EXHIBIT 10.9
$32,500,000
SECOND AMENDED AND RESTATED
WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT
AMONG
THE BORROWER
▇▇▇▇▇▇ LEASING CORPORATION,
THE LENDERS,
AND
NATIONAL CITY BANK,
AS AGENT
August 31, 2001
TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.......................................................... 1
Section 1.01 Certain Defined Terms................................................................ 1
Section 1.02 Accounting Terms..................................................................... 18
Section 1.03 Other Definitional Provisions........................................................ 18
ARTICLE 2. COMMITMENT, LOANS AND COLLATERAL.......................................................... 19
Section 2.01 Revolving Loans; Commitment.......................................................... 19
Section 2.02 Notices.............................................................................. 20
Section 2.03 Borrowing of Loans................................................................... 20
Section 2.04 Extension of Commitment Termination Date............................................. 20
Section 2.05 Fees................................................................................. 21
Section 2.06 Conversion of Loans.................................................................. 21
Section 2.07 Borrowing Base; Prepayments.......................................................... 22
Section 2.08 Use of Proceeds of Loans............................................................. 22
Section 2.09 Payment of Loans..................................................................... 22
Section 2.10 Interest............................................................................. 23
Section 2.11 Notes................................................................................ 23
Section 2.12 Payments............................................................................. 24
Section 2.13 Computations......................................................................... 24
Section 2.14 Minimum Amounts of Borrowings and Prepayments........................................ 24
Section 2.15 Additional Costs..................................................................... 24
Section 2.16 Limitation on Types of Loans......................................................... 25
Section 2.17 Illegality........................................................................... 25
Section 2.18 Certain Conversions Pursuant to Sections 2.16 and 2.17............................... 25
Section 2.19 Indemnification...................................................................... 26
Section 2.20 Proportionate Treatment.............................................................. 26
Section 2.21 Proportionate Sharing................................................................ 26
Section 2.22 Agent's Obligation to Expend Funds; Non-Receipt of Funds by Agent.................... 27
Section 2.23 Change of Lending Office............................................................. 27
Section 2.24 Replacement of Lenders under Certain Circumstances................................... 28
Section 2.25 Security............................................................................. 28
ARTICLE 3. REPRESENTATIONS AND WARRANTIES............................................................ 29
Section 3.01 Organization......................................................................... 29
Section 3.02 Power, Authority, Consents........................................................... 29
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Section 3.03 No Violation of Law or Agreements.................................................... 30
Section 3.04 Due Execution, Validity, Enforceability.............................................. 30
Section 3.05 Basic Business....................................................................... 30
Section 3.06 Properties, Priority of Liens........................................................ 30
Section 3.07 Judgments, Actions, Proceedings...................................................... 30
Section 3.08 No Defaults, Compliance With Laws.................................................... 31
Section 3.09 Intentionally Omitted................................................................ 31
Section 3.10 Financial Statements................................................................. 31
Section 3.11 Tax Returns.......................................................................... 31
Section 3.12 Intellectual Property................................................................ 31
Section 3.13 Use of Proceeds...................................................................... 31
Section 3.14 Name Changes......................................................................... 31
Section 3.15 Condition of Assets; Permits, etc.................................................... 32
Section 3.16 ERISA................................................................................ 32
Section 3.17 True and Complete Copies............................................................. 32
Section 3.18 Principal Place of Business.......................................................... 33
Section 3.19 Corporate Structure.................................................................. 33
Section 3.20 Regulated Company.................................................................... 33
Section 3.21 Indebtedness......................................................................... 33
Section 3.22 Solvency............................................................................. 33
Section 3.23 Intentionally Omitted................................................................ 33
Section 3.24 Full Disclosure...................................................................... 33
ARTICLE 4. THE CLOSING; CONDITIONS TO THE LOANS...................................................... 34
Section 4.01 Conditions to Amendment and Restatement.............................................. 34
Section 4.02 Conditions to Each Loan.............................................................. 35
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION............................ 36
Section 5.01 Annual Financial Statements.......................................................... 36
Section 5.02 Quarterly Financial Statements....................................................... 37
Section 5.03 No Default/Compliance Certificate.................................................... 37
Section 5.04 Monthly Reports...................................................................... 37
Section 5.05 Intentionally Omitted................................................................ 37
Section 5.06 Other Information.................................................................... 37
Section 5.07 Copies of Documents.................................................................. 37
Section 5.08 Preferred Stock...................................................................... 38
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Section 5.09 Notices Under Material Contracts..................................................... 38
Section 5.10 Notice of Litigation; Cancellation of Insurance; Other Notices....................... 38
Section 5.11 Notices in Regard to Borrowing Base Assets........................................... 38
Section 5.12 ERISA................................................................................ 38
Section 5.13 Notices of Defaults.................................................................. 38
Section 5.14 UCC Acknowledgements................................................................. 38
Section 5.15 Intentionally Omitted................................................................ 38
Section 5.16 Budget; Business Plans............................................................... 38
ARTICLE 6. AFFIRMATIVE COVENANTS..................................................................... 39
Section 6.01 Books and Records.................................................................... 39
Section 6.02 Chattel Paper........................................................................ 39
Section 6.03 Inspections and Audits............................................................... 39
Section 6.04 Maintenance of Collateral............................................................ 39
Section 6.05 Continuance of Business.............................................................. 39
Section 6.06 Perform Obligations.................................................................. 40
Section 6.07 Insurance............................................................................ 40
Section 6.08 Compliance With Laws, etc............................................................ 40
Section 6.09 Borrowing Base....................................................................... 40
Section 6.10 Financial Covenants.................................................................. 40
Section 6.11 Trade Accounts Payable............................................................... 41
Section 6.12 Liens Against Users.................................................................. 41
Section 6.13 Liens................................................................................ 41
Section 6.14 Key Man Life Insurance............................................................... 41
ARTICLE 7. NEGATIVE COVENANTS........................................................................ 42
Section 7.01 Indebtedness......................................................................... 42
Section 7.02 Liens................................................................................ 43
Section 7.03 Guaranties........................................................................... 43
Section 7.04 Advances............................................................................. 43
Section 7.05 Mergers, Acquisitions................................................................ 44
Section 7.06 Changes in Business; Sale of Assets.................................................. 44
Section 7.07 Redemptions; Dividends............................................................... 45
Section 7.08 Stock Issuance....................................................................... 45
Section 7.09 Prepayments.......................................................................... 45
Section 7.10 Investments.......................................................................... 45
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Section 7.11 Fiscal Year; Accounting Changes...................................................... 46
Section 7.12 ERISA Obligations.................................................................... 46
Section 7.13 Transactions With Affiliates......................................................... 47
Section 7.14 Capital Expenditures................................................................. 47
Section 7.15 Amendments........................................................................... 47
Section 7.16 Copies of Corporate Documents........................................................ 47
Section 7.17 Principal Place of Business.......................................................... 48
ARTICLE 8. EVENTS OF DEFAULT......................................................................... 48
Section 8.01 Events of Default.................................................................... 48
Section 8.02 Effect; Remedies..................................................................... 49
ARTICLE 9. CONCERNING THE AGENT...................................................................... 49
Section 9.01 Appointment and Authority of the Agent............................................... 49
Section 9.02 Delegation of Duties................................................................. 50
Section 9.03 Independent Credit Evaluations....................................................... 50
Section 9.04 Limited Scope of Duties.............................................................. 50
Section 9.05 Reliance by the Agent................................................................ 51
Section 9.06 Exculpatory Provisions............................................................... 51
Section 9.07 Indemnification of the Agent......................................................... 52
Section 9.08 National City Bank Individually...................................................... 52
Section 9.09 Dealing With the Lenders............................................................. 52
Section 9.10 Duties Not to be Increased........................................................... 53
Section 9.11 Successor Agent...................................................................... 53
ARTICLE 10. ADDITIONAL LENDERS, ASSIGNMENTS AND PARTICIPATIONS........................................ 53
Section 10.01 Additional Lenders................................................................... 53
Section 10.02 Assignments.......................................................................... 54
Section 10.03 Participations....................................................................... 54
Section 10.04 Information.......................................................................... 55
ARTICLE 11. MISCELLANEOUS PROVISIONS.................................................................. 55
Section 11.01 Fees and Expenses; Indemnity......................................................... 55
Section 11.02 Taxes................................................................................ 56
Section 11.03 Payments............................................................................. 57
Section 11.04 Survival of Agreements and Representations; Reaffirmation of
Security Interest; Waiver of Trial by Jury........................................... 57
Section 11.05 Lien on and Set-off of Deposits...................................................... 57
Section 11.06 Modifications, Consents and Waivers; Entire Agreement................................ 58
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Section 11.07 Remedies Cumulative.................................................................. 58
Section 11.08 Further Assurances................................................................... 58
Section 11.09 Notices.............................................................................. 58
Section 11.10 Construction; Governing Law; Consent to Jurisdiction................................. 59
Section 11.11 Severability......................................................................... 60
Section 11.12 Binding Effect; No Assignment or Delegation.......................................... 60
Section 11.13 Counterparts; Facsimile Execution.................................................... 60
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.01 -- Commitments Percentages and Loan Commitments
Schedule 3.01(a) -- Capitalization
Schedule 3.01(b) -- Jurisdiction
Schedule 3.07 -- Litigation
Schedule 3.16 -- ERISA Plans
Schedule 3.17 -- Material Contracts
Schedule 3.19 -- Officers and Directors
Schedule 3.21 -- Indebtedness; Bank Accounts
Schedule 7.02 -- Liens
Schedule 7.03 -- Guaranties
Exhibit A-1 -- Form of Monthly Borrowing Base Report
Exhibit A-2 -- Form of Summary Borrowing Base Report
Exhibit A-3 -- Form of Monthly Business Review
Exhibit B -- Form of Notice
Exhibit C -- Form of Promissory Note
Exhibit D -- Form of Security Agreement
Exhibit E -- Intentionally Omitted
Exhibit F -- Form of Joinder Agreement
Exhibit G -- Form of Leases
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SECOND AMENDED AND RESTATED
WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT
WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT, dated as of
September 3, 1998, as amended and restated as of June 30, 1999 and as further
amended and restated as of August 31, 2001 (this "Agreement"), among ▇▇▇▇▇▇
LEASING CORPORATION, a Delaware corporation (the "Borrower"); each of the
financial institutions that is or pursuant to the terms hereof, may become a
party hereto as a lender (individually, a "Lender", and collectively, the
"Lenders"); and NATIONAL CITY BANK, as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, European American Bank (as the original agent under
the Original Agreement), the Borrower and certain Lenders were parties to that
certain Warehouse Revolving Credit Facility Agreement dated as of September 3,
1998 (as amended, the "Original Agreement"); and
WHEREAS, the Original Agreement was amended and restated as of
June 30, 1999 (as amended, the "First Amended and Restated Agreement");
WHEREAS, on November 14, 2000, the Lenders removed European
American Bank as the agent under the Original Agreement and replaced it with
National City Bank; and
WHEREAS, the parties hereto wish to amend and restate the
First Amended and Restated Agreement in its entirety, as hereinafter set forth;
NOW, THEREFORE, the parties hereto agree that the First
Amended and Restated Agreement is hereby amended and restated to read in its
entirety as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms.
As used in this Agreement, the following terms shall have the
following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"Additional Costs" - as defined in Section 2.15.
"Additional Lender" - as defined in Section 10.01.
"Adjusted LIBOR" means, for each Interest Period in respect of
LIBOR Loans, an interest rate per annum (rounded upward to the nearest 1/16th of
one percent (0.0625%)) determined pursuant to the following formula:
Adjusted LIBOR = LIBOR
--------------------------------------------------
1.00 - Eurodollar Reserve Percentage
The Adjusted LIBOR shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Affiliate" - as to any Person, any other Person which
directly or indirectly Controls, or is under common Control with, or is
controlled by, such Person; provided that (i) any Person which owns directly or
indirectly 5% or more (on a fully diluted basis) of the Voting Securities or 5%
or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person), in each case with
respect to any corporation or other Person with a class of securities registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
20% or more of such securities or partnership or other ownership interests, with
respect to any corporation or other Person which does not have a class of
securities registered under the Exchange Act, will be deemed to Control such
corporation or other Person and (ii) and each stockholder, director and officer
of the Borrower shall be deemed to be an Affiliate of the Borrower.
"Agreement" - this Agreement, as the same may, from time to
time, be amended, supplemented or modified.
"Amended Articles" - the Certificate of Incorporation of the
Borrower filed on June 16, 1997, as amended by Certificates of Amendment filed
on July 15, 1997, February 20, 1998, June 1, 1998, March 30, 1999, June 25,
1999, April 11, 2000 and July 24, 2001, as the same may be amended from time to
time, true and complete copies of which have been delivered to the Agent
pursuant to this Agreement.
"Applicable Margin" - with respect to all Loans, the
percentage set forth below:
Applicable Margin
for Revolving
Loans
Base Rate
Loans .25%
LIBOR Rate
Loans 2.125%
"Authorized Officer" - Any (i) Chief Executive Officer,
President or Vice President of the Borrower or (ii) any other officer or
officers of the Borrower designated in writing by the Borrower to the Agent
provided that the Borrower shall have furnished the Agent with an incumbency
certificate and certified resolutions, in form satisfactory to the Agent,
confirming the authority of such officer to act as an Authorized Officer
hereunder.
"Base Rate" - the greater of (i) the Prime Rate or (ii)
one-half percent over the Federal Funds Rate.
"Base Rate Loan" - a Loan which bears interest at a rate based
upon the Base Rate.
"Basic Business" - as defined in Section 3.05.
"Benefit Plan" - any employee benefit plan (as defined in
Section 3(3) of ERISA) or other employee benefit plan which is (a) maintained by
the Borrower or any Subsidiary, (b) a plan to which the Borrower or any
Subsidiary contributes or is required to contribute, (c) a plan to which the
Borrower or any Subsidiary was required to make contributions at any time during
the five (5) calendar
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years preceding the date of this Agreement or (d) any other plan with respect to
which the Borrower or any Subsidiary has incurred liability.
"Booked Residual" - with respect to any Contract, on any date
of determination, the residual value of the Equipment subject to such Contract,
as reflected in the Borrower's servicing system.
"Borrowing Base" - as to any Eligible Contract as at the date
of any determination thereof, but subject to paragraphs (a) through (c) of this
definition below, the lesser of (i) 88.5% of the then Net Present Value of such
Eligible Contract or (ii) 100% of the Net Investment pertaining to the Eligible
Equipment subject to such Eligible Contract, less, all security deposits and
advance lease payments and other sums received by the Borrower relating to any
Eligible Contract (solely as they relate to assets included in the Borrowing
Base). Notwithstanding the foregoing:
(a) the aggregate amount includible in the Borrowing Base
of Net Present Value of Eligible Contracts with any
one User (including Affiliates of such User) shall
not exceed $200,000;
(b) the aggregate amount includible in the Borrowing Base
of Net Present Value of Eligible Contracts which have
initial lease terms in excess of 60 months from the
commencement date of such Contracts shall not exceed
10% of the aggregate Commitment for all Lenders; and
(c) no Contract may be included in the Borrowing Base for
a period of in excess of 360 days.
"Borrowing Base Report" - a Monthly Borrowing Base Report or a
Summary Borrowing Base Report.
"Borrowing Date" - the Business Day specified in a Notice
delivered pursuant to Section 2.02 hereof as the date on which the Borrower
requests the Lenders to make a Loan.
"Business Day" - any day on which commercial banks are not
authorized or required to close in Philadelphia, Pennsylvania and, with respect
to a borrowing of, a payment or prepayment of principal of or interest on, or a
conversion of or into, or an Interest Period for, a LIBOR Loan, or a Notice by
the Borrower with respect to any of the foregoing, which is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Capital Expenditures" - for any period, the aggregate amount
of all payments made by any Person directly or indirectly for the purpose of
acquiring, constructing or maintaining fixed assets, real property or equipment
which, in accordance with GAAP, would be added as a debit to the fixed asset
account of such Person (but excluding assets acquired for lease in the ordinary
course of business).
"Capital Leases" - as defined under Statement 13 of the
Financial Accounting Standards Board or as that term may be defined hereafter in
accordance with GAAP.
"Capitalized Lease Obligations" - as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
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"Cash" - lawful currency of the United States in Dollars.
"Change of Control" means
(a) the termination of employment with the Borrower for any
reason or the failure to devote full time and attention to the business and
affairs of the Borrower by any two of the Principals;
(b) the sale, lease or transfer of all or substantially all of
the assets of the Borrower to any Person or group (as such term is defined in
Section 13(d)(3) of the Exchange Act) other than the shareholders listed on
Schedule 3.01(a);
(c) the liquidation or dissolution of (or the adoption of a
plan of liquidation by the board of directors) of the Borrower;
(d) the acquisition by any Person or group (as so defined)
(other than the shareholders listed on Schedule 3.01(a)) of a direct or indirect
majority in interest (more than 50%) of the issued and outstanding Voting
Securities of the Borrower by way of merger or consolidation or otherwise; or
(e) the occurrence of any event that constitutes an "Organic
Change" as such term is defined in the Amended Articles.
"Change of Control Date" - the date on which a Change of
Control shall occur.
"Charge Offs" - for any period, the sum of any payments due
and payable to the Borrower or its Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP) under any contract, lease or
other agreement all or a portion of which (i) has been, or should have been, in
accordance with the Credit and Collection Policy, written off the books of the
Borrower or any Subsidiary, as applicable, as uncollectible or (ii) has remained
unpaid for a period of 121 days (as of the 20th calendar day of the month) or
more from the original due date for such payment.
"Closing Date" - August 31, 2001.
"Code" - the Internal Revenue Code of 1986, as it may be
amended from time to time, and the rules and regulations thereunder.
"Collateral" - as defined in the Security Agreement.
"Commitment" - with respect to all of the Lenders, the sum of
the Commitments of each Lender hereunder and, with respect to each Lender, the
amount set forth opposite such Lender's name on Schedule 1.01 hereto (as such
Schedule may be amended from time to time, including pursuant to Sections 10.01
and 10.02) or in the Joinder Agreement pursuant to which such Lender becomes a
party hereto, as the case may be.
"Commitment Fee" - shall have the meaning given thereto in
Section 2.05.
"Commitment Percentage" - the percentage of each Lender's
Commitment to the aggregate Commitment of all the Lenders, as set forth on
Schedule 1.01 hereto (as such Schedule may be amended from time to time,
including pursuant to Sections 10.01 and 10.02) or in the Joinder Agreement
pursuant to which such Lender becomes a party hereto, as the case may be.
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"Commitment Termination Date" - the earlier of (x) August 31,
2003 or such later date as shall be applicable pursuant to Section 2.04 or (y)
such other date as the Commitment shall terminate in accordance with this
Agreement.
"Conditional Sale Agreement" - any contract for the sale of
Equipment in the ordinary course of the Borrower's business or lease intended as
security under Section 1-201(37) of the UCC.
"Consolidated Net Income" - the net income (but not loss or
deficit) of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided, however, that Consolidated Net Income
shall not include amounts added to such net income (or deficit) in respect of
the write-up of any asset.
"Consolidated Net Loss" - the net loss or deficit of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP; provided, however, that Consolidated Net Loss shall not include
amounts added to such net loss or deficit in respect of the write-up of any
asset.
"Consolidated Tangible Net Worth" - as at the date of
determination, the consolidated shareholders' equity of the Borrower and its
Subsidiaries plus the portion of Subordinated Debt which is due and payable more
than five years from its date of issuance, less (i) goodwill and other
intangibles determined in accordance with GAAP and (ii) advances to
shareholders, directors, officers, employees and Affiliates.
"Continue," "Continuation" and "Continued" - the continuation
of a LIBOR Loan as a LIBOR Loan from one Interest Period to the next Interest
Period.
"Contract" - any Lease or Conditional Sale Agreement entered
into or otherwise acquired by the Borrower, in which the Borrower is lessor,
sublessor or seller, as the case may be.
"Contract Balance Remaining" - with respect to any Contract,
as of any date, the aggregate (un-discounted) amount of all unpaid Eligible
Contract Payments due under such Contract.
"Control" - as to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Securities, by
contract or otherwise.
"Convert," "Conversion" and "Converted" shall refer to a
conversion of Loans of one type into Loans of the other type, which may be
accompanied by the transfer by a Lender (in its sole discretion) of the booking
location of a Loan from one lending office to another.
"Credit and Collection Policy" - the credit and collection
practices and policies of the Borrower as in effect on the Closing Date, subject
to such modifications permitted herein.
"Custodian" - ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, in its capacity as custodian under the Custodian Agreement, or such
other financial institution as may be selected by the Borrower (provided that
such financial institution is reasonably acceptable to the Agent).
"Custodian Agreement" - as defined in Section 2.25(b).
"Debt Instrument" - as defined in Section 8.01.
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"Debt Service" - for any period, the sum, for the Borrower and
its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following (a) all payments of Indebtedness
(including, without limitation, the principal component of any payments in
respect of Capitalized Lease Obligations, excluding, however, all such principal
in respect of Indebtedness incurred for the sole purpose of, or in connection
with, the financing of lease receivables under revolving warehouse facilities)
scheduled to be made during such period, net of any refinance proceeds plus (b)
all Interest Expense for such period.
"Default" - an event which with notice or lapse of time or
both would constitute an Event of Default.
"Dollars" - and "$" - lawful money of the United States of
America.
"EBITDA - for any period, the sum, for the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) net operating income (calculated
before taxes, Interest Expense, securitization income, extraordinary and unusual
items and income or loss attributable to equity in Affiliates) for such period
plus (b) (i) Net Margin on Managed Assets, (ii) depreciation and amortization
(to the extent deducted in determining net operating income) and (iii) provision
for loan losses (to the extent deducted in determining net operating income) for
such period.
"Eligible Equipment" - Equipment:
(a) (x) to which the Borrower has good and marketable
title or (y) with respect to which the Borrower has a
fully assignable security interest therein and which
interest, as to all Equipment other than Low Value
Equipment, shall constitute a valid first priority
perfected security interest;
(b) that is subject to an Eligible Contract;
(c) that is used in the normal course of business of the
User under such Eligible Contract and is consistent
with the Basic Business of the Borrower;
(d) except with respect to any item of Equipment subject
to a Contract which (x) has a Net Present Value of
less than $25,000 and (y) covers Equipment with an
aggregate Original Cost of less than $25,000, shall
be insured against loss by either the Borrower or the
User in accordance with industry practice;
(e) which is not subject to any Lien other than the Lien
in favor of the Agent on behalf of the Lenders, and
in which the Agent, as to all Equipment other than
Low Value Equipment, has a duly perfected first
priority security interest under the UCC;
(f) that is in good working condition; and
(g) that is located within the United States.
