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EXHIBIT 10.15
LOAN AND SECURITY AGREEMENT
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DATED AS OF SEPTEMBER 6, 1996
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DVI FINANCIAL SERVICES INC.
AS BORROWER
AND
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
AS LENDER
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TABLE OF CONTENTS
Page
RECITALS.......................................................................1
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS.................................1
1.01 Certain Defined Terms...........................................1
1.02 Accounting Terms and Determinations............................10
SECTION 2. LOANS, NOTE AND PREPAYMENTS.......................................11
2.01 Loans..........................................................11
2.02 Note...........................................................11
2.03 Procedure for Borrowing........................................11
2.04 Repayment of Loans; Interest...................................13
2.05 Optional Prepayments...........................................13
2.06 Mandatory Prepayment or Pledge.................................14
2.07 Indemnity......................................................14
2.08 Purpose of Loans...............................................14
SECTION 3. PAYMENTS; COMPUTATIONS; ETC.......................................14
3.01 Payments.......................................................14
3.02 Computations...................................................15
SECTION 4. COLLATERAL SECURITY...............................................15
4.01 Collateral; Security Interest..................................15
4.02 Further Documentation..........................................16
4.03 Changes in Locations, Name, etc................................16
4.04 Lender's Appointment as Attorney-in-Fact.......................16
4.05 Performance by Lender of Borrower's Obligations................18
4.06 Proceeds.......................................................18
4.07 Remedies.......................................................18
4.08 Limitation on Duties Regarding Presentation of Collateral......19
4.09 Powers Coupled with an Interest................................19
4.10 Release of Security Interest...................................20
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TABLE OF CONTENTS (Continued)
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SECTION 5. CONDITIONS PRECEDENT..............................................20
5.01 Initial Loan...................................................20
5.02 Initial and Subsequent Loans...................................22
SECTION 6. REPRESENTATIONS AND WARRANTIES....................................23
6.01 Financial Condition............................................23
6.02 No Change......................................................24
6.03 Corporate Existence; Compliance with Law.......................24
6.04 Corporate Power; Authorization; Enforceable Obligations........24
6.05 No Legal Bar...................................................25
6.06 No Material Litigation.........................................25
6.07 No Default.....................................................25
6.08 Collateral; Collateral Security................................25
6.09 Chief Executive Office.........................................26
6.10 Location of Books and Records..................................26
6.11 No Burdensome Restrictions.....................................26
6.12 Taxes..........................................................26
6.13 Margin Regulations.............................................26
6.14 Investment Company Act; Other Regulations......................26
6.15 Subsidiaries...................................................26
6.16 Third Party Representations....................................27
6.17 Eligible Contracts.............................................27
6.18 Bulk Transfer..................................................27
6.19 Origination and Collections of Contracts.......................27
6.20 No Adverse Selection...........................................27
6.21 Contracts are Financing Leases or Security Agreements..........27
6.22 Borrower Solvent...............................................27
6.23 ERISA..........................................................27
6.24 Environmental Matters..........................................28
SECTION 7. COVENANTS OF THE BORROWER.........................................28
7.01 Financial Statements...........................................29
7.02 Existence, Etc.................................................29
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TABLE OF CONTENTS (Continued)
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7.03 Insurance......................................................30
7.04 Prohibition of Fundamental Changes.............................30
7.05 Notices........................................................30
7.06 Periodic Due Diligence Review..................................31
7.07 Limitation on Liens on Collateral..............................31
7.08 Certain Equipment Leases; Certain Equipment Loans..............31
7.09 Underwriting Guidelines........................................32
7.10 Limitation on Transactions with Affiliates.....................32
7.11 Limitation on Changes in Fiscal Year...........................32
7.12 Limitation on Lines of Business................................32
7.13 Limitations on Modifications, Waivers and Extensions
of Contracts.................................................33
7.14 Further Identification of Collateral...........................33
7.15 Limitation on Collection Account...............................33
7.16 Limitation on Sale or Other Disposition of Collateral..........33
7.17 Repayment of Loans if Contract is Found Defective..............34
7.18 Monthly Officer's Certificate..................................34
7.19 Data Pool Report...............................................34
SECTION 8. EVENTS OF DEFAULT.................................................34
SECTION 9. REMEDIES UPON DEFAULT.............................................37
SECTION 10. NO DUTY ON LENDER'S PART.........................................37
SECTION 11. MISCELLANEOUS....................................................38
11.01 Waiver........................................................38
11.02 Notices.......................................................38
11.03 Indemnification and Expenses..................................38
11.04 Amendments....................................................39
11.05 Successors and Assigns, Etc...................................39
11.06 Survival......................................................39
11.07 Captions......................................................40
11.08 Counterparts..................................................40
11.09 Loan Agreement Constitutes Security Agreement; Governing Law..40
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TABLE OF CONTENTS (Continued)
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11.10 SUBMISSION TO JURISDICTION; WAIVERS...........................40
11.11 WAIVER OF JURY TRIAL..........................................41
11.12 Acknowledgments...............................................41
11.13 Hypothecation or Pledge of Loans..............................41
11.14 Servicing.....................................................41
11.15 Set-Off.......................................................42
SCHEDULE 1 TO LOAN AGREEMENT........................................ I
Representations and Warranties re: Contracts
SCHEDULE 2 TO LOAN AGREEMENT........................................ II
Filing Jurisdictions and Offices
SCHEDULE 3 TO LOAN AGREEMENT........................................III
Subsidiaries of Borrower
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TABLE OF CONTENTS (Continued)
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EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Guarantee
EXHIBIT D-1 Form of Request for Borrowing
EXHIBIT D-2 Form of Loan Supplement
EXHIBIT E Form of Opinion of Counsel to the Borrower
EXHIBIT F Form of Borrowing Base Certificate
EXHIBIT G Form of Covenant Compliance Certificate
EXHIBIT H Form of Data Pool Report
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LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT, dated as of September 6, 1996,
between DVI FINANCIAL SERVICES INC., a Delaware corporation (the "Borrower"),
and ▇▇▇▇▇▇ COMMERCIAL PAPER INC., a New York corporation (the "Lender").
RECITALS
The Borrower wishes to obtain financing from time to time to
provide interim funding for certain leases of, and loans in respect of,
Equipment (as defined herein), which equipment leases and loans are to be
contributed to one or more trusts or other vehicles to be sponsored by the
Borrower or an Affiliate thereof, and which equipment leases and loans and which
Equipment shall, directly or indirectly, secure the Loans (as defined herein) to
be made by the Lender hereunder.
The Lender has agreed, subject to the terms and conditions of
this Loan Agreement, to provide such funding, with a portion of the proceeds of
the sale of all equipment lease and loan asset-backed securities issued by any
such trust or other vehicle, together with other funds of the Borrower, being
used to repay any Loans made hereunder.
Accordingly, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control"
(together with the correlative meanings of "controlled by" and "under common
control with") means possession, directly or indirectly, of the power (a) to
vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the directors or managing general partners (or their
equivalent) of such Person, or (b) to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended from time to time.
"Borrower" shall have the meaning provided in the heading
hereof.
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"Borrowing Base" shall mean 90% of the aggregate Collateral
Value of all Eligible Contracts pledged to the Lender as Collateral hereunder.
"Borrowing Base Certificate" shall have the meaning assigned
thereto in Section 7.18 hereof.
"Borrowing Base Deficiency" shall have the meaning assigned
thereto in Section 2.06 hereof.
"Business Day" shall mean any day on which (i) banks are not
authorized or required to close in New York, New York and (ii) if the applicable
Business Day relates to any computation or payment to be made with respect to
the Eurodollar Rate, any day on which dealings in dollar deposits are carried on
in the London interbank market.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Certificates" shall mean equipment lease and loan
asset-backed securities issued by an Affiliate of the Borrower or a trust
sponsored by the Borrower or any of its Affiliates.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall have the meaning assigned to such term in
Section 4.01(b) hereof.
"Collateral Value" shall mean as of any date in respect of an
Eligible Contract, the lesser of (a) the Discounted Present Value of such
Eligible Contract, or (b) the market value of such Eligible Contract as
determined by the Lender in its sole discretion (using commercially reasonable
methods), which market value may be determined to be zero; provided, that:
(i) the aggregate Collateral Value of all Eligible Contracts
in respect of which the same Person (or its Affiliates) is the Obligor
thereunder may not at any time exceed $3,000,000;
(ii) the aggregate Collateral Value of all Eligible Contracts
originated by any Person other than the Borrower or its Affiliates may
not at any time exceed 30% of the Maximum Credit at such time;
provided, however, that beginning upon the day which is forty-five (45)
days after the outstanding principal amount of Loans is $50,000,000 or
more, the aggregate Collateral Value of all Eligible Contracts
originated by any Person other than the Borrower or its Affiliates may
not at any time exceed 30% of
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aggregate Collateral Value of all Eligible Contracts included in the
Borrowing Base at such time;
(iii) the aggregate Collateral Value of all Small Item
Contracts may not at any time exceed 10% of the Maximum Credit at such
time; provided, however, that beginning upon the day which is
forty-five (45) days after the outstanding principal amount of Loans is
$50,000,000 or more, the aggregate Collateral Value of all Small Item
Contracts may not at any time exceed 10% of the aggregate Collateral
Value of all Eligible Contracts included in the Borrowing Base at such
time;
(iv) the aggregate Collateral Value of all Eligible Contracts
having an original term of more than 63 months may not at any time
exceed 25% of the Maximum Credit at such time; provided, however, that
beginning upon the day which is forty-five (45) days after the
outstanding principal amount of Loans is $50,000,000 or more, the
aggregate Collateral Value of all Eligible Contracts having an original
term of more than 63 months may not at any time exceed 25% of the
aggregate Collateral Value of all Eligible Contracts included in the
Borrowing Base at such time;
(v) the aggregate Collateral Value of all Eligible Contracts
having an original term of more than 84 months and fewer than 96 months
may not at any time exceed 5% of the Maximum Credit at such time;
provided, however, that beginning upon the day which is forty-five (45)
days after the outstanding principal amount of Loans is $50,000,000 or
more, the aggregate Collateral Value of all Eligible Contracts having
an original term of more than 84 months and fewer than 96 months may
not at any time exceed 5% of the aggregate Collateral Value of all
Eligible Contracts included in the Borrowing Base at such time;
(vi) the aggregate Collateral Value of all Eligible Contracts
having an original term of more than 95 months shall be zero;
(vii) the aggregate Collateral Value of all FMV Leases may not
at any time exceed 5% of the Maximum Credit at such time; provided,
however, that beginning upon the day which is forty-five (45) days
after the outstanding principal amount of Loans is $50,000,000 or more,
the aggregate Collateral Value of all FMV Leases may not at any time
exceed 5% of the aggregate Collateral Value of all Eligible Contracts
included in the Borrowing Base at such time; and
(viii) the Collateral Value of each Eligible Contract (A) in
respect of which there is a breach of a representation and warranty
applicable thereto set forth on Schedule 1 (assuming each
representation and warranty being deemed to be made as of each date
Collateral Value is determined), (B) which remains pledged to the
Lender hereunder longer than 180 days after the date on which it is
first included in the Borrowing Base or (C) which has been released
from the possession of the Custodian under the Custodial Agreement to
the Borrower for a period in excess of five (5) days, shall in each of
the foregoing cases be zero.
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"Commonly Controlled Entity" shall mean an entity, whether or
not incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Code.
"Contract" shall mean an Equipment Lease or an Equipment Loan.
"Contract Documents" shall mean, with respect to a Contract,
the documents comprising the Contract File for such Contract.
"Contract File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Contract Schedule" shall mean a schedule of Contracts in
computer-readable format setting forth the following information as to each
Contract pledged to the Lender hereunder: (i) the Contract identifying number;
(ii) whether the Contract is an Equipment Lease or an Equipment Loan, (iii) a
description of the Equipment; (iv) the Obligor's name and relationship, if any,
to other Obligors; (v) the street address where the Equipment is in use,
including city, state and zip code; (vi) the closing date of the Contract; (vii)
the stated maturity date of the Contract; (viii) the original months to
maturity; (ix) the last date through which the Contract was paid; (x) the
remaining months to maturity, as of the Contract paid to date; (xi) if such
Contract is an Equipment Lease, the Contract Yield, or if such Contract is an
Equipment Loan, the interest rate thereon; (xii) the due date of the first
payment on the Contract, (xiii) the original amount funded under the Contract;
(xiv) the outstanding principal balance; (xv) the Discounted Present Value;
(xvi) the purchase price of the Equipment; (xvii) the month and year that the
Equipment was purchased, (xviii) if such Contract is an Equipment Lease, the
amount of the monthly payment of the Contract (other than the purchase option
payment), or if such Contract is an Equipment Loan, the amount of the monthly
payments of principal and interest; (xix) if such Contract is an Equipment
Lease, the amount of the purchase option payment; (xx) whether the Borrower has
initially determined that the Contract is an FMV Lease.
"Contract Yield" shall mean the yield on a Contract as
determined in accordance with the Borrower's customary practices in effect as of
the date hereof.
"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.
"Covenant Compliance Certificate" shall have the meaning
assigned thereto in Section 7.18 hereof.
"Custodial Agreement" shall mean the Custodial Agreement,
dated as of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
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"Custodian" shall mean First Trust National Association, its
successors and permitted assigns.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Discount Rate" shall mean a rate equal to the sum of (i) the
rate announced by Citibank, N.A. from time to time as its "prime rate", as
published in The Wall Street Journal, Eastern Edition, plus (ii) 1.00%.
"Discounted Present Value" shall mean, for any Contract as of
any date of determination, the present value of the then remaining payments
under such Contract, discounted at the Discount Rate, as determined by the
Lender in accordance with the above formula and notified to the Borrower on the
Business Day immediately preceding each Interest Payment Date (or, at the sole
discretion of the Lender following notice to the Borrower, on any Business Day).
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Contract" shall mean a Contract as to which the
applicable representations and warranties on Schedule 1 hereof are correct.
