Federal, state, county, city,
municipal, local, foreign or other governmental taxes (including taxes owed to
PBGC at the time due and payable), levies, assessments, charges, liens, and all
additional charges, interest, penalties, expenses, claims or encumbrances upon
or relating to (i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income or gross receipts of any Corporate Credit Party, (iv) the
ownership or use of any assets by any Corporate Credit Party, or (v) any other
aspect of any Corporate Credit Party's business.
(r) "Chattel Paper" shall mean all "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by any Person, wherever
located.
(s) "Closing Date" shall mean the Business Day on which the
conditions precedent set forth in Section 3 have been satisfied or specifically
waived in writing by Lender.
(t) "Closing Fee" shall have the meaning assigned to it in Section
2.7.
(u) "Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Connecticut; provided, that in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Lender's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Connecticut, the term "Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Agreement relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
(v) "Collateral" shall have the meaning assigned to it in Section
7.1.
(w) "Commitment Termination Date" shall mean the earliest of (i)
the Stated Expiry Date, (ii) the date Lender's obligation to advance funds is
terminated pursuant to Section 8.2, and (iii) the date of prepayment in full by
Borrower of the Obligations in accordance with the provisions of Section 2.2(c)
without intention of borrowing under the commitment again.
(x) "Contracts" shall mean all the contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which any Person may now or hereafter have any right,
title or interest, including any agreement relating to the terms of payment or
the terms of performance of any Account.
(y) "Contractual Obligation" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement, instrument,
or other undertaking to which such Person is a party or by which it or any of
its property is bound, including, without limitation, the Existing Credit
Facilities.
(z) "Copyrights" shall mean all of the following now owned or
hereafter acquired by any Person: (i) all copyrights in any original work of
authorship fixed in any tangible medium of expression, now known or later
developed, all registrations and applications for registration of any such
copyrights in the United States or any other country, including registrations,
recordings and applications, and supplemental registrations, recordings, and
applications in the United States Copyright Office; and (ii) all Proceeds of the
foregoing, including license royalties
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and proceeds of infringement suits, the right to ▇▇▇ for past, present and
future infringements, all rights corresponding thereto throughout the world and
all renewals and extensions thereof.
(aa) "Corporate Credit Party" shall mean any Credit Party that is a
corporation or other limited liability entity, such as a limited liability
company.
(ab) "Credit Party" shall mean Borrower, and each other Person
(other than Lender) that is or may become a party to this Agreement or any other
Loan Document.
(ac) "Credit Rating Deficiency Amount" shall mean, at any time an
amount equal to the greater of: (a) the amount, if any, by which the aggregate
present value (as determined by Lender) of all Eligible Lease Receivables at
such time actually owed by Lessees having a Credit Rating of A or B is less than
fifty-five percent (55%) of the total aggregate present value (as determined by
Lender) of all Eligible Lease Receivables or (b) the amount, if any, by which
the aggregate present value (as determined by Lender) of all Eligible Lease
Receivables actually owed by Lessees having a Credit Rating of A, B or C is less
than ninety percent (90%) of the total aggregate present value (as determined by
Lender) of all Eligible Lease Receivables.
(ad) "Credit Rating" shall mean the most recent credit rating of A,
B, C, or D assigned by Borrower to the Lessee obligated on a Borrowing Base
Lease determined in accordance with Borrower's standard underwriting criteria,
provided, that, the underwriting criteria used by Borrower to determine such
credit ratings shall be acceptable to Lender, in its sole discretion. For
purposes of determining the Credit Rating Deficiency Amount, Lender may, in its
discretion assign credit ratings to Lessees differing from those assigned by
Borrower.
(ae) "Default" shall mean any Event of Default or any event which,
with the passage of time or notice or both, would, unless cured or waived,
become an Event of Default.
(af) "Default Rate" shall have the meaning assigned to it in
Section 2.5(d).
(ag) "Documents" shall mean all "documents," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located, including all bills of lading, dock warrants, dock receipts, warehouse
receipts, and other documents of title, whether negotiable or non-negotiable.
(ah) "EBITDA" shall mean earnings, excluding: (1) extraordinary
gains and non-cash losses; and (2) foreign currency translation gains and
non-cash losses, before interest, taxes, depreciation and amortization as
determined in accordance with GAAP.
(ai) "Eligible Lease Receivables" shall mean at the time of
calculation or determination, any bona fide Lease Receivables in which the
Lender has a first priority perfected security interest and assignment, and
which arise from or in connection with any bona fide Lease in which the Lender
has a first priority perfected security interest and assignment, and which Lease
Receivables and/or Leases, as the case may be, satisfy all of the following
requirements:
(i) It is owing to Borrower and is subject to a validly
perfected security interest and assignment in favor
of Lender having priority over any other liens or
encumbrances thereon;
(ii) It is a valid, legally enforceable obligation of the
Account Debtor thereunder and is not and may not
become subject to any offset, counterclaim or, in the
opinion of Lender, counterclaims, claims or other
defense on the part of such Account Debtor or to any
claim on the part of such Account Debtor denying
liability thereunder;
(iii) It is subject to no Liens whatsoever, except for the
security interest or assignment of Lender hereunder
(except for any applicable rights of the lessee under
such Lease);
(iv) The Leased Equipment regarding the Leases is subject
to no Liens whatsoever, except for the security
interest or assignment of Lender hereunder (and
except for any applicable
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rights of the lessee under such Lease), and the
Borrower has good and merchantable title to all of
such Leased Equipment;
(v) It has (or any payment thereunder) not remained
unpaid for a period exceeding sixty (60) days from
the date of the invoice and/or any payment due date
and the first scheduled payment is due within thirty
(30) days of the date of the Lease;
(vi) It does not arise out of transactions with any
Account Debtor located outside the United States of
America or any Governmental Authority;
(vii) Each Lease shall have an aggregate Gross Lease
Receivable of no more than $100,000.00;
(viii) The applicable Code Financing Statements in favor of
the Lender and/or the Borrower, as the case may be,
regarding the Leases, the Gross Lease Receivables
and/or the Leased Equipment under the applicable
Lease are duly filed and record in all appropriate
offices and/or records;
(ix) Borrower is the sole and absolute owner of all the
applicable Leases, Gross Lease Receivables and Leased
Equipment (subject only to the Liens of the Lender
hereunder);
(x) The applicable Leased Equipment under each Lease
shall have been delivered and/or installed, shall be
in good working order and shall have been fully and
duly accepted by the lessee under the applicable
Lease;
(xi) It has been newly originated by the Borrower and is
not part of a re-written Lease;
(xii) It shall be duly and fully insured under such
liability and hazard insurance policies as the Lender
may require in its sole discretion, which policies
shall be in such amounts, with insurance carriers and
on terms and conditions acceptable to the Lender in
its sole discretion, including, without limitation,
insuring the interest of the Borrower and its
successors and assigns and upon the Lender's request
or demand, naming the Lender as loss-payee and/or
additional inured, as appropriate;
(xiii) It shall be, or arise from, a commercial transaction
only;
(xiv) Each of the Leases and any documentation relating
thereto shall be marked, and contain a legend, that
the executed counterpart marked "original" of the
Lease and any documentation related thereto is the
original of the Lease and all other counterparts are
duplicates and to the extent, if any, that the Lease
and any documentation related thereto constitutes
Chattel Paper no security interest in the Lease and
documentation related thereto may be created through
the transfer or possession of any counterpart other
than the counterpart marked "Original";
(xv) Each Lease shall comply with all of the Borrower's
credit standards, policies and procedures, including,
without limitation, all risk acceptance criteria,
which have been previously submitted to, and approved
by, the Lender prior to the date of this Agreement;
(xvi) It does not arise out of any Lease regarding used or
residual equipment which has been returned or
delivered to the Borrower for any reason whatsoever
or has been repossessed by the Borrower;
(xvii) It shall not arise out of any restructured or
rewritten Leases or any Lease in default;
(xviii) It shall not be due from an Account Debtor which is
affiliated in any way whatsoever with any other
Account Debtor with past due payments of more than
sixty (60) days;
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(xix) Each Lease shall be in form and substance
satisfactory in all respects to the Lender, and shall
contain, among other things, "waiver-of-defense",
"consent to assignment" and "consent to security
interest" provisions, and any similar or like
provisions, in favor of an assignee or a lender, as
the case may be;
(xx) It shall be in full compliance with all laws,
statutes, rules, ordinances or governmental
regulations of any kind whatsoever including, without
limitation, any broker, truth-in-lending or leases or
banking laws, rules or regulations;
(xxi) It shall be assigned to the Lender by the Borrower
pursuant to a duly executed collateral assignment
which collateral assignment shall be in form and
substance acceptable to the Lender in its sole
discretion;
(xxii) That no power of attorney is used in connection with
the applicable Lease Receivable and/or Lease;
(xxiii) A notice of assignment letter regarding the Lease
Receivables, the Lease and the Leased Equipment in
connection with any Lease having aggregate Gross
Lease Receivable of $50,000.00 or more (or such
lesser amount as lender, in its sole discretion, may
hereafter designate) shall be duly executed by the
Account Debtor, which notice of assignment letter
shall be in form and substance satisfactory in all
respects to the Lender;
(xxiv) It does not arise out of transactions with any
creditor of the Borrower or any Guarantor or any
employee, officer, partner, Affiliate or Subsidiary
of the Borrower and/or or any Guarantor;
(xxv) The original Leases, schedules, acceptance
certificates, riders, supplements, purchase options,
exhibits, addendum, and any and all other documents
or instruments executed and/or delivered in
connection with, the Leases (including, without
limitation, any guarantees or undertakings of any
kind whatsoever of the same), shall have been
delivered to the Lender or, if acceptable to the
Lender (in its sole discretion), to the Trustee, on
the Lender's behalf pursuant to the terms of this
Agreement and/or the Trust Agreement, or any of the
same which the Lender does not require to be
delivered to it or to the Trustee shall be held by
the Borrower in trust as trustee of an express trust
for the Lender shall be promptly delivered to the
Lender upon the Lender's request or demand for the
same; and
(xxvi) That any and all documents and/or instruments that
the Lender shall request in connection with each such
applicable Lease Receivable and/or Lease and/or
Leased Equipment shall be promptly executed and/or
delivered to the Lender or, if acceptable to the
Lender (in its sole discretion), to the Trustee, on
the Lender's behalf pursuant to the terms of this
Agreement and/or the Trust Agreement, upon the
Lender's request for the same.
In the event of any dispute as to whether a Lease Receivable is or has ceased to
be an Eligible Lease Receivable, the decision of the Lender shall control in its
sole discretion. Any Eligible Lease Receivable which the Lender subsequently
determines to be no longer eligible or acceptable hereunder at any time shall
nevertheless be and remain at all times part of the Collateral.
(aj) "Environmental Laws" shall mean all Federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any applicable
judicial or administrative interpretation thereof relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous
Material Transportation Act (49 U.S.C. Sections 1801 et seq.); the Federal
Insecticide,
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Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.) ("RCRA");
the Toxic Substance Control Act (15 U.S.C. Sections 2601 et seq.); the Clean
Air Act (42 U.S.C. Sections 740 et seq.); the Federal Water Pollution
Control Act (33 U.S.C. Sections_1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C. Sections 651 et seq.) ("OSHA"); and the Safe Drinking
Water Act (42 U.S.C. Sections 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes.
(ak) "Environmental Liabilities" shall mean all liabilities,
obligations, responsibilities, remedial actions, removal costs, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including any thereof arising under any Environmental Law, permit, order or
agreement with any Governmental Authority) and which relate to any health or
safety condition regulated under any Environmental Law, Environmental Permits or
in connection with any Release, threatened Release, or the presence of a
Hazardous Material.
(al) "Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals, registrations or other written
documents required by any Governmental Authority under any Environmental Law.
(am) "Equipment" shall mean all "equipment" as such term is defined
in the Code, now owned or hereafter acquired by any Person, wherever located,
including any and all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal property (other than
Inventory) of every kind and description which may be now or hereafter used in
such Person's operations or which are owned by such Person or in which such
Person may have an interest, and all parts, accessories and accessions thereto
and substitutions and replacements therefor.
(an) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
(ao) "ERISA Affiliate" shall mean, with respect to any Credit
Party, any trade or business (whether or not incorporated) which, together with
such Credit Party, are treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the IRC.
(ap) "ERISA Event" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status.
(aq) "ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
(ar) "Event of Default" shall have the meaning assigned to it in
Section 8.1.
(as) "Existing Credit Facilities" shall mean Borrower's existing
credit facilities with Congress Financial Corporation.
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(at) "Fees" shall mean the fees due to Lender as set forth in
Section 2.7.
(au) "Financial Statements" shall mean the consolidated income
statement, balance sheet and statement of cash flows of Borrower and its
Subsidiaries, prepared as set forth in this Agreement for each Fiscal Month and
for each Fiscal Year or for such other stated period as set forth in this
Agreement, prepared in accordance with GAAP.
(av) "Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
(aw) "Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower.
(ax) "Fiscal Year" shall mean the 12 month period of Borrower
ending December 31st of each year. Subsequent changes of the fiscal year of
Borrower shall not change the term "Fiscal Year" unless Lender shall consent in
writing to such change.
(ay) "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time, consistently
applied.
(az) "General Intangibles" shall mean all "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any Person,
including all right, title and interest which such Person may now or hereafter
have in or under any Contract, Intellectual Property, interests in partnerships,
joint ventures and other business associations, permits, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials, Books and Records, Goodwill (including the Goodwill associated with
any Intellectual Property), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums), uncertificated securities, chooses in action, deposit
accounts, rights to receive tax refunds and other payments and rights of
indemnification.
(ba) "Goods" shall mean all "goods," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located, including
movables, fixtures, equipment, inventory, or other tangible personal property.
(bb) "Goodwill" shall mean all goodwill, trade secrets, proprietary
or confidential information, technical information, procedures, formulae,
quality control standards, designs, operating and training manuals, customer
lists, and distribution agreements now owned or hereafter acquired by any
Person.
(bc) "Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
(bd) "Gross Lease Receivables" shall mean any and all now existing
or owned and hereafter arising or acquired rents, payments and other amounts due
under or in connection with any Leases (including, without limitation, any sales
or use tax, supplemental rent payments, additional rent payments, rental
reserves, security deposits, purchase option payments, renewal payments, early
termination payments, residual payments, casualty payments, termination
payments, stipulated loss payments, insurance payments, or any other payments,
proceeds or amounts of any kind whatsoever due under or in connection with any
Leases and all proceeds thereof), proceeds of sale from sale of the equipment
leased or financed thereunder or the lease or other disposition (temporary or
otherwise) of same, any and all other amounts due under the same, and all
proceeds of the foregoing, including, without limitation, insurance proceeds.
(be) "Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such
guaranteeing Person (whether or not contingent): (i) to purchase or repurchase
any such primary obligation; (ii) to advance or supply funds (a) for the
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purchase or payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor;
(iii) to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation; or (iv) to indemnify the
owner of such primary obligation against loss in respect thereof.
(bf) "Guarantor" shall mean Hypercom Corporation ("Hypercom") and
each other Person which executes a Guaranty or a support, put or other similar
agreement in favor of Lender in connection with the transactions contemplated by
this Agreement.
