Exhibit 10.34
LOAN AND SECURITY AGREEMENT
Fidelity Leasing, Inc.
with
CoreStates Bank, N.A., as Agent,
First Union National Bank, as Co-Agent
and
Each of the Financial Institutions Now or Hereafter
Shown on the Signature Pages hereof as Lenders
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . 1
1.1 Terms Defined. . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Principles. . . . . . . . . . . . . . . 10
SECTION 2. THE LOANS. . . . . . . . . . . . . . . . . . . . . 10
2.1 Credit Facility - Description. . . . . . . . . . . 10
2.2 Advances, Conversions and Payments . . . . . . . . 12
2.3 Preconditions to Advances and Assignment of
Leases and Leased Property . . . . . . . . . . . . 13
2.4 Credit Facility Interest . . . . . . . . . . . . . 15
2.5 Additional Interest Provisions.. . . . . . . . . . 18
2.6 Fees . . . . . . . . . . . . . . . . . . . . . . . 19
2.7 Prepayments. . . . . . . . . . . . . . . . . . . . 20
2.8 Use of Proceeds. . . . . . . . . . . . . . . . . . 21
2.9 Capital Adequacy . . . . . . . . . . . . . . . . . 21
SECTION 3. COLLATERAL . . . . . . . . . . . . . . . . . . . . 22
3.1 Description. . . . . . . . . . . . . . . . . . . . 22
3.2 Lien Documents . . . . . . . . . . . . . . . . . . 22
3.3 Other Actions. . . . . . . . . . . . . . . . . . . 22
3.4 Searches . . . . . . . . . . . . . . . . . . . . . 23
3.5 Filing Security Agreement. . . . . . . . . . . . . 23
3.6 Power of Attorney. . . . . . . . . . . . . . . . . 23
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES . . . 24
4.1 Resolutions, Opinions, and Other Documents . . . . 24
4.2 Absence of Certain Events. . . . . . . . . . . . . 25
4.3 Warranties and Representations at Closing. . . . . 25
4.4 Compliance with this Agreement . . . . . . . . . . 25
4.5 Officers' Certificate. . . . . . . . . . . . . . . 25
4.6 Closing. . . . . . . . . . . . . . . . . . . . . . 26
4.7 Non-Waiver of Rights . . . . . . . . . . . . . . . 26
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 26
5.1 Corporate Organization and Validity. . . . . . . . 26
5.2 Places of Business . . . . . . . . . . . . . . . . 27
5.3 Pending Litigation . . . . . . . . . . . . . . . . 27
5.4 Title to Collateral. . . . . . . . . . . . . . . . 27
5.5 Governmental Consent . . . . . . . . . . . . . . . 27
5.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . 28
5.7 Financial Statements . . . . . . . . . . . . . . . 28
5.8 Full Disclosure. . . . . . . . . . . . . . . . . . 28
5.9 Subsidiaries . . . . . . . . . . . . . . . . . . . 28
5.10 Guarantees . . . . . . . . . . . . . . . . . . . . 28
5.11 Government Regulations, etc. . . . . . . . . . . . 29
5.12 Names. . . . . . . . . . . . . . . . . . . . . . . 29
5.13 Other Associations . . . . . . . . . . . . . . . . 30
5.14 Environmental Matters. . . . . . . . . . . . . . . 30
5.15 Capital Stock. . . . . . . . . . . . . . . . . . . 30
5.16 Solvency . . . . . . . . . . . . . . . . . . . . . 31
5.17 Leases and Leased Property . . . . . . . . . . . . 31
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS . . . . . . . . . 34
6.1 Payment of Taxes and Claims. . . . . . . . . . . . 34
6.2 Maintenance of Properties and Corporate
Existence. . . . . . . . . . . . . . . . . . . . . 34
6.3 Business Conducted . . . . . . . . . . . . . . . . 36
6.4 Litigation . . . . . . . . . . . . . . . . . . . . 36
6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . 36
6.6 Bank Accounts. . . . . . . . . . . . . . . . . . . 36
6.7 Warranties for Future Advances . . . . . . . . . . 36
6.8 Financial Covenants. . . . . . . . . . . . . . . . 37
6.9 Change of Ownership Interests. . . . . . . . . . . 38
6.10 Financial and Business Information . . . . . . . . 38
6.11 Officers' Certificates . . . . . . . . . . . . . . 39
6.12 Inspection . . . . . . . . . . . . . . . . . . . . 40
6.13 Tax Returns and Reports. . . . . . . . . . . . . . 40
6.14 Material Adverse Developments. . . . . . . . . . . 40
6.15 Places of Business . . . . . . . . . . . . . . . . 40
6.16 Sale of Collateral . . . . . . . . . . . . . . . . 40
SECTION 7. BORROWER'S NEGATIVE COVENANTS: . . . . . . . . . . 41
7.1 Merger, Consolidation, Dissolution or
Liquidation. . . . . . . . . . . . . . . . . . . . 41
7.2 Liens and Encumbrances . . . . . . . . . . . . . . 41
7.3 Negative Pledge. . . . . . . . . . . . . . . . . . 41
7.4 Transactions With Affiliates or Subsidiaries . . . 42
7.5 Guarantees . . . . . . . . . . . . . . . . . . . . 42
7.6 Indebtedness . . . . . . . . . . . . . . . . . . . 42
7.7 Use of Lenders' Name . . . . . . . . . . . . . . . 42
SECTION 8. DEFAULT. . . . . . . . . . . . . . . . . . . . . . 43
8.1 Events of Default. . . . . . . . . . . . . . . . . 43
8.2 Cure . . . . . . . . . . . . . . . . . . . . . . . 45
8.3 Rights and Remedies on Default . . . . . . . . . . 45
8.4 Nature of Remedies . . . . . . . . . . . . . . . . 47
8.5 Set-Off. . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9. AGENT. . . . . . . . . . . . . . . . . . . . . . . 47
9.1 Appointment and Authorization. . . . . . . . . . . 48
9.2 General Immunity . . . . . . . . . . . . . . . . . 48
9.3 Consultation with Counsel. . . . . . . . . . . . . 48
9.4 Documents. . . . . . . . . . . . . . . . . . . . . 48
9.5 Rights as a Bank . . . . . . . . . . . . . . . . . 49
9.6 Responsibility of Agent/Co-Agent . . . . . . . . . 49
9.7 Collections and Disbursements. . . . . . . . . . . 50
9.8 Indemnification. . . . . . . . . . . . . . . . . . 51
9.9 Expenses . . . . . . . . . . . . . . . . . . . . . 51
9.10 No Reliance. . . . . . . . . . . . . . . . . . . . 51
9.11 Reporting. . . . . . . . . . . . . . . . . . . . . 52
9.12 Removal of Agent/Co-Agent. . . . . . . . . . . . . 52
9.13 Action on Instructions of Lenders. . . . . . . . . 53
9.14 Several Obligations. . . . . . . . . . . . . . . . 53
9.15 Consent of Banks . . . . . . . . . . . . . . . . . 53
9.16 Participations and Assignments . . . . . . . . . . 54
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 56
10.1 GOVERNING LAW. . . . . . . . . . . . . . . . . . . 56
10.2 Integrated Agreement . . . . . . . . . . . . . . . 56
10.3 Waiver . . . . . . . . . . . . . . . . . . . . . . 56
10.4 Time . . . . . . . . . . . . . . . . . . . . . . . 57
10.5 Expenses of Agent. . . . . . . . . . . . . . . . . 57
10.6 Brokerage. . . . . . . . . . . . . . . . . . . . . 57
10.7 Notices. . . . . . . . . . . . . . . . . . . . . . 57
10.8 Headings . . . . . . . . . . . . . . . . . . . . . 58
10.9 Survival . . . . . . . . . . . . . . . . . . . . . 58
10.10 Successors and Assigns . . . . . . . . . . . . . . 59
10.11 Counterparts . . . . . . . . . . . . . . . . . . . 59
10.12 Modification . . . . . . . . . . . . . . . . . . . 59
10.13 Signatories. . . . . . . . . . . . . . . . . . . . 59
10.14 Third Parties. . . . . . . . . . . . . . . . . . . 59
10.15 Discharge of Taxes, Borrower's Obligations,
Etc. . . . . . . . . . . . . . . . . . . . . . . . 59
10.16 Most Favored Lenders . . . . . . . . . . . . . . . 60
10.17 Consent to Jurisdiction. . . . . . . . . . . . . . 60
10.18 Waiver of Jury Trial . . . . . . . . . . . . . . . 60
10.19 Information to Participant . . . . . . . . . . . . 60
EXHIBIT LIST
Exhibit 2.1(b) -- Form of Revolving Credit Note
Exhibit 2.1(c) -- Form of Term Note
Exhibit 2.1(e) -- Form of Borrowing Base Certificate
Exhibit 2.3(b)(ii) -- Form of Assignment Agreement
Exhibit 5.1 -- Borrower's States of Qualifications
Exhibit 5.2 -- Places of Business
Exhibit 5.3 -- Judgments, Proceedings, Litigation and
Orders
Exhibit 5.9 -- Subsidiaries and Affiliates
Exhibit 5.10 -- Existing Guaranties, Investments and
Borrowings, Leases and Employment
Agreements
Exhibit 5.12(a) -- Schedule of Names
Exhibit 5.12(b) -- Trademarks, Patents and Copyrights
Exhibit 5.13 -- Other Associations
Exhibit 5.14 -- Environmental Matters
Exhibit 5.15 -- Capital Stock
Exhibit 5.17 -- Form of Lease
Exhibit 6.11 -- Officers' Certificates
SCHEDULES
Schedule A -- Schedule and Addresses of Lenders
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement ("Agreement") is dated this ____ day of
________, 199_, by and among Fidelity Leasing, Inc., a Pennsylvania corporation
("Borrower"), CoreStates Bank, N.A., a national banking association in its
capacity as agent ("Agent") and as lender, First Union National Bank, a national
banking association in its capacity as co-agent ("Co-Agent") and as lender, and
the financial institutions listed on Schedule A attached hereto and made a part
of this Agreement (as such Schedule may be amended, modified or replaced from
time to time), in their capacity as lenders (singly, each is a "Lender" and
collectively, all are "Lenders").
BACKGROUND
A. Borrower wishes, from time to time, to obtain advances from Lenders up
to the Maximum Credit Limit. Lenders are willing to continue to make loans and
grant extensions of credit to Borrower under the terms and provisions
hereinafter set forth.
B. The parties desire to define the terms and conditions of their
relationship to writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 TERMS DEFINED: As used in this Agreement, the following terms have
the following respective meanings:
ACCOUNT - Any right to payment for goods sold or leased or for
services rendered which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.
ADDITIONAL FACILITY FEE - Section 2.6(b).
ADJUSTED DEBT TO TANGIBLE NET WORTH RATIO - At any time means the
ratio of (i) total Liabilities less Nonrecourse Debt to (ii) Borrower's Tangible
Net Worth less an amount equal to fifty percent (50%) of all restricted cash,
restricted receivables and other collateral pledged or sold in connection with
Securitization Transactions(s) and less fifty (50%) percent of Borrower's
Subordinated Indebtedness.
ADJUSTED LIBOR RATE - As applied to a LIBOR Based Rate Loan, for any
LIBOR Interest Period, the rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) determined pursuant to the following formula:
Adjusted LIBOR Rate = LIBOR RATE
------------------------
(1 - Reserve Percentage)
For purposes hereof, "LIBOR Rate" shall mean the arithmetic average of the rates
of interest per annum (rounded upwards, if necessary to the next 1/16 of 1%) at
which the Agent is offered deposits of United States dollars in the London
Interbank market on or about eleven o'clock (11:00) a.m. London time two (2)
Business Days prior to the commencement of such LIBOR Interest Period on amounts
substantially equal to such LIBOR Based Rate Loan as to which the Borrower may
elect the LIBOR Based Rate to be applicable with a maturity of comparable
duration to the LIBOR Interest Period selected by the Borrower for such LIBOR
Based Rate Loan.
ADMINISTRATION FEE - Section 2.6(c).
ADVANCE(S) - Any monies advanced or credit extended to Borrower by any
Lender under the Credit Facility.
AFFILIATE - As to any Person, each other Person that directly, or
indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, the Person in question.
AGREEMENT - This Amended and Restated Loan and Security Agreement, as
it may hereafter be amended, supplemented or replaced from time to time.
ASSIGNMENT AGREEMENT - Section 2.3(b)(ii).
AUTHORIZED OFFICER - Any officer or partner of Borrower authorized by
specific resolution of Borrower to request Advances as set forth in the
incumbency certificate referred to in Section 4.1(d) of this Agreement.
BASE RATE - On any date of determination, a per annum rate of interest
which is 225 basis points (in the case of Term Loans) or 175 basis points (in
the case of Revolving Credit Loans) in excess of the CD Rate, on such date.
BASE RATE LOANS - Any portion of Loans on which interest accrues at
the Base Rate.
BOOKS AND RECORDS - All of Borrower's original ledger cards, payment
schedules, credit applications, Contract Rights, liens, security instruments,
guarantees and other General Intangibles relating in any way to the Leases or
Leased Property.
BORROWING BASE - As of any date of determination, an amount equal to
the lesser of:
(i) the Maximum Credit Limit, and
(ii) 85% of the Present Value of the sum of the Lease Receivables
corresponding to each Eligible Lease.
BUSINESS DAY - Any day that is not a Saturday or Sunday or day on
which Agent or any Lender is required or permitted to close.