"Environmental Laws" shall mean and all Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority, any and all Requirements of
Law and any and all common law requirements, rules and bases of liability
regulating, relating to or imposing liability or standards of conduct concerning
pollution or protection of human health or the environment, as now or may at any
time hereafter be in effect.
"Equipment" shall mean medical equipment and computer
equipment (including the software necessary for the operation of the medical
equipment) used in the care, treatment, hospitalization, diagnosis or testing of
patients in a medical setting, and furniture and office equipment located at
such hospital or medical setting.
"Equipment Lease" shall mean a lease originated by the
Borrower or its Affiliates or a third-party acceptable to the Lender in respect
of Equipment.
"Equipment Loan" shall mean a loan and security agreement or
an installment sale contract, with or without a promissory note, originated by
the Borrower or its Affiliates or a third-party acceptable to the Lender in
respect of Equipment.
"Equipment Schedule" shall have the meaning assigned thereto
in Section 7.08(b) hereof.
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"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurodollar Rate" shall mean the rate at which eurodollar
deposits for one month are offered to prime banks in the interbank eurodollar
market as reported at Telerate page 3750 on such date of determination or, if
not so reported, as otherwise reasonably determined by the Lender. The
determination of the Eurodollar Rate by the Lender shall be conclusive absent
manifest error.
"Event of Default" shall have the meaning assigned thereto in
Section 8 hereof.
"Exposure" with respect to any Contract, shall mean excess of
(a) the Discounted Present Value of such Contract over (b) the value of the
collateral securing such Contract.
"FMV Lease" shall mean an Equipment Lease granting the Obligor
the option to purchase the underlying Equipment at its then fair market value or
at a purchase price other than a nominal purchase price, or which would
otherwise be deemed to create a lease and not a security interest in accordance
with Section 1-201(37) of the Uniform Commercial Code, as initially determined
by the Borrower, subject to determination by the Lender in its sole discretion.
"Funding Date" shall mean the date on which a Loan is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
the Borrower, any of its Affiliates or any of its properties.
"Guarantee" shall mean that certain Guarantee of the
Guarantor, substantially in the form of Exhibit C hereto, as amended,
supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), shall mean any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any letter of
credit) with respect to which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "primary obligations") of any other third Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working
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capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency 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) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
terms "Guarantee" and "Guaranteed" used as a verb shall have a correlative
meaning. The amount of any Guarantee Obligation of any guaranteeing person shall
be deemed to be the lower of (a) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee Obligation
is made and (b) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantor" shall mean DVI, Inc., a Delaware corporation.
"Indemnified Parties" shall have the meaning assigned thereto
in Section 11.03 hereof.
"Interest Payment Date" shall mean the tenth (10th) day of
each calendar month, or if such day is not a Business Day, the next succeeding
Business Day.
"Interest Period" shall mean with respect to any Loan:
(a) initially, the period commencing on the Funding
Date with respect to such Loan to but excluding the first Interest
Payment Date; and
(b) thereafter, each period commencing on an
Interest Payment Date to but excluding the next succeeding Interest
Payment Date;
provided, that the foregoing provisions relating to Interest Periods are subject
to the provision that any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date.
"Lender" shall have the meaning assigned thereto in the
heading hereto.
"Lien" shall mean any mortgage, lien, encumbrance, charge or
other security interest, whether arising under contract, by operation of law,
judicial process or otherwise.
"Loan" shall have the meaning assigned thereto in Section
2.01(a) hereof.
"Loan Agreement" shall mean this Loan and Security Agreement,
as may be amended, supplemented or otherwise modified from time to time.
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"Loan Documents" shall mean, collectively, this Loan
Agreement, the Note, the Custodial Agreement, the Guarantee and the Underwriting
Letter Agreement.
"Loan Supplement" shall have the meaning assigned thereto in
Section 2.03(b) hereof.
"Master Lease" shall have the meaning assigned thereto in
Section 7.08 hereof.
"Material Adverse Effect" shall mean any event which has had
or could reasonably be expected to have a material adverse effect on (a) the
business, assets, property, condition (financial or otherwise) or prospects of
the Guarantor or Borrower and its Subsidiaries taken as a whole, or (b) the
validity or enforceability of (i) this Loan Agreement, the Note or the other
Loan Documents or (ii) the rights or remedies of the Lender hereunder or
thereunder.
"Materials of Environmental Concern" shall mean any hazardous
or toxic substances, materials or wastes, defined, listed, classified or
regulated as such in or under any Environmental Laws, including, without
limitation, asbestos, petroleum or petroleum products (including gasoline, crude
oil or any fraction thereof), polychlorinated biphenyls, and urea-formaldehyde
insulation.
"Maximum Credit" shall mean $100,000,000, as such amount may
be reduced from time to time in accordance with the terms of this Loan
Agreement.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Note" shall mean the promissory note provided for by Section
2.02(a) hereof relating to the Loans and any promissory note delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Obligor" shall mean, with respect to a Contract (i) which is
an Equipment Lease, the lessee of the Equipment that is the subject of such
Contract, (ii) which is an Equipment Loan, the purchaser of the Equipment that
is the subject of such Contract, and/or in either such case any other person who
owes payments under such Contract.
"Obligor Loan Agreement" shall have the meaning assigned
thereto in Section 7.08(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
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"Plan" shall mean at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to [redacted] per
annum plus the rate otherwise applicable (or, if no such rate is otherwise
applicable, the rate of interest applicable to principal of Loans).
"Properties" shall have the meaning assigned thereto in
Section 6.24 hereof.
"Reportable Event" shall mean any of the events set forth in
Section 4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. Section 2615.
"Request for Borrowing" shall have the meaning assigned
thereto in Section 2.03(a) hereof.
"Requirement of Law" shall mean as to any Person, the
Certificate 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 applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Regulations G, T, U and X" shall mean Regulations G, T, U and
X of the Board of Governors of the Federal Reserve System (or any successor), as
the same may be modified and supplemented and in effect from time to time.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person.
"Secured Obligations" shall have the meaning assigned thereto
in Section 4.01(c) hereof.
"Servicer" shall have the meaning assigned thereto in Section
11.14(c) hereof.
"Servicing Agreement" shall have the meaning assigned thereto
in Section 11.14(c) hereof.
"Servicing Records" shall have the meaning assigned thereto in
Section 11.14(b) hereof.
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"Single Employer Plan" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Small Item Contract" shall mean an Eligible Contract which is
collateralized by Equipment in respect of which no individual item has a market
value of $100,000 or more.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Loan Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.
"Supplement" shall have the meaning assigned thereto in
Section 7.08 hereof.
"Termination Date" shall mean September 5, 1997 or such
earlier date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law.
"Trust Receipt" shall have the meaning assigned to such term
in the Custodial Agreement.
"Underwriting Guidelines" shall have the meaning assigned
thereto in Section 5.01(k) hereof.
"Underwriting Letter Agreement" shall mean the Underwriting
Letter Agreement, dated as of September 6, 1996, among the Borrower, the
Guarantor and the Lender.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
1.02 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
Section 2. Loans, Note and Prepayments.
2.01 Loans.
(a) The Lender agrees to consider from time to time the
Borrower's requests that the Lender make, on the terms and conditions of this
Loan Agreement, loans (individually, a "Loan"; collectively, the "Loans") to the
Borrower in Dollars, on any Business Day from
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and including the Effective Date to but excluding the Termination Date, each in
an amount of $1,000,000 or more, and in an aggregate principal amount at any one
time outstanding up to but not exceeding the lesser of (i) the Maximum Credit,
and (ii) the Borrowing Base. This Loan Agreement does not constitute a
commitment of the Lender to make Loans but rather sets forth the procedures to
be followed in connection with requests for Loans by the Borrower and the making
of any Loans actually advanced by the Lender. The Borrower hereby acknowledges
that the Lender is under no obligation to agree to make, or to make, any Loan
pursuant to this Loan Agreement. Subject to the terms and conditions of this
Loan Agreement, the Borrower may borrow, repay and reborrow hereunder.
(b) In no event shall a Loan be made when any Default or Event
of Default has occurred and is continuing or would exist after the making of
such Loan on such Funding Date.
2.02 Note.
(a) The Loans made by the Lender shall be collectively
evidenced by a single promissory note of the Borrower substantially in the form
of Exhibit A hereto (the "Note"), dated the date hereof, payable to the Lender
in a principal amount equal to the amount of the Maximum Credit as originally in
effect and otherwise duly completed. The Lender shall have the right to have its
Note subdivided, by exchange for promissory notes of lesser denominations or
otherwise.
(b) The date, amount and interest rate of each Loan made by
the Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of the Note, endorsed by the Lender on the schedule attached to the Note or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under the Note in
respect of the Loans.
2.03 Procedure for Borrowing.
(a) The Borrower may request a borrowing hereunder, on any
Business Day during the period from and including the Effective Date to and
including the Termination Date, but no more frequently than two times per week,
by delivering to the Lender, with a copy to the Custodian, an irrevocable
written request for borrowing, substantially in the form of Exhibit D-1 (a
"Request for Borrowing"), which request must be received by the Lender, with a
copy to the Custodian, no later than 11:00 a.m., New York City time, two (2)
Business Days prior to the requested Funding Date. Such Request for Borrowing
shall (i) attach a Contract Schedule in respect of the Eligible Contracts that
the Borrower proposes to pledge to the Lender and be included in the Borrowing
Base in connection with such Loan, (ii) specify the requested Funding Date,
which shall be at least two (2) Business Days after the date of such Request for
Borrowing, and (iii) attach an officer's certificate signed by a Responsible
Officer of each of the Borrower and the Guarantor as required by Section 5.02(b)
hereof.
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(b) Upon receipt of the Borrower's Request for Borrowing, the
Lender may, at its option, agree to make a Loan to the Borrower by executing and
delivering, via telecopy, a loan supplement to the Borrower substantially in the
form of Exhibit D-2 attached hereto (a "Loan Supplement") no later than 11:00
a.m. (New York City time) one (1) Business Day after its receipt of such Request
for Borrowing. Such Loan Supplement shall identify the Lender and the Borrower,
attach a schedule identifying the Eligible Contracts proposed to be pledged by
the Borrower to the Lender on such Funding Date which are acceptable to the
Lender to be pledged as Collateral hereunder and included in the Borrowing Base,
and shall set forth (i) the Funding Date and (ii) the amount of the Loan to be
made on such Funding Date, and may contain additional terms or conditions which
may or may not be inconsistent with this Loan Agreement. With respect to
Eligible Contracts which are rejected by the Lender as Collateral hereunder,
upon the request of the Borrower, the Lender shall indicate to the Borrower the
reason or reasons, if any, for the rejection of such Eligible Contracts. The
making of any Loan described in a Loan Supplement shall remain subject to the
satisfaction by the Borrower of all of the conditions precedent to any Loan
contained in this Loan Agreement. In the event there is a conflict between the
terms of this Loan Agreement and the terms of the Loan Supplement, the terms of
the Loan Supplement shall control. Each Loan Supplement, together with this Loan
Agreement, shall be conclusive evidence of the terms of the Loan(s) covered
thereby. If the Borrower has not received a Loan Supplement from the Lender
prior to such time, such Request for Borrowing shall be deemed to have been
rejected by the Lender.
(c) The Borrower shall release to the Custodian no later than
11:00 a.m., New York City time, two (2) Business Days prior to the requested
Funding Date, the Contract File pertaining to each Eligible Contract to be
pledged to the Lender and included in the Borrowing Base on such requested
Funding Date, in accordance with the terms and conditions of the Custodial
Agreement.
(d) Pursuant to the Custodial Agreement, the Custodian shall
deliver to the Lender and the Borrower, no later than 11:00 a.m. on a Funding
Date, a Trust Receipt in respect of all Contracts pledged to the Lender on such
Funding Date. Subject to Section 5 hereof, such Loan will then be made available
to the Borrower by the Lender transferring, via wire transfer, to the following
account of the Borrower: Fleet Bank, National Association, for the A/C of DVI
Financial Services Inc., ABA# ▇▇▇▇▇▇▇▇▇, Account# ▇▇▇▇-▇▇-▇▇▇▇, Attn: ▇▇▇▇▇
▇▇▇▇▇▇, on such Funding Date, in the aggregate amount of such Loan in funds
immediately available to the Borrower.
(e) Notwithstanding anything to the contrary in this Loan
Agreement, (i) if the Lender is unable, after good faith effort, to obtain a
source of funds for the proposed Loan on substantially the same economic terms
as are available to the Lender as of the date of this Loan Agreement, and as a
result the cost to the Lender of making such Loan is increased by an amount
which the Lender deems material, the Lender shall not be obligated to consider
making such Loan unless the Borrower agrees to pay the Lender any additional
amounts necessary to compensate the Lender for such increased cost, as notified
by the Lender to the Borrower, and (ii) the Lender shall have no obligation to
consider making any Loan hereunder if there shall
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have occurred any material adverse change in (A) the financial condition of the
Borrower or the Guarantor, (B) the financial markets generally or (C) the
secondary market for Contracts. The Lender shall promptly notify the Borrower of
any determination by the Lender of any of the foregoing.
2.04 Repayment of Loans; Interest.
(a) Each outstanding Loan shall mature on the Termination
Date.
(b) Each Loan shall bear interest on the unpaid principal
amount thereof for the period from and including the Funding Date with respect
to such Loan to but excluding the date such Loan shall be paid in full, at a
rate per annum equal to [redacted]. Notwithstanding the foregoing, the Borrower
hereby promises to pay to the Lender interest at the applicable Post-Default
Rate on any principal of any Loan and on any other amount payable by the
Borrower hereunder or under the Note that shall not be paid in full when due
(whether at stated maturity, by acceleration or by mandatory prepayment or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full (both before and after judgment).
(c) Accrued interest on each Loan shall be payable on each
Interest Payment Date (and for the last month (or portion thereof) of the Loan
Agreement on the Termination Date), except that if an Event of Default has
occurred and is continuing, interest payable at the Post-Default Rate shall be
payable from time to time on demand.