(bg) "Guaranty" shall mean any agreement to perform all or any
portion of the Obligations on behalf of Borrower or any other Credit Party, in
favor of, and in form and substance satisfactory to, Lender, together with all
amendments, modifications and supplements thereto, and shall refer to such
Guaranty as the same may be in effect at the time such reference becomes
operative. The term Guaranty shall include the Guaranty of Hypercom in favor of
Lender dated the date hereof.
(bh) "Hazardous Material" shall mean any substance, material or
waste which is regulated by, or forms the basis of liability now or hereafter
under, any Environmental Laws, including any material or substance which is (a)
defined as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
(bi) "Indebtedness" of any Person shall mean: (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (including reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured, but not including obligations to trade creditors incurred in the
ordinary course of business and not more than 45 days past due); (ii) all
obligations evidenced by notes, bonds, debentures or similar instruments; (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (iv)
all Capital Lease Obligations; (v) all Guaranteed Indebtedness; (vi) all
Indebtedness referred to in clauses (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
(vii) the Obligations; and (viii) all liabilities under Title IV of ERISA.
(bj) "Indemnified Liabilities" shall have the meaning assigned to
it in Section 2.11.
(bk) "Indemnified Person" shall have the meaning assigned to it in
Section 2.11.
(bl) "Instruments" shall mean all "instruments," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located, including all certificated securities and all notes and other evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
(bm) "Intellectual Property" shall mean any and all Licenses,
Patents, Copyrights, Trademarks, trade secrets and customer lists.
(bn) "Inventory" shall mean all "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any Person, wherever
located, including all inventory, merchandise, goods and other personal property
which are held by or on behalf of such Person for sale or lease or are furnished
or are to be furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or to be used or
consumed in such Person's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
(bo) "IRC" shall mean the Internal Revenue Code of 1986, and any
successor thereto.
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(bp) "IRS" shall mean the Internal Revenue Service, or any
successor thereto.
(bq) "Lease" or "Leases" shall mean (i) any of the Borrower's now
existing or owned and hereafter arising or acquired equipment lease or leases
that are identified on any Lease Certificate which has been delivered to the
Lender by the Borrower with regard to any Revolving Credit Advance under this
Agreement, (ii) any of the Borrower's now existing or owned and hereafter
arising or acquired equipment financing arrangement or arrangements determined
or intended not to be a true lease that are identified on any Lease Certificate
which has been delivered to the Lender by the Borrower with regard to any
Revolving Credit Advance under this Agreement, or (iii) any of the Borrower's
now existing or owned and hereafter arising or acquired equipment security
agreements, conditional sale agreements or promissory notes and any schedules,
amendments, modifications, supplements, riders, purchase options, exhibits and
addendum thereto, pursuant to which the Borrower leases or finances equipment
that are identified on any Lease Certificate which has been delivered to the
Lender by the Borrower with regard to any Revolving Credit Advance under this
Agreement. Any such lease, financing arrangement, security agreement,
conditional sale agreement or promissory note that are identified on any Lease
Certificate which has been delivered to the Lender by the Borrower with regard
to any Revolving Credit Advance under this Agreement shall include, without
limitation, any and all rents, payments, rental reserves, security deposits and
other amounts due thereunder, proceeds of sale from sale of the equipment leased
or financed thereunder or the lease or other disposition (temporary or
otherwise) of same, any and all other amounts due under the same, and all
proceeds of the foregoing, including, without limitation, insurance proceeds.
(br) "Lease Certificate" means a fully completed certificate in
substantially the form of Exhibit D or in such form as Lender shall otherwise
request, certified as being complete and correct by Borrower's chief financial
officer or president. Without limiting the generality of the foregoing, any such
Lease Certificate shall, among other things, identify the Lease or Leases
regarding the requested Revolving Credit Advance under this Agreement by the
applicable Account Debtor and the state in which the applicable Account Debtor's
billing address is located and setting forth for each such Lease (i) a number
identifying the Lease, (ii) the original and remaining term of the Lease, (iii)
the scheduled monthly or quarterly payments for each Lease and (iv) the original
cost of the applicable Leased Equipment.
(bs) "Lease Receivables" means only any regular rent or lease
payments due under any now existing or owned and hereafter arising or acquired
Leases, and expressly excludes any sales or use tax, supplemental rent payments,
additional rent payments, rental advances, security deposits, purchase option
payments, renewal payments, early termination payments, residual payments,
casualty payments, termination payments, stipulated loss payments, insurance
payments or any other payments, proceeds or amounts of any kind whatsoever due
under or in connection with any Leases, and all proceeds of the foregoing,
including, without limitation, insurance proceeds.
(bt) "Leased Equipment" means all now existing or owned and
hereafter arising or acquired equipment leased or financed under, or in
connection with, or relating to, any Leases (whether same constitutes
"Equipment" or "Inventory" under the Code, and any and all substitutions,
replacements, accessories, accessions, additions, and improvements thereto or
therefor now existing or owned and hereafter arising or acquired with respect to
all of the foregoing, and any and all returns, exchanges therefor or
repossessions thereof, and any proceeds resulting from the sale, lease or other
disposition (temporary or otherwise) of the foregoing, and any bills of sale,
warranty agreements or any other purchase agreements or documents of any kind
whatsoever related to any or all of the foregoing, and all the proceeds thereof,
including, without limitation, insurance proceeds.
(bu) "License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Person.
(bv) "Lien" shall mean any mortgage, security deed or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge,
claim, security interest, security title, easement or encumbrance, or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).
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(bw) "Litigation" shall mean any claim, lawsuit, litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority.
(bx) "Loan Documents" shall mean this Agreement, the Note, the
Financial Statements, the Guaranty, and all security agreements, mortgages and
all other documents, instruments, certificates, and notices at any time
delivered by any Person (other than Lender) in connection with any of the
foregoing.
(by) "Loan" shall mean the Revolving Credit Loan.
(bz) "Material Adverse Effect" shall mean: (i) a material adverse
effect on (a) the business, assets, operations, prospects or financial or other
condition of Borrower or any other Credit Party or the industry within which
Borrower or any other Credit Party operates, (b) Borrower's or any other Credit
Party's ability to pay or perform the Obligations under the Loan Documents to
which such Credit Party is a party in accordance with the terms thereof, (c) the
Collateral or Lender's Liens on the Collateral or the priority of any such Lien,
or (d) Lender's rights and remedies under this Agreement and the other Loan
Documents; or (ii) the incurrence by Borrower or any other Credit Party of any
liability (other than Indebtedness permitted by Section 5(c)), contingent or
liquidated, which has an actual or estimated incurrence of liability, or dollar
exposure or loss, greater than $50,000 to Borrower or any other Credit Party.
(ca) "Maturity Date" shall mean the date that is one year from the
Closing Date.
(cb) "Maximum Amount" shall mean the maximum amount of credit to be
provided by Lender to or for the benefit of Borrower for aggregate Revolving
Credit Advances outstanding at any time, without regard to the Borrowing Base or
reserves, which amount, for purposes of this Agreement, is $10,000,000.
(cc) "Multiemployer Plan" shall mean a "multiemployer plan," as
defined in Section 4001(a) (3) of ERISA, to which Borrower, any other Credit
Party or any ERISA Affiliate is making, is obligated to make, has made or been
obligated to make, contributions on behalf of participants who are or were
employed by any of them.
(cd) "Net Borrowing Availability" shall mean at any time the
Borrowing Availability less the Revolving Credit Loan.
(ce) "Net Face Amount" shall mean the gross Lease Receivable less
all sales, excise or similar taxes charged thereon and less all discounts,
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
(cf) "Note" shall mean the Revolving Credit Note.
(cg) "Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 2.1(b).
(ch) "Obligations" shall mean all loans, advances, debts, expense
reimbursement, fees, liabilities, and obligations, for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or amounts are liquidated or
determinable) owing by Borrower and any other Credit Party to Lender, of any
kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, whether arising under any of the Loan Documents
or under any other agreement between Borrower, such Credit Party and Lender, and
all covenants and duties regarding such amounts. This term includes all
principal, interest (including interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest accruing
at the then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), Fees, Charges, expenses, attorneys'
fees and any other sum chargeable to Borrower under any of the Loan Documents,
and all principal and interest due in respect of the Loans and all obligations
and liabilities of any Guarantor under any Guaranty.
(ci) "Operating Account" shall have the meaning assigned to it in
Schedule A.
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(cj) "Operating Income" shall mean net income less taxes, interest
expense, extraordinary items and interest income as determined in accordance
with GAAP.
(ck) "Patents" shall mean all of the following in which any Person
now holds or hereafter acquires any interest: (i) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or Territory thereof, or any other country; and (ii)
all reissues, continuations, continuations-in-part or extensions thereof.
(cl) "PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
(cm) "Permitted Encumbrances" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other governmental Charges
or levies, either not yet due and payable or to the extent that nonpayment
thereof is permitted by the terms of Section 4.11; (ii) pledges or deposits
securing obligations under worker's compensation, unemployment insurance, social
security or public liability laws or similar legislation; (iii) pledges or
deposits securing bids, tenders, contracts (other than contracts for the payment
of money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (iv) deposits securing public or statutory
obligations of any Credit Party; (v) inchoate and unperfected workers',
mechanics', or similar liens arising in the ordinary course of business, so long
as such Liens attach only to Equipment, fixtures or real estate; (vi) carriers',
warehousemans', suppliers' or other similar possessory liens arising in the
ordinary course of business and securing indebtedness not yet due and payable in
an outstanding aggregate amount not in excess of $25,000 at any time so long as
such Liens attach only to Inventory; (vii) deposits of money securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which any Credit
Party is a party; (viii) zoning restrictions, easements, licenses, or other
restrictions on the use of real property or other minor irregularities in title
(including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such real estate; (ix) Purchase Money
Liens securing Purchase Money Indebtedness (or rent) to the extent permitted
under Section 6(c)(ii); (x) Liens in existence on the Closing Date as disclosed
on Disclosure Schedule 6(h) provided that no such a Lien is spread to cover
additional property after the Closing Date and the amount of Indebtedness
secured thereby is not increased; and (xi) Liens in favor of Lender securing the
Obligations.
(cn) "Permitted Sale Collateral" shall mean any Leases, Gross Lease
Receivables, Leased Equipment, Chattel Paper of the Borrower, and/or guaranties
or any undertakings of any kind whatsoever of any Leases or Chattel Paper of the
Borrower which the Lender permits the Borrower to sell or assign after the date
of this Agreement only pursuant to the terms of this Agreement.
(co) "Person" shall mean any individual, sole proprietorship,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether Federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof), and shall include such Person's successors
and assigns.
(cp) "Plan" shall mean, with respect to Borrower or any other
Credit Party, at any time, an employee benefit plan, as defined in Section 3(3)
of ERISA, which Borrower or any other Credit Party maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
(cq) "Proceeds" shall mean "proceeds," as such term is defined in
the Code and, in any event, shall include: (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Borrower or any other
Credit Party from time to time with respect to any Collateral; (ii) any and all
payments (in any form whatsoever) made or due and payable to Borrower or any
other Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any Collateral by any
governmental body, authority, bureau or agency (or any person acting under color
of governmental authority); (iii) any claim of Borrower or any other Credit
Party against third parties (a) for past, present or future infringement of any
Intellectual Property or (b) for past, present or future infringement or
dilution of any Trademark or Trademark License or for injury to the goodwill
associated with any Trademark, Trademark registration or Trademark licensed
under any Trademark License; (iv) any recoveries by Borrower or any other Credit
Party against third parties with respect to any litigation or
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dispute concerning any Collateral; and (v) any and all other amounts from time
to time paid or payable under or in connection with any Collateral, upon
disposition or otherwise.
(cr) "Purchase Money Indebtedness" shall mean (i) any Indebtedness
incurred for the payment of all or any part of the purchase price of any fixed
asset, (ii) any Indebtedness incurred for the sole purpose of financing or
refinancing all or any part of the purchase price of any fixed asset, and (iii)
any renewals, extensions or refinancings thereof (but not any increases in the
principal amounts thereof outstanding at that time).
(cs) "Purchase Money Lien" shall mean any Lien upon any fixed
assets which secures the Purchase Money Indebtedness related thereto but only if
such Lien shall at all times be confined solely to the asset the purchase price
of which was financed or refinanced through the incurrence of the Purchase Money
Indebtedness secured by such Lien and only if such Lien secures only such
Purchase Money Indebtedness.
(ct) "Qualified Plan" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
(cu) "Real Property" shall have the meaning assigned to it in
Section 4.16.
(cv) "Release" shall mean, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials in the indoor or outdoor
environment by such Person, including the movement of Hazardous Materials
through or in the air, soil, surface water, ground water or property.
(cw) "Requirement of Law" shall mean as to any Person, the
Certificate or Articles of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case binding upon such Person or any of its property or to which such
Person or any of its property is subject.
(cx) "Restricted Payment" shall mean: (i) the declaration or
payment of any dividend or the occurrence of any liability to make any other
payment or distribution of cash or other property or assets on or in respect of
Borrower's or any other Credit Party's Stock; (ii) any payment on account of the
purchase, redemption, defeasance or other retirement of Borrower's or any other
Credit Party's Stock or Indebtedness or any other payment or distribution made
in respect of any thereof, either directly or indirectly; other than (a) that
arising under this Agreement, (b) if no Default shall have occurred and be
continuing, or shall result therefrom, interest and principal, when due without
acceleration or modification of the amortization as in effect on the Closing
Date, under Indebtedness (not including the Subordinated Indebtedness) described
in Disclosure Schedule (4.7) or otherwise permitted under Section 5(c)(ii), and
(c) distributions to shareholders in respect of such shareholders' income taxes
directly attributable to the Borrower's net income, provided that such
distributions are paid to the appropriate Governmental Authorities within 5
Business Days of receipt thereof; or (iii) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of such Person
which is not expressly and specifically permitted in this Agreement; provided,
that no payment to Lender shall constitute a Restricted Payment.
(cy) "Retiree Welfare Plan" shall mean, at any time, a Plan that is
a "welfare plan" as defined in Section 3(2) of ERISA, that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
(cz) "Revolving Credit Advance" shall have the meaning assigned to
it in Section 2.1(a).
(da) "Revolving Credit Loan" shall mean at any time the aggregate
amount of Revolving Credit Advances then outstanding.
(db) "Revolving Credit Note" shall mean the promissory note of
Borrower dated the Closing Date, substantially in the form of Exhibit F.
(dc) "Revolving Credit Rate" shall have the meaning assigned to it
in Section 2.5(a).
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(dd) "Schedule of Documents" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Loan Documents and the
transactions contemplated thereunder, substantially in the form of Schedule F.
(de) "Stated Expiry Date" shall mean August ___, 2002.
(df) "Stock" shall mean all certificated and uncertificated shares,
options, warrants, general or limited partnership interests, participation or
other equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company or equivalent entity whether voting or
nonvoting, including common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
(dg) "Stockholder" shall mean each holder of Stock of Borrower or
any other Credit Party.
(dh) "Subsidiary" shall mean, with respect to any Person, (i) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner.