CD RATE - On any date of determination, that rate quoted in the Money
Rate Section of THE WALL STREET JOURNAL on such date, as the average of top
rates given by major New York banks on primary new issues of certificates of
deposit with a maturity of six (6) months. If for any reason THE WALL STREET
JOURNAL is unavailable, a CD Rate shall be as quoted in another publication of
comparable standing.
CLOSING - Section 4.6.
CLOSING DATE - Section 4.6.
COLLATERAL - All now or hereafter existing Leases and Leased Property,
Books and Records and all cash and noncash proceeds, thereof, including
insurance proceeds.
CONTRACT RIGHTS - All rights under contracts not yet earned by
performance.
CREDIT FACILITY - Section 2.1(a).
CURRENT TERM - The Initial Term during the period of the Initial Term,
and any renewal or extended term during the term thereof, if Lenders elect, in
their sole discretion, to renew or extend the Credit Facility.
DEFAULTED LEASE - Any Lease where the Lease or Leased Property
associated therewith fails, at any time, to comply with all of the
representations and warranties set forth in Section 5.17 below.
DEFAULTING LENDER - Section 2.2(b)(iii)(C).
DEFAULT RATE - Section 2.5(b).
DISTRIBUTION -
(1) Dividends or other distributions on capital stock of Borrower;
and
(2) The redemption, repurchase or acquisition of such stock or of
warrants, rights or other options to purchase such stock.
ELIGIBLE LEASE(S) - Each Lease which meets all of the following
specifications: (1) is not subject to any Lien, security interest or prior
assignment other than Agent's security interest for the benefit of Lenders and
the rights of the Lessees thereunder; (2) is a valid and enforceable Lease,
representing the undisputed obligation of the Lessee, with rentals due
thereunder not more than 61 days contractually past due; (3) is not subject to
any defense, set off, counterclaim, deduction, or allowance or adjustment; (4)
unless otherwise agreed to in writing by Agent and Co-Agent, provides for the
lease of Leased Property with an aggregate invoice price of less than $150,000,
(5) provides for the lease of Leased Property which has not been returned,
rejected, lost or damaged; (6) arose in the ordinary course of Borrower's
business; (7) Borrower has not received notice of bankruptcy, receivership,
reorganization, insolvency or material adverse change in the financial condition
of the Lessee; (8) the Lessee is not a Subsidiary or Affiliate of Borrower; (9)
is not a Defaulted Lease and complies with all general warranties set forth in
Section 5.17 hereof; (10) does not have an initial stated term in excess of
sixty (60) months, provided, however, that lease(s) with an initial stated term
of up to 72 months may be considered Eligible Leases so long as the aggregate
Lease Receivable(s) of all such Lease(s) shall, at no time, exceed an amount
which is ten (10%) percent of the outstanding principal balance of the Loans;
(11) has not, in the case of Revolving Credit Loans, been pledged to Agent
and/or Lenders for a period of more than eighteen (18) months; (12) contains a
provision whereby the Lessee agrees not to assert any claim or reduction,
counterclaim, setoff, recoupment, or any other claim, allowance or adjustment
against any assignee of Borrower; (13) is a Lease with a Lease Receivable, which
together with all other Lease Receivables owed by the same Lessee, does not
exceed $250,000 in the aggregate.
EQUIPMENT - The meaning ascribed thereto in the Pennsylvania Uniform
Commercial Code.
ERISA - The Employee Retirement Income Security Act of 1974, as the
same may be amended, from time to time.
EVENT OF DEFAULT - Section 8.1.
EXPENSES - Section 10.5.
FACILITY FEE - Section 2.6(b).
FEDERAL FUNDS RATE - means on any day, the effective rate of interest
charged by the Federal Reserve Bank of Philadelphia for overnight Federal Funds
in Philadelphia as reported by the Federal Reserve Bank in Philadelphia for such
day.
FINANCIAL STATEMENTS - The financial statements of Borrower prepared
in accordance with GAAP.
FIXED CHARGE COVERAGE RATIO - The ratio of Borrower's operating cash
flow (income before taxes, depreciation, amortization and extraordinary items,
plus interest expense) to the sum of (i) interest expense; (ii) mandatory
principal payments and (iii) an amount equal to twenty-five (25%) percent of the
average daily outstanding principal balance of the Revolving Credit Loans.
GAAP - Generally accepted accounting principles as in effect on the
Closing Date, as may be amended from time to time.
GENERAL INTANGIBLES - The meaning ascribed thereto in the Pennsylvania
Uniform Commercial Code and shall include, but not be limited to, all contract
rights (including without limitation, all rights under remarketing agreements),
chattel paper, documents, instruments, books, records, ledgers, journals, check
books, print outs, blue prints, designs, computer programs, computer tapes,
punch cards, formulae, drawings, customer lists, choses in action, claims,
goodwill, designs and plans, licenses, license agreements, tax and all other
types of refunds, returned and unearned insurance premiums, rights and claims
under insurance policies, patents, patent application, trademarks, trade names,
trade styles, trademark applications and copyrights.
GOOD BUSINESS DAY - Any Business Day when banks in Philadelphia,
Pennsylvania and London, England are open for business.
GUARANTORS - Resource America, Inc., Resource Leasing, Inc., FL
Partnership Management, Inc. and FL Financial Services, Inc.
GUARANTY - Section 4.1(l).
HAZARDOUS SUBSTANCE - Section 5.14.
INITIAL TERM - Section 2.1(d).
INVENTORY - The meaning ascribed thereto in the Pennsylvania Uniform
Commercial Code and shall include all additions, improvements, accessions,
attachments, upgrades, replacements and substitutions thereto or therefor.
LEASE(S) - All of Borrower's Accounts, Documents, General Intangibles,
Instruments and Chattel Paper arising in connection with each and every
equipment lease (whether a "true lease" or a lease intended as security) and/or
schedule to a master lease agreement, assigned to Lenders and/or Agent for the
benefit of Lenders, or now or hereafter designated on any schedule as being
assigned to Lenders and/or Agent for the benefit of Lenders. The term "Lease"
includes (i) all payments to be made thereunder, (ii) all rights of Borrower
therein, and (iii) any and all amendments, renewals, extensions or guarantees
thereof.
LEASE RECEIVABLE(S) - With respect to each Lease, the gross value of
the contractual firm term lease payments plus the absolute and unconditional
obligation, if any, of the corresponding Lessee to make a payment(s) at the end
of the stated Lease term.
LEASED PROPERTY - Any personal property leased or to be leased or
financed by Borrower pursuant to a Lease; the term "Leased Property" includes
all of Borrower's Inventory or Equipment so leased and any and all additions,
improvements, accessions, attachments, upgrades, replacements and substitutions
thereto and therefor.
LESSEE - The lessee(s) or obligor(s) responsible for payment and/or
performance under a Lease.
LIABILITIES - All liabilities of every kind of Borrower and its
Subsidiaries as would be shown on a consolidated financial statement of Borrower
prepared in accordance with GAAP, and all contingent and unmatured obligations
of Borrower and its Subsidiaries pursuant to any and all guarantee, surety or
similar type agreements relating to the debts of Persons outside of the
consolidated group.
LIBOR BASED RATE - A rate of interest determined by reference to the
Adjusted LIBOR Rate.
LIBOR BASED RATE LOAN - Any portion of the Revolving Credit Loans or
any Term Loan on which interest accrues at the LIBOR Based Rate.
LIBOR BASED REVOLVING LOAN RATE - The Adjusted LIBOR Rate plus 175
basis points.
LIBOR BASED TERM LOAN RATE - The Adjusted LIBOR Rate plus 225 basis
points.
LIBOR INTEREST PERIOD - Section 2.4(c)(i).
LIEN - Any interest of any kind or nature in property securing an
obligation owed to, or a claim of any kind or nature in property by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute, regulation or contract, and including, but not limited to,
a security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt, a lease, consignment or bailment for security
purposes, a trust, or an assignment.
LOANS - All Revolving Credit Loans and Term Loans.
LOAN DOCUMENTS - This Agreement, the Revolving Credit Notes, the Term
Notes, the Guaranty and all agreements, instruments and documents executed
and/or delivered from time to time in connection therewith, as amended or
replaced from time to time.
MATURITY DATE - The later of (i) March 31, 1998 or (ii) the last day
of the then Current Term.
MAXIMUM CREDIT LIMIT - The sum of the Pro Rata Shares which at the
time of Closing equals Twenty Million Dollars ($20,000,000).
NET INCOME - The consolidated net income after taxes of Borrower as
such would appear on Borrower's consolidated statement of income, prepared in
accordance with GAAP.
NET WORTH - At any time means the amount of stockholders equity on a
consolidated basis plus Borrower's Subordinated Indebtedness (excluding the
current portion of such Indebtedness) with a maturity of at least five (5) years
and an interest rate which is no greater than the market rate of interest for
similar debt.
NONRECOURSE DEBT - All Liabilities of Borrower which are non-recourse
in nature and treated as non-recourse obligations on Borrower's Financial
Statements. Non-recourse Debt shall not include any Liabilities which are
partially recourse and may be off balance sheet.
OBLIGATIONS - All existing and future liabilities and obligations of
every kind or nature at any time owing by Borrower to Lenders (or any of them),
Co-Agent and/or to Agent, whether joint or several, related or unrelated,
primary or secondary, matured or contingent, due or to become due, and whether
principal, interest, fees or Expenses, including, without limitation,
obligations in respect of the Revolving Credit Loans and Term Loans and any
extensions, modifications, substitutions, increases and renewals thereof, and
the payment of all reasonable amounts advanced by Agent (or any Lender after the
occurrence of an Event of Default) to preserve, protect and enforce rights
hereunder and in the Collateral and all Expenses incurred by Agent (or any
Lender after the occurrence of an Event of Default) in connection therewith.
PENNSYLVANIA UNIFORM COMMERCIAL CODE OR UCC - The Uniform Commercial
Code as enacted in Pennsylvania, as the same shall be amended from time to time.
PERSON - An individual, partnership, corporation, limited liability
corporation, trust, unincorporated association or organization, joint venture
or any other entity.
PRESENT VALUE - The value, from time to time, as of the date of
determination, of the remaining Lease Receivables due under a Lease, discounted
using the applicable interest rate as set forth herein.
PRO RATA PERCENTAGE - Section 2.1(a)(iii).
PRO RATA SHARE - Section 2.1(a)(iii).
PROPERTY - Any interest of Borrower in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
REGULATION D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations,
as amended, and any successor thereto.
RESERVE PERCENTAGE - For a Lender, on any day, that percentage
(expressed as a decimal) which is in effect on such day, prescribed by the Board
of Governors of the Federal Reserve System (or any successor or any other
banking authority to which a Lender is subject, including any board or
governmental or administrative agency of the United States or any other
jurisdiction to which a Lender is subject), for determining the maximum reserve
requirement (including without limitation any basic, supplemental, marginal or
emergency reserves) for (a) deposits of United States dollars or (b)
Eurocurrency liabilities as defined in Regulation D, in each case used to fund
a LIBOR Based Rate Loan subject to a LIBOR Based Rate. The Adjusted LIBOR Rate
shall be adjusted automatically on and as of the effective day of any change in
the Reserve Percentage.
REVOLVING CREDIT LOANS - Section 2.1(a).
REVOLVING CREDIT NOTES - Section 2.1(b).
SECURITIZATION TRANSACTION - Any transaction for which Agent has
received 30 days prior written notice, using, in part, leases or leased property
to secure notes issued by Borrower or a special purpose subsidiary of Borrower
and in connection with which, Borrower will be subject to no recourse or limited
recourse arising out of a servicing agreement.
STOCK PLEDGE AGREEMENTS - Section 4.1(m).
SUBORDINATED INDEBTEDNESS - All indebtedness which is subordinate in
all respects to the Obligations pursuant to a subordination agreement acceptable
to Agent and Co-Agent in their sole discretion.
SUBORDINATION AGREEMENT - Section 4.1(n).
SUBSIDIARY - Any corporation more than fifty percent (50%) of whose
voting stock is legally and beneficially owned by Borrower or owned by a
corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by Borrower.
SUPERMAJORITY LENDERS - At any time, Lenders holding Pro Rata
Percentages aggregating at least sixty-six and two-thirds (66-2/3%) percent of
the aggregate amount outstanding under the Credit Facility at such time;
provided, however, that if there is no outstanding amount under the Credit
Facility, the SuperMajority Lenders shall be determined by those Lenders holding
sixty-six and two-thirds (66-2/3%) percent of the Maximum Credit Limit.
TANGIBLE NET WORTH - Borrower's Net Worth less assets which would be
classified as intangible on a balance sheet prepared in accordance with GAAP
including, without limitation, trademarks, goodwill, deferred closing costs,
loans to shareholders and Affiliates and "start-up" costs except Borrower may
include up to $300,000 worth of intangible assets representing certain
organizational costs and deferred taxes paid for by Borrower prior to September
30, 1996.
TERM LOAN - Section 2.1(a).
UNMATURED EVENT OF DEFAULT - An event or condition which, with the
passage of time, the giving of notice, or both, would become an Event of
Default.
UNUSED LINE FEE - Section 2.6(a).
1.2 ACCOUNTING PRINCIPLES: Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except as otherwise expressly provided in this Agreement.