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"Eligible Contract" - a lease or Conditional Sale Agreement
entered into by the Borrower as lessor or seller, as the case may be:
(a) of Eligible Equipment;
(b) with respect to which the Borrower has all of the
right, title and interest of the lessor thereunder;
(c) which is fully assignable and transferable to the
Agent;
(d) which is non-cancelable and provides that the User's
obligations thereunder are absolute and unconditional
(subject only to the User's right, if any, of "quiet
enjoyment" (being a covenant of the lessor not to
repossess or to disturb the User's possession or use
of the leased asset if the User is in full compliance
with all of its obligations to the lessor)), which
obligations are not, either pursuant to the terms of
such contract or otherwise, subject to contingencies
(other than the passage of time), defense, deduction,
set-off or claim, and as to which no defenses,
set-offs, claims or counterclaims exist or have been
asserted by the User or anyone on its behalf;
(e) which is a net lease and the User thereunder is
responsible for all payments in connection therewith,
including, but not limited to, payment of all taxes,
insurance and maintenance expenses;
(f) which is payable in Dollars;
(g) which is substantially in the form of one of the form
contracts set forth in Exhibit G hereto or otherwise
in a form approved by the Agent and which has not
been amended, modified or supplemented except for
immaterial changes set forth in writing prior to the
inclusion of such Contract in the Borrowing Base and
which in any event do not reduce or limit the rights
of the Borrower thereunder and are not due to the
User's failure to satisfy the requirements of the
Credit and Collection Policy or the User's default or
delinquency, nor have any rights of the lessor
thereunder been waived;
(h) which has been entered into in accordance and
consistent with the credit standards and requirements
of the Borrower's Credit and Collection Policy as in
effect on the Closing Date, as amended, modified or
supplemented after the Closing Date provided that the
Agent has consented to any material amendment,
modification or supplement;
(i) which has an initial maturity of no less than one
year and no greater than six years unless expressly
agreed to by the Agent;
(j) which is in full force and effect (all equipment
leased thereunder has been accepted by the User);
(k) which does not (as of the date such Contract is first
included in the Borrowing Base) have any payments
more than 60 days past due from the Contract due date
thereof (without giving effect to any waiver) and
which does not have any other default and which has
not been rewritten or amended because of payment or
delinquency issues;
(l) is not a Government Contract which has the United
States or any of its agencies or instrumentalities as
the User;
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(m) which is not subject to any Lien other than the Lien
in favor of the Agent on behalf of the Lenders, and
in which the Agent has a duly perfected first
priority security interest under the UCC;
(n) the User under which is located in the United States;
(o) with respect to which the Agent maintains at its
principal place of business, or the Custodian
maintains at its place of business in the United
States permitted under the Custodian Agreement in
accordance with the terms of the Custodian Agreement,
the documentation with respect to such Contract
required to be maintained by the Custodian pursuant
to Section 4.02(c) hereof and, with respect to the
Custodian, any other documentation required to be
maintained with the Custodian pursuant to the
Custodian Agreement, and the Borrower, with respect
to such Contract, has complied with any covenants set
forth in the Loan Documents pertaining to Eligible
Contracts;
(p) that is eligible for financing under one or more of
the Borrower's Securitization Programs (including,
without limitation, that available commitment then
exists under such Securitization Program(s) to fund
such lease or Conditional Sale Agreement); and
(q) which has not been charged off in accordance with the
Credit and Collection Policy.
"Eligible Contract Payments" - all fixed, periodic basic
rental payments (excluding any residual payments) which are due and payable or
to become due under an Eligible Contract during the original term thereof
(excluding any renewal term except to the extent the User under such Contract
shall have become contractually obligated to make rental payments during such
renewal term).
"Environmental Laws" - any statute, law, rule, code,
ordinance, regulation, permit, certificate or order of any Governmental
Authority relating to injury to, or the protection of, human health or the
environment, including, without limitation, all legal requirements pertaining to
the use, storage, handling, treatment, transport, disposal, reporting,
licensing, permitting, investigation, remediation and removal of Hazardous
Substances.
"Equipment" - computer, networking, telecommunications
equipment and inventory, related peripherals, photocopiers or security systems,
whether constituting equipment or inventory, and other categories of equipment
and inventory customary in small-ticket equipment leasing and consistent with
the Borrower's Credit Policy Manual, or such other assets as shall be acceptable
to the Agent in its sole discretion.
"ERISA" - the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time, and the regulations thereunder.
"ERISA Affiliate" - all members of a controlled group of
corporations and all trades and businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are
treated as a single employer under any or all of Sections 414(b), (c) or (m) of
the Code or Section 4001 of ERISA.
"Eurodollar Reserve Percentage" - the reserve percentage, if
any, (expressed as a decimal, rounded upward to the nearest 1/100th of one
percent (0.01%)) in effect on the date LIBOR for such
8
Interest Period is determined (whether or not applicable to any Lender) under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities") having a term
comparable to such Interest Period.
"Events of Default" - as defined in Section 8.01.
"Fair Market Value" for the purposes of Section 7.06 shall
mean such purchase price in Cash as shall be agreed to in a bona fide
arms'-length negotiation between an unaffiliated, informed and willing purchaser
and seller, neither of whom is under any compulsion to purchase or sell,
respectively.
"Federal Funds Rate" - for any day, the weighted average of
the rates on overnight federal funds transactions with member banks of the
Federal Reserve System arranged by federal funds brokers as published by the
Federal Reserve Bank of Cleveland for such day, or if such day is not a Business
Day, for the immediately preceding Business Day (or, if such rate is not so
published for any such day, the average rate charged to the Agent on such day on
such transactions as reasonably determined by the Agent).
"Financial Statements" - collectively, the latest of (a) the
audited consolidated balance sheet and statements of income and of cash flows of
the Borrower and its Subsidiaries, as at and for the year ended December 31,
2000 and the unaudited consolidated balance sheet and statements of income and
of cash flows of the Borrower and its Subsidiaries for the six (6) month period
ended June 30, 2001 and (b) the most recent consolidating balance sheet and
statement of income of the Borrower and consolidated balance sheet and
statements of income and of cash flows of the Borrower and its Subsidiaries
delivered by the Borrower to the Agent and each of the Lenders pursuant to
Section 5.01 or 5.02 hereof.
"First Amended and Restated Agreement" - as defined in the
Recitals.
"Fiscal Quarter" or "FQ" - any period of three consecutive
calendar months comprising a quarter of a Fiscal Year; references to a Fiscal
Quarter with numbers corresponding to a calendar year and a number corresponding
to a Fiscal Quarter (e.g., "2001 FQ1") refer to such Fiscal Quarter (i.e., the
first) of such Fiscal Year.
"Fiscal Year" or "FY" - a period of 12 consecutive calendar
months ending on each December 31st; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., "the 2001 Fiscal Year" or "2001 FY")
refer to the Fiscal Year ending on December 31st of such calendar year.
"Fixed Charge Coverage Ratio" - as at the date of
determination, the ratio of (a) (i) EBITDA for the period of four consecutive
Fiscal Quarters ending on, or most recently ended prior to, such date plus
principal collections on managed assets, excluding, however, all such principal
in respect of the financing of lease receivables under revolving warehouse
facilities, less (ii) Charge Offs for such period to (b) Debt Service.
"Foreign Exchange Contract" - any foreign exchange contract,
currency exchange contract or other contractual arrangement protecting a Person
against fluctuations in the exchange rate of different currencies.
"GAAP" - generally accepted accounting principles, in effect
from time to time in the United States, consistently applied, subject to Section
1.02.
9
"Government Contract" means a Contract under which the User is
a federal, state or local government or government agency (or any agency or
instrumentality thereof).
"Governmental Authority" - any federal, state or local
governmental authority or regulatory body, any subdivision, agency, commission
or authority thereof (including, without limitation, any environmental
protection authority or body) or any quasi-governmental body exercising any
regulatory authority thereunder.
"Hazardous Substances" - any substance: (a) the presence of
which requires or may hereafter require notification, investigation or
remediation under any Environmental Law; (b) which is or becomes defined as a
"hazardous substance," "hazardous waste," "pollutant" or "contaminant" under any
present or future Environmental Law or amendments thereto, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), and applicable state and local statutes and regulations; (c) which is
toxic, explosive, corrosive, flammable, carcinogenic or otherwise hazardous; (d)
without limitation, which contains gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds; or (e) without limitation, which
contains polychlorinated biphenyls or asbestos.
"Hedging Liability" - relative to any Person, all liabilities
of such Person under interest rate and currency swap, cap and collar agreements
and all other Writings designed to protect such Person against fluctuations in
interest or currency exchange rates.
"Indebtedness" - with respect to any Person, all (i)
indebtedness of such person for borrowed money, including by way of overdraft
privileges, (ii) obligations of such Person for the deferred purchase price of
property or services (other than deferred taxes, current trade payables and
accrued expenses incurred in the ordinary course of such Person's business),
(iii) Capitalized Lease Obligations; (iv) obligations of such Person evidenced
by notes, bonds, debentures or similar instruments, (v) indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, (vi) liabilities and obligations of
others for which such Person is directly or indirectly liable, by way of
guaranty (whether by direct guaranty, suretyship, discount, endorsement,
take-or-pay agreement, agreement to purchase or advance or keep in funds or
other agreement having the effect of a guaranty) or otherwise; (vii) liabilities
and obligations of others than such Person secured by liens on any assets of
such Person, whether or not such liabilities and obligations shall have been
assumed by it; (viii) liabilities and obligations of such Person, direct or
contingent, with respect to bankers acceptances credited for such Person,
letters of credit for the account of such Person or similar facilities; (ix) the
net liabilities or obligations (as determined below) of such Person under any
Interest Rate Contract or Foreign Exchange Contract; (x) liabilities and
obligations of such Person, direct or contingent, including as servicer, with
respect to receivables financing facilities; and (xi) all obligations of the
kind referred to in preceding parts (i) through (x) secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise to be
secured by) any Lien on property (including accounts or contract rights) owned
by such Person, whether or not such Person has assumed or become liable for the
payment of such obligation. For the purposes of this definition, the amount of
the liabilities and obligations under any Foreign Exchange Contract or Interest
Rate Contract shall be the amount determined in respect thereof as of the end of
the then most recently ended fiscal quarter of such Person based on the
assumption that such agreement had terminated at the end of such fiscal quarter
and, in making such determination, if any agreement relating to such contracts
provides for the netting of amounts payable by and to such Person thereunder or
for the simultaneous payment of amounts by and to such Person, then, in each
such case, the amount of such liabilities and obligations shall be the net
amount so determined. The amount of liabilities and obligations in the case of
any guaranty, suretyship or other similar agreement shall equal the unpaid
portion of the stated or determinable amount of the primary
10
obligation in respect of which such guaranty, surety or similar agreement is
made or, if not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof as determined by the Agent.
"ING" - ING (U.S.) Capital LLC.
"ING Debt" - Indebtedness of the Borrower for borrowed money
to ING arising under the ING Purchase Agreement.
"ING Purchase Agreement" - that certain Purchase Agreement
dated as of March 30, 1999 (as amended) between ING and the Borrower, as may be
further amended from time to time as permitted by this Agreement.
"Insurance Subsidiary"- any Subsidiary organized under Bermuda
law for the purpose of establishing and operating a captive property insurance
program.
"Interest Coverage Ratio" - means, as at the date of
determination, the ratio of (a) (i) EBITDA for the period of four consecutive
Fiscal Quarters ending on, or most recently ended prior to, such date less (ii)
Charge Offs for such period to (b) Interest Expense for such period.
"Interest Expense" - for any period, the sum, for the Borrower
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following (a) all interest in respect of
Indebtedness (including, without limitation, the interest component of any
payments in respect of Capitalized Lease Obligations accrued or capitalized
during such period (whether or not actually paid during such period)),
excluding, however, all such interest in respect of Indebtedness incurred for
the sole purpose of, or in connection with, the financing of lease receivables,
plus, (b) the net amount payable (or minus the net amount receivable) under
Hedging Liabilities during such period (whether or not actually paid or received
during such period).
"Interest Period" - with respect to any LIBOR Loan, each
period commencing on the date such Loan is made, or Converted from a Loan or
Loans of another type or the last day of the next preceding Interest Period with
respect to such Loan, and ending one month, two months, or three months
thereafter, as the Borrower may select as provided in Section 2.02.
Notwithstanding the foregoing, (i) each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or, if such next Business Day falls in the next succeeding
calendar month, on the immediately preceding Business Day); (ii) no more than
ten (10) Interest Periods for LIBOR Loans shall be in effect at the same time;
(iii) notwithstanding clause (i) above, no Interest Period shall have a duration
of less than one month; and (iv) no Interest Period may end later than the
Commitment Termination Date. In the event that the Borrower fails to select the
duration of any Interest Period for any LIBOR Loan within the time period and
otherwise as provided in Section 2.02, the Interest Period with respect to such
Loan will be one month.
"Interest Rate Contract" - any interest rate swap, interest
rate cap or other contractual arrangement protecting a Person against increases
in variable interest rates on Indebtedness.
"Investment" - any investment in any Person by means of
purchase of shares of stock or Indebtedness, capital contribution, loan, advance
or guarantee, or any acquisition of all or the part of the business or assets of
any Person, or any commitment or option to make any Investment.
"IRS" - Internal Revenue Service.
11
"Joinder Agreement" - as defined in Section 10.01.
"Key Man Insurance" as defined in Section 6.14.
"Lease" - any lease rental schedules, master lease agreements
as they relate to such rental schedules, agreements for use and chattel paper
(including any and all supplements and amendments thereon and modifications
thereof but excluding any Conditional Sale Agreements).
"Leverage Ratio" - ratio of (i) Total Recourse Liabilities to
(ii) Consolidated Tangible Net Worth.
"LIBOR" - for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) quoted by the Agent as
determined on the basis of the offered rates which appear on the Telerate page
3750 as of 11:00 a.m., London time, two Business Days prior to the first day of
such Interest Period for deposits in Dollars for a period of time comparable to
such Interest Period and in an amount comparable to the aggregate principal
amount of the LIBOR Loans made or to be made by the Lenders to which such
Interest Period relates or, if such rate shall then be unavailable, the rate per
annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted by the
Agent at approximately 10:00 a.m., Philadelphia time (or as soon thereafter as
practical) two Business Days prior to the first day of such Interest Period for
the offering by the Agent to prime lending banks in the London interbank market
of Dollar deposits having a term comparable to such Interest Period and in an
amount comparable to the aggregate principal amount of the LIBOR Loans made or
to be made by the Lenders to which such Interest Period relates.
"LIBOR Loan" - a Loan the interest on which is determined on
the basis of Adjusted LIBOR plus the Applicable Margin.
"Lien" - any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature of a grant of a security interest or lien),
and the filing of or agreement to give any financing statement under the UCC or
similar law of any jurisdiction.
"Loan(s)" - individually, a Revolving Loan and, collectively,
the Revolving Loan(s).
"Loan Documents" - this Agreement, the Notes, the Security
Documents and all other documents executed and delivered in connection herewith
or therewith, including all amendments, modifications and supplements thereto.
"Lockbox Agreement" - as defined in Section 6(1) of the
Security Agreement.
"Low Value Equipment" - any item of Equipment subject to a
Conditional Sale Agreement which (x) has a Net Present Value of less than
$25,000 and (y) covers Equipment with an aggregate Original Cost of less than
$25,000.
"Majority Lenders" - those Lenders whose pro rata share of the
aggregate Loans outstanding (or, if no Loans are outstanding, those whose pro
rata share of the Commitment) constitutes more than 55% of the aggregate Loans
(or the Commitment).
"Master Asset-Backed Facility" - that certain Master Lease
Receivables Asset-Backed Financing Facility Agreement, dated as of December 1,
2000 among the Borrower, ▇▇▇▇▇▇ Leasing Receivables Corp. IV and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association.
12
"Material Adverse Effect" - (x) as to a Person, a material
adverse effect on the business, operations, financial condition or properties of
such Person or on the ability of such Person to perform its obligations
hereunder or under the other Loan Documents or (y) a material adverse effect on
the Agent's Lien on the Collateral or on the collectibility of any material
portion of the Collateral or on the rights and remedies of the Lenders and the
Agent under the Loan Documents.
"Material Contracts" - collectively, (i) the Primus Purchase
Agreements; (ii) the ING Purchase Agreement, (iii) the Wachovia Purchase
Agreement, (iv) the Wachovia II Purchase Agreement, (v) the Securitization
Agreements; (vi) the Third Amended and Restated Stockholders Agreement (as
amended), (vii) the agreements, instruments and other documents executed and
delivered pursuant to or in connection with any of the foregoing, and (viii) any
other agreements, understandings or contracts the loss of which, or the breach
or default under which, would have a Material Adverse Effect on the Borrower.
"Monthly Borrowing Base Report" - a borrowing base report in
the form of Exhibit A-1 annexed hereto, which borrowing base report is required
to be given pursuant to Section 5.04.
"Monthly Business Review" - management's discussion and
analysis of the Borrower's prior month's operations, including but not limited
to the most recent month-end balance sheet, income statement, portfolio agings,
and write-off/reserve information, in the form of Exhibit A-3 hereto.
"Moody's" - ▇▇▇▇▇'▇ Investors Service.
"Net Investment" - with respect to any item of Equipment,
means the Original Cost to the Borrower, adjusted to reflect the cost of related
additions, modifications, refurbishments, or replacements that are properly
capitalized less, as of the date of determination, (i) for direct finance leases
as determined in accordance with GAAP, the portion of lease payments received
attributable to the repayment of the Original Cost, and (ii) for operating
leases determined in accordance with GAAP, depreciation, in either case based on
the books and records of the Borrower maintained in accordance with GAAP.
"Net Margin on Managed Assets" - accrued interest income for
any period on lease receivables serviced by the Borrower less accrued interest
expense in respect of Indebtedness incurred for the sole purpose of, or in
connection with, the financing of lease receivables serviced by the Borrower.
"Net Present Value" - an amount discounted monthly to present
value by a percentage per annum equal to the Base Rate plus the Applicable
Margin. Net Present Value of Eligible Contracts shall refer to the Net Present
Value of the Eligible Contract Payments thereunder. All present value
calculations shall be made using a 30-day month and a 360-day year and actual
days elapsed.
"Non-Recourse Indebtedness" - Indebtedness of the Borrower for
which the remedy for nonpayment or non-performance of any obligation or any
default (other than for breach of standard representations and warranties or
misapplication of funds) in respect thereof is strictly and absolutely limited
to any collateral securing such Indebtedness and in respect of which the
Borrower is not subject to any personal liability.
"Non-Recourse Lender(s)" - any creditors of the Borrower which
shall have provided financing in the form of Non-Recourse Indebtedness.
"Notes" - as defined on Section 2.11.
13
"Notice" - as defined in Section 2.02.
"Obligations" - as defined in Section 2.25.
"Original Agreement" - as defined in the Recitals.
"Original Cost" - the purchase price to the Borrower for any
Equipment or other assets as invoiced by the supplier thereof, excluding sales
taxes, shipping, handling and customary brokerage fees and commissions and other
related costs.
"Participant" - as defined in Section 10.03.
"Participation" - as defined in Section 10.03.
"Permitted Financing Security Interest" - as defined in
Section 7.02.
"Permitted Liens" - (i) Liens in favor of the lessor on
equipment leased by the Borrower pursuant to Capital Leases to the extent such
leases are permitted under this Agreement; (ii) Liens consisting of
precautionary UCC filings in favor of the lessor on equipment leased by the
Borrower pursuant to leases other than Capital Leases to the extent permitted
under this Agreement; (iii) Liens consisting of precautionary UCC filings made
against assets transferred by the Borrower to the Securitization Subsidiaries
pursuant to the Securitization Programs or to third parties pursuant to whole
loan sales; (iv) liens in favor of lenders to the Securitization Subsidiaries
(or trustees thereof) on notes and/or stock issued to the Borrower by such
Securitization Subsidiaries in partial consideration for assets sold by the
Borrower to such Securitization Subsidiaries; (v) liens on assets of
Securitization Subsidiaries in favor of lenders to such Securitization
Subsidiaries (or trustees thereof) pursuant to one or more Securitization
Programs; (vi) liens or charges for current taxes, assessments or other
governmental charges other than those arising from income taxes (A) which are
not yet due and payable or (B) the validity of which is being contested in good
faith by appropriate proceedings upon stay of execution of the enforcement
thereof and which are in respect of claims for current taxes, assessments, or
other governmental charges not exceeding an aggregate amount of $25,000 and for
which adequate reserves have been set aside on the books of the Borrower and its
Subsidiaries in accordance with GAAP; (vii) Liens or charges not exceeding an
aggregate amount of $25,000, incurred in the ordinary course of business of the
Borrower and its Subsidiaries in connection with workers' compensation,
unemployment insurance or other forms of governmental insurance or benefits;
(viii) deposits in the ordinary course of business required to secure
performance bids, trade contracts, surety and appeal bonds, performance bonds
and similar instruments; (ix) mechanics', materialmen's, warehousemen's or other
similar liens arising in the ordinary course of the Borrower's and its
Subsidiaries' business which either (A) are inchoate and relate to an obligation
which is not yet due and payable, or (B) are being contested in good faith and
which are in respect of mechanics', materialmen's, or other similar charges not
exceeding an aggregate of $25,000 and for which adequate reserves have been set
aside on the books of the Borrower and its Subsidiaries in accordance with GAAP;
and (x) Liens on assets of the Insurance Subsidiary securing permitted
Indebtedness of the Insurance Subsidiary.
"Person" - an individual, a corporation, a partnership, a
joint venture, a limited liability company or partnership, a trust or
unincorporated organization, a joint stock company or other similar
organization, a government or any political subdivision thereof, a court, or any
other legal entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" - an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (i) maintained by
14
any Borrower or any ERISA Affiliate or (ii) maintained or contributed to
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which the Borrower or
any ERISA Affiliate is then making or accruing obligations to make contributions
or has within the preceding five plan years (with respect to both clauses (i)
and (ii)) made contributions or had an obligation to do so.
"Portfolio Delinquency Ratio" - at the end of any Collection
Period (as such term is defined in the Master Asset-Backed Facility), the
percentage equivalent of a fraction, the numerator of which is equal to the
aggregate Contract Balance Remaining (as such term is defined in the Master
Asset-Backed Facility), on all leases included in the Borrower's servicing
portfolio as to which any Scheduled Payment (as such term is defined in the
Master Asset-Backed Facility), (or part thereof in excess of 10% of such
Scheduled Payment) is delinquent sixty-one or more days, as of the end of the
Collection Period, and the denominator of which is the aggregate Contract
Balance Remaining of all leases included in the Borrower's servicing portfolio
as of the end of the Collection Period.
