CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("AGREEMENT" or "THIS AGREEMENT") is made and
entered into effective as of the day of April, 1997, by and among
MERIDIAN FINANCIAL CORPORATION, an Indiana corporation with its principal
place of business located at 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx,
Xxxxxxx 00000 ("BORROWER"), and LASALLE NATIONAL BANK, a national banking
association with banking offices at 0000 Xxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx 00000 ("BANK").
RECITALS
WHEREAS, the Borrower's primary business is the origination of
equipment leases for the food service industry;
WHEREAS, the Borrower desires to obtain a credit facility in the
maximum principal amount of Five Million Dollars ($5,000,000.00) in favor
of the Borrower, and
WHEREAS, the Borrower desires to have the right to obtain a second
line of credit in the maximum principal sum of Five Million Dollars
($5,000,000.00);
WHEREAS, the Bank is willing, subject to the terms and conditions of
this Agreement, to make available to Borrower each of the requested credit
facilities;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS
1 DEFINITIONS. In addition to the definitions in the opening
paragraph of this Credit Agreement, the following terms shall have the
meanings set forth below (such meanings to be equally applicable to both
the singular and plural form of the terms defined):
(a) "ADVANCE" shall mean any disbursement of any of the Loans
requested by the Borrower under this Agreement.
(b) "ADVANCE PAYMENT" shall mean any payments, whether one or
more, received by the Borrower from any Lessee which is designated in
any schedule to any Lease as an 'Advance Payment', typically the first
and/or last monthly rental payments under a Lease.
(c) "ADVANCE RENTAL" shall mean, with respect to any Lease, the
amount of Advance Payment LESS the amount of the Security Deposit,
each of which shall be stated in dollars. Any Advance Rental on a
Lease shall be deemed to be due on or before the date on which a
Request for Advance with respect to such Lease is submitted to Bank.
(d) "APPLICABLE BORROWING BASE" shall mean the Initial Credit
Line Borrowing Base, the Initial Term Loan Borrowing Base, the Second
Credit Line Borrowing Base or the Second Term Loan Borrowing Base, as
the context requires.
(e) "APPLICABLE MARGIN" shall mean with respect to: (i) Loans
under either of the Credit Lines taken as or converted to a Prime Rate
Loan, one percent (1.0%) per annum; (ii) Loans under either of the
Credit Lines taken as or converted to a LIBOR Rate Loan, three hundred
(300) basis points; (iii) Loans under either of the Term Loans taken
as or converted to Prime Rate Loans, one and one-quarter percent
(1.25%) per annum; (iv) Loans under either of the Term Loans taken as
or converted to LIBOR Rate Loans, three hundred twenty-five (325)
basis points; and (v) Loans under either of the Term Loans taken as
Fixed Rate Loans, three hundred fifty (350) basis points.
(f) "ASSIGNMENT OF LIFE INSURANCE POLICY" shall mean the
Assignment Of Life Insurance Policy As Collateral executed and
delivered to Bank by Borrower, all other owners and all beneficiaries
of such policy or policies, assigning to Bank not less than Three
Million Two Hundred Twenty-Five Thousand Dollars ($3,250,000.00) of
life insurance on certain officers of Borrowers as additional
collateral for the Loans, as required pursuant to Section 8.10 of this
Agreement.
(g) "BANK'S COUNSEL" shall mean the law firm of XXXX XXXXX
XXXXXX & XXXXXXX, Professional Corporation, Xxx Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxx 00000, Xxxxxxxxxxxx, Xxxxxxx 00000-0000, or such other
counsel as Bank may hereafter designate in writing to Borrower.
(h) "BORROWER'S COUNSEL" shall mean the law firm of XXXXX &
XXXXXXX, Suite 2700, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000.
(i) "BORROWING BASE" shall mean an amount which is eighty
percent (80%) of the Net Book Value of a Borrowing Base Lease.
(j) "BORROWING BASE CERTIFICATE" means a certificate
substantially in the form of the Borrowing Base Certificate example
attached hereto as EXHIBIT 1.1(J).
(k) "BORROWING BASE LEASE" shall mean a Qualified Lease which is
assigned to Bank.
(l) "BORROWING DATE" shall mean the date upon which Borrower
requests a Loan to be advanced by Bank or, if the actual date of such
Advance is different from the date requested, the actual date on which
such Loan was advanced by Bank.
(m) "BUSINESS DAY" shall mean for all purposes, any day
excluding Saturday, Sunday and any day which is a legal holiday under
the laws of the United States of America, the State of Indiana or the
State of Illinois or is a day on which banking institutions located in
the State of Illinois and/or the State of Indiana are authorized or
required by law or other governmental action to close or is a day on
which the United States Federal Reserve is closed and, in connection,
with a LIBOR Rate Loan shall mean any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of Great Britain
or is a day on which banking institutions doing business in the London
Interbank market are closed.
(n) "CASH COLLATERAL ACCOUNT" shall mean an account established
at Bank pursuant to the requirements of Section 6.1 of this Agreement.
(o) "CHICAGO TIME" shall mean, as applicable, Central Standard
Time or Central Daylight Time.
(p) "COLLATERAL" shall mean all personal property which has been
assigned to Bank, or in which Bank has been granted a Security
Interest, as collateral security for the Secured Obligations.
(q) "COLLECTIONS" shall mean all payments, funds, or money paid
by or on behalf of any Lessee with respect to any Lease.
(r) "COST" shall mean the amount actually paid by Borrower for
Leased Equipment, including freight, sales taxes and installation
expenses, stated in dollars.
(s) "COST RECOVERY" shall mean, with respect to any Lease, that
portion of a Rental which represents the recovery of Cost after giving
effect to the amortization of the Service Charge.
(t) "CREDIT FACILITY" shall mean the Initial Credit Line, the
Initial Term Loan, the Second Credit Line or the Second Term Loan, as
the context requires.
(u) "CREDIT LINE" shall mean the Initial Credit Line or the
Second Line, as the context requires, or, if used in the plural, the
Initial Credit Line and the Second Credit Line.
(v) "CREDIT LINE LOAN" shall mean a Loan advanced by Bank to
Borrower for the purchase of Qualified Leased Equipment or for the
payment of indebtedness owed by Borrower to Star Financial Bank
incurred for the purchase of Qualified Leased Equipment, which payment
satisfies the lien of Star Financial Bank with respect thereto, under
the Initial Credit Line or the Second Credit Line and, if used in the
plural, any two or more such Loans.
(w) "DEFAULT" shall mean any event which, after the expiration
of any applicable grace period, or with notice to the Borrower, or
both, would constitute an Event of Default.
(x) "EFFECTIVE DATE" shall mean with respect to: (i) the Initial
Credit Line and this Agreement, the date of the execution of this
Agreement by all parties; (ii) the Initial Term Note, the date upon
which Borrower timely executes and delivers to Bank the Initial Term
Loan Note; (iii) the Second Credit Line, the date upon which all of
the conditions precedent set forth in Sections 6.1, 6.2, 6.3 and 6.5
hereof have been fully satisfied and Borrower has executed and
delivered to delivered to Bank the Second Credit Line Note required
pursuant to Section 2.3(c); and (iv) the Second Term Note, the date
upon which Borrower timely executes and delivers to Bank the Second
Term Loan Note.
(y) "EVENT OF DEFAULT" shall mean any of the events set forth in
Section 10.1 hereof.
(z) "FIXED RATE LOAN" shall mean any Loan under either of the
Term Loans for which Borrower has received an Advance which, at the
time requested Borrower designated Treasury Rate Option as the Rate
Option or which was subsequently converted to bear interest at the
Treasury Rate Option.
(27) "GAAP" shall mean generally acceptable accounting
principles as promulgated by the American Institute of Certified
Public Accountants and/or the Financial Accounting Standards Board.
(28) "GUARANTOR(S)" shall mean, collectively, each Guarantor of
any Lease.
(29) "INITIAL CREDIT LINE" shall mean the Five Million Dollar
($5,000,000.00) revolving credit facility made available to Borrower
pursuant to Section 2.1 of this Agreement.
(30) "INITIAL CREDIT LINE BORROWING BASE" shall mean the
Borrowing Base applicable to the Initial Credit Line itself or any
Request for Advance under the Initial Credit Line, which is expressly
limited to Qualified Leased Equipment funded or to be funded from an
Advance under the Initial Credit Line, as the context requires.
(31) "INITIAL CREDIT LINE LEASE" shall mean a Lease the
Borrowing Base of which was originally advanced to Borrower under the
Initial Credit Line and any Qualified Lease assigned to Bank pursuant
to Section 2.5 hereof in connection with the release of a Lease any
portion of the Net Book Value of which was at any time included in the
computation of the Initial Credit Line Borrowing Base.
(32) "INITIAL CREDIT LINE MATURITY DATE" shall mean that date
which is the first to occur of: (i) the Termination Date of the
Initial Credit Line; or (ii) that date six (6) months after the
Effective Date of this Agreement.
(33) "INITIAL CREDIT LINE NOTE" shall mean the promissory note
in favor of and executed and delivered to Bank by Borrower in
accordance with the provisions of Section 2.1(c) of this Agreement.
(34) "INITIAL TERM LOAN" shall mean the Loan made to Borrower by
Bank to repay the outstanding principal balance of the Initial Credit
Line pursuant to the provisions of Section 2.2 of this Agreement.
(35) "INITIAL TERM LOAN BORROWING BASE" shall mean, at the time
of determination, the aggregate Borrowing Base of Initial Term Loan
Leases.
(36) "INITIAL TERM LOAN LEASES" shall mean, at the time of
determination, any Initial Credit Line Lease: (i) not released by Bank
pursuant to the provisions of Section 2.5 prior to the Effective Date
of the Initial Term Loan Note; and (ii) not yet released by Bank.
(37) "INITIAL TERM LOAN MATURITY DATE" shall mean that date
which is the first to occur of: (i) the Termination Date of the
Initial Term Loan; (ii) the end of the term of the average of
maturities, rounded to the next lower whole month, of all Borrowing
Base Leases funded by Advances under the Initial Credit Line; (iii)
that date which is thirty (30) months after the Effective Date of the
Initial Term Loan Note; or (iv) that date which is three (3) years
after the Effective Date of this Agreement.
(38) "INITIAL TERM LOAN NOTE" shall mean the promissory note in
favor of and executed and delivered to Bank by Borrower in accordance
with the provisions of Section 2.2(c) of this Agreement.
(39) "INTEREST PERIOD" shall mean the period of time designated
by Borrower for which a LIBOR Rate Loan is to be outstanding, which
shall be thirty (30), sixty (60), ninety (90) or one hundred eighty
(180) days, if deposits for such period are available from financial
institutions acceptable to Bank in the London Interbank market.
(40) "LEASE" shall mean every written agreement for the transfer
of the right to possession and use of equipment, fixtures and other
goods for a finite term in return for consideration, including, with
particularly and without limitation, a lease intended as, or treated
at law as, a sale.
(41)(AO) "LEASE ASSIGNMENT" shall mean an Lease Assignment in
the form of EXHIBIT 5.3 to this Agreement executed and delivered to
Bank with respect to a Lease.
(42) "LEASE DOCUMENTS" shall mean, collectively, the Lease
(including the master lease and all schedules created in relation
thereto), the certificate of acceptance, the disbursement
authorization, any resolutions of the Lessee authorizing the Lease,
each Guaranty, each resolution of each Guarantor authorizing any
Guaranty, each invoice and xxxx of sale for Leased Equipment, each
certificate of insurance, each waiver of each landlord or mortgagee
and all other instruments and other papers creating, evidencing, or
representing the collateral or the security interests therein.
(43) "LEASE PORTFOLIO SUMMARY REPORT" shall mean a monthly
report of the Borrower as of the last Business Day of each month, as
soon as available and in any event within fifteen (15) calendar days
after the end of such month, listing all Leases (other than the
Trustee Leases), separately, containing all information reasonably
required by Bank, in such form and detail as the Bank shall reasonably
request, including, but not limited to, with respect to each Lease:
(i) the name and address of the Lessee; (ii) the street address at
which the Leased Equipment is located; (iii) the franchisor or
franchise concept; (iv) all other Leases with the same Lessee,
including all information required by this Subsection with respect
thereto; (v) the date of the Advance; (vi) the amount of Advance made
by Bank; (vii) the Cost of the Leased Equipment; (viii) the Net Book
Value of such Lease; (ix) the date and amount of last payment on the
Lease; (x) the total amount of lease payments remaining due on the
Lease (reflected in columnar format and aged, based on the last due
date of the lease payment remaining unpaid, and categorized as 30 days
or less, 31 to 60 days, 61-90 days and over 90 days past due); (xi)
the existence of an Event of Default, if any; and (xii) the unpaid
balance of any Loans from Bank with respect to such Lease.
(44) "LEASED EQUIPMENT" shall mean all equipment, fixtures and
other goods leased to any Lessee under any Lease.
(45) "LESSEE" shall mean any person or entity possessing Leased
Equipment pursuant to a Lease.
(46) "LIBOR" means, for each Interest Period, the offered rate
per annum for deposits of Dollars for a period approximately equal to
the Interest Period and for an amount equal or comparable to the
principal amount of the LIBOR Rate Loan as of 11:00 A.M. (London,
England time) two (2) Business Days prior to the first day in such
Interest Period. If no such offered rate exists, such rate will be
the rate of interest per annum, as determined by Bank (rounded
upwards, if necessary, to the nearest 1/16 of 1%) at which deposits of
Dollars in immediately available funds are offered at 11:00 A.M.
(London, England time) two (2) Business Days prior to the first day in
such Interest Period by major financial institutions reasonably
satisfactory to the Bank in the London interbank market for a period
approximately equal to the Interest Period and for an amount equal or
comparable to the principal amount of the LIBOR Rate Loan on such date
of determination. If no such deposits are offered by such
institutions, such rate will be the rate in effect for the prior
Interest Period.
(47) "LIBOR RATE LOAN" shall mean any Loan for which Borrower
has received an Advance which, at the time requested Borrower
designated the LIBOR Rate Option as the Rate Option or which was
subsequently converted to the LIBOR Rate Option.
(48) "LIBOR RATE OPTION" shall mean the interest rate option
available to Borrower pursuant to Section 4.3(b) or Section 4.3(c)(ii)
of this Agreement.
(49) "LOCATION" shall mean the street address and legal
description, in metes and bounds or as platted, of such street
address.
(50) "LOCKBOX ACCOUNT" a depository account maintained with Bank
into which Borrower shall deposit, and require its Lessees to deposit,
Collections on Leases, as required by Section 6.1 of this Agreement.
(51) "LOAN" shall mean any Advance made to Borrower,r whether as
a Prime Rate Loan, LIBOR Rate Loan or Fixed Rate Loan and, if used in
the plural, any or all Advances made to Borrower without regard to the
Rate Option.
(52) "LOAN DOCUMENTS" shall mean, collectively, this Agreement,
the Security Agreement, the Assignment of Life Insurance Policy, ,
each Lease Assignment, each UCC Filing and all other documents
executed or delivered in conjunction with the execution of this
Agreement.