(di) "Tangible Net Worth" shall mean total assets (exclusive of any
and all intangible assets including without limitation goodwill, franchises,
licenses, patents, trademarks, tradenames, copyrights, service marks,
capitalized closing costs and other assets properly categorized as intangibles
assets) minus total liabilities, as determined in accordance with GAAP.
(dj) "Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Lender.
(dk) "Termination Date" shall mean the date on which the Revolving
Credit Loan, and any other Obligations under this Agreement are indefeasibly
paid in full, in cash, and Borrower shall have no further right to borrow any
moneys or obtain other credit extensions or financial accommodations under this
Agreement.
(dl) "Title IV Plan" shall mean an "employee pension benefit plan,"
as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which Borrower, any other Credit Party or any
ERISA Affiliate maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any of them.
(dm) "Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Person granting any right to
use any Trademark or Trademark registration.
(dn) "Trademarks" shall mean all of the following now owned or
hereafter acquired by any Person: (i) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature, now existing
or hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, including all registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any State or Territory
thereof, or any other country or any political subdivision thereof, and (ii) all
reissues, extensions or renewals thereof.
(do) "Transaction Summary" shall mean the Transaction Summary set
forth in the Recitals to this Agreement.
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(dp) "Trustee" shall mean any trustee, or any successor trustee,
acceptable to the Lender in its sole discretion, which, at the Lender's sole
option, shall hold, on behalf of the Lender pursuant to the terms of this
Agreement and the Trust Agreement, all of the original Leases, schedules,
acceptance certificates, riders, supplements, purchase options, exhibits,
addendum, tax authorizations and liability and hazard insurance policies for,
and any and all other documents or instruments executed and/or delivered in
connection with (including, without limitation, any guarantees or undertakings
of any kind whatsoever of the same) the Leases.
(dq) "Trust Agreement" shall mean the Trust Agreement between the
Lender, the Borrower and the Trustee, which shall be in form and substance
acceptable to the Lender in its sole discretion, and any and all riders,
amendments, supplements or modifications thereto and any exhibits or schedules
delivered in connection therewith.
(dr) "Unfunded Pension Liability" shall mean, at any time, the
aggregate amount, if any, of the sum of (i) the amount by which the present
value of all accrued benefits under each Title IV Plan exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent
valuation date for such Title IV Plan determined on the basis of a shutdown of
the employees thereunder and using the actuarial assumptions in effect for
funding purposes under such Title IV Plan, and (ii) for a period of five (5)
years following a transaction which could be covered by Section 4069 of ERISA,
the liabilities (whether or not accrued) that could be avoided by Borrower, any
other Credit Party or any ERISA Affiliate as a result of such transaction.
(ds) Any accounting term used in this Agreement or the other Loan
Documents shall have, unless otherwise specifically provided therein, the
meaning customarily given such term in accordance with GAAP, and all financial
computations thereunder shall be computed, unless otherwise specifically
provided therein, in accordance with GAAP consistently applied; provided, that
all financial covenants and calculations in the Loan Documents shall be made in
accordance with GAAP as in effect on the Closing Date unless Borrower and Lender
shall otherwise specifically agree in writing. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. All other undefined terms
contained in this Agreement or the other Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code. The
words "herein," "hereof" and "hereunder" or other words of similar import refer
to this Agreement as a whole, including the exhibits and schedules thereto, as
the same may from time to time be amended, modified or supplemented, and not to
any particular section, subsection or clause contained in this Agreement.
(dt) For purposes of this Agreement and the other Loan Documents,
the following additional rules of construction shall apply, unless specifically
indicated to the contrary: (a) wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, the feminine and the neuter; (b) the term "or" is
not exclusive; (c) the term "including" (or any form thereof) shall not be
limiting or exclusive; (d) all references to statutes and related regulations
shall include any amendments of same and any successor statutes and regulations;
(e) all references in this Agreement or in the Schedules to this Agreement to
sections, schedules, disclosure schedules, exhibits, and attachments shall refer
to the corresponding sections, schedules, disclosure schedules, exhibits, and
attachments of or to this Agreement; and (f) all references to any instruments
or agreements, including references to any of the Loan Documents, shall include
any and all modifications or amendments thereto and any and all extensions or
renewals thereof.
2. AMOUNT AND TERMS OF CREDIT
2.1 Loan. (a) Subject to the terms and conditions of this Agreement and the
discretion of Lender as described below from the Closing Date and until the
Commitment Termination Date (i) Lender may make advances to Borrower (each, a
"Revolving Credit Advance"), in an aggregate outstanding amount not to exceed
the Borrowing Availability and (ii) Borrower may at its request from time to
time borrow, repay and reborrow under the Revolving Credit Loan. Notwithstanding
any contrary provisions contained in this Agreement the making of each Revolving
Credit Advance shall be in the sole and absolute discretion of the Lender.
(b) Borrower shall request each Revolving Credit Advance by
written notice to Lender substantially in the form of Exhibit A (each a "Notice
of Revolving Credit Advance") given no later than 11:00 a.m. (New York time) on
the Business Day of the proposed Revolving Credit Advance. Lender shall be fully
protected under this
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Agreement in relying upon, and shall be entitled to rely upon (i) any Notice of
Revolving Credit Advance believed by Lender to be genuine, and (ii) the
assumption that the Persons making electronic requests or executing and
delivering a Notice of Revolving Credit Advance were duly authorized, unless the
responsible individual acting thereon for Lender shall have actual knowledge to
the contrary.
(c) The Revolving Credit Loan shall be evidenced by, and be
repayable in accordance with the terms of, the Revolving Credit Note and this
Agreement.
(d) Borrower agrees that Lender, in making any Revolving Credit
Advance or incurring any other Obligation hereunder, shall be entitled to rely
upon the most recent Borrowing Base Certificate delivered to Lender and other
information available to Lender by Borrower. Borrower further agrees that Lender
shall be under no obligation to make any further Revolving Credit Advance or
incur any other Obligation if Borrower shall have failed to deliver a Borrowing
Base Certificate and a Lease Certificate to Lender by the time specified in
Section 5.1(a); provided, that, unless otherwise in Default, the Borrower may
resume borrowing under this Agreement upon compliance with the terms set forth
in this Section and in Section 5.1(a).
2.2 Term and Termination. (a) Lender may make Revolving Credit Advances and
extend other financial accommodations to Borrower from the Closing Date until
the Commitment Termination Date. Upon the Commitment Termination Date, Borrower
shall pay to Lender in full, in cash, all outstanding Revolving Credit Advances
and all accrued but unpaid interest thereon, and all other non-contingent
Obligations due to or incurred by Lender.
(b) If the Revolving Credit Loan shall at any time exceed the
Borrowing Availability, then Borrower shall have the option of (i) immediately
repaying the Revolving Credit Loan in the amount of such excess; any such excess
balance outstanding shall nevertheless constitute Obligations that are evidenced
by the Revolving Credit Note, secured by the Collateral and entitled to all of
the benefits of the Loan Documents, or (ii) pledging additional Collateral to
secure Lender for the amount of such excess, the amount and the sufficiency of
such Collateral shall be subject to the sole and absolute discretion of the
Lender.
(c) The Borrower may prepay the Revolving Credit Note in whole or
in part as follows (i) with respect to Revolving Credit Advances bearing
interest at the Revolving Prime Based Rate (as hereafter defined), without
penalty with accrued interest to the date of such prepayment on the amount
prepaid, provided that, it gives Lender one (1) day prior written notice, and
(ii) with respect to Revolving Credit Advances bearing the Revolving LIBOR Based
Rate (as hereafter defined), provided that it gives Lender five (5) business
days prior written notice and provided that prepayments may be made only on the
last day of the Interest Period pertaining to the Revolving Credit Advance being
prepaid. If the Borrower (i) fails to borrow the Revolving Credit Loan after
delivering a Notice of Revolving Credit Advance; (ii) fails to pay as and when
due any principal of or interest on the Loan; or (iii) makes any payment or
prepayment of the Loan other than on the last day of a month, then the Borrower
shall pay to the Lender the amount of any losses, costs and expenses reasonably
incurred as a consequence thereof, including any loss of margin or expenses in
liquidating or re-employing deposits or other funds acquired to make such Loan.
A certificate, calculating in reasonable detail the amount of any such losses,
costs and expenses, submitted to the Borrower by the Lender shall, absent
manifest error, be final, conclusive and binding for all purposes.
2.3 Use of Proceeds. Borrower shall use the proceeds of the Revolving
Credit Loan to finance the purchase of new equipment to be leased by Borrower to
unrelated third parties and for other general corporate purposes.
2.4 Single Loan. The Revolving Credit Loans and all of the other
Obligations of Borrower to Lender shall constitute one general obligation of
Borrower secured by all of the Collateral.
2.5 Interest. (a) Borrower shall pay interest to Lender on each Revolving
Credit Advance at the rate set forth in (i) or (ii) below as elected by Borrower
at the time the Revolving Credit Advance is requested (the "Revolving Credit
Rate") provided that (A) no more than fifty percent (50%) of the aggregate
principal balance of all Revolving Credit Advances may bear interest pursuant to
(i) below at any time; (B) each Revolving Credit Advance for which the Revolving
Credit Rate set forth in (i) below is elected must be in the amount of no less
than one hundred thousand dollars ($100,000); (C) Borrower may have no more than
five (5) Revolving Credit Advances bearing interest at the Revolving Credit Rate
set forth in (i) below outstanding at any time; and (D) at the option of the
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Lender the rate described in (i) below shall no longer be available following
the occurrence of an Event of Default hereunder:
(i) A rate per annum (the Revolving LIBOR-Based Rate")
equal to the sum of London InterBank Offering Rate available to Lender for U.S.
dollar thirty-day deposits, plus four hundred seventy (470) basis points such
Revolving LIBOR-Based Rate to be further adjusted to compensate Lender for all
applicable reserve requirements imposed upon Lender in respect of LIBOR
investments as determined by Lender at the time of such advance and at the end
of each successive 30 day period thereafter (each an "Interest Period"). Each
such rate shall remain in effect for the entire Interest Period until
redetermined for the next successive Interest Period; or
(ii) a floating rate per annum (the "Revolving Prime-Based
Rate") equal to the "Prime Rate" as published in the section of the Wall Street
Journal entitled "Money Rates," (the "Wall Street Journal Prime Rate") plus one
and three quarters percent (1.75%). The Revolving Prime-Based Rate will change
automatically and immediately as of the date of a change in the Prime Rate,
without notice to Borrower.
Interest shall be calculated on the basis of a 360-day year, but shall be
computed for the actual number of days in each period for which interest is
charged. With respect to a Revolving Prime-Based Rate, interest shall be payable
monthly in arrears on the first Business Day of each month. With respect to a
Revolving LIBOR-Based Rate, interest shall be payable, in arrears, on the first
Business Day following the expiration of the 30-day LIBOR period.
Notwithstanding anything else set forth herein, all interest on the Revolving
Credit Loan shall be payable on the Commitment Termination Date, and if any
interest accrues or remains payable after the Commitment Termination Date, upon
demand by Lender.
(b) Each determination by Lender of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.
(c) Effective upon the occurrence of any Event of Default and for
so long as any Event of Default shall be continuing, upon notice to the Borrower
(except that no notice shall be required upon the occurrence of any Event of
Default specified in Sections 8.1(e), (f) or (g)) the Revolving Credit Rate
shall be increased by three percentage points (3.00%) per annum (such increased
rate, the "Default Rate"), and all outstanding Obligations, shall continue to
accrue interest from the date of such Event of Default at the Default Rate
applicable to such Obligations.
(d) If any interest or other payment to Lender under this
Agreement becomes due and payable on a day other than a Business Day, such
payment date shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such extension.
(e) In no event will Lender charge interest at a rate that exceeds
the highest rate of interest permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable.
2.6 Cash Management System. On or prior to the Closing Date and until the
Termination Date, Borrower will establish and maintain the cash management
system described in Schedule A.
2.7 Fees. As compensation for Lender's costs and efforts incurred and
expended in entering into this Agreement and in consideration of Lender's making
the Loans available to Borrower, Borrower agrees to pay to Lender the Fees set
forth below.
(a) Closing Fee. A non-refundable fee of $75,000 (the "Closing
Fee") payable simultaneously with the execution and delivery of this Agreement.
(b) Audit Fee. It is anticipated that Collateral audits will be
required twice each year. If a Default shall have occurred, the Lender may
require additional audits in its sole discretion. Collateral audits will be
performed by an independent firm selected by the Lender, in its sole discretion.
Borrower will reimburse Lender for all fees and expenses incurred in connection
with such audits.
(c) Unused Line Fee. Lender shall charge, and the Borrower shall
pay Lender, a non-refundable unused facility fee ("Fee") in an amount equal to
(a) 1/2 percent (.50%) multiplied by (i) the difference between
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$10,000,000.00, and the actual amount of the average daily principal balance of
all outstanding principal and/or Revolving Credit Advances during the applicable
month (or applicable portion thereof), multiplied by (ii) a fraction, the
numerator of which shall be the number of days in such applicable month (or
applicable portion thereof), and the denominator of which shall be 360. The Fee
shall be calculated, due and payable on the last day of each month commencing
September 30, 2001, and each month thereafter through and including the
Termination Date. No portion of any fees paid to Lender of any kind whatsoever
shall be refundable to Borrower for any reason whatsoever.
(d) Borrower will reimburse Lender for the fees incurred by Lender
in connection with the preparation, execution and delivery of this Agreement and
the Loan Documents.
2.8 Receipt of Payments. Borrower shall make each payment under this
Agreement (not otherwise made pursuant to Section 2.9) without set-off or
counterclaim not later than 1:00 p.m. (New York time) on the day when due in
lawful money of the United States of America in immediately available funds. For
purposes of computing interest and Fees, all payments shall be deemed received
by Lender two (2) Business Days following receipt of good funds by Lender,
except that payments made to Lender by wire or other forms of immediate cash
shall be deemed received by Lender upon confirmation by Lender that it has
received such funds. For purposes of determining the Borrowing Availability,
payments shall be deemed received by Lender upon receipt of good funds by
Lender. To cover the extra expenses involved in handling delinquent payments,
Lender may collect a late charge equal to five percent (5.00%) of any amount due
(including, without limitation, payments of principal and interest), with a
minimum late charge of $15.00, if any such amount is not paid by Borrower within
ten (10) days after the due date thereof.
2.9 Application and Allocation of Payments. Borrower irrevocably agrees
that Lender shall have the continuing and exclusive right to apply any and all
payments against the then due and payable Obligations in such order as Lender
may deem advisable. Lender is authorized to, and at its option may (without
prior notice or precondition and at any time or times), but shall not be
obligated to, make or cause to be made Revolving Credit Advances on behalf of
Borrower for: (a) payment of all Fees, expenses, indemnities, charges, costs,
principal, interest, or other Obligations owing by Borrower under this Agreement
or any of the other Loan Documents, (b) the payment, performance or satisfaction
of any of Borrower's obligations with respect to preservation of the Collateral
or otherwise under this Agreement, or (c) any premium in whole or in part
required in respect of any of the policies of insurance required by this
Agreement, even if the making of any such Revolving Credit Advance causes the
outstanding balance of the Revolving Credit Loan to exceed the Borrowing
Availability, and, except as otherwise permitted by this Agreement, Borrower
agrees to repay immediately, in cash, any amount by which the Revolving Credit
Loan exceeds the Borrowing Availability. Borrower irrevocably agrees that Lender
shall have the right to charge any amounts due under the Loan (including,
without limitation, principal, interest and Fees) against any account of
Borrower maintained with Lender, without prior notice to Borrower.