"Post-Default Rate" - a rate of interest per annum equal to
(a) in respect of the principal amount of Base Rate Loans, 2% in excess of the
Base Rate plus the Applicable Margin as in effect from time to time, and (b) in
respect of the principal amount of LIBOR Loans, 2% in excess of the Adjusted
LIBOR plus the Applicable Margin in effect thereon at the time of such default
until the end of the then current Interest Period therefor and, thereafter, 2%
in excess of the Base Rate plus the Applicable Margin as in effect from time to
time; and (c) in respect of other amounts payable by the Borrower hereunder
(including interest) not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum equal to 2% in excess of the Base
Rate plus the Applicable Margin as in effect from time to time.
"Preferred Stock" - the Class A Convertible Preferred Stock,
par value $.01 per share, the Class C Convertible Preferred Stock, par value
$.01 per share, and the Class D Convertible Preferred Stock, par value $.01 per
share, issued by the Borrower, in each case on the terms and conditions
described in the Amended Articles, as terms such may be amended, modified or
supplemented from time to time to the extent permitted in accordance with the
terms of this Agreement.
"Prime Rate" - the interest rate which the Agent announces
from time to time at the Principal Office as its prime commercial lending rate.
Each change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect at the time of such
change in the Prime Rate. The Prime Rate is established from time to time by the
Agent as an index or base rate and at any time may or may not be the best or
lowest rate charged by the Agent on any Loan.
"Primus Entities" - Primus Capital Fund IV Limited Partnership
and Primus Executive Fund Limited Partnership.
"Primus Purchase Agreements" - (i) that certain Purchase
Agreement dated as of February 25, 1998 (as amended) among the Borrower and the
Primus Entities, as may be further amended from time to time as permitted by
this Agreement and (ii) that certain Purchase Agreement dated as of March 30,
1999 (as amended) among the Borrower, ING and the Primus Entities, as may be
further amended from time to time as permitted by this Agreement.
"Principal Office" - the principal office of the Agent, which
is currently located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇.
"Principals" - ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇.
15
"Regulation D" - Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"Regulation T" - Regulation T of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"Regulation U" - Regulation U of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"Regulation X" - Regulation X of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"Regulatory Change" - any change after the date of this
Agreement in foreign or United States federal, state or local laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class of banks
including the Lenders of or under any foreign or United States federal, state,
or local laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Residual Receipts" - all Booked Residuals received by the
Borrower, proceeds from the sale of Equipment subject to Eligible Contracts
received by the Borrower in the event the User does not purchase the Equipment
at the end of the term of such Contract, any amounts collected by the Borrower
as judgments against a User or others related to the failure of such User to pay
any required amounts under the related Eligible Contract or to return the
Equipment, including any amounts retained by the Borrower relating to a security
deposit or other similar payment in advance as security, plus any amounts not
otherwise described above which are received by the Borrower and applied against
the Booked Residual of such Contract in accordance with the Borrower's servicing
standards, in each case as reduced by any reasonably incurred out-of-pocket
expenses incurred by the Borrower in enforcing such Contract or in liquidating
such Equipment.
"Revolver Period" - as defined in Section 2.01.
"Revolving Loans" - revolving credit loans made by the Lenders
pursuant to Section 2.01.
"S&P" - Standard & Poor's, a division of the ▇▇▇▇▇▇-▇▇▇▇
Companies.
"Securitization Agreements" - all agreements, contracts and
understandings entered into in connection with the Securitization Programs.
"Securitization Programs" -any financings pursuant to which
Securitization Subsidiaries created or acquired by the Borrower acquire assets
from the Borrower for which the Borrower acts as a servicer or manager of such
assets, which financings are Non-Recourse to the Borrower (other than in its
capacity as servicer of the leases owned by such Securitization Subsidiaries).
"Securitization Subsidiary" - any bankruptcy-remote Subsidiary
existing, created or acquired by the Borrower for the limited purpose of
securitizing or otherwise pledging or borrowing against lease receivables in the
ordinary course of business.
"Security Agreement" - as defined in Section 2.25.
16
"Security Documents" - as defined in Section 2.25.
"Solvent" - with respect to any Person, means that (i) the
fair value of all of such Person's properties and assets is in excess of the
total amount of its Indebtedness; (ii) it is able to pay its debts as they
mature; (iii) it does not have unreasonably small capital for the business in
which it is engaged or for any business or transaction in which it is about to
engage; and (iv) it is not "insolvent" as such term is defined in Section
101(31) of Title 11 of the United States Code, 11 U.S.C. Section 101, et seq.
"Subordinated Debt" - The ING Debt, the Wachovia Debt, and
other Indebtedness of the Borrower subordinated to the Obligations, the terms
and conditions of which Indebtedness and subordination are satisfactory to the
Majority Lenders, as evidenced by the written consent of the Majority Lenders
thereto.
"Subsidiary" - with respect to any Person, any corporation,
partnership, joint venture or other Person whether now existing or hereafter
organized or acquired: (i) in the case of a corporation, of which a majority of
the securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership, joint venture
or other Person, of which a majority of the partnership or other ownership
interests are at the time owned by such Person and/or one or more of its
Subsidiaries.
"Summary Borrowing Base Report" - a borrowing base report in
the form of Exhibit A-2 annexed hereto, which borrowing base report is required
to be given in connection with a Notice with respect to a borrowing or any
action taken pursuant to Section 2.07(a) hereof.
"Total Debt" - means Total Recourse Liabilities (other than
any portion of Subordinated Debt which is due and payable more than five (5)
years from the date of its issuance) related to the financing of Contracts
and/or Equipment, plus Non-Recourse Indebtedness, plus all Indebtedness of the
Borrower and its Subsidiaries under Securitization Programs.
"Total Recourse Liabilities" - all Indebtedness of a Person,
other than Non-Recourse Indebtedness, and other liabilities which, in accordance
with GAAP, would be included on the liabilities side of a balance sheet of such
Person.
"UCC" - the Uniform Commercial Code of the Commonwealth of
Pennsylvania as in effect from time to time, without reference to its conflict
of laws provisions and except as to the perfection or effect of non-perfection
of Liens on Collateral which are governed by the laws of the jurisdiction in
which the Collateral is located.
"Unused Commitment" - as to each Lender, as of any date, the
difference, if any, between (i) the amount of its Commitment in effect on such
date, and (ii) the then aggregate outstanding principal amount of all Loans made
by such Lender hereunder.
"User" - the lessee or other user of Equipment pursuant to an
Eligible Contract.
"Voting Securities" - with respect to any Person, any
ownership interests in or shares of such Person of a class having general voting
power under ordinary circumstances to elect a majority of the directors or other
persons performing similar functions of such Person (irrespective of whether at
the time ownership interests in or shares of any other class or classes shall or
might have voting power by reason of the happening of any event or contingency).
17
"Wachovia" - Wachovia Capital Investments, Inc.
"Wachovia Debt" - Indebtedness of the Borrower for borrowed
money to Wachovia arising under the Wachovia Purchase Agreement.
"Wachovia Purchase Agreement" - that certain Purchase
Agreement dated as of April 7, 2000 (as amended) between Wachovia and the
Borrower, as may be further amended from time to time as permitted by this
Agreement.
"Wachovia II Purchase Agreement" - that certain Purchase
Agreement dated as of July 26, 2001 between Wachovia and the Borrower, as
amended from time to time as permitted by this Agreement.
"Welfare Plan" - an employee welfare benefit Plan, as defined
in Section 3(l) of ERISA.
"Writing" - means any contract, agreement, indenture,
mortgage, document or other writing (whether by formal agreement, letter or
otherwise) under which any obligation is evidenced, assumed or undertaken or any
Lien (or right or interest therein) is granted or perfected.
Section 1.02 Accounting Terms.
Any accounting terms used in this Agreement which are not specifically
defined herein shall have the meanings customarily given thereto in accordance
with GAAP, consistently applied. All accounting determinations for purposes of
determining compliance with Section 6.10 hereof shall be made in accordance with
GAAP as in effect on the Closing Date and applied on a basis consistent in all
material respects with the audited Financial Statements delivered to the Agent
on or before such date. The Financial Statements required to be delivered
hereunder from and after the Closing Date, and all financial records, shall be
maintained in accordance with GAAP. If GAAP shall change from the basis used in
preparing the audited Financial Statements delivered to the Agent on or before
the Closing Date, the certificates required to be delivered pursuant to Section
5.03 demonstrating compliance with the covenants contained herein shall include
calculations setting forth the adjustments necessary to demonstrate how the
Borrower is in compliance with the financial covenants based upon GAAP as in
effect on the Closing Date.
Section 1.03 Other Definitional Provisions.
(i) Unless otherwise specified therein, all terms defined
in this Agreement shall have the defined meanings when used in the other Loan
Documents or any certificate or other document made or delivered pursuant
hereto.
(ii) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
section, subsection, schedule and exhibit references are to this Agreement
unless otherwise specified. References in this Agreement to "the date hereof"
shall be deemed to refer to the date of this Second Amended and Restated
Warehouse Revolving Credit Facility Agreement, unless expressly provided
otherwise.
(iii) The word "type", when used in relation to a Loan,
shall mean either a Base Rate Loan or a LIBOR Loan.
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(iv) Defined terms in the Agreement shall include in the
singular number the plural and in the plural number the singular.
(v) References in this Agreement to any other agreement,
document or instrument shall, unless the context otherwise requires, include
such other agreement, document or instrument as the same may be from time to
time amended, modified or supplemented.
ARTICLE 2.
COMMITMENT, LOANS AND COLLATERAL
Section 2.01 Revolving Loans; Commitment.
(a) Subject to the terms and conditions hereof, including,
without limitation, satisfaction of the conditions set forth in Article 4
hereof, each Lender severally but not jointly agrees to make revolving loans
(each, a "Revolving Loan" and collectively, the "Revolving Loans") to the
Borrower from time to time on any Business Day during the period (the "Revolver
Period") from the date of this Agreement up to, but not including, the
Commitment Termination Date, in an aggregate principal amount at any one time
outstanding up to but not exceeding such Lender's Commitment. The Revolving
Loans shall be made by the Lenders on a pro rata basis, calculated for each
Lender based on its Commitment Percentage; provided, however, that no Revolving
Loan shall be made to the Borrower hereunder if, after giving effect thereto and
to all other Revolving Loans being made concurrently therewith, the aggregate
outstanding principal amount of all Revolving Loans to the Borrower would exceed
the lesser of (x) the aggregate amount of the Commitments or (y) the amount of
the Borrower's Borrowing Base.
(b) Subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow amounts in respect of Revolving Loans available under
the Commitment during the Revolver Period.
(c) The Revolving Loans made on each Borrowing Date pursuant
to this Section 2.01 may, on and subject to the terms and conditions of this
Agreement, be Base Rate Loans or LIBOR Loans (each being referred to in this
Agreement as a "type" of Loan) as specified in the relevant Notice referred to
in Section 2.02 hereof; provided, however, that, subject to the provisions of
this Agreement, the Borrower may Convert Revolving Loans of one type into
Revolving Loans of the other type or Continue Revolving Loans, all as
hereinafter provided.
(d) The principal amount of any repayment during the Revolver
Period shall be deemed available for borrowing hereunder during the Revolver
Period, subject to the limitations set forth in subsection (a) of this Section
2.01, and shall otherwise be governed in all respects by the other terms and
conditions of this Agreement.
(e) Each Revolving Loan shall be paid in full on the
Commitment Termination Date. Revolving Loans may, in addition, be prepaid from
time to time in accordance with Section 2.07.
(f) The Borrower shall not be entitled to terminate or reduce
the Commitment prior to the Commitment Termination Date; provided, however, that
in the event that the aggregate amount of the Commitments shall be less than
$30,000,000 after giving effect to any extension pursuant to Section 2.04(a),
the Borrower shall have the right to terminate the Commitment upon five (5)
Business Days' prior written notice to the Agent and the Lenders.
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Section 2.02 Notices. The Borrower shall give the Agent written notice
in substantially the form of Exhibit B hereto (a "Notice") of each borrowing of
a Loan (or Continuation with respect to a LIBOR Loan), each Conversion and
prepayment of a Loan and, in the case of the borrowing or prepayment of, or
Conversion of a Loan into, a LIBOR Loan of the duration of each Interest Period
applicable thereto. The Notice shall be accompanied by a Summary Borrowing Base
Report. Each Notice shall be irrevocable and shall be effective only if received
by the Agent no later than 12:00 P.M., Philadelphia time, on the date which is,
for a Base Rate Loan, at least one Business Day, or, for a LIBOR Loan, at least
three Business Days prior to the date of the borrowing (or Continuation),
prepayment or Conversion of the Loan designated in the Notice. Each such Notice
of a borrowing (or Continuation), Conversion or prepayment shall specify the
amount and type of Loan to be borrowed (or Continued), Converted or prepaid and
the date of such borrowing (or Continuation), Conversion or prepayment (which
shall be a Business Day). Each such Notice of the duration of an Interest Period
shall specify the LIBOR Loans to which such Interest Period is to relate. If the
Borrower fails to give a Notice of borrowing to continue its LIBOR Loan as a
LIBOR Loan at least three Business Days prior to the end of the then current
Interest Period, such Loan shall automatically be Converted into a Base Rate
Loan on the last day of the then current Interest Period.
Section 2.03 Borrowing of Loans.
(a) Upon the satisfaction by the Borrower of the applicable
conditions set forth in Article 4 hereof, the Lenders shall make the Loans
requested by the Borrower on the applicable Borrowing Date in accordance with
subsection (b) of this Section 2.03.
(b) By no later than 2:00 P.M. on each Borrowing Date, each
Lender shall make available the respective amount of the Loan to be made by it
on such date by depositing the proceeds thereof, in immediately available funds,
with the Agent at its Principal Office and the Agent shall pay over such funds,
upon the Agent's receipt of the documents required under Article 4 with respect
to such Loans, (i) to an account of the Borrower to whom such Loan is requested
to be made and maintained with the Agent at its Principal Office or (ii) on
instructions from the Borrower to the Agent in the Notice related to such Loan,
by transmitting such amount to such other account entity as the Borrower
requesting such Loan shall have designated in such Notice.
Section 2.04 Extension of Commitment Termination Date
(a) Subject to the satisfaction of the conditions set forth in
Section 4.02, the Commitment Termination Date (and the Revolver Period) shall be
extended annually on August 31, 2003 and on each day which is one year
thereafter (each such date, an "Anniversary Date"); provided that (i) the
Borrower shall have requested such extension by giving irrevocable written
notice to the Agent (which shall promptly notify the Lenders) no earlier than
180 days and no later than 90 days prior to the Anniversary Date and (ii) the
Majority Lenders shall have consented in writing to such extension and delivered
such irrevocable consent to the Agent at least 60 days prior to the Anniversary
Date (such 60th day being referred to as the "Extension Notification Date"). Any
determination by the Lenders to consent to an extension of the Commitment
Termination Date shall be in their sole and absolute discretion and, subject to
such consent, there shall be no obligation on the part of any Lender hereunder,
whether express or implied, to extend the Commitment Termination Date. Any
Lender which shall have failed to notify the Agent of its consent or non-consent
by the Extension Notification Date shall be deemed to have withheld its consent
to such extension (each such Lender, together with each Lender that has provided
notice of its non-consent, being referred to as a "Non-Consenting Lender"). If,
as of the close of business on the Extension Notification Date, the Majority
Lenders shall have consented in writing to such extension (as contemplated in
part (ii) of the first sentence of this paragraph (a)) and there shall be any
Non-Consenting Lender(s), the Agent shall so notify the Borrower. During the
period beginning on the first day following
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the Extension Notification Date until the date to which the Commitment
Termination Date has been extended, the Borrower shall have the option to
require each Non-Consenting Lender, upon written notice from the Borrower, to
assign its Commitment and all of its rights and obligations under this Agreement
(i) first, to the Lenders who shall not be Non-Consenting Lenders and are
willing to accept such assignment, subject to ratable allocation by the Agent
among such Lenders, and (ii) second, to the extent such Non-Consenting Lender's
rights and obligations hereunder have not been assigned to an existing Lender as
contemplated in the foregoing part (i), to one or more other financial
institutions acceptable to the Borrower and the Agent that are willing to become
Lenders hereunder through the Commitment Termination Date as so extended. The
obligation of a Non-Consenting Lender to assign its rights and obligations under
this Agreement as contemplated by this Section 2.04 is subject to the
requirements that (x) all amounts owing to such Non-Consenting Lender under the
Loan Documents through the effective date of such assignment shall have been
paid in full and (y) any assignment is effected in accordance with the terms of
Section 10.02 (provided that the replacement Lender shall be responsible to pay
the fee required to be paid to the Agent pursuant to Section 10.02(a)). In the
event that no such assignment occurs then the Borrower shall pay all Obligations
owing to the Non-Consenting Lender on the Commitment Termination Date.
(b) In the event that the Majority Lenders shall consent to
the extension of the Commitment Termination Date pursuant to subsection (a) of
this Section 2.04, and provided (i) no Default or Event of Default shall have
occurred and be continuing, and (ii) any Non-Consenting Lender which shall not
have assigned its Commitments and Loans pursuant to subsection (a) of this
Section 2.04 shall have received payment of all amounts owing to such
Non-Consenting Lender pursuant to the Loan Documents then, subject to the
Borrower's right to terminate the remaining Commitments pursuant to Section
2.01(f), (x) the Commitment Termination Date shall be extended for an additional
year from the date on which, but for such extension, the Commitment would
otherwise have terminated, and (y) the Commitment shall be reduced by the amount
of the Commitment of any Non-Consenting Lender which shall not have assigned its
Commitment and Loans pursuant to subsection (a) of this Section 2.04.
Section 2.05 Fees.
(a) Whether or not any Loans are made, the Borrower shall pay
to the Agent for the account of each Lender an annual commitment fee (the
"Commitment Fee") on the average daily amount of the Unused Commitment of each
Lender, for the period from the Closing Date to and including the Commitment
Termination Date, at the rate of (i) thirty-seven and one-half hundredths of one
percent (.375%) per annum (computed on the basis of a 360-day year and 30 day
month and actual days elapsed) if the average daily amount of the Unused
Commitment for the respective quarterly period is greater than 50% of the
Commitment, or (ii) twenty-seven and one-half hundredths of one percent (.275%)
per annum (computed on the basis of a 360-day year and 30 day month and actual
days elapsed) if the average daily amount of the Unused Commitment for the
respective quarterly period is less than or equal to 50% of the Commitment. The
Commitment Fee shall be payable quarterly in arrears on the last Business Day of
each January, April, July and October following the date of this Agreement and
on the Commitment Termination Date.
(b) Whether or not any Loans are made hereunder, the Borrower
shall pay the Agent, for its own account, in addition to all other amounts
payable by the Borrower hereunder, the agency fees set forth in the letter
agreement between the Borrower and the Agent.
Section 2.06 Conversion of Loans. Subject to Sections 2.16, 2.17, 2.18
and 2.19, and, with respect to Conversion into or Continuation of LIBOR Loans,
provided no Default or Event of Default shall have occurred and be continuing,
the Borrower shall have the right to Convert Base Rate Loans into LIBOR Loans
and Continue LIBOR Loans and Convert LIBOR Loans into Base Rate Loans from time
to
21
time, provided that (a) the Borrower shall give to the Agent notice of each such
Conversion as provided in Section 2.02, (b) LIBOR Loans may be Converted only on
the last day of an Interest Period for such Loans and (c) each Conversion or
Continuation shall be effected by each Lender applying the proceeds of the new
Loan to the Loan being Converted or Continued.
Section 2.07 Borrowing Base; Prepayments.
(a) The Borrower agrees that at no time shall the aggregate
principal amount of the Loans outstanding exceed the amount of the Borrowing
Base. In the event that the aggregate outstanding principal amount of all Loans
to the Borrower exceeds the Borrowing Base, the Borrower shall immediately
prepay the Loans in an amount sufficient to reduce the sum of the aggregate
principal amount of the Loans to an amount not greater than the Borrowing Base.
The Borrower shall use the insurance proceeds received with respect to assets
subject to Eligible Contracts to prepay principal and accrued interest thereon
if as a result of such Eligible Contracts becoming ineligible a prepayment is
required pursuant to this Section 2.07(a).
(b) In the event that at any time either the Agent or the
Majority Lenders in the exercise of its or their reasonable discretion deem that
any part of the Borrowing Base no longer meets the eligibility requirements set
forth herein, then the Borrower shall, within five (5) days of the giving of
notice of such determination, take any of the actions provided in Section
2.07(a) such that the aggregate principal amount of the Loans outstanding does
not exceed the Borrowing Base. The Borrower shall deliver a Summary Borrowing
Base Report to the Agent in connection with any action taken pursuant to
subsection (a) of this Section 2.07.
(c) The Borrower shall have the right to prepay the Loans from
time to time in whole or in part, without premium or penalty, provided that: (i)
the Borrower shall give the Agent notice of each such prepayment as provided in
Section 2.02 hereof; (ii) partial prepayments shall be made in such amounts as
provided in Section 2.14 hereof; and (iii) the Borrower shall have paid all
compensation, if any owed to any Lender pursuant to Section 2.19 hereof.
(d) In the event that any payment shall be made in
satisfaction of a claim under the Key Man Insurance policy, one hundred percent
(100%) of the proceeds of such payment shall be applied by the Agent to prepay
the outstanding Loans and the Commitment shall be permanently reduced by the
amount of such prepayment.
(e) All prepayments of Loans pursuant to this Section 2.07
shall be without premium or penalty, except as provided in Section 2.19 hereof,
and such prepayment shall be accompanied by interest accrued on the principal
amount so prepaid.
(f) All prepayments, other than optional prepayments pursuant
to Section 2.07(c) hereof, shall be applied first to Base Rate Loans and then to
LIBOR Loans.
Section 2.08 Use of Proceeds of Loans. The proceeds of each Loan
hereunder shall be used by the Borrower solely for the purposes of financing or
refinancing all or a portion of Equipment subject to Eligible Contracts.
Section 2.09 Payment of Loans. On the Commitment Termination Date, the
Borrower shall be obligated to pay to the Agent for the accounts of each of the
Lenders the full outstanding principal amount of all of its Loans together with
accrued interest thereon and all other amounts due with respect thereto or
otherwise under this Agreement, the Notes and the other Loan Documents, subject
to any required prepayment to be made prior thereto under this Agreement.
22
Section 2.10 Interest.