(53) "LOAN RATE" shall mean, as the context requires: (i) Prime
Rate plus the Applicable Margin; (ii) LIBOR plus the Applicable
Margin; or (iii) Treasury Rate plus the Applicable Margin.
(54) "MATURITY DATE" shall mean the Initial Credit Line Maturity
Date, the Initial Term Loan Maturity Date, the Second Credit Line
Maturity Date or the Second Term Loan Maturity Date, as the context
requires.
(55) "MAXIMUM AMOUNT" shall mean, with respect to each of the
Credit Lines, Five Million Dollars ($5,000,000.00).
(56) "NET BOOK VALUE" shall mean, at the time of determination
and with respect to any Lease: (i) the Cost; LESS (ii) the aggregate
Cost Recovery for all Rentals due under such Lease on or before such
date.
(57) "NOTE" shall mean the Initial Credit Line Note, the Initial
Term Loan Note, the Second Credit Line Note or the Second Term Loan
Note, as the context requires, or, if used in the plural, so many of
them as may at such time be outstanding.
(58) "NOTICE OF CONTINUATION\CONVERSION" shall mean a written
request to Bank, in the form of EXHIBIT 4.2 attached, to continue a
LIBOR Rate Loan or convert a Prime Rate Loan or LIBOR Rate Loan to a
different Loan Rate
(59) "PRIME RATE" shall mean, at any time, the rate established
by LaSalle National Bank, Chicago, Illinois, from time to time based
on its consideration of economic, money market, business and
competitive factors, and it is not necessarily the Bank's most favored
rate.
(60) "PRIME RATE LOAN" shall mean any Loan for which Borrower
has received an Advance which, at the time requested Borrower
designated the Prime Rate Option as the Rate Option or which was
subsequently converted to Prime Rate Option.
(61) "PRIME RATE OPTION" shall mean the interest rate option
available to Borrower under Section 4.3(a) or Section 4.3(c)(i).
(62) "QUALIFIED LEASE" shall mean a Lease of Qualified Leased
Equipment other than: (i) a Trustee Lease; (ii) a Lease with respect
to which all or any portion of a Rental is more than thirty (30) days
past due; (iii) a Lease the maturity of which exceeds sixty (60)
months, excluding any purchase option or payment solely in
consideration of the purchase of the Leased Equipment thereunder; (iv)
a Lease with respect to which any portion of the Rentals have been
assigned to any person or entity other than Bank; and (v) a Lease with
respect to which any person or entity other than Bank has been granted
or acquired a security interest in or lien upon the Lease or the
Leased Equipment subject thereto which will remain after payment of
all invoices or indebtedness with respect thereto by Borrower. If the
context so requires, "Qualified Lease" shall also mean any and all
instruments and documents which evidence or relate to any such Lease.
(63) "QUALIFIED LEASED EQUIPMENT" shall mean any equipment,
fixtures or other goods used solely in the food service industry the
possession or use of which is permitted by a Lessee pursuant to a
Lease.
(64) "RATE OPTION" shall mean an interest rate option available
to Borrower pursuant to Section 4.3 of this Agreement.
(65) "RENTAL" shall mean a single installment or payment to paid
with respect to a Lease, including Cost Recovery and Service Charge.
(66) "REQUEST FOR ADVANCE" shall mean a written request for an
Advance by the Borrower in substantially the form of EXHIBIT 1.1(BN)
to this Agreement, completed in a manner acceptable to the Bank.
(67) "SECOND CREDIT LINE" shall mean the Five Million Dollar
($5,000,000.00) revolving credit facility made available to Borrower
pursuant to Section 2.3 of this Agreement.
(68) "SECOND CREDIT LINE BORROWING BASE" shall mean the
Borrowing Base applicable to the Second Credit Line itself or any
Request for Advance under the Second Credit Line, which is expressly
limited to Qualified Lease Equipment funded or to be funded by
Advances under the Second Credit Line, as the context may require.
(69) "SECOND CREDIT LINE LEASE" shall mean a Lease the Net Book
Value of which was originally advanced to Borrower under the Second
Credit Line and any Qualified Lease assigned to Bank pursuant to
Section 2.5 hereof in connection with the release of a Lease the Net
Book Value of which was at any time included in the computation of the
Second Credit Line Borrowing Base.
(70) "SECOND CREDIT LINE MATURITY DATE" shall mean that date
which is the first to occur of: (i) the Termination Date of the
Second Credit Line; or (ii) that date six (6) months after the
Effective Date of the Second Credit Line.
(71) "SECOND CREDIT LINE NOTE" shall mean the promissory note in
favor of and executed and delivered to Bank by Borrower in accordance
with the provisions of Section 2.3(c) of this Agreement.
(72) "SECOND TERM LOAN" shall mean the Loan made to Borrower by
Bank to repay the outstanding principal balance of the Second Credit
Line pursuant to Section 2.4 of this Agreement.
(73) "SECOND TERM LOAN BORROWING BASE" shall mean, at the time
of determination, the aggregate Borrowing Base of Second Term Loan
Leases.
(74) "SECOND TERM LOAN LEASES" shall mean, at the time of
determination any Second Credit Line Lease: (i) not released by Bank
pursuant to the provisions of Section 2.5 prior to the Effective Date
of the Second Term Loan Note; and (ii) not yet released by Bank.
(75) "SECOND TERM LOAN NOTE" shall mean the promissory note in
favor of and executed and delivered to Bank by Borrower in accordance
with the provisions of Section 2.4(c) of this Agreement.
(76) "SECOND TERM LOAN MATURITY DATE" shall mean that date which
is the first to occur of: (i) the Termination Date of the Second Term
Loan; (ii) the end of the term of the average of maturities, rounded
to the next lower whole month but not to exceed in any event sixty
(60) months, of all Borrowing Base Leases funded by Advances under the
Second Credit Line; (iii) that date which is thirty (30) months after
the Effective Date of the Second Term Loan Note; or (iv) that date
which is three (3) years after the Effective Date of the Second Credit
Line.
(77) "SECURED OBLIGATIONS" shall mean the entire unpaid
principal balance of and all interest now accrued or hereafter to
accrue on the Notes, the performance of all the respective covenants,
agreements and obligations of the Borrower under this Agreement, the
Notes, the Security Agreement, the Assignment Of Life Insurance
Policies and the other Loan Documents, whether direct or indirect,
liquidated or unliquidated, fixed or contingent, matured or unmatured,
and all other liabilities, obligations, covenants and duties owing to
the Bank from the Borrower of any kind or nature, present or future,
whether or not evidenced by any note, guaranty, security agreement,
assignment of life insurance policy, lease assignment, depository
agreement, any other Loan Document or other instrument, including,
without limitation, any obligations, liabilities or indebtedness of
Borrower acquired by Bank, together with all amendments, renewals or
extensions of any of the liabilities, obligations and indebtedness
referred to herein. The term "Secured Obligations" includes, without
limitation, all interest, charges, expenses, reasonable attorneys'
fees and any other sum chargeable to the Borrower under this Credit
Agreement and/or any other Loan Document.
(78) "SECURITY AGREEMENT" shall mean the Security Agreement And
Master Assignment Of Leases in the form of EXHIBIT 5.1 attached hereto
executed and delivered to Bank by the Borrower.
(79) "SECURITY DEPOSIT" shall mean any Advance Payments received
by Borrower which are for Lease payments due at the end of the Lease
term; provided such Advance Payments are received by Borrower prior to
the date upon which Bank makes an Advance with respect to such Lease
and which, at the time of determination, would constitute a prepayment
if applied to such Lease.
(80) "SECURITY INTEREST" shall mean every security interest,
pledge, lien, hypothecation, and other encumbrance on or in any of the
assets of the Borrower now or hereafter granted by the Borrower to the
Bank, whether pursuant to this Agreement, the Security Agreement, the
Assignment Of Life Insurance Policy, any other Loan Documents, the
Lease Documents or otherwise.
(81) "SERVICE CHARGE" shall mean, with respect to any Lease: (i)
the aggregate dollar amount of all Rentals due under such Lease; LESS
(ii) the sum of: (A) the Cost; and (B) any broker fee or other
expenses in connection with Leased Equipment which is not treated as
Cost under this Agreement.
(82) "SUBORDINATED DEBT" means any indebtedness of Borrower with
respect to which Borrower and the holder of the debt have entered into
a subordination agreement in a form acceptable to Banks prohibiting
repayment until the payment in full of the Loans (except as may be
provided for herein), including, without limitation, the Subordinated
Debt owed or to be owed by Borrower to Inroads Capital Partners, L.P.,
Mesirow Capital Partners VII, L.P. and Edgewater Private Equity Fund
II, L.P. in the amount Three Million Five Hundred Thousand Dollars
($3,500,000), which is subordinated to the Secured Obligations
pursuant to the Subordination And Intercreditor Agreement dated April
, 1997.
(83) "TANGIBLE NET WORTH" shall mean the sum of the amounts set
forth on the balance sheet of Borrower, prepared in accordance with
GAAP as (i) the sum of Borrower's: (A) par or stated value of all
outstanding capital stock; (B) paid-in capital; and (C) retained
earnings; LESS the sum of (ii)(A) goodwill, including any amounts
representing the cost of acquisitions or subsidiaries in excess of the
underlying tangible assets; (B) patents, copyrights or trademarks,
leasehold improvements not recoverable at the expiration of a lease
and deferred charges (including, but not limited to, unamortized debt
discount and expense and organizational expenses); (C) loans to, or
investments in, affiliates, officers and employees; (D) treasury
stock; and (E) all other intangible assets of Borrower; PLUS (iii) the
amount of the deferred fee due those persons or entities who have
contributed or will contribute, by way of equity or subordinated debt,
those amounts required pursuant to Section 6.1(a) and 6.5; and PLUS
(iv) Subordinated Debt.
(84) "TERMINATION DATE" shall mean the earlier of: (i) the
Maturity Date of a Credit Line or a Term Loan; or (ii) the date the
Bank declares this Agreement or any Loan hereunder to be terminated,
pursuant to Section 10.3 below.
(85) "TOTAL INDEBTEDNESS" shall mean, as of the date of any
determination, all indebtedness of the Borrower, including, without
limitation, all unpaid Secured Obligations, all amounts due under all
capital leases, all accounts and trade payables, and all other
liabilities and obligations of the Borrower.
(86) "TREASURY RATE" shall mean the shall mean the United States
Treasury Constant Maturities Rate for obligations of a similar
maturity as published in the weekly Federal Reserve Statistical
Release Form H.15 (519) in effect on the date of a Fixed Rate Loan.
In the event the United States Treasury Constant Maturities Rate is
no longer published on a weekly basis in the weekly Federal Reserve
Statistical Release Form H.15 (519) or no reasonably comparable
maturities, in the judgment of Bank, are then listed, Bank shall have
the right to ascertain said rate from any other reasonable and
comparable source as shall be available, and upon selection of such
source, Bank shall give notice thereof to Borrower.
(87) "TREASURY RATE OPTION" shall mean the interest rate option
available to Borrower under Section 4.3(c)(iii).
(88) "TRUST" shall mean that certain Indenture of Trust dated
December 15, 1993, as amended or supplemented, by and between Borrower
and Trustee.
(89) "TRUSTEE" shall mean Texas Commerce Bank National
Association, as Trustee under the Trust.
(90) "TRUSTEE LEASES" shall mean any and all Leases which have
been pledged to Trustee or in, to or upon which Trustee held a
security interest, prior to the date of this Agreement or which is
hereafter funded from proceeds exclusively derived from a Lease so
pledged prior to the date of this Agreement.
(91) "UCC FILING" means a financing statement filing made by:
(i) the Borrower pursuant to the Uniform Commercial Code of any state
in which Leased Equipment is located for informational purposes or to
perfect the rights of Borrower as a lessor or secured party under a
Lease; or (ii) Bank pursuant to the Uniform Commercial Code of any
state in which Leased Equipment or other assets of Borrower are
situated to perfect the rights of Bank as a secured party under this
Agreement, the Security Agreement or any other Loan Document.
2 ACCOUNTING TERMS. All accounting terms, except as their meanings
have been modified by this Agreement, shall have the meanings given them in
accordance with generally accepted accounting principles, as such
principles are in effect on the date hereof and as same may be amended from
time to time and at any time.
3 COMMERCIAL TERMS. Terms not otherwise defined in this Agreement
shall, to the extent applicable, have the meanings given such terms in the
Indiana Uniform Commercial Code, IND. CODE (section) (section) 26-1-1-101 ET
SEQ..
4 TREATMENT OF RENTALS. Any classification of Rentals, or any
portion thereof, as Service Charge or Cost Recovery contained in this
Agreement are for the convenience of the Bank and the Borrower and are
intended for the purposes of determining eligibility for Advances and
monitoring covenant performance standards, such as the Borrowing Base. The
uses of such terms in this Agreement are not determinative of the
accounting or tax treatment of any Lease or Rentals due thereunder.
ARTICLE 2.
CREDIT FACILITIES
1 INITIAL CREDIT LINE.
(a) ADVANCES. Bank agrees to lend to Borrower, and Borrower
agree to borrow from Bank, on the terms and subject to the conditions
of this Agreement, an aggregate principal sum not to exceed the lesser
of: (i) Five Million Dollars ($5,000,000,00); or (ii) the Initial
Credit Line Borrowing Base. Subject to the terms and conditions
herein, Borrower may obtain Advances of this Initial Credit Line until
six (6) months after the Effective Date of this Agreement unless
sooner terminated as provided in this Agreement.
(b) LIMITATIONS ON ADVANCES. Notwithstanding any provision of
this Agreement or the Initial Credit Line Note to the contrary, Bank
shall not be obligated to make any Advance which, (i) when added to
the sum of the aggregate outstanding principal balance of the Initial
Credit Line would cause or result in a violation of any of the
covenants set forth in ARTICLE 8 of this Agreement; (ii) when added to
the sum of the aggregate outstanding principal balance of the Initial
Credit Line would cause the aggregate outstanding balance of the
Initial Credit Line to exceed the Initial Credit Line Borrowing Base;
or (iii) if the Advance would cause the aggregate outstanding
principal balance of the Initial Credit Line to exceed Five Million
Dollars ($5,000,000.00). Bank shall not be obligated to honor any
request for an Advance under the Initial Credit Line if the
disbursement of funds thereunder would occur more than six (6) months
after the Effective Date of the Initial Credit Line. In addition,
Bank shall have no obligation to honor any request for Advance if an
Event of Default has occurred and has not been cured within the
applicable grace period, if any, or which would cause or result in an
Event of Default or Default.
(c) INITIAL CREDIT LINE NOTE. To further evidence Borrower's
obligations under the Initial Credit Line, Borrower shall execute and
deliver to Bank the Initial Credit Line Note in the form of EXHIBIT
2.1(C) to this Agreement on the Effective Date of the Initial Credit
Line.