2.10 Accounting. Lender is authorized to record on its books and records the
date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrower on a monthly basis a
statement and accounting of such recordations but any failure on the part of the
Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to Borrower shall not in any manner affect the obligation of
Borrower to repay (with applicable interest) the Loan made to Borrower under
this Agreement. Except to the extent that Borrower shall, within 30 days after
such statement and accounting is sent, notify Lender in writing of any objection
Borrower may have thereto (stating with particularity the basis for such
objection), such statement and accounting shall be deemed final, binding and
conclusive upon Borrower, absent manifest error.
2.11 Indemnity. Borrower and each other Credit Party executing this
Agreement jointly and severally agree to indemnify and hold Lender and its
Affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan
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Documents or any other documents or transactions contemplated by or referred to
herein or therein and any actions or failures to act with respect to any of the
foregoing, including any and all product liabilities, Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, "Indemnified Liabilities"), except to the extent that any such
Indemnified Liability is finally determined by a court of competent jurisdiction
to have resulted solely from such Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO THE
BORROWER OR TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
2.12 Taxes. All payments to Lender under any Loan Document shall be made
free and clear of, and without deduction for, any Taxes. If Borrower shall be
required by law to deduct any Taxes from any payment to Lender under any Loan
Document, then the amount payable to Lender shall be increased so that, after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.12), Lender receives an amount equal to that
which it would have received had no such deductions been made and Borrower shall
pay the full amount deducted to the relevant taxing authority, and promptly
furnish to Lender tax receipts evidencing such payment. Borrower shall pay and
indemnify Lender for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 2.12) paid by Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted.
2.13 Borrowing Base; Reserves. The Borrowing Base shall be determined by
Lender (including the eligibility of Lease Receivables) based on the most recent
Borrowing Base Certificate delivered to Lender in accordance with Section 5.1(b)
and such other information available to Lender. Without limiting any other
rights and remedies of Lender hereunder or under the other Loan Documents, the
Revolving Credit Loan shall be subject to Lender's continuing right to withhold
from Borrowing Availability reserves, and to increase and decrease such reserves
from time to time, if and to the extent that in Lender's reasonable credit
judgment and sole discretion such reserves are necessary, including to protect
Lender's interest in the Collateral or to protect Lender against possible
non-payment of Lease Receivables for any reason by Account Debtors or possible
diminution of the value of any Collateral or possible non-payment of any of the
Obligations or for any taxes or customs duties or in respect of any state of
facts which could constitute a Default. Lender may, at its option, implement
reserves by designating as ineligible a sufficient amount of Lease Receivables
which would otherwise be Eligible Lease Receivables, as the case may be, so as
to reduce the Borrowing Base by the amount of the intended reserves.
3. CONDITIONS PRECEDENT
3.1 Conditions to the Initial Revolving Credit Advance. Lender shall not be
obligated to make any Loan, or to take, fulfill, or perform any other action
hereunder, until the following conditions have been satisfied in a manner
satisfactory to Lender in its sole discretion, or waived in writing by Lender:
(a) The Loan Documents to be delivered on or before the Closing
Date shall have been duly executed and delivered by the appropriate parties, all
as set forth in the Schedule of Documents and all as satisfactory to Lender in
its discretion;
(b) Lender shall have received evidence satisfactory to it that
all of the obligations of Borrower under its Existing Credit Facilities under
the financing documentation as in effect immediately prior to the Closing Date
are in full force and effect and Borrower is not in default thereunder;
(c) Lender shall have received evidence satisfactory to it that
each Credit Party has obtained all consents and acknowledgments of all Persons
and Governmental Authorities whose consents or acknowledgments may be required
prior to the execution and delivery of this Agreement and the other Loan
Documents (or pursuant to
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the terms hereof or thereof) and the consummation of the transactions
contemplated hereby and thereby and that such consents or acknowledgments remain
in full force and effect;
(d) Lender shall have received evidence satisfactory to it that
the insurance policies provided for in Section 4.17 are in full force and
effect, together with appropriate evidence showing loss payable or additional
insured clauses or endorsements in favor of Lender as required under such
Section;
(e) All representations or warranties by any Credit Party
contained herein or in any of the other Loan Documents shall be true and correct
as of such date, except to the extent that such representation or warranty is
expressly stated to relate to a specific earlier date, in which case, such
representation and warranty shall be true and correct as of such earlier date;
(f) Lender shall have received an opinion of counsel to the
Borrower with respect to the Loan Documents in form and substance satisfactory
to Lender;
(g) Payment by Borrower of the Closing Fee and all other fees,
costs, and expenses payable by Borrower hereunder that have accrued as of the
Closing Date;
(h) Lender shall be satisfied (i) that all other Financial
Statements delivered to it fairly present the business and financial condition
of Borrower and Guarantor and the results of operations for the periods then
ended, and there has been no Material Adverse Effect on Borrower's or
Guarantor's business, assets or financial condition since the respective dates
of such Financial Statements; (ii) as to the solvency of Borrower following the
transactions contemplated hereby; and (iii) with the results of customer
checkings and due diligence, including without limitation, reference checks;
(i) Verification of Lease Receivables constituting Eligible Lease
Receivables satisfactory to Lender, and a written statement indicating the
Credit Rating assigned thereto;
(j) Guarantor shall have delivered updated Financial Statements to
Lender, in form and substance satisfactory to Lender;
(k) All Indebtedness owing to any Affiliates of Borrower or any of
Borrower's stockholders, officers or employees, shall be subordinated to the
Obligations on terms and conditions satisfactory to Lender;
(l) Hypercom, the Borrower's parent corporation, shall have closed
credit facilities totaling $45,000,000 with Foothill Capital ("Foothill") on
terms and conditions satisfactory to Lender, in its sole discretion;
(m) Hypercom shall have repaid, in full, all credit facilities
extended by Bank One, Arizona, NA, Fleet National Bank and Imperial Bank and all
such facilities shall have been terminated, except as provided on Disclosure
Schedule 3.1(m) attached hereto;
(n) Borrower shall have closed on its financing with Congress
Financial Corporation in an amount no less than ten million dollars
($10,000,000) on terms and conditions satisfactory to Lender, in its sole
discretion, and Lender shall have received satisfactory evidence thereof;
(o) Lender shall have received satisfactory evidence that the
Borrower has been released from any and all guaranties of the obligations of
Hypercom to Foothill; and
(p) Lender shall have received executed W-9 forms from both
Hypercom and Borrower.
3.2 Further Conditions to the Loan. Lender shall not be obligated to fund
any Loan, if, as of the date thereof:
(a) Any representation or warranty by any Credit Party contained
herein or in any of the other Loan Documents shall be untrue or incorrect as of
such date, except to the extent that such representation or warranty is
expressly stated to relate to a specific earlier date, in which case, such
representation and warranty shall be true and correct as of such earlier date;
or
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(b) Any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) Any Default shall have occurred and be continuing or would
result after giving effect to such Loan; or
(d) After giving effect to such Loan, the Revolving Credit Loan
exceeds the Borrowing Availability; or
(e) Any action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
Governmental Authority to enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of, this Agreement or any other
Loan Document or the consummation of any transaction contemplated hereby or
thereby and which, in Lender's sole judgment, would make it inadvisable to
consummate any transaction contemplated by this Agreement or any other Loan
Document; or
(f) The Borrower shall have promptly executed and/or delivered to
the Lender, in its sole discretion, any and all other documents and/or
instruments that the Lender shall request in connection with the Gross Lease
Receivables and/or the Leases and/or the Leased Equipment.
The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request and the date of such
acceptance, (i) a representation and warranty by Borrower that the conditions in
Sections 3.1 and 3.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Lender's Liens pursuant to the Loan Documents.
4. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, Borrower
and each other Credit Party executing this Agreement represent and warrant to
Lender (each of which representations and warranties shall survive the execution
and delivery of this Agreement), and promise to and agree with Lender until the
Termination Date as follows:
4.1 Corporate Existence; Compliance with Law. Each Corporate Credit Party:
(a) is, as of the Closing Date, and will continue to be (i) a corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation, (ii) duly qualified to do
business and in good standing in each other jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect, and (iii) in compliance with all Requirements of
Law and Contractual Obligations, except to the extent failure to comply
therewith could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and (b) has and will continue to have (i) the
requisite corporate power and authority and the legal right to execute, deliver
and perform its obligations under the Loan Documents, and to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore or
proposed to be conducted, and (ii) all licenses, permits, franchises, rights,
powers, consents or approvals from or by all Persons or Governmental Authorities
having jurisdiction over such Corporate Credit Party which are necessary or
appropriate for the conduct of its business.
4.2 Executive Offices; Corporate or Other Names; Conduct of Business. The
location of Borrower's chief executive office and principal place of business,
corporate offices, warehouses, locations where Collateral related records are
kept (including in each case the county of such locations) and any other
locations at which the Borrower has an office or place of business or at which
Borrower's assets are located (other than the location of individual items of
leased equipment) are as set forth in Disclosure Schedule (4.2) and, except as
set forth in such Disclosure Schedule, such locations have not changed during
the preceding twelve months. As of the Closing Date, during the prior five
years, except as set forth in Disclosure Schedule (4.2), no Corporate Credit
Party has been known as or conducted business in any other name (including trade
names). No Corporate Credit Party shall change its (a) name, (b) chief executive
office, (c) principal place of business, (d) corporate offices, (e) warehouses
or other Collateral locations, or (f) location of its records concerning the
Collateral, or acquire, lease or use any real estate after the Closing Date
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without such Person, in each instance, giving thirty (30) days prior written
notice thereof to Lender and taking all actions deemed necessary or appropriate
by Lender to continuously protect and perfect Lender's Liens upon the
Collateral.
4.3 Corporate Power; Authorization; Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party, and the creation of all Liens provided for herein and therein: (a)
are and will continue to be within such Credit Party's power and authority; (b)
have been and will continue to be duly authorized by all necessary or proper
action; (c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Credit Party (d) do not and will not result in
the creation or imposition of any Lien (other than Permitted Encumbrances) upon
any of the Collateral; and (e) do not and will not require the consent or
approval of any Governmental Authority or any other Person, except those
referred to in Section 3.1(c) (all of which will have been duly obtained, made
or complied with on or before the Closing Date and shall be in full force and
effect on such date). As of the Closing Date, each Loan Document shall have been
duly executed and delivered on behalf of each Credit Party part thereto, and
each such Loan Document upon such execution and delivery shall be and will
continue to be a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally, and by general principles of equity. In addition
to, and not in limitation of, any other representation or warranty made by
Borrower hereunder, the Borrower has a right to assign, and/or grant security
interests in, and has validly assigned and/or granted security interests in and
to, the Collateral, including, without limitation, the Gross Lease Receivables,
the Leases and the Leased Equipment to the Lender. The Lender will have a
legally valid and perfected first priority security interest in, and assignment
of, all of the Collateral effective against all parties or persons except as
otherwise provided in this Agreement.
4.4 Financial Statements and Projections; Books and Records. (a) The
Financial Statements delivered by Borrower to Lender for its most recently ended
Fiscal Year and Fiscal Month are true, correct and complete and reflect fairly
and accurately the financial condition of Borrower as of the date of each of
such Financial Statement in accordance with GAAP.
(b) Borrower and each other Corporate Credit Party shall keep
adequate Books and Records with respect to the Collateral and its business
activities in which proper entries, reflecting all consolidated and
consolidating financial transactions, and payments received on any and all
credits granted to, and all other dealings with, the Collateral, will be made in
accordance with GAAP and all Requirements of Law and on a basis consistent with
the Financial Statements.
4.5 Material Adverse Change. Between the date of Borrower's most recent
Financial Statements delivered to Lender and the Closing Date: (a) no Corporate
Credit Party has incurred any obligations, contingent or non-contingent
liabilities, or liabilities for Charges, long-term leases or unusual forward or
long-term commitments which could, alone or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (b) no event has occurred which
alone or in the aggregate has had or could reasonably be expected to have a
Material Adverse Effect. No Requirement of Law or Contractual Obligation of any
Credit Party has had or could reasonably be expected to have a Material Adverse
Effect and no Credit Party is in default, and to such Credit Party's knowledge
no third party is in default under or with respect to any of its Contractual
Obligations, which alone or in the aggregate has had or could reasonably be
expected to have a Material Adverse Effect.
4.6 Real Estate. The real estate listed in Disclosure Schedule (4.6)
constitutes all of the real property owned, leased, or used by each Corporate
Credit Party in its business, and such Corporate Credit Party will not execute
any material agreement or contract in respect of such real estate after the date
of this Agreement without giving Lender prompt written notice thereof. Each
Corporate Credit Party holds and will continue to hold good and marketable fee
simple title to all of its owned real estate, and good and marketable title to
all of its other properties and assets, and valid and insurable leasehold
interests in all of its leases (both as lessor and lessee, sublessee or
assignee), and none of the properties and assets of any Corporate Credit Party
are or will be subject to any Liens, except Permitted Encumbrances.
4.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (4.7), as of the
Closing Date no Corporate Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. All of the issued and
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outstanding Stock of each Corporate Credit Party (including all rights to
purchase, options, warrants or similar rights or agreements pursuant to which
any Corporate Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock) as of the Closing Date is owned by each of the Stockholders
(and in the amounts) set forth on Disclosure Schedule (4.7). Upon consummation
of the transactions contemplated by the Loan Documents, the Corporate Credit
Parties will not have any outstanding Indebtedness other than the Indebtedness
under this Agreement or as is described in Section 5(c).
4.8 Government Regulation. No Credit Party is subject to or regulated under
the Investment Company Act of 1940, the Public Utility Holding Company Act of
1935, the Federal Power Act or any other Federal or state statute, rule or
regulation that restricts or limits such Person's ability to incur Indebtedness,
pledge its assets, or to perform its obligations under the Loan Documents. The
making of the Loan, the application of the proceeds and repayment thereof, and
the consummation of the transactions contemplated by the Loan Documents do not
and will not violate any provision of any such statute or any rule, regulation
or order issued by the Securities and Exchange Commission.
4.9 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin security" as
such terms are defined in Regulations U or G of the Federal Reserve Board as now
and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause the Loan or other extensions of credit under this
Agreement to be considered a "purpose credit" within the meaning of Regulation
G, T, U or X of the Federal Reserve Board. No Credit Party will take or permit
to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
4.10 Taxes; Charges. Except as disclosed on Disclosure Schedule (4.10) all
tax returns, reports and statements required by any Governmental Authority to be
filed by Borrower or any other Credit Party have, as of the Closing Date, been
filed and will, until the Termination Date, be filed with the appropriate
Governmental Authority and no tax Lien has been filed against any Credit Party
or any Credit Party's property. Proper and accurate amounts have been and will
be withheld by Borrower and each other Credit Party from their respective
employees for all periods in complete compliance with all Requirements of Law
and such withholdings have and will be timely paid to the appropriate
Governmental Authorities. Disclosure Schedule (4.10) sets forth as of the
Closing Date those taxable years for which any Credit Party's tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described on Disclosure
Schedule (4.10), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee. As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
could reasonably be expected to have a Material Adverse Effect.