(a) Interest shall accrue on the unpaid principal amount of
each Loan, for the period commencing on the date of such Loan until such Loan
shall be paid in full, at the following rates per annum:
(i) during such periods such Loan is a LIBOR Loan, for each
Interest Period relating thereto, the Adjusted LIBOR for such period plus the
Applicable Margin; and
(ii) during such periods such Loan is a Base Rate Loan, the
Base Rate as in effect from time to time plus the Applicable Margin.
(b) Notwithstanding the foregoing, from and after the
occurrence and during the continuance of an Event of Default or if the Borrower
shall fail to pay any amount on the due date therefore (without giving effect to
any period of grace), the Borrower shall pay interest at the applicable
Post-Default Rate on the Loan or any installment of principal thereof, and on
any other amount payable by the Borrower hereunder (including interest to the
extent permitted by law).
(c) Accrued interest on each Loan shall be payable in arrears
(i) in the case of a Base Rate Loan, on the last day of each month for which
interest is due, (ii) in the case of a LIBOR Loan, on the last day of the
Interest Period therefor, (iii) in the case of all Loans, on the date on which
the same may become payable in full (whether at stated maturity, by acceleration
or otherwise) and (iv) in the case of any Loan, upon the payment, prepayment or
Conversion thereof (but only on the principal amount so paid, prepaid or
Converted); provided, however, that interest payable at the Post-Default Rate
shall be payable from time to time on demand of the Agent.
(d) Anything in this Agreement or the Notes to the contrary
notwithstanding, the obligation of the Borrower to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be made to the Agent for the account of any Lender to the extent
that the Lender's receipt thereof would not be permissible under the law or laws
applicable to such Lender limiting rates of interest which may be charged or
collected by such Lender. Any such payments of interest which are not made as a
result of the limitation referred to in the preceding sentence shall be made by
the Borrower to the Agent for the account of such Lender, if at all, on the
earliest interest payment date or dates on which the receipt thereof would be
permissible under the laws applicable to such Lender limiting rates of interest
which may be charged or collected by such Lender. Any such payments of interest
which are made and should not have been made as a result of the limitation
referred to herein shall be applied to the principal outstanding on the
Borrower's Base Rate Loans and LIBOR Loans.
Section 2.11 Notes.
(a) The Loans made by each Lender shall be evidenced by a
promissory note made by the Borrower and payable to the order of each Lender
(the "Notes") in substantially the form of Exhibit C hereto, in a principal
amount equal to such Lender's Commitment and otherwise duly completed.
(b) The Borrower hereby authorizes the Lenders to make
notations of all payments and prepayments made on account of the principal of
the Loans and interest thereon shall be recorded by each Lender on the schedule
attached to each Note or on its regularly maintained ledger records and all such
notations shall, in the absence of manifest error, be conclusive as to the date
and principal amount of such Loan, the amount of each principal payment thereon,
the outstanding balance thereunder and the interest accrued and paid thereon;
provided, however, that any failure by such Lender to make any such notation
23
shall not limit or otherwise affect the obligations of the Borrower hereunder or
under the Notes in respect of the Loans.
Section 2.12 Payments. (a) All payments of principal, interest, fees
and other amounts payable by the Borrower hereunder shall be made in Dollars, in
immediately available funds, to the Agent for the account of the Lenders, pro
rata at the Principal Office of the Agent no later than 1:00, P.M., Philadelphia
time, on the dates on which such payments shall become due. Except as provided
in clause (ii) to the definition of "Interest Period" set forth in Section 1.01
hereof, payments which are due on a day which is not a Business Day shall be
payable on the first Business Day thereafter and interest shall continue to
accrue, or shall be payable for any principal so extended, in each case for the
period of such extension. Each such payment made after such time on such dates
shall be deemed to have been made on the next succeeding Business Day and
interest shall accrue thereon accordingly. All payments received by the Agent
for the account of the Lenders hereunder shall be applied first, to pay all
fees, expenses and other amounts then due and payable hereunder, second, to pay
accrued and unpaid interest on the Loans and third, to repay the outstanding
principal balance of the Loans. The Agent shall promptly remit in immediately
available funds to each Lender its pro rata share of all such payments received
by the Agent hereunder for the account of such Lender.
(b) The Borrower hereby authorizes the Agent to charge any
account at the Agent which is maintained by the Borrower with the amount of all
payments to be made hereunder and under the other Loan Documents, including all
fees and expenses, as and when such payments are due.
Section 2.13 Computations. Interest on all Loans, the Commitment Fee
and any other amounts payable hereunder or under the Notes or in connection
herewith or therewith shall be computed on the basis of a 360-day year, 30-day
month and actual days elapsed.
Section 2.14 Minimum Amounts of Borrowings and Prepayments. Except for
borrowings which exhaust the remaining amount of the Commitment, each borrowing
of a Loan and each Conversion or Continuation of a Loan shall be in an amount at
least equal to $1,000,000 (with respect to LIBOR Loans) and $100,000 (with
respect to Base Rate Loans). Each voluntary prepayment of a Loan shall be in an
amount of at least $250,000. There shall be no minimum amount required for
mandatory prepayment of a Loan.
Section 2.15 Additional Costs.
(a) In the event that any future law or regulation or
guideline or interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof, or compliance by
any Lender with any request or directive (whether or not having the force of
law) of any such authority or any Regulatory Change (including for the purposes
of this Section 2.15, any law, rule, regulation or guidelines adopted at any
time, whether or not such law, rule, regulation or guidelines was in effect on
or prior to the Closing Date, pursuant to or arising out of the July 1988 Report
of the Basle Committee on Bank Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standard") shall
(i) change the basis of taxation of any amounts payable to such Lender under
this Agreement or the Notes in respect of any Loans (other than taxes imposed on
the overall net income of such Lender for any such Loans by the United States or
the jurisdiction in which such Lender has its principal office); or (ii) impose
or modify any reserve, Federal Deposit Insurance Corporation premium or
assessment, special deposit or similar requirements relating to any extensions
of credit or other assets of, or any deposits with or other liabilities of, such
Lender; or (iii) impose any other conditions affecting this Agreement or the
Notes in respect of Loans (or any of such extensions of credit, assets, deposits
or liabilities); and the result of any event referred to in clause (i), (ii) or
(iii) above shall be to increase such Lender's costs of making or maintaining
any Loans or its Commitment, or to reduce any
24
amount receivable by such Lender hereunder in respect of any Loans or its
Commitment (such increases in costs and reductions in amounts receivable are
hereinafter referred to as "Additional Costs"), then, upon demand made by such
Lender the Borrower shall pay to such Lender from time to time as specified by
such Lender, additional commitment fees or other amounts which shall be
sufficient to compensate such Lender for such Additional Cost, together with
interest on each such amount which is not paid when demanded by such Lender,
payable at the Post-Default Rate.
(b) Determinations by any Lender for purposes of this Section
2.15 of its costs of making or maintaining the Loans or on amounts receivable by
it in respect of the Loans, and of the additional amounts required to compensate
such Lender in respect of any Additional Costs, shall be set forth in writing
delivered by the Agent or the affected Lender to the Borrower showing the
calculation thereof in reasonable detail and shall be conclusive, absent
manifest error.
Section 2.16 Limitation on Types of Loans. Anything herein contained to
the contrary notwithstanding, if, on or prior to the determination of an
interest rate for any LIBOR Loans for any Interest Period therefor:
(a) the Agent determines (which determination shall be
conclusive) that, by reason of any event affecting the money markets in the
United States of America or the London interbank market, quotations of interest
rates for the relevant deposits are not being provided in such markets in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for such Loans under this Agreement; or
(b) the Agent determines (which determination shall be
conclusive) that by reason of any event affecting money or financial markets in
the United States of America or the London interbank market, rates of interest
or the cost of making or maintaining loans, the rate of interest referred to in
the definition of "Adjusted LIBOR" in Article 1 hereof upon the basis of which
the rate of interest of any LIBOR Loans for such period is determined does not
accurately reflect the cost to the Lenders of making or maintaining such Loans
for such period;
then the Agent shall give the Borrower prompt written notice thereof, and so
long as such condition remains in effect, the Lenders shall be under no
obligation to make LIBOR Loans and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding LIBOR Loans, either prepay
such LIBOR Loans in accordance with Section 2.07 hereof or Convert such LIBOR
Loans into Base Rate Loans in accordance with Section 2.06 hereof.
Section 2.17 Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Lender to (i) honor its
obligations to make LIBOR Loans hereunder or (ii) maintain LIBOR Loans
hereunder, then such Lender shall promptly notify the Agent and the Borrower
thereof in writing, and such Lender's obligation to make or maintain LIBOR Loans
hereunder shall be suspended until such time as such affected Lender(s) may
again make and maintain LIBOR Loans and such Lenders' outstanding LIBOR Loans
shall be Converted into Base Rate Loans in accordance with Sections 2.06 and
2.19 hereof; provided, however, that this Section 2.17 shall not apply to those
other Lenders for whom it does not become unlawful to honor or maintain LIBOR
Loans hereunder.
Section 2.18 Certain Conversions Pursuant to Sections 2.16 and 2.17. If
the LIBOR Loans are to be Converted pursuant to Section 2.16 or 2.17 hereof,
such LIBOR Loans shall be Converted into Base Rate Loans on the last day(s) of
the then current Interest Period(s) for such LIBOR Loans (or on such earlier
date as the Agent may specify to the Borrower) and, until the Agent gives notice
as provided
25
below that the circumstances specified in Section 2.16 or 2.17 hereof which gave
rise to such Conversion no longer exist:
(a) to the extent that such LIBOR Loans have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such LIBOR Loans shall be applied instead to Base Rate Loans; and
(b) all Loans which would otherwise be made as LIBOR Loans
shall be made instead as Base Rate Loans and all Base Rate Loans which would
otherwise be Converted into LIBOR Loans shall remain as Base Rate Loans or be
prepaid by the Borrower.
Section 2.19 Indemnification. The Borrower shall pay to any Lender,
upon the written request of such Lender, such amount or amounts as shall
compensate such Lender for any loss, cost or expense incurred by such Lender (as
determined by such Lender) as a result of:
(a) any payment or prepayment or Conversion of a LIBOR Loan
held by such Lender on a date other than the last day of an Interest Period for
such LIBOR Loan; or
(b) any failure by the Borrower to borrow a LIBOR Loan on the
date for such borrowing specified in the relevant Notice under Section 2.02
hereof;
(c) the receipt or recovery by any Lender of all or any part
of a LIBOR Loan (whether by voluntary prepayment, acceleration or otherwise)
other than on the last day of an Interest Period,
such compensation to include, without limitation, an amount equal to (i) any
loss or expense suffered by such Lender during the period from the date of
receipt of such early payment or prepayment or the date of such conversion to
the last day of such Interest Period if the rate of interest obtainable by such
Lender upon the redeployment of an amount of funds equal to such payment,
prepayment or conversion or failure to borrow or Convert is less than the rate
of interest applicable to such Loan for such Interest Period or (ii) any loss or
expense suffered by such Lender in liquidating deposits prior to maturity which
correspond to such payment, prepayment, conversion, failure to borrow or failure
to Convert. The determination by such Lender of the amount of any such loss or
expense, when set forth in a written notice to the Borrower, containing such
Lender's calculation thereof in reasonable detail, shall be conclusive absent
manifest error.
Section 2.20 Proportionate Treatment.
(a) Each borrowing hereunder shall be made from the Lenders
and each payment of fees under Sections 2.05(a) hereof shall be made for account
of the Lenders, in each case in proportion to their respective Commitment
Percentages.
(b) Each payment and prepayment by the Borrower of principal
of or interest on the Loans shall be made to the Agent for the account of the
Lenders in proportion to the respective unpaid principal amounts thereof.
(c) The Commitment and other obligations of the Lenders under
this Agreement are several and not joint and several.
Section 2.21 Proportionate Sharing. If any Lender shall obtain payment
of any principal of or interest on any Loan by any means (including through the
exercise of any right of set-off, banker's lien or counterclaim or similar right
or otherwise or through the exercise of any right under any Loan
26
Document), and, as a result of such payment, such Lender shall have received a
greater percentage of the principal or interest then due hereunder by the
Borrower to such Lender than its proportionate share thereof, it shall promptly
purchase participations from such other Lenders (or in interest due thereon, as
the case may be) in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Lenders shall share the
benefit of such excess payment (net of any expenses which may be incurred by
such Lender in obtaining or preserving such excess payment) in proportion to the
principal and/or interest on the Loans held by each of the Lenders. To such end,
all the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Lender so purchasing a
participation (or direct interest) in the Loans made by other Lenders (or in
interest due thereon, as the case may be) may exercise any and all rights of
set-off, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans in the
amount of such participation. Nothing in this Agreement shall require any Lender
to exercise, and retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a set-off to which this Section 2.21 applies, such Lender shall, to
the extent practicable exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section
2.21 to share in the benefits of any recovery on such secured claim.
Section 2.22 Agent's Obligation to Expend Funds; Non-Receipt of Funds
by Agent. The Agent shall not be required to expend any of its own money to make
up the full amount of any Loan requested by the Borrower hereunder, or otherwise
incur any expense as a consequence of the failure of any Lender to make
available to the Agent its Commitment which the Lenders have become obliged to
make hereunder. Should such a failure occur and the Agent shall nevertheless
have advanced money of its own or incurred expense in order to make up the full
amount of any such Loan, it shall be deemed to have done so at the request of
any Lender which has so failed to provide its portion of such Loan, unless such
Lender shall have previously notified the Agent that it should not make such an
advance or incur such an expense to make good such failure, and in the absence
of such prior notice, such Lender shall be obligated to pay to the Agent on
demand the amount expended by the Agent out of its own funds plus any costs
incurred by the Agent to carry such funds while such Lender has not provided to
the Agent its portion of such Loan, all of which shall constitute a loan by the
Agent to such Lender which shall bear interest from the date of the advance by
the Agent at the "Federal Funds" rate from day to day on the Loan with respect
to which the advance or expenditure was made. During the continuance of any such
default as between the Agent and such Lender, and notwithstanding anything
elsewhere herein to the contrary expressed or implied, the principal amount of
Indebtedness in respect of Loans made by such Lender in default shall be deemed
to be reduced, so long as the default continues by the amount not remitted by it
to the Agent as described in the preceding sentence and such principal amount
and interest thereon shall be deemed assigned to and collectible by the Agent
for its own account for application against the amount of its claim under the
preceding sentence. Notwithstanding the foregoing, in the event the Agent shall
have made an advance on behalf of a Lender without prior notice not to do so,
the Borrower shall, on written demand from the Agent, repay to the Agent the
amount so made available with interest thereon, in respect of each day during
the period commencing on and including the date such advance was so made by the
Agent until the date the Agent recovers such amount at a rate per annum equal to
the Base Rate plus the Applicable Margin.
Section 2.23 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.15, 2.17
or 11.02 with respect to such Lender, it shall, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such Lender)
to designate another lending office for any Loans affected by such event with
the object of avoiding the consequences of such event, provided that such
designation is made on terms that, in the sole judgment of such Lender, shall
not result in any economic, legal or regulatory disadvantage to such
27
Lender or its lending office and provided, further, that nothing in this Section
2.23 shall affect or postpone any of the obligations of the Borrower or the
right of any Lender pursuant to Section 2.15, 2.17 or 11.02.
Section 2.24 Replacement of Lenders under Certain Circumstances. Upon
the occurrence of any event giving rise to the operations of Section 2.15, 2.17
or 11.02 with respect to any Lender which results in such Lender charging to the
Borrower increased costs in excess of those being generally charged by the other
Lenders, the Borrower shall have the right to replace such Lender (the "Replaced
Lender") with one or more financial institutions acceptable to the Borrower and
the Agent (such consent not to be unreasonably withheld or delayed) that are
willing to become Lenders hereunder (a "Replacement Lender") provided that (i)
such replacement does not conflict with the requirements of any Governmental
Authority, (ii) no Event of Default or Default shall exist at the date of such
replacement, (iii) prior to any such replacement, the Replaced Lender shall not
have taken any action under Section 2.23 so as to eliminate the continued need
for payment of amounts owing pursuant to Section 2.15, 2.17 or 11.02, as the
case may be, (iv) the Replacement Lender shall have entered into one or more
assignment and assumption agreements with the Replaced Lender as contemplated
in, and shall otherwise assign its Commitment and outstanding Loans to the
Replaced Lender in accordance with, Section 10.02 and, in connection therewith,
shall pay to the Replaced Lender as of the date of such replacement in respect
thereof, all Loans (purchased at par) of such Lender and all other amounts
(including accrued interest and fees) owing to the Replaced Lender on or prior
to the date of such replacement, (v) if any LIBOR Loan owing to the Replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, the Borrower shall, concurrently with such replacement, pay
any amounts payable in respect thereof under Section 2.19; and (vi) until such
replacement shall be consummated, the Borrower shall pay all amounts (if any)
required pursuant to Section 2.15, 2.17 and 11.02, as the case may be.
Section 2.25 Security. In order to secure the due payment and
performance by the Borrower of all of the Indebtedness, liabilities and
obligations of the Borrower to the Agent and the Lenders under this Agreement,
the Notes or any of the other Loan Documents, whether now existing or hereafter
arising, including, without limitation, the due and punctual payment of the
principal of and the interest on the Notes according to their terms and effect
and all fees, costs and expenses from time to time payable to the Agent or the
Lenders under the Loan Documents, and under any Interest Rate Contracts (all
such Indebtedness, liabilities and obligations are hereinafter referred to,
collectively, as the "Obligations"), the Borrower shall:
(a) grant to the Agent, as secured party and collateral agent
for itself and the Lenders, a Lien on all of the Borrower's Contracts included
from time to time in the Borrowing Base and all assets subject to, or relating
to, such Contracts, including all security therefor and all books and records
relating thereto, whether now owned or hereafter acquired, by the execution and
delivery to the Agent of a security agreement in the form of Exhibit D hereto
(as amended, modified or supplemented from time to time, the "Security
Agreement");
(b) enter into a collateral administration agreement with the
Agent and the Custodian, in form and substance reasonably satisfactory to the
Agent (as amended, modified or supplemented from time to time, the "Custodian
Agreement") pursuant to which the Custodian agrees to hold Contract
documentation on behalf of and for the benefit of the Agent;
(c) pursuant to Article 4, file UCC-1 financing statements
with respect to all Collateral under the Security Agreement, including, without
limitation, all UCC financing statements required to assign to the Agent any
Liens filed by the Borrower against lessees under Contracts;
(d) execute and deliver or cause to be executed and delivered
such other agreements, instruments and documents (including, but not limited to,
except with respect to Low Value Equipment,
28
assignments to the Agent of UCC-1 Financing Statements filed by the Borrower
against lessees or sublessees under Contracts) as the Agent may reasonably
require in order to effect the purposes of the Security Agreement, and this
Agreement (the Security Agreement, the Custodian Agreement, UCC Financing
Statements, and such other agreements, instruments and documents are referred to
collectively as the "Security Documents").
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to each Lender and
the Agent (which representations and warranties shall be deemed restated at and
as of the date of the making of any Loans) that as of the date hereof:
Section 3.01 Organization.
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has the power to
own its assets and to transact the business in which it is currently engaged and
in which it proposes to be engaged. Schedule 3.01(a) annexed hereto (which shall
be updated from time to time in writing by the Borrower, as necessary (but which
update shall not cure any prior misrepresentation)) accurately and completely
lists (i) the authorized and outstanding shares of capital stock of the Borrower
and the ownership of such stock and (ii) each Subsidiary of the Borrower and the
outstanding shares of capital stock of such Subsidiary and the ownership of such
stock. All of the shares of the Borrower are validly issued and fully paid and
nonassessable, and are owned free and clear of any Lien (other than Liens in
favor of the Borrower attaching to certain shares of capital stock purchased by
employees pursuant to the Borrower's employee stock purchase loan program).
Except as set forth on Schedule 3.01(a), there are not outstanding any warrants,
options, contracts or commitments of any kind entitling any Person to purchase
or otherwise acquire any shares of capital stock of the Borrower nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of the Borrower.
(b) The Borrower is in good standing in each state in which it
is qualified to do business, which jurisdictions are listed on Schedule 3.01(b)
hereto (which shall be updated from time to time in writing by the Borrower, as
necessary (but which update shall not cure any prior misrepresentation)). Other
than as set forth on Schedule 3.01(b), there are no jurisdictions in which the
character of the properties owned or proposed to be owned by the Borrower or in
which the transaction of the business of the Borrower as now conducted or as
proposed to be conducted requires or will require the Borrower to qualify to do
business and as to which failure to so qualify could have a Material Adverse
Effect.
Section 3.02 Power, Authority, Consents. The Borrower has the power to
execute, deliver and perform the Loan Documents to which it is a party. The
Borrower has taken all necessary action (corporate or otherwise) to authorize
the borrowing hereunder on the terms and conditions of this Agreement. The
Borrower has taken all necessary action (corporate or otherwise) to authorize
the execution, delivery and performance of the Loan Documents to which it is a
party. No consent or approval of any Person (including, without limitation, any
stockholder of the Borrower), other than any such consent or approval a copy of
which has been delivered in form and substance satisfactory to the Agent, no
filing with, action by, consent or approval of any landlord or mortgagee, no
waiver of any Lien or right of distraint or other similar right and no filing
with, action by, consent, license, approval, authorization or declaration of any
governmental authority, bureau or agency, is or will be required in connection
with the execution, delivery or performance by the Borrower or the validity,
enforcement or
29
priority, of the Loan Documents (or any Lien created and granted thereunder),
except such filings and assignments as are required by this Agreement.
Section 3.03 No Violation of Law or Agreements. The execution, delivery
and performance by the Borrower of each Loan Document to which it is a party
will not (i) violate or conflict with any provision of law or any rule or
regulation, (ii) violate or conflict with any provision of the Amended Articles
or by-laws of the Borrower, (iii) violate or conflict with or result in a breach
of any order, writ, injunction, ordinance, resolution, decree, or other similar
document or instrument of any court or governmental authority, bureau or agency,
domestic or foreign, or create (with or without the giving of notice or lapse of
time, or both) a default under or breach of any agreement, bond, note or
indenture to which the Borrower is a party, or by which it is bound or any of
its properties or assets are affected or (iv) result in the imposition of any
Lien of any nature whatsoever upon any of its properties or assets owned by or
used in connection with the business of the Borrower, except for the Liens
created and granted pursuant to the Security Documents.
Section 3.04 Due Execution, Validity, Enforceability. This Agreement
and each other Loan Document executed and delivered by the Borrower has been
duly executed and delivered by the Borrower, and each constitutes the valid and
legally binding obligation of the Borrower, enforceable against it in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally or by the availability of equitable remedies.