2.05 Optional Prepayments. The Loans are prepayable at any
time without premium or penalty, in whole or in part but subject to Section
2.07. Any amounts prepaid shall be applied to repay the outstanding principal
amount of any Loans (together with interest thereon) until paid in full. Amounts
prepaid may be reborrowed in accordance with the terms of this Loan Agreement.
If the Borrower intends to repay a Loan in whole or in substantial part from a
source other than the proceeds of Certificates, the Borrower shall give two (2)
Business Days' irrevocable prior written notice thereof to the Lender. If such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments shall be in an aggregate principal amount of
$1,000,000 or more.
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2.06 Mandatory Prepayment or Pledge.
(a) If at any time the aggregate outstanding principal amount
of Loans exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as
determined by the Lender and notified to the Borrower on any Business Day, the
Borrower shall no later than two (2) Business Days after receipt of such notice,
at the option of the Borrower, either prepay the Loans in part or in whole or
pledge additional Collateral (which Collateral shall be in all respects
acceptable to the Lender) to the Lender, such that after giving effect to such
prepayment or pledge the aggregate outstanding principal amount of the Loans
does not exceed the Borrowing Base.
(b) The Borrower shall prepay the Loans in part or in whole to
the extent required by Section 7.17(b) hereof.
(c) The Borrower shall prepay the Loans made in respect of all
Contracts included in a securitization on the date upon which the Certificates
from such securitization are sold.
2.07 Indemnity. Upon demand by the Lender, the Borrower agrees
to indemnify the Lender and to hold the Lender harmless from any net loss or
expense (not to include any lost profit or opportunity cost) which the Lender
may sustain or incur as a consequence of default by the Borrower in making any
prepayment on the date so specified after the Borrower has given a notice in
accordance with Section 2.05 or a prepayment of a Loan on a day which is not the
Termination Date, including, without limitation, in each case, any such loss or
expense arising from the reemployment of funds obtained by it to maintain its
Loans hereunder or from fees payable to terminate the deposits from which such
funds were obtained. This Section 2.07 shall survive termination of this Loan
Agreement and payment of the Note.
2.08 Purpose of Loans. Each Loan shall be used to provide
interim financing for Eligible Contracts identified to the Lender in writing on
each Contract Schedule, as such Contract Schedule may be amended from time to
time.
Section 3. Payments; Computations; Etc.
3.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
under this Loan Agreement and the Note, shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Lender at
the following account maintained by the Lender: Citibank NYC, For the A/C of
▇▇▇▇▇▇ Commercial Paper Inc., ABA# ▇▇▇▇▇▇▇▇▇, Account #: ▇▇▇▇▇▇▇▇, Ref: DVI
Financial Services Inc., not later than 1:00 p.m., New York City time, on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day).
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(b) Except to the extent otherwise expressly provided herein,
if the due date of any payment under this Loan Agreement or the Note would
otherwise fall on a day that is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall be payable for any
principal so extended for the period of such extension.
3.02 Computations. Interest on the Loans shall be computed on
the basis of a 360-day year for the actual days elapsed (including the first day
but excluding the last day) occurring in the period for which such interest is
payable.
Section 4. Collateral Security.
4.01 Collateral; Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian shall
hold the Contract Documents as exclusive bailee and agent for the Lender
pursuant to terms of the Custodial Agreement and shall deliver to the Lender
Trust Receipts, each to the effect that it has reviewed such Contract Documents
in the manner required by the Custodial Agreement and identifying any
deficiencies in such Contract Documents as so reviewed.
(b) All of the Borrower's right, title and interest in, to and
under each of the following items of property, whether now owned or hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the "Collateral":
(i) all Contracts and any other equipment leases, loan and
security agreements, installment sale contracts and/or promissory notes
listed on any Contract Schedule, whether or not the related Contract
File has been delivered to, or is held by, the Custodian;
(ii) all Contract Documents related thereto;
(iii) all rights, remedies, powers and privileges of the
Borrower under such Contract Documents (including, without limitation,
all rights of the Borrower in and to the Equipment and other interests
that are the subject of the Contracts);
(iv) all Servicing Records and other books and records
(including, without limitation, computer programs, tapes and other
computer storage media) relating to any of the foregoing;
(v) all recourse or support obligations, guarantees,
indemnities and security relating to any of the foregoing and all
letters of credit relating thereto;
(vi) all "general intangibles" as defined in the Uniform
Commercial Code relating to or constituting any and all of the
foregoing; and
(vii) any and all replacements, substitutions, distributions
on or proceeds of any and all of the foregoing.
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(c) The Borrower hereby assigns, pledges and grants a security
interest in the Collateral to the Lender to secure the repayment of principal of
and interest on all Loans and all other amounts owing to the Lender hereunder,
under the Note and under the other Loan Documents (collectively, the "Secured
Obligations"). The Borrower agrees to ▇▇▇▇ its computer programs and tapes to
evidence the interests granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to time,
upon the written request of the Lender, and at the sole expense of the Borrower,
the Borrower will promptly and duly execute and deliver, or will promptly cause
to be executed and delivered, such further instruments and documents and take
such further action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Loan Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby. The
Borrower also hereby authorizes the Lender to file any such financing or
continuation statement without the signature of the Borrower to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Loan Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
4.03 Changes in Locations, Name, etc. The Borrower shall not
(i) change the location of its chief executive office/chief place of business
from that specified in Section 6 hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or change the location where it
maintains its records with respect to the Collateral unless it shall have given
the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as Lender shall request and taken all other actions deemed
necessary by Lender to continue its perfected status in the Collateral with the
same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion and at the Borrower's
expense, for the purpose of carrying out the terms of this Loan Agreement, to
pay insurance in respect of, and to pay or discharge taxes and Liens levied or
placed on or threatened against, the Collateral, all as fully and effectively as
the Borrower might do and, if an Event of Default shall have occurred and be
continuing, to take any and all other appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Loan Agreement, and, without limiting the generality of the
foregoing, the Borrower hereby gives the Lender the power and right, on behalf
of the Borrower, without assent by, but with notice to, the Borrower, if an
Event of Default shall have occurred and be continuing, to do the following:
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(i) in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due
under any Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such moneys due under any such Collateral whenever payable; and
(ii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time
in respect of or arising out of any Collateral; (C) to sign and endorse
any invoices, assignments, verifications, notices and other documents
in connection with any of the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral and to enforce any
other right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against the Borrower with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith,
to give such discharges or releases as the Lender may deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Lender were the absolute owner thereof for
all purposes, and to do, at the Lender's option and the Borrower's
expense, at any time, or from time to time, all acts and things which
the Lender deems reasonably necessary to protect, preserve or realize
upon the Collateral and the Lender's Liens thereon and to effect the
intent of this Loan Agreement, all as fully and effective as the
Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time and
from time to time, to execute, in connection with the sale provided for in
Section 4.07 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect
the Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained in the
Loan Documents and the
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Lender shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of the Lender incurred in
connection with such performance or compliance, together with interest thereon
at a rate per annum equal to the Post-Default Rate, shall be payable by the
Borrower to the Lender on demand and shall constitute Secured Obligations.
4.6 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the
Borrower consisting of cash, checks and other near-cash
items shall be held by the Borrower in trust for the
Lender, segregated from other funds of the Borrower, and
shall forthwith upon receipt by the Borrower be turned
over to the Lender in the exact form received by the
Borrower (duly endorsed by the Borrower to the Lender, if
required) and (b) any and all such proceeds received by
the Lender (whether from the Borrower or otherwise) may,
in the sole discretion of the Lender, be held by the
Lender as collateral security for, and/or then or at any
time thereafter may be applied by the Lender against, the
Secured Obligations (whether matured or unmatured), such
application to be in such order as the Lender shall elect.
Any balance of such proceeds remaining after the Secured
Obligations shall have been paid in full and this Loan
Agreement shall have been terminated shall be paid over to
the Borrower or to whomsoever may be lawfully entitled to
receive the same. For purposes hereof, proceeds shall
include, but not be limited to, all principal and interest
payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, and any other income
and all other amounts received with respect to the
Collateral.
4.07 Remedies. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels or as
an entirety at public or private sale or sales, at any exchange, broker's board
or office of the Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The 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 the whole or any part of
the Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby waived or released. The Borrower
further agrees, at the Lender's request, to assemble the Collateral and
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make it available to the Lender at places which the Lender shall reasonably
select, whether at the Borrower's premises or elsewhere. The Lender shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Lender may elect, and only after such application and after
the payment by the Lender of any other amount required or permitted by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Uniform Commercial Code, need the Lender account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
the Lender. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least ten days before such sale or other disposition. The Borrower and
the Guarantor shall remain liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to pay the Secured
Obligations and the fees and disbursements of any attorneys employed by the
Lender to collect such deficiency.
4.08 Limitation on Duties Regarding Presentation of
Collateral. The Lender's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Lender deals with similar property for its own account.
Neither the Lender nor any of its directors, officers or employees shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or
otherwise.
4.09 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this
Loan Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents the Lender shall release
its security interest in any remaining Collateral.
Section 5. Conditions Precedent.
5.01 Initial Loan. The agreement of the Lender to make the
initial Loan requested to be made by it hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of
such Loan, of the following conditions precedent:
(a) Loan Documents. The Lender shall have received (i) this
Loan Agreement, executed and delivered by a duly authorized officer of
the Borrower, and
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(ii) a Note, conforming to the requirements hereof and executed by a
duly authorized officer of the Borrower.
(b) Guarantee. The Lender shall have received the Guarantee,
executed by a duly authorized officer of the Guarantor.
(c) Custodial Agreement. The Lender shall have received the
Custodial Agreement, conforming to the requirements hereof and executed
by a duly authorized officer of the Borrower and the Custodian.
(d) Underwriting Letter Agreement. The Lender shall have
received the Underwriting Letter Agreement executed by a duly
authorized officer of each of the Borrower and the Guarantor.
(e) Filings, Registrations, Recordings. Any documents
(including, without limitation, financing statements) required to be
filed, registered or recorded in order to create, in favor of the
Lender, a perfected, first-priority security interest in the
Collateral, subject to no Liens other than those created hereunder,
shall have been properly prepared for filing, registration or recording
in each office in each jurisdiction in which such filings,
registrations and recordations are required to perfect such
first-priority security interest, and with respect to each FMV Lease, a
financing statement on Form UCC-1 naming the Borrower as the debtor and
the Lender as secured party and describing the Equipment that is the
subject of such FMV Lease, and proceeds thereof, as the collateral,
shall have been properly prepared for filing, registration or recording
in each office in each jurisdiction in which such filings,
registrations and recordations are required to perfect such
first-priority security interest in such Equipment (assuming the
Borrower is the owner of such Equipment).
(f) Corporate Proceedings.
(i) The Lender shall have received a certificate of
the Secretary or Assistant Secretary of the Borrower, dated as
of the date hereof, and certifying (A) that attached thereto
is a true, complete and correct copy of resolutions duly
adopted by the Board of Directors of the Borrower authorizing
(1) the execution, delivery and performance of this Loan
Agreement, the Note and the other Loan Documents to which it
is a party, and (2) the borrowings contemplated hereunder and
that such resolutions have not been amended, modified, revoked
or rescinded, and (B) as to the incumbency and specimen
signature of each officer executing any Loan Documents on
behalf of the Borrower, and authorized to execute any Request
for Borrowing, and such certificate and the resolutions
attached thereto shall be in form and substance satisfactory
to the Lender; and
(ii) The Lender shall have received a certificate of
the Secretary or Assistant Secretary of the Guarantor, dated
as of the date hereof, and certifying (A) that attached
thereto is a true, complete and correct copy of resolutions
duly
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adopted by the Board of Directors of the Guarantor authorizing
the execution, delivery and performance of the Guarantee, and
that such resolutions have not been amended, modified, revoked
or rescinded, and (B) as to the incumbency and specimen
signature of each officer executing the Guarantee on behalf of
the Guarantor, and such certificate and the resolutions
attached thereto shall be in form and substance satisfactory
to the Lender.
(g) Corporate Documents.
(i) The Lender shall have received true and complete
copies of the certificate of incorporation and by-laws of the
Borrower, certified as such as of the date hereof by the
Secretary or an Assistant Secretary of the Borrower; and
(ii) The Lender shall have received true and complete
copies of the certificate of incorporation and by-laws of the
Guarantor, certified as such as of the date hereof by the
Secretary or an Assistant Secretary of the Guarantor.
(h) Good Standing Certificates. The Lender shall have received
copies of certificates evidencing the good standing of the Borrower and
the Guarantor, dated as of a recent date, from the Secretary of State
(or other appropriate authority) of the State of Delaware and in each
jurisdiction where the ownership, lease or operation of property, or
the conduct of business, requires the Borrower and/or the Guarantor to
qualify as a foreign corporation, except where the failure to qualify
would not have a Material Adverse Effect.
(i) Legal Opinion. The Lender shall have received the executed
legal opinions of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., general counsel to the
Borrower and the Guarantor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood, special counsel
to the Borrower and the Guarantor, covering the matters set forth in
the form attached hereto as Exhibit E and dated the initial Funding
Date and covering such other matters incident to the transactions
contemplated by this Loan Agreement as the Lender shall reasonably
request.
(j) Fees and Expenses. The Lender shall have received all fees
and expenses required to be paid by the Borrower on or prior to the
initial Funding Date pursuant to Section 11.03(b).
(k) Financial Statements. The Lender shall have received the
financial statements referenced in Section 6.01(a) and 6.01(b).
(l) Underwriting Guidelines. The Lender and the Borrower shall
have agreed upon the Borrower's underwriting guidelines for Contracts
(the "Underwriting Guidelines").
(m) Consents, Licenses, Approvals, etc. The Lender shall have
received certified copies of all consents, licenses and approvals, if
any, required in connection
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with the execution, delivery and performance by the Borrower or the
Guarantor, as applicable, of, and the validity and enforceability of,
the Loan Documents, which consents, licenses and approvals shall be in
full force and effect.
(n) Other Documents. The Lender shall have received such other
documents as the Lender may reasonably request.