4.11 Payment of Obligations. Each Credit Party will pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all of its Charges and other obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of such Credit Party and none of the
Collateral becomes subject to any Lien or forfeiture or loss as a result of such
contest. Borrower and each Corporate Credit Party is, and at the time of each of
the Revolving Credit Advances, (i) has capital sufficient to carry on its
business and transactions in which it is engaged or about to engage; (ii) is
able to pay its debts as they mature; and (iii) owns property whose fair salable
value is greater than the amounts required to pay it debts.
4.12 ERISA. (a) Disclosure Schedule (4.12) lists and separately identifies
all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies
of all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Lender. Each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred which would cause
the loss of such
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qualification or tax-exempt status. Each Plan is in compliance with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA. No Corporate Credit Party or ERISA Affiliate
has failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. No
Corporate Credit Party or ERISA Affiliate has engaged in a prohibited
transaction, as defined in Section 4975 of the IRC, in connection with any Plan,
which would subject any Corporate Credit Party to a material tax on prohibited
transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (4.12): (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Corporate Credit Party, threatened claims (other than claims for benefits in
the normal course), sanctions, actions or lawsuits, asserted or instituted
against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no
Credit Party or ERISA Affiliate has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a Multiemployer
Plan; (v) within the last five years no Title IV Plan with Unfunded Pension
Liabilities has been transferred outside of the "controlled group" (within the
meaning of Section 4001(a)(14) of ERISA) of any Corporate Credit Party or ERISA
Affiliate; and (vi) no liability under any Title IV Plan has been satisfied with
the purchase of a contract from an insurance company that is not rated AAA by
the Standard & Poor's Corporation or the equivalent by another nationally
recognized rating agency.
4.13 Litigation. No Litigation is pending or, to the knowledge of any Credit
Party, threatened by or against any Credit Party or against any Credit Party's
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Affect. Except as set forth on Disclosure
Schedule (4.13), as of the Closing Date there is no Litigation pending or
threatened against any Credit Party which seeks damages in excess of $50,000 or
injunctive relief or alleges criminal misconduct of any Credit Party. Each
Credit Party shall notify Lender promptly upon learning of the existence or
commencement of any Litigation commenced or to the knowledge of any Credit Party
threatened against any Credit Party that: (x) may involve an amount in excess of
$50,000; (y) could reasonably be expected to have a Material Adverse Effect
whether or not determined adversely; or (z) regardless of amount (i) is asserted
or instituted, against any Plan, its fiduciaries or its assets, or against any
Credit Party or any ERISA Affiliate in connection with any Plan, (ii) includes
any demand for injunctive relief, (iii) alleges criminal misconduct by any
Credit Party, or (iv) alleges the violation of any law regarding, or seeks
remedies in connection with, any Environmental Liabilities.
4.14 Intellectual Property. As of the Closing Date, all material Intellectual
Property owned or used by any Corporate Credit Party is listed, together with
application or registration numbers, where applicable, in Disclosure Schedule
(4.14). Each Corporate Credit Party owns, or is licensed to use, all
Intellectual Property necessary to conduct its business as currently conducted
except for such Intellectual Property the failure of which to own or license
could not reasonably be expected to have a Material Adverse Effect.
4.15 Full Disclosure. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of any
Credit Party under any Loan Document, or to induce Lender to execute the Loan
Documents, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
4.16 Hazardous Materials. Except as set forth on Disclosure Schedule (4.16) as
of the Closing Date, (a) each real property location owned, leased or occupied
by each Corporate Credit Party (the "Real Property") is maintained free of
contamination from any Hazardous Material, (b) no Corporate Credit Party is
subject to any Environmental Liabilities or, to any Corporate Credit Party's
knowledge, potential Environmental Liabilities, in excess of $50,000 in the
aggregate, (c) no notice has been received by any Corporate Credit Party
identifying it as a "potentially responsible party" or requesting information
under CERCLA or analogous state statutes, and to the knowledge of any Corporate
Credit Party, there are no facts, circumstances or conditions that may result in
any Corporate Credit Party being identified as a "potentially responsible party"
under CERCLA or analogous state statutes; and (d) each Corporate Credit Party
has provided to Lender copies of all existing environmental reports, reviews and
audits and all written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any Corporate Credit Party.
Each Corporate Credit Party: (i) shall comply in all material respects with all
applicable
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Environmental Laws and Environmental Permits; (ii) shall notify Lender in
writing within seven days if and when it becomes aware of any Release, on, at,
in, under, above, to, from or about any of its Real Estate; and (iii) shall
promptly forward to Lender a copy of any order, notice, permit, application, or
any communication or report received by it or any other Credit Party in
connection with any such Release.
4.17 Insurance. As of the Closing Date, Disclosure Schedule (4.17) lists all
insurance of any nature maintained for current occurrences by Borrower and each
other Corporate Credit Party, as well as a summary of the terms of such
insurance. Each Corporate Credit Party shall deliver to Lender endorsements to
all of its and those of its Subsidiaries (a) "All Risk" and business
interruption insurance policies naming Lender loss payee, and (b) general
liability and other liability policies naming Lender as an additional insured.
All policies of insurance on real and personal property will contain an
endorsement, in form and substance acceptable to Lender, showing loss payable to
Lender (Form 438 BFU or equivalent) and extra expense and business interruption
endorsements. Such endorsement, or an independent instrument furnished to
Lender, will provide that the insurance companies will give Lender at least 30
days prior written notice before any such policy or policies of insurance shall
be altered or cancelled and that no act or default of Borrower or any other
Person shall affect the right of Lender to recover under such policy or policies
of insurance in case of loss or damage. Each Corporate Credit Party shall direct
all present and future insurers under its "All Risk" policies of insurance to
pay all proceeds payable thereunder directly to Lender. If any insurance
proceeds are paid by check, draft or other instrument payable to Borrower and
Lender jointly, Lender may endorse Borrower's name thereon and do such other
things as Lender may deem advisable to reduce the same to cash. Lender reserves
the right at any time, upon review of each Credit Party's risk profile, to
require additional forms and limits of insurance to adequately protect Lender's
interests in accordance with Lender's normal practice for similarly situated
borrowers. Each Corporate Credit Party shall, on each anniversary of the Closing
Date and from time to time at Lender's request, deliver to Lender a report by a
reputable insurance broker, satisfactory to Lender, with respect to such
Person's insurance policies. All policies of insurance covering the Collateral
provide coverage for property located on premises other than the Borrower's
premises.
4.18 Deposit and Disbursement Accounts. Attachment I to Schedule A lists all
banks and other financial institutions at which Borrower, or any other Corporate
Credit Party, maintains deposits and/or other accounts, including the Operating
Account, and such Attachment correctly identifies the name, address and
telephone number of each such depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number. No
Corporate Credit Party will establish any depository or other bank account of
any kind with any financial institution (other than the accounts set forth on
Attachment 1 to Schedule A) without Lender's prior written consent.
4.19 Lease Receivables. As of the date of each Borrowing Base Certificate
delivered to Lender, and subject to Lender's determination in its sole
discretion, each Lease Receivable listed thereon as an Eligible Lease Receivable
is an Eligible Lease Receivable. Borrower has not made, and will not make, any
agreement with any Account Debtor for any extension of time for the payment of
any Lease Receivable, any compromise or settlement for less than the full amount
thereof, any release of any Account Debtor from liability therefor, or any
deduction therefrom except a discount or allowance for prompt or early payment
allowed by Borrower in the ordinary course of its business consistent with
historical practice and as previously disclosed to Lender in writing. With
respect to the Lease Receivables pledged as collateral pursuant to any Loan
Document (a) the amounts shown on all invoices, statements and reports which may
be delivered to the Lender with respect thereto are actually and absolutely
owing to the relevant Credit Party as indicated thereon and are not in any way
contingent; (b) no payments have been or shall be made thereon except payments
immediately delivered to the applicable Bank Accounts or the Lender as required
hereunder; and (c) to Borrower's knowledge, all Account Debtors have the
capacity to contract. Borrower shall notify Lender promptly of any event or
circumstance which, to Borrower's knowledge would cause Lender to consider any
then existing Lease Receivable as no longer constituting an Eligible Lease
Receivable.
4.20 Leases. With respect to the Leases, the Lease Receivables and/or the Gross
Lease Receivables, as the case may be, Borrower warrants and represents to
Lender that, unless otherwise indicated in writing by Borrower: (i) they are
genuine, are in all respects what they purport to be, are not evidenced by a
judgment and are only evidenced by one, if any, executed original instrument,
agreement, contract or document; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in
any documents related thereto; (iii) the amounts of the face value shown on any
Leases or schedules thereto or schedule of accounts or accounts receivable
report delivered or provided to Lender, and all invoices, statements and reports
delivered or provided to
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Lender, with respect to any Gross Lease Receivables and/or Leases are actually
and absolutely owing to Borrower and are not contingent for any reason; (iv)
there are no setoffs, counterclaims or disputes existing or asserted with
respect thereto and Borrower has not made any agreement with any Account Debtor
thereunder for any deduction therefrom; (v) there are no facts, events or
occurrences which in any way impair the validity or enforcement thereof or tend
to reduce the amount payable thereunder from the amount of any such Lease
Receivables and/or Leases, and on all contracts, reports, invoices and
statements delivered or provided to Lender with respect thereto; (vi) to the
best of Borrower's knowledge and belief, all Account Debtors, under any Gross
Lease Receivables and/or Leases, (A) had the capacity to contract at the time
any Lease or contract or other document giving rise to the Lease Receivable was
executed, (B) are solvent, and (C) are not the subject of a bankruptcy or
insolvency proceeding of any kind; (vii) the Lease Receivable, the Leased
Equipment and the Leases giving rise to any such Lease Receivable are not
subject to any Liens or claim or encumbrance, except those of Lender, those
removed or terminated prior to the date hereof and those subordinate to Lender's
security interest (unless otherwise agreed by the Lender in its sole
discretion); (viii) Borrower has no knowledge of any fact or circumstance which
would impair the validity or collectibility thereof; (ix) to the best of
Borrower's knowledge and belief, there are no proceedings or actions which are
threatened or pending against any Account Debtor thereunder which might result
in any material adverse change in said party's financial condition; (x) they
have not been pledged, assigned or transferred to any Person other than to the
Lender; (xi) the Leases and any guarantees or undertakings of any kind
whatsoever regarding the same constitutes legal, valid and binding agreements
enforceable against the Account Debtors and any guarantors in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally; (xii) Borrower is the sole and absolute owner of
all the applicable Leases, Gross Lease Receivables and Leased Equipment (subject
only to the Liens of the Lender hereunder); (xiii) the applicable Leased
Equipment shall have been delivered and/or installed, shall be in good working
order and shall have been fully and duly accepted by the applicable lessee;
(xiv) it has been originated by the Borrower; (xv) there are no verbal, written
or implied agreements or representations between the Borrower and the Account
Debtor regarding any such Lease Receivables and/or Leases and/or Leased
Equipment other than the written agreements or documents either delivered to and
held by the Lender, or held by the Borrower or the Trustee (if applicable) on
behalf of the Lender, pursuant to the terms of this Agreement; and (xvi) all of
the Leases relate to commercial and business transactions and not consumer
transactions and the Leased Equipment is used for commercial purposes only and
not for any consumer or farming purposes.
4.21 Conduct of Business; Maintenance of Existence. Each Corporate Credit Party
(a) shall conduct its business substantially as now conducted or as otherwise
permitted hereunder and preserve all of its rights, privileges and franchises
necessary and desirable in connection therewith, and (b) shall at all times
maintain, preserve and protect all of the Collateral and other property provided
by such party, used or useful in the conduct of its business and keep the same
in good repair, working order and condition (taking into consideration ordinary
wear and tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices.
4.22 Further Assurances. At any time and from time to time, upon the written
request of Lender and at the sole expense of Borrower, Borrower and each other
Credit Party shall promptly and duly execute and deliver any and all such
further instruments and documents, including any requested projections, and take
such further action as Lender may reasonably deem desirable (a) to obtain the
full benefits of this Agreement, (b) to protect, preserve and maintain Lender's
rights in the Collateral, or any of it, and under this Agreement, or (c) to
enable Lender to exercise all or any of the rights and powers herein granted.
4.23 No Joint Venture. Lender and Borrower shall not be deemed to be partners or
joint venturers and Borrower shall indemnify and hold Lender harmless from
damages and expenses resulting from such a construction of the relationship of
the parties.
5. AFFIRMATIVE COVENANTS
5.1 Reports and Notices. Borrower represents, agrees and promises that from and
after the Closing Date until the Termination Date, Borrower shall deliver to
Lender:
(a) As frequently as Lender may request and in any event no less
frequently than once per month and simultaneously with the delivery of each
Notice of Revolving Credit Advance, (i) a Borrowing Base Certificate in
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the form of Exhibit C detailing Eligible Lease Receivables for adjustment to the
Borrowing Base, (ii) an accounts receivable analysis and aging report for those
Lease Receivables pledged as Collateral, and (iii) a statement that all Lease
Receivables over 60 days past due have been replaced by additional Collateral,
each to be certified as true and correct by the Chief Financial Officer of
Borrower or such other officer as is acceptable to Lender;
(b) Within 15 days following the end of each Fiscal Month, (i) a list
of all Account Debtors, lessees, Leases, loans, Lease and loan types, Leased
Equipment, types of Leased Equipment, original and outstanding Lease and loan
balances relating to the Collateral, (ii) a summary accounts receivable analysis
and aging report for Borrower's entire Lease portfolio, including those Leases
which have been sold or pledged to third parties but which Borrower continues to
service, (iii) an accounts payable analysis and aging report, and (iv) a
description of all ineligible calculations;
(c) Within 15 days following the end of each Fiscal Month, the
internally prepared Financial Statements for such Fiscal Month, accompanied by a
certification of ▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President of Borrower that such
Financial Statements are complete and correct, that no Restricted Payments have
been made, that Borrower is in compliance with all financial covenants contained
herein and that no other Default has occurred (or specifying those Defaults of
which she is aware), and showing in reasonable detail the calculations used in
determining compliance with the financial covenants hereunder, such
certification to be in the form of Exhibit H attached hereto, or such other form
as Lender shall require;
(d) Within 120 days following the close of each Fiscal Year, the
audited consolidated and consolidating (at least with respect to Borrower)
Financial Statements of Hypercom for such Fiscal Year, accompanied by (i) a
report from Hypercom's accountants to the effect that in connection with their
audit examination nothing has come to their attention to cause them to believe
that a Default has occurred or specifying those Defaults of which they are
aware, and (ii) any management letter that may be issued;
(e) Within 10 days after the filing thereof, copies of the federal and
state income tax returns of Borrower and all Guarantors; and
(f) Within 30 days following the end of each Fiscal Month, the
compliance certificate as required by Section 6.3(a)(iii) of the Loan and
Security Agreement, dated as of July 31, 2001, between Hypercom and Foothill
Capital Corporation.