Section 3.05 Basic Business. The basic business of the Borrower is the
small ticket finance leasing of equipment to commercial users, such equipment
consisting of, but not limited to, computers, copiers, surveillance systems,
telecommunications equipment and related peripherals (the "Basic Business").
Section 3.06 Properties, Priority of Liens. The Borrower has good and
marketable title to all of its properties and assets, free and clear of any Lien
of any nature whatsoever, except the Liens permitted by Section 7.02. The
Borrower has granted duly perfected first priority Liens in favor of the Agent
on behalf of the Lenders on the Collateral covered under the Security Documents.
Section 3.07 Judgments, Actions, Proceedings. Except to the extent
disclosed on Schedule 3.07 (which shall be updated from time to time in writing
by the Borrower, as necessary (but which update shall not cure any prior
misrepresentation)), there are no outstanding judgments, actions or proceedings
pending before any court or governmental authority, bureau or agency, with
respect to, or, to the best of the Borrower's knowledge, threatened against or
affecting, the Borrower or any of its Subsidiaries, nor are there any such
actions or proceedings in which the Borrower is a plaintiff or complainant, in
any instance involving (i) any single judgment in excess of $100,000, (ii) all
judgments then outstanding in excess of $250,000 or (iii) actions or proceedings
which would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Borrower (excluding, with respect to actions or
proceedings in which the Borrower is a plaintiff or complainant, collection
actions in the ordinary course of business). Without limiting the foregoing,
there are no pending or, to the best of the Borrower's knowledge, threatened
claims, actions or proceedings, and the Borrower has not received or given
within the last three years, any written communication from or to any
Governmental Authority or any other Person concerning any pending or threatened
investigation, claim, environmental proceeding, cleanup order, citizen suit or
other action instituted by any private party or Governmental Authority in
connection with any Environmental Law or the presence or possible presence of
any Hazardous Substances.
30
Section 3.08 No Defaults, Compliance With Laws. Neither the Borrower
nor any of its Subsidiaries is in default under any agreement, ordinance,
resolution, decree, bond, note, indenture, order or judgment to which it is a
party or by which it is bound, or by which any of the properties or assets owned
by it or used in the conduct of its business is affected, and the Borrower and
its Subsidiaries have complied and are in compliance in all applicable laws,
ordinances and regulations, including, without limitation, Environmental Laws,
in either case which default, or non-compliance with which laws, could have a
Material Adverse Effect on the Borrower.
Section 3.09 Intentionally Omitted.
Section 3.10 Financial Statements. The Financial Statements present
fairly in all material respects the financial position and results of operations
of the Borrower and its Subsidiaries on a consolidated basis as of and at the
date thereof and for the period then ended, and have been prepared in accordance
with GAAP. The Borrower has no material obligations, liabilities or commitments,
direct or contingent, which are not reflected in the Financial Statements. There
has been no material adverse change in the business, operations, property,
assets, financial or other condition of the Borrower since December 31, 2000.
The fiscal year of the Borrower is the twelve-month period ending on December 31
of each year.
Section 3.11 Tax Returns. The Borrower has filed on a timely basis all
federal, state and local tax returns required to be filed by it and has not
failed to pay any taxes, or interest or penalties relating thereto, on or before
the due dates thereof (as may have been extended by valid extensions obtained by
the Borrower) and there are no waivers in effect of agreements by the Borrower
for the extension of time for the assessment of any tax. Except to the extent
that they are being contested in good faith by appropriate proceedings for which
a bond, or other security satisfactory to the Agent, has been posted and for
which adequate reserves have been set aside on the books of the Borrower in
accordance with GAAP, (a) there are no federal, state or local tax liabilities
of the Borrower due or to become due for any tax year ended on or prior to the
date of the Financial Statements, whether incurred in respect of or measured by
income, which are not properly reflected in the Financial Statements, and (b)
there are no claims pending or, to the best of the Borrower's knowledge,
proposed or threatened against the Borrower for past federal, state or local
taxes, except those, if any, as to which proper reserves are reflected in the
Financial Statements.
Section 3.12 Intellectual Property. The Borrower possesses all
necessary patents, trademarks, trademark rights, trade names, trade name rights,
service marks, service ▇▇▇▇ rights, and copyrights to conduct its business as
now conducted and as proposed to be conducted, without any conflict with the
patents, trademarks, trademark rights, trade names, trade name rights, service
marks, service ▇▇▇▇ rights and copyrights of others, the failure which to
possess could have a Material Adverse Effect.
Section 3.13 Use of Proceeds. The Borrower's uses of the proceeds of
any Loans made by the Lenders to the Borrower pursuant to this Agreement are,
and will continue to be, legal and proper corporate uses and such uses are and
will be consistent with all applicable laws, statutes and regulations,
including, without limitation, Regulations T, U and X. No part of the proceeds
received from the Borrower from the Loans will be used directly or indirectly
for the purpose of purchasing or carrying, or for the payment in whole or in
part of Indebtedness which was incurred for the purpose of purchasing or
carrying, any margin stock as such term is defined in Regulation U.
Section 3.14 Name Changes. The Borrower has not, within the six-year
period immediately preceding the Closing Date, changed its name, been the
surviving entity of a merger or consolidation, or acquired all or substantially
all of the assets of any Person.
31
Section 3.15 Condition of Assets; Permits, etc. All of the assets and
properties of the Borrower which are reasonably necessary for the operation of
its business are in good working order and condition, ordinary wear and tear
excepted, and are able to perform the function for which they are currently
being used. Each item included in the Borrowing Base satisfied the applicable
conditions to eligibility with respect to such item set forth in the definitions
in Section 1.01. The Borrower possesses all permits, licenses, consents and
approvals of governmental and regulatory authorities and other Persons necessary
to conduct its business.
Section 3.16 ERISA.
(a) Neither the Borrower nor any Subsidiary of the Borrower
maintains or contributes to any Benefit Plan other than those listed on Schedule
3.16.
(b) Each Benefit Plan is in substantial compliance with the
applicable provisions of ERISA and the Code, and neither the Borrower nor any
Subsidiary of the Borrower has received any notice asserting that any Benefit
Plan is not in compliance with ERISA or such provisions of the Code.
(c) Each Benefit Plan which is intended to be tax-qualified
has been determined by the IRS to be qualified under Section 401(a) of the Code
and the regulations promulgated thereunder and neither the Borrower nor any
Subsidiary of the Borrower knows or has reason to know why each such Benefit
Plan should not at all times continue to be so qualified, and each trust related
to such Benefit Plan has been determined to be exempt from Federal income tax
under Section 501(a) of the Code.
(d) Neither the Borrower nor any Subsidiary of the Borrower
has engaged in any prohibited transaction for which an exemption is not
available or has not been previously obtained from the Department of Labor in
connection with which the Borrower or any Subsidiary of the Borrower could be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or tax imposed by Section 4975 of the Code.
(e) Neither the Borrower nor any ERISA Affiliate maintains,
sponsors, contributes or is otherwise obligated to contribute to, or has ever
maintained, sponsored, contributed to or was obligated to contribute to, any
Plan.
(f) No Welfare Plan which the Borrower maintains, sponsors,
contributes to or is obligated to contribute to provides or will provide
post-retirement benefits, including, without limitation, death or medical
benefits other than (i) coverage mandated by applicable law, (ii) retirement or
death benefits under any Plan or (iii) disability benefits under any Welfare
Plan provided for by paid-up insurance or otherwise.
(g) Neither the Borrower nor the assets of the Borrower are or
are deemed to be "plan assets" whether by operation of law or under regulations
promulgated under ERISA.
(h) No condition exists and no event has occurred which would
cause the Borrower to have any liability under Title IV of ERISA for the
termination of or withdrawal from a Plan.
Section 3.17 True and Complete Copies. The Borrower has provided the
Agent with a true and complete copy of its Credit and Collection Policy in
effect on the Closing Date. Schedule 3.17 hereto (which shall be updated from
time to time in writing by the Borrower, as necessary (but which update shall
not cure any prior misrepresentation)) contains a true, correct and complete
list of all of the Material Contracts, and the Borrower has made all such
Material Contracts available for inspection by the Agent. Except as set forth on
Schedule 3.17, there have been no material amendments, modifications or
32
supplements to the Material Contracts, there exists no default or event of
default thereunder and the Material Contracts are in full force and effect.
Section 3.18 Principal Place of Business. The principal place of
business of the Borrower and the records relating to the invoices, claims,
accounts receivable and contract rights of the Borrower are located at the
address indicated for the Borrower in Section 11.09 or such other location as to
which the Borrower has provided notice pursuant to, and otherwise complied with
the provisions of, Section 7.18.
Section 3.19 Corporate Structure.
(a) Except as set forth on Schedule 3.01(a) hereto (which
shall be updated from time to time in writing by the Borrower, as necessary (but
which update shall not cure any prior misrepresentation)), the Borrower has no
Subsidiaries or other equity interest in any Person. The Borrower has made
available for inspection by the Agent a true and complete copy of each agreement
governing the terms of the Securitization Programs.
(b) Schedule 3.19 hereto (which shall be updated from time to
time in writing by the Borrower, as necessary (but which update shall not cure
any prior misrepresentation))sets forth a true and complete list of the officers
and directors of the Borrower, each of whom is the duly elected, acting and
qualified officer in the position so indicated.
Section 3.20 Regulated Company. Neither the Borrower nor any of its
Subsidiaries is (i) an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, (ii) a "holding company" or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (iii) subject to any other law which purports to
regulate or restrict its ability to borrow money or to consummate the
transactions contemplated by this Agreement or the other Loan Documents or to
perform its obligations hereunder or thereunder.
Section 3.21 Indebtedness. Schedule 3.21 hereto (which shall be updated
from time to time in writing by the Borrower, as necessary (but which update
shall not cure any prior misrepresentation)) sets forth a true and complete list
of all existing Indebtedness for borrowed money of the Borrower and of the bank
or other depositary accounts of the Borrower.
Section 3.22 Solvency. The Borrower is Solvent prior to, and will be
Solvent after giving effect to, the transactions contemplated by this Agreement
and the other Loan Documents and the making of the Loans to be made hereunder.
Section 3.23 Intentionally Omitted.
Section 3.24 Full Disclosure. Neither the Financial Statements nor any
certificate, opinion, or any other statement made or furnished in writing to the
Agent or the Lenders by or on behalf of the Borrower in connection with this
Agreement or the transactions contemplated hereby, contains any untrue statement
of a material fact, or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading. There is no fact
known to the Borrower which has, or could in the now foreseeable future have, a
Material Adverse Effect on the Borrower, which fact has not been set forth
herein, in the Financial Statements, or any certificate, opinion, or other
written statement so made or furnished to the Agent or the Lenders.
33
ARTICLE 4.
THE CLOSING; CONDITIONS TO THE LOANS
Section 4.01 Conditions to Amendment and Restatement.
This amendment and restatement of the First Amended and
Restated Agreement is subject to the fulfillment (to the satisfaction of the
Agent and the Lenders) of the following conditions precedent:
(a) The Borrower shall have executed and delivered to the
Agent, with sufficient original counterpart copies for each Lender, this
Agreement and the Notes;
(b) The Borrower shall have delivered to the Agent the
following, each of which shall be in form and substance satisfactory to the
Agent:
(i) copies of the certificate of incorporation of the Borrower
and all amendments thereto, certified as of a date not more than forty-five days
prior to the date hereof by the Secretary of State of Delaware;
(ii) a Certificate of the Secretary or Assistant Secretary of
the Borrower certifying to its certificate of incorporation and continued
existence, the by-laws of the Borrower, the taking of all corporate action by
the Borrower necessary to authorize the execution, delivery and performance of
each of the Loan Documents to which it is a party and that such action has not
been rescinded, limited or modified and the incumbency (with specimen
signatures) of the Authorized Officers of the Borrower;
(iii) good standing certificates as of a date not more than
twenty days prior to the date hereof with respect to the Borrower from the
Secretary of State of the state of New Jersey and the state of organization of
the Borrower;
(c) The Agent shall have received an opinion of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, general counsel to the Borrower, with respect to certain matters as
required by the Agent, addressed to the Agent and the Lenders (and their
respective participants and assigns), in form and substance satisfactory to the
Agent and special counsel to the Agent.
(d) The Agent shall have received copies of all consents and
authorizations of, permits from or filings with, any Governmental Authority or
other Person required in connection with the execution, delivery, performance on
enforceability of this Agreement or the other Loan Documents or any provision
thereof.
(e) The Borrower shall have delivered to the Agent results of
lien searches, satisfactory to the Agent, against the Borrower in the State of
New Jersey and such other jurisdictions as the Agent shall determine.
(f) The Borrower shall have made available for inspection by
each Lender true, correct and complete copies of all Material Contracts as
executed by the parties thereto, including all schedules thereto appropriately
completed. The Material Contracts, including the schedules thereto, shall be in
form and substance acceptable to the Lenders and the Agent.
(g) There shall be no pending or threatened suit, action,
investigation or other proceeding which, in the judgment of the Agent, could
have a Material Adverse Effect on the Borrower.
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(h) The Agent shall have received for itself and for the
accounts of the Agent and each of the Lenders, all fees, costs and expenses
payable by the Borrower, to the extent payable on or prior to the closing
contemplated hereby and under the other Loan Documents and letter agreements
with respect to fees payable to the Agent, duly executed by the Borrower.
(i) All matters related to the financial condition, assets,
liabilities and creditworthiness of the Borrower shall be satisfactory to the
Agent and the Lenders, in their sole discretion.
(j) All legal matters relating to the execution and delivery
of this Agreement and the other Loan Documents shall be satisfactory to special
counsel for the Agent.
(k) The Agent and the Borrower shall have executed and
delivered a letter agreement with respect to payment of certain facility fees to
the Lenders.
Section 4.02 Conditions to Each Loan.
The obligation of the Lenders to make Loans hereunder shall be subject
to the fulfillment (to the satisfaction of the Agent) of the following
conditions precedent in addition, in the case of the initial Loans, to the
conditions set forth in Section 4.01:
(a) The Agent shall have received (i) a Notice relating to
such Loan and (ii) a Summary Borrowing Base Report which shall establish to the
satisfaction of the Agent that the Borrowing Base for the Borrower is equal to
or greater than the outstanding principal amount of its Loans after giving
effect to the Loan proposed to be made.
(b) The Borrower shall be in full compliance with the terms
and conditions of the Loan Documents, each of the representations and warranties
set forth in this Agreement (subject to updated information to the Schedules
delivered by the Borrower to the Agent from time to time) and the other Loan
Documents shall be true and correct in all material respects as if made on and
as of the date of such Loan, the certificate of incorporation and by-laws
delivered to the Agent pursuant to Section 4.01 shall have not been materially
amended or rescinded and shall remain in full force and effect, and, as of the
date of such Loan and after giving effect thereto and to the consummation of the
transactions contemplated hereby, no Default or Event of Default shall have
occurred and be continuing. The issuance by the Borrower of a Notice of
Borrowing shall be deemed a representation and warranty by the Borrower as to
the matters referred to in the preceding sentence.
(c) (i) The Agent shall have received with respect to all
items included in the Borrowing Base or being acquired with the proceeds of such
Loan (A) a photostatic copy of the master lease agreement for each Eligible
Contract, with a certificate annexed thereto of the Borrower, certifying such
photostatic copy to be a true and complete copy of the original executed
agreement and certifying that copies of all invoices, bills of sales and other
documents relating to the assets included in the Borrowing Base (other than the
documents delivered to the Agent or the Custodian pursuant to this subsection
(c)) are held at the offices of the Borrower or, if there shall be a Custodian,
written confirmation from the Custodian addressed to the Agent that it shall
have within its possession such copy of the master lease agreement and
certificate; provided, that if there shall be only one or no lease schedule to
such Eligible Contract, then the original executed Contract (including any
master lease agreement) shall be delivered to the Agent, or, if there shall be a
Custodian, the Custodian pursuant to the Custodian Agreement and (B) with
respect to each Eligible Contract included in the Borrowing Base, the original
executed Contract, the original executed delivery and acceptance certificate
with respect to the Equipment or other assets leased pursuant to such Eligible
Contract and the original of any note, guaranty, letter of credit or other
credit enhancement provided in connection with such Contract (in each case, the
original shall bear the original
35
signature of an employee of the Borrower (if required) together with a facsimile
copy of the signature of the User or the original signature of the User), or, if
there shall be a Custodian, written confirmation from the Custodian that it
shall have in its possession the documents described in this subpart (i)(B) and
any other Contract documentation required to be delivered to the Custodian
pursuant to the Custodian Agreement; and (ii) if the Agent shall determine that
such filing is required in order to ensure that the Borrower shall have a duly
perfected Lien on all Collateral, other than Low Value Equipment, UCC-1
financing statements naming the Borrower as secured party and the User under any
Eligible Contracts included in the Borrowing Base, as debtor, and other any
documentation which may be required by the Agent in order to ensure that the
Agent shall have a duly perfected Lien on the Collateral; provided, however,
Borrower shall not be required to file UCC financing statements against any Low
Value Equipment.
(d) The Agent and the Borrower shall have duly executed a
Supplement to the Security Agreement which shall include the Collateral to be
included in the Borrowing Base or to be acquired with the proceeds of such Loan
and all requisite filings of UCC financing statements shall have been made, and
all other required filings and actions shall have been made and taken, in order
to fully perfect the Lien of the Agent on behalf of the Lenders on any of the
Collateral.
(e) There shall not have occurred a material adverse change in
the business, operations, financial condition or properties of the Borrower
since December 31, 2000 or in the ability of the Borrower to perform its
obligations hereunder or under the other Loan Documents.
(f) All legal matters incident to the Loan shall be reasonably
satisfactory to special counsel for the Agent.
(g) The Agent shall have received any and all further
information and documents which the Agent or its special counsel may reasonably
request in connection with making such Loan.
ARTICLE 5.
DELIVERY OF FINANCIAL REPORTS,
DOCUMENTS AND OTHER INFORMATION
While the Commitment is outstanding and until payment in full of the
Notes and full and complete performance of all of its other obligations arising
hereunder, the Borrower agrees to deliver to each of the Lenders:
Section 5.01 Annual Financial Statements. Annually, as soon as
available, but in any event within 90 days after the last day of the fiscal year
of the Borrower and its Subsidiaries, a consolidated balance sheet, consolidated
statements of stockholders' equity, income, retained earnings and cash flows of
the Borrower and its Subsidiaries as at and for such fiscal year, each as
prepared in the normal course of the Borrower's business in accordance with
GAAP, in reasonable detail, and certified without qualification by a recognized
firm of independent certified public accountants acceptable to the Agent as
fairly presenting the financial position and the results of operations of the
Borrower and its Subsidiaries as at and for the year ending on its date and as
having been prepared in accordance with GAAP, and an unaudited balance sheet and
statement of stockholders' equity, income, retained earnings and cash flows of
the Borrower (not including its Subsidiaries) as of the last day of such fiscal
year, such balance sheet to be certified by the President or Chief Financial
Officer of the Borrower as fairly presenting in all material
36
respects the financial position of the Borrower as at its date and as having
been prepared in accordance with GAAP.
Section 5.02 Quarterly Financial Statements. As soon as available, but
in any event within 45 days after the end of each calendar quarter, unaudited
consolidated balance sheets, statements of operations, statements of
stockholders' equity, retained earnings and cash flows of the Borrower and its
Subsidiaries as at and for the period ended at such quarter, each certified by
the President or Chief Financial Officer of the Borrower as fairly presenting in
all material respects the financial position and the results of operations of
the Borrower and its Subsidiaries, as at its date and for such period and as
having been prepared in accordance with GAAP (subject to normal year-end audit
adjustments).
Section 5.03 No Default/Compliance Certificate. At the same time as it
delivers the financial statements required under the provisions of Section 5.01
and 5.02, a certificate of the President or Chief Financial Officer of the
Borrower certifying that (a) no Event of Default or Default has occurred
hereunder or under the other Loan Documents and (b) the Borrower has complied
with and is then in compliance with all the terms, covenants and conditions of
this Agreement and the other Loan Documents, or, if such cannot be so certified,
specifying in reasonable detail the exceptions, if any, to such statement, which
certificate shall be accompanied by a detailed calculation in form and substance
satisfactory to the Agent evidencing compliance with Section 6.10 as at the date
of such financial statements.
Section 5.04 Monthly Reports. The Borrower will furnish or will cause
to be furnished, to the Agent and each other Lender copies of the following
financial statements reports and information: (a) as soon as available, but in
any event within 30 days after the end of the immediately preceding calendar
month, in each case certified by the President or Chief Financial Officer of the
Borrower, (i) the Monthly Borrowing Base Report showing detailed values of
assets in the Borrowing Base, and a reconciliation of Loans outstanding and
related borrowing availability as of the end of the preceding calendar month,
(ii) a detailed aged accounts receivable trial balance (including remaining
Contract Balances) showing accounts receivable of the Borrower and including all
Contracts sold or otherwise transferred to Securitization Programs or any
financial institutions as of the last day of the immediately preceding calendar
month, in the following categories: 0-30 days; 31-60 days; 61-90 days and 91
days and over, and (iii) the Monthly Business Review of the Borrower.
Section 5.05 Intentionally Omitted.
Section 5.06 Other Information. Promptly after a written request
therefor, such other information as to the business, affairs, financial
condition or information evidencing compliance with the requirements of this
Agreement, the Notes and the other Loan Documents, and such other data and
information of any nature, as either Agent or the Majority Lenders may
reasonably request from time to time.
Section 5.07 Copies of Documents. Promptly upon their becoming
available, copies of any (a) correspondence or notices received by the Borrower
from any Governmental Authority which regulates the operations of the Borrower,
including as to environmental matters and Hazardous Substances, relating to an
actual or threatened change or development which could have a Material Adverse
Effect with respect to the Borrower; (b) written reports submitted to the
Borrower by its independent accountants in connection with any annual or interim
audit of the books of the Borrower made by such accountants; and (c) any
appraisals received by the Borrower with respect to its material properties or
fixed assets. Borrower shall make available for inspection by the Agent or the
Lenders any agreements with Securitization Programs and any reports or
certificates from any Securitization Programs.
37
Section 5.08 Preferred Stock. Promptly upon receipt thereof, a copy of
any mandatory redemption, repurchase or put notice from any holder of Preferred
Stock or from any other equityholder of the Borrower with respect to any capital
stock of the Borrower, and promptly and in any event within two Business Days of
such declaration, detailed notice of the declaration of any dividend on any
shares of capital stock.