5.02 Initial and Subsequent Loans. The agreement of the Lender
to make any Loan requested to be made by it on any date (including the initial
Loan) is subject to the satisfaction of the following conditions precedent:
(a) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loan requested to be made on such date.
(b) Representations and Warranties. Each of the
representations and warranties made by the Borrower and the Guarantor
in or pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such
date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date), and
the Lender shall have received an officer's certificate duly executed
by a Responsible Officer of each of the Borrower and the Guarantor to
that effect.
(c) Borrowing Base. The aggregate outstanding principal amount
of the Loans shall not exceed the Borrowing Base on such date and would
not exceed the Borrowing Base after giving effect to the Loan requested
to be made on such date.
(d) Due Diligence Review. The Lender shall have completed its
due diligence review, if any, of the Contract Files relating to the
Contracts being pledged in connection with the Loan being made on such
Funding Date, the results of which are satisfactory to the Lender.
(e) Trust Receipt. The Lender shall have received from the
Custodian a Trust Receipt in respect of Eligible Contracts to be
pledged hereunder on such Business Day, dated such Business Day and
duly completed and disclosing no material deficiencies in such Eligible
Contracts.
(f) Lien Searches. With respect to Contracts in respect of
existing Equipment previously financed or owned by the Borrower or a
third party, the Lender shall have received the results of a recent
lien search in each of the jurisdictions and offices where the related
Obligor and such Equipment are located, and such lien searches shall
reveal no Liens encumbering such Equipment or, if Liens do exist, the
Lender shall have received satisfactory evidence of release of such
Liens prior to or concurrently with the Loan being made on such Funding
Date.
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(g) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Loan Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance
to the Lender, and the Lender shall have received such other documents
and legal opinions in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall reasonably
request.
Each Request for Borrowing by the Borrower hereunder shall constitute a
certification by the Borrower of the satisfaction of the conditions precedent
set forth in paragraphs (a)-(c), above, (both as of the date of such Request for
Borrowing and, unless the Borrower otherwise notifies the Lender prior to the
date of such borrowing, as of the date of such borrowing).
Section 6. Representations and Warranties. The Borrower
represents and warrants to the Lender on the date hereof that:
6.01 Financial Condition. (a) The audited consolidated balance
sheets of the Guarantor and its consolidated Subsidiaries as at June 30, 1994
and as at June 30, 1995, and the related consolidated statements of income and
of cash flows for the fiscal years ended on each such date, reported thereon by
Deloitte & Touche, copies of which have heretofore been furnished to the Lender,
are complete and correct and present fairly the consolidated financial condition
of the Guarantor and its consolidated Subsidiaries as at such dates, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal years then ended.
(b) The unaudited consolidated balance sheet of the Guarantor
and its consolidated Subsidiaries as at June 30, 1996, and the related unaudited
consolidated statements of income and of cash flows for the twelve-month period
ended on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to the Lender, are complete and correct and present
fairly the consolidated financial condition of the Guarantor and its
consolidated Subsidiaries as at such date, and their consolidated cash flows for
the twelve-month period then ended (subject to normal year-end audit
adjustments).
(c) All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein).
(d) Neither the Guarantor nor any of its consolidated
Subsidiaries had, at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction, or other financial derivative, which is not reflected in
the foregoing statements or in the notes thereto.
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6.02 No Change. Since June 30, 1996, there has been no
development or event nor any prospective development or event, which has had or
could reasonably be expected to have a Material Adverse Effect.
6.03 Corporate Existence; Compliance with Law. The Borrower
(a) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to carry on its business as now being or
as proposed to be conducted, the lack of which would be reasonably likely to
have a Material Adverse Effect, (c) is duly qualified to do business and is in
good standing under the laws of each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would be reasonably likely (either individually or in the aggregate)
to have a Material Adverse Effect, and (d) is in compliance in all material
respects with all Requirements of Law.
6.04 Corporate Power; Authorization; Enforceable Obligations.
(a) The Borrower has the corporate power and authority, and the legal right, to
make, deliver and perform this Loan Agreement, the Note, and each other Loan
Document to which it is a party, and to borrow and to grant Liens hereunder, and
has taken all necessary corporate action to authorize the borrowings and the
granting of Liens on the terms and conditions of this Loan Agreement, the Note,
and each other Loan Document to which it is a party, and the execution, delivery
and performance of this Loan Agreement, the Note, and each other Loan Document
to which it is a party.
(b) No consent or authorization of, approval by, notice to,
filing with or other act by or in respect of, any Governmental Authority or any
other Person is required or necessary in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of this Loan Agreement or the Note or any other Loan Document,
except (i) for filings and recordings in respect of the Liens created pursuant
to this Loan Agreement, and (ii) as previously obtained and currently in full
force and effect.
(c) This Loan Agreement has been duly and validly executed and
delivered by the Borrower and constitutes, and the Note and each other Loan
Document when executed and delivered on behalf of the Borrower will constitute,
a legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.05 No Legal Bar. The execution, delivery and performance of
this Loan Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or material Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien
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(other than the Liens created hereunder) on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or material
Contractual Obligation.
6.06 No Material Litigation. There are no actions, suits,
arbitrations, investigations or proceedings of or before any arbitrator or
Governmental Authority pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues, (i) with respect to this Loan Agreement or
the Note or any of the transactions contemplated hereby, or (ii) which could
reasonably be expected to have a Material Adverse Effect.
6.07 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
6.08 Collateral; Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any of the Collateral to any Person other than the
Lender, and immediately prior to the pledge of such Contract, the Borrower was
the sole owner of the Collateral and had good and marketable title thereto, free
and clear of all Liens, in each case except for Liens to be released
simultaneously with the Liens granted in favor of the Lender hereunder.
(b) The provisions of this Loan Agreement are effective to
create in favor of the Lender a valid first priority security interest in all
right, title and interest of the Borrower in, to and under the Collateral.
(c) Upon receipt by the Custodian of each Contract File, and
the filing of financing statements on Form UCC-1 naming the Lender as "Secured
Party" and the Borrower as "Debtor", and describing the Collateral, in the
jurisdictions and recording offices listed on Schedule 2 attached hereto, the
security interests granted hereunder in the Collateral will constitute fully
perfected first-priority security interests under the Uniform Commercial Code in
all right, title and interest of the Borrower in, to and under such Collateral,
which can be perfected by filing or possession under the Uniform Commercial
Code.
6.09 Chief Executive Office. The Borrower's chief executive
office on the Effective Date is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
6.10 Location of Books and Records. The location where the
Borrower keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
6.11 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
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6.12 Taxes. Each of the Borrower and its Subsidiaries has
filed all Federal income tax returns and all other material tax returns that are
required to be filed by them and has paid all taxes due pursuant to such returns
or pursuant to any assessment received by any of them, except for any such taxes
or assessments, if any, that are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves in conformity with GAAP have been provided. No tax Lien has been filed,
and, to the knowledge of the Borrower, no claim is being asserted, with respect
to any such tax or assessment.
6.13 Margin Regulations. Neither the making of any Loan
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X.
6.14 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur indebtedness.
6.15 Subsidiaries. All of the Subsidiaries of the Borrower at
the date hereof are listed on Schedule 3 to this Loan Agreement.
6.16 Third Party Representations. Each of the representations
and warranties made by the Guarantor in the Guarantee is true and correct in all
material respects.
6.17 Eligible Contracts. With respect to every Contract
delivered or to be delivered to the Custodian, the representations and
warranties set forth on Schedule 1 hereto applicable thereto are true and
correct.
6.18 Bulk Transfer. The transfer, assignment and conveyance of
the Contracts and the Contract Documents by the Borrower pursuant to this Loan
Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
6.19 Origination and Collection of Contracts. The Contracts
were originated or acquired by the Borrower, and the origination and collection
practices used by the Borrower with respect to each Contract have been, in all
respects legal, proper, prudent and customary in the equipment financing and
servicing business, and in accordance with the Underwriting Guidelines. With
respect to Contracts acquired by the Borrower, all such Contracts are in
conformity with the Underwriting Guidelines.
6.20 No Adverse Selection. The Borrower used no selection
procedures that identified the Contracts as being less desirable or valuable
than other comparable equipment leases, security agreements or installment sales
contracts owned by the Borrower.
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6.21 Contracts are Financing Leases or Security Agreements.
(A) All of the Contracts other than FMV Leases are financing leases intended to
create a security interest in accordance with Section 1-201(37) of the Uniform
Commercial Code or security agreements which create a valid security interest
under the Uniform Commercial Code, (B) the Borrower does not own the Equipment
that is the subject of the Contracts other than FMV Leases and (C) the Borrower
has a perfected first priority Lien in the Equipment that is subject to
Contracts other than FMV Leases.
6.22 Borrower Solvent. As of the date hereof and immediately
after giving effect to each Loan, the fair value of the property of the Borrower
is greater than the fair value of the liabilities (including, without
limitation, contingent liabilities) of the Borrower and the Borrower is and will
be solvent, is and will be able to pay its debts as they mature and is and will
not have an unreasonably small capital to engage in the business in which it is
engaged and proposes to engage.
6.23 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in reorganization or insolvent.
Except as set forth in the financial statements referred to in Section 6.01(a)
and (b), neither the Borrower nor any Commonly Controlled Entity has any
material liability with respect to "expected post retirement benefit
obligations" within the meaning of Statement of Financial Account Standards No.
106.
6.24 Environmental Matters.
(a) To the best knowledge of the Borrower, the facilities and
properties owned, leased or operated by the Guarantor or any of its Subsidiaries
(the "Properties") do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably be expected
to give rise to liability under, any Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to have a Material Adverse Effect.
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(b) To the best knowledge of the Borrower, there has been no
release or threat of release of Materials of Environmental Concern at or from
the Properties, or arising from or related to the operations of the Guarantor or
any Subsidiary in connection with the Properties or otherwise in connection with
the Business, in violation of or in amounts or in a manner that could reasonably
give rise to liability under Environmental Laws except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to have a Material Adverse Effect.
Section 7. Covenants of the Borrower. The Borrower covenants
and agrees with the Lender that, so long as any Loan is outstanding and until
payment in full of all Secured Obligations:
7.01 Financial Statements. The Borrower shall deliver to the
Lender:
(a) as soon as available and in any event within fifty (50)
days after the end of each of the first three quarterly fiscal periods
of each fiscal year of the Guarantor, the consolidated and
consolidating balance sheets of the Guarantor and its consolidated
Subsidiaries as at the end of such period and the related unaudited
consolidated and consolidating statements of income and retained
earnings and of cash flows for the Guarantor and its consolidated
Subsidiaries for such period and the portion of the fiscal year through
the end of such period, setting forth in each case in comparative form
the figures for the previous year, accompanied by a certificate of a
Responsible Officer of the Guarantor, which certificate shall state
that said consolidated financial statements fairly present the
consolidated and consolidating financial condition and results of
operations of the Guarantor and its Subsidiaries in accordance with
GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(b) as soon as available and in any event within ninety-five
(95) days after the end of each fiscal year of the Guarantor, the
audited consolidated and consolidating balance sheets of the Guarantor
and its consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated and consolidating statements of income and
retained earnings and of cash flows for the Guarantor and its
consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an
opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall not be qualified as
to scope of audit or going concern and shall state that said
consolidated and consolidating financial statements fairly present the
consolidated and consolidating financial condition and results of
operations of the Guarantor and its consolidated Subsidiaries as at the
end of, and for, such fiscal year in accordance with GAAP, and a
certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any Default or Event of Default;
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(c) as soon as available, the annual report of the Guarantor
on Form 10-K as filed with the Securities and Exchange Commission for
each fiscal year; and
(d) from time to time such other information regarding the
financial condition, operations, or business of the Guarantor and its
Subsidiaries as the Lender may reasonably request.
7.02 Existence, Etc. The Borrower will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises;
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to comply with
such requirements would be reasonably likely (either individually or in
the aggregate) to have a Material Adverse Effect; and
(c) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied.
7.03 Insurance. The Borrower shall maintain insurance with
financially sound and reputable insurance companies, and with respect to
property and risks of a character usually maintained by entities engaged in the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such entities.
7.04 Prohibition of Fundamental Changes. The Borrower shall
not enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, however,
that the Borrower may merge or consolidate with any other Person if (i) the
surviving entity assumes all of the obligations of the Borrower hereunder, and
(ii) immediately after giving effect to such merger or consolidation, (A) the
net worth of the surviving entity is not less than the net worth of the Borrower
immediately prior to such transaction and (B) the rating assigned to the
Guarantor by each of Standard and Poor's Ratings Group and ▇▇▇▇▇'▇ Investors
Service, Inc. is not less than the rating assigned to the Guarantor immediately
prior to such transaction.
7.05 Notices. The Borrower shall give notice to the Lender,
promptly upon the Borrower obtaining notice thereof:
(a) of the occurrence of any Default or Event of Default;
(b) of any default related to any Collateral, any Material
Adverse Effect and any event or change in circumstances which could
reasonably be expected to have a Material Adverse Effect;
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(c) in any event within ten (10) days after service of process
on the Borrower or the Guarantor or any of its Subsidiaries, or any
agent thereof for service of process, notice of all legal or arbitrable
proceedings affecting the Borrower or the Guarantor or any of its
Subsidiaries that questions or challenges the validity or
enforceability of any of the Loan Documents;
(d) in any event within thirty (30) days of the following
events: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC
or a Plan or any withdrawal from, or the termination, reorganization or
insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, reorganization
or insolvency of, any Plan; and
(e) any of ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ or ▇▇▇ Fear shall die, suffer an inability to work for six (6) or
more consecutive months, or shall no longer be employed by the
Guarantor, the Borrower or any of the other Subsidiaries of the
Guarantor.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken or proposes
to take with respect thereto.