(d) USE OF PROCEEDS. Proceeds of any Advance under the Initial
Credit Line shall be used solely for the purpose of purchasing
Qualified Leased Equipment and for the purpose of paying indebtedness
owing on one or more existing Qualified Leases originally financed by
Star Financial Bank; PROVIDED, however, that Borrower shall deliver to
Bank and Bank's counsel copies of the Lease Documents for such Leases
for review and Bank shall, within one (1) week of the delivery of such
Lease Documents, approve such Lease Documents and authorize Borrower,
in writing, to obtain an Advance with respect to such Lease. No
provision of this Section 2.1(d) shall modify any condition precedent
to an Advance with respect to any Qualified Lease originally financed
by Star Financial Bank.
2 INITIAL TERM LOAN.
(a) ADVANCE. Bank agrees to lend to Borrower, and Borrower
agrees to borrow from Bank, on the terms and subject to the conditions
of this Agreement, the Initial Term Loan in the sum of the lesser of:
(i) the aggregate principal sum of the outstanding balance of the
Initial Credit Line at the Effective Date of the Initial Term Loan
Note; or (ii) the Initial Credit Line Borrowing Base on the Effective
Date of the Initial Term Loan Note.
(b) LIMITATIONS ON ADVANCE. Notwithstanding any provision of
this Agreement to the contrary. Bank shall have no obligation to
Advance the Initial Term Loan if: (i) Borrower fails to execute and
deliver the Initial Term Loan Note within the LATER of: (A) ten (10)
days after the Initial Credit Line Maturity Date; and (B) three (3)
Business Days after receipt of written notice from Bank that the
Initial Term Loan Note is ready for execution by Borrower; or (ii) a
Default or an Event of Default has occurred and has not been cured
within the applicable grace period.
(c) INITIAL TERM LOAN NOTE. To further evidence Borrower's
obligations with respect to the Initial Term Loan, Borrower shall
execute and deliver to Bank the Initial Term Loan Note in the form of
EXHIBIT 2.2(C) to this Agreement. The principal amount of the Term
Loan Note shall be equal to the lesser of: (i) the outstanding
principal balance of the Initial Credit Line at the Effective Date of
the Initial Term Loan Note; or (ii) the Initial Credit Line Borrowing
Base on the Effective Date of the Initial Term Loan Note. The
Effective Date of the Initial Term Loan Note shall be the date upon
which the Initial Term Loan Note is executed and delivered to Bank.
(d) USE OF PROCEEDS. Proceeds of the Initial Term Loan Note
shall be used solely for the purpose of repayment to Bank of the
outstanding balance of the Initial Credit Line. Borrower hereby
authorizes and directs Bank to pay to itself as a credit against
Borrower's obligations to Bank with respect to the Initial Credit Line
all proceeds of the Initial Term Loan on the Effective Date of the
Initial Term Loan Note.
3 SECOND CREDIT LINE.
(a) ADVANCES. Bank agrees to lend to Borrower, and Borrower
agrees to Borrow from Bank, on the terms and subject to the conditions
of this Agreement, an aggregate principal sum not to exceed the lesser
of: (i) Five Million Dollars ($5,000,000.00); or (ii) the Second
Credit Line Borrowing Base. Subject to the terms and conditions
herein, Borrower may obtain Advances of this Second Credit Line until
six (6) months after the Effective Date of the Second Credit Line Note
unless sooner terminated as provided in this Agreement. Provided,
however, that notwithstanding any provision of this Agreement to the
contrary, Borrower shall not be entitled to receive any Advance under
the Second Credit Line if Borrower has not satisfied the requirements
of Section 6.5 and executed and delivered to Bank the Second Credit
Line Note on or before January 1, 1998.
(b) LIMITATIONS ON ADVANCES. Notwithstanding any provision of
this Agreement or the Second Credit Line Note to the contrary, Bank
shall have no obligation to make any Advance which: (i) when added to
the sum of the aggregate outstanding balance of the Second Credit Line
will cause the aggregate outstanding balance of the Second Credit Line
to exceed the Borrowing Base for the Second Credit Line at such time;
(ii) when added to the sum of the aggregate outstanding balance of the
Second Credit Line would cause or result in a violation of any of the
Covenants set forth in ARTICLE 8 of this Agreement; or (iii) would
cause the sum of the aggregate outstanding balance of the Second
Credit Line to exceed Five Million Dollars ($5,000,000.00). Bank will
not be obligated to honor any request for an Advance under the Second
Credit Line if the disbursement of funds thereunder would occur more
than six (6) months after the Effective Date of the Second Line of
Credit. In addition, Bank shall have no obligation to honor any
request for Advance if an Event of Default has occurred and has not
been cured within the applicable grace period, if any, or which would
cause or result in an Event of Default or Default.
(c) SECOND CREDIT LINE NOTE. To further evidence Borrower's
obligations under the Second Credit Line, Borrower shall execute and
deliver to Bank the Second Credit Line Note in the form of EXHIBIT
2.3(C) to this Agreement on the Effective Date of the Second Credit
Line.
(d) USE OF PROCEEDS. Proceeds of any Advance under the Second
Credit Line shall be used solely for the purpose of purchasing
Qualified Leased Equipment.
4 SECOND TERM LOAN.
(a) ADVANCE. Bank agrees to lend to Borrower, and Borrower
agrees to borrow from Bank, on the terms and subject to the conditions
of this Agreement, the Second Term Loan in the sum of the lesser of:
(i) the aggregate principal sum of the outstanding balance of the
Second Credit Line at the Effective Date of the Second Term Loan Note;
or (ii) the Second Credit Line Borrowing Base on the Effective Date of
the Second Term Loan Note.
(b) LIMITATIONS ON ADVANCE. Notwithstanding any provision of
this Agreement to the contrary. Bank shall have no obligation to
Advance the Second Term Loan if: (i) Borrower fails to execute and
deliver the Second Term Loan Note within the LATER of: (A) ten (10)
days after the Second Credit Line Maturity Date; and (B) three (3)
Business Days after receipt of written notice from Bank that the
Second Term Loan Note is ready for execution by Borrower; or (ii) a
Default or an Event of Default has occurred and has not been cured
within the applicable grace period.
(c) SECOND TERM LOAN NOTE. To further evidence Borrower's
obligations with respect to the Second Term Loan, Borrower shall
execute and deliver to Bank the Second Term Loan Note in the form of
EXHIBIT 2.2(C) to this Agreement. The principal amount of the Term
Loan Note shall be equal to the lesser of: (i) the outstanding
principal balance of the Initial Credit Line at the Effective Date of
the Second Term Loan Note; or (ii) the Second Credit Line Borrowing
Base on the Effective Date of the Second Term Loan Note. The
Effective Date of the Second Term Loan Note shall be the date upon
which the Second Term Loan Note is executed and delivered to Bank.
(d) USE OF PROCEEDS. Proceeds of the Second Term Loan Note
shall be used solely for the purpose of repayment to Bank of the
outstanding balance of the Second Credit Line. Borrower hereby
authorizes and directs Bank to pay to itself as a credit against
Borrower's obligations to Bank with respect to the Second Credit Line
all proceeds of the Second Term Loan on the Effective Date of the
Second Term Loan Note.
5 RELEASE AND REPLACEMENT OF BORROWING BASE LEASES. If AT&T
Commercial Finance Corporation or a similar investor purchases any Lease,
Borrower may obtain the release of such Lease and the related Leased
Equipment; PROVIDED THAT, after giving effect to such release: (a) the
aggregate amount of the Applicable Borrowing Base EXCEEDS the principal
balance of the Secured Obligations; or (b) Borrower (i) pays to Bank the
amount by which the aggregate principal balance of the Credit Facilities IS
LESS THAN the aggregate amount of all Applicable Borrowing Bases at the
time of such release (the "BORROWING BASE DEFICIENCY"); or (ii) Borrower
assigns to Bank Qualified Leases which are not then already assigned to
Bank having a Borrowing Base not less than the amount of the Borrowing Base
Deficiency. Any payment by Borrower to Bank in connection with this
Section 2.5 shall be applied in reduction of the principal balance of the
Credit Facility with respect to which the Borrowing Base Deficiency existed
prior to such payment and any Qualified Leases assigned to Bank pursuant to
this Section 2.5 shall be designated to the Credit Facility the Borrowing
Base Deficiency of which is cured by such assignment. Notwithstanding any
provision of this Agreement, the Security Agreement or any Lease Assignment
to the contrary, Borrower may not obtain the release of any Initial Term
Loan Lease or Second Term Loan Lease unless such Lease: (x)(1) is prepaid
in full by the Lessee; or (2) sold to AT&T Commercial Finance Corporation
or a similar investor; and (y) the Net Book Value of such Lease is paid to
Bank as a prepayment of the respective Term Loan.
ARTICLE 3.
ADVANCE PROCEDURES
1 REQUESTS FOR ADVANCES - GENERALLY Each Request for Advance
submitted to Bank shall, at a minimum, provide the following information:
(i) the date of the Request for Advance; (ii) the date of the Qualified
Lease; (iii) the name and address of the Lessee, including, without
limitation, the form of entity (general partnership, limited partnership,
limited liability partnership, corporation, limited liability company or
other), the state or province under whose law such entity was formed; (iv)
the Cost of the Qualified Leased Equipment, including, where multiple
Locations are involved, the Cost at each Location; (v) the Lease number;
(vi) the Locations of the Qualified Leased Equipment; (vii) the names,
addresses, telephone numbers and telephone facsimile numbers, if any, of
the Lessees and any guarantors of the Qualified Lease; (viii) the
certification of an authorized officer of Borrower, acceptable to Bank,
setting forth: (A) the amount which is the lesser of the aggregate
Borrowing Base of the applicable Credit Line (Initial or Second) and the
Maximum Amount of the applicable Credit Line; (B) the outstanding balance
of said applicable Credit Line as at the time of the Request for Advance,
adjusted, where required, for the effect of other amounts sought to be
Advanced for other Qualified Leased Equipment submitted as a part of the
applicable or other Requests for Advances submitted to Bank but for which
disbursement is not reflected in the outstanding balance of the applicable
Credit Line; (C) the Cost of the Qualified Leased Equipment; (D) the
Borrowing Base with respect to the Qualified Lease for which the Advance is
sought; and (E) the amount of the requested Advance; (ix) the amount of
such Requested Advance which is to advanced as a Prime Rate Loan, a LIBOR
Rate Loan or, if applicable, a Fixed Rate Loan; (x) the date upon which
such Advance is requested to be disbursed; (xi) Net Book Value with respect
to all Borrowing Base Leases; and (xii) such other information as Bank may
reasonably request.
2 REQUESTS FOR ADVANCES - CREDIT LINE(S). The Credit Lines shall
be available to the Borrower as Advances, subject to the terms and
conditions hereof, at such times prior to the respective Credit Line
Termination Dates, and in such sums, as the Borrower may request. Each
request for a disbursement of any Loan under this Agreement shall be
accompanied by a written Request for Advance and shall, at a minimum,
provide the information required by Section 3.1 of this Agreement.
3 ADVANCES ON INITIAL TERM LOAN. Subject to the terms and
conditions of this Agreement, upon execution and delivery to Bank of the
Initial Term Loan Note and a Request for Advance, in form and substance
acceptable to Bank, the Bank shall advance the proceeds of the Initial Term
Loan to Borrower by disbursing to Bank such proceeds in payment of the
Borrower's obligations under the Initial Credit Line Note and with respect
to the Initial Credit Line, as further provided in this Agreement.
4 ADVANCES ON SECOND TERM LOAN. Subject to the terms and
conditions of this Agreement, upon execution and delivery to Bank of the
Second Term Loan Note and a Request for Advance, in form and substance
acceptable to Bank, the Bank shall advance the proceeds of the Second Term
Loan to Borrower by disbursing to Bank such proceeds in payment of the
Borrower's obligations with respect to the Second Credit Line Note and with
respect to the Second Credit Line, as further provided in this Agreement.
5 TIMING AND EFFECT OF REQUEST FOR ADVANCE. Each Request for
Advance shall constitute Borrower's irrevocable notice and must be received
by Bank prior to 9:00 o'clock, A.M., Chicago Time, on the Borrowing Date in
the case of a Prime Rate Loan, the second Business Day prior to the date
upon which the Advance is sought to be disbursed in the case of a Fixed
Rate Loan, or the third Business Day prior to the date upon which Advance
is sought to be disbursed, in the case of a LIBOR Rate Loan. In the event
that a Request for Advance requests more than one Loan Rate, the Request
shall irrevocable specify the amount of Advances to be received under each
Rate Option. Notwithstanding any provision of this Agreement or any of the
Notes to the contrary, no LIBOR Rate Loan shall be for a sum less than Five
Hundred Thousand Dollars ($500,000.00) nor for a period less than thirty
(30) days or one (1) month, as the case may be.
6 LIBOR INTEREST PERIODS. Each LIBOR Rate Loan must be for a
period of thirty (30), sixty (60), ninety (90) or one hundred eighty (180)
days. The applicable Interest Period must be designated at the time of the
Request for Advance or Notice of Continuation\Conversion.
ARTICLE 4.
INTEREST RATES
1 CREDIT LINES - RATE OPTIONS.
(a) INITIAL BORROWINGS. Each Advance under a Credit Line shall
be made upon the Borrower's irrevocable written notice delivered to
Bank in the form of the Request for Advance, which notice must be
received by the Bank in conformity with the prior notice requirements
of Section 3.5. Such Request for Advance shall specify:
(i) the amount of the Advance, which, in the case of an
Advance of LIBOR Rate Loans, shall be in aggregate minimum
principal amount of Five Hundred Thousand Dollars ($500,000.00)
or any amount in excess thereof;
(ii) the requested Borrowing Date, which shall be a Business
Day;
(iii) whether the Advance is to be comprised of LIBOR Rate
Loans or Prime Rate Loans;
(iv) if the Advance is to be LIBOR Rate Loans, the Interest
Period applicable to such Loans;
PROVIDED, HOWEVER, that with respect to the Borrowing to be made on
the Effective Date of this Agreement, the Request For Advance shall be
delivered to Bank not later than 9:00 o'clock, A.M., Chicago Time one
Business Day before such Effective Date and such Advance will consist
of Prime Rate Loans only.
(b) CONVERSION TO LIBOR DURING DEFAULT. During the existence of
a Default or an Event of Default, the Borrower may not elect to have a
Loan converted into or continued as a LIBOR Rate Loan.
2 CONVERSION AND CONTINUATION ELECTIONS.
(a) CONVERSION. The Borrower may, upon irrevocable written
notice to the Bank in the form of a Notice of Continuation\Conversion
in the form of EXHIBIT 4.2 to this Agreement and in accordance with
the advance notification provisions set forth in Section 3.5:
(i) elect to convert on any Business Day, any Prime Rate
Loans (or any part thereof in an amount not less than Five
Hundred Thousand Dollars ($500,000.00) into LIBOR Rate Loans or,
in the case of a Term Loan, into a Fixed Rate Loan; or
(ii) elect to convert on the last day of the applicable
Interest Period any LIBOR Rate Loans having Interest Periods
maturing on such day to a Prime Rate Loan or, in the case of Term
Loan, into a Fixed Rate Loan; provided, however, no remaining
LIBOR Rate Loan shall be for an amount less than Five Hundred
Thousand Dollars ($500,000.00).