SECTION 2. THE LOANS
2.1 CREDIT FACILITY - DESCRIPTION:
(a) (i) Subject to the terms and conditions of this Agreement, each
Lender, severally, hereby establishes for the benefit of Borrower, a credit
facility (collectively referred to as "Credit Facility") which shall include
Advances extended by Lenders to or for the benefit of Borrower from time to time
hereunder in the form of revolving credit loans ("Revolving Credit Loans") or
term loans ("Term Loans"). The aggregate outstanding principal amount of all
Loans, at any time, shall not exceed the Borrowing Base. Subject to such
limitation, the outstanding balance of all Revolving Credit Loans may fluctuate
from time to time, to be reduced by repayments made by Borrower and to be
increased by future Revolving Credit Loans which may be made by Lenders. If the
aggregate outstanding amount of all Loans at any time exceeds the Maximum Credit
Limit, Borrower shall immediately repay such excess in full. If the aggregate
outstanding amount of all Loans exceeds the Borrowing Base, Borrower shall
within ten (10) days of such occurrence, either (x) repay such excess in full
or (y) pledge additional Eligible Leases in accordance with the terms hereof.
The obligations of Borrower under the Credit Facility and this Agreement shall
at all times be absolute and unconditional.
(ii) Subject to the terms and conditions of this Agreement, and
provided that no Event of Default or Unmatured Event of Default has occurred
hereunder, Borrower shall have the option to have any Advance under the Credit
Facility initially be a Revolving Credit Loan or a Term Loan and Borrower may
at any time, in accordance with the terms hereof, convert a Revolving Credit
Loan to a Term Loan. In no event shall the initial principal amount of any Term
Loan be less than $2,000,000 or any Revolving Credit Loan be less than $500,000.
At no time shall Borrower have more than five (5) Term Loans outstanding.
(iii) Subject to the terms and conditions of this Agreement, each
Lender severally agrees to lend to Borrower an amount equal to such Lender's
respective percentage (as to each Lender, the percentage of the Credit Facility
set forth opposite its name on Schedule "A" attached hereto and made a part
hereof and referred to as its "Pro Rata Percentage") of the Advance requested
by Borrower. The aggregate outstanding Loans by each Lender shall not exceed
the respective amounts ("Pro Rata Shares") set forth opposite such Lender's name
on Schedule "A".
(b) At Closing, Borrower shall execute and deliver its promissory
note to each Lender for the total principal amount of such Lender's Pro Rata
Share (collectively as may be amended, modified or replaced from time to time,
the "Revolving Credit Notes"). The Revolving Credit Notes shall evidence
Borrower's absolute and unconditional obligation to repay such Lender(s) for all
Revolving Credit Loans made by such Lender(s) under the Credit Facility, with
interest as herein and therein provided. Each and every Revolving Credit Loan
under the Credit Facility shall be deemed evidenced by the Revolving Credit
Notes, which are deemed incorporated herein by reference and made a part hereof.
All Revolving Credit Notes shall be substantially in the form set forth in
Exhibit "2.1(b)" attached hereto and made a part hereof.
(c) (i) In the event Borrower requests any Advance to initially be
a Term Loan, or at any time a Revolving Credit Loan is converted to a Term Loan,
Borrower shall execute and deliver its promissory note to each Lender for the
total principal amount of such Lender's Pro Rata Percentage of such Term Loan
(collectively as may be amended, modified or replaced from time to time, the
"Term Notes"). The Term Notes shall evidence Borrower's absolute and
unconditional obligation to repay such Lender for the Term Loan made by such
Lender under the Credit Facility, with interest as herein and therein provided.
Each and every Term Loan under the Credit Facility shall be evidenced by
separate Term Notes, which shall be deemed incorporated herein by reference and
made a part hereof. All Term Notes shall be substantially in the form set forth
in Exhibit "2.1(c)" attached hereto and made a part hereof.
(d) The term ("Initial Term") of the Credit Facility shall expire on
March 31, 1998. The Credit Facility may, nonetheless, be renewed annually in
Lenders' sole discretion, for additional twelve (12) month periods. Borrower's
request for such renewal must be made at least 60 days prior to the expiration
of the then Current Term. After the Maturity Date, no further Advances shall
be available from Lenders.
(e) Borrower shall deliver, at least monthly on the first Business
Day of each month, and with each borrowing request, unless Agent requests more
frequent delivery, a Borrowing Base Certificate in the form of Exhibit 2.1(e)
attached hereto and made a part hereof, executed by an Authorized Officer,
evidencing the availability under the Borrowing Base and compliance with the
respective sublimits.
2.2 ADVANCES, CONVERSIONS AND PAYMENTS:
(a) Except to the extent otherwise set forth in this Agreement, all
payments of principal and of interest on the Credit Facility, the Unused Line
Fee, the Facility Fee, the Administration Fee, the Expenses, and all other
charges and any other Obligations of Borrower hereunder, shall be made to Agent
at its main Philadelphia banking office CoreStates Bank, N.A., 1339 Chestnut
Street, Philadelphia, Pennsylvania, in United States dollars, in immediately
available funds. Agent, on behalf of all Lenders, shall have the unconditional
right and discretion to make an Advance under the Credit Facility in the form
of a Revolving Credit Loan (whether or not availability exists under the
Borrowing Base) to pay, and/or to charge Borrower's operating account with any
such respective institution for, all of Borrower's Obligations as they become
due from time to time under this Agreement including, without limitation,
interest, principal, fees and reimbursement of Expenses.
(b) (i) Advances which may be made by Lenders from time to time
under the Credit Facility shall be made available by crediting such proceeds to
Borrower's operating account with Agent.
(ii) All Advances requested by Borrower and all requests by
Borrower to convert Revolving Credit Loans to Term Loans must be requested by
11:00 A.M. Eastern time, three (3) Business Days prior to the date of such
requested Advance or conversion. All requests or confirmation of requests for
an Advance or conversion are to be in writing and may be sent by telecopy or
facsimile transmission provided that Agent shall have the right to require that
receipt of such request not be effective unless confirmed via telephone with
Agent.
(iii) A. Upon receiving a request for an Advance or conversion
in accordance with subparagraph (ii) above, as soon as reasonably practical
thereafter, Agent shall notify all Lenders of the request. Each Lender shall
advance its applicable Pro Rata Percentage of the requested Advance to Agent by
remitting federal funds, immediately available, to Agent pursuant to Agent's
instructions prior to 11:00 A.M. Eastern Time on the scheduled date of the
Advance. Subject to satisfaction of the terms and conditions hereof, Agent
shall make the requested Advance available to Borrower by crediting such amount
to Borrower's operating account with Agent as soon as is reasonably practical
thereafter on the day the requested Advance is to be made. In lieu of the
foregoing, Agent may, in its discretion, fund the Pro Rata Percentage of such
Advance on behalf of any one or more Lenders (unconditionally and absolutely
obligating such affected Lender(s) to reimburse Agent in full without deduction
or setoffs for its portion of such Advance) with a settlement of the pro rata
percentages of such Advances of each Lender on the following Business Day under
such procedures as Agent may establish.
B. Neither Agent nor any other Lender shall be obligated,
for any reason whatsoever, to advance the share of any other Lender. If such
corresponding amount is not made available to Agent by such Lender on the date
the Advance is made and Agent elects (at its discretion, without any obligation
to do so) to make such Lender's Pro Rata Percentage of the Advance, Agent shall
be entitled to recover such amount on demand from such Lender together with
interest at the per annum rate equal to the Federal Funds Rate in respect of the
first two days and at the Base Rate in respect of each day thereafter during the
period commencing 2:00 P.M. Eastern Time on the date of such Advance and ending
on (but excluding) the date Agent recovers such amount. Agent shall also be
entitled to recover any and all losses and damages (including, without
limitation, attorneys' fees and costs) from any Lender failing to so advance
upon demand of Agent. Agent may set off the obligations of a Lender under this
paragraph against any distributions or payments of the Obligations which Agent
would otherwise make available to such Lender.
C. To the extent and during the time period in which any
Lender fails to provide or delays providing its respective payment to Agent
pursuant to subsections A or B above (any such Lender being referred to, during
such period, as a "Defaulting Lender"), such Lender's percentage of all payments
of the Obligations (but not its Pro Rata Percentage of future Advances required
to be funded by such Lender) shall decrease to reflect the actual percentage
which its actual outstanding Loans bear to the total outstanding Loans of all
Lenders. In addition, notwithstanding any definition or other provision of this
Agreement to the contrary, during any period in which a Lender is a Defaulting
Lender, all calculations for voting purposes among the Lenders shall be made as
if the Defaulting Lender were not a Lender and not a party to this Agreement.
2.3 PRECONDITIONS TO ADVANCES AND ASSIGNMENT OF LEASES AND LEASED PROPERTY
(a) Before Lenders will make any Advance:
(i) Borrower will deliver to Agent the following (dated and
signed) in form and substance satisfactory to Agent and its counsel:
A. A borrowing request setting forth the requested date
of the Advance (but no sooner than three (3) Business Days after Agent receives
the request), the requested advance amount, and whether the request is for a
Term Loan or a Revolving Credit Loan, a Borrowing Base Certificate in the form
attached hereto as Exhibit "2.1(e)" setting forth the availability under the
Borrowing Base, any information required by this Agreement and such other
information as Agent shall reasonably request. A borrowing request may be made
orally, provided that Borrower confirms the request in writing within two (2)
days thereafter, provided further however, that Lenders need not make any
Advances until Agent receives actual written confirmation and a Borrowing Base
Certificate,
B. Such financial information concerning any of the
Leases, Borrower or any Lessee as Agent may reasonably request, and
C. Such other instruments, agreements and documents as
Agent reasonably requests to carry out the intent of the parties to this
Agreement.
(ii) No Event of Default or Unmatured Event of Default shall have
occurred hereunder.
(b) In order to increase the Borrowing Base, Borrower shall deliver
to Agent for the benefit of Lenders the following items:
(i) A description of the collateral package, which shall
include, identification of the Lessee, a description of the Leased Property, the
net cost of the Leased Property, the net remaining principal balance under the
Lease(s), and the terms of and rentals owed under each Lease, and such other
information which Agent or Lenders shall reasonably request,
(ii) An Assignment Agreement signed by Borrower assigning
Borrower's right, title and interest in and to the Leased Property and Leases
to Agent for the benefit of Lenders, in the form attached hereto as Exhibit
"2.3(b)(ii)" ("Assignment Agreement"),
(iii) Invoices showing the true cost of the Leased Property net
of any servicing or maintenance charges, brokers' fees or similar types of "soft
costs",
(iv) If requested by Agent, additional Uniform Commercial Code
("UCC") financing statements covering, INTER ALIA, the Leased Property and the
Leases listing Agent for the benefit of Lenders, as secured party and Borrower
as debtor, to be filed in locations reasonably required by Agent,
(v) Copies of all UCC-1 financing statements filed by Borrower
against Lessee(s) and any acknowledgment copies or recording information
Borrower has received back from the recording offices, provided, however, that
Borrower shall not be required to furnish evidence of the filing of UCC-1
financing statements covering Leased Property leased pursuant to Lease(s) having
an outstanding Lease Receivable value of under $16,000.
(vi) The sole original of each Lease along with all schedules
duly assigned to Agent for the benefit of Lenders,
(vii) For each item of Leased Property with a Lease Receivable
in excess of $20,000, evidence that such item of Leased Property is insured
against such risks, in such amounts, with such insurance, and on such terms and
conditions as shall be satisfactory to Lenders ("Insurance Coverage"),
(viii) A certificate of acceptance or other document evidencing,
or other evidence of oral confirmation, that the Lessee has received and
accepted the Leased Property,
(ix) Where the initial cost of the Leased Property is in excess
of $100,000 and such Leased Property is to be affixed to real estate in such a
manner as, under applicable law, to become a fixture, a landlord or mortgagee
waiver from all persons having an interest in the real estate on which the
Leased Property will be located, and
(x) An undated notice signed by the Borrower directing each
Lessee to pay all sums due or to become due under each Lease directly to Agent
for the benefit of Lenders ("Lessee Notice") to be used only following the
occurrence of an Event of Default. Agent will hold the Lessee Notices in escrow
and will not release them, unless and until a Default shall have occurred.
2.4 CREDIT FACILITY INTEREST:
(a) REVOLVING CREDIT LOANS: The unpaid principal balance of all or
a portion of the Revolving Credit Loans shall bear interest at the LIBOR Based
Revolving Loan Rate.
(b) TERM LOANS: The unpaid principal balance of all or a portion of
the Term Loans shall bear interest at the LIBOR Based Term Loan Rate. In
addition Borrower may request that a Term Loan be converted to a fixed rate loan
at a rate quoted at the time of request by Agent and Co-Agent and acceptable to
Lenders.