7.06 Periodic Due Diligence Review. The Borrower acknowledges
that the Lender has the right to perform continuing due diligence reviews with
respect to the Contracts, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than three (3) Business
Days) prior notice to the Borrower, the Lender or its authorized representatives
will be permitted during normal business hours to examine, inspect, make copies
of, and make extracts of, the Contract Files and any and all documents, records,
agreements, instruments or information relating to such Contracts in the
possession, or under the control, of the Borrower. The Borrower further agrees
that the Borrower shall reimburse the Lender for the out-of-pocket costs and
expenses incurred by the Lender in connection with the Lender's activities
pursuant to this Section 7.06, which reimbursement shall be limited to $5,000
annually; provided, that such $5,000 annual limit shall not apply to costs and
expenses incurred by the Lender hereunder after the occurrence and during the
continuation of an Event of Default.
7.07. Limitation on Liens on Collateral. The Borrower will
not, nor will it permit or allow others to, create, incur or permit to exist any
Lien on the Collateral, other than the Lien created hereby. The Borrower will
defend the Collateral against, and will take such other action as is necessary
to remove, any Lien on the Collateral, other than the Lien created hereby, and
the Borrower will defend the right, title and interest of the Lender in and to
any.
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7.08 Certain Equipment Leases; Certain Equipment Loans
(a) With respect to each Equipment Lease pledged to the Lender
hereunder consisting of a master lease (a "Master Lease") supplemented with a
certificate of delivery and master equipment schedules (each, a "Supplement"),
the Borrower shall (i) deliver each original Supplement to the Custodian,
stamped "Secured Party's Original", together with a certified copy of the
related Master Lease (showing the stamped statement required under (iii), below,
for inclusion in the Contract File in accordance with the terms of the Custodial
Agreement), (ii) maintain exclusive possession of each original Master Lease and
not permit any third-party to take possession thereof, (iii) not stamp any
Supplement "Secured Party's Original" other than the original Supplement
delivered to the Custodian, and (iv) stamp each Master Lease with a statement to
the effect that no security interest in a Supplement may be created through the
transfer or possession of any counterpart of the original Supplement other than
that Supplement marked "Secured Party's Original" and a certified copy of the
Master Lease.
(b) With respect to each Equipment Loan pledged to the Lender
hereunder consisting of a loan and security agreement or an installment sale
contract (an "Obligor Loan Agreement") supplemented with a certificate of
delivery and master equipment schedules (each, an "Equipment Schedule"), the
Borrower shall (i) deliver each original Equipment Schedule to the Custodian,
stamped "Secured Party's Original", together with a certified copy of the
related Obligor Loan Agreement (showing the stamped statement required under
(iii), below, for inclusion in the Contract File in accordance with the terms of
the Custodial Agreement), (ii) maintain exclusive possession of each original
Obligor Loan Agreement and not permit any third-party to take possession
thereof, (iii) not stamp any Equipment Schedule "Secured Party's Original" other
than the original Equipment Schedule delivered to the Custodian, (iv) stamp each
Obligor Loan Agreement with a statement to the effect that no security interest
in a Equipment Schedule may be created through the transfer or possession of any
counterpart of the original Equipment Schedule other than that Equipment
Schedule marked "Secured Party's Original" and a certified copy of the Obligor
Loan Agreement, and (v) if any promissory note or promissory notes were executed
in connection with the origination of such Equipment Loan or otherwise, deliver
such original promissory note or promissory notes to the Custodian.
7.09 Underwriting Guidelines. Without prior written notice to
the Lender, the Borrower shall not amend or otherwise modify the Underwriting
Guidelines.
7.10 Limitation on Transactions with Affiliates. The Borrower
shall not enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate unless such transaction is (a) not otherwise prohibited under
this Loan Agreement, (b) in the ordinary course of the Borrower's business and
(c) upon fair and reasonable terms no less favorable to the Borrower, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.
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7.11 Limitation on Changes in Fiscal Year. The Borrower shall
not permit its fiscal year to end on a day other than June 30.
7.12 Limitation on Lines of Business. The Borrower shall
notify the Lender in writing no later than two (2) Business Days prior to any
Funding Date, if it shall have entered into any line of business, either
directly or through any Subsidiary, other than those lines of businesses in
which the Borrower and its Subsidiaries are engaged on the date of this Loan
Agreement or which are directly related thereto, unless the Borrower has
previously notified the Lender in writing thereof.
7.13 Limitations on Modifications, Waivers and Extensions of
Contracts. The Borrower will not, nor will it permit or allow others to, amend,
modify, terminate or waive any provision of any Contract to which the Borrower
is a party in any manner which could reasonably be expected to materially
adversely affect the value of such Contract as Collateral. The Borrower will (i)
exercise promptly and diligently each and every material right which the
Borrower may have under each Contract (other than any right of termination, but
including the enforcement of warranty, servicing and other obligations of
manufacturers and other parties) except where the failure to so act could not
materially adversely affect the value of such Contract as Collateral and (ii)
deliver to the Lender a copy of each material demand, notice or document
received by it relating in any way to any Contract other than any such demand,
notice or document relating to the delinquency of a Contract or the bankruptcy
of the obligor thereunder.
7.14 Further Identification of Collateral. The Borrower will
furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender may reasonably request, all in reasonable
detail.
7.15 Limitation on Collection Account. The Borrower will not,
nor will it permit or allow others on its behalf to, establish a collection
account for the receipt of payments pursuant to the Contracts with a financial
institution other than one acceptable to the Lender in the exercise of its
reasonable discretion and upon such terms as reasonably required by the Lender.
7.16 Limitation on Sale or Other Disposition of Collateral.
The Borrower will not sell, lease, transfer, assign or otherwise dispose of any
Collateral, except that Borrower may transfer, assign or otherwise dispose of
Collateral if (i) no Default or Event of Default has occurred and is continuing,
(ii) the Borrower provides the Lender with at least two (2) Business Days'
advance notice thereof, (iii) the Borrower has demonstrated to the Lender's
reasonable satisfaction, as expressed by the Lender in writing, that after
giving effect to such sale, lease, transfer, assignment or other disposition, no
Borrowing Base Deficiency shall exist, and (iv) such sale, lease, transfer,
assignment or other disposition satisfies such other terms and conditions as the
Lender may reasonably specify in advance of such sale, lease, transfer,
assignment or other disposition.
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7.17 Repayment of Loans if Contract is Found Defective. (a)
Upon discovery by the Borrower or the Lender of any breach of any representation
or warranty listed on Schedule 1 hereto applicable to any Contract, the party
discovering such breach shall promptly give notice of such discovery to the
other.
(b) The Lender has the right, in its unreviewable discretion,
to require the Borrower to prepay the amount of any Loan made in respect of, or
at the option of the Borrower, to substitute an Eligible Contract for, any
Contract (i) which breaches one or more of the representations and warranties
applicable thereto listed on Schedule 1 hereto or (ii) which is determined in
the reasonable judgment of the Lender to be unacceptable for inclusion in a
securitized pool relating to the Certificates, in each case no later than two
(2) Business Days after receipt by the Borrower of notice thereof from the
Lender.
7.18 Monthly Officer's Certificate. The Borrower shall deliver
to the Lender, no later than thirty (30) days after the last day of each
calendar month, a certificate of a Responsible Officer of the Borrower to the
effect that, (i) to the best of such Responsible Officer's knowledge, each of
the Borrower and the Guarantor during such calendar month has observed or
performed in all material respects all of its covenants (including, without
limitation, the financial covenants set forth in the Guarantee) and other
agreements, and satisfied every condition, contained in this Loan Agreement and
the other Loan Documents to be observed, performed or satisfied by it
(accompanied by supporting documentation and calculations showing such
compliance in a covenant compliance certificate in the form of Exhibit G hereto
(a "Covenant Compliance Certificate")), (ii) that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate (and, if any Default or Event of Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
the Borrower has taken or proposes to take with respect thereto), (iii)
attaching a borrowing base certificate substantially in the form of Exhibit F
hereto (a "Borrowing Base Certificate") setting forth the Borrowing Base as at
the most recent Interest Payment Date to occur prior thereto, and (iv) attaching
an updated Contract Schedule.
7.19 Data Pool Report. The Borrower shall deliver to the
Lender, one (1) Business Day prior to each Funding Date and no later than five
(5) days after the end of each calendar quarter, (i) a complete "Data Pool"
profile report including the following categories: type of Equipment,
transaction size, end user discipline and the Borrower's percentage approval
ratio, substantially in the form of Exhibit H hereto, and (ii) a computer
readable diskette or electronic transmission containing information reasonably
requested by the Lender to enable the Lender to generate its own reports in
respect of the Contracts and other Collateral pledged hereunder.
Section 8. Events of Default. Each of the following events
shall constitute an event of default (an "Event of Default") hereunder:
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(a) the Borrower shall default in the payment of any principal
of or interest on any Loan when due (whether at stated maturity, upon
acceleration or at mandatory or optional prepayment); or
(b) the Borrower shall default in the payment of any other
amount payable by it hereunder or under any other Loan Document after
receipt by the Borrower of a written demand therefor by the Lender, and
such default shall have continued unremedied for five Business Days; or
(c) any representation, warranty or certification made or
deemed made by the Borrower herein (other than those in Schedule 1
hereto) or by the Borrower or the Guarantor in any other Loan Document
or any certificate furnished to the Lender pursuant to the provisions
thereof, shall prove to have been false or misleading in any material
respect as of the time made or furnished; or
(d) the Borrower shall fail to comply with the requirements of
Section 2.06 or Section 7 hereof (other than Sections 7.01, 7.13(ii),
7.14, 7.18 and 7.19); or the Borrower shall otherwise fail to comply
with the requirements of Sections 7.01, 7.13(ii), 7.14, 7.18 or 7.19
and such default shall continue unremedied for a period of five (5)
Business Days; or the Borrower shall fail to observe or perform any
other agreement contained in this Loan Agreement or any other Loan
Document and such failure to observe or perform shall continue
unremedied for a period of fifteen (15) Business Days; or
(e) the Guarantor shall fail to comply with the requirements
of paragraph 10 of the Guarantee; or the Guarantor shall fail to
observe or perform any other agreement contained in the Guarantee and
such failure to observe or perform shall continue unremedied for a
period of fifteen (15) Business Days; or
(f) a final judgment or judgments for the payment of money in
excess of $2,000,000 in the aggregate shall be rendered against the
Borrower or any of its Subsidiaries or the Guarantor by one or more
courts, administrative tribunals or other bodies having jurisdiction
over them and the same shall not be discharged (or provision shall not
be made for such discharge) or bonded, or a stay of execution thereof
shall not be procured, within 60 days from the date of entry thereof
and the Borrower or any such Subsidiary or the Guarantor shall not,
within said period of 60 days, or such longer period during which
execution of the same shall have been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed during such
appeal; or
(g) the Guarantor or the Borrower shall admit in writing its
inability to pay its debts as such debts become due; or
(h) the Guarantor or the Borrower or any of its Subsidiaries
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee, examiner or liquidator
of itself or of all or a substantial part of its property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence
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a voluntary case under the Bankruptcy Code, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi) take any corporate or other action for the
purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced, without the
application or consent of the Guarantor, the Borrower or any of its
Subsidiaries, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a
receiver, custodian, trustee, examiner, liquidator or the like of the
Borrower or any such Subsidiary or of all or any substantial part of
its property, or (iii) similar relief in respect of the Borrower or any
such Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more
days; or an order for relief against the Borrower or any such
Subsidiary shall be entered in an involuntary case under the Bankruptcy
Code; or
(j) the Custodial Agreement or the Guarantee shall for
whatever reason be terminated or cease to be in full force and effect,
or the enforceability thereof shall be contested by any party thereto;
or
(k) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the insolvency or reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(l) (i) the Guarantor shall at any time own, beneficially and
of record, less than 100% of all of the issued and outstanding shares
of Capital Stock of the Borrower
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having ordinary voting rights for the election of directors, or (ii)
the Pritzker family, ▇▇▇▇▇▇ ▇▇▇▇ and members of his immediate family
and ▇▇▇▇▇ ▇▇▇▇▇▇▇, on a combined basis, shall at any time own,
beneficially and of record, less than the greater of (x) 20% of all of
the issued and outstanding shares of Capital Stock of the Guarantor
having ordinary voting rights for the election of directors, or (y)
such greater percentage as is necessary so that such Persons constitute
the single largest block of shareholders of such issued and outstanding
shares Capital Stock of the Guarantor; or
(m) any four (4) of ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇ Fear shall die, suffer an inability to work
for six (6) or more consecutive months, or shall no longer be employed
by the Guarantor, the Borrower or any of the other Subsidiaries of the
Guarantor; or
(n) any other event shall occur which, in the sole discretion
of the Lender, has had a Material Adverse Effect.
Section 9. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default other
than those referred to in Section 8(h) or (i) with respect to the Borrower, the
Lender may immediately declare the principal amount of the Loans then
outstanding under the Note to be immediately due and payable, together with all
interest thereon and fees and expenses accruing under this Loan Agreement;
provided that upon the occurrence of an Event of Default referred to in Sections
8(h) or (i), such amounts shall immediately and automatically become due and
payable without any further action by any Person. Upon such declaration or such
automatic acceleration, the balance then outstanding on the Note shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Upon the occurrence of one or more Events of Default, the
Lender shall, in addition to the remedies set forth in Section 4.07 hereof, have
the right to obtain physical possession of the Servicing Records and all other
files of the Borrower relating to the Collateral and all documents relating to
the Collateral which are then or may thereafter come in to the possession of the
Borrower or any third party acting for the Borrower and the Borrower shall
deliver to the Lender such assignments as the Lender shall reasonably request.
The Lender shall be entitled to specific performance of all agreements of the
Borrower contained in this Loan Agreement.
Section 10. No Duty on Lender's Part. The powers conferred on
the Lender hereunder are solely to protect the Lender's interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
The Lender shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Borrower for any act
or failure to act hereunder, except for its or their own gross negligence or
willful misconduct.