(b) Borrower may, upon irrevocable written notice to the Bank, in
a Notice of Continuation\Conversion and in accordance with the advance
notification provisions of Section 3.5, elect to renew on the last day
of the applicable Interest Period any LIBOR Rate Loans having Interest
Periods maturing on such day (or any part thereof in an amount not
less than Five Hundred Thousand Dollars ($500,000.00);
PROVIDED, that if the aggregate amount of LIBOR Rate Loans in
respect of any Advance shall have been reduced, by payment,
prepayment, or conversion of part thereof to be less than Five
Hundred Thousand ($500,000.00), such LIBOR Rate Loan shall
automatically convert into a Prime Rate Loan, and on and after
such date the right of the Borrower to continue such Loans as,
and convert such Loans into, LIBOR Rate Loans, as the case may
be, shall terminate.
(c) NOTICE OF CONTINUATION. The Borrower shall deliver a Notice
of Continuation\Conversion to Bank not later than 9:00 o'clock, A.M.,
Chicago Time, at least three (3) Business Days in advance of the
requested date upon which a Loan is to be converted from one Rate
Option to another Rate Option (the "CONVERSION DATE") or the date upon
which a new Interest Period is to commence (the "CONTINUATION DATE"),
if the Loans are to be converted into or continued as LIBOR Rate
Loans, and, on the requested Conversion Date, if the Loans are to be
converted into Prime Rate Loans, specifying:
(i) the proposed Conversion Date or Continuation Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the nature of the proposed conversion or continuation;
and
(iv) the duration of the requested Interest Period with
respect to any Loans to be converted or continued as LIBOR Rate
Loans.
(d) FAILURE TO DESIGNATE. If upon the expiration of any Interest
Period applicable to LIBOR Rate Loans, the Borrower has failed to
select timely a new Interest Period to be applicable to such LIBOR
Rate Loans, as the case may be, or if, upon any such expiration, any
Default or Event of Default shall then exist, the Borrower shall be
deemed to have elected to convert such LIBOR Rate Loans into Prime
Rate Loans effective as of the expiration date of such current
Interest Period.
3 INTEREST.
(a) CREDIT LINES - PRIME RATE LOANS The aggregate sum of all
Prime Rate Loans advanced under the Credit Line shall bear interest on
the outstanding principal amount thereof from the date when each
Credit Line Loan was made at a rate per annum equal to the sum of the
Prime Rate plus the Applicable Margin.
(b) CREDIT LINES - LIBOR RATE LOAN. Each LIBOR Rate Loan shall
bear interest on the outstanding principal amount thereof from the
date LIBOR Rate Loan was made at a rate per annum equal to LIBOR plus
the Applicable Margin.
(c) TERM LOANS. The Term Loans shall bear interest on the
unpaid principal balance thereof at a rate per annum equal, at
Borrower's option to: (i) a variable rate equal to the Prime Rate
plus the Applicable Margin, with respect to the aggregate of the Prime
Rate Loans; (ii) a variable rate equal to the then effective LIBOR
plus the Applicable Margin with respect to any LIBOR Rate Loans; or
(iii) a fixed rate equal to the Treasury Rate for Loans of comparable
maturities plus the Applicable Margin. Any selection of a fixed rate
under this Section 4.3(c)(iii) shall be irrevocable and no right of
conversion to any other Rate Option shall thereafter exist.
(d) DEFAULT RATES. While any Event of Default exists and is
continuing and/or after maturity of the Loans (whether by acceleration
or otherwise), the Borrower shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by law) on
the principal amount of all Secured Obligations due and unpaid, at a
rate per annum which is determined by adding three percent (3%) per
annum to the Applicable Margin then in effect for such Loans and, in
the case of Secured Obligations not subject to an Applicable Margin,
at a rate per annum equal to the Prime Rate plus three percent (3%);
PROVIDED, HOWEVER, that, on and after the expiration of any Interest
Period applicable to any LIBOR Rate Loan outstanding on the date of
occurrence of such Event of Default or maturity, the principal amount
of such Loan shall, during the continuation of such Event of Default
and/or after acceleration, bear interest at a rate per annum equal to
the Prime Rate plus three percent (3%).
(e) INTEREST IN EXCESS OF LEGALLY PERMISSIBLE RATES. Anything
herein to the contrary notwithstanding, the obligations of the
Borrower hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that
contracting for or receiving such payment by Bank would be contrary to
the provisions of any law applicable to Bank limiting the highest rate
of interest which may be lawfully contracted for, charged or received
by Bank, and in such event the Borrower shall pay Bank interest at the
highest rate permitted by applicable law. Borrower acknowledges that
it is a corporation organized under the laws of the State of Indiana
and that no portion of the proceeds have been used by any individual
for personal, family or household purposes and that none of the Loans
hereunder are, or will be, subject to the Indiana Uniform Consumer
Credit Code or the Federal Consumer Credit Protection Act of 1968, as
amended.
4 FEES.
(a) COMMITMENT FEES. Borrower shall pay to Bank for the account
of Bank a commitment fee ("COMMITMENT FEE") on the Initial Credit Line
in the sum of Fifty Thousand Dollars ($50,000.00) on the Effective
Date of the Initial Credit Line. Borrower shall pay to Bank an
additional commitment fee in the sum of Fifty Thousand Dollars
($50,000.00) with respect to the Second Credit Line on the Effective
Date of the Second Credit Line. Each such commitment fee shall be
fully earned when paid.
(b) NON-USE FEES. Borrower shall pay to Bank for the account of
Bank a fee ("NON-USE FEE") on the average daily unused portion of the
Initial Credit Line and, if all conditions precedent thereto have been
satisfied, the Second Credit Line, computed and paid on a quarterly
basis in arrears on the last Business Day of each calendar quarter
based upon the daily utilization for that quarter as calculated by
Bank, multiplied by one-fourth of one percent (.25%) per annum. The
Non-use Fees shall accrue from the Effective Date to the Termination
Date of the respective Credit Lines and shall be due and payable
quarterly in arrears on the last Business Day of each calendar
quarter, commencing on June 30, 1997 except that the final payment
shall be made on the Termination Date.
5 COMPUTATION OF FEES AND INTEREST.
(a) 360 DAY YEAR. All computations of fees and interest payable
under this Agreement shall be made on the basis of a 360-day year and
actual days elapsed. Interest and fees shall accrue during each
period during which interest or such fees are computed from the first
day thereof to the last day thereof.
(b) NOTIFICATION OF LIBOR RATE. Bank will, with reasonable
promptness, notify the Borrower of each determination of a LIBOR Rate;
PROVIDED that any failure to do so shall not relieve the Borrower of
any liability hereunder or provide the basis for any claim against
Bank.
(c) CHANGE IN RATE. Any change in the applicable interest rate
on a Loan resulting from a change in the applicable rate shall become
effective as of the opening of business on the day on which such
change in the applicable rate becomes effective. Bank will with
reasonable promptness notify the Borrower of the effective date and
the amount of each such change, PROVIDED that any failure to do so
shall not relieve the Borrower of any liability hereunder or provide
the basis for any claim against Bank.
(d) PRESUMPTIVELY CONCLUSIVE. Each determination of an interest
rate by Bank shall be presumptively conclusive and binding on the
Borrower in the absence of manifest error.
6 REPAYMENT OF PRINCIPAL AND INTEREST.
(a) INTEREST. Interest on the Loans will be due and payable
monthly on the first day of the month following the month during which
such interest accrues. Interest will be payable at the then
applicable rate with respect to each of the Loans.
(b) PRINCIPAL. The principal of the Loans shall be payable as
follows:
(i) the principal balance and any accrued but unpaid
interest, costs and expenses with respect to the Initial Credit
Line shall be due and payable in full on the Initial Credit Line
Maturity Date;
(ii) unless sooner terminated, the principal amount of the
Initial Term Loan shall be due and payable in monthly
installments of principal equal to the aggregate Cost Recovery
due monthly on the Borrowing Base Leases for which Borrower
received Advances under the Initial Credit Line which remain
outstanding at the Effective Date of the Initial Term Loan Note;
PROVIDED, that notwithstanding any provision of this Agreement to
the contrary, all principal of and interest, costs and expenses
in connection with the Initial Term Loan shall be due and payable
in full, without further notice, on the third anniversary date of
the Effective Date of this Agreement;
(iii) the principal balance and any accrued but unpaid
interest, costs and expenses of the Second Credit Line shall be
due and payable in full on the Second Credit Line Maturity Date;
and
(iv) unless sooner terminated, the principal amount of the
Second Term Loan shall be due and payable in monthly installments
of principal equal to the aggregate Cost Recovery due monthly on
the Borrowing Base Leases for which Borrower received Advances
under the Second Credit Line which remain outstanding at the
Effective Date of the Second Term Loan Note; PROVIDED, that
notwithstanding any provision of this Agreement to the contrary,
all principal of and interest, costs and expenses in connection
with the Second Term Loan shall be due and payable in full,
without further notice, on the third anniversary date of the
Effective Date of the Second Credit Line.
(c) PRINCIPAL PAYMENTS - BORROWING BASE VIOLATIONS.
Notwithstanding any provision of this Agreement to the contrary, in
the event that the principal balance of any Credit Facility shall
exceed the Applicable Borrowing Base, Borrower shall: (i) pay to Bank
on demand any principal amount required to reduce the principal
balance of such Credit Facility to the Applicable Borrowing Base; or
(ii) assign to Bank additional Qualified Leases having a Borrowing
Base equal to or in excess of the amount by which the principal
balance of such Credit Facility exceeds the Applicable Borrowing Base.
(d) PRINCIPAL PAYMENTS - PREPAYMENT OR SALE OF TERM LOAN LEASE.
Notwithstanding any provision of this Agreement or any of the other
Loan Documents to the contrary, Borrower shall pay to Bank the Net
Book Value, together with any applicable Prepayment Penalty
(hereinafter defined), of any Initial Term Loan Lease or Second Term
Loan Lease prepaid in full by the Lessee or sold by Borrower pursuant
to Section 2.5 as a mandatory prepayment of the respective Term Loan.
(e) PREPAYMENT PENALTY - FIXED RATE LOANS. Any prepayment, in
whole or in part, of any Fixed Rate Loan shall be accompanied by an
amount (the "PREPAYMENT PENALTY") equal to the principal sum of such
prepayment mutliplied by: (i) three percent (3%) in the case of any
prepayment made after the Effective Date or Conversion Date, as the
case may be, of such Fixed Rate Loan and prior to the first
anniversary thereof; (ii) two percent (2%) in the case of any
prepayment made after the first anniversary of such Effective Date or
Conversion Date and prior to the second anniversary thereof; or (iii)
one percent (1%) in the case of any prepayment after the second
anniversary of such Effective Date or Conversion Date and prior to the
Maturity Date.
(f) COSTS AND EXPENSES. Costs and expenses due Bank form
Borrower as provided in this Agreement shall be due and payable upon
demand and shall bear interest at the Default Rate from the date of
demand.
ARTICLE 5.
COLLATERAL
1 SECURITY INTEREST. To secure the payment of the Notes and all
other Secured Obligations, the Borrower shall execute and deliver to Bank
the Security Agreement And Master Assignment Of Leases in the form of
EXHIBIT 5.1 to this Agreement and thereby grant to the Bank security
interests in all of its Leases, Lease Documents, Leased Equipment,
equipment, inventory, contract rights, chattel paper, goodwill, general
intangibles, accounts, accounts receivable, instruments, rents, monies,
payments, and all other rights arising out of the sale, lease or other
disposition of any property described herein, all records and data relating
to any of the property described herein, whether in the form of microfiche,
microfilm, or electronic media, together with all of grantor's interest in
and to all computer software required to utilize, create, maintain, and
process any such records or data on electronic media, insurance proceeds
and fixtures, all attachments, accessions, accessories, tools parts
supplies, increases, and additions to and replacements of and substitutions
for any property described herein and other assets as may be required under
the terms of this Agreement and the Loan Documents. Notwithstanding
anything contained herein to the contrary, the grant of the Security
Interest shall not include a security interest in any of the Leases, Leased
Equipment or the Borrower's security interest in any of the Leases or
Leased Equipment which have been assigned by Borrower to the Trustee under
the Trust, the proceeds of any of the Trustee Lease, the debt service
reserve fund or any other deposit account established by the Trustee in
connection with the Trustee Leases, so long as such Leases and Leased
Equipment remain subject to such assignment the debt service reserve fund
created by the Trust.
2 NEGATIVE PLEDGE OF TRUSTEE LESSEES AND LEASED EQUIPMENT.
Borrower hereby warrants, covenants and pledges that Borrower shall not
grant any lien, security interest or chattel mortgage in, to or upon, and
shall not pledge or assign, any of the Trustee Leases or any Leased
Equipment leased to Lessees under the Trustee Leases nor the debt service
reserve fund or any other fund associated with the Trust to any person or
entity, except Trustee. Borrower shall defend the title to the Trustee
Leases and any related Leased Equipment and such funds against any and all
persons, except the Trustee, claiming an adverse interest therein.
Notwithstanding any provision of this Agreement to the contrary, any
violation of this Section 5.2 shall constitute an Event of Default
entitling Bank to pursue any and/or all of its remedies hereunder, under
the Loan Documents, in equity or at law.
3 ASSIGNMENT OF LEASES. To further secure its obligations to Bank,
Borrower shall execute and deliver to Bank a Lease Assignment in the form
of EXHIBIT 5.3 in connection with each Lease (other than a Trustee Lease):
(a) on the Effective Date of this Agreement in connection with any such
Lease then existing; (b) at the time of a Request for Advance in
connection with such Lease; or (c) within ten (10) days after receipt by
Borrower of the Lessee's written acceptance of the Leased Equipment
thereunder.
4 POSSESSION OF LEASES. On the Effective Date of this Agreement,
Borrower shall deliver to Bank the originals of all Lease Documents, other
than the Trustee Leases, then owned by Borrower or, if such Leases are not
then within the possession of Borrower, Borrower shall obtain such
possession and deliver the originals of all such Lease Documents to Bank
within ten (10) days after the Effective Date of this Agreement.
Notwithstanding any provision of this Agreement to the contrary, failure to
timely deliver the original Lease Documents as required by this Section 5.4
shall constitute an Event of Default under this Agreement and Bank may
immediate cease funding any Loans and refuse to honor any Request for
Advance, all Loans shall immediately become due and payable, without
further action by Bank, and Bank may exercise any one or all of its
remedies as provided herein or in any other Loan Document.