(c) (i) LIBOR BASED RATE LOANS: LIBOR Based Rate Loans shall be
selected for a period of either one (1), two (2), or three (3) months' duration,
as Borrower may elect, during which a LIBOR Based Rate is applicable ("LIBOR
Interest Period"); provided, however, that (a) if the LIBOR Interest Period
would otherwise end on a day which shall not be a Good Business Day, such LIBOR
Interest Period shall be extended to the next succeeding Good Business Day,
unless such Good Business Day falls in another calendar month, in which case
such LIBOR Interest Period shall end on the next preceding Good Business Day
subject to clause (c) below; (b) interest shall accrue from and including the
first day of each LIBOR Interest Period to, but excluding, the day on which any
LIBOR Interest Period expires; and (c) with respect to any LIBOR Interest Period
which begins on the last Good Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such LIBOR Interest Period), the LIBOR Interest Period shall end on the last
Good Business Day of a calendar month. All accrued and unpaid interest on a
LIBOR Based Rate Loan must be paid in full on the day the applicable LIBOR
Interest Period expires. No LIBOR Interest Period may end after the Maturity
Date. Subject to all of the terms and conditions applicable to a request that
a new Advance be a LIBOR Based Rate Loan, Borrower may extend LIBOR Based Rate
Loans as of the last day of the applicable LIBOR Interest Period to a new LIBOR
Based Rate Loan. If Borrower does not notify Agent of its desire to extend a
LIBOR Based Rate Loan or repay such Advance prior to the expiration of the
applicable LIBOR Interest Period, such Advance shall automatically be extended
as a LIBOR Based Rate Loan with the same LIBOR Interest Period as the Advance
had prior to such extension (unless such LIBOR Interest Period would extend
beyond the Maturity Date, in which case, the LIBOR Interest period shall be a
period which will not extend beyond the Maturity Date).
(ii) The Adjusted LIBOR Rate may be automatically adjusted by
Agent or Co-Agent on a prospective basis to take into account the additional or
increased cost of maintaining any necessary reserves for Eurodollar deposits or
increased costs due to changes in applicable law or regulation or the
interpretation thereof occurring subsequent to the commencement of the then
applicable LIBOR Interest Period, including but not limited to changes in tax
laws and changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), excluding any such changes
that have resulted in a payment pursuant to Section 2.9 hereof, that increase
the cost to Lenders of funding the LIBOR Based Rate Loan. Agent or Co-Agent,
as the case may be, shall promptly give the Borrower and each Lender notice of
such a determination and adjustment, which determination shall be conclusive,
absent manifest error, as to the correctness of the fact and the amount of such
adjustment. Agent or Co-Agent, as the case may be, shall furnish to Borrower
a statement setting forth the basis for adjusting such LIBOR Based Rate and the
method for determining the amount of such adjustment.
(iii) In the event that Agent shall have reasonably determined
that Eurodollar deposits equal to the amount of the principal of the requested
LIBOR Based Rate Loan and for the LIBOR Interest Period specified are
unavailable, impractical or unlawful, or a LIBOR Based Rate will not adequately
and fairly reflect the cost of making or maintaining the principal amount of the
requested LIBOR Based Rate Loan specified by Borrower during the LIBOR Interest
Period specified, or that by reason of circumstances affecting Eurodollar
markets, adequate and reasonable means do not exist for ascertaining the rate
based on the Adjusted LIBOR Rate applicable to the specified LIBOR Interest
Period, Agent shall promptly give notice of such determination to the Borrower
that rates based on the Adjusted LIBOR Rate are not available. A determination
by Agent hereunder shall be prima facie evidence of the correctness of the fact
and amount of such additional costs or unavailability. Upon such a
determination, (i) the right of Borrower to select, convert to, or maintain a
LIBOR Based Rate Loan at the rate based on the Adjusted LIBOR Rate shall be
suspended until Agent shall have notified the Borrower that such conditions
shall have ceased to exist, and (ii) the LIBOR Based Rate Loans shall accrue
interest at the Base Rate.
(iv) In the event that, as a result of any changes in applicable
law or regulation or the interpretation thereof, it becomes unlawful for a
Lender to maintain Eurodollar liabilities sufficient to fund any LIBOR Based
Rate Loan subject to the LIBOR Based Rate, then such Lender shall immediately
notify Agent who shall immediately notify the other Lenders and Borrower
thereof, and such Lender's obligation to make, convert to, or maintain a LIBOR
Based Rate Loan at a LIBOR Based Rate shall be suspended until such time as such
Lender may again cause the LIBOR Base Rate to be applicable to its share of any
LIBOR Based Rate Loans and such Lender's share of the Loans subject to the LIBOR
Based Rate shall accrue interest at the Base Rate. If it becomes unlawful for
a Lender to maintain a LIBOR Based Rate Loan, such Lender may require that
Borrower immediately prepay such Lender's LIBOR Based Rate Loans or convert such
Loans to Base Rate Loans. Promptly after becoming aware that it is no longer
unlawful for such Lender to maintain such Eurodollar liabilities, such Lender
shall notify Agent who will notify Borrower thereof and such suspension shall
cease to exist. In the event it becomes unlawful for a Lender to maintain
Eurodollar liabilities, Borrower may seek to have such Lender replaced with a
lender for whom maintenance of Eurodollar liabilities is not unlawful so long
as such replacement lender is satisfactory to Agent and the SuperMajority
Lenders (without giving effect to the potentially replaced Lender), in their
sole and absolute discretion.
(v) In the event Borrower prepays (voluntarily or involuntarily)
or converts a LIBOR Based Rate Loan prior to the last day of the applicable
Interest Period, Borrower shall also pay to Agent for the account of Lenders,
on demand, the additional amount, as specified by Agent in a certificate setting
forth the basis of such computation, equal to the amount of any reasonable fees,
costs, expenses or other charges, PLUS the present value of an amount which is
the difference (if a positive number) between (y) the aggregate interest which
would have been payable to the last day of such Interest Period on such prepaid
amount, and (z) the aggregate interest the Lenders could expect to earn on such
prepaid amount if such amount were invested for the period from the date of such
prepayment to the last day of such Interest Period in United States Treasury
obligations maturing on or closest to the last day of such Interest Period.
Such certificate shall be conclusive except for manifest error.
2.5 ADDITIONAL INTEREST PROVISIONS.
(a) CALCULATION OF INTEREST: Interest on the Loans, regardless of
the applicable interest rate, shall be based on a three hundred sixty (360) day
year and charged for the actual number of days elapsed.
(b) DEFAULT RATE: After the occurrence and during the continuance
of an Event of Default hereunder and following notice from Agent to Borrower of
the Lenders' intention to apply the Default Rate to the Loans, the per annum
effective rate of interest on all Loans outstanding under the Credit Facility
shall be increased to a per annum rate equal to two (2%) percentage points in
excess of the applicable interest rate ("Default Rate").
(c) CONTINUATION OF INTEREST CHARGES: All contractual rates of
interest chargeable on outstanding Loans, regardless of the then applicable
interest rate, shall continue to accrue and be paid even after default,
maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind
or the happening of any event or occurrence similar or dissimilar.
(d) APPLICABLE INTEREST LIMITATIONS: In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest hereunder and
charged or collected pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall,
in a final determination, deem applicable hereto. In the event that such court
determines Lenders have charged or received interest hereunder in excess of the
highest applicable rate, Agent, on behalf of Lenders, shall in its sole
discretion, apply and set off such excess interest received by Lenders against
other Obligations due or to become due and such rate shall automatically be
reduced to the maximum rate permitted by such law.
(e) LIMITATION ON LIBOR BASED RATE LOANS: Upon the occurrence of an
Event of Default, and following written notice from Agent to Borrower, Agent may
in its sole discretion, or upon the instructions of Supermajority Lenders Agent
shall, eliminate the availability of LIBOR Based Rate Loans.
2.6 FEES:
(a) Unused Line Fee: So long as the Credit Facility is outstanding
and has not been terminated, Borrower shall unconditionally pay to Agent, for
the benefit of Lenders in accordance with their respective Pro Rata Percentages,
a non-refundable fee ("Unused Line Fee") equal to three-eights of one percent
(3/8%) per annum of the average daily unused portion of the Credit Facility
(which shall be calculated as the Maximum Credit Limit minus the average daily
outstanding balance of all Loans during the quarter for which such calculation
is made). The Unused Line Fee shall be computed and paid on a quarterly basis,
in arrears, on the first day of each January, April, July and October for the
previous quarter for which such computation is made by Agent, beginning on the
first day of January, 1997.
(b) Facility Fee: As of the Closing, Agent and Co-Agent shall have
fully earned, and Borrower shall have paid to Agent, a facility fee ("Facility
Fee") in an amount equal to one-quarter percent (1/4%) of Twenty Million Dollars
($20,000,000). In the event that Lenders and Agent, in their sole discretion
(after a request by Borrower), agree from time to time to increase the Maximum
Credit Limit, Borrower shall at the time of any such increases (as a condition
thereof), pay to Agent, for the ratable benefit of Agent and Co-Agent an
additional facility fee ("Additional Facility Fee(s)") in an amount equal to
one-quarter of one percent (1/4%) of the applicable increase. Notwithstanding
the increase the Maximum Credit Limit, such decisions being left to the sole
and absolute discretion of Agent and Co-Agent.
(c) ADMINISTRATION FEE: So long as the Credit Facility is
outstanding and has not been terminated, Borrower shall unconditionally pay to
Agent, for Agent's account, a non-refundable fee ("Administration Fee") equal
to three eighths of one percent (3/8%) per annum of the average daily
outstanding principal balance of all Loans during the quarter for which such
calculation is made). The Administration Fee shall be computed and paid on a
quarterly basis, in arrears, on the first day of each January, April, July and
October for the previous quarter for which such computation is made by Agent,
beginning on the first day of January, 1997.
2.7 PREPAYMENTS:
(a) (i) BASE RATE LOANS: Base Rate Loans may be prepaid at any time
and from time to time, in whole or in part, without premium or penalty. All
partial prepayments shall be applied first to accrued and unpaid interest, fees
and Expenses related to such prepaid Loan and then to the outstanding principal
balance of the Base Rate Loan so prepaid.
(ii) LIBOR BASED RATE LOANS: LIBOR Based Rate Loans may not be
prepaid on any date other than the last day of the selected Interest Period
unless Borrower gives Agent written notice of such intention prior to 1:00 p.m.
on a Business Day which is no less than two (2) Business Days prior to the date
it intends to make such prepayment (unless such prepayment must be immediate
because of the illegality of LIBOR Based Rate Loans as set forth in Section
2.4(c)(iv) hereof, in which case Borrower shall not be required to provide such
notice) and pays a prepayment fee in accordance with Section 2.4(c)(v) above.
All such prepayments must be of the full amount of the applicable LIBOR Based
Rate Loan plus all accrued but unpaid interest, fees and Expenses related to
such prepaid Loan. Borrower agrees that this fee is an estimate of Lender's
damages and not a penalty.
(iii) FIXES RATE TERM LOANS: Term Loans bearing interest at a
fixed rate pursuant to Section 2.4(b) hereof may not be prepaid unless Borrower
pays a prepayment fee equal to (the amount of any applicable fees, costs,
Expenses or other charges, PLUS the present value of an amount which is the
difference (if a positive number) between (y) the aggregate interest which would
have been payable to the last day of such Term Loan on such prepaid amount, and
(z) the aggregate interest Lenders could expect to earn on such prepaid amount
if such amount were invested for the period from the date of such prepayment to
the maturity date of the Term Loan in United States Treasury obligations
maturing on or closest to such maturity date. Borrower agrees that this fee is
our estimate of Lenders' damages and not a penalty. All such prepayments shall
be applied to the prepaid Term Loan, first against all accrued and unpaid
interest, fees and Expenses related to such prepaid Term Loan and then to
installments of the outstanding principal balance of the Term Loan so prepaid
in the inverse order of Maturity.
(b) PROCEEDS OF COLLATERAL: Prior to the occurrence of an Event of
Default, proceeds from Collateral comprising a portion of the Borrowing Base to
the extent that the aggregate outstanding amount of all Loans exceeds the
Borrowing Base, shall promptly be paid to Agent for the benefit of Lenders and
be first applied to accrued but unpaid interest, fees, costs and Expenses
related to the Credit Facility, and then to the outstanding balance of the
Revolving Credit Loans, the Term Loan and then to Borrower's other Obligations
in such order as Agent may elect in its sole discretion. Following the
occurrence of an Event of Default, all proceeds from the Collateral shall be
immediately delivered to Agent and Agent may apply such proceeds to any of
Borrower's Obligations in such order as Agent may decide in its sole discretion.
(c) MANDATORY PREPAYMENT: In the event the aggregate outstanding
amount of all Loans at any time exceeds the Maximum Credit Limit, Borrower shall
immediately repay such excess in full and if the aggregate outstanding amount
of all Revolving Credit Loans exceeds the Borrowing Base, Borrower shall within
ten (10) days either (i) repay such excess in full or (ii) pledge additional
Eligible Leases in accordance with the terms hereof. Any such payments shall
first be applied to accrued but unpaid interest, fees, costs and Expenses
related to the Credit Facility, and then to the outstanding balance of the
Revolving Credit Loans, the Term Loan and then to Borrower's other Obligations
in such order as Agent may elect in its sole discretion.
2.8 USE OF PROCEEDS: The extensions of credit under and proceeds of the
Credit Facility shall be used to enable Borrower to purchase Leased Property and
finance Leases associated with such Leased Property.
2.9 CAPITAL ADEQUACY: If any present or future law, governmental rule,
regulation, policy, guideline, directive or similar requirement (whether or not
having the force of law) imposes, modifies, or deems applicable any capital
adequacy, capital maintenance or similar requirement which affects the manner
in which Commercial banks generally allocate capital resources to their
commitments (including any commitments hereunder), and as a result thereof, in
the opinion of a Lender, the rate of return on such Lender's capital with regard
to the Loans is reduced to a level below that which such Lender could have
achieved but for such circumstances, then in such case and upon notice from
Agent and/or such Lender to Borrower, from time to time, Borrower shall pay such
Lender such additional amount or amounts as shall compensate such Lender for
such reduction in its rate of return. Such notice shall contain the statement
of such Lender with regard to any such amount or amounts which shall, in the
absence of manifest error, be binding upon Borrower. In determining such
amount, such Lender may use any reasonable method of averaging and attribution
that it deems applicable.