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Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
11.02 Notices. Except as otherwise expressly permitted by this
Loan Agreement, all notices, requests and other communications provided for
herein and under the other Loan Documents (including, without limitation, any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including, without limitation, by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof); or, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Loan Agreement and except
for notices given under Section 2 (which shall be effective only on receipt),
all such communications shall be deemed to have been duly given when transmitted
by telex or telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) The Borrower agrees to indemnify and hold harmless the
Lender and each of its Affiliates and their officers, directors, employees,
agents and advisors (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities, judgments, costs and expenses of any kind
which may be imposed on, incurred by, or asserted against any Indemnified Party,
relating to or arising out of, this Loan Agreement, the Note, any other Loan
Document or any transaction contemplated hereby or thereby, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, that, in each case, results from anything other
than such Indemnified Party's gross negligence or willful misconduct. In any
suit, proceeding or action brought by any Indemnified Party in connection with
any Contract for any sum owing thereunder, or to enforce any provisions of any
Contract, the Borrower will save, indemnify and hold such Indemnified Party
harmless from and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by the
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from the Borrower. The Borrower also agrees
to reimburse the Lender for all its costs and expenses incurred in connection
with the enforcement or the preservation of the Lender's rights under this Loan
Agreement, the Note, any other Loan Document or any transaction contemplated
hereby or thereby, including without limitation the reasonable fees and
disbursements of its counsel. The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the
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44
Collateral, the obligation of the Borrower under the Secured Note is a recourse
obligation of the Borrower.
(b) The Borrower agrees to pay as and when billed by the
Lender all of the reasonable out-of-pocket costs and expenses incurred by the
Lender in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Loan Agreement, the Note, any
other Loan Document or any other documents prepared in connection herewith or
therewith. The Borrower agrees to pay as and when billed by the Lender all of
the reasonable out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby and
thereby including, without limitation, all the reasonable fees, disbursements
and expenses of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Lender, and those
costs and expenses payable to the Lender pursuant to Section 7.06 hereof.
11.04 Amendments. Except as otherwise expressly provided in
this Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender.
11.05 Successors and Assigns, Etc.. This Loan Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The Lender may, in accordance with
applicable law, at any time sell to one or more lenders participating interests
in the Loans, the Note or any other interest of the Lender hereunder and under
the other Loan Documents, or assign and transfer all or any of its rights or
obligations under any Loan Document to one or more lenders at any time;
provided, however, that in any such transaction, the Lender shall remain as
agent for any such other lender or lenders. The Borrower may not assign any of
its rights or obligations hereunder or under any other Loan Document without the
prior written consent of the Lender.
11.06 Survival. The obligations of the Borrower under Section
2.07 and 11.03 hereof shall survive the repayment of the Loans and the
termination of this Loan Agreement. In addition, each representation and
warranty made, or deemed to be made by a request for a borrowing, herein or
pursuant hereto shall survive the making of such representation and warranty,
and the Lender shall not be deemed to have waived, by reason of making any Loan,
any Default that may arise by reason of such representation or warranty proving
to have been false or misleading, notwithstanding that the Lender may have had
notice or knowledge or reason to believe that such representation or warranty
was false or misleading at the time such Loan was made.
11.07 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
11.08 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
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11.09 Loan Agreement Constitutes Security Agreement; Governing
Law. This Loan Agreement shall be governed by New York law without reference to
choice of law doctrine, and shall constitute a security agreement within the
meaning of the Uniform Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD
OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED IN
ACCORDANCE WITH SECTION 11.02 HEREOF; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
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46
11.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Loan Agreement, the Note and the other
Loan Documents;
(b) the Lender has no fiduciary relationship to the Borrower,
and the relationship between the Borrower and the Lender is solely that
of debtor and creditor; and
(c) no joint venture exists between the Lender and the
Borrower.
11.13 Hypothecation or Pledge of Loans. The Lender shall have
free and unrestricted use of all Collateral and nothing in this Agreement shall
preclude the Lender from engaging in repurchase transactions with the Collateral
or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Collateral. Nothing contained in this Loan Agreement shall
obligate the Lender to segregate any Collateral delivered to the Lender by the
Borrower.
11.14 Servicing.
(a) The Borrower shall service and administer the Contracts in
accordance with due care and customary and prudent servicing procedures for
equipment leases, security agreements and installment sale contracts of a
similar type and, prior to the occurrence of an Event of Default, shall have
full power and authority to do any and all things not inconsistent with the
provisions of this Loan Agreement which it may deem necessary or desirable in
connection with such servicing and administration. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) an Event of Default, or (ii) the date on which all the Secured
Obligations have been paid in full, or (iii) the transfer of servicing approved
by the Lender.
(b) If the Contracts are serviced by the Borrower, (i) the
Borrower acknowledges that Lender has been granted a security interest in all
servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Contracts (the "Servicing Records"),
and (ii) the Borrower grants the Lender a security interest in all servicing
fees and rights relating to the Contracts and all Servicing Records to secure
the obligation of the Borrower or its designee to service in conformity with
this Section and any other obligation of Borrower to the Lender. The Borrower
covenants to safeguard such Servicing Records and to deliver them promptly to
the Lender or its designee (including the Custodian) at the Lender's request.
(c) If the Contracts are serviced by a third party servicer
(such third party servicer, the "Servicer"), the Borrower (i) shall provide a
copy of the servicing agreement to the Lender (the "Servicing Agreement"); and
(ii) hereby irrevocably assigns to the Lender and
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47
Lender's successors and assigns all right, title, interest and the benefits of
the Servicing Agreement with respect to the Contracts.
(d) The Borrower shall provide to the Lender a letter from the
Servicer to the effect that upon the occurrence of an Event of Default, the
Lender may terminate the Servicing Agreement and transfer such servicing to its
designee, at no cost or expense to the Lender, it being agreed that the Borrower
will pay any and all fees required to terminate the Servicing Agreement and to
effectuate the transfer of servicing to the Lender.
(e) After the Funding Date, until the pledge of such Contract
is relinquished by the Custodian, the Borrower will have no right to modify or
alter the terms of the Contract and the Borrower will have no obligation or
right to repossess the Contract or substitute another Contract, except as
provided in the Custodial Agreement.
11.15 Set-Off. In addition to any rights and remedies of the
Lender provided by this Loan Agreement and by law, the Lender shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
Affiliate thereof to or for the credit or the account of the Borrower. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
BORROWER
DVI FINANCIAL SERVICES INC.
By___________________
Name
Title:
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
LENDER
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
By___________________
Name
Title:
Address for Notices:
3 World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ / ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
49
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
IN RESPECT OF THE CONTRACTS
As to each Contract included in the Borrowing Base on a
Funding Date (and the related Equipment), the Borrower shall be deemed to make
the following representations and warranties to the Lender on and as of such
Funding Date and at all times thereafter while such Contract is pledged to the
Lender hereunder:
(i) Such Contract and all accompanying documents are complete
and authentic and all signatures thereon are genuine.
(ii) Such Contract arose from a bona fide lease or installment
sale or loan to an Eligible Obligor, complying with all applicable
state and Federal laws and regulations, to Persons having the legal
capacity to contract and is not subject to any defense, set-off or
counterclaim. "Eligible Obligor" means, at any time, an Obligor which
(1) is currently not more than 60 days delinquent in making a payment;
(2) is not an Affiliate of the Borrower; (3) is located in the United
States; and (4) is not an agency, a department, an instrumentality or a
political subdivision of the United States or of any state or local
government.
(iii) All amounts represented to be payable under such
Contract are, in fact, payable in accordance with the provisions of
such Contract, the first scheduled monthly payment then due and owing
or a down payment has been made with respect to such Contract and no
payments under such Contract are more than 60 days past due.
(iv) To the best of the Borrower's knowledge, all property
subject to any Lien given in connection with such Contract is not
subject to any encumbrance, except for Liens released simultaneously
with the grant of the Lien in favor of the Lender hereunder in such
Contract.
(v) The Borrower held good and indefeasible title to, and was
the sole owner of, the Collateral, and such Collateral is not subject
to any Lien except for Liens released simultaneously with the
Borrower's pledge of Collateral made herein.
(vi) Such Contract conforms to the description thereof as set
forth on the related Contract Schedule, and each Contract, other than
an FMV Lease, is a financing lease intended to create a security
interest in accordance with Section 1-201(37) of the Uniform Commercial
Code or a security agreement creating a valid security interest under
the Uniform Commercial Code.
(vii) Such Contract has not been declared ineligible, rejected
or refused as unacceptable for inclusion under (A) the First Amended
and Restated Loan Agreement,
50
amended and restated as of March 28, 1995, between the Borrower, the banks
signatory thereto and NatWest Bank N.A., as agent, as amended from time to
time, (B) the Loan and Security Agreement, dated as of July 27, 1995,
between the Borrower and Union Bank of Switzerland, New York Branch, as
amended from time to time, (C) the Amended and Restated Interim Loan and
Security Agreement, dated as of September 13, 1994, between the Borrower
and Prudential Securities Realty Funding Corporation, as amended from time
to time, or (D) any other securitization or warehouse loan agreement
entered into by the Borrower, (other than by reason of concentration
limits); and such Contract, if purchased by the Borrower from another
lender, was not purchased because such Contract was in default to such
other lender.
(viii) All information in respect of such Contract set forth in the
Contract Schedule is true and correct.
(ix) (A) Such Contract contains provisions requiring the Obligor to
assume all risk of loss or malfunction of the related Equipment and to
maintain appropriate liability insurance with respect thereto, and making
the Obligor absolutely and unconditionally liable for all payments
required to be made thereunder, without any right of set-off for any
reason whatsoever, subject only to the Obligor's right of quiet enjoyment,
(B) such Contract may not be terminated or prepaid unless the amount
required to be paid by or on behalf of an Obligor in respect of such
prepayment is equal to or in excess of the Discounted Present Value of
such Contract plus accrued interest, (C) such Contract does not provide
for the substitution, exchange or addition of any other items of Equipment
pursuant to such Contract that would result in any reduction or extension
of payments due under such Contract, (D) the rights with respect to such
Contract are assignable by the Borrower without the consent of any Person
and (E) such Contract enables the Borrower to (subject to any applicable
grace, cure and notice periods) declare all payments thereunder to be
immediately due and payable if the Obligor is in default of such Contract.
(x) To the best of the Borrower's knowledge after due inquiry, all
requirements of applicable Federal, state and local laws, and regulations
thereunder, including, without limitation, usury laws, if any, in respect
of such Contract have been complied with in all material respects.
(xi) To the best of the Borrower's knowledge after due inquiry, such
Contract represents the legal, valid and binding obligation of the
Obligor, enforceable in accordance with its terms, subject to bankruptcy,
insolvency and other similar laws (including, but not limited to,
principles of equity) affecting the rights of creditors generally.
(xii) No instrument of release or waiver has been executed in
connection with such Contract, and no Obligor in respect of such Contract
has been released from its obligations thereunder, in whole or in part.
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51
(xiii) Such Contract has not been amended after the date on which
such Contract is listed on the Contract Schedule and pledged to the Lender
hereunder except with the prior written approval of the Lender.
(xiv) Such Contract is not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and, to
the best of Borrower's knowledge, no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto.
(xv) There is no proceeding or investigation pending or, to the best
of Borrower's knowledge after due inquiry, threatened, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of such Contract, (B)
asserting the bankruptcy or insolvency of an Obligor, (C) seeking to
prevent payment and performance of such Contract or (D) seeking any
determination or ruling that might materially and adversely affect the
validity or enforceability of such Contract.
(xvi) The Borrower has duly fulfilled all obligations on its part to
be fulfilled under or in connection with such Contract and has done
nothing to impair the rights of the Lender in such Contract or payments
with respect thereto.
(xvii) There is no monetary default, breach, violation or event of
acceleration existing under such Contract, and no event has occurred
which, with the passage of time or with notice, or both, would constitute
a monetary default, breach, violation or event of acceleration that has or
will cause a prepayment of Loans made in respect of such Contract pursuant
to this Loan Agreement; there is no non-monetary default, breach,
violation or event of acceleration existing under such Contract, and no
event has occurred which, with the passage of time or with notice, or
both, would constitute a non-monetary default, breach, violation or event
of acceleration; the Borrower has not waived any monetary or non-monetary
default, breach, violation or event of acceleration in respect of such
Contract; and no payment (or portion thereof) under such Contract has been
written off by the Borrower as uncollectible.
(xviii) All parties to such Contract had legal capacity to execute
such Contract and such Contract has been duly and properly executed by
such parties.
(xix) Such Contract was not selected by the Borrower on any basis
intended to adversely affect the value of the Lender's Lien therein.
(xx) Such Contract was not originated in, nor is it subject to the
laws of, any jurisdiction the laws of which would make unlawful the
pledge, transfer or assignment of such Contract under this Loan Agreement,
including any sale in accordance with this Loan Agreement.
(xxi) Immediately after the pledge, assignment and transfer to the
Lender as herein contemplated, all necessary action will have been taken
(including the filing or
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52
amendment of Uniform Commercial Code financing statements in all
applicable jurisdictions) to grant a valid and enforceable first priority
perfected Lien in such Contract and all payments to become due thereunder
and all rights of the Borrower in the Equipment that is the subject of
such Contract.
(xxii) (A) Such Contract has not been sold, transferred, assigned or
pledged by the Borrower to any Person other than the Lender, except for
Liens released simultaneously with the grant of the Lien in favor of the
Lender hereunder, (B) immediately prior to the pledge and conveyance of
such Contract pursuant to Section 4 hereof, the Borrower was the sole
owner of such Contract and had good and marketable title thereto, free and
clear of all Liens, except for Liens released simultaneously with the
grant of the Lien in favor of the Lender hereunder and (C) upon execution
and delivery hereof by the Borrower, the Lender will have a first priority
perfected Lien in all of the right, title and interest of the Borrower in
and to such Contract and the payments to become due thereunder, free and
clear of all Liens, except for the interests of Obligors pursuant to the
Contract.
(xxiii) If such Contract constitutes "chattel paper" for purposes of
Sections 9-105(1)(b) and 9-308 of the Uniform Commercial Code as in effect
in any applicable jurisdiction, there is only one original executed
counterpart thereof marked "Secured Party's Original" and such original
has been delivered to the Custodian in accordance with the Loan Agreement
and the Custodial Agreement.