5.2 Financial Covenants. Borrower shall not breach any of the following
financial covenants and as frequently as Lender may request and in any event no
less frequently than once per Fiscal Quarter, Borrower shall deliver to Lender a
statement, in a form satisfactory to Lender, confirming Borrower's compliance
with such financial covenants, certified as true and correct by the Chief
Financial Officer of Borrower or such other officer as is acceptable to Lender.
(a) Total Liabilities/Tangible Net Worth Ratio. Borrower shall maintain
a ratio of total liabilities (adding any contingent liabilities of the Borrower
arising from the sale of any Leases but excluding any Subordinated Indebtedness
of any kind whatsoever) to Tangible Net Worth of no greater than 15.0:1.0 as of
the end of each Fiscal Quarter of the Borrower, beginning with the Fiscal
Quarter ending September 30, 2001.
(b) Operating Income. Borrower shall maintain Operating Income of at
least $800,000 for each Fiscal Quarter of the Borrower, beginning with the
Fiscal Quarter ending September 30, 2001.
(c) EBITDA. Hypercom, on a consolidated basis (including Borrower)
shall maintain a minimum EBITDA of at least $1,870,000 for each Fiscal Quarter
beginning with the Fiscal Quarter ended June 30, 2001. Hypercom, on a
consolidated basis (but excluding Borrower) shall maintain a minimum EBITDA of
at least $595,000 for each Fiscal Quarter beginning with the Fiscal Quarter
ended June 30, 2001.
(d) Total Liabilities/EBITDA. Throughout the term of this Agreement
Hypercom, on a consolidated basis, shall maintain a ratio of total liabilities
(excluding any Subordinated Indebtedness of any kind whatsoever and Borrower's
currently existing $31,960,000 lease securitization transaction) to EBITDA of no
greater than 4.1:1.0 for each fiscal year measured as of the end of each fiscal
year.
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(e) Eligible Lease Receivables Credit Ratings. At all times, (i) the
aggregate present value (as determined by Lender) of all Eligible Lease
Receivables actually owed by Lessees having a credit rating of A or B shall
equal not less than fifty-five percent (55%) of the total aggregate present
value (as determined by Lender) of all eligible risk lease receivables and (ii)
the aggregate present value (as determined by Lender) of all Eligible Lease
Receivables actually owed by Lessee having a credit rating of A, B or C shall be
not less than ninety percent (90%) of the total aggregate present value (as
determined by Lender) of all Eligible Lease Receivables.
5.3 Other Reports and Information. Borrower shall advise Lender promptly, in
reasonable detail, of: (a) any Lien, other than Permitted Encumbrances,
attaching to or asserted against any of the Collateral or any occurrence causing
a material loss or decline in value of any Collateral and the estimated (or
actual, if available) amount of such loss or decline; (b) any material change in
the composition of the Collateral; and (c) the occurrence of any Default or
other event which could reasonably be expected to have a Material Adverse
Effect. Borrower shall, upon request of Lender, furnish to Lender such other
reports and information in connection with the affairs, business, financial
condition, operations, prospects or management of Borrower or any other Credit
Party or the Collateral as Lender may request, all in reasonable detail.
5.4 Maintain its Existence. Preserve and maintain Golden Eagle Leasing, Inc.'s
corporate existence and good standing in the jurisdiction of its organization,
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is required.
5.5 Maintenance of Properties. Maintain, keep and preserve all of its properties
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted.
5.6 Conduct of Business. Continue to engage in a business of the same general
type as conducted and proposed to be conducted by it on the date of this
Agreement.
5.7 Maintenance of Insurance. (a) Keep its properties and the properties subject
to each Lease, including, without limitation, and Leased Equipment, insured
against fire and other hazards (so called "All Risk" coverage) in amounts and
with companies satisfactory to the Lender to the same extent in covering such
risks as is customary in the same or a similar business, but in no event in an
amount less than the lesser of (i) the total indebtedness or (ii) the amount
necessary to avoid and co-insurance penalty which policy shall name the Lender
as loss payee as its interest may appear, (b) Maintain public liability coverage
against claims for personal injuries, death or property damage in an amount
deemed reasonable by the Lender, which policy shall name the Lender as an
additional insured, and (c) Maintain all worker's compensation, employment or
similar insurance as may be required by applicable law. Notwithstanding the
above, Borrower's obligations under this Section shall be complied with provided
that Borrower maintains a general insurance policy insuring Leased Equipment
located at lessee's premises, containing a $250.00 deductible for each loss and
the Borrower and/or lessee shall be required to insure the Leased Equipment
based upon Borrower's current business practices which allows certain lessees,
that Borrower determines are "good credit risks" to self-insure the Leased
Equipment or it charges a monthly fee in lieu of insurance to such lessees. Such
All Risk property insurance coverage shall provide for a minimum of thirty (30)
days' written cancellation notice to the Lender. The Borrower agrees to deliver
copies of all of the aforesaid insurance policies to the Lender. In the event of
any loss or damage to any Collateral, the Borrower shall give immediate written
notice to the Lender and to its insurers of such loss of damage and shall
properly file its proofs of loss with said insurers. All insurance policies
required hereunder shall provide that Borrower's successors and assigns shall
also be covered by said insurance policies.
5.8 Compliance with Laws. Comply with all respects with all applicable laws,
statutes, rules, ordinances, regulations, and orders of Governmental
Authorities, such compliance to include, without limitation, paying before the
same become delinquent all taxes, assessments, and governmental charges imposed
upon it or upon its property, and complying with all broker, truth-in-lending or
lending or banking laws, rules or regulations.
5.9 Collateral. Shall (a) preserve the Collateral in good condition and order
and not permit it to be abused or misused, (b) not allow any of the applicable
Collateral to be affixed to real estate, (c) until a request from the Lender or
the occurrence of a Default or an Event of Default or upon contrary instructions
from Lender, collect its accounts pursuant to this Agreement, (d) following the
request of the Lender or upon the occurrence of a Default or an Event
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of Default (and upon request of the Lender), deliver all proceeds of the
Collateral to the Lender immediately upon receipt in the identical form received
without commingling with other property, (e) following the request of the Lender
or upon the occurrence of a Default or an Event of Default and when and to the
extent required by the Lender, notify Account Debtors and obligers that their
accounts, instruments, documents, contracts and all of the Borrower's rights to
receive payments have been assigned to the Lender and shall be paid directly to
the Lender, (f) take reasonably necessary steps to preserve the liability of
Account Debtors, and obligers, and secondary parties whose liabilities are part
of the Collateral, (g) take any action required by the Lender with reference to
the Federal Assignment of Claims Act, (h) allow the Lender to inspect the
Collateral and to inspect and copy all records relating to the Collateral, (i)
immediately upon request by the Lender or following the occurrence of a Default
or an Event of Default: (a) transfer possession or permit the Lender to take
possession of all Collateral (to the extent applicable); and (b) allow the
Lender to immediately take possession of all instruments, and documents, which
are part of the Collateral, or as to those hereafter required immediately
following acquisition, and (j) notify the Lender of any change of location or
material adverse change in the condition of any of the Collateral, or of any
material adverse change in any fact or circumstance warranted or represented by
the Borrower herein or finished to the Lender, or if any Default or Event of
Default occurs.
5.10 Defend Collateral. Defend the Collateral against all claims and demands of
all Persons at any time claiming the same or any interest therein and, in the
event the Lender's security interest in (and/or assignment of) the Collateral,
or any part thereof, would be impaired by an adverse decision, allow the Lender
to contest or defend any such claim or demand in the Borrower's name and the
Borrower agrees to pay, upon demand, the Lender's reasonable costs, charges and
expenses, including, without limitation reasonable attorneys' fees in connection
therewith.
5.11 Assignments of Leases, Leased Equipment, etc.
(a) Assign to the Lender, among other thing, all Leases, including,
without limitation, the assignment of all applicable leases, schedules, and any
and all other lease documentation relating thereto, all Leased Equipment, all
Gross Lease Receivables and any and all guarantees or undertaking of any kind
whatsoever of any of the foregoing.
(b) Simultaneously with any assignment of any Leases hereunder, execute
any other documents or instruments requested by the Lender regarding the Leases
and/or the Leased Equipment and/or Gross Lease Receivables and deliver the same
to the Lender in its sole discretion.
(c) The original Leases, schedules, acceptance certificates,
amendments, modifications, riders, supplements, purchase options, exhibits,
addendum, and any and all other documents or instruments executed and/or
delivered in connection with (including, without limitation, any and all
guarantees or undertaking of any kind whatsoever of the same) the Leases shall
be delivered to the Lender or, if acceptable to the Lender (in its sole
discretion), to the Trustee, on the Lender's behalf pursuant to the terms of
this Agreement and/or the Trust Agreement, or any of the same which the Lender
does not require to be delivered to it or to the Trustee shall be held by the
Borrower in trust as trustee of an express trust for the Lender and any such
documents or items shall be promptly delivered to the Lender upon the Lender's
request or demand for the same.
(d) Promptly executed and/or delivery to the Lender or, if acceptable
to the Lender (in its sole discretion), to the Trustee, on behalf of Lender
pursuant to the terms of this Agreement and/or the Trust Agreement, any and all
documents and/or instrument that the Lender shall request in connection with the
Gross Lease Receivables, the Leases and/or the Leased Equipment.
5.12 No Material Change to Management Team. The Borrower shall not make a
material change to the executive management team of the Borrower as it exists as
of the date hereof, and ▇▇▇▇ ▇▇▇▇▇▇▇ at all times shall continue in her current
role as Senior Vice President, Chief Financial Officer and Chief Operating
Officer of the Borrower.
5.13 Lease Documentation. Maintain its standard forms of lease documents and
notify the Lender of any proposed material changes in its standard forms, which
change shall be subject to the prior written approval of the Lender.
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5.14 UCC Filings. Duly and timely record and file all applicable Uniform
Commercial Code Financing Statements in favor of the Lender and/or the Borrower,
as the case may be, regarding the Collateral, including, without limitation, the
Leases, the Gross Lease Receivables and/or the Leased Equipment under the
applicable Lease, in all appropriate offices and/or records. Notwithstanding the
foregoing, no filing shall be required for Collateral with a value of less than
ten thousand dollars ($10,000).
5.15 Hold Documents as the Trustee. Hold any original Leases, schedules,
acceptance certificates, riders, supplements, purchase options, exhibits,
addendum, tax authorizations and liability and hazard insurance policies for,
and any and all other documents or instruments executed and/or delivered in
connection with (including, without limitation, any guarantees or undertakings
of any kind whatsoever of the same) the Leases which the Lender does not require
to be delivered to it or, if acceptable to the Lender (in its sole discretion),
to the Trustee, on Lender's behalf pursuant to the terms of this Agreement
and/or the Trust Agreement, in trust as trustee of an express trust for the
Lender and, upon the Lender's request or demand, promptly deliver the same to
the Lender.
5.16 Leased Equipment. Acquire and/or purchase any Collateral, including,
without limitation, any Leased Equipment, with good and merchantable title free
and clear of any Lien except as otherwise provided under this Agreement.
5.17 Leases. With respect to any Leases entered into at any time after the date
of this Agreement and any Lease Receivables and/or Gross Lease Receivables
related thereto, Borrower warrants and represents to Lender that as of the date
of any such Leases, Lease Receivables and/or Gross Lease Receivables, as the
case may be, unless otherwise indicated in writing by Borrower: (A) they are
genuine, are in all respects what they purport to be, are not evidenced by a
judgment and are only evidenced by one, if any, executed original instrument,
agreement, contract or document; (B) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in
any documents related thereto; (C) the amounts of the face value shown on any
Leases or schedules thereto or schedule of accounts or accounts receivable
report delivered or provided to Lender, and all invoices, statements and reports
delivered or provided to Lender, with respect to any Gross Lease Receivables
and/or Leases are actually and absolutely owing to Borrower and are not
contingent for any reason; (D) there are no setoffs, counterclaims or disputes
existing or asserted with respect thereto and Borrower has not made any
agreement with any Account Debtor thereunder for any deduction therefrom; (E)
there are no facts, events or occurrences which in any way impair the validity
or enforcement thereof or tend to reduce the amount payable thereunder from the
amount of any Gross Lease Receivables and/or Leases, and on all contracts,
reports, invoices and statements delivered or provided to Lender with respect
thereto; (F) to the best of Borrower's knowledge and belief, all Account
Debtors, under any Gross Lease Receivables and/or Leases, (i) had the capacity
to contract at the time any Lease or contract or other document giving rise to
the Gross Lease Receivable was executed, (ii) are solvent, and (iii) are not the
subject of a bankruptcy or insolvency proceeding of any kind; (G) the Gross
Lease Receivable, the Leased Equipment and the Leases giving rise to any such
Gross Lease Receivable are not subject to any Liens or claim or encumbrance,
except those of Lender, those removed or terminated prior to the date hereof and
those subordinate to Lender's security interest (unless otherwise agreed by the
Lender in its sole discretion); (H) Borrower has no knowledge of any fact or
circumstance which would impair the validity or collectibility thereof; (I) to
the best of Borrower's knowledge and belief, there are no proceedings or actions
which are threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in said party's financial condition;
(J) they have not been pledged, assigned or transferred to any Person other than
to the Lender; (K) the Leases and any guarantees or undertakings of any kind
whatsoever regarding the same constitutes legal, valid and binding agreements
enforceable against the Account Debtors and any guarantors in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally; (L) Borrower is the sole and absolute owner of (or
has a perfected, first priority lien and security interest in) all the
applicable Leases, Gross Lease Receivables and Leased Equipment (subject only to
the Liens of the Lender hereunder); (M) the applicable Leased Equipment shall
have been delivered and/or installed, shall be in good working order and shall
have been fully and duly accepted by the applicable lessee; (N) it has been
newly originated by the Borrower and does not arise from a re-written lease; (O)
there are no verbal, written or implied agreements or representations between
the Borrower and the Account Debtor regarding any such Gross Lease Receivables
and/or Leases and/or Leased Equipment other than the written agreements or
documents delivered to and held by the Lender, or held by the Borrower or the
Trustee (if applicable) on behalf of the Lender, pursuant to the terms of this
Agreement; and (P) all of the applicable Leases are commercial and business
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transactions and not consumer transactions and the Leased Equipment is used for
commercial purposes only and not for any consumer or farming purposes.