5 CROSS-COLLATERAL. All of the Secured Obligations and any other
obligation of Borrower to Bank, whether payment or performance, shall
constitute one and the same indebtedness, secured by the Security Interests
granted Bank pursuant to the Security Agreement, Assignment Of Life
Insurance Policy, Lease Assignment or any other Loan Documents.
Notwithstanding any provision of this Agreement, the Notes or any other
Loan Document to the contrary, a Default or Event of Default with respect
to any of the Secured Obligations shall constitute a Default or Event of
Default, as the case may be, with respect to all of the Secured Obligations
and any other obligation of Borrower to Bank.
6 UCC FILINGS. In addition to the UCC Filings required to be
assigned to Bank pursuant to Section 6.3 of this Agreement, Borrower shall
execute and deliver to Bank such financing statements as Bank may
reasonably request to perfect Bank's Security Interest. Without in any way
limiting the foregoing, Borrower shall execute and deliver to Bank
financing statements with respect to the State of Indiana, the County of
Marion, Indiana and with respect to each state (and where necessary or
advisable, each county) in which Borrower does business or in which Leased
Equipment, other than Leased Equipment subject to a Trustee Lease, is
situated. In addition, Borrower agrees to obtain, execute, deliver, file
and record all financing statements and other instruments as shall in the
judgment of Bank be necessary or desirable to evidence, validate and
perfect the Borrower's security interest in the Leased Equipment. At the
request of Bank, Borrower shall join with Bank in executing one or more
financing statements in a form satisfactory to Bank and shall pay the cost
of filing the same in all public offices wherever filing is deemed by Bank
to be necessary or desirable to perfect Bank's Security Interest. Borrower
hereby authorizes Bank to file such financing statements without the
signature of any officer or authorized representative of Borrower or to
execute such financing statement on behalf of Borrower. Borrower
acknowledges that a carbon, photographic or other reproduction of the
Security Agreement or of a financing statement shall be sufficient as a
financing statement.
ARTICLE 6.
CONDITIONS PRECEDENT
1 CONDITIONS PRECEDENT TO ALL OBLIGATIONS OF BANK. All obligations
of the Bank under this Agreement are expressly conditioned upon the full
performance, acceptable to Bank, of each of the following conditions:
(a) ADDITIONAL EQUITY AND SUBORDINATED DEBT. Not more than
sixty (60) days prior to the Effective Date of this Agreement,
Borrower shall have received from Mesirow Capital Partners VII, L.P.,
Inroads Capital Partners, L.P. and Edgewater Private Equity Fund II,
L.P. contributed equity capital in an amount not less than Three
Million Dollars ($3,000,000.00) and debt in an amount not less Five
Hundred Thousand Dollars ($500,000.00), which debt has been
subordinated by written agreement to the obligations of Borrower to
Bank, and evidence of the receipt of the aggregate sum of Three
Million Five Hundred Thousand Dollars ($3,500,000.00), acceptable to
Bank and Bank's counsel, has been delivered to Bank.
(b) SATISFACTION OF THE INDEBTEDNESS TO STAR FINANCIAL BANK AND
RELEASE OF LEASES. Bank shall have received, reviewed and found
acceptable evidence that Borrower has fully satisfied its obligations,
liabilities and indebtedness to Star Financial Bank, that all Leases
assigned to Star Financial Bank and Leased Equipment related thereto
have been released and that there are no liens or security interests
with respect to Borrower's assets except those of the Trustee or as
set forth in EXHIBIT 6.1(B) and to which Bank has separately consented
in writing.
(c) ESTABLISHMENT OF LOCKBOX AND CASH COLLATERAL ACCOUNTS.
Borrower shall have entered into agreements for the establishment with
Bank of one or more lockbox accounts and cash collateral accounts and
shall have provided to Bank satisfactory evidence of Borrower's
ability to implement cash management systems acceptable to Bank.
(d) RECEIPT OF WRITTEN ASSURANCES REGARDING BORROWER'S
PROCEDURES. Bank shall have received from Borrower a written
undertaking setting forth procedures pertaining to Borrower's lease
and loan administration functions which provides Bank with assurances,
acceptable to Bank, that Borrower duly and properly perfects
Borrower's rights as an owner or secured party with respect to its
Leased Equipment and its Leases.
(e) OPINION OF COUNSEL. Bank shall have received, reviewed and
found acceptable an opinion of Borrower's counsel substantially to the
effect set forth in EXHIBIT 6.1(E) attached hereto.
2 CONDITIONS TO EACH ADVANCE. The Borrower shall deliver to the
Bank and its designated counsel, in conformity with the prior notice
requirements of Section 3.5 of this Agreement, an original (or a facsimile
copy) executed Request for Advance specifying the information required
thereby or required pursuant to Section 3.1 of this Agreement. The amount
of an Advance shall not exceed the aggregate Borrowing Base of the Leases
which are to become Borrowing Base Leases supporting such Advance. On the
date which the Borrower specifies the Advance is to be made, if:
(a) no Event of Default has occurred and is then existing;
(b) the making of the Advance shall not cause or result in
either a violation of any of the terms of this Agreement,
the Lease Assignment or the Security Agreement or shall not
cause or result in a Default or an Event of Default,
(c) Borrower has executed and delivered to Bank an Assignment of
each Lease associated with such Request for Advance and has
delivered to Bank all of the original documents required by
Section 6.3 of this Agreement,
the Bank shall make the proceeds of each Advance requested by the Borrower
available to the Borrower by causing an amount of same day funds equal to
such Advance to be credited to the Borrower's account maintained at Bank.
3 ORIGINALS OF LEASE DOCUMENTS TO BE DELIVERED TO BANK AND ITS
DESIGNATED COUNSEL WITH REQUEST FOR ADVANCE. In conjunction with the
delivery of any Request for Advance to Bank, the Borrower shall also
deliver to Bank an executed original `Lease Assignment' in the form
attached hereto as EXHIBIT 5.3 for each Lease for which Borrower seeks an
Advance together with the originals (except as to Bank's counsel, to whom a
copy will be simultaneously delivered) of each of the following documents
pertaining to each Lease:
(a) Each Lease and each Schedule executed with respect to such
Lease, fully executed by Borrower and Lessee,
(b) A file-marked, executed copy of each UCC-1 Financing
Statement necessary to perfect the Borrower's interest in
each Lease and the Leased Equipment naming the Borrower as
`Secured Party', the Lessee as `Debtor' and the Bank as
`Assignee'.
(c) A file marked copy of each UCC-2 Real Estate Financing
Statement necessary to perfect the Borrower's interest in
each Lease and the Leased Equipment naming the Borrower as
`Secured Party, the Lessee as `Debtor' and the Bank as
`Assignee' to the extent that the Leased Equipment
constitutes fixtures.
(d) The Certificate of Acceptance.
(e) The Disbursement Authorization.
(f) The Lessee's resolution authorizing the lease transaction,
if the Lessee is other than an individual.
(g) The Guaranty, if any, of the Lease.
(h) Each resolution of each Guarantor authorizing the Guaranty,
if the Guarantor is other than an individual.
(i) Each xxxx of sale for the Leased Equipment or the invoices
with respect thereto with Borrower's check number(s) in
payment thereof, noted thereon.
(j) A certificate of insurance with an endorsement declaring the
Borrower and Bank as a lender loss payee for an amount at
least equal to the full insurable value of the Leased
Equipment.
(k) Any landlord or mortgagee waiver of lien rights with respect
to the Leased Equipment, to the extent that the Leased
Equipment constitutes fixtures.
(l) A UCC search certified by the office of each record
custodian in which a UCC filing was made showing that the
Borrower's UCC Filing has, to the extent same would
constitute a security interest rather than a precautionary
lease filing, priority over all other lien filings that
might attach to the Leased Equipment.
In those jurisdictions which do not return to the secured party/lessor,
within a reasonable period of time, a file-stamped copy of the financing
statement or other written evidence of recording of a financing statement,
Borrower may submit to Bank an affidavit or certificate from an authorized
representative of an independent document service such as Lexis Document
Services or CT Corporation System; PROVIDED, however, that Bank shall not
be required to make Advances with respect to Leased Equipment located in
such jurisdictions if, in the sole judgment of Bank, the aggregate dollar
value of Leased Equipment located in such jurisdictions is unreasonably
large in relation to the aggregate dollar value of all Qualified Leased
Equipment unless Borrower has delivered to Bank the results of an
information and copy request under the Uniform Commercial Code (Uniform
Commercial Code Form UCC-11 or similar form), certified by the appropriate
public office, showing Borrower's security interest, and the assignment to
Bank thereof, to be recorded in such office.
4 BANK'S COUNSEL TO REVIEW DOCUMENTS. The Bank's Counsel shall
review the documents submitted by Borrower with each Request for Advance
until such time as Bank is reasonably assured that Borrower's policies,
procedures and documentation are adequate to obtain and perfect a security
interest in the Leased Equipment and to enforce Lessee's obligations to pay
all Rentals due under a Lease. Bank agrees that it will make reasonable
efforts to obtain adequate assurance in a reasonable period of time but in
no event shall Bank continue its review of documents submitted by Borrower
for longer than three (3) months after the Effective Date of this
Agreement, unless Borrower shall modify the contractual terms of any
document used in connection with a Lease, in which case, Bank shall be
entitled to review each variation of such document submitted with a Request
for Advance. Any documentation deficiencies shall be reported to Borrower
within two Business Days of receipt of the documentation, however, if any
Lease pertains to Leased Equipment located in a state not previously
reviewed by Bank's Counsel, then Bank's Counsel may notify Borrower that
additional time is necessary to complete such review. Subject to the
foregoing provisions of this Section 6.4, the reasonable costs of document
review by Bank's Counsel shall be paid by Borrower.
5 CONDITIONS PRECEDENT TO OBLIGATIONS OF BANK - SECOND CREDIT LINE
Notwithstanding any provision of this Agreement to the contrary, all
obligations of the Bank to make any Advance under or with respect to the
Second Credit Line are expressly conditioned upon receipt by Bank of
evidence acceptable to Bank that the Borrower has obtained, in addition to
the equity capital and subordinated debt required by Section 6.1(a),
subordinated debt or contributed equity capital in an amount not less than
Three Million Dollars ($3,000,000.00), such that Borrower shall have
received from a date not more than sixty (60) days prior to the Effective
Date of this Agreement, contributed equity capital of not less than Three
Million Dollars ($3,000,000.00) and debt in an amount not less Three
Million Five Hundred Thousand Dollars ($3,500,000.00), which debt has been
subordinated by written agreement to the obligations of Borrower to Bank.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make Advances
pursuant to this Agreement, the Borrower represents and warrants that:
1 CORPORATE ORGANIZATION AND GOOD STANDING. The Borrower is a
corporation duly organized and validly existing under the laws of the State
of Indiana and is duly licensed or qualified to transact business as a
foreign corporation in each jurisdiction in which the nature of the
business transacted by it or the character of properties owned or leased by
it requires such licensing or qualification, except where the failure to be
so licensed or qualified would not have a material adverse effect on the
Borrower.
2 CORPORATE POWER AND AUTHORITY. The Borrower has the requisite
power and authority, corporate and otherwise, to enter into this Agreement,
to make the borrowings herein contemplated, to execute and deliver the Note
and the Loan Documents to which it is a party, and to perform its
obligations hereunder and thereunder, all of which have been duly
authorized by all proper and necessary corporate action and do not and will
not:
(a) violate or conflict with any provision of the articles of
incorporation or bylaws of the Borrower;
(b) violate or conflict with the provisions of any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award to which the Borrower is a party or
by which it or its property is bound;
(D) conflict with, result in a breach of, or constitute a
default under, any indenture, Lease, or any other agreement
or instrument to which the Borrower is a party or by which
it or its property is bound.
3 FINANCIAL CONDITION. The Borrower's audited financial statements
(which have been prepared in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding fiscal
year) included in Borrower's Annual Report on Form 10-KSB for the year
ended September 30, 1996, and its unaudited financial statements included
in Borrower's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 1996, copies of which have been furnished to the Bank, present
fairly the financial condition of the Borrower as at such date and the
results of their operations for the period then ended, and there has been
no material adverse change in said financial condition since December 31,
1996. The Borrower does not have any contingent obligations, liabilities,
taxes, or other outstanding financial obligations which are material in the
aggregate.
4 PROPERTIES. The Borrower has good and marketable title to all of
its properties and assets, and none of its assets are subject to any
mortgage, pledge, title retention lien, security interest, or encumbrance,
except for those set forth on Schedule 7.4 attached hereto, which must in
all respects be acceptable to Bank on the Effective Date of this Agreement.
5 LITIGATION. No litigation, tax claim, proceeding, dispute, or
governmental proceeding is pending or, to its knowledge, threatened against
the Borrower, which either (a) involves an uninsured claim of over Twenty-
Five Thousand Dollars ($25,000.00) against the Borrower, or (b) in the
opinion of the Borrower, may have a material adverse effect on the business
or condition (financial or other), affairs, or operations of the Borrower.
6 ERISA. No fact or circumstance, including but not limited to any
reportable event within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), exists in connection with any
Plan of the Borrower ("PLAN" shall mean an employee pension benefit plan or
pension covered by ERISA which is guaranteed by the Pension Benefit
Guaranty Corporation or any successor thereto) which might constitute
grounds for the termination of any such Plan by the Pension Benefit
Guaranty Corporation or for the appointment of a trustee to administer any
such Plan. For purposes of this representation and warranty, the Borrower
shall be deemed to have knowledge of all facts attributable to any
administrator of any such Plan.
7 BORROWER INFORMATION. Any written information provided by
Borrower to Bank prior to, in conjunction with or pursuant to execution of
this Agreement is true, accurate and complete in all material respects.
ARTICLE 8.
FINANCIAL COVENANTS
So long as any portion of the Advances made under this Agreement
remains unpaid or this Agreement continues in effect, unless the Bank
otherwise consents in writing, the Borrower shall abide by each of the
following covenants:
1 BORROWING BASE. The aggregate outstanding balance of any Credit
Facility shall not exceed the Applicable Borrowing Base.
2 TANGIBLE NET WORTH. The Minimum Tangible Net Worth of the
Borrower, tested quarterly, shall be:
(a) AT CLOSING AND THROUGH SEPTEMBER 29, 1997. Not less than One
Million Five Hundred Thousand Dollars ($1,500,000.00) on the Effective
Date of this Agreement;
(b) AT SEPTEMBER 30, 1997 AND THROUGH SEPTEMBER 29, 1998. Not
less than Three Million Dollars ($3,000,000.00) as of September 30,
1997;
(c) AT SEPTEMBER 30, 1998 AND THROUGH SEPTEMBER 29, 1999. Not
less than Five Million Five Hundred Thousand Dollars ($5,500,000.00)
as of September 30, 1998;
(d) AT SEPTEMBER 30, 1999 AND THROUGH SEPTEMBER 29, 2000. Not
less than Seven Million Five Hundred Thousand Dollars ($7,500,000.00)
as of September 30, 1999; and
(e) AT SEPTEMBER 30, 2000 AND THEREAFTER. Not less than Ten
Million Dollars ($10,000,000.00) from and after September 30, 2000.