(xxiv) Any "instrument" for purposes of Section 9-105(1)(i) and
9-308 of the Uniform Commercial Code as in effect in any applicable
jurisdiction executed in respect of such Contract has been delivered to
the Custodian in accordance with the Custodial Agreement.
(xxv) With respect to each Equipment Lease consisting of a Master
Lease supplemented with a Supplement, (i) the original Supplement has been
delivered to the Custodian, stamped "Secured Party's Original", together
with a certified copy of the related Master Lease (showing the stamped
statement required under (iii), below) for inclusion in the Contract File
in accordance with the terms of the Custodial Agreement, (ii) the Borrower
has exclusive possession of the original Master Lease and no third-party
has taken possession thereof, (iii) the Borrower has not stamped any
Supplement "Secured Party's Original" other than the original Supplement
delivered to the Custodian, and (iv) each Master Lease has been stamped
with a statement to the effect that no security interest in a Supplement
may be created through the transfer or possession of any counterpart of
the original Supplement other than that Supplement marked "Secured Party's
Original" and a certified copy of the Master Lease.
(xxvi) With respect to each Equipment Loan pledged to the Lender
hereunder consisting of an Obligor Loan Agreement supplemented with an
Equipment Schedule, (i) the original Equipment Schedule has been delivered
to the Custodian, stamped "Secured Party's Original", together with a
certified copy of the related
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53
Obligor Loan Agreement (showing the stamped statement required under
(iii), below), for inclusion in the Contract File in accordance with the
terms of the Custodial Agreement, (ii) the Borrower has exclusive
possession of the original Obligor Loan Agreement and no third-party has
taken possession thereof, (iii) the Borrower has not stamped any Equipment
Schedule "Secured Party's Original" other than the original Equipment
Schedule delivered to the Custodian, (iv) each Obligor Loan Agreement has
been stamped with a statement to the effect that no security interest in a
Equipment Schedule may be created through the transfer or possession of
any counterpart of the original Equipment Schedule other than that
Equipment Schedule marked "Secured Party's Original" and a certified copy
of the Obligor Loan Agreement, and (v) if any promissory note or
promissory notes were executed in connection with the origination of such
Equipment Loan or otherwise, such original promissory note or promissory
notes have been delivered to the Custodian.
(xxvii) The Borrower's computer records have been marked to indicate
that such Contract has been pledged, assigned and transferred to the
Lender pursuant to this Loan Agreement.
(xxviii) All insurance policies required to be maintained by such
Contract are in full force and effect and such insurance policies are of a
type customary for the Equipment covered thereby.
(xxix) The credit standing of the related Obligor of the Equipment
subject to such Contract was approved by the Borrower using its customary
practices and procedures. To the best of the Borrower's knowledge, unless
the Borrower has notified the Lender in writing, the Obligor is not and
has never been insolvent or the subject of any bankruptcy or insolvency
proceeding and the Borrower has no knowledge of any circumstance or
condition with respect to such Contract, such Equipment or the Obligor's
credit standing that could reasonably be expected to cause the Lender to
regard such Contract as an unacceptable security, cause such Contract to
become delinquent or adversely affect the value or marketability of such
Contract.
(xxx) The Equipment subject to such Contract was properly delivered
to the Obligor in good repair, without defects and in satisfactory order
and, to the best of Borrower's knowledge, is in proper working order as of
the date on which such Contract was pledged to the Lender and listed on
the Contract Schedule.
(xxxi) The Exposure does not exceed the lesser of (x) 30% of the
value of the collateral securing such Contract, or (y) $500,000.
(xxxii) The Contract was originated within twelve (12) calendar
months from the date such Contract was first included in the Borrowing
Base.
(xxxiii) The Obligor in respect of such Contract is currently
operating and carrying on its business (not preparing to operate and carry
on its business).
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(xxxiv) If the Contract is an Equipment Loan, it bears a fixed
interest rate and is not convertible to an adjustable interest rate.
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SCHEDULE 2
FILING JURISDICTIONS AND OFFICES
Secretary of the Commonwealth of Pennsylvania
Prothonotary of Bucks County, PA
56
SCHEDULE 3
SUBSIDIARIES OF DVI, INC.(1)
DVI Financial Services Inc. (Date of Inc.: 4/30/86)
DVI Business Credit Corporation (Date of Inc.: 7/2/91)
DVI Healthcare Operations, Inc. (Date of Inc.: 7/9/91)
SUBSIDIARIES OF DVI FINANCIAL SERVICES, INC.(1)
DVI Lease Finance Corporation II (Date of Inc.: 4/13/93)
DVI Lease Receivables Corp. 1993-A (Date of Inc.: 12/14/93)
DVI Receivables Corp. (Date of Inc.: 1/21/94)
DVI Subordinated Securities Corp. (Date of Inc.: 5/29/96)
DVI Receivables Corp. II (Date of Inc.: 6/3/96)
DVI Lease Finance Corporation III (Date of Inc.: 6/26/96)
SUBSIDIARIES OF DVI BUSINESS CREDIT CORPORATION(1)
DVI Business Credit Receivables Corp. (Date of Inc.: 12/20/95)
----------
(1) All of the issued and outstanding common stock of each subsidiary is owned
by its respective parent.
57
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$100,000,000 September 6, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, DVI FINANCIAL SERVICES INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of ▇▇▇▇▇▇
COMMERCIAL PAPER INC. (the "Lender"), at the principal office of the Lender at 3
World Financial Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in lawful
money of the United States, and in immediately available funds, the principal
sum of ONE HUNDRED MILLION DOLLARS ($100,000,000) (or such lesser amount as
shall equal the aggregate unpaid principal amount of the Loans made by the
Lender to the Borrower under the Loan Agreement), on the dates and in the
principal amounts provided in the Loan Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Loan
Agreement.
The date, amount and interest rate of each Loan made by the Lender
to the Borrower, and each payment made on account of the principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of this
Note, endorsed by the Lender on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrower to make a
payment when due of any amount owing under the Loan Agreement or hereunder in
respect of the Loans made by the Lender.
This Note is the Note referred to in the Loan and Security Agreement
dated as of September 6, 1996 (as amended, supplemented or otherwise modified
and in effect from time to time, the "Loan Agreement") between the Borrower and
the Lender, and evidences Loans made by the Lender thereunder. Terms used but
not defined in this Note have the respective meanings assigned to them in the
Loan Agreement.
The Borrower agrees to pay all the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges, admits and agrees that the Borrower's obligations under this Note
are recourse obligations of the Borrower to which the Borrower pledges its full
faith and credit.
The Borrower, and any endorsers or guarantors hereof, (a) severally
waive diligence, presentment, protest and demand and also notice of protest,
demand, dishonor and nonpayments of this Note, (b) expressly agree that this
Note, or any payment hereunder, may
58
be extended from time to time, and consent to the acceptance of further
Collateral, the release of any Collateral for this Note, the release of any
party primarily or secondarily liable hereon, and (c) expressly agree that it
will not be necessary for the Lender, in order to enforce payment of this Note,
to first institute or exhaust the Lender's remedies against the Borrower or any
other party liable hereon or against any Collateral for this Note. No extension
of time for the payment of this Note, or any installment hereof, made by
agreement by the Lender with any person now or hereafter liable for the payment
of this Note, shall affect the liability under this Note of the Borrower, even
if the Borrower is not a party to such agreement; provided, however, that the
Lender and the Borrower, by written agreement between them, may affect the
liability of the Borrower.
Any reference herein to the Lender shall be deemed to include and
apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE) WHOSE LAWS THE
BORROWER EXPRESSLY ELECTS TO APPLY TO THIS NOTE. THE BORROWER AGREES THAT ANY
ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS NOTE MAY BE
COMMENCED IN THE SUPREME COURT OF THE STATE OF NEW YORK, BOROUGH OF MANHATTAN,
OR IN ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR THE SOUTHERN DISTRICT OF NEW
YORK.
All notices hereunder shall be made in accordance with the terms of
the Loan Agreement.
DVI FINANCIAL SERVICES INC.
By: _______________________________
Name:
Title:
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59
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
Principal Amount Paid Unpaid Principal Notation
Date Made Amount of Loan or Prepaid Amount Made by
--------- -------------- ---------- ------ -------
60
EXHIBIT B
[FORM OF CUSTODIAL AGREEMENT]
[stored as a separate document]
61
EXHIBIT C
[FORM OF GUARANTEE OF DVI, INC.]
GUARANTEE OF DVI, INC.
Guarantee, dated as of September 6, 1996, by DVI, INC., a Delaware
corporation (the "Guarantor") in favor of ▇▇▇▇▇▇ COMMERCIAL PAPER INC. (the
"Lender").
RECITAL
WHEREAS, pursuant to the Loan and Security Agreement, dated as of
September 6, 1996 (as amended, supplemented or otherwise modified from time to
time, the ("Loan Agreement"; capitalized terms used but not otherwise defined
herein shall have the meaning given them in the Loan Agreement) between DVI
Financial Services Inc., (the "Borrower"), and the Lender, the Lender has agreed
to consider making loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Note issued by the Borrower
thereunder. It is a condition precedent to the obligation of the Lender to make
its loans to the Borrower under the Loan Agreement that the Guarantor shall have
executed and delivered this Guarantee to the Lender.
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to make its loans to the Borrower under the Loan Agreement, the Guarantor
hereby agrees with the Lender as follows:
1. Guarantee. To induce the Lender to enter into the Loan Agreement,
with the Borrower, the Guarantor unconditionally guarantees to the Lender, its
successors, endorsees, and permitted assigns, the prompt payment when due of all
present and future obligations and liabilities of all kinds of the Borrower to
the Lender arising out of the Loan Agreement (the "Obligations").
2. Absolute Guarantee. The Guarantor's obligations under this
Guarantee shall not be affected by the genuineness, validity, regularity, or
enforceability of the Obligations or of any instrument evidencing the
Obligations, or by the existence, validity, enforceability, perfection, or
extent of any collateral for the Obligations, or by any other circumstances
relating to the Obligations which might otherwise constitute a discharge of or
defense to this Guarantee. The Lender makes no representation or warranty to the
Guarantor regarding such matters, and has no duty or responsibility to disclose
to the Guarantor any circumstances that may now or hereafter affect such
matters. The Lender shall not be obligated to file any claim relating to the
Obligations if the Borrower becomes subject to a bankruptcy, reorganization, or
similar proceeding, and the failure of the Lender so to file shall not affect
the Guarantor's obligations hereunder. If any payment by the Borrower to the
62
Lender on account of the Obligations is rescinded or must otherwise be returned
for any reason whatsoever, the Guarantor shall remain liable hereunder for such
Obligations as if such payment had not been made. The Guarantor's obligations
under this Guarantee constitute a guarantee of payment and not of collection.
3. Consents, Waivers, and Renewals. The Lender may at any time and
from time to time, either before or after the maturity thereof, without notice
to or further consent of the Guarantor, extend the time of payment of, exchange,
or surrender any collateral for, or renew, any of the Obligations, and may also
make any agreement with the Borrower or with any other individual or entity
liable on any of the Obligations, or interested therein, for the extension,
renewal, payment, compromise, discharge, or release thereof, in whole or in
part, or for any modification of the terms thereof or of any agreement between
the Lender and the Borrower or any such other individual or entity, without
impairing or affecting this Guarantee. The Lender may seek payment of any of the
Obligations from the Guarantor, whether or not the Lender shall have resorted to
any collateral for the Obligations or shall have proceeded against the Borrower
or any other obligor principally or secondarily obligated for any of the
Obligations.
4. Expenses. The Guarantor shall pay on demand all out-of-pocket
expenses (including the reasonable fees and expenses of the Lender's counsel)
incurred in the enforcement or protection of the rights of the Lender under this
Guarantee, and any collateral for the Obligations shall secure such payment;
provided, however, that the Guarantor shall not be liable for any expenses of
the Lender if no payment under this Guarantee is due.
5. No Subrogation. Notwithstanding any payment or payments made by
the Guarantor hereunder, or any setoff or application of funds of the Guarantor
by the Lender, the Guarantor shall not be entitled to be subrogated to any of
the rights of the Lender against the Borrower or against any collateral security
or guarantee or right of offset held by the Lender for the payment of the
Obligations, nor shall the Guarantor seek any reimbursement from the Borrower in
respect of payments made by the Guarantor hereunder, until all amounts owing to
the Lender by the Borrower on account of the Obligations are paid in full and
the Loan Agreement is terminated. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by the Guarantor in
trust for the Lender, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Lender in the
exact form received by the Guarantor (duly endorsed by the Guarantor to the
Lender, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Lender may determine.
6. Continuing Guarantee. This Guarantee is absolute, unconditional,
and irrevocable and shall remain in full force and effect and be binding upon
the Guarantor and its successors and permitted assigns until all of the
Obligations have been satisfied in full. If any present or future Obligations
are guaranteed by individuals or entities in addition to the Guarantor, the
death, release, or discharge, in whole or part of the bankruptcy, liquidation,
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63
termination, or dissolution of one or more of them shall not discharge or affect
the liabilities of the Guarantor hereunder.
7. No Waiver; Cumulative Rights. No failure on the part of the
Lender to exercise, and no delay in exercising, any right, remedy, or power
under this Guarantee shall operate as a waiver thereof, nor shall any single or
partial exercise by the Lender of any right, remedy, or power hereunder preclude
any other or future exercise of any right, remedy, or power. Each and every
right, remedy, and power hereby granted to the Lender or allowed it by law or
other agreement shall be cumulative and not exclusive of any other, and may be
exercised by the Lender from time to time.
8. Waiver of Notice. Except as required otherwise herein, the
Guarantor waives notice of the acceptance of this Guarantee, presentment to or
demand of payment from anyone liable for any of the Obligations, notice of
dishonor or non-payment, protest, diligence, suit, notice of any sale of any
collateral for the Obligations, notice of the taking of any action by the Lender
against the Borrower, the Guarantor, or others, and all other notices that may
otherwise be required by law.