SECTION 3. COLLATERAL
3.1 DESCRIPTION: As security for the payment of the Obligations, and
satisfaction by Borrower of all covenants and undertakings contained in this
Agreement and the other Loan Documents, Borrower hereby grants to Agent, for the
benefit of Lenders, a continuing first lien on and security interest in, upon
and to the Collateral.
3.2 LIEN DOCUMENTS: At Closing and thereafter as Agent deems necessary,
Borrower shall execute and deliver to Agent, or have executed and delivered (all
in form and substance reasonably satisfactory to Agent):
(a) FINANCING STATEMENTS - Financing statements pursuant to the UCC,
which Agent, on behalf of Lenders, may file in any jurisdiction where any
Collateral is or may be located and where Borrower maintains its chief executive
office; and
(b) OTHER AGREEMENTS - Any other agreements, documents, instruments
and writings, including, without limitation, security agreements and Assignment
Agreements, reasonably required by Agent to evidence, perfect or protect Agent's
and/or Lenders' liens and security interest in the Collateral or as Agent may
reasonably request from time to time.
3.3 OTHER ACTIONS: In addition to the foregoing, Borrower shall do
anything further that may be lawfully and reasonably required by Agent to secure
Lenders and effectuate the intentions and objects of this Agreement, including,
but not limited to, the execution and delivery of lockbox agreements,
continuation statements, amendments to financing statements, security
agreements, contracts and any other documents required hereunder. Borrower
shall also immediately deliver (with execution by Borrower of all necessary
documents or forms to reflect Agent's Lien for the benefit of Lenders thereon)
to Agent as bailee for Lenders, all items for which Agent and/or Lenders must
or may receive possession to obtain a perfected security interest, including
without limitation, all Leases, notes, certificates and documents of title,
chattel paper, warehouse receipts, instruments, and any other similar
instruments constituting Collateral.
3.4 SEARCHES: Agent shall, prior to or at Closing, and thereafter as
Agent may determine from time to time, at Borrower's sole expense, obtain the
following searches (the results of which are to be consistent with the
warranties made by Borrower in this Agreement):
(a) UCC SEARCHES: UCC searches with the Secretary of State and local
filing office of each state where Borrower maintains its executive office, a
place of business, or assets;
(b) JUDGMENTS, ETC.: Judgment, federal tax lien and corporate tax
lien searches, in all applicable filing offices of each state searched under
subparagraph (a) above.
Borrower shall, prior to or at Closing and at its expense, obtain and
deliver to Agent good standing certificates showing Borrower to be in good
standing in its state of incorporation and in each other state or foreign
country in which it is doing and presently intends to do business for which
Borrower's failure to be so qualified might have material adverse effect on
Borrower's business, financial condition, Property or Agent's and/or Lenders'
rights hereunder.
3.5 FILING SECURITY AGREEMENT: A carbon, photographic or other
reproduction or other copy of this Agreement or of a financing statement is
sufficient as and may be filed in lieu of a financing statement.
3.6 POWER OF ATTORNEY: Each of the officers of Agent is hereby
irrevocably made, constituted and appointed (such appointment being coupled with
an interest) the true and lawful attorney for Borrower (without requiring any
of them to act as such) with full power of substitution to do the following:
(1) endorse the name of Borrower upon any and all checks, drafts, money orders
and other instruments for the payment of monies that are payable to Borrower and
constitute collections on the Collateral; (2) execute in the name of Borrower
any financing statements, schedules, assignments, instruments, documents and
statements that Borrower is obligated to give Agent hereunder or is necessary
to perfect Agent's and/or Lenders' security interest or Lien in the Collateral,
including without limitation, execute in its own name or in the name of
Borrower, all documentation necessary to have Agent's Lien for the benefit of
Lenders noted on all vehicle titles, to prepare and sign any and all
applications for vehicle titles relating to Leased Property and any registration
documentation with respect to such Leased Property; (3) to verify validity,
amount or any other matter relating to the Collateral by mail, telephone,
telecopy or otherwise; and (4) upon the occurrence of an Event of Default, do
such other and further acts and deeds in the name of Borrower that Agent may
reasonably deem necessary or desirable to enforce any Account or perfect its
liens on, or to protect its interest in, any other Collateral.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement is subject to the following conditions
precedent (all documents to be in form and substance satisfactory to Agent, Co-
Agent and their counsel):
4.1 RESOLUTIONS, OPINIONS, AND OTHER DOCUMENTS: Borrower shall have
delivered to Agent the following:
(a) this Agreement and the Revolving Credit Notes all properly
executed;
(b) each document and agreement required to be executed under any
provision of this Agreement or any related agreement;
(c) certified copies of (i) resolutions of Borrower's board of
directors authorizing the execution of this Agreement, the Revolving Credit
Notes to be issued hereunder and each document, instrument and agreement
required to be delivered by any Section hereof and resolutions of each
Guarantor's board of directors authorizing the execution and delivery of the
Guarantee and (ii) Borrower's and each Guarantor's Articles of Incorporation and
By-laws;
(d) an incumbency certificate identifying all Authorized Officers of
Borrower and each signatory of the Guarantee on behalf of each Guarantor
authorizing the execution and delivery of the Guarantee, with specimen
signatures;
(e) a written opinion of Borrower's and Guarantors' independent
counsel addressed to Agent for the benefit of all Lenders;
(f) certification by Borrower's chief financial officer that there
has not occurred any material adverse change in the operations and condition
(financial or otherwise) of Borrower since June 30, 1996;
(g) payment by Borrower of all Expenses associated with the Credit
Facility incurred to the Closing Date and the Facility Fee;
(h) Uniform Commercial Code, judgment, federal and state tax lien
searches against Borrower, at Borrower's expense, showing that the Collateral
is not subject to any Liens, together with Good Standing and Corporate Tax Lien
Search Certificates showing no tax Liens on Borrower's Property and showing
Borrower to be in good standing in each jurisdiction where the failure to so
qualify might have a material adverse affect on Borrower's business, financial
condition, Property or Agent's and/or Lenders' rights hereunder;
(j) An initial borrowing base certificate dated the Closing Date
evidencing Borrower's minimum borrowing availability under the Borrowing Base
as of the Closing Date;
(k) UCC-1 Financing Statements naming Borrower as debtor and Agent
as secured party, to be filed in all locations satisfactory to Agent;
(l) A Guaranty Agreement executed by each of the Guarantors
("Guaranty");
(m) Stock Pledge Agreements for the shares of Borrower and Resource
Leasing, Inc. executed by Resource Leasing, Inc. and Resource America, Inc.
respectively (collectively "Stock Pledge Agreements); and
(n) A subordination agreement ("Subordination Agreement") among
Resource Leasing, Inc., Agent and Borrower whereby Resource Leasing, Inc. agrees
to subordinate all indebtedness owing from Borrower to Resource Leasing, Inc.,
on terms and conditions satisfactory to Agent.
4.2 ABSENCE OF CERTAIN EVENTS: At the Closing Date, no Event of Default
or Unmatured Event of Default hereunder shall have occurred and be continuing.
4.3 WARRANTIES AND REPRESENTATIONS AT CLOSING: The warranties and
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as though made on and as of that date. Borrower shall not
have taken any action or permitted any condition to exist which would have been
prohibited by any Section hereof.
4.4 COMPLIANCE WITH THIS AGREEMENT: Borrower shall have performed and
complied with all agreements, covenants and conditions contained herein
including, without limitation, the provisions of Sections 6 and 7 hereof, which
are required to be performed or complied with by Borrower before or at the
Closing Date.
4.5 OFFICERS' CERTIFICATE: Agent shall have received a certificate dated
the Closing Date and signed by an Authorized Officer of Borrower certifying that
all of the conditions spec-ified in this Section have been fulfilled.
4.6 CLOSING: Subject to the conditions of this Section 4, the Credit
Facility shall be made available on the date ("Closing Date") this Agreement is
executed and all of the conditions contained in Section 4.1 hereof are completed
(the "Closing").
4.7 NON-WAIVER OF RIGHTS: By completing the Closing here-under, or by
making advances hereunder, Agent and Lenders do not thereby waive a breach of
any warranty, representation or covenant made by Borrower hereunder or any
agreement, document, or instrument delivered to Agent or otherwise referred to
herein, including without limitation, the Existing Loan Documents, and any
claims and rights of Agent and/or Lenders resulting from any breach or
misrepresentation by Borrower are specifically reserved by Agent for the benefit
of Lenders.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce Lenders to complete the Closing and make the initial Advances
under the Credit Facility to Borrower, Borrower warrants and represents to Agent
and Lenders that:
5.1 CORPORATE ORGANIZATION AND VALIDITY:
(a) Borrower is a corporation duly organized and validly existing
under the laws of its state of incorporation, is duly qualified, is validly
existing and in good standing and has lawful power and authority to engage in
the business it conducts in each state and other jurisdiction where the nature
and extent of its business requires qualification, except where the failure to
so qualify would not have a material adverse effect on Borrower's business,
financial condition, Property or prospects. A list of all states and other
jurisdictions where Borrower is qualified to do business is attached hereto as
Exhibit "5.1" and made a part hereof.
(b) The making and performance of this Agreement and related
agreements, and each document required by any Section hereof will not violate
any law, government rule or regulation, or the charter, minutes or bylaw
provisions of Borrower or violate or result in a default (immediately or with
the passage of time) under any contract, agreement or instrument to which
Borrower is a party, or by which it is bound. Borrower is not in violation of,
nor has knowingly caused any Person to violate, any term of any agreement or
instrument to which it or such Person is a party or by which it may be bound or
of its charter, minutes or bylaws which violation could have a material adverse
effect on Borrower's business, financial condition, Property or prospects.
(c) Borrower has all requisite corporate power and authority to enter
into and perform this Agreement and to incur the obligations herein provided
for, and has taken all proper and necessary corporate action to authorize the
execution, delivery and performance of this Agreement, and the documents and
related agreements required hereby.
(d) This Agreement, the Revolving Credit Notes to be issued
hereunder, and all related agreements and documents required to be executed and
delivered by Borrower hereunder, when delivered, will be valid and binding upon
Borrower and enforceable in accordance with their respective terms.
5.2 PLACES OF BUSINESS: The only places of business of Borrower, and the
places where it keeps and intends to keep copies of the Leases and its Books and
Records concerning the Collateral, are at the addresses listed in Exhibit "5.2"
attached hereto and made a part hereof. The name of the record owner of each
property is also set forth on Exhibit "5.2".
5.3 PENDING LITIGATION: There are no judgments or judicial or
administrative orders, proceedings or investigations (civil or criminal)
pending, or to the knowledge of Borrower, threatened, against Borrower in any
court or before any governmental author-ity or arbitration board or tribunal
except as shown in Exhibit "5.3" attached hereto and made a part hereof, none
of which may materially and adversely affect the business, financial condition,
Property or prospects of Borrower, or the ability of Borrower to perform under
this Agreement. Borrower is not in default with respect to any order of any
court, governmental authority, regulatory agency or arbitration board or
tribunal, the effect of which would materially and adversely affect the
business, financial condition, Property or prospects of Borrower. No
shareholder or executive officer of Borrower has been indicted or convicted in
connection with or is engaging in any criminal conduct, or is currently subject
to any lawsuit or proceeding or under investigation in connection with any anti-
racketeering or other conduct or activity.
5.4 TITLE TO COLLATERAL: Borrower has good and marketable title in fee
simple (or its equivalent under applicable law) to all the Collateral it
respectively purports to own, free from Liens, except those of Agent for the
benefit of Lenders and free from the claims of any other Person other than the
leasehold interests of the Lessees.
5.5 GOVERNMENTAL CONSENT: Neither the nature of Borrower or of its
business or Property, nor any relationship between Borrower and any other
Person, nor any circumstance affecting Borrower in connection with the issuance
or delivery of the Revolving Credit Notes, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
governmental authority on the part of Borrower in connection with the execution
and delivery of this Agreement or the issuance or delivery of the Revolving
Credit Notes or other documents contemplated hereby.
5.6 TAXES: All tax returns required to be filed by Borrower in any
jurisdiction have in fact been filed, and all taxes, assessments, fees and other
governmental charges upon Borrower, or upon any of its Property, income or
franchises, which are shown to be due and payable on such returns have been
paid, except for those taxes being contested in good faith with due diligence
by appropriate proceedings for which appropriate reserves have been maintained
under GAAP.
5.7 FINANCIAL STATEMENTS: Borrower's annual consolidated audited balance
sheet as of September 30, 1996 and the related income statements and statements
of cash flows as of such dates, all accompanied by reports thereon from
Borrower's independent certified public accountants with respect to the annual
statements (complete copies of which have been delivered to Agent), have been
prepared in accordance with GAAP and present fairly, accurately and completely
the financial position of the Borrower as of such dates and the results of its
operations for such periods. The fiscal year for Borrower currently ends on
September 30. Borrower's federal tax identification number is 00-0000000.
5.8 FULL DISCLOSURE: Neither the financial statements referred to in
Section 5.7, nor this Agreement or related agreements and documents or any
written statement furnished by Borrower to Agent in connection with the
negotiation of the Credit Facility and contained in any financial statements or
documents relating to Borrower contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading.