3 MAXIMUM DEBT TO TANGIBLE NET WORTH. The ratio of Borrower's
recourse indebtedness to Borrower's Tangible Net Worth shall not exceed
5.0:1.0 at the end of any calendar quarter.
4 MINIMUM INTEREST COVERAGE. Minimum interest coverage shall not
be less than 1.00:1 at any time during fiscal year 1997 nor less than
1.40:1 at any time thereafter. Interest coverage shall be defined as the
ratio of (i) earnings before interest expense and taxes to (ii) interest
expense less accrued interest on subordinated debt. Minimum interest
coverage shall be tested on a rolling four (4) quarter basis; PROVIDED;
however, that prior to March 31, 1998, minimum interest coverage will be
tested as follows: (x) at June 30, 1997, for the quarter then ending; (y)
at September 30, 1997, the six months then ended; and (z) at December 31,
1997, for the nine months then ended.
5 NO ADDITIONAL RECOURSE DEBT. Borrower shall not incur additional
recourse indebtedness without the prior written consent of Bank, which
consent may be withheld for any or no reason whatsoever.
6 DIVIDEND/DISTRIBUTION LIMITATION. Borrower shall not pay any
dividends or otherwise make any distributions with respect to its equity in
excess of One Hundred Thousand Dollars ($100,000.00) for Fiscal Year 1997
nor more than Forty Thousand Dollars ($40,000.00) during any fiscal year
after Fiscal Year 1997.
7 PAYMENTS ON SUBORDINATED DEBT. Borrower shall not pay any
accrued interest on Subordinated Debt prior to January 1, 1998 and
thereafter such interest may be paid only if and for so long as, Borrower
is in full compliance with the requirements of, and not in violation of the
provisions of, Sections 8.1 through 8.6, inclusive, or of any other
provision of this Agreement. Borrower shall not repay any principal of, or
any amounts other than interest with respect to, any Subordinated Debt
prior to January 1, 2001 and thereafter such principal and other amounts
may be paid only if and for so long as, Borrower is in full compliance with
the requirements of, and not in violation of the provisions of, Sections
8.1 through 8.6, inclusive, or of any other provision of this Agreement.
Borrower shall not acquire any Subordinated Debt prior to January 1, 2001
and thereafter such Subordinated Debt may be acquired by Borrower only if
and for so long as, Borrower is in full compliance with the requirements
of, and not in violation of the provisions of, Sections 8.1 through 8.6,
inclusive, or of any other provision of this Agreement.
8 DELINQUENCY LIMITATION. No more than five percent (5.0%) of the
aggregate U.S. Dollar value of the Borrower's Leases shall be more than
thirty (30) days delinquent, on a contractual basis, at any one time. For
the purposes of this Section 8.8, the entire unpaid balance of rentals due
with respect to a Lease shall be deemed to be more than thirty (30) days
past due if any Rental is more than thirty (30) days past due, in whole or
in part.
9 LESSEE CONCENTRATION. In no event shall any Lessee, or group of
Lessees which would be "affiliates" for the purposes of any proceeding
under the United States Bankruptcy Code, be liable to Borrower with respect
to Leases or any other obligations which, in the aggregate, at any time,
exceed ten percent (10%) of the aggregate of all of Borrower's Leases.
10 ASSIGNMENT OF KEY MAN LIFE INSURANCE. Within sixty (60) days
after the Effective Date of this Agreement, Borrower and any other owners
and beneficiaries shall delivered to Bank originals of life insurance
policies, issued or underwritten by insurers acceptable to Bank, and
executed and delivered to Bank an Assignment Of Life Insurance Policy with
respect to life insurance policies upon the lives of Xxxxxxx X. XxXxx and
Xxxxxxx Xxxxxxx in the aggregate face amount not less than Three Million
Two Hundred Fifty Thousand Dollars ($3,250,000.00); provided, however, that
after review of such life insurance policies, Bank may require Six Million
Five Hundred Thousand Dollars ($6,500,000.00) in face amount of life
insurance to be assigned to Bank subject to Bank's agreement to retain no
more than Three Million Two Hundred Fifty Thousand Dollars ($3,250,000.00)
in any event. Notwithstanding any provision of this Section 8.10 to the
contrary, not less than Million Five Hundred Thousand Dollars
($4,500,000.00) of the face amount of such life insurance, including that
portion assigned to or to be retained by Bank, shall insure the life of
Xxxxxxx X. XxXxx. Notwithstanding any provision of this Agreement to the
contrary, the failure to timely deliver the original life insurance
policies and/or execute and deliver the Assignment Of Life Insurance Policy
with respect to either officer of the Borrower shall constitute an Event of
Default under this Agreement.
ARTICLE 9.
ADDITIONAL COVENANTS
1 GENERAL AFFIRMATIVE COVENANTS. So long as any portion of the
Secured Obligations under this Agreement, including the Notes, remains
unpaid or this Agreement continues in effect, unless the Bank otherwise
consent in writing, the Borrower shall abide by each of the following
covenants and agreements:
(a) PAYMENT AND PERFORMANCE OF OBLIGATIONS. The Borrower will
pay all principal, interest, fees, and other charges with respect to
the Notes and any other obligations to Bank when and as the same
become due and payable, will strictly observe and perform all
covenants, agreements, terms, conditions, and limitations contained in
this Agreement and the Loan Documents.
(b) NOTICE OF DEFAULT. The Borrower shall promptly notify the
Bank in writing of the occurrence of any Event of Default or Default,
specifying in connection with such notification all actions proposed
to be taken to remedy such circumstance.
(c) NOTICE OF NON-PAYMENT. The Borrower shall notify the Bank in
writing of the occurrence of any failure or refusal by the Borrower to
pay any amount in excess of Ten Thousand Dollars ($10,000) payable
under any agreement to which it is a party (other than trade payables
less than sixty (60) calendar days past due), within ten (10) calendar
days of such failure or refusal, unless the Borrower is diligently and
in good faith contesting its obligations to make such payment by
appropriate action.
(d) NOTICE OF LEGAL PROCEEDINGS. The Borrower shall, promptly
upon becoming aware of the existence thereof, notify the Bank in
writing of the institution of any litigation, legal proceeding, or
formal dispute with any person or tribunal, that might materially and
adversely affect the condition, financial or otherwise, or the
earnings, affairs, business prospects, or properties of the Borrower.
(e) CONTINUATION OF PRIMARY BUSINESS. The Borrower shall
continue to maintain the character of its restaurant equipment leasing
business as currently conducted.
(f) MAINTENANCE OF CORPORATE EXISTENCE. Qualification and
Assets. The Borrower shall at all times maintain (I) its legal
existence; (ii) its qualification to transact business and good
standing as a foreign corporation in all jurisdictions where the
failure to so qualify would materially and adversely affect the nature
of its properties or the conduct of its businesses; and (iii) all
franchises, licenses, rights, and privileges necessary for the proper
conduct of its businesses.
(g) MAINTENANCE OF SECURITY. The Borrower shall execute, file
and deliver to the Bank all security agreements, UCC Filings,
assignments, and such other documents and instruments, and all
supplements thereto, and continuation statements thereof, and take
such other actions as the Bank deems reasonably necessary in order to
maintain as valid, enforceable, and first priority liens, the Security
Interest granted and assigned to the Bank.
(h)PAYMENT OF TAXES AND CLAIMS. The Borrower shall pay all taxes
imposed upon it or upon any of its properties or with respect to its
franchises, business, income, or profits before any material penalty
or interest accrues thereon. The Borrower shall also pay all material
claims (including without limitation claims for labor, services,
materials, and supplies) for sums which have or shall become due and
payable and which by law have or might become a vendors lien or a
mechanics, laborers', materialmen's, statutory, or other lien
affecting any of the Collateral; provided, however, that the Borrower
shall not be required to pay any such taxes or claims if (i) the
amount, applicability, or validity thereof is being contested in good
faith by appropriate legal proceedings promptly initiated and
diligently conducted; and (ii) the Borrower shall have set aside on
its books reserves (segregated to the extent required by generally
accepted accounting principles) adequate with respect thereto.
(i) MAINTENANCE OF INSURANCE. The Borrower shall at all times
maintain, or cause to be maintained, insurance covering such risks as
is customarily carried by prudent businesses similarly situated,
including, without limitation, hazard, fidelity, errors and omissions.
All such insurance shall be written by such insurers and in such form,
amount, and coverage as may be reasonably satisfactory to the Bank,
naming the Bank, as additional insured or loss payee, as applicable.
The Borrower shall provide the Bank with a certificate from such
insurance companies setting forth the amount or amounts of coverage
and containing an agreement from each such insurance company that no
termination, expiration, cancellation, or lapse of any such insurance
policy shall occur without at least thirty (30) calendar days advance
written notice to the Bank.
(j)COMPLIANCE WITH LAWS AND AGREEMENTS. The Borrower shall comply
with the provisions of any laws and the provisions of any agreements
material to its businesses and operations and shall maintain its
ability to perform its obligations under all agreements material to
its businesses and operations.
(k) INSPECTIONS. The Borrower shall, at any reasonable time and
from time to time upon prior notice permit any agents or
representatives of the Bank to inspect, examine, and make copies of
and abstracts from Borrower's records and books of account, and
(1) discuss its affairs, finances, and accounts, and (2) make
available to Bank any of Borrower's officers, management employees, or
independent public accountants (and by this provision the Borrower
hereby authorizes said accountants to discuss with the Bank and its
agents or representatives the Borrower's affairs, finances, and
accounts).
(l) RECORDS. The Borrower shall keep accurate records and books
of account reflecting all of its financial transactions, in which
complete entries shall be made in accordance with generally accepted
accounting principles consistently applied.
(m) ERISA. With respect to any Plan maintained or adopted by the
Borrower, the Borrower shall (I) at all times make prompt payments of
contributions required to be made to meet the minimum funding
standards of ERISA; (ii) promptly, after the filing thereof, furnish
to the Bank copies of all reports of prohibited transactions and
accumulated funding deficiencies required to be made pursuant to the
provisions of ERISA; and (iii) notify the Bank promptly of the
occurrence of any Reportable Event (as such term is defined in ERISA).
(n) FURTHER ASSURANCES. The Borrower shall execute and deliver
such other and further instruments, documents, or assurances as in the
judgment of the Bank may be reasonably required to more effectively
create or perfect the Security Interest(s) or to confirm or evidence
the obligations imposed by the terms and provisions of this Agreement
and the Loan Documents.
(o) CHANGE IN NAME OR LOCATION. The Borrower shall notify the
Bank in writing at least thirty (30) calendar days in advance of any
change in location of its principal place of business, chief executive
office, or place where records are kept, or of any proposed change of
corporate name. To the extent not in the physical possession of the
Bank, the Collateral and all books and records pertaining thereto
shall be maintained and stored at the Borrower's principal place of
business, and the Borrower shall not remove any part of the Collateral
from such location, other than temporarily in the ordinary course of
business, unless the Borrower shall have provided the Bank with prior
written notification of such change in location in accordance with the
terms of this section and shall have assisted the Bank in filing such
security agreements, financing statements, or other notices deemed
necessary by the Bank to preserve and maintain the continued validity,
enforceability, and priority of the Bank's lien on and Security
Interest in the Collateral.
(p) SENIOR MANAGEMENT. The Borrower shall notify the Bank in
writing within fifteen (15) calendar days of any change in the
Borrower's senior management.
(q) CHANGE IN OWNERSHIP. Except as required in connection with
the Three Million Dollar ($3,000,000.00) equity capital contribution
required by this Agreement, the Borrower shall not make any
substantial change of control in the ownership of the capital stock of
the Borrower without the consent of Bank, which consent may be
withheld for any or no reason.
2 COVENANTS AS TO LEASES. With respect to the Leased Equipment and
the Leases (other than the Trustee Leases and any related Leased Equipment
or security interest therein), the Borrower covenants as follows:
(a) each Lease assigned to Bank shall constitute a valid and
enforceable lease of and/or a lien on and security interest in the Leased
Equipment which is the subject thereof and such assignment and the Security
Interest will be duly perfected and, except as otherwise provided herein,
will be prior to all other liens upon, security interests in, and
collateral assignments of such Leased Equipment and Leases.
(b) As of the date of acquisition and granting of a Security Interest,
the Borrower will be the owner of such Leases free of Liens, encumbrances,
and rights of others, except for (i) the Security Interest created pursuant
to this Agreement; (ii) any subordinated liens on Leased Equipment; (iii)
landlord liens under state law; and (iv) rights of Lessees under Leases.
(c) As of the date of the execution of a Lease, there will be no right
of rescission, offset, defense, or counterclaim to the obligation of the
Lessee thereunder to pay the unpaid payments due under such Lease, except
with respect to Advance Payments paid by such Lessee; the operation of the
terms of such Lease or the exercise of any right thereunder will not render
such Lease unenforceable in whole or in part or be subject to any right of
rescission, offset, defense, or counterclaim and no such right of recision,
offset, defense, or counterclaim shall have been asserted.
(d) As of the date of acquisition of any Leased Equipment, there will
not be any liens or claims affecting the Leased Equipment which are or may
become a lien prior to or equal with the Security Interest granted to Bank
in such Leased Equipment except the lien of the Trustee and except for
landlord liens under state laws, which liens may have priority over the
Security Interest.
(e) As of the date of its execution, each Lease will be a legal, valid
and binding obligation of the obligor thereunder and will be enforceable in
accordance with its terms, except only as such enforcement may limited by
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditor's rights generally or by general equity principles, and all
parties to such Lease will have full legal capacity to execute such Lease
and all other documents related thereto, and the terms of such Lease will
not have been waived or modified in any respect.
(f) Each Lease shall contain customary and enforceable provision such
as to render the rights and remedies of the Borrower adequate for the
realization against the Leased Equipment which is the subject of each Lease
of the benefits of the Security Interest; notwithstanding the foregoing
Bank acknowledges the sufficiency of the form of the Lease currently
employed by the Borrower.
(g) The Borrower shall require each Lessee to furnish promptly to the
Borrower the annual financial statements of the Lessee (and of any
Guarantors) which, in some cases, may be certified by independent Certified
Public Accountants, and such interim financial statements of the Lessee as
the Borrower may require during the term of the Lease. If the annual
financial statements of a Lessee are not certified by independent certified
public accountants, such Lessee shall be required to also furnish to the
Borrower copies of its federal income tax returns. The Borrower shall upon
request make copies of all such financial statements and income tax returns
available for inspection by the Bank at any reasonable time during normal
business hours. In addition, the Borrower will cause Lessees to grant it,
or its representatives the right to enter the premises of each location of
the Leased Equipment for the purpose of inspection, and the right to
inspect any and all books and records relating to the Leased Equipment, at
any reasonable time during normal business hours.