9. Representations and Warranties.
(a) The Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee and
to carry on its business as now being or as proposed to be conducted, the lack
of which would be reasonably likely to have a Material Adverse Effect, (iii) is
duly qualified to do business and is in good standing under the laws of each
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would be reasonably
likely (either individually or in the aggregate) to have a Material Adverse
Effect, and (iv) is in compliance in all material respects with all Requirements
of Law.
(b) The execution, delivery, and performance of this Guarantee
have been duly authorized by all necessary corporate action and do not
contravene any provision of the Guarantor's charter or by-laws, as amended to
date, or any law, regulation, rule decree, order, judgment, or contractual
restriction binding on the Guarantor or its assets.
(c) All consents, licenses, authorizations, and approvals of,
and registrations and declarations with, any governmental authority or
regulatory body necessary for the due execution, delivery, and performance of
this Guarantee have been obtained and remain in full force and effect and all
conditions thereof have been duly complied with, and no other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required in connection with the execution, delivery, or performance of this
Guarantee.
(d) This Guarantee constitutes the legal, valid, and binding
obligations of the Guarantor and is enforceable against the Guarantor in
accordance with its
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64
terms, subject as to enforceability to bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership, and other laws of general
applicability relating to or affecting creditors' rights and to equitable
principles of general application.
10. Financial Covenants. The Guarantor shall maintain the following
financial covenants:
(a) Tangible Net Worth. The Guarantor shall have at the end of each
fiscal quarter Tangible Net Worth in an amount equal to or greater than the sum
of (i) $75,000,000, plus (ii) 75% of net income (with no deduction for losses)
for the period commencing with the first day of the calendar quarter ending June
30, 1996 and each subsequent calendar quarter on a cumulative basis, plus (iii)
100% of the proceeds of any new issuance of equity.
(b) Leverage Ratio. The Guarantor shall maintain at all times a
Leverage Ratio not greater than 5:1.
(c) Risk-Adjusted Leverage Ratio. The Guarantor shall maintain at
all times a Risk-Adjusted Leverage Ratio not greater than 5:1.
(d) Debt Service Coverage. The Guarantor shall maintain a ratio of
(i) the sum of Cash Receipts minus Cash Operating Expenses plus Interest
Expense, to (ii) Interest Expense plus all mandatory scheduled payments of
principal on Indebtedness, of not less than 1.05:1.
(e) Capitalized Terms in Paragraph 10. Capitalized terms used in
this paragraph 10 and not otherwise defined herein shall have the meaning given
them in that certain First Amended and Restated Loan Agreement, dated June 14,
1991 and amended and restated as of March 28, 1995 (the "Restated Loan
Agreement"), between the Borrower, certain banks, NatWest Bank N.A. as
Pre-Funding Lender and as Agent, as in effect at the time it was filed with the
Securities and Exchange Commission, without giving effect to any subsequent
amendments, supplements or other modifications thereto; provided, however, that
all references to the term "Borrower" set forth in the Restated Loan Agreement
shall be deemed to refer to the Guarantor.
11. SUBMISSION TO JURISDICTION; WAIVERS. THE GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTEE, OR FOR RECOGNITION AND ENFORCEMENT
OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
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(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
WHICH THE LENDER SHALL HAVE BEEN NOTIFIED IN ACCORDANCE WITH PARAGRAPH 15
HEREOF; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION.
12. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
13. Assignment. The Guarantor may not assign its rights, interests,
or obligations under this Guarantee to any other person without the prior
written consent of the Lender.
14. Governing Law. This Guarantee shall be governed by, and
construed and enforced in accordance with, the law of the State of New York
applicable to contracts made to be performed within such State.
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15. Notices. Any notice or communication to the Guarantor in respect
of this Guarantee shall be sufficiently given if in writing and delivered in
person or sent by certified or registered mail or the equivalent (with return
receipt requested), by courier, or by facsimile addressed to the following:
DVI, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Any such notice or communication shall specifically identify the amounts
to which this Guarantee relates, and shall be sufficiently given only upon
actual receipt by the Guarantor. Any notice or communication by the Guarantor to
the Lender in respect of this Guarantee shall
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be sufficiently given if in writing and delivered in the manner provided in the
Loan Agreement.
IN WITNESS WHEREOF, this Guarantee has been duly executed and
delivered by the Guarantor to the Lender as of the date first above written.
DVI, INC.
By:_______________________________
Name:
Title:
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EXHIBIT D-1
[FORM OF REQUEST FOR BORROWING]
REQUEST FOR BORROWING
[insert date]
▇▇▇▇▇▇ Commercial Paper Inc.
3 World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ / ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Borrowing Request No.:_____________________
Ladies/Gentlemen:
Reference is made to the Loan and Security Agreement, dated as of
September 6, 1996 (the "Loan Agreement"; capitalized terms used but not
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between ▇▇▇▇▇▇ Commercial Paper Inc. (the "Lender") and DVI
Financial Services Inc. (the "Borrower").
In accordance with Section 2.03(a) of the Loan Agreement, the
undersigned Borrower hereby requests that you make a Loan to us in a principal
amount of $_________________ [insert requested Loan Amount] on
____________________ [insert requested Funding Date, which must be at least two
(2) Business Days from the date of the request], in connection with which we
propose to pledge to you as Collateral the Contracts set forth on the Contract
Schedule attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is
continuing either before or after giving effect to such Loan;
(b) each of the representations and warranties made by the Borrower
and the Guarantor in or pursuant to the Loan Documents is true and correct
in all material respects on and as of such date as if made on and as of
such date (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date); and
69
(c) the aggregate principal amount of the Loans does not exceed the
Borrowing Base, and will not exceed the Borrowing Base after giving effect
to such Loan on the Funding Date.
Very truly yours,
DVI FINANCIAL SERVICES INC.
By:______________________________
Name:
Title:
-2-
70
SCHEDULE I
TO BORROWING REQUEST
[CONTRACTS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[attach Contract Schedule]
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EXHIBIT D-2
[FORM OF LOAN SUPPLEMENT]
LOAN SUPPLEMENT
DVI Financial Services Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Loan Supplement No.:_____________________
Ladies/Gentlemen:
We hereby agree to make a Loan to you with the characteristics set forth
below, subject to the terms and conditions set forth in the Loan and Security
Agreement, dated as of September 6, 1996 (the "Loan Agreement"; capitalized
terms used but not otherwise defined herein shall have the meaning given them in
the Loan Agreement), between ▇▇▇▇▇▇ Commercial Paper Inc. (the "Lender") and DVI
Financial Services Inc. (the "Borrower"):
Lender: ▇▇▇▇▇▇ Commercial Paper Inc.
Borrower: DVI Financial Services Inc.
Loan Amount: $_____________________________
Funding Date: _____________________________
Collateral to be Pledged
on Funding Date: See Schedule I attached hereto
Termination Date: _____________________________
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
By___________________________
Name:
Title:
Date:______________________________
72
SCHEDULE I
TO LOAN SUPPLEMENT
COLLATERAL TO BE PLEDGED
TO LENDER ON FUNDING DATE
[attach list of Collateral]
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EXHIBIT E
[FORM OF OPINION OF COUNSEL OF BORROWER AND GUARANTOR]
[stored as a separate document]
74
EXHIBIT F
[FORM OF BORROWING BASE CERTIFICATE]
Pursuant to Section 7.18 of the Loan and Security Agreement, dated
as of September 6, 1996 (the "Loan Agreement"), between DVI Financial Services
Inc. (the "Borrower") and ▇▇▇▇▇▇ Commercial Paper Inc. (the "Lender"), we hereby
certify that the Borrowing Base as of the Interest Payment Date set forth below
is $_____________, calculated as follows:
A. COLLATERAL VALUE OF ELIGIBLE CONTRACTS:
1. Discounted Present Value of Eligible Contracts $______________
2. Market Value(1) of Eligible Contracts $______________
3. LESSER OF (1) AND (2) $______________
MINUS
4. Aggregate Collateral Value of Eligible Contracts
in respect of which same Person (or its Affiliates)
is Obligor, in excess of $3,000,000 $_______________
5. Aggregate Collateral Value of Eligible Contracts
having an original term of more than 95 months $_______________
6. Aggregate Collateral Value of Eligible Contracts
which breach Schedule 1 rep or warranty $_______________
7. Aggregate Collateral Value of Eligible Contracts
pledged to the Lender longer than 180 days after
first being included in the Borrowing Base $_______________
8. Aggregate Collateral Value of Eligible Contracts
which have been released by the Custodian to the
Borrower for more than five (5) days $_______________
SUBTOTAL 1 $_______________
----------
(1) Determined by the Lender in its sole discretion (using commercially
reasonable methods), which market value be determined to be zero.
75
[UNTIL THE DAY WHICH IS 45 DAYS AFTER THE OUTSTANDING PRINCIPAL AMOUNT OF
LOANS IS $50,000,000 OR MORE, MINUS]
9. Aggregate Collateral Value of Eligible Contracts
originated by a Person other than Borrower or
its Affiliates in excess of 30% of the Maximum
Credit $_______________
10. Aggregate Collateral Value of Eligible Contracts
which are Small Item Contracts in excess of 10%
of the Maximum Credit $_______________
11. Aggregate Collateral Value of Eligible Contracts
having an original term of more than 63 months
in excess of 25% of the Maximum Credit $_______________
12. Aggregate Collateral Value of Eligible Contracts
having an original term of more than 84 months
and fewer than 96 months in excess of
5% of the Maximum Credit $_______________
13. Aggregate Collateral Value of Eligible Contracts
which are FMV Leases in excess of
5% of the Maximum Credit $_______________
SUBTOTAL 2 $_______________
[UPON AND AFTER THE DAY WHICH IS 45 DAYS AFTER THE OUTSTANDING PRINCIPAL
AMOUNT OF LOANS IS $50,000,000 OR MORE, MINUS]
9. Aggregate Collateral Value of Eligible Contracts
originated by a Person other than Borrower or
its Affiliates in excess of 30% of the aggregate
Collateral Value of all Eligible Contracts in the
Borrowing Base $_______________
10. Aggregate Collateral Value of Eligible Contracts
which are Small Item Contracts in excess of 10%
of the aggregate Collateral Value of all Eligible
Contracts in the Borrowing Base $_______________
11. Aggregate Collateral Value of Eligible Contracts
having an original term of more than 63 months
in excess of 25% of the aggregate Collateral Value
of all Eligible Contracts in the Borrowing Base $_______________
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12. Aggregate Collateral Value of Eligible Contracts
having an original term of more than 84 months
and fewer than 96 months in excess of
5% of the aggregate Collateral Value of
all Eligible Contracts in the Borrowing Base $_______________
13. Aggregate Collateral Value of Eligible Contracts
which are FMV Leases in excess of
5% of the aggregate Collateral Value of
all Eligible Contracts in the Borrowing Base $_______________
SUBTOTAL 2 $_______________
B. BORROWING BASE
90% of Aggregate Collateral Value of
Eligible Contracts (Subtotal 2) $
===============
This Borrowing Base Certificate has been duly executed and delivered
by the Borrower to the Lender as of ____________ ___, 199__ (the "Interest
Payment Date").
DVI FINANCIAL SERVICES INC.
By: _______________________________
Name:
Title:
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EXHIBIT G
[FORM OF COVENANT COMPLIANCE CERTIFICATE]
1) Tangible Net Worth
DVI, Inc. shall have at the end of each fiscal quarter Tangible Net
Worth in an amount equal to or greater than the sum of (i) $75,000,000 plus (ii)
75% of net income (with no deduction for losses) for the period commencing with
the first day of the calendar quarter ending June 30, 1996 and each subsequent
quarter on a cumulative basis, plus (iii) 100% of any new issuance of equity.
Tangible Net Worth Calculation:
Additional Capital ______________
plus Retained Earnings ______________
plus Earned Surplus ______________
plus Capital Stock ______________
minus Intangibles ______________
minus Treasury Stock ______________
Total ______________
Intangibles Calculation:
Goodwill ______________
plus Other intangibles ______________
Total ______________
2) Leverage Ratio
DVI, Inc. shall maintain at all times a Leverage Ratio not
greater than 5:1.
Leverage Calculation:
Total Recourse Liabilities ______________
over (Tangible Net Worth ______________
plus Sub-Debt *) ______________
Total ______________
78
Total Recourse Liabilities Calculation
GAAP Liabilities ______________
minus Non-Recourse Debt** ______________
minus Sub-Debt *** ______________
minus Deferred Income Tax Payable ______________
minus Accrued Expenses (and Accounts Payable) ______________
plus Contingent Liabilities ______________
minus Non-Recourse Portion of Partial Recourse Debt ______________
Total ______________
3) Risk-Adjusted Leverage Ratio
DVI, Inc. shall maintain at all times a Risk-Adjusted Leverage
Ratio not greater than 5:1.
Risk Adjusted Leverage Ratio Calculation
Total Recourse Liabilities _______________
over (Tangible Net Worth _______________
plus Sub-Debt * _______________
minus RALR Calculation) _______________
Total _______________
RALR Calculation
The greater of (a) $1,000,000 or (b) the lesser of (1) DVI, Inc.'s
unfinanced or retained interests in securitized accounts receivable (the so
called "C" piece) or (2) the product resulting from multiplying (A) DVI, Inc.'s
actual loss experience, expressed as a decimal times (B) five, times (C) DVI,
Inc.'s total securitized accounts receivable.
4) Debt Service Coverage Calculation
At the end of each fiscal quarter with respect to the 12-month
period then ended, DVI, Inc. shall have a ratio of (1) Cash Receipts minus Cash
Operating Expenses plus Interest Expense, to (2) Interest Expense plus all
mandatory scheduled payments of principal on Indebtedness of not less than
1.05:1.
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Debt Service Coverage Calculation
(Cash Receipts ______________
minus Cash Operating Expenses ______________
plus Interest Expense) ______________
over (Interest Expense ______________
plus Scheduled Payments of Principal) ______________
Total ______________
* Sub-Debt not due within the twelve-month period immediately proceeding
any date of computation.
** Excluding the non-recourse portion of Partial Recourse Debt.
*** Sub-Debt not due within the next twelve months.
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EXHIBIT H
[FORM OF DATA POOL REPORT]
[see attached]