5.9 SUBSIDIARIES: Borrower has no Subsidiaries or Affiliates, except as
listed on Exhibit "5.9" attached hereto and made a part hereof.
5.10 GUARANTEES:
Borrower does not own nor hold equity or long term debt investments
in, has any outstanding advances to, or serves as guarantor, surety or
accommodation maker for the obligations of, or has any outstanding borrowings
from, any Person except as described in Exhibit "5.10", attached hereto and a
made part hereof.
5.11 GOVERNMENT REGULATIONS, ETC.:
(a) The use of the proceeds of and Borrower's issuance of the
Revolving Credit Notes will not directly or indirectly violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as amended,
Regulations U, T, G and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II. Borrower does not own or intend to carry or
purchase any "margin stock" within the meaning of said Regulation U.
(b) Borrower has obtained all licenses, permits, franchises or other
governmental authorizations necessary for the ownership of its Property and for
the conduct of its business, where the failure to obtain would have a material
adverse effect on the business, financial condition, Property or prospects of
Borrower or Agent's and/or Lenders' rights with respect to the Collateral.
(c) Borrower is not in violation of, has not received written notice
that it is in violation of, or has knowingly caused any Person to violate, any
applicable statute, regulation or ordinance of the United States of America, or
of any state, city, town, municipality, county or of any other jurisdiction, or
of any agency, or department thereof, (including without limitation,
environmental laws and regulations), which may materially and adversely affect
its business, financial condition, Property or prospects or Agent's and/or
Lenders' rights with respect to the Collateral.
(d) Borrower is current with all reports and documents required to
be filed with any state or federal securities commission or similar agency and
is in full compliance in all material respects with all applicable rules and
regulations of such commissions.
5.12 NAMES:
(a) Within five (5) years prior to the Closing Date, Borrower has not
conducted business under or used any other name (whether corporate or assumed)
except for the names shown on Exhibit "5.12(a)", attached hereto and made a
part hereof. Borrower is the sole owner of all names listed on such Exhibit
"5.12(a)" and any and all business done and all invoices issued in such trade
names are Borrower's sales, leases, business and invoices. Each trade name of
Borrower represents a division or trading style of Borrower and not a separate
corporate subsidiary or affiliate or independent entity.
(b) All trademarks, patents or copyrights which Borrower uses, plans
to use or has a right to use are listed on Exhibit "5.12(b) attached hereto and
made a part hereof. Borrower is the sole owner of such Property except to the
extent any other Person has claims or rights in such Property, as such claims
and rights are described on such Exhibit "5.12(b)." To the best of Borrower's
knowledge, Borrower is not in violation of any rights of any other Person with
respect to such Property.
5.13 OTHER ASSOCIATIONS: Borrower is not engaged and has no interest in
any joint venture or partnership with any other Person except as described on
Exhibit "5.13" hereto and made a part hereof.
5.14 ENVIRONMENTAL MATTERS: Except as disclosed on Exhibit "5.14" attached
hereto and made a part hereof, Borrower has no knowledge:
(a) of the presence of any Hazardous Substances on any of the real
property where Borrower conducts operations or has its personal property, or
(b) of any on-site spills, releases, discharges, disposal or storage
of Hazardous Substances that have occurred or are presently occurring on any of
such real property or where any Collateral is located, or
(c) of any spills, releases, discharges or disposal of Hazardous
Substances that have occurred, are presently occurring on any other real
property as a result of the conduct, action or activities of Borrower.
As used herein, the term "Hazardous Substances" means any substances defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance or similar term, by any environmental statute, rule or
regulation of any governmental entity presently in effect and applicable to such
real property.
5.15 CAPITAL STOCK: The authorized and outstanding shares of capital stock
of Borrower is as set forth on Exhibit "5.15" attached hereto and made a part
hereof. All of the capital stock of Borrower has been duly and validly
authorized and issued and is fully paid and non-assessable and has been sold and
delivered to the holders thereof in compliance with, or under valid exemption
from, all Federal and state laws and the rules and regulations of all regulatory
bodies thereof governing the sale and delivery of securities. Except for the
rights and obligations set forth in Exhibit "5.15", there are no subscriptions,
warrants, options, calls, commitments, rights or agreements by which Borrower
or any of the shareholders of Borrower is bound relating to the issuance,
transfer, voting or redemption of shares of its capital stock or any pre-emptive
rights held by any Person with respect to the shares of capital stock of
Borrower. Except as set forth in Exhibit "5.15", Borrower has not issued any
securities convertible into or exchangeable for shares of its capital stock or
any options, warrants or other rights to acquire such shares or securities
convertible into or exchangeable for such shares.
5.16 SOLVENCY: Borrower is solvent, able to pay its debts as they become
due, and has capital sufficient to carry on its business and all business in
which it is about to engage, and now owns Property having a value both at fair
valuation and at present fair salable value greater than the amount required to
pay its debts. Borrower will not be rendered insolvent by the execution and
delivery of this Agreement or any of the other documents executed in connection
with this Agreement or by the transactions contemplated hereunder or thereunder.
5.17 LEASES AND LEASED PROPERTY: Each Lease reported to Agent and Lenders
as an Eligible Lease and the Leased Property associated therewith shall, at all
times when such Leases are included in the Borrowing Base calculation, be in
compliance with all of the following representations:
(a) Each Lease is in substantially the same form as that attached as
Exhibit 5.17 hereto or has been otherwise approved by Agent in its reasonable
discretion and is genuine, based on contracts that are enforceable in accordance
with its terms against the Lessee and the Leased Property named and referenced
therein, constitutes the entire agreement for the leasing of the Leased Property
thereby covered, has not been altered or amended, except as set forth in the
related schedules, and Borrower's Books and Records relating thereto are
accurate, complete and genuine;
(b) The sole original of each Lease has been delivered to Agent, and
all other counterparts of each Lease shall contain a legend stating that the
Lease has been assigned to CoreStates Bank, N.A., As Agent, pursuant to that
certain Loan and Security Agreement dated _______ __, 1996, or contain similar
language specifying that such counterpart is not an original for "chattel paper"
purposes under the UCC;
(c) Where the Lease consists of a Master Lease Agreement and specific
schedules which describe the terms of any specific items to be leased pursuant
to such schedule, the sole original schedule shall constitute the sole original
Lease, provided that the terms of the Master Lease Agreement and the schedule
make it clear that the sole original schedule is a separate lease for "Chattel
Paper" purposes under the UCC and that possession of such schedule constitutes
possession of "Chattel Paper" under the UCC;
(d) Except as otherwise consented to by Agent and Co-Agent in
writing, the aggregate amount of Leases with the same Lessee (or its Affiliates)
is not in excess of $250,000;
(e) The original amount and unpaid balance of each Lease shown on
Borrower's Books and Records and on any statement or schedule delivered to Agent
in connection therewith is the true and correct amount actually owed to
Borrower, no portion of which, except as specifically provided for in the Lease,
has been prepaid;
(f) The amount due under each Lease is not subject to, and the terms
of the Lease provide that the Lessee may not assert, any claim or reduction,
counterclaim, setoff, recoupment, or any other claim, allowance or adjustment
and no Lease has been re-negotiated, restructured or compromised except as
renewed in the ordinary course of business;
(g) All security agreements, title retention instruments and other
documents and instruments which are security for any Lease, and/or each Lease,
contain a correct and sufficient description of the Leased Property covered
thereby and all security interests granted therein to Borrower (either directly
or as assignee), if applicable, have been properly perfected and assigned to
Agent for the benefit of Lenders;
(h) Borrower has not and will not enter into any agreement with a
Lessee of any Leased Property which provides, directly or indirectly, for the
crediting of any obligation or liability of Borrower to such Lessee against
future rentals accruing under the Lease;
(i) Each item of Leased Property has been delivered to and, in all
instances, accepted by the Lessee and is in good condition, ordinary wear and
tear excepted, has not been returned, rejected, lost, stolen, destroyed or
damaged and has not been removed from service;
(j) Each Lease has been duly executed by Borrower and each Lessee,
is a valid, legal and binding obligation of Borrower, and such Lessee, and is
enforceable against Borrower and such Lessee in accordance with its terms.
Borrower is the sole owner of each of the Leases and has the authority to assign
all of its right, title and interest therein upon the terms herein set forth;
(k) Each of the Leases and all Leased Property which is the subject
matter thereof at the time of its assignment to Agent for the benefit of Lenders
and at all times thereafter, will be free and clear of any and all assignments,
options, rights, or other Liens whatsoever except Lenders' and/or Agent's and
residual sharing arrangements;
(l) Borrower has made its usual credit investigation of each Lessee
and has determined that the credit is satisfactory;
(m) All costs, fees, and expenses incurred in making and closing each
of the Leases has been paid and each Lease is and will be current at the time
of the assignment thereof to Lenders. No default exists or event exists which
with the giving of notice or the passage of time or both, will result in the
occurrence of a default of any obligation, as expressed in any Lease;
(n) All rentals, fees, costs, expenses and charges paid or payable
by the Lessee under any Lease, including without limitation, any brokerage and
other fees paid to Borrower do not violate any laws relating to the maximum
fees, costs, expenses or charges that can be charged in any state in which any
Leased Property is located or in which the corresponding Lessee is located, or
in which a transaction was consummated, or in any other state which may have
jurisdiction with respect to any such Leased Property, Lease or Lessee;
(o) Agent, for the benefit of Lenders, has a first perfected lien and
security interest in the Collateral (including without limitation each Lease and
the Leased Property) subject to no other Lien. Borrower has taken and in the
future, shall take all steps necessary to maintain Agent's first perfected lien
and security interest in the Collateral, including, if required, perfecting
Borrower's security interest (in the event the Lease is not a "true lease")
through filing financing statements, amendments thereto, or assignments and/or
continuations thereof and recording of the documentation necessary to perfect
Borrower's lien;
(p) For each Lease, with a Lease Receivable in excess of $16,000,
Borrower has either (i) listed Agent for the benefit of Lenders, as assignee on
the UCC-1 Financing Statement so filed, or (ii) after Borrower has received
acknowledgment copies of UCC-1s, deliver to Agent executed UCC-3 Financing
Statements naming Agent for the benefit of Lenders as assignee of Borrower's
security interest. Agent agrees not to file the UCC-3 Financing Statements
until such time as an Event of Default or Unmatured Event of Default occurs
under this Agreement, and Agent will return such UCC-3 Financing Statements to
Borrower if such Leases are ultimately sold or refinanced on a permanent basis
with another lender;
(q) Each Lease is valid and enforceable and presents the undisputed
obligation of the Lessee named therein and is not more than sixty-one (61) days
contractually past due;
(r) Each item of Leased Property leased pursuant to a Lease with a
Lease Receivable in excess of 20,000 has been insured in the ordinary course of
Borrower's or the corresponding Lessee's business;
(s) Borrower has not received notice of a bankruptcy, receivership,
reorganization or insolvency of any Lessee;
(t) No Lessee is a Subsidiary or Affiliate of Borrower, or is an
officer or employee of Borrower;
(u) Each Lease contains a provision whereby the Lessee agrees not to
assert any claim or reduction, counterclaim, setoff, recoupment or any other
claim, allowance or adjustment against any assignee of Borrower; and
(v) The Lessee is not otherwise in default under the corresponding
Lease.
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants that until all of Borrower's Obligations under or in
connection with this Agreement to Lenders and Agent are paid and satisfied in
full and the Revolving Credit has been terminated:
6.1 PAYMENT OF TAXES AND CLAIMS: Borrower shall pay, before they become
delinquent, all taxes, assessments and governmental charges or levies imposed
upon it or upon Borrower's Property, except for those taxes being contested in
good faith with due diligence by appropriate proceedings for which appropriate
reserves have been maintained pursuant to GAAP.
6.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE:
(a) PROPERTY INSURANCE - Borrower shall maintain or caused to be
maintained insurance on the Collateral against fire, flood, casualty and such
other hazards in such amounts, with such deductibles and with such insurers as
are customarily used by companies operating in the same industry as Borrower or
the corresponding Lessee. At or prior to Closing, Borrower shall furnish Agent
with copies of original insurance binders certified as true and correct and
being in full force and effect as of the Closing Date or such other evidence of
insurance as Agent may require. In the event Borrower fails to procure or cause
to be procured any such insurance or to timely pay or cause to be paid the
premium(s) on any such insurance, Agent (on behalf of Lenders) may do so for
Borrower, but Borrower shall continue to be liable for the same. The policies
of all such casualty insurance shall contain standard Lender's Loss Payable
Clauses issued in favor of Agent (on behalf of Lenders) under which all losses
thereunder shall be paid to Agent (on behalf of Lenders) as Agent's interest may
appear. Such policies shall expressly provide that the requisite insurance
cannot be altered or canceled without thirty (30) days prior written notice to
Agent and shall insure Lenders notwithstanding the act or neglect of Borrower.
Borrower hereby appoints Agent as Borrower's attorney-in-fact, exercisable at
Agent's option to endorse any check which may be payable to Borrower in order
to collect the proceeds of such insurance and any amount or amounts collected
by Agent pursuant to the provisions of this paragraph may be applied by Agent
to Borrower's Obligations. Borrower further covenants that all insurance
premiums owing under its current casualty policy have been paid. Borrower also
agrees to notify Agent, promptly, upon Borrower's receipt of a notice of
termination, cancellation, or non-renewal from its insurance company of any such
policy.