(h) The company will notify the Bank in writing within fifteen days of
any default by a Lessee under the terms of a Lease and will specify the
actions taken and being taken to remedy any such default; provided that if
the event of default is the failure to pay rent when due, then the Borrower
may, in its discretion, provide in its notice to Bank that such notice
shall serve as a continuing notice of default by that Lessee in which case
no further notice to the Bank relative to the failure of such Lessee to
timely pay rent under its lease need be given by the Borrower unless the
Borrower deems itself to be insecure.
(i) The Borrower shall deposit, and shall take all reasonable steps to
require Borrower's Lessees to deposit, all Collection into the lockbox
account with Bank required pursuant to Section 6.1(c) of this Agreement
and, in the event, any Collections are received by Borrower, Borrower shall
receive all Collections with respect to any Lease in trust for the benefit
of Bank. All such Collections shall be deposited into the Collateral
Proceeds Account in accordance with the terms of the Security Agreement.
(j) With respect to each Lease, the Borrower hereby supplements and
adds to its covenants set forth above by making the following covenants:
(i) Prior to entering into a Lease, the Borrower will take such
steps as it deems reasonable and prudent to determine the
creditworthiness of the Lessee, including in appropriate
circumstances, but not limited to, undertaking a review of the credit
reports from commercial credit bureaus, investigating and verifying
the potential Lessee's credit record and bank accounts, and
establishing certain minimum levels of historical debt service
coverage and pro forma debt service coverage.
(ii) Each Lease will contain provisions substantially similar to
the following which provisions Bank acknowledges are reflected in the
form of Lease currently employed by Borrower.:
(A) The Lessee will repair and maintain the Leased
Equipment, pay all taxes relating to the Lease and Lessee's use
of the Leased Equipment (other than taxes measured by the net
income or net capital of the Borrower) and bear the entire risk
of the Leased Equipment being lost, damaged, destroyed or
rendered unfit or available for use.
(B) The Lessee will obtain and maintain during the term of
the Lease, at Lessee's sole expense, general liability and
casualty policies of insurance covering the Leased Equipment in
an amount equal at all times to not less than 100% of the full
replacement value of the Leased Equipment and naming the Borrower
or its nominee as an additional insured or loss payee,
respectively.
(C) The following occurrences, among others, will constitute
events of default under the Lease; (1) Lessee's failure to make
the rental payments called for under the Lease or Lessee's
failure to perform or observe any other covenant, condition or
agreement to be performed or observed by it under the Lease,
which failure, in either event, remains unremedied for 30
consecutive days or such other period as shall be provided for in
the Lease; (2) Lessee becomes insolvent or bankrupt or makes an
assignment for the benefit of creditors; (3) Lessee shall, or
shall attempt, without the Borrower's consent, to remove, sell,
transfer or encumber any of the Leased Equipment; (4) Lessee
shall cease doing business as a going concern; or (5) Lessee
shall suffer a material adverse change in its financial
condition, and as a result thereof the Borrower deems itself to
be insecure.
(D) Upon the occurrence of an event of default under the
Lease, the Borrower shall have the right to take all or any of
the following actions: (1) declare all other Leases between the
Borrower and the defaulting Lessee to be in default; (2)
terminate the Lease; (3) declare all sums due and payable under
the Lease for the full term of the Lease immediately due and
payable; (4) demand the return of the Leased Equipment or take
appropriate steps to obtain possession of the Leased Equipment;
and (5) sell the Leased Equipment at public or private sale or
otherwise dispose of or deal with the Leased Equipment.
3 NEGATIVE COVENANTS. So long as any portion of the Secured
Obligations under this Agreement including the Note, remain unpaid or this
Agreement continues in effect, the Borrower shall not violate any of the
following covenants:
(a) LIMITATION ON INDEBTEDNESS. The Borrower shall not incur, create,
assume, have outstanding, guaranty, or otherwise be or become directly or
indirectly liable with respect to any indebtedness if, as a result thereof,
the Borrower is in violation of any of the covenants set forth in this
Agreement.
(b) AMENDMENT OF CORPORATE DOCUMENTS. The Borrower shall not cause or
permit any amendment of its Articles of Incorporation or any material
change in its Bylaws as in effect on the date hereof; provided, however,
Borrower may amend it Articles of Incorporation and Bylaws with respect to
indemnification and make such other changes as do not materially affect
Bank.
(c) MERGERS, SALES, TRANSFERS OR OTHER DISPOSITION OF ASSETS. The
Borrower shall not: (i) dissolve or otherwise dispose of all or
substantially all of its assets; (ii) sell, lease, or otherwise transfer or
dispose of any assets for less than the fair market value (except assets no
longer usable in Borrower's business); (iii) consolidate with or merge into
another corporation or other legal entity; (iv) effect any change in its
capitalization; or (v) sell, lease, transfer, lend, or convey any of its
assets to an affiliate; PROVIDED, however, that Borrower may make such
changes in its capitalization as are required: (x) in connection with the
conversion of any of Borrower's outstanding preferred stock into Borrower's
common stock ; and (y) to issue stock or stock options pursuant to
incentive plans applicable to officers, directors, other management
personnel and consultants; PROVIDED, FURTHER, that all such transactions
under this clause (y) shall not cause or result in more than a five percent
(5%) dilution of the stock ownership interests of Xxxxxxx X. XxXxx and
Xxxxxxx Xxxxxxx.
(d) LIENS. The Borrower shall not create or permit to exist any
mortgage, pledge, title retention lien, lease purchase, or other
encumbrance or security interest, with respect to any assets now owned or
hereafter acquired by the Borrower except: (i) the Security Interest; (ii)
materialmen's, mechanics', suppliers', tax, or warehousemen's liens,
statutory liens of landlords and other like liens arising in the ordinary
course of business which are not yet due or which are being contested in
good faith by appropriate proceedings; (iii) liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment compensation, and other types of social
security, or to secure the performance of other statutory obligations; (iv)
encumbrances consisting of zoning regulations, easements, rights of way,
survey exceptions, and other similar restrictions on the use of real
property, and minor irregularities in titles thereto which do not
materially impair their use in the operation of its business; (v) existing
liens and security interests disclosed in writing to the Bank prior to
execution of this Agreement, to which Bank has consented in a separate
writing; (vi) the security interests of the Trustee with respect to the
Trustee Leases and the Trust.
(e) GUARANTIES. The Borrower shall not guaranty, endorse, assume,
become surety for, indemnify, or otherwise become or be responsible for the
obligations of any third party, except: (i) endorsements of negotiable
instruments for deposit or collection in the ordinary course of business;
and (ii) obligations incurred in connection with the assignment or sale of
Leases (or any part thereof) owned by the Borrower in the ordinary course
of business of the Borrower.
(f) USE OF PROCEEDS. The Borrower shall not use the proceeds of this
Agreement, nor of any Advance, for any purpose other than working capital,
payment for or recoupment of the costs of Leased Equipment acquired by the
Borrower or payment of indebtedness to Star Financial Bank in connection
with Qualified Leases assigned to Bank in connection with such payment.
4 REPORTING REQUIREMENTS. So long as any portion of the Borrower's
liabilities under this Agreement, including the Note, remains unpaid or
this Agreement remains in effect, unless the Bank otherwise consents in
writing, the Borrower shall furnish to the Bank the following reports:
(a) ANNUAL REPORTS. As soon as available, and in any event within
ninety (90) calendar days after the end of the each fiscal year of the
Borrower, the Borrower shall furnish to the Bank (i) a complete annual
audited financial statement of the Borrower, with all notes thereto,
prepared in reasonable detail in accordance with generally accepted
accounting principles consistently applied, and in detail reasonably
satisfactory to the Bank, which shall contain at least a balance sheet, a
statement of profit and loss and stockholder's equity, and a statement of
cash flows, set forth in each case in comparative form with corresponding
figures from the preceding fiscal year, and (ii) if prepared, the
management letter to the Borrower prepared by the firm of independent
certified public accountants in connection with the certification of the
annual audited financial statements of the Borrower. Each annual audited
financial statement of the Borrower shall be duly certified by a firm of
independent certified public accountants of recognized national standing or
otherwise acceptable to the Bank. The certified report of such firm shall
include a statement to the effect that the examination made in preparing
and certifying such annual audited financial statement has not disclosed
the existence of a condition or event at the end of the fiscal year which
constitutes an Event of Default or Default hereunder, or a statement
specifying the nature and period of existence of any such condition or
event disclosed by such examination.
(b) ANNUAL FINANCIAL STATEMENTS OF FRANCHISORS. Provided such
franchisor obtains audited financial statements, within ten (10) days of
receipt thereof, the audited financial statements of each franchisor for or
in connection with which Borrower leases Qualified Leased Equipment.
(c) FIELD AUDIT REPORTS. At the option of Bank, provide to Bank
audit reports with respect to the Bank's collateral and Borrower's business
operations, in form acceptable to Bank, or permit Bank to engage auditors
and to grant access to Borrower's premises, Lessees and Borrower's books
and records, for such purposes, no less frequently than twice each year.
Borrower agrees that Borrower shall be liable for all costs and expenses in
connection with such field audits and the resulting reports.
(d) QUARTERLY COMPLIANCE REPORT. Within thirty (30) days after the
end of each fiscal quarter, Borrower shall provide to Bank a duly executed
and completed Covenant Compliance Certificate in the form of EXHIBIT
9.4(D), certified by Borrower's chief financial officer. Each such
certificate shall certify that there exists no Event of Default or Default
hereunder and that all representations and warranties contained in this
Agreement and the Loan Documents are true and correct as if made again
effective on the date of such certificate.
(e) MONTHLY MANAGEMENT-PREPARED FINANCIAL STATEMENTS. As soon as
available, and in any event within thirty (30) days after the end of each
fiscal month of the Borrower, the Borrower shall furnish to the Bank (i)
management-prepared internal financial statements of the Borrower for the
preceding month, prepared on a basis consistent with prior periods and in
accordance with generally accepted accounting principles. Such monthly
financial statements shall contain at least a balance sheet of the Borrower
as the end of such month and a statement of profit and loss for such month
and for the fiscal year to date. Each monthly financial statement shall be
accompanied by a certificate of the chief financial officer of the Borrower
dated as of such date and certifying that the monthly financial statement
so provided is correct and complete as of such date and fairly presents the
results of operations for the periods then ended, and that there exists no
Event of Default or Default hereunder and that all representations and
warranties contained in this Agreement and the Loan Documents are true and
correct as if made again effective on the date of such certificate.
(f) MONTHLY LEASE PORTFOLIO SUMMARY REPORT. The Borrower shall furnish
the Bank with a Lease Portfolio Summary Report and analysis, which shall
show the status of all Leases, including those which are delinquent, all in
such form and detail as the Bank shall reasonably request, as of the last
Business Day of each month, as soon as available and in any event within
fifteen (15) calendar days after the end of such month.
(g) MONTHLY BORROWING BASE CERTIFICATE. Within thirty (30) days after
the end of each month, or more frequently if requested by the Bank, the
Borrower shall furnish the Bank with a Borrowing Base Certificate and
listing of all of Borrower's Leases (excepting only the Trustee Leases).
(h) OTHER REPORTS AND INFORMATION. The Borrower shall deliver or cause
to be delivered to the Bank such information (not otherwise required to be
furnished under this Agreement or the Loan Documents) respecting its
business, affairs, assets, and liabilities, and such statements, lists of
property and accounts, reports, opinions, certifications, and documents as
the Bank may from time to time reasonably request.
ARTICLE 10.
DEFAULT AND REMEDIES
1 EVENTS OF DEFAULT. The occurrence of one or more of the
following events shall constitute an "Event of Default":
(a) DEFAULT UNDER THE LOAN DOCUMENTS. The occurrence of an Event of
Default under and as defined in any of the Loan Documents.
(b) PAYMENTS. The Borrower shall fail to make any payment of
principal, interest, fees, or other amounts with respect to any of the
Secured Obligations or any other obligations, liabilities or indebtedness
of the Borrower to the Bank, including without limitation the obligations
set forth in Sections 4.6(c), 4.6(d) and 4.6(e) of this Agreement, in the
Notes or otherwise, on or before the date such payment is due, and such
failure shall continue for a period of ten (10) calendar days.
(c) COVENANT DEFAULTS. The Borrower shall fail to perform or observe
any other covenant, agreement, or provision contained in this Agreement or
the other Loan Documents and such non-performance or non-observance shall
continue for a period of thirty days following receipt of notice thereof
from Bank.
(d) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made by the Borrower herein or in any certificate, schedule, statement,
report, notice or writing furnished by or on behalf of the Borrower to the
Bank, whether furnished prior to, contemporaneously with, or subsequent to
the execution of this Agreement, is untrue or is breached in any material
respect.
(e) DEFAULT ON INDEBTEDNESS. Any creditor or any representative of any
creditor of the Borrower declares, or is or becomes entitled to declare,
any liquidated indebtedness of the Borrower which exceeds Twenty-Five
Thousand Dollars ($25,000.00), to be due and payable prior to its expressed
maturity by reason of any default by the Borrower in the performance or
observance of any obligation or condition, or any such indebtedness becomes
due by its terms and is not promptly paid or extended.
(f) INSOLVENCY. The Borrower becomes insolvent or generally does not
pay its debts as they become due, or applies for, consents to, or
acquiesces in the appointment of a trustee or receiver of the Borrower or
any material portion of its property; or in the absence of such
application, consent, or acquiescence, a trustee or receiver is appointed
for the Borrower or for a substantial part of its property and is not
discharged within ninety (90) calendar days; or any bankruptcy,
reorganization, debt arrangement, or other proceeding under any bankruptcy
or insolvency law is instituted by or against the Borrower and, if
instituted against the Borrower, is consented to or acquiesced in by the
Borrower, or remains for thirty (30) calendar days undismissed.
(g) DISSOLUTION OR LIQUIDATION. Any dissolution or liquidation
proceeding is instituted by or against the Borrower and, if instituted
against the Borrower, is consented to or acquiesced in by the Borrower, or
remains for thirty (30) calendar days undismissed.
(h) TERMINATION OR SUSPENSION OF BUSINESS. The transaction of the
usual business of the Borrower is terminated or suspended.
(i) CHANGE IN OWNERSHIP. There occurs a substantial change of control
in the ownership of the capital stock of the Borrower and such change has
not been previously approved in writing by the Bank.
(j) JUDGMENTS. The entry of a money judgment against the Borrower in
excess of Twenty-Five Thousand Dollars ($25,000.00), unless such judgment
shall be satisfied, discharged, or stayed within sixty (60) calendar days
after the entry thereof, and if stayed, satisfied or discharged within ten
(10) calendar days after the expiration or lapse of any such stay.
(k) MATERIAL ADVERSE CHANGE. The occurrence of any material adverse
change in the condition of the Borrower, financial or otherwise.