Section 5.09 Notices Under Material Contracts. Promptly upon receipt
thereof by the Borrower, copies of any notice of the occurrence of any
non-compliance event or notices of any default or event of default and any
mandatory redemption, repayment or default notice received or sent by Borrower
under any Material Contract.
Section 5.10 Notice of Litigation; Cancellation of Insurance; Other
Notices. Promptly, notice in writing of (i) any litigation, legal proceeding or
dispute which if determined or resolved against the Borrower could have a
Material Adverse Effect on the Borrower, (ii) any cancellation or threatened
cancellation by any insurance carrier of any insurance policy or policies
carried by the Borrower or by any of its Subsidiaries on the assets and
properties of the Borrower (except that no notice shall be required to the
extent acceptable replacement policies are in place at the time of such
cancellation or threatened cancellation); (iii) any removal or resignation of
any director or officer of the Borrower, (iv) any material change in bank or
other depositary accounts of the Borrower and (v) concurrently with being made
generally available to the public by the Borrower, all press releases and
statements delivered to its shareholders concerning adverse developments that
are material.
Section 5.11 Notices in Regard to Borrowing Base Assets. Promptly, and
in any event (a) within one Business Day, notice in writing in the event that at
any time the outstanding principal amount of the Loans shall exceed the amount
of the Borrowing Base and (b) promptly, and in any event within five (5)
Business Days, notify in writing the Agent of any material damage to or other
loss or casualty with respect to Eligible Equipment in Inventory or assets
subject to an Eligible Contract or any notice of cancellation or termination of
any Eligible Contract.
Section 5.12 ERISA. Promptly, notice in writing (a) upon the Borrower's
receipt of any notice from the PBGC or from any other party that (i) the PBGC
has instituted proceedings to terminate (or appoint a trustee to administer) any
Plan, or (ii) the Borrower has or could have liability with respect to a Plan.
Section 5.13 Notices of Defaults. Promptly, notify the Agent in writing
of the occurrence of any Default or Event of Default hereunder, or any event
which has a Material Adverse Effect on the Borrower.
Section 5.14 UCC Acknowledgements. Promptly upon receipt thereof by the
Borrower, copies of stamped acknowledgments of all UCC-1 financing statements
filed which name the Agent as secured party and the Borrower as debtor
evidencing the filing thereof and evidence of the payment of all applicable
recordation taxes.
Section 5.15 Intentionally Omitted.
Section 5.16 Budget; Business Plans. (a) By no later than January 31 of
each Fiscal Year, the Borrower's budget as in effect for such Fiscal Year; and
(b) promptly after the same is approved by the Borrower's Board of Directors, a
copy of any long-range plans of the Borrower and its Subsidiaries that may be
prepared for or at the direction of the Board of Directors, and all amendments
thereto which may be in effect from time to time.
38
ARTICLE 6.
AFFIRMATIVE COVENANTS
While the Commitment is outstanding, and until payment in full of the
Notes and full and complete payment and performance of all of their other
obligations arising hereunder, the Borrower, agrees that the Borrower shall, and
shall cause its Subsidiaries to:
Section 6.01 Books and Records. Keep proper books of record and account
in which full, true and correct entries in all material respects shall be made
of all dealings or transactions in relation to its business and activities and
maintain accounts and reserves in accordance with GAAP, for all taxes (including
income taxes), all depreciation, depletion, obsolescence and amortization of its
properties, all contingencies, and all other reserves
Section 6.02 Chattel Paper Cause each originally executed lease
agreement or lease or rental schedule to any master lease agreement (with any
such original bearing the original signature of an employee of the Borrower
together with a facsimile copy of the signature of the User or the original
signature of the User) to be maintained with the Agent or, if there shall be a
Custodian, with the Custodian in accordance with the terms of the Custodian
Agreement.
Section 6.03 Inspections and Audits. Permit the Agent and the Lenders
and their respective representatives (including, without limitation, an
independent audit firm acceptable to the Agent and the Majority Lenders), upon
reasonable notice, free access during normal business hours to and right of
inspection and examination of the Collateral (subject, with respect to
inspection of Collateral located on a User's premises, to any restrictions on
such inspection rights under the terms of the Contract relating thereto) and the
Borrower's books, records and papers and the right to make excerpts therefrom
and copies and transcripts thereof, to discuss, the affairs, finances and
accounts of the Borrower with the officers of the Borrower and to conduct any
audit or similar examination of any other documents assigned to the Agent deemed
to be reasonably necessary or appropriate by the Agent, provided that not more
than one such inspection and examination per annum shall be at the Borrower's
expense, which shall be conducted by an independent audit firm selected by Agent
and the Majority Lenders; provided, however, (x) that in no event shall the cost
to the Borrower for each such exam exceed $5,000; (y) that the Agent agrees to
consult with the Borrower within a reasonable time prior to each such exam
conducted by an independent audit firm regarding the expenses associated
therewith; and (z) that upon the occurrence and during the continuance of a
Default or an Event of Default all inspections and examinations under this
Section 6.03 shall be at the Borrower's expense without any obligation on the
part of the Agent with respect to the expense thereof. The report of any
independent audit firm described above shall be reasonably satisfactory to the
Agent and the Majority Lenders.
Section 6.04 Maintenance of Collateral. Maintain, or, with respect to
properties and assets subject to lease, require the Users to maintain, in good
working order and condition, subject to normal wear and tear, all of the assets
and properties from time to time owned by the Borrower and, in the ordinary
course of business, make all needful and proper repairs, replacements, additions
and improvements thereto as are necessary for the conduct of its business.
Section 6.05 Continuance of Business. Do or cause to be done, all
things reasonably necessary to preserve and keep in full force and effect the
Borrower's corporate existence and all permits, rights and privileges necessary
for the proper conduct of its business and continue to engage in the Basic
Business as its primary line of business and to enter into Contracts solely in
accordance with the Credit and Collection Policy.
39
Section 6.06 Perform Obligations.
(a) Pay and discharge all of its obligations and liabilities,
including, without limitation, all taxes, assessments and governmental charges
upon its income and properties, when due, unless and to the extent only that
such obligations, liabilities, taxes, assessments and governmental charges shall
be contested in good faith and by appropriate proceedings and that, to the
extent required by GAAP, proper and adequate book reserves relating thereto are
established by the Borrower, and then only to the extent that a bond is filed in
cases where the filing of a bond is necessary to avoid the creation of a Lien
other than Permitted Liens against any of its properties.
(b) Perform all of its obligations (if any) under each of the
Eligible Contracts and do, or cause to be done, all things necessary in order to
keep each such Eligible Contract in full force and effect.
Section 6.07 Insurance. (a) Maintain with responsible insurance
companies such insurance on its properties against such risks, including public
liability, property damage and worker's compensation insurance as are usually
insured against by persons engaged in the business of leasing equipment in the
same location in at least such amounts as such insurance is usually carried by
persons engaged in the business of leasing equipment in such state or states or
country or countries as the business of the Borrower may be conducted. Such
policies owned by the Borrower shall contain additional insured and loss payable
provisions in favor of the Agent for the benefit of the Lenders and each of such
policies shall contain a provision precluding cancellation without a minimum of
thirty (30) days' prior written notice to the Agent or, if less, the maximum
period provided for the giving of such notice by the insurance carrier.
(b) File with the Agent upon the request of the Agent a
detailed list of the insurance then in effect, stating, as applicable, the names
of the insurance companies, the amounts and costs of the insurance, dates of
expiration thereof and the properties and risks covered thereby.
Section 6.08 Compliance With Laws, etc. Comply with all statutes, laws,
ordinances, codes, regulations, permits, orders, approvals, licenses, judgments,
restrictions or rules of any Governmental Authority having jurisdiction over the
Borrower or its business or operations, including, without limitation, all
Environmental Laws and ERISA, to the extent that non-compliance with the same
could have a Material Adverse Effect on the Borrower.
Section 6.09 Borrowing Base. Make such prepayments, from time to time,
as required by Section 2.07 hereof so that the outstanding principal amount of
all Loans to the Borrower hereunder shall at no time exceed the Borrowing Base.
Section 6.10 Financial Covenants. (a) Cause the Borrower to maintain at
all times with respect to the Borrower and its Subsidiaries on a consolidated
basis:
(i) a Leverage Ratio of not more than 5 to 1;
(ii) a ratio of Total Debt to Consolidated Tangible Net Worth,
as of the end of each calendar quarter of not more than 12:1.
(iii) a Consolidated Tangible Net Worth of not less than the
sum of (A) $23,600,000 plus (B) commencing with Consolidated Net Income for the
quarter ending September 30, 2001, 75% of cumulative Consolidated Net Income
(but not loss or deficit), less any dividends accrued on its Preferred Stock
permitted by Section 7.07(b);
40
(iv) a Fixed Charge Coverage Ratio as at the last day of any
Fiscal Quarter of not less than 1.15:1;
(v) an Interest Coverage Ratio as at the last day of any
Fiscal Quarter of not less than 3.25:1;
(vi) a charge-off policy and procedure to identify and
charge-off on a monthly basis all accounts receivable that are more than 120
days delinquent as of the twentieth day of each calendar month;
(vii) a lease loss reserve policy in the form of Exhibit A-3
hereto, which policy shall not be materially amended, modified or otherwise
altered without the prior written consent of the Agent, which consent shall not
be unreasonably withheld.
(b) not permit the Borrower and its Subsidiaries to incur a
Consolidated Net Loss of (i) greater than $100,000 in any calendar quarter; (ii)
greater than $100,000 in the aggregate as of the end of any two consecutive
calendar quarter period or (iii) greater than $100,000 in the aggregate as of
the end of any four consecutive calendar quarter period; and
(c) not permit the three-month rolling average of the
Portfolio Delinquency Ratio to exceed 3.50%.
Section 6.11 Trade Accounts Payable. Promptly pay when due, or in
conformity with customary trade terms, all of its trade accounts payable, except
for late payments in the ordinary course of business with respect to
non-material contracts of the Borrower, the lateness of which payments, singly
or in the aggregate, could have a Material Adverse Effect on the Borrower.
Section 6.12 Liens Against Users. With respect to all Equipment subject
to a Conditional Sale Agreement, other than Low Value Equipment, upon the
earlier of execution of an Eligible Contract or purchase by the Borrower of the
inventory subject thereto from a manufacturer, promptly file all UCC financing
statements (or assignments thereof) necessary to grant the Borrower, as secured
party, a duly perfected Lien against the User, as debtor.
Section 6.13 Liens. Cause the Liens granted to the Agent pursuant to
the Security Documents to at all times be first priority perfected Liens subject
to no additional Liens.
Section 6.14 Key Man Life Insurance. Maintain, key man life insurance
on the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇ providing for coverage in an amount of not less
than $2,000,000 issued by an insurance underwriter reasonably acceptable to the
Agent ("Key Man Insurance"). The Borrower shall deliver to the Agent the
original or certified duplicate policy of such insurance. Such insurance shall
contain endorsements, in form satisfactory to the Agent, providing that the
insurance shall not be cancelable, except upon ten (10) (in the case of
nonpayment of premium) or forty-five (45) (for all other purposes) days' prior
written notice from the insurer to the Agent and showing the Agent as sole loss
payee with secured party endorsement in the Agent's standard form. All premiums
on such insurance policy shall be paid by the Borrower and, if the Borrower
fails to do so, the Agent may (but shall not be required to) procure such
insurance and charge the cost thereof to the Borrower's loan account as part of
the Obligations payable on demand and secured by the Collateral. Any insurance
proceeds received at any time pursuant to a claim under such insurance policy
shall be applied by the Agent as a mandatory prepayment and the Commitment shall
be reduced in accordance with Section 2.07(d).
41
ARTICLE 7.
NEGATIVE COVENANTS
While the Commitment is outstanding and until payment in full of the
Notes and full and complete payment and performance of all of its other
obligations arising hereunder, the Borrower shall not do, or permit to be done
in respect of itself or (except with respect to Section 7.07) any Subsidiary,
any of the following:
Section 7.01 Indebtedness. Create, incur, permit to exist or have
outstanding any Indebtedness, except Indebtedness of the following type:
(a) Indebtedness of the Borrower to the Lenders under this
Agreement and the Notes;
(b) subject to Section 7.03, Indebtedness of the Borrower for
borrowed money (which shall include the amount of any guarantee(s) and the
Indebtedness under any Securitization Program, valued as provided in the
definition of Indebtedness) which is (x) Non-Recourse Indebtedness or (y) other
Indebtedness provided that (i) such other Indebtedness is not used to finance
Contracts and/or Equipment of the Borrower, (ii) the principal amount of such
other Indebtedness plus all Capitalized Lease Obligations plus the amount of all
stand-by letters of credit and cash collateral referred to in subsection
7.01(i)(x) and guarantees referred to in subsection 7.01(i)(y) shall not exceed
$7,500,000 and (iii) the covenants governing such other Indebtedness shall not
have covenants which are more restrictive than the covenants under this
Agreement and the other Loan Documents and, provided, further, that any
Indebtedness for borrowed money, if secured, shall be secured solely by the
assets financed thereunder (which shall not in any event include Contracts
and/or Equipment of the Borrower);
(c) Subordinated Debt;
(d) Capitalized Lease Obligations, provided that the aggregate
amount thereof (being the amount which is required to be capitalized in
accordance with GAAP), combined with the then outstanding principal amount of
Indebtedness for borrowed money permitted under subsection (b)(y) above, shall
not at any time exceed $7,500,000;
(e) Indebtedness of its Subsidiaries to the Borrower to the
extent permitted under Section 7.04 of this Agreement;
(f) Indebtedness existing on the date hereof and set forth on
Schedule 3.21 hereof;
(g) Indebtedness incurred by a Securitization Subsidiary in
connection with a Securitization Program;
(h) Indebtedness solely of the Insurance Subsidiary which
consists of the obligations of the Insurance Subsidiary under policies of
property insurance issued by the Insurance Subsidiary in the ordinary course of
business (it being understood and agreed that the Borrower shall have no
liabilities or obligations with respect to such insurance policies); and
(i) One or more stand-by letters of credit obtained by: (x)
the Borrower in an aggregate amount not to exceed $500,000 (or cash collateral
placed with an obligee of the Insurance Subsidiary in an aggregate amount not to
exceed $500,000) to support the Insurance Subsidiary; or (y) the Insurance
Subsidiary (or cash collateral) to support the Insurance Subsidiary and
guaranteed by the Borrower
42
(provided that the Borrower's guaranty of stand-by letters of credit or cash
collateral obligations obtained by the Insurance Subsidiary shall not exceed
$500,000 in the aggregate).
Section 7.02 Liens. Create, or assume or permit to exist, any Lien on
any of the properties or assets of the Borrower or any Subsidiary, whether now
owned or hereafter acquired, except:
(a) Liens created and granted by the Security Documents;
(b) Permitted Liens;
(c) purchase money security interests, conditional sale
arrangements and other security interests to finance Equipment acquired by the
Borrower (hereinafter referred to individually as a "Permitted Financing
Security Interest"); provided, however, that:
(i) The transaction in which any Permitted Financing Security
Interest is proposed to be created (including the Indebtedness with respect
thereto) is not then prohibited by this Agreement;
(ii) Any Permitted Financing Security Interest now owned or
hereafter acquired by any Person shall attach only to the Equipment and related
Contract acquired in such transaction and shall not extend to or cover any
assets or properties included in the Borrowing Base or any other assets or
properties of the Borrower; and
(d) Liens existing on the date hereof on Collateral other than
Borrowing Base assets which Liens are set forth on Schedule 7.02 hereto.
Section 7.03 Guaranties. Except as disclosed on Schedule 7.03 and
except to the extent the same shall constitute Indebtedness permitted under
Section 7.01, assume, endorse, be or become liable for, or guarantee, the
obligations of any Person other than the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business; provided that the
aggregate maximum Indebtedness of the Borrower (valued as provided in the
definition of Indebtedness) under guarantees of obligations of Persons which are
not Subsidiaries of the Borrower shall not at any time exceed $1,000,000. For
the purposes hereof, the term "guarantee" shall include any agreement, whether
such agreement is on a contingency or otherwise, to purchase, repurchase or
otherwise acquire Indebtedness of any other person, or to purchase, sell or
lease, as lessee or lessor, property or services primarily for the purpose of
enabling another person to make payment of Indebtedness, or to make any payment
(whether as an advance, capital contribution, purchase of any equity interest or
otherwise) to assure a minimum equity asset base, working capital or other
balance sheet or financial condition, in connection with the Indebtedness of
another person or to supply funds to or in any manner invest in another person
in connection with such person's Indebtedness.
Section 7.04 Advances. Make, or suffer to exist, any loan or advance or
extend any credit to, or make, or suffer to exist, any investment in (whether by
loan, advance, capital contribution, purchase of stock, or otherwise) or acquire
any stock, bond or any other equity or debt security of, any Person, including,
without limitation, any Affiliate of the Borrower other than:
(a) advances or loans to employees not to exceed $350,000 in
the aggregate outstanding at any time;
(b) trade credit advanced in the ordinary course of business;
(c) Investments permitted by Section 7.10 (other than
7.10(c)).
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Section 7.05 Mergers, Acquisitions. Merge or consolidate with any
Person or acquire all or substantially all of the assets or any of the equity
interest in any Person or sell all or any substantial part of its assets without
the Agent's written consent or create any Subsidiaries whether wholly or
partially owned, except (a) in the case of a merger, if the Borrower is the
surviving entity or (b) otherwise, subject to the prior written consent of the
Agent, provided that in the case of a merger, consolidation or other acquisition
of assets, the Majority Lenders shall not unreasonably withhold their consent
thereto if (x) the assets or business acquired shall be consistent with the
Basic Business and (y) there shall not, either before or after giving effect
thereto, be any Default or Event of Default or (c) the aggregate amount of cash
capital of the Insurance Subsidiary contributed by the Borrower shall not exceed
$300,000. Upon request of the Agent, and in any event promptly upon any material
change in such information, the Borrower shall furnish the Lenders with a list
of each of its Subsidiaries, indicating their respective capitalizations and
ownership and such financial and other information as may be requested by any
Lender. Provided that no Default or Event of Default has occurred and is
continuing, or shall occur after giving effect thereto, nothing in this Section
7.05 shall prohibit the creation or acquisition of Subsidiaries by the Borrower
in connection with Securitization Programs.
Section 7.06 Changes in Business; Sale of Assets. Conduct any business
other than the Basic Business and the business of the Insurance Subsidiary or
make any material change in the nature of its operation, or liquidate or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, assets or
business except, with respect to assets other than the assets included in the
Borrowing Base, in the ordinary course of business (it being understood that
sales of individual or groups of leases and related equipment from time to time
by the Borrower to third parties pursuant to whole loan sales or to its
Securitization Subsidiaries pursuant to Securitization Programs shall be deemed
to be in the ordinary course of the business of the Borrower and its
Subsidiaries) and for fair consideration and, in the case of a disposition of
assets included in the Borrowing Base, subject to payment, concurrently with and
as a condition to any such disposition, of the amounts required to be paid
pursuant to Section 2.07, or dispose of any material assets in the form of
shares of stock of any other Person or indebtedness, whether now owned or
hereafter acquired, or discount, sell, pledge, hypothecate or otherwise dispose
of accounts receivable other than in the ordinary course of business; provided
that, notwithstanding the foregoing or any other provision of the Loan Documents
to the contrary, from and after the occurrence and during the continuance of a
Default or an Event of Default, but without limiting any rights or remedies of
the Agent and the Lenders under this Agreement, the other Loan Documents and at
law or equity:
(a) no conveyance, sale, assignment, transfer or other
disposition of assets of the Borrower included in the Borrowing Base shall be
permitted;
(b) a sale, assignment, transfer or other disposition of
assets not included in the Borrowing Base shall be permitted subject to
satisfaction of each of the following conditions:
(i) the Borrower shall have provided to the Agent and each of
the Lenders, prior to such disposition, a notice (the "Notice") which refers
expressly to this Section 7.06 and specifies, in reasonable detail, the assets
to be disposed of, the purchaser and proposed date thereof (which shall be more
than seven (7) Business Days after the date of actual receipt by the Agent and
the Lenders of such Notice), the purchase price therefor, and the Default or
Event of Default which then exists; and
(ii) (x) if such disposition is to a Person other than a
Securitization Program, the purchase price to the Borrower for such assets shall
be paid entirely in cash in an amount equal to the higher of Net Investment or
Fair Market Value; or
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(y) if such disposition is to a Securitization Program (it
being understood and agreed that Securitization Subsidiaries shall solely
conduct the businesses related to the limited purposes for which they were
created), (1) the purchase price to the Borrower for such assets shall be the
higher of Net Investment or Fair Market Value; (2) the Borrower shall have
provided the Agent with a written confirmation from the lenders or trustee or
other representative of the lenders providing the financing for such disposition
that the same shall have been advised of the existence of such Default or Event
of Default; (3) the economic terms of such transaction shall not have been
modified in any material respect from the economic terms in effect prior to such
Default or Event of Default; and (4) the Borrower shall not have received
written objection to such disposition from the Agent on behalf of the Lenders
(which objection the Agent may give, and, upon instruction of the Majority
Lenders, shall give) within seven (7) Business Days of actual receipt by the
Agent and the Lenders of the Notice, it being understood and agreed that the
Agent and Lenders may object to any such disposition in their sole discretion.
Any failure by the Agent on behalf of the Lenders to object to any disposition
pursuant to this Section 7.06(b)(ii)(y) shall not bind the Agent and the Lenders
with respect to any other or subsequent disposition of assets and the Agent may
at any time provide a notice to the Borrower prohibiting all future dispositions
of assets pursuant to this subsection.
Section 7.07 Redemptions; Dividends
(a) Purchase, redeem, retire or otherwise acquire, directly or
indirectly, or make any sinking fund payments with respect to, any shares of its
capital stock now or hereafter outstanding or set apart any sum for any such
purpose; or
(b) Declare or pay any cash dividends or make any distribution
of cash or other property of any kind on its outstanding stock or other equity
interests, or set aside any sum for any such purpose, including, without
limitation, on any shares of Preferred Stock (provided that the Borrower may
accrue but not declare or pay dividends under Section 1A of the Amended
Articles).
Section 7.08 Stock Issuance. Issue any additional shares or any right
or option to acquire any shares, or any security convertible into any shares, of
the capital stock of the Borrower except that such issuance or acquisition shall
be permitted if and to the extent that, after giving effect thereto, there shall
not have occurred a Change of Control.