6. NEGATIVE COVENANTS
Borrower covenants and agrees (for itself and, with respect to (d), (f), (g) and
(k) below, each other Credit Party) that, without Lender's prior written
consent, from the Closing Date until the Termination Date, neither Borrower nor,
with respect to (d), (f), (g) and (k) below, any other Credit Party shall,
directly or indirectly, by operation of law or otherwise:
(a) Merge with, consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with, any Person or form
any Subsidiary;
(b) Except as otherwise permitted in this Section 6 below, make any
investment in, or make or accrue loans or advances of money to, any Person,
except that Borrower may hold investments comprised of notes payable, or stock
or other securities issued by Account Debtors to Borrower pursuant to negotiated
agreements with respect to settlement of such Account Debtor's Lease Receivables
in the ordinary course of business;
(c) Enter into any lending, borrowing or other commercial transaction
with any of its employees, directors, Affiliates or any other Credit Party
(including upstreaming and downstreaming of cash and intercompany advances and
payments by a Credit Party on behalf of another Credit Party which are not
otherwise permitted hereunder) other than loans or advances to employees in the
ordinary course of business in an aggregate outstanding amount not exceeding
$50,000, and loans or advances from Hypercom to Borrower. Notwithstanding the
foregoing, Borrower may reimburse Hypercom for Intercompany Services, as that
term is defined in the Subordination Agreement;
(d) Make any changes in any of its business objectives, purposes, or
operations which could have or reasonably be expected to adversely affect
repayment of the Obligations or have a Material Adverse Effect or engage in any
business other than that presently engaged in or proposed to be engaged in the
Projections delivered to Lender on the Closing Date;
(e) Amend its charter or by-laws or other organizational documents;
(f) Create or permit any Lien on any of the Collateral;
(g) Take any action or omit to take any action, which act or omission
would constitute a material default or an event of default pursuant to, or
noncompliance with, any of its Contractual Obligations;
(h) Cancel any debt owing to it, except for cancellation of debt not
constituting Lease Receivables for reasonable consideration and in the ordinary
course of its business consistent with past practice;
(i) Make or permit any Restricted Payment by Borrower;
(j) Change its fiscal year end from December 31st at any time; or
(k) Make or consent to a material change in the ownership or structure
of the Borrower or in the manner in which the business of the Borrower is
conducted or in its method of accounting or in its election to be taxed under
the IRC, as applicable.
7. SECURITY INTEREST
7.1 Grant of Security Interest. (a) As collateral security for the prompt and
complete payment and performance of the Obligations, each of the Borrower hereby
grants to the Lender a present and continuing security interest in and Lien upon
all of the following property in which it now has or at any time in the future
may acquire any right, title or interest: (i) all now existing and hereafter
arising or acquired Leases under which Lender has advanced funds to Borrower and
said Leases have been delivered to the Lender or the Trustee, including, without
limitation, any and all
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rents, payments, advance rentals, security deposits, and other amounts due
thereunder, proceeds of sale from sale of the equipment leased or financed
thereunder or the lease or other disposition of same, any and all other amounts
due under any Leases; (ii) all now existing and hereafter arising or acquired
Gross Lease Receivables; (iii) all now existing and hereafter arising or
acquired Leased Equipment and any and all substitutions, replacements,
accessories, additions and improvements thereto or therefor now owned and
hereafter acquired with respect to all of the foregoing, and any and all
returns, exchanges therefor or repossessions thereof, and any proceeds resulting
from the sale, lease or other disposition of the foregoing; (iv) the Operating
Account (and any and all now existing and hereafter arising or acquired amounts
and/or proceeds contained therein); (v) any escrow account (and any and all now
existing and hereafter arising or acquired amounts and/or proceeds contained
therein) relating to any Leases; (vi) all now existing and hereafter arising or
acquired Chattel Paper of the Borrower relating to any Leases, Leased Equipment
or Gross Lease Receivables; (vii) all now existing and hereafter arising or
acquired guaranties, letter of credit or any undertakings of any kind whatsoever
of any Leases or Chattel Paper of the Borrower relating to any Leases, Leased
Equipment or Gross Lease Receivables, and all collateral or security relating
thereto; (viii) all now existing and hereafter arising or acquired general
intangibles of the Borrower relating to any or all of the foregoing or any other
collateral described herein; (ix) all now existing and hereafter arising or
acquired proceeds and products of any or all of the foregoing contained in
subsections (i) through (vii), including, without limitation, cash, deposit
accounts (whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including property, hazard, liability, flood and credit
insurance), negotiable instruments and other instruments for the payment of
money, chattel paper, security agreements or documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds; and (x) all now existing and
hereafter arising or acquired books and records relating to any or all of the
above, including, without limitation, all ledger sheets, ledger cards, files,
correspondence, books of account, business papers, tapes, cards, computer
programs, computer software, computer discs, computer runs, computer data and
computer records and any other electronic or computer documents, information or
records of any kind whatsoever in the possession or control of Borrower, any
computer service bureau or any other third party of any kind whatsoever; except
the foregoing shall, after compliance with the applicable provisions of this
Agreement, exclude any Permitted Sale Collateral pursuant to the terms of this
Agreement (all of the foregoing, together with any other collateral pledged to
the Lender pursuant to any other Loan Document, collectively, the "Collateral").
(b) Borrower, Lender and each other Credit Party executing this
Agreement agree that this Agreement creates, and is intended to create, valid
and continuing Liens upon the Collateral in favor of Lender. Borrower and each
other Credit Party executing this Agreement represents, warrants and promises to
Lender that: (i) Borrower and each other Credit Party granting a Lien in
Collateral is the sole owner of each item of the Collateral upon which it
purports to ▇▇▇▇▇ ▇ ▇▇▇▇ pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Encumbrances which have
priority by operation of law; and (iii) no effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Encumbrances.
Borrower and each other Credit Party executing this Agreement promise to defend
the right, title and interest of Lender in and to the Collateral against the
claims and demands of all Persons whomsoever, claiming by, through or under
Borrower, and shall take such actions, including (x) the prompt delivery of all
original Instruments, Chattel Paper and certificated Stock owned by Borrower and
each other Credit Party granting a Lien on Collateral to Lender, (y)
notification of Lender's interest in Collateral at Lender's request, and (z) the
institution of litigation against third parties as shall be prudent in order to
protect and preserve each Credit Party's and Lender's respective and several
interests in the Collateral. Borrower (and any other Credit Party granting a
Lien in Collateral) shall ▇▇▇▇ its Books and Records pertaining to the
Collateral to evidence the Loan Documents and the Liens granted under the Loan
Documents.
7.2 Lender's Rights. (a) Lender may, (i) at any time in Lender's own name or in
the name of Borrower, communicate with Account Debtors, parties to Contracts,
and obligors in respect of Leases, Instruments, Chattel Paper or other
Collateral to verify to Lender's satisfaction, the existence, amount and terms
of any Leases, Lease Receivables, Instruments, Chattel Paper or other
Collateral, and (ii) at any time and without prior notice to Borrower or any
other Credit Party, notify Account Debtors, parties to Contracts, and obligors
in respect of Leases, Instruments, Chattel Paper or other Collateral that the
Collateral has been assigned to Lender and that payments shall be made directly
to Lender. Upon the request of Lender, Borrower shall so notify such Account
Debtors, parties to Contracts, and obligors in respect of Leases, Instruments,
Chattel Paper or other Collateral. Borrower hereby
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constitutes Lender or Lender's designee as Borrower's attorney with power to
endorse Borrower's name upon any notes, acceptance drafts, money orders or other
evidences of payment or Collateral.
(b) It is expressly agreed by Borrower that, notwithstanding anything
herein to the contrary, Borrower shall remain liable under each Contract,
Instrument, License, or Lease to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, and Lender shall have
no obligation or liability whatsoever to any Person under any Contract,
Instrument, License, or Lease (between Borrower or any other Credit Party and
any Person other than Lender) by reason of or arising out of the execution,
delivery or performance of this Agreement, and Lender shall not be required or
obligated in any manner (i) to perform or fulfill any of the obligations of
Borrower, (ii) to make any payment or inquiry, or (iii) to take any action of
any kind to collect or enforce any performance or the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time or
times under or pursuant to any Lease.
(c) Borrower and each other Credit Party shall, with respect to each
owned, leased, or controlled property or facility, during normal business hours
and upon reasonable advance notice (unless a Default shall have occurred and be
continuing, in which event no notice shall be required and Lender shall have
access at any and all times): (i) provide access to such facility or property to
Lender and any of its officers, employees and agents, as frequently as Lender
determines to be appropriate; (ii) permit Lender and any of its officers,
employees and agents to inspect, audit and make extracts from all of Borrower's
and each Corporate Credit Party's Books and Records; and (iii) permit Lender to
inspect, review, evaluate and make physical verifications and appraisals of the
Leased Equipment and other Collateral in any manner and through any medium that
Lender considers advisable, and Borrower and such Credit Party agree to render
to Lender, at Borrower's and such Credit Party's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
Borrower and each other Credit Party shall make available to Lender and its
counsel, as quickly as practicable under the circumstances, originals or copies
of all Borrower's and each Corporate Credit Party's Books and Records and any
other instruments and documents which Lender may request. Borrower shall deliver
any document or instrument reasonably necessary for Lender, as it may from time
to time request, to obtain records from any service bureau or other Person which
maintains records for Borrower or any other Credit Party.
7.3 Lender's Appointment as Attorney-in-fact. On the Closing Date Borrower and
each other Credit Party executing this Agreement shall execute and deliver the
power of attorney in the form attached as Exhibit J (the "Power of Attorney").
The power of attorney granted pursuant to the Power of Attorney and all powers
granted under any Loan Document are powers coupled with an interest and shall be
irrevocable until the Termination Date. The powers conferred on Lender under the
Power of Attorney are solely to protect Lender's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. Lender agrees and
promises that (a) it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing, (b)
Lender shall only exercise the powers granted under the Power of Attorney in
respect of Collateral, provided, except as otherwise required by applicable law,
Lender shall not have any duty as to any Collateral, and Lender shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers. NONE OF LENDER OR ITS OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER OR ANY OTHER CREDIT
PARTY FOR ANY ACT OR FAILURE TO ACT PURSUANT TO THE POWERS GRANTED UNDER THE
POWER OF ATTORNEY OR OTHERWISE, EXCEPT FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES. Borrower and each other Credit Party executing this Agreement also
hereby authorizes Lender to file any financing or continuation statement without
the signature of Borrower or such Credit Party to the extent permitted by
applicable law.
7.4 Grant of License to Use Intellectual Property Collateral. For the purpose of
enabling Lender to exercise its rights and remedies under the Loan Documents,
Borrower and each other Credit Party executing this Agreement hereby grants to
Lender an irrevocable, non-exclusive license (exercisable upon the occurrence
and during the continuance of an Event of Default without payment of royalty or
other compensation to Borrower or such Credit Party) to use, transfer, license
or sublicense any Intellectual Property now owned, licensed to, or hereafter
acquired by Borrower or such Credit Party, and wherever the same may be located,
and including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer and automatic machinery
software and programs used for the compilation or printout thereof, and
represents, promises and agrees that any
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such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person; provided, that such
license will terminate on the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder which shall be deemed to be continuing until waived in writing by
Lender in accordance with Section 10.3:
(a) Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable; or
(b) Borrower, Guarantor, any other Credit Party, or any Affiliate of
any of such parties, shall fail or neglect to perform, keep or observe any of
the covenants, promises, agreements, requirements, conditions or other terms or
provisions contained in this Agreement or any of the other Loan Documents,
regardless of whether such breach involves a covenant, promise, agreement,
condition, requirement, term or provision with respect to a Credit Party that
has not signed this Agreement, and such default shall continue unremedied for a
period of ten (10) days; or
(c) An event of default shall occur under any Contractual Obligation of
the Borrower, Guarantor, any other Credit Party, or any Affiliate of any of such
parties, (other than this Agreement and the other Loan Documents), beyond the
period of grace (not to exceed 10 days), if any, provided in the instrument or
agreement under which such Contractual Obligation was created, and such event of
default (i) involves the failure to make any payment, whether of principal,
interest or otherwise, and whether due by scheduled maturity, required
prepayment, acceleration, demand or otherwise, in respect of any Indebtedness
(other than the Obligations) of such Person, or (ii) causes (or permits any
holder of such Indebtedness or a trustee to cause) such Indebtedness to become
due prior to its stated maturity or prior to its regularly scheduled dates of
payment; or
(d) Any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by
Borrower, Guarantor, any other Credit Party, or any Affiliate of any of such
parties shall be untrue or incorrect as of the date when made, regardless of
whether such breach involves a representation or warranty with respect to a
Credit Party that has not signed this Agreement, and such default shall continue
unremedied for a period of ten (10) days; or
(e) There shall be commenced against the Borrower, Guarantor, any other
Credit Party, or any Affiliate of any of such parties any Litigation seeking
issuance of a warrant of attachment, execution, distrait or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which remains unstayed or undismissed for thirty
(30) consecutive days; or Borrower, Guarantor, any other Credit Party, or any
Affiliate of any of such parties shall have concealed, removed or permitted to
be concealed or removed, any part of its property with intent to hinder, delay
or defraud its creditors or any of them or made or suffered a transfer of any of
its property or the incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent transfer or other similar law; or
(f) A case or proceeding shall have been commenced involuntarily
against Borrower, Guarantor, any other Credit Party, or any Affiliate of any of
such parties in a court having competent jurisdiction seeking a decree or order:
(i) under the United States Bankruptcy Code or any other applicable Federal,
state or foreign bankruptcy or other similar law, and seeking either (x) the
appointment of a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Person or of any substantial part of
its properties, or (y) the reorganization or winding up or liquidation of the
affairs of any such Person and such case or proceeding shall remain undismissed
or unstayed for sixty (60) consecutive days or such court shall enter a decree
or order granting the relief sought in such case or proceeding; or (ii)
invalidating or denying any Person's right, power, or competence to enter into
or perform any of its obligations under any Loan Document or invalidating or
denying the validity or enforceability of this Agreement or any other Loan
Document or any action taken hereunder or thereunder; or
(g) Borrower, Guarantor, any other Credit Party, or any Affiliate of
any of such parties shall (i) commence any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or
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foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors, seeking to have an order for relief entered with respect to
it or seeking appointment of a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for it or any substantial part of
its properties, (ii) make a general assignment for the benefit of creditors,
(iii) consent to or take any action in furtherance of, or, indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
paragraphs (e) or (f) of this Section 8.1 or clauses (i) and (ii) of this
paragraph (g), or (iv) shall admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due; or
(h) A final judgment or judgments for the payment of money shall be
rendered against Borrower, Guarantor, any other Credit Party, or any Affiliate
of any of such parties, unless the same shall be (i) fully covered by insurance
and the issuer(s) of the applicable policies shall have acknowledged full
coverage in writing within fifteen (15) days of judgment, or (ii) vacated,
stayed, bonded, paid or discharged within a period of fifteen (15) days from the
date of such judgment; or
(i) Any other event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect and Lender shall have
given Borrower notice thereof; or
(j) Any provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms, or any Lien
granted, or intended by the Loan Documents to be granted, to Lender shall cease
to be a valid and perfected Lien having the first priority (or a lesser priority
if expressly permitted in the Loan Documents) in any of the Collateral; or
(k) A change of control shall have occurred; or
(l) The Borrower or any Guarantor shall (i) fail to pay any
Indebtedness for borrowed money or any other indebtedness or obligations of any
kind whatsoever, including any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise)
(except that with regard to any Guarantor any such failure to pay any
Indebtedness shall not be a default unless such failure to pay any Indebtedness
shall not be a default unless such failure to pay the same involves Indebtedness
in the aggregate of $50,000.00 or more), or (ii) fail to perform or observe any
term, covenant, or condition on its part, to be performed or observed under any
agreement or instrument relating to any Indebtedness or any other indebtedness
for borrowed money or any other indebtedness or obligations of any kind
whatsoever, when required to be performed or observed (including any applicable
grace periods), if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration after the giving of notice or passage
of time, or both, of the maturity of such indebtedness, whether or not such
failure to perform or observe shall be waived by the holder of such indebtedness
or obligations; or any such indebtedness or obligations shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof, or (B) the
occurrence of a default under, or demand for payment of, any other indebtedness
or obligations of the Borrower or any Guarantor to Lender; or
(m) At any time after its execution and delivery and for any reason,
any Guaranty shall cease to be in full force and effect or shall be declared
null and void, or the validity or enforceability of any Guaranty shall be
contested by the Guarantor, or any Guarantor shall deny it has any further
liability or obligation under any Guaranty, or any Guarantor shall fail to
perform any of its obligations under any Guaranty; or
(n) At any time after its execution and delivery and for any reason,
any collateral assignment or assignment of any Collateral shall cease to be in
full force and effect or shall be declared null and void, or the validity or
enforceability of any collateral assignment or assignment of any Collateral
shall be contested by any Person, or any Person shall deny they have any further
liability or obligation under any collateral assignment or assignment of any
Collateral, or any Person shall fail to perform any of their obligations under
any collateral assignment or assignment of any Collateral; or
(o) The dissolution of the Borrower; or
(p) There shall occur any material uninsured damage to or loss, theft,
or destruction of any of the Collateral; or
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(q) Borrower ceases to conduct its business as currently conducted or
is enjoined, restrained or in any way prevented by court order form conducting
all or any material part of its business affairs.