(b) PUBLIC AND PRODUCTS LIABILITY INSURANCE - Borrower shall
maintain, and shall deliver to Agent upon Agent's request evidence of, public
liability, products liability and business interruption insurance in such
amounts as is customary for companies in the same or similar businesses located
in the same or similar area.
(c) FINANCIAL RECORDS - Borrower shall keep current and accurate
books of records and accounts in which full and correct entries will be made of
all of its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP.
Borrower shall not change its respective fiscal year end date without the prior
written consent of Agent.
(d) CORPORATE EXISTENCE AND RIGHTS - Borrower shall do (or cause to
be done) all things necessary to preserve and keep in full force and effect its
existence, good standing, rights and franchises.
(e) COMPLIANCE WITH LAWS - Borrower shall be in compliance with any
and all laws, ordinances, governmental rules and regulations, and court or
administrative orders or decrees to which it is subject, whether federal, state
or local, (including without limitation environmental or environmental-related
laws, statutes, ordinances, rules, regulations and notices and all applicable
consumer sale and/or leasing laws and regulations), and shall obtain and
maintain any and all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its Property or to the conduct of
its businesses, which violation or failure to obtain may materially adversely
affect the business, Property, financial conditions or prospects of Borrower.
6.3 BUSINESS CONDUCTED: Borrower shall continue in the business presently
operated by it using its best efforts to maintain its customers and goodwill.
Borrower shall not engage, directly or indirectly, in any material respect in
any line of business substantially different from the businesses conducted by
it immediately prior to the Closing Date, unless such line of business is
reasonably related to such business so conducted prior to the Closing Date.
6.4 LITIGATION: Borrower shall give prompt notice to Agent of any
litigation claiming in excess of $100,000 from Borrower, or which may otherwise
have a material adverse effect on the business, financial condition, Property
or prospects of Borrower.
6.5 TAXES:
(a) Borrower shall pay all taxes (other than taxes based upon or
measured by any Lender's income or revenues), if any, in connection with the
Loans and/or the recording of any Lien Documents. The obligations of Borrower
under this section shall survive the payment of Borrower's Obligations under
this Agreement and the termination of this Agreement. Borrower shall cause to
be paid all taxes incurred in connection with any of the Leases or the
acquisition, sale or lease of any of the Leased Property.
6.6 BANK ACCOUNTS: Borrower shall maintain its major depository
account(s) with Agent and its major disbursement account(s) with Co-Agent.
6.7 WARRANTIES FOR FUTURE ADVANCES: Each request by Borrower for an
Advance under the Credit Facility in any form following the Closing Date shall
constitute an automatic representation and warranty by Borrower to the effect
that:
(a) There has been no material adverse change in Borrower's
operations or condition (financial or otherwise) since the date of delivery of
Borrower's most recent Financial Statements.
(b) No Event of Default which has not been cured or waived, or
Unmatured Event of Default, then exists;
(c) Each Advance is within and complies with the terms and conditions
of this Agreement including without limitation the notice provisions contained
in Section 2.3 hereof;
(d) No Lien, including, without limitation, any federal tax Lien, has
been imposed on Borrower which may, in any way, take priority over Agent's
and/or Lenders' security interests in or Liens on any Collateral; and
(e) Each representation and warranty set forth in Section 5 of this
Agreement is then true and correct in all material respects.
6.8 FINANCIAL COVENANTS: Borrower shall maintain and comply with the
following financial covenants as reflected on and computed from their Financial
Statements:
(a) ADJUSTED DEBT TO TANGIBLE NET WORTH RATIO: Borrower shall have
and maintain at all times an Adjusted Debt to Tangible Net Worth Ratio on a
consolidated basis, measured quarterly as of the last day of each fiscal quarter
during each fiscal year, of not more than 4.5 to 1.
(b) TANGIBLE NET WORTH: Borrower shall have and maintain a Tangible
Net Worth of not less than $5,000,000 as of December 31, 1996. As of the last
day of each fiscal quarter thereafter, Borrower shall have a Tangible Net Worth
of not less than the amount required hereby for the immediately preceding fiscal
quarter plus an amount equal to 75% of the Borrower's Net Income for the
immediately preceding fiscal quarter (for the purposes of such step-up, Net
Income shall never be less than zero). (c) FIXED CHARGE COVERAGE
RATIO: Borrower shall have and maintain as of the end of each fiscal quarter,
based on financial information for the twelve-month period ending as of the end
of such fiscal quarter, on a consolidated basis, a Fixed Charge Coverage Ratio
of not less than 1.15 to 1 on September 30, 1997 and at all times through
December 31, 1997 and 1.5 to 1 at all times thereafter.
6.9 CHANGE OF OWNERSHIP INTERESTS/MANAGEMENT: Guarantor and Xxxxxxx
Xxxxxxxxx shall at all times own 100% of the aggregate voting interests of all
classes of capital stock of Borrower entitled to vote generally and Xxxxxxx
Xxxxxxxxx at all times remain as President of Borrower and have a substantial
equity interest (including options) in Borrower.
6.10 FINANCIAL AND BUSINESS INFORMATION: Borrower shall deliver to Agent
(and Lenders if so indicated) the following:
(a) FINANCIAL STATEMENTS AND COLLATERAL REPORTS: such data, reports,
statements and information, financial or other-wise, as Agent may reasonably
request, including, without limita-tion:
(i) within one hundred twenty (120) days after the end of each
fiscal year of Borrower, deliver to Agent and each Lender, Financial Statements
of Borrower for such year including the balance sheet of Borrower as at the end
of such fiscal year and a statement of cash flows and income statement for such
fiscal year, all on a consolidated and consolidating basis, setting forth in the
consolidated statements in comparative form, the corresponding figures as at the
end of and for the previous fiscal year, all in reasonable detail, including all
supporting schedules, and audited and certified by independent public
accountants of recognized standing, selected by Borrower and satisfactory to the
Agent (Xxxxx Xxxxxxxx being deemed satisfactory to Agent), to have been prepared
in accordance with GAAP, and such independent public accountants shall also
provide an unqualified opinion that the Financial Statements present fairly the
Borrower's financial condition. Such independent accountants shall also provide
a statement certifying that nothing has come to their attention to cause them
to believe that calculations contained in the compliance certificate are
inaccurate.
(ii) within fifteen (15) days of the end of each calendar month,
deliver to Agent for the benefit of Lenders, Borrower's Lease receivables aging
report, covenant compliance certificate and such other reports as Agent
reasonably deems necessary, certified by Borrower's chief financial officer or
other officer acceptable to Agent as true and correct, all in form and substance
satisfactory to Agent;
(iii) within fifteen (15) days after the end of each month,
deliver to Agent and each Lender, Borrower's internally prepared monthly
consolidated and consolidating Financial Statements, including balance sheet,
income statement and statements of cash flows.
(b) NOTICE OF EVENT OF DEFAULT - promptly upon becoming aware of the
existence of any condition or event which constitutes a default or an Event of
Default or Unmatured Event of Default under this Agreement, a written notice
specifying the nature and period of existence thereof and what action Borrower
is taking (and proposes to take) with respect thereto;
(c) NOTICE OF CLAIMED DEFAULT - promptly upon receipt by Borrower,
notice of default, oral or written, given to Borrower by any creditor for
borrowed money in excess of $50,000;
(d) SECURITIES AND OTHER REPORTS - if Borrower or any Affiliate shall
be required to file reports with the Securities and Exchange Commission pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
promptly upon its becoming available, one copy of each financial statement,
report, notice or proxy statement sent by Borrower or such Affiliate to
stockholders generally, and, a copy of each regular or periodic report, and any
registration statement, or prospectus in respect thereof, filed by Borrower with
any securities exchange or with federal or state securities and exchange
commissions or any successor agency.
6.11 OFFICERS' CERTIFICATES: Along with the set of Financial Statements
delivered to Agent for the benefit of Lenders at the end of each fiscal quarter
and fiscal year pursuant to Section 6.9(a) hereof, deliver to Agent a
certificate (in the form of Exhibit "6.11" attached hereto and made a part
hereof) from the chief financial officer or other officer of Borrower acceptable
to Agent (and as to certificates accompanying the annual statements of Borrower,
also certified by Borrower's independent certified public accountant) setting
forth:
(a) COVENANT COMPLIANCE - the information (including detailed
calculations) required in order to establish whether Borrower is in compliance
with the requirements of Sections 6.8 as of the end of the period covered by the
financial statements then being furnished (and any exhibits appended thereto)
under Section 6.10; and
(b) EVENT OF DEFAULT - that the signer, in his capacity as an officer
of Borrower, has reviewed the relevant terms of this Agreement, and has made (or
caused to be made under his supervision) a review of the transactions and
conditions of Borrower from the beginning of the accounting period covered by
the Financial Statements being delivered therewith to the date of the
certificate, and that such review has not disclosed the existence during such
period of any condition or event which constitutes an Event of Default or
Unmatured Event of Default or if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Borrower
has taken or proposes to take with respect thereto.
6.12 INSPECTION: Borrower will permit any of Agent's officers or other
representatives to visit and inspect any of Borrower's locations or where any
Collateral is kept during regular business hours, to examine and audit all of
Borrower's books of account, records, reports and other papers, to make copies
and extracts therefrom and to discuss its affairs, finances and accounts with
its officers, employees and independent certified public accountants. Agent
will notify Lenders within a reasonable time of each scheduled field examination
and to the extent reasonably practicable, representatives of each Lender may
accompany Agent during each such field examination. Prior to the occurrence of
an Event of Default, up to two (2) such (and after the occurrence of an Event
of Default, all such) examinations shall be at Borrower's expense at the
standard rates charged by the Agent or an outside firm engaged to perform such
services, for such activities (plus the Agent's or such outside firm's out-
of-pocket expenses).
6.13 TAX RETURNS AND REPORTS: At Agent's request from time to time,
Borrower shall promptly furnish Agent with copies of the annual federal and
state income tax returns of Borrower.
6.14 MATERIAL ADVERSE DEVELOPMENTS: Borrower agrees that immediately upon
becoming aware of any development or other information which would reasonably
be expected to materially and adversely affect its businesses, financial
condition, Property, prospects or its ability to perform under this Agreement,
it shall give to Agent telephonic or telegraphic notice specifying the nature
of such development or information and such anticipated effect. In addition,
such verbal communication shall be confirmed by written notice thereof to Agent
on the next business day after such verbal notice is given.
6.15 PLACES OF BUSINESS: Borrower shall give thirty (30) days prior
written notice to Agent of any changes in the location of any of its respective
places of business, of the places where Books and Records are kept, or the
establishment of any new, or the discontinuance of any existing place of
business.
6.16 SALE OF COLLATERAL: Borrower shall xxxx its Books and Records to
indicate Agent's security interest in the Collateral for the benefit of Lenders,
including the Leases and Leased Property and, unless Agent consents otherwise
in writing, Borrower shall retain title at all times to the Leased Property;
provided however, that so long as no Event of Default or Unmatured Event of
Default has occurred, Borrower may, subject to the prepayment provisions set
forth herein, sell (i) Leases and Leased Property pursuant to Securitization
Transactions or other Nonrecourse Financing of Borrower. So long as no Event
of Default or Unmatured Event of Default has occurred, upon receipt of the
proceeds (if required) from the sale of such Leases and/or Leased Property,
Agent shall execute such documentation as is reasonably necessary to release its
security interest in such Leases and/or Leased Property.
SECTION 7. BORROWER'S NEGATIVE COVENANTS:
Borrower covenants that until all of Borrower's Obligations under or in
connection with this Agreement to Lenders are paid and satisfied in full and the
Credit Facility has been terminated, that:
7.1 MERGER, CONSOLIDATION, DISSOLUTION OR LIQUIDATION:
(a) Borrower shall not sell, lease, license, transfer or otherwise
dispose of more than 10% of Borrower's aggregate assets during any 12
consecutive month period except in the ordinary course or ordinary operation of
Borrower's business and in Securitization Transactions or other non-recourse
financing.
(b) Borrower shall not enter into any merger, consolidation,
reorganization or recapitalization or acquire all or substantially all of the
assets of any other Person or entity except for a merger, consolidation or
acquisition in which properties and assets of Borrower are transferred to or
combined with, as a single entity, any one Person, so long as (A) no Event of
Default or Unmatured Event of Default has occurred hereunder and that after
giving effect to such merger, consolidation or acquisition, no Event of Default
or Unmatured Event of Default shall have occurred, and (B) Borrower shall be the
surviving corporation.
7.2 LIENS AND ENCUMBRANCES: Borrower shall not: (i) execute a negative
pledge agreement with any Person covering any of the Collateral, or (ii) cause
or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the Collateral, whether now owned or
hereafter acquired, to be subject to a Lien;
7.3 NEGATIVE PLEDGE: Borrower shall not pledge, grant or permit any Lien
to exist on the common stock of its Subsidiaries nor on any Leases or Leased
Property (except those liens and assignments granted to Agent for the benefit
of Lenders).
7.4 TRANSACTIONS WITH AFFILIATES OR SUBSIDIARIES:
(a) Borrower shall not enter into any transaction with any Subsidiary
or other Affiliate including, without limitation, the purchase, sale, lease or
exchange of Property, or the loaning or giving of funds to any Affiliate or any
Subsidiary (other than a sale to a special purpose Subsidiary in connection with
a Securitization Transaction or other non-recourse sale), unless (i) such
Subsidiary or Affiliate is engaged in a business substantially related to the
business conducted by Borrower and the transaction is in the ordinary course of
and pursuant to the reasonable requirements of Borrower's business and upon
terms substantially the same and no less favorable to Borrower as it would
obtain in a comparable arm's-length transactions with any Person not an
Affiliate or a Subsidiary, and (ii) so long as such transaction is not otherwise
prohibited hereunder.