Section 7.09 Prepayments. Make any prepayment, whether voluntary or
mandatory, of any Indebtedness for borrowed money (other than Indebtedness
evidenced by the Notes) incurred or permitted to exist under the terms of this
Agreement, without the prior written consent of the Agent, provided that if no
Default or Event of Default exists or would exist after giving effect thereto,
the Borrower may prepay (a) Non-Recourse Indebtedness (provided the terms
thereof are not more onerous to the Borrower than the terms of this Agreement)
and (b) Subordinated Debt (other than Subordinated Debt issued to holders of
Preferred Stock).
Section 7.10 Investments. Make, or suffer to exist, any Investment in
any Person, except Investments in:
(a)
(i) obligations issued or guaranteed by the United States of
America;
(ii) certificates of deposit, overnight time deposits, bankers
acceptances and other "money market instruments" issued by any bank or trust
company organized under the laws of the United States of America or any State
thereof and (x) whose deposits are insured by the Federal Deposit
45
Insurance Corporation or (y) having capital and surplus in an aggregate amount
of not less than $100,000,000;
(iii) open market commercial paper rated at least A-1 by S&P
or P-1 by ▇▇▇▇▇'▇ or the equivalent rating from another nationally recognized
credit rating firm;
(iv) repurchase agreements entered into with any bank or trust
company organized under the laws of the United States of America or any State
thereof and having capital and surplus in an aggregate amount of not less than
$100,000,000 relating to United States of America government obligations;
(v) shares of "money market funds", each having net assets of
not less than $100,000,000;
in each case maturing or being due or payable in full not more than 180 days
after the Borrower's acquisition thereof;
(b) Subsidiaries of the Borrower and Securitization Programs,
provided that the amount of such Investment of the Borrower therein shall not at
any time exceed fifty percent (50%) of Consolidated Tangible Net Worth;
(c) Advances permitted pursuant to Section 7.04;
(d) Interest Rate Contracts and Foreign Exchange Contracts
provided that the same are entered into in the ordinary course of business and
not for speculative purposes and are with a counterparty rated A+ or higher by
S&P or the equivalent by ▇▇▇▇▇'▇ or another nationally recognized credit rating
firm; and
(e) Investments in Persons to the extent permitted by Section
7.05.
Section 7.11 Fiscal Year; Accounting Changes. Change its fiscal year or
make a material change to its accounting policies or practices.
Section 7.12 ERISA Obligations.
(a) Except as disclosed on Schedule 3.16, maintain, sponsor,
contribute to or become obligated to contribute to, any Plan.
(b) Permit any Welfare Plan which the Borrower maintains,
sponsors, contributes to or is obligated to contribute to, to provide
post-retirement benefits other than (i) coverage mandated by applicable law,
(ii) retirement or death benefits under any Benefit Plan or (iii) disability or
other benefits under any Welfare Plan that have been fully provided for by
paid-up insurance or otherwise.
(c) Permit the Borrower or the assets of the Borrower to
become assets of any employee benefit plan, whether by operation of law or under
regulations promulgated under ERISA.
(d) Be or become obligated to the PBGC for any amount.
(e) Be, or engage in any prohibited transaction which could
result in the Borrower becoming, or become obligated to the IRS or the U.S.
Department of Labor with respect to excise or other
46
penalty taxes provided for in those provisions of Section 4975 the Code or
ERISA, as in effect or hereafter amended or supplemented, in excess of $25,000.
(f) Incur any liability or obligation for, under, with respect
to, or otherwise in connection with, any Plan, which liability or obligation
arises under ERISA or the Code, by virtue of the Borrower or Subsidiary having
an ERISA Affiliate, or any other event or condition not in the ordinary course
of business shall occur or exist with respect to a Benefit Plan, provided that
such event or condition, together with all other such events or conditions, if
any, could have a Material Adverse Effect.
Section 7.13 Transactions With Affiliates. Except as expressly
permitted by this Agreement, directly or indirectly: (a) make any Investment in
an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
assets to an Affiliate for less than book value; or (c) merge into or
consolidate with or purchase or acquire assets from an Affiliate for more than
book value; or (d) enter into any other transaction directly or indirectly with
or for the benefit of any Affiliate (including, without limitation, guarantees
and assumptions of obligations of an Affiliate), except to the extent any of the
foregoing transactions shall be entered into in the ordinary course of business
(it being understood that sales of individual or groups of leases and related
equipment from time to time by the Borrower to its Securitization Subsidiaries
pursuant to Securitization Programs shall be deemed to be in the ordinary course
of the business of the Borrower and its Subsidiaries), on terms no less
favorable to the Borrower than the Borrower could obtain in a comparable
arms'-length transaction with a Person not an Affiliate and for fair
consideration; provided, however, that (i) any Affiliate who is an individual
may serve as an employee or director of the Borrower and receive reasonable
compensation for his or her services in such capacity (including pursuant to any
employment agreement approved by the Board of Directors of the Borrower); and
(ii) the Borrower may make or have loans or advances to employees not in excess
of $350,000 in aggregate principal amount at any time outstanding.
Section 7.14 Capital Expenditures. Make or be or become obligated to
make Capital Expenditures in excess of $1,000,000 in the aggregate in any fiscal
year without the prior written consent of the Agent.
Section 7.15 Amendments. (i) (x) Except as shall otherwise be consented
to in writing by the Agent, amend, supplement or terminate, or agree to modify,
amend or supplement any Material Contract or the terms or provisions of the
Preferred Stock; provided however, that (A) such consent shall be deemed to have
been given if the Agent shall not have objected thereto within thirty (30) days
after actual receipt by the Agent and each of the Lenders of a written request
for such consent from the Borrower which references this Section 7.15 and
expressly states it shall be deemed approved within thirty (30) days of receipt
if not objected to by the Agent, accompanied by a copy of the proposed
amendment, supplement or modification, and (B) changes, amendments or
terminations that would not have a Material Adverse Effect on the Borrower may
be made without the prior written consent of the Agent or (y) materially modify,
alter, amend or otherwise materially change its Credit and Collection Policy
without the prior written consent of the Agent, which consent shall be granted
in the Agent's sole discretion or (ii) except as shall otherwise be consented to
by the Agent, in its sole discretion, enter into or be a party to any agreement
(other than Subordinated Debt Agreements) which restricts or limits the ability
of the Borrower to amend, modify or supplement this Agreement or any of the Loan
Documents.
Section 7.16 Copies of Corporate Documents. Materially modify, amend,
supplement or terminate, or agree to materially modify, amend or supplement, the
Borrower's certificate of incorporation (including the Amended Articles) or
by-laws, without the prior written consent of the Agent, which consent shall not
be unreasonably withheld or delayed.
47
Section 7.17 Principal Place of Business. Change the principal place of
business of the Borrower or the location of the Borrower's books and records or
open any new place of business except in each case 30 days prior written notice
to the Agent and provided that the Borrower shall have taken all such actions as
the Agent shall have required in order to maintain the priority and perfection
of the Lien in favor of the Agent on the assets of the Borrower.
ARTICLE 8.
EVENTS OF DEFAULT
Section 8.01 Events of Default. The occurrence of any one or more of
the following events (each, an "Event of Default") shall constitute a default
under this Agreement:
(a) Failure to make any payment or mandatory prepayment of
principal when due or, within three (3) Business Days of the due date thereof,
interest upon any Note, or payment of any fee or any other amount payable
hereunder.
(b) Failure to perform or observe any of the agreements of the
Borrower contained in Article 7 (except with respect to any non-material breach
of any provision in Article 7, which shall be subject to Section 8.01(c) below)
or Section 5.13, 6.05, 6.09 or 6.10 hereof.
(c) Failure by the Borrower to perform or observe in any
material respect any other term, condition or covenant of this Agreement or of
any of the other Loan Documents, which failure shall remain unremedied for a
period of twenty (20) days after the earlier of the date on which the Agent
gives written notice thereof to the Borrower or on which the Borrower became
aware or should, in the exercise of reasonable due diligence, have become aware
of such failure.
(d) The occurrence of any default or event of default under
any term, condition or covenant of any bond, note, debenture, guaranty, trust
agreement, mortgage or similar instrument to which the Borrower or any
Subsidiary is a party or by which such Person is bound, or by which any of such
Person's properties or assets may be affected, including, without limitation,
under any agreement relating to any Securitization Program (a "Debt Instrument")
if the outstanding indebtedness or obligations of the Borrower or such
Subsidiary under such Debt Instrument exceeds $500,000 in aggregate principal
amount and (x) may be declared to be due and payable by reason of such default
or event of default prior to the date on which such indebtedness or obligations
would otherwise become due and payable or (y) is due and payable and unpaid.
(e) Any representation or warranty made in writing to any
Agent or to any Lender in any of the Loan Documents or in connection with the
making of the Loans, or any certificate, statement or report made or delivered
in compliance with this Agreement or any of the other Loan Documents, shall have
been false or misleading in any material respect when made or delivered.
(f) The Borrower shall fail to comply in any material respect
with its obligations under any Material Contract or there shall occur any
default or event of default thereunder which is not cured within any applicable
cure period provided therein, if any.
(g) The Borrower or any of its Subsidiaries shall (i) make an
assignment for the benefit of creditors, file a petition in bankruptcy, be
adjudicated insolvent, petition or apply to any tribunal for the appointment of
a receiver, custodian, or any trustee for it or a substantial part of its
assets, or shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdictions whether now or hereafter in effect, or the
48
Borrower or any of its Subsidiaries shall take any corporate action to authorize
any of the foregoing actions; or there shall have been filed any such petition
or application, or any such proceeding shall have been commenced against it,
which shall not be controverted within ten days or which remains undismissed for
a period of thirty days or more; or any order for relief shall be entered in any
such proceeding; or the Borrower or any of its Subsidiaries by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or the appointment of a custodian, receiver
or any trustee for it or any substantial part of any of its properties, or shall
suffer any custodianship, receivership or trusteeship to continue which shall
not be controverted within ten days or which remains undischarged for a period
of thirty days or more; (ii) generally not pay its debts as such debts become
due; or (iii) have concealed, removed, or permitted to be concealed or removed,
any part of its property, with intent to hinder, delay or defraud its creditors
or any of them or made or suffered a transfer of any of its property which may
be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or
shall have made any transfer of its property to or for the benefit of a creditor
at a time when other creditors similarly situated have not been paid; or shall
have suffered or permitted, while insolvent, any creditor to obtain a Lien upon
any of its property through legal proceedings or distraint which is not
controverted within ten days or vacated within thirty days from the date
thereof.
(h) Any judgment against the Borrower or any attachment, levy
of execution against any of its properties for any amount in excess of $500,000
which is not controverted within ten days and which shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of thirty
days or more.
(i) The Liens created and granted to the Agent under the
Security Documents shall fail to be valid, first, perfected Liens subject to no
prior or equal Lien.
(j) A Change of Control shall occur.
(k) There shall have occurred a material adverse change in the
business, operations, financial condition or properties of the Borrower and its
Subsidiaries taken as a whole or on the ability of the Borrower to perform its
obligations hereunder or under the other Loan Documents.
Section 8.02 Effect; Remedies. Upon the occurrence and during the
continuance of an Event of Default, the Borrower shall not be entitled to
exercise any rights to obtain Loans under this Agreement. Upon the occurrence of
any Event of Default (i) (x) described in Section 8.01(g) hereof, the Commitment
shall terminate and the Loans and any other outstanding Obligations shall
immediately and automatically become due and payable in full, without
requirement of any action whatsoever by the Agent or the Lenders, or (y) upon
the occurrence of any other Event of Default, the Agent, upon request of
Majority Lenders, shall terminate the Commitment and the Loans and any other
then outstanding Obligations may, without demand or notice of any kind, be
declared due and payable by the Majority Lenders through the Agent, and
thereupon shall immediately become due and payable, in each case without
presentment or demand for payment, notice of nonpayment, protest or further
notice or demand of any kind all of which are expressly waived by the Borrower,
and (ii) the Agent, on behalf of and at the request of the Majority Lenders,
shall be entitled to exercise all of the rights and remedies available under the
Security Agreement, the other Loan Documents and at law or in equity.
ARTICLE 9.
CONCERNING THE AGENT
Section 9.01 Appointment and Authority of the Agent. Each Lender hereby
appoints National City Bank to serve as the Agent for such Person under this
Agreement and the other Loan Documents,
49
and hereby irrevocably authorizes such Person, as the Agent, to take such
actions on its behalf under this Agreement and the other Loan Documents and to
exercise such powers and to perform such duties hereunder and thereunder as are
expressly delegated to the Agent by the terms hereof or thereof, together with
such other powers as are reasonably incidental thereto. The Lenders hereby
authorize the Agent to execute and deliver the Security Agreement, the Custodian
Agreement and the Lockbox Agreement as Agent and agree to be bound by the terms
and conditions thereof.
Section 9.02 Delegation of Duties. The Agent may exercise its powers
and execute its duties by or through employees or agents.
Section 9.03 Independent Credit Evaluations.
(a) Each Lender expressly acknowledges to the Agent that the
Agent has not made any representations or warranties to it regarding this
Agreement, the other Loan Documents, any of the other documents mentioned herein
or therein or the transactions contemplated hereby and thereby or regarding the
Borrower or its business or financial condition.
(b) Each Lender acknowledges to the Agent and to each other
Person that it has independently and without reliance on the Agent or any other
Person, and based upon such documents and inquiries as it has deemed
appropriate, made its own credit analyses of the Borrower and its own decision
to enter into this Agreement and the other Loan Documents.
(c) Each Lender agrees that it will, independently and without
reliance on the Agent or any other Person, and based upon such documents and
inquiries as it shall deem appropriate at the time, continue to make its own
credit analyses and decisions in taking or not taking actions under this
Agreement and the other Loan Documents and to make such investigations as it
deems necessary to keep current its information relating to the affairs,
financial position and creditworthiness of the Borrower.
Section 9.04 Limited Scope of Duties.
(a) Nothing in this Agreement is intended to, or shall be
construed as to, impose upon the Agent any duties or responsibility in respect
of this Agreement except as expressly set forth in this Agreement. The
relationship between the Agent and each of the Lenders is that of agent and
principal only and the respective duties and obligations of the Agent are of an
administrative and mechanical nature only. Nothing in this Agreement shall be
construed so as to constitute the Agent as a trustee or fiduciary for any Lender
or to impose upon an Agent any duties or responsibilities other than those for
which express provision is made herein.
(b) Except for notices, financial statements and other
documents, if any, expressly required to be furnished to the Lenders by the
Agent pursuant to the provisions of this Agreement, or the other Loan Documents,
the Agent shall not have any duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
concerning the business or financial condition of the Borrower which may come
into the possession of the Agent or any of its Affiliates, whether before or
after the making of any Loan hereunder, nor shall the Agent have any duty to
inspect the properties or books of the Borrower.
(c) The Agent shall be entitled to assume that no Event of
Default or Default has occurred and is continuing, unless the Agent has actual
knowledge of such fact or has received notice from a Lender or the Borrower, as
the case may be, that such Lender or Borrower, as the case may be, considers
that an Event of Default or Default has occurred and is continuing and
specifying the nature thereof.
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(d) So long as the Agent shall be entitled, pursuant to
Section 9.04(c), to assume that no Event of Default or Default has occurred and
is continuing, the Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
by, or with respect to taking or refraining from taking any action or actions
which it may be able to take under or in respect of, this Agreement and the
other Loan Documents, except that (i) subject to subparagraph (e) of this
Section 9.04, the Agent shall not exercise any rights under Article 8 hereof
except upon the written consent or written instructions of the Majority Lenders
and (ii) the Agent shall be required to act or not act upon the written
instructions of the Majority Lenders (or the Lenders comprising such other
percentage in interest of the Lenders as provided herein) and such exercise of
discretion shall be binding on all the Lenders. Any such instructions shall be
binding upon the Agent and the Lenders (including, but not limited to, any
Lender which has not signed such instructions or which has dissented from the
actions or inactions specified in such instructions); provided, however, that
the Agent shall not be required to act or not to act if to do so, in its sole
judgment, would expose the Agent to liability (which liability would not be
covered by the provisions of Section 9.07) or would be contrary to this
Agreement, the Notes, the other Loan Documents or to applicable law, except that
the Agent shall so act or not act if doing so would expose it to liability if
and only if it shall have received from the Lenders such confirmation of
indemnities against all such liabilities and any and all expenses, including
fees and expenses of its counsel satisfactory to it in its sole judgment.
(e) In the event that the Agent shall have acquired actual
knowledge of a Default or Event of Default, the Agent shall promptly give notice
thereof to the Lenders and shall take such action and assert such rights under
this Agreement, and/or under the other Loan Documents as the Majority Lenders
shall direct, provided that the Agent shall not be required to act or not to act
if to do so would expose the Agent to liability or would be contrary to this
Agreement, the other Loan Documents or applicable law, and provided further,
that if the Majority Lenders entitled so to direct the Agent shall fail, for ten
days after the giving of any such notice, so to direct the Agent, the Agent may
take such action and assert such rights as it deems to be advisable, in its
discretion, for the protection of the interests of the Lenders and the Agent.
Section 9.05 Reliance by the Agent.
(a) The Agent shall be entitled to rely on any notice,
consent, certificate, affidavit, letter, telegram, teletype message, statement,
order or other document received by it and believed by it to be genuine and
correct and to have been signed and sent or delivered by a proper Person or
Persons and, in respect of legal matters, upon the advice and statements of
lawyers, independent accountants and other experts selected by the Agent. The
Agent and each Lender may rely conclusively on each incumbency certificate
furnished to it pursuant to Article 4 until it subsequently receives a
certificate amending or rescinding the prior certificate.
(b) As to any matter not expressly provided for in this
Agreement, the Agent shall be fully protected in acting in accordance with
instructions signed by the Majority Lenders and such instructions of the
Majority Lenders and action taken or inaction pursuant thereto shall be binding
on all the Lenders, including, but not limited to, any Lender which has not
signed such instructions or which has dissented from the actions or inactions
specified in such instructions, provided that the Agent shall not be required to
act or not to act if to do so, in its sole judgment, would expose the Agent to
liability which liability would not be covered by the indemnity provisions of
Section 9.07 or would be contrary to this Agreement, the other Loan Documents or
applicable law.
Section 9.06 Exculpatory Provisions.
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(a) Neither the Agent nor any of their respective
shareholders, directors, officers, employees or agents shall be liable in any
manner to any of the Lenders for any action taken, or omitted to be taken, in
good faith by it or them hereunder or in connection herewith, or be responsible
for the consequences of any oversight or error of judgment, except for losses
which are finally adjudicated to be the direct result of its gross negligence or
willful misconduct.
(b) The Agent shall not be responsible in any manner to any of
the Lenders for the due execution, effectiveness, genuineness, validity or
enforceability of any of this Agreement, the Notes, the other Loan Documents or
the Loans or for the truth, accuracy or completeness of any recital, statement
or warranty contained herein or in any other Loan Document or in any
certificate, report or other document furnished to it by or on behalf of any
Person in connection with this Agreement or any other Loan Document; nor shall
the Agent be under any obligation to any of the Lenders to ascertain or inquire
as to the performance or observance by the Borrower or any other Person of any
of the agreements or conditions set forth herein or in any other Loan Document
or as to the use of any moneys loaned hereunder.
Section 9.07 Indemnification of the Agent.
(a) The Lenders, severally, agree to indemnify Agent (to the
extent not promptly reimbursed by the Borrower or from the income or proceeds of
the sale of any of the Collateral), ratably according to the respective unpaid
principal amounts of the Obligations at the time owing to each of them, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, suits, judgments, court costs and other out-of-pocket costs and
expenses of any kind or nature whatsoever (hereinafter called, collectively,
"Expenses") which may be imposed on, incurred by or asserted against the Agent,
as such, in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by the Agent under this Agreement
or any other Loan Document, provided that no Lender shall be liable for any
portion of such Expenses which, based on a final adjudication, are determined to
be the direct result of the gross negligence or willful misconduct of the Agent
hereunder.
(b) In the event that the Agent does not receive from any
Lender a payment which such Lender is required by the terms hereof to make to
the Agent and the Agent has made the amount thereof available to the Borrower,
as the intended recipient thereof, if the Borrower repays the Agent the amount
made available to it, the Borrower shall be subrogated to the Agent's right to
recover such amount from any Lender which failed to make such required payment.
Section 9.08 National City Bank Individually. With respect to its
obligation as a Lender to lend under this Agreement and the advances made by it
pursuant hereto, National City Bank shall have the same obligations and the same
rights, powers and privileges as it would have were it not an Agent. National
City Bank may accept deposits from, lend money to and, generally, engage in any
kind of banking, trust or other business with the Borrower or any of their
respective Subsidiaries or Affiliates in all respects as if such Person were not
acting as an Agent hereunder.
Section 9.09 Dealing With the Lenders. The Agent may at all times deal
solely with the several Lenders for all purposes of this Agreement and the
protection, enforcement and collection of the Obligations, including the
acceptance and reliance upon any certificate, consent or other document of such
Lenders and the division of payments pursuant to Section 2.12, notwithstanding
possession by the Agent of actual knowledge that any Lender has sold a
participation in Loans made or to be made by it hereunder to another Person. The
Agent may deem and treat the payees of the Notes as the owners thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
has been filed with the Agent. Any request, authority or consent of any holder
of any Note shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note.
52
Section 9.10 Duties Not to be Increased. The respective duties and
liabilities of the Agent shall not be increased without the written consent of
the Agent.
Section 9.11 Successor Agent.
(a) The Agent may resign at any time by giving written notice
to the Lenders and the Borrower, and the Agent may be removed at any time with
or without cause by notice from the Majority Lenders (excluding the Agent), such
resignation or removal to become effective only upon the appointment of a
successor Agent as hereinafter provided.
(b) Upon any such resignation or removal, the Majority Lenders
(excluding the Agent) shall have the right to appoint from among the Lenders a
successor Agent, subject to the written consent of the Borrower (which consent
shall not be unreasonably withheld or delayed and which shall not be required if
a Default or Event of Default shall then exist), unless none of the Lenders is
willing to act as successor Agent hereunder, in which event the Majority Lenders
(excluding the Agent) shall appoint as successor Agent, subject to the written
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed and which shall not be required if a Default or Event of Default shall
then exist), any financial institution of international standing having an
office in the United States of America, chartered by the State of New York or
another of the States of the United States of America or authorized as a
national banking association organized under the laws of the United States of
America, and who is willing to act in that capacity. If no successor Agent shall
have been appointed by the Majority Lenders, then the retiring Agent may on
behalf of the Lenders appoint a successor Agent, subject to the prior written
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed and which shall not be required if a Default or Event of Default shall
then exist), which shall be a financial institution of international standing
having an office in the United States of America.
(c) Upon the acceptance of its appointment as Agent hereunder
by any such successor Agent, the latter shall thereupon succeed to and become
vested with the duties, rights, powers and privileges of the retiring Agent and
the retiring Agent shall be discharged from all duties and liabilities under
this Agreement.