(l) ERISA. The occurrence of any reportable event or any other fact or
circumstance which constitutes grounds for the termination of any Plan, as
defined in Section 7.6 hereof, of the Borrower by the Pension Benefit
Guaranty Corporation or for the appointment by an appropriate United States
District Court of a trustee to administer any such Plan shall have occurred
and be continuing for thirty (30) calendar days; or any Plan of the
Borrower shall be terminated within the meaning of ERISA; or a trustee
shall be appointed by the appropriate United States District Court to
administer any Plan of the Borrower; or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any Plan of the
Borrower or to appoint a trustee to administer any such Plan; and, upon the
occurrence of any of the foregoing, the aggregate amount of the vested
unfunded liability under all such Plans exceeds ten percent (10%) of the
stockholders' equity of the Borrower, and such liability is not covered by
insurance.
2 REMEDIES NOT EXCLUSIVE. The rights and remedies provided in this
Agreement, the Note, and all other Loan Documents are cumulative, may be
exercised in such sequence or combination as the Bank may elect, and are
not exclusive of any rights or remedies otherwise provided by law.
3 REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall
have occurred, the Bank may exercise any one or more of the following
rights and remedies, and any other remedies provided in any of the Loan
Documents or under applicable law:
(a) ACCELERATION. Declare the unpaid balance of the Notes including
principal, interest, and any fees or other obligations, or any part
thereof, to be immediately due and payable, without demand, presentment, or
further notice of any kind, the same being hereby expressly waived by the
Borrower, whereupon it shall be due and payable.
(b) ADVANCES; TERMINATION. Refuse to make any further Advances, and
terminate this Agreement.
(c) JUDGMENT. Reduce any claim to judgment.
(d) OFFSET. Exercise the rights of offset and/or banker's lien against
the interests of the Borrower in and to every property of the Borrower
(other than escrow deposits managed by the Borrower, proceeds of the
Trustee Leases and property subject to the security interest of Trustee)
which is in the possession of the Bank to the extent of the full amount of
the Borrower's obligations to the Bank.
(e) FORECLOSURE. Exercise all those rights and remedies allowed to
secured parties by all applicable laws, including without limitation the
Uniform Commercial Code as enacted in Indiana and the Uniform Commercial
Code as enacted in any other jurisdiction in which the Collateral or any
portion thereof may be located.
(f) POSSESSION. Enter upon the premises of the Borrower and take
immediate possession of the Collateral, with or without legal process,
either personally or by means of a receiver appointed by a court of
competent jurisdiction.
(g) COLLECTION OF ACCOUNTS. Collect and receive all accounts, rents,
income, revenue, earnings, issues, and profits arising from the Collateral
or any part thereof, including, without limitation, the Leases (other than
the Trustee Leases).
(h) EXERCISE OF RIGHTS. Exercise any and all other rights afforded by
any applicable laws or by this Agreement and the Loan Documents at law, in
equity, or otherwise, including, but not limited to, the rights to bring
suits or other proceedings before any tribunal of competent jurisdiction,
either for specific performance of any covenant or condition contained in
the Loan Documents or in aid of the exercise of any right granted to the
Bank in this Agreement.
4 PERFORMANCE BY THE BANK. Should the Borrower fail to observe or
perform any covenant, duty, or promise by it to be observed or performed
under the terms of the Agreement or the Loan Documents, the Bank may, in
its sole discretion and without any obligation to do so, perform or attempt
to perform, such covenant, duty, or promise on behalf of the Borrower, and,
in the event the Bank should do so, the Borrower shall immediately upon
demand reimburse the Bank for all its expenses, disbursements, fees, and
costs incurred in connection therewith, with interest thereon at the rate
specified in the Note. The Bank does not assume and shall never have,
except by its express written consent, any liability or responsibility for
the performance of any covenant, duty, or promise of the Borrower
hereunder.
5 SET-OFF. The Borrower hereby irrevocably authorizes the Bank,
upon the occurrence of an Event of Default, to set off the liability of the
Borrower on the Note, without notice, against all deposits and credits of
the Borrower with, and any and all claims of the Borrower against, the Bank
at any time outstanding provided, however, that the Bank shall not offset
against deposits and credit of the Borrower held in trust or in a custodial
capacity for third parties or against the proceeds of the Trustee Leases
and property subject to the security interest of Trustee.
6 RELEASE. Upon repayment of the Advance (and all accrued interest
and related charges) relative to a Lease (other than a Trustee Lease), Bank
shall assign or release, at Borrower's discretion, its Security Interest
relative thereto.
7 ATTORNEYS AND ACCOUNTANTS. In the exercise of its rights under
this Agreement, the Note or the Loan Documents, the Bank may retain,
consult with, and otherwise utilize the services of counsel and of
accountants. Whenever attorneys or accountants are used by the Bank in the
exercise of any of its remedies under this Agreement, the Note or the other
Loan Documents, or otherwise, including collection or enforcement of this
Agreement, the Note or the other Loan Documents, or to enforce, defend,
declare, or adjudicate any of the Bank's rights under any of such
instruments and documents or in any of the Collateral, whether by suit,
negotiation, or otherwise, such reasonable attorneys' and accountants' fees
as are incurred by the Bank in connection therewith shall be payable by the
Borrower to Bank, which obligation shall survive any termination of this
Agreement.
ARTICLE 11.
MISCELLANEOUS
1 EXPENSES. The Borrower agrees to reimburse the Bank, upon
demand, for reasonable out-of-pocket expenses (including reasonable
attorneys' fees and legal expenses), incurred in connection with the
preparation, review, and amendment of this Agreement which obligation shall
survive any termination of this Agreement.
2 NON-LIABILITY OF BANK. The relationship between the Borrower and
the Bank is, and shall at all times remain, solely that of debtor and
creditor, and the Bank neither undertakes nor assumes any responsibility or
duty to review, inspect, supervise, pass judgment upon, or inform the
Borrower of any matter in connection with any aspect or phase of the
Borrower's businesses, operations, or condition, financial or otherwise.
The Borrower shall rely entirely upon its own judgment with respect to all
such matters, and any review of, inspection of, supervision of, exercise of
judgment on, or supply of information to the Borrower by the Bank in
connection with any such matter is for the protection and benefit of the
Bank, and neither the Borrower nor any third party is entitled to rely
thereon.
3 WAIVERS. No failure to exercise and no delay in exercising, on
the part of the Bank or any holder of the Note, of any power or right
hereunder or under the Note or the Loan Documents or the Lease Documents
and no course of dealing between the Borrower and the Bank or the holder of
the Note, shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude any other or further
exercise thereof or the exercise of any other power or right.
4 AMENDMENTS. No amendment, modification, or supplement to this
Agreement, the Note or the Loan Documents, or to any other document or
instrument executed or issued by any of the parties hereto in connection
with the transactions contemplated herein, shall be binding unless executed
in writing by all parties hereto; and this provision of this Agreement
shall not be subject to waiver by any party and shall be strictly enforced.
5 INTEREST RATE PROTECTION AGREEMENTS. Bank acknowledges that
Borrower may hereafter enter into one or more SWAP contracts, interest
hedging agreements or other rate contracts providing protection against
fluctuations in interest rates.
6 TAXES. The Borrower agrees to pay, and save the Bank harmless
from all liability for, any stamp or other taxes, except taxes imposed with
respect to or attributable to the income of Bank, which may be payable with
respect to the execution or delivery of this Agreement, the Notes and the
other Loan Documents, and any of the Leases, which obligation of the
Borrower shall survive the termination of this Agreement.
7 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the law of the State of Indiana, giving effect to
Federal laws applicable to national banking associations, but without
giving effect to the conflict of laws principles thereof. Any suit, action,
or proceeding against the Borrower with respect to this Agreement, the
Note, the other Loan Documents or the Collateral or any part thereof, may
be brought in the courts of the County of Xxxxxx, State of Indiana, or in
the United States District Court for the Southern District of Indiana, as
the Bank in its sole discretion may elect, and the Borrower hereby consents
to the jurisdiction of such courts for the purpose of any such suit,
action, or proceeding. Any suit, action, or proceeding brought by the
Borrower against the Bank with respect to this Agreement, the Note, the
other Loan Documents or the Collateral or any part thereof, shall be
brought in any of such courts; provided, however, that the Bank does not
waive its right to petition for removal of any action brought in the courts
of Xxxxxx County, Indiana to a United States District Court should it elect
to do so. The Borrower hereby irrevocably waives any and all objections to
the jurisdiction of such courts, including without limitation lack of
personal jurisdiction, lack of venue, and forum non convenient Service of
any writ, process, summons, or complaint upon the Borrower may be made by
mail upon it at the address stated in this Agreement, upon any registered
agent for service of process, or by any other method provided by law.
Service by any such method shall be conclusively deemed to be legally
sufficient in all respects, and the Borrower hereby irrevocably waives any
objection to the service or sufficiency of service of any writ, process,
summons, or complaint which is served in accordance with the foregoing.
8 SECTION TITLES. The section titles contained in this Agreement
are inserted for convenience only and shall not govern the interpretation
of any of the provisions of this Agreement.
9 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Bank and their respective successors
and assigns; provided, however, that the Borrower may not assign or
transfer any of its interest hereunder without the prior written consent of
the Bank, and, provided further, that the Bank may transfer, assign, or
grant participation in its rights hereunder, and such transferee, assignee,
or participant shall not be considered the Bank hereunder and the Borrower
shall be entitled to deal with the Bank as if such assignment, transfer, or
grant of a participation had not occurred.
10 RELIANCE BY THE BANK. All covenants, agreements,
representations, and warranties made herein by the Borrower shall,
notwithstanding any investigation by the Bank, be deemed to be material to
the Bank and to have been relied upon by the Bank and shall survive the
execution and delivery of this Agreement.
11 SEVERABILITY. The provisions of this Agreement are
severable. If any provision hereof shall be held invalid or unenforceable
in whole or in part by a court of competent jurisdiction, the remainder of
this Agreement shall not thereby fail or be rendered void or unenforceable,
but shall continue in full force and effect, with only the invalid or
unenforceable provision rendered a nullity and severed from this Agreement.
12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the Borrower in this Agreement shall
survive the execution hereof, the delivery of the Note and the making of
all Advances, and the Bank shall be entitled to rely on such
representations and warranties at all times.
13 TERMINATION. Unless previously renewed pursuant to the
terms hereof, this Agreement shall terminate on the Termination Date, at
which time no further Advances shall be made. Upon such termination, the
Note shall be immediately due and payable. Notwithstanding such
termination, this Agreement shall, along with, nonetheless continue in full
force and effect with respect to any amounts due hereunder, until such
amounts have been repaid in full.
14 ENTIRE AGREEMENT. This Agreement, the Note, the Loan
Documents and all other documents related to any of the foregoing or
otherwise contemplated hereunder embody the final and entire agreement
between the parties hereto relating to the subject matter hereof and
supersede any and all prior commitments, arrangements, representations,
understandings and agreements and any and all oral agreements between the
parties relating to the subject matter hereof. There are no unwritten
agreements between the parties.
15 INDEMNITY. The Borrower shall indemnify and hold harmless
the Bank and its successors, assigns, agents and employees, from and
against any and all claims, actions, suits, proceedings, costs, expenses,
damages, fines, penalties and liabilities, including, without limitation,
reasonable attorney fees and costs, arising out of, connected with or
resulting from (a) the operation of the business of the Borrower, (b) the
Bank's preservation or attempted preservation of the Collateral, or (c) any
failure of the Security Interest granted to the Bank in the Collateral to
be or to remain perfected or to have the priority as contemplated herein
and in the Loan Documents; provided that, the Borrower shall have no
obligation to indemnify the Bank for any loss caused solely by the Bank's
gross negligence or willful misconduct. At the Bank's request, the Borrower
shall, at its own cost and expense, defend or cause to be defended any and
all such actions or suits that may be brought against the Bank and, in any
event, shall satisfy, pay and discharge any and all judgments, awards,
penalties, costs and fines that may be recovered against the Bank in any
such action, plus all attorneys' fees and costs related thereto to the
extent permitted by applicable law; provided, however, that the Bank shall
give the Borrower, to the extent the Bank seeks indemnification from the
Borrower under this Section 11.15, written notice of any such claim, demand
or suit as soon as practicable after the Bank has received written notice
thereof, and the Bank shall not settle any such claim, demand or suit, if
the Bank seeks indemnification therefor from the Borrower, without first
giving notice to Borrower of the Bank's desire to settle and obtaining the
consent of Borrower to the same, which consent Borrower hereby agrees not
to unreasonably withhold.
16 ROLE OF THE BANK. Notwithstanding any of the terms or
conditions hereof or of the other Loan Documents to the contrary, the Bank
shall not have, and by its execution and acceptance of this Agreement
hereby expressly disclaims, any obligation or responsibility for the
management, conduct or operation of the business and affairs of the
Borrower. Any term or condition hereof, or of any of the other Loan
Documents, permitting the Bank to take or refrain from taking any action
with respect to the Borrower or the Collateral shall be deemed solely to
permit the Bank to audit and review the management, operation and conduct
of the business and affairs of the Borrower and to maintain and preserve
the security given by the Borrower to the Bank, for the Secured
Obligations, and may not be relied upon by any other person. Further, the
Bank shall not have, have not assumed, and by its execution and acceptance
of this Agreement hereby expressly disclaims, any liability or
responsibility for the payment or performance of any indebtedness or
obligation of the Borrower, and no term or condition hereof, or of any of
the other Loan Documents, shall be construed otherwise.
17 NOTICES. All notices required or permitted to be given
hereunder shall be given in writing and shall be personally delivered or
sent by telecopier (receipt confirmed), by express courier service, or by
registered or certified United States mail, return receipt requested,
postage prepaid, addressed as follows (or to such other address as to which
any party hereto shall have given the other written notice):
If to the Borrower:
MERIDIAN FINANCIAL CORPORATION
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: ____________________________
with copy to:
XXXXX & XXXXXXX
Suite 2700
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esquire
If to the Bank:
LaSALLE NATIONAL BANK
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Senior Vice
President
with copy to:
XXXX XXXXX XXXXXX & XXXXXXX, Professional
Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx 00000
Xxxxxxxxxxxx, XX 46282-0008
Attn: Xxxxx X. Xxxxxx, Esquire
All notices hereunder shall be deemed given upon the earliest of (a)
actual delivery in person or by telecopier, (b) one (1) Business Day after
delivery to an express courier service, or (c) three (3) Business Days
after having been deposited in the United States mail, in accordance with
the foregoing.
18 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. THE BORROWER AND THE BANK ACKNOWLEDGE THAT THIS WAIVER IS
A MATERIAL INDUCEMENT FOR EACH SUCH PARTY TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT THE BORROWER AND THE BANK HAVE ALREADY RELIED ON THE
WAIVER IN ITS RELATED FUTURE DEALINGS WITH THE OTHER. THE BORROWER AND THE
BANK FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day of April, 1997.
MERIDIAN FINANCIAL CORPORATION, an Indiana
corporation
By:
Printed Name and Title
LASALLE NATIONAL BANK
By:
Printed
Name and Title