8.2 Remedies. (a) If any Default shall have occurred and be continuing, then
Lender may terminate or suspend its obligation to make further Revolving Credit
Advances. In addition, if any Event of Default shall have occurred and be
continuing, Lender may, without notice, take any one or more of the following
actions: (i) declare all or any portion of the Obligations to be forthwith due
and payable, including contingent liabilities, whereupon such Obligations shall
become and be due and payable; (ii) exercise any rights and remedies provided to
Lender under the Loan Documents or at law or equity, including all remedies
provided under the Code; provided, that upon the occurrence of any Event of
Default specified in Sections 8.1 (e), (f) or (g), the Obligations shall become
immediately due and payable (and any obligation of Lender to make further Loans,
if not previously terminated, shall immediately be terminated) and the
Obligations shall automatically begin to accrue interest at the Default Rate, in
each case, without declaration, notice or demand by Lender.
(b) Without limiting the generality of the foregoing, Borrower and each
other Credit Party executing this Agreement expressly agrees that upon the
occurrence of any Event of Default, Lender may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Lender shall have the right upon
any such public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase for the benefit of Lender the whole or any
part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption Borrower and each other Credit Party executing this
Agreement hereby releases. Such sales may be adjourned, or continued from time
to time with or without notice. Lender shall have the right to conduct such
sales on any Credit Party's premises or elsewhere and shall have the right to
use any Credit Party's premises without rent or other charge for such sales or
other action with respect to the Collateral for such time or times as Lender
deems necessary or advisable.
(c) Borrower and each other Credit Party executing this Agreement
further agrees, upon the occurrence and during the continuance of an Event of
Default and at Lender's request, to assemble the Collateral and make it
available to Lender at places which Lender shall reasonably select, whether at
its premises or elsewhere. Until Lender is able to effect a sale, lease, or
other disposition of the Collateral, Lender shall have the right to complete,
assemble, use or operate the Collateral or any part thereof, to the extent that
Lender deems appropriate, for the purpose of preserving such Collateral or its
value or for any other purpose. Lender shall have no obligation to any Credit
Party to maintain or preserve the rights of any Credit Party as against third
parties with respect to any Collateral while such Collateral is in the
possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of any Collateral and to enforce any of
Lender's remedies with respect to such appointment without prior notice or
hearing. To the maximum extent permitted by applicable law, Borrower and each
other Credit Party executing this Agreement waives all claims, damages, and
demands against Lender, its Affiliates, agents, and the officers and employees
of any of them arising out of the repossession, retention or sale of any
Collateral except such as are determined in a final judgment by a court of
competent jurisdiction to have arisen solely out of the gross negligence or
willful misconduct of such Person. Borrower and each other Credit Party
executing this Agreement agrees that ten (10) days prior notice by Lender to
such Credit Party of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters.
Borrower and each other Credit Party shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay all amounts to which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All provisions of this Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited, to the extent necessary, so that they do not render this
Agreement invalid, unenforceable, in whole or in part.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement and to the fullest extent permitted by applicable law, Borrower and
each other Credit Party executing this Agreement waives:
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(a) presentment, demand and protest, and notice of presentment, dishonor, intent
to accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all Loan Documents, the
Notes or any other notes, commercial paper, Lease Receivables, Accounts,
Contracts, Documents, Instruments, Chattel Paper and guaranties at any time held
by Lender on which such Credit Party may in any way be liable, and hereby
ratifies and confirms whatever Lender may do in this regard; (b) all rights to
notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon, any Collateral or any bond or
security which might be required by any court prior to allowing Lender to
exercise any of its remedies; and (c) the benefit of all valuation, appraisal
and exemption laws. Borrower and each other Credit Party executing this
Agreement acknowledges that it has been advised by counsel of its choices and
decisions with respect to this Agreement, the other Loan Documents and the
transactions evidenced hereby and thereby.
8.4 Proceeds. The Proceeds of any sale, disposition or other realization upon
any Collateral shall be applied by Lender upon receipt, in the following order
of priorities: first, to reimburse or pay in full the actual expenses of Lender
incurred in connection with such sale, disposition or other realization,
including all other expenses, liabilities and advances incurred or made by
Lender in connection therewith; second, to the other Obligations in such order
as the Lender may deem advisable; and finally, after the indefeasible payment
and satisfaction in full in cash of all of the Obligations, and after the
payment by Lender of any other amount required by any provision of law,
including Section 9-504(1)(c) of the Code (but only after Lender has received
what Lender considers reasonable proof of a subordinate party's security
interest), the surplus, if any, to Borrower or its representatives or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.
9. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of
Borrower and each other Credit Party executing such Loan Document, Lender, and
their respective successors and assigns, except as otherwise provided herein or
therein. Neither Borrower nor any other Credit Party may assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender. Any such purported assignment, transfer, hypothecation, delegation or
other conveyance by Borrower or such Credit Party without the prior express
written consent of Lender shall be void. The terms and provisions of this
Agreement and the other Loan Documents are for the purpose of defining the
relative rights and obligations of Borrower, the other Credit Parties and Lender
with respect to the transactions contemplated hereby and thereby, and there
shall be no third party beneficiaries of any of the terms and provisions of any
of the Loan Documents. Lender reserves the right at any time to create and sell
participations in the Loans and the Loan Documents and to sell, transfer or
assign any or all of its rights in the Loans and under the Loan Documents.
10. MISCELLANEOUS
10.1 Complete Agreement; Modification of Agreement. This Agreement and the other
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and no Loan Document may be modified, altered or amended
except by a written agreement signed by Lender, Borrower and any other Credit
Party a party to such Loan Document. Borrower and each other Credit Party
executing this Agreement or any other Loan Document shall have all duties and
obligations under this Agreement and such other Loan Documents from the date of
its execution and delivery, regardless of whether a Loan has been funded at that
time.
10.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs and
expenses incurred in connection with: (a) the preparation, negotiation,
execution, delivery, performance and enforcement of the Loan Documents and the
preservation of any rights thereunder; (b) collection (including the fees and
expenses of all special counsel, advisors, consultants (including environmental
and management consultants) and auditors retained in connection therewith),
including deficiency collections; (c) the forwarding to Borrower or any other
Person on behalf of Borrower by Lender of the proceeds of any Loan; (d) any
amendment, extension, modification or waiver of, or consent with respect to any
Loan Document or advice in connection with the administration of the Loan or the
rights thereunder; (e) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by or between any combination of Lender, Borrower or
any other Person or Persons), and an appeal or review thereof, in any way
relating to the Collateral, any Loan Document, or any action taken or any other
agreements to be executed or
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delivered in connection therewith, whether as a party, witness or otherwise; and
(f) any effort (i) to monitor the Loan, (ii) to evaluate, observe or assess
Borrower or any other Credit Party or the affairs of such Person, and (iii) to
verify, protect, evaluate, assess, appraise, collect, sell, liquidate or
otherwise dispose of the Collateral; including the following with respect to all
of the foregoing provisions of this Section 10.2: the fees, costs and expenses
of attorneys, accountants, environmental advisors, appraisers, investment
bankers, management and other consultants, and paralegals; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or incurred in connection therewith.
10.3 No Waiver. Neither Lender's failure, at any time or times, to require
strict performance by Borrower or any other Credit Party of any provision of any
Loan Document, nor Lender's failure to exercise, nor any delay in exercising,
any right, power or privilege hereunder, (a) shall waive, affect or diminish any
right of Lender thereafter to demand strict compliance and performance
therewith, or (b) shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
future exercise thereof or the exercise of any other right, power or privilege.
Any suspension or waiver of a Default, or other provision under the Loan
Documents shall not suspend, waive or affect any other Default under any Loan
Document, whether the same is prior or subsequent thereto and whether of the
same or of a different type, and shall not be construed as a bar to any right or
remedy which Lender would otherwise have had on any future occasion. None of the
undertakings, indemnities, agreements, warranties, covenants and representations
of Borrower or any other Credit Party to Lender contained in any Loan Document
and no Default by Borrower or any other Credit Party under any Loan Document
shall be deemed to have been suspended or waived by Lender, unless such waiver
or suspension is by an instrument in writing signed by an officer or other
authorized employee of Lender and directed to Borrower specifying such
suspension or waiver (and then such waiver shall be effective only to the extent
therein expressly set forth), and Lender shall not, by any act (other than
execution of a formal written waiver), delay, omission or otherwise, be deemed
to have waived any of its rights or remedies hereunder.
10.4 Severability. Wherever possible, each provision of the Loan Documents shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of any Loan Document shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of such Loan Document. Except as otherwise expressly
provided for in the Loan Documents, no termination or cancellation (regardless
of cause or procedure) of any financing arrangement under the Loan Documents
shall in any way affect or impair the Obligations, duties, covenants,
representations and warranties, indemnities, and liabilities of Borrower or any
other Credit Party or the rights of Lender relating to any unpaid Obligation
(due or not due, liquidated, contingent or unliquidated), or any transaction or
event occurring prior to such termination, or any transaction or event, the
performance of which is not required until after the Commitment Termination
Date, all of which shall not terminate or expire, but rather shall survive such
termination or cancellation and shall continue in full force and effect until
the Termination Date; provided, that all indemnity obligations of the Credit
Parties under the Loan Documents shall survive the Termination Date.
10.5 Conflict of Terms. Except as otherwise provided in any Loan Document by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in any other Loan Document, the provision contained in this
Agreement shall govern and control.
10.6 Authorized Signature. Until Lender shall be notified in writing by Borrower
or any other Credit Party to the contrary, the signature upon any document or
instrument delivered pursuant hereto and believed by Lender or any of Lender's
officers, agents, or employees to be that of an officer of Borrower or such
other Credit Party listed in the Secretarial Certificate in the form of Exhibit
I shall bind Borrower and such other Credit Party and be deemed to be the act of
Borrower or such other Credit Party affixed pursuant to and in accordance with
resolutions duly adopted by Borrower's or such other Credit Party's Board of
Directors, and Lender shall be entitled to assume the authority of each
signature and authority of the person whose signature it is or appears to be
unless the person acting in reliance of such signature shall have actual
knowledge of the fact that such signature is false or the person whose signature
or purported signature is presented is without authority.
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10.7 Notices. Except as otherwise provided herein, whenever any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any party by any other party, or whenever any party
desires to give or serve upon any other party any communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (a) upon the earlier of actual
receipt and three (3) days after deposit in the United States Mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (b)
upon transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
10.7), (c) one (1) Business Day after deposit with a reputable overnight courier
with all charges prepaid or (d) when hand-delivered, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated below or to such other address (or facsimile number) as may be
substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
(other than Borrower or Lender) designated herein to receive copies shall in no
way adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
Lender's Representative:
Name: ▇▇▇▇▇▇▇ Bank
Address: CityPlace II
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Borrower's Representative:
Name: Golden Eagle Leasing, Inc.
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10.8 Section Titles. The Section titles and Table of Contents contained in any
Loan Document are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
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10.9 Counterparts. Any Loan Document may be executed in any number of separate
counterparts by any one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
10.10 Time of the Essence. Time is of the essence for performance of the
Obligations under the Loan Documents.
10.11 Right of Setoff. The Lender is hereby authorized at any time and from time
to time without notice to the Borrower or any other party (any such notice being
expressly waived by the Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) of any kind
whatsoever at any time held, including, without limitation, any amounts or
proceeds contained in the Lockbox Account and/or the Disbursement Account, and
other indebtedness at any time owing by the Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or the Revolving Credit Note or
any other Loan Document, irrespective of whether or not the Lender shall have
made any demand under this Agreement or the Revolving Credit Note or such other
Loan Document and although such obligations may be unmatured. The Lender agrees
promptly to notify the Borrower after any such setoff and application, provided
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of the Lender under this Section 10.11 are in
addition to any other rights and remedies of any kind whatsoever (including,
without limitation, other rights of setoff) which the Lender may have.
10.12 PREJUDGMENT REMEDY WAIVER. THE BORROWER ACKNOWLEDGES THAT THE TRANSACTIONS
TO WHICH THIS AGREEMENT RELATE ARE COMMERCIAL TRANSACTIONS. THE BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED AND IN EFFECT ON THE DATE
HEREOF, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY
PREJUDGMENT REMEDY OR OTHER RIGHT OR REMEDY THAT THE LENDER MAY ELECT TO USE OR
OF WHICH IT MAY AVAIL ITSELF. THE BORROWER FURTHER WAIVES, TO THE GREATEST
EXTENT PERMITTED BY LAW, THE BENEFITS OF ALL PRESENT AND FUTURE VALUATION,
APPRAISEMENT, EXEMPTION, STAY, REDEMPTION AND MORATORIUM LAWS. THE BORROWER
FURTHER WAIVES ANY REQUIREMENT THAT LENDER OBTAIN A BOND OR OTHER SIMILAR DEVICE
IN CONNECTION WITH THE EXERCISE OF ANY REMEDY OR THE ENFORCEMENT OF ANY RIGHT
HEREUNDER.
10.13 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER THE LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CONNECTICUT APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF
LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
10.14 Jury Waiver. THE BORROWER WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY
AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO
AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE LOAN
PROVIDED FOR HEREIN, OR ANY CONDUCT RELATING TO THE NEGOTIATION, ADMINISTRATION
OR ENFORCEMENT OF SUCH LOAN OR ARISING FROM THE DEBTOR/CREDITOR RELATIONSHIP OF
THE BORROWER AND THE LENDER HERETO. THE BORROWER ACKNOWLEDGES THAT THIS WAIVER
MAY DEPRIVE IT OF AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS KNOWINGLY BEEN
AGREED TO BY THE BORROWER.
10.15 Reinstatement. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations is rescinded or must otherwise be returned or restored by the Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or otherwise, all as though such payments had not
been made.
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IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed as
of the date first written above.
GOLDEN EAGLE LEASING, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: Senior Vice President,
--------------------------
COO and CFO
--------------------------
▇▇▇▇▇▇▇ BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
---------------------------
Title: Assistant Vice President
--------------------------
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