(d) After the resignation or removal of any Agent hereunder,
the provisions of this Article 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent hereunder and it shall
also continue to be entitled to the indemnities provided hereunder insofar as
they relate to events which occurred while it was Agent hereunder.
ARTICLE 10.
ADDITIONAL LENDERS, ASSIGNMENTS AND PARTICIPATIONS
Section 10.01 Additional Lenders. Any commercial lender, other
financial institution or other entity (an "Additional Lender") may join this
Agreement with the consent of the Borrower and the Agent (acting in their sole
discretion) and without the necessity of obtaining the consent of any of the
Lenders then a party hereto, by executing and delivering to the Borrower and the
Agent an agreement in substantially the form of Exhibit F hereto (a "Joinder
Agreement"), duly completed, accepting all the terms and conditions of this
Agreement. Upon execution and delivery of such Joinder Agreement, and subject to
such consent, such Additional Lender shall be a "Lender" for all purposes of
this Agreement, the Security Agreement and the other Loan Documents. Upon such
Additional Lender becoming a Lender hereunder, (i) the Agent and the Borrower
shall make appropriate arrangements so that a Note is issued by the Borrower to
such Additional Lender, payable to its order, with appropriate insertions and
53
replacement notes, if applicable, be issued to the other Lenders and (ii) this
Agreement and the Schedules hereto shall be deemed modified to reflect such
Additional Lender.
Section 10.02 Assignments.
(a) Each Lender may, with the prior written consent of the
Agent (which consent shall not be unreasonably withheld or delayed) and of the
Borrower (which consent shall not be unreasonably withheld or delayed and which
shall not be required if a Default or Event of Default shall then exist), assign
to one or more banks or other financial institutions all or a portion of its
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Commitment, the Loans
owing to it and the Note or Notes held by it) provided that (i) for each such
assignment, the parties thereto shall execute and deliver to the Agent, for its
acceptance, an assignment and assumption agreement in form reasonably
satisfactory to it, together with any Note or Notes being assigned and a
processing and recordation fee in the amount of $2,500, (ii) unless such
assignment is an assignment of the assignor's entire remaining Commitment, no
assignment may be made hereunder unless each Lender shall have a Commitment of
at least seven million five hundred thousand Dollars ($7,500,000) immediately
after giving effect to such assignment and (iii) no Lender may transfer its
proportionate share of Loans without transferring its same proportionate share
of Commitment. Upon execution and delivery of such assignment agreement and
payment of the processing and recordation fee to the Agent, from and after the
effective date of such assignment as specified in such assignment agreement, (x)
the assignee of such Lender shall be a party hereto and, to the extent of the
rights and obligations so assigned to it, shall have the rights and obligations
of a Lender hereunder, (y) the assigning Lender shall, to the extent of the
rights and obligations so assigned by it, have relinquished its rights (other
than any rights under Section 11.01 of this Agreement, which rights will survive
such assignment) and be released from its obligations under this Agreement (and,
in the case of an assignment covering all or the remaining portion of such
Lender's rights and obligations under this Agreement and the other Loan
Documents, the Lender shall cease to be a "Lender" hereunder) and (z) Schedule
1.01 to this Agreement shall be deemed modified to reflect any such assignment.
(b) Within five (5) Business Days after receipt by the
Borrower of an assignment executed by a Lender as described in subsection (a)
above, the Borrower, at its own expense, shall execute and deliver to such
assignee in exchange for the Note or Notes surrendered upon such assignment, a
new Note to the order of such assignee in an amount equal to the Commitment
assumed by such assignee and, if the assigning Lender has retained a portion of
the Commitment, a new Note to the order of such Lender in an amount equal to the
Commitment retained by it. Such new Note or Notes shall re-evidence the
indebtedness outstanding under the old Note or Notes, shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes and shall otherwise be in substantially the form of the Notes
subject to such assignment, with such additions as the Agent shall require in
order to reflect the issuance of such new Notes as substitute Notes.
Section 10.03 Participations.
(a) Each Lender shall have the right, subject to the further
provisions of this Article 10, to grant or sell a participation in all or any
part of its Loans, Notes, and Commitment (a "Participation") to any commercial
lender, other financial institution or other entity (a "Participant") without
the consent of the Borrower (except if the proposed participant is a competitor
of the Borrower in which case the participation shall be subject to the prior
written consent of the Borrower), the Agent or any other party hereto, although
notice thereof shall be given to the Borrower and the Agent by each selling
Lender promptly after any Participation if, after giving effect thereto, the
interests hereunder in which it shall not have granted a Participation shall be
not less than a majority of both its Commitment and its interest in the Loans
outstanding.
54
(b) Notwithstanding anything in the foregoing to the contrary,
(i) no Participant shall have any direct rights hereunder, (ii) the Borrower,
the Agent and the Lenders other than the selling Lender shall deal solely with
the selling Lender and shall not be obligated to extend any rights or make any
payment to, or seek any consent of, the Participant, and (iii) no Participation
shall relieve the selling Lender from its Commitment to make Loans hereunder or
any of its other obligations hereunder and such Lender shall remain solely
responsible for the performance thereof.
Section 10.04 Information. A Lender may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Article 10, disclose to the assignee or participant (or proposed assignee
or participant) any information concerning the Borrower, their respective
officers, directors and Affiliates, including, without limitation, any
information in regard to the creditworthiness of the Borrower, obtained by the
Lender pursuant to this Agreement and the other Loan Documents, provided, that
prior to receiving any information concerning the Borrower, such assignee or
participant (or proposed assignee or participant) executes and delivers to
Lender a confidentiality agreement in form and substance reasonably acceptable
to Borrower, and provided further that nothing in this Section 10.04 shall limit
the ability of any Lender to disclose to any Person any information concerning
the Borrower, their respective officers, directors and Affiliates: (a) to its
attorneys, auditors, agents, professional advisors, trustees or affiliates with
a need to know (who are advised of the confidential nature of such information
and agree to be bound by the provisions of the confidentiality agreement), (b)
to the extent such information presently is or hereafter becomes available to
such Lender on a non-confidential basis from a source owing no duties of
confidentiality to Borrower or such information is in the public domain at the
time of disclosure, (c) to the extent required by law (including applicable
securities law), regulation, requirement, ruling, or legal or judicial order or
process or required to be disclosed in any report, statement or testimony
submitted to any regulatory authority, (d) to any rating agency to the extent
required in connection with any rating to be assigned to such Lender (provided
that any such rating agency is advised of the confidential nature of such
information and agrees to be bound by the provisions of the confidentiality
agreement) or (e) to the extent required in connection with any litigation
between the Borrower and any Lender with respect to the Loans or this Agreement
and the other Loan Documents.
ARTICLE 11.
MISCELLANEOUS PROVISIONS
Section 11.01 Fees and Expenses; Indemnity.
(a) The Borrower agrees to promptly pay on demand (i) all
reasonable costs and reasonable expenses of the Agent in preparing the Loan
Documents and all reasonable costs and reasonable expenses of the issue of the
Notes including, but not limited to, the reasonable fees, expenses and
disbursements of special counsel to the Agent, but excluding internal overhead
administrative costs and expenses in connection with the preparation, execution
and delivery of this Agreement, the Notes, the Security Documents and the other
Loan Documents and the consummation of the transactions contemplated by all such
documents; and (ii) all reasonable costs and expenses of the Agent's and the
Lenders' enforcement of their rights and remedies hereunder, performance of and
compliance with all agreements and conditions contained herein on the part of
the Borrower to be performed or complied with (including, without limitation,
all costs of filing or recording any assignments, mortgages, financing
statements and other documents) and the negotiation, preparation and execution
and delivery of any amendment, modification or supplement of or to any Loan
Document, or any consent or waiver under any such document (or any such
instrument which is proposed but not executed and delivered) and with any claim
or action threatened, made or brought against the Agent or the Lenders arising
out of or relating to any extent to this Agreement, the Security Documents, the
other Loan Documents or the transactions
55
contemplated hereby or thereby. In addition, the Borrower agrees to promptly
(and in any event within 30 days after its receipt of an invoice or statement
therefor) pay all costs and expenses (including, without limitation, fees and
disbursements of counsel) suffered or incurred by the Agent and the Lenders in
connection with its enforcement of the payment of the Notes or any other sum due
to it under this Agreement or any of the other Loan Documents or any of its
other rights hereunder or thereunder.
(b) The Borrower shall indemnify the Agent and the Lenders
against, and hold each of them harmless from, any loss, liabilities, damages,
claims, reasonable costs and reasonable expenses (including attorneys' fees and
disbursements) suffered or incurred by it arising out of, resulting from or in
any manner connected with, the execution, delivery and performance of each of
the Loan Documents, the Loans and any and all transactions related to or
consummated in connection with the Loans (other than as a result of an act or
omission of the Agent or any Lender which a court of competent jurisdiction
finally determines has been committed with gross negligence, willful misconduct
or in bad faith), including, without limitation, losses, liabilities, damages,
claims, reasonable costs and reasonable expenses suffered or incurred by the
Agent or the Lenders in investigating, preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect of
any commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law or any other statute of any
jurisdiction, or any regulation, or at common law or otherwise, which is alleged
to arise out of or is based upon (i) the ownership or use of any of the
Collateral or the Lien of the Agent or the Lenders in the Collateral, (ii) the
failure on the part of the Borrower to comply in all respects with the laws of
the United States of America and other jurisdictions in which the Collateral or
any part thereof my be operated and with all lawful acts, rules, regulations and
orders of any commissions, boards or other legislative, executive,
administrative or judicial bodies or officers having power to regulate or
supervise any of the Collateral, and (iii) the execution, delivery,
consummation, waiver, consent, amendment, enforcement, performance and
administration (except for internal overhead administrative costs and expenses)
of this Agreement, the Loan Agreement, the Security Documents and the other Loan
Documents, or the use by the Borrower of the proceeds of each extension of
credit under the Loan Agreement; (iv) any untrue statement of any material fact
of the Borrower in any document or schedule filed with any governmental body;
(v) any omission or alleged omission to state any material fact required to be
stated in such document or schedule, or necessary to make the statements made
therein, in light of the circumstances under which made, not materially
misleading; (vi) any acts, practices or omissions of the Borrower or its agents
or representatives related to the making of any acquisition, purchase of shares
or assets pursuant thereto, financing of such purchases or the consummation of
any other transactions contemplated by any such acquisitions which are in
violation of any federal securities law or of any other statute, regulation or
other law of any jurisdiction applicable to the making of any such acquisition,
the purchase of shares or assets pursuant thereto, the financing of such
purchases or the consummation of the other transactions contemplated by any such
acquisition; or (vii) any withdrawals, termination or cancellation of any such
acquisition for any reason whatsoever. The indemnity set forth herein shall be
in addition to any other obligations or liabilities of the Borrower to the Agent
and the Lenders hereunder or at common law or otherwise. The provisions of this
Section 11.01 shall survive the payment of the Notes and the termination of this
Agreement.
Section 11.02 Taxes. If, under any law in effect on the date of the
closing of any Loan hereunder, or under any retroactive provision of any law
subsequently enacted, it shall be determined that any federal, state or local
tax is payable in respect of the issuance of any Note, or in connection with the
filing or recording of any assignments, mortgages, financing statements, or
other documents (whether measured by the amount of indebtedness secured or
otherwise) as contemplated by this Agreement (other than in respect of tax
penalties imposed solely by reason of any act or omission of the Agent or any of
the Lenders committed in bad faith or with gross negligence), then the Borrower
agrees to pay any such tax and all interest and penalties, if any, and will
indemnify the Agent and the Lenders against and hold each of them harmless from
any loss or damage resulting from or arising out of the nonpayment or delay in
56
payment of any such tax. If any such tax or taxes shall be assessed or levied
against any Lender or any other holder of a Note, such Lender, or such other
holder, as the case may be, may notify the Borrower and make immediate payment
thereof, together with interest or penalties in connection therewith, and shall
thereupon be entitled to and shall receive immediate reimbursement therefor from
the Borrower. Notwithstanding any other provision contained in this Agreement,
the covenants and agreements of the Borrower in this Section 11.02 shall survive
payment of the Notes and the termination of this Agreement.
Section 11.03 Payments. All payments by the Borrower hereunder shall be
made to the Agent as provided in Section 2.12 hereof. All payments hereunder and
under the Notes shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments shall not be less
than the amounts otherwise specified to be paid under this Agreement and the
Notes (after withholding for or on account of (i) any present or future taxes,
levies, imposts, duties or other similar charges of whatever nature imposed by
any government or any political subdivision or taxing authority thereof, other
than any tax (except those referred to in clause (ii) below) on or measured by
the net income of the Lenders pursuant to applicable federal, state and local
income tax laws, and (ii) deduction of amounts equal to the taxes on or measured
by the net income of the Lenders payable by the Lenders with respect to the
amount by which the payments required to be made under this sentence exceed the
amounts otherwise specified to be paid in this Agreement and the Notes). Upon
payment in full of each Note, the Agent shall ▇▇▇▇ such Note "Paid" and return
it to the Borrower. The Borrower shall be liable for all Obligations under this
Agreement and the other Loan Documents.
Section 11.04 Survival of Agreements and Representations; Reaffirmation
of Security Interest; Waiver of Trial by Jury.
(a) All agreements, representations and warranties made herein
shall survive the delivery of this Agreement and the Notes.
(b) The Borrower hereby reaffirms as of the date hereof each
and every security interest and lien granted in favor of the Agent and the
Lenders under the Loan Documents, and agrees and acknowledges that such security
interests and liens shall continue from and after the date hereof and shall
remain in full force and effect from and after the date hereof, in each case
after giving effect to the Original Agreement as amended by the First Amended
and Restated Agreement and as further amended by this Agreement, and the
obligations secured thereby and thereunder shall include the Borrower's
obligations under the Original Agreement as amended by the First Amended and
Restated Agreement and as further amended by this Agreement. Each such
reaffirmed security interest and lien remains and shall continue to remain in
full force and effect and is hereby in all respects ratified and confirmed and
all references in the Security Documents to the Original Agreement shall refer
to the Original Agreement as amended by the First Amended and Restated Agreement
and as further amended and modified by this Agreement.
(c) THE BORROWER, THE AGENT AND EACH LENDER WAIVES TRIAL BY
JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF, THIS AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE
OTHER LOAN DOCUMENTS, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF.
Section 11.05 Lien on and Set-off of Deposits. As security for the due
payment and performance of all the Obligations, the Borrower hereby grants to
the Agent for the ratable benefit of the Lenders a Lien on any and all deposits
or other sums at any time credited by or due from any Lender to the Borrower,
whether in regular or special depository accounts or otherwise, and any and all
monies, securities and other property of the Borrower, and the proceeds thereof,
now or hereinafter held or
57
received by or in transit to any Lender from or for the Borrower, whether for
safekeeping, custody, pledge, transmission, collection or otherwise, and any
such deposits, sums, monies, securities and other property may, at any time
after the occurrence and during the continuance of any Event of Default, be
set-off, appropriated and applied by such Lender against any of the Obligations,
whether or not any of such Obligations is then due or is secured by any
Collateral, or, if it is so secured, whether or not the Collateral held by the
Agent is considered to be adequate.
Section 11.06 Modifications, Consents and Waivers; Entire Agreement.
(a) No modification, amendment or waiver of or with respect to
any provision of this Agreement, the Notes, the Security Documents or any of the
other Loan Documents nor consent to any departure by the Borrower from any of
the terms or conditions hereof or thereof, shall in any event be effective
unless it shall be in writing and signed by the Borrower and the Majority
Lenders; provided, however, that no amendment, waiver or consent shall, unless
in writing and signed by the affected Lenders, increase the amounts or extend
the term of the Commitment of such Lender or subject such Lender to any
additional obligations, or, unless signed by all of the Lenders do any of the
following:(i) reduce the principal of, or interest on, the Notes or any fees
hereunder, (ii) postpone any scheduled date for any payment of principal of, or
interest on, the Notes or any fees hereunder, (iii) change the percentage in
interest of the Lenders which shall be required to take action hereunder, (iv)
other than as permitted by the Loan Documents, release all or a substantial
portion of the Collateral if the effect thereof is to cause the outstanding
principal amount of the Loans to exceed the amount of the Borrowing Base, (v)
change the definitions of "Eligible Equipment", "Eligible Contracts", and/or
"Borrowing Base" or (vi) change any provision of this Section 11.06; provided
further, however, that no amendment, waiver or consent with respect to any
provision of Article 9 shall be effective unless signed by the Agent affected by
such amendment. No consent to or demand on the Borrower in any case shall, of
itself, entitle it to any other or further notice or demand in similar or other
circumstances.
(b) This Agreement embodies the entire agreement and
understanding among the Agent, the Lenders and the Borrower and supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 11.07 Remedies Cumulative. Each and every right granted to the
Agent and the Lenders hereunder or under any other document delivered here under
or in connection herewith, or allowed it by law or equity, shall be cumulative
and may be exercised from time to time. No failure on the part of the Agent or
the Lenders to exercise, and no delay in exercising, any right shall operate as
a waiver thereof, nor shall any single or partial exercise of any right preclude
any other or future exercise thereof or the exercise of any other right.
Section 11.08 Further Assurances. At any time and from time to time,
upon the reasonable request of the Agent, the Borrower shall, at its expense,
execute, deliver and acknowledge or cause to be executed, delivered and
acknowledged, such further documents and instruments, including, without
limitation, collateral assignments of software rights and Lien searches required
from time to time to confirm the Agent's Lien on the Collateral, and do such
other acts and things as the Agent may reasonably request in order to fully
effect the purposes of this Agreement, the Notes, the Security Documents and the
other Loan Documents.
Section 11.09 Notices. Except as otherwise provided for herein, all
notices, requests, reports and other communications pursuant to this Agreement
shall be in writing, and shall be delivered personally, or registered mail,
postage prepaid, by hand or commercial messenger service, or sent by certified
mail or registered mail, postage prepaid, return receipt requested, except for
routine reports
58
delivered in compliance with Article 5 hereof which may be sent
by ordinary first-class mail, facsimile (followed by a hard copy), with
electronic confirmation of receipt, addressed as follows:
If to the Borrower:
▇▇▇▇▇▇ Leasing Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer
With a Copy to: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Agent:
National City Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (other than in the case of Notices and reports and
other documents delivered in compliance with Article 5 hereof)
to:
Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 215-568-6603
If to the Lenders, at the addresses set forth on the signature
pages hereto or in the Joinder Agreement pursuant to which a
Lender becomes a party hereto, as the case may be.
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or commercial messenger
service to such party at its address specified above, or, if sent by mail, on
the fifth Business Day after the day deposited, with a United States Postal
Depositary postage prepaid, or, if sent by facsimile, when electronically
confirmed. Any facsimile transmission will be confirmed by hard copy sent one
(1) Business Day after transmission by first class or registered or certified
mail. Any party may change the person or address to whom or which notices are to
be given hereunder; provided, however, that any such notice shall be deemed to
have been given hereunder only when actually received by the party to which it
is addressed.
Section 11.10 Construction; Governing Law; Consent to Jurisdiction.
(a) The headings used in this Agreement are for convenience of
reference only and shall not in any way be deemed to limit, define or describe
the scope and intent of this Agreement or any provision hereof.
59
(b) This Agreement, the Notes, the Security Documents and the
other Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Pennsylvania without reference
to its principles of conflict of laws.
(c) The Borrower irrevocably consents that any legal action or
proceeding against it under, arising out of or in any manner relating to this
Agreement, the Notes, or any other Loan Document may be subject to the
jurisdiction of any court of the Commonwealth of Pennsylvania sitting in the
County of Philadelphia or the United States District Court for the Eastern
District of Pennsylvania. The Borrower, by the execution and delivery of this
Agreement, expressly and irrevocably assents and submits to the personal
jurisdiction of any of such courts in any such action or proceeding. The
Borrower further irrevocably consents to the service of any complaint, summons,
notice or other process relating to any such action or proceeding by delivery
thereof to it by hand or by mail in the manner provided for in Section 11.09
hereof. The Borrower hereby expressly and irrevocably waives any claim or
defense in any such action or proceeding based on any alleged lack of personal
jurisdiction, improper venue or forum non conveniens or any similar basis.
Nothing in this Section 11.10 shall affect, or impair in any manner or to any
extent the right of the Agent or the Lenders to commence legal proceedings or
otherwise proceed against the Borrower in any jurisdiction or to serve process
in any manner permitted by law.
Section 11.11 Severability. The provisions of this Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision in this Agreement in
any jurisdiction. Each of the covenants, agreements and conditions contained in
this Agreement is independent and compliance by the Borrower with any of them
shall not excuse noncompliance by the Borrower with any other. The Borrower is
liable for the performance and compliance with this Agreement. The Borrower
shall take any action the effect of which shall constitute a breach or violation
of any provision of this Agreement.
Section 11.12 Binding Effect; No Assignment or Delegation. This
Agreement shall be binding upon and inure to the benefit of the Borrower and its
successors and to the benefit of Lenders and the Agent and their respective
successors and assigns. The rights and obligations of the Borrower under this
Agreement shall not be assigned or delegated without the prior written consent
of the Majority Lenders, and any purported assignment or delegation without such
consent shall be void.
Section 11.13 Counterparts; Facsimile Execution. This Agreement may be
executed in as many counterparts as may be deemed necessary or convenient, each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same instrument. Execution and
delivery of this Agreement by facsimile transmission shall constitute execution
and delivery for all purposes.
[Remainder of page intentionally left blank; Signatures to follow]
60
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
BORROWER:
▇▇▇▇▇▇ LEASING CORPORATION
By:____________________________
Name:
Title:
AGENT:
NATIONAL CITY BANK
as Agent
By:____________________________
Name:
Title:
LENDERS:
NATIONAL CITY BANK FIRSTRUST SAVINGS BANK
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Specialized Lending Group Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
By:_____________________________ By:____________________________
Name: Name:
Title: Title:
SOVEREIGN BANK
Three Radnor Corporate Center
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
By:_________________________________
Name:
Title:
SCHEDULE 1.01
COMMITMENT PERCENTAGES AND LOAN COMMITMENTS
Lender Name Loan Commitment Commitment Percentage(1)
---------------------- --------------- ------------------------
National City Bank $ 15,000,000 46.15%
Sovereign Bank $ 10,000,000 30.77%
Firstrust Savings Bank $ 7,500,000 23.08%
---------------------- ------------ -----
Total $ 32,500,000 100%
---------------------------------
(1) Figure represents the actual percentage rounded to the nearest one-hundredth
of one percent.