(b) Subject in any event to the limitations of Section 7.4(a) above,
Borrower shall not create or acquire any Subsidiary unless such Subsidiary
engages in a business substantially related to the business of Borrower as
conducted immediately prior to the Closing Date.
7.5 GUARANTEES: Excepting the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection, Borrower shall not
become or be liable, directly or indirectly, primary or secondary, matured or
contingent, in any manner, whether as guarantor, surety, accommodation maker,
or otherwise, for the existing or future indebtedness of any kind of any Person.
7.6 INDEBTEDNESS: Borrower shall not incur or assume any indebtedness for
money borrowed or become a surety, guarantor of, or otherwise responsible or
liable in any manner with respect to, directly or indirectly, the indebtedness
of any Person except for: (i) Subordinated Indebtedness; (ii) trade debt
incurred in the ordinary course of Borrower's business; and (iii) Non- Recourse
Debt.
7.7 USE OF LENDERS' NAME: Borrower shall not use any Lender's name (or
the name of any of any Lender's Affiliates) or Agent's name in connection with
any of its business operations except to identify the existence of the Credit
Facility and the names of the Lenders and Agent in the ordinary course of
Borrower's business. Nothing herein contained is intended to permit or
authorize Borrower to make any contract on behalf of any Lender or Agent.
SECTION 8. DEFAULT
8.1 EVENTS OF DEFAULT: Each of the following events shall constitute an
event of default ("Event of Default") and Agent and/or Co-Agent shall thereupon
have the option, and the SuperMajority Lenders shall have the right to cause
Agent and Co-Agent, to declare the Obligations immediately due and payable, all
without demand, notice, presentment or protest or further action of any kind (it
also being understood that the occurrence of any of the events or conditions set
forth in subparagraphs (j), (k) or (l) shall automatically cause an acceleration
of the Obligations):
(a) PAYMENTS - if Borrower fails to make any payment of principal or
interest under the Credit Facility within two days after Agent has given notice
that such payment was due; or
(b) OTHER CHARGES - if Borrower fails to pay any other charges, fees,
Expenses or other monetary obligations owing to any Lender or Agent arising out
of or incurred in connection with this Agreement within two days after Agent has
given notice that such payment is due and payable; or
(c) PARTICULAR COVENANT DEFAULTS - if Borrower fails to perform,
comply with or observe any covenant or undertaking contained in this Agreement,
provided, however, that in the case of Borrower's failure to perform, comply
with or observe the covenants contained in Sections 6.1, 6.2, 6.5, 6.10 or 6.11
("Curable Covenant"), Borrower shall have five (5) days from the date on which
Borrower became aware or should have become aware of its failure to perform,
comply with or observe any such Curable Covenant to cure such nonperformance or
compliance to the satisfaction of Agent; or
(d) FINANCIAL INFORMATION - if any statement, report, financial
statement, or certificate made or delivered by Borrower or any of its officers,
employees or agents, to Agent or any Lender, is not true and correct, in all
material respects, when made; or
(e) UNINSURED LOSS - if there shall occur any uninsured damage to or
loss, theft, or destruction in excess of $100,000 with respect to any portion
of any Collateral; or
(f) WARRANTIES OR REPRESENTATIONS - if any warranty, representation
or other statement by or on behalf of Borrower or any Guarantor or pledgor
contained in or pursuant to this Agreement, or in any document, agreement or
instrument furnished in compliance with, relating to, or in reference to this
Agreement, is false, erroneous, or misleading in any material respect when made;
or
(g) AGREEMENTS WITH OTHERS - if Borrower shall default beyond any
grace period under any agreement with any creditor for borrowed money and (i)
such default consists of the failure to pay any principal, premium or interest
with respect to such indebtedness or (ii) such default consists of the failure
to perform any covenant or agreement with respect to such indebtedness, if the
effect of such default is to cause Borrower's obligations which are the subject
thereof to become due prior to its maturity date or prior to its regularly
scheduled date of payment or would entitle such creditor to accelerate such
obligations; or
(h) OTHER AGREEMENTS WITH LENDERS - if Borrower breaches or violates
the terms of, or if a default or an Event of Default, occurs under, any other
existing or future agreement (related or unrelated) between or among Borrower
and Agent or any Lender or all Lenders, except with respect to Non-Recourse
Debt; or
(i) JUDGMENTS - if any final judgment for the payment of money in
excess of $100,000 which is not fully and unconditionally covered by insurance
shall be rendered; or
(j) ASSIGNMENT FOR BENEFIT OF CREDITORS, ETC. - if Borrower makes or
proposes an assignment for the benefit of creditors generally, offers a
composition or extension to creditors, or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter owned or conducted by
Borrower which might materially and adversely affect Borrower; or
(k) BANKRUPTCY, DISSOLUTION, ETC. - upon the commencement of any
action for the dissolution or liquidation of Borrower, or the commencement of
any proceeding to avoid any transaction entered into by Borrower, or the
commencement of any case or proceeding for reorganization or liquidation of
Borrower's debts under the Bankruptcy Code or any other state or federal law,
now or hereafter enacted for the relief of debtors, whether instituted by or
against Borrower; provided, however, that Borrower shall have sixty (60) days
to obtain the dismissal or discharge of involuntary proceedings filed against
it, it being understood that during such sixty (60) day period, no Lender shall
be obligated to make Advances hereunder and Agent may seek adequate protection
in any bankruptcy proceeding; or
(l) RECEIVER - upon the appointment of a receiver, liquidator,
custodian, trustee or similar official or fiduciary for Borrower or for any of
Borrower's Property; or
(m) EXECUTION PROCESS, SEIZURE, ETC. - the issuance of any execution
or distraint process against Borrower, or any Property of Borrower is seized
by any governmental entity, federal, state or local; or
(n) TERMINATION OF BUSINESS - if Borrower ceases any material portion
of its business operations as presently conduct-ed; or
(o) PENSION BENEFITS, ETC. - if Borrower fails to comply with ERISA,
so that grounds exist to permit the appointment of a Trustee under ERISA to
administer Borrower's employee plans or to allow the pension benefit guarantee
corporation to institute a proceeding to appoint a trustee to administer such
plan(s), or to permit the entry of a Lien to secure any deficiency or claim; or
(p) INVESTIGATIONS - any indication or evidence received by Agent or
any Lender that reasonably leads it to believe Borrower may have directly or
indirectly been engaged in any type of activity which, would be reasonably
likely to result in the forfeiture of any Property of Borrower to any
governmental entity, federal, state or local; or
(q) GUARANTOR DEFAULT - Any Guarantor shall default under, terminate,
or disclaim liability under its Guaranty Agreement; or
(r) STOCK PLEDGOR DEFAULT - Resource Leasing, Inc. or Resource
America, Inc. shall, default under their respective Stock Pledge Agreement; or
(s) MINIMUM STOCKHOLDERS' EQUITY - Resource America, Inc. shall,
after the earlier of December 31, 1996 or the date on which Resource America,
Inc. receives the proceeds of a proposed secondary offering of its stock, fail
to maintain a minimum stockholders' equity of $40,000,000; or
(t) DEFAULT UNDER SUBORDINATION AGREEMENT - Resource Leasing, Inc.
or Borrower shall default under the terms of the Subordination Agreement.
8.2 CURE - Nothing contained in this Agreement or the Loan Documents shall
be deemed to compel Agent and/or Lenders to accept a cure of any Event of
Default hereunder.
8.3 RIGHTS AND REMEDIES ON DEFAULT:
(a) In addition to all other rights, options and remedies granted or
available to Agent, Co-Agent or Lenders under this Agreement or the Loan
Documents, or otherwise available at law or in equity, upon or at any time after
the occurrence and during the continuance of an Event of Default or Unmatured
Event of Default, Agent may, in its discretion, and the SuperMajority Lenders
or Co-Agent shall have the right to cause Agent to, withhold or cease making
Advances under the Credit Facility.
(b) In addition to all other rights, options and remedies granted or
available to Agent and Co-Agent under this Agreement or the Loan Documents (each
of which is also then exercisable by Agent), Agent may, in its discretion, and
Co-Agent or the SuperMajority Lenders shall have the right to cause Agent to,
upon or at any time after the occurrence and during the continuance of an Event
of Default, terminate the Credit Facility.
(c) In addition to all other rights, options and remedies granted or
available to Agent under this Agreement or the Loan Documents (each of which is
also then exercisable by Agent), Agent may, upon or at any time after the
occurrence of an Event of Default, exercise all rights under the UCC and any
other applicable law or in equity, and under all Loan Documents permitted to be
exercised after the occurrence of an Event of Default, including the following
rights and remedies (which list is given by way of example and is not intended
to be an exhaustive list of all such rights and remedies):
(i) The right to take possession of, and notify all Lessees of
the Agent's, Co-Agent's and Lenders' security interest in the Collateral and
require payment under the Leases to be made directly to Agent for the benefit
of Lenders and Agent may, in its own name or in the name of Borrower, exercise
all rights of lessor under the Leases and collect, xxx for and receive payment
on all Leases, and settle, compromise and adjust the same on any terms as may
be satisfactory to Agent and Co-Agent, in their sole and absolute discretion for
any reason or without reason and Agent may do all of the foregoing with or
without judicial process (including without limitation notifying the United
States postal authorities to redirect mail addressed to Borrower to an address
designated by Agent); or
(ii) By its own means or with judicial assistance, subject to the
rights of the Lessees, enter Borrower's premises or location of Collateral and
take possession of the Collateral, or render it unusable, or dispose of the
Collateral on such premises in compliance with subsection (e) below, without any
liability for rent, storage, utilities or other sums, and Borrower shall not
resist or interfere with such action; or
(iii) Require Borrower, at Borrower's sole expense, subject to the
rights of the Lessees, to assemble all or any part of the Collateral and make
it available to Agent at any place designated by Agent; or
(iv) The right to reduce or modify the Maximum Credit Limit,
Borrowing Base or any portion thereof or the advance rates or to modify the
terms and conditions upon which Agent, on behalf of Lenders, may be willing to
consider making Advances under the Credit Facility or to take additional
reserves in the Borrowing Base for any reason.
(e) Borrower hereby agrees that a notice received by it at least five
(5) days before the time of any intended public sale or of the time after which
any private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition. If permitted
by applicable law, any Collateral which threatens to speedily decline in value
or which is sold on a recognized market may be sold immediately by Agent without
prior notice to Borrower. Borrower covenants and agrees not to interfere with
or impose any obstacle to Agent's or Co-Agent's exercise of its rights and
remedies with respect to the Collateral, after the occurrence of an Event of
Default hereunder.
8.4 NATURE OF REMEDIES: All rights and remedies granted Agent, Co-Agent
or Lenders hereunder and under the Loan Documents, or otherwise available at law
or in equity, shall be deemed concurrent and cumulative, and not alternative
remedies, and Agent may proceed with any number of remedies at the same time
until all Obligations under or in connection with this Agreement are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver
or release of any other right or remedy, and either Agent or Co-Agent, upon or
at any time after the occurrence of an Event of Default, may proceed against
Borrower, at any time, under any agreement, with any available remedy and in any
order.
8.5 SET-OFF: If any bank account of Borrower with Agent, Co-Agent or any
Lender or any participant is attached or otherwise liened or levied upon by any
third party, Agent, Co-Agent or such Lender, as applicable, (and such
participant) as agent for Lenders shall have and be deemed to have, without
notice to Borrower, the immediate right of set-off and may apply the funds or
amount thus set-off against any of Borrower's Obligations hereunder.
SECTION 9. AGENT/CO-AGENT
As between the Agent and Co-Agent, on one hand, and the Lenders, on the
other hand, the Agent and Co-Agent and each of the Lenders, who are now or shall
become parties to this Agreement, agree as follows (with the consent and
approval of Borrower):
9.1 APPOINTMENT AND AUTHORIZATION. Each Lender, and each subsequent
holder of any of the Revolving Credit Notes by its acceptance thereof, hereby
irrevocably appoints and authorizes the Agent and Co-Agent to take such action
on its behalf and to exercise such powers under this Agreement as are delegated
to the Agent or Co-Agent as applicable by the terms hereof, together with such
powers as are reasonably incidental thereto. Except as may be otherwise
expressly provided herein, Borrower is hereby authorized by the Lenders to deal
solely with the Agent in all transactions which affect the Lenders under this
Agreement and the Loan Documents. Provided, however, nothing herein shall
prohibit Co-Agent or any Lender from communicating directly with Borrower
concerning any matters related to the Loans or Loan Documents. The rights,
privileges and remedies accorded to the Agent hereunder shall be exercised by
the Agent on behalf of all of the Lenders.
9.2 GENERAL IMMUNITY. Subject to the provisions of this Agreement, the
Agent and/or Co-Agent, as applicable will handle all transactions relating to
the Loans and all other Obligations, including, without limitation, all
transactions with respect to this Agreement, the Loan Documents and all related
documents in accordance with their usual banking practices. In performing their
duties as Agent and Co-Agent hereunder, the Agent and Co-Agent will either take
the same care as it takes in connection with loans in which either of them alone
is interested. However, neither the Agent, Co-Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them hereunder or in connection herewith except for its or
their own gross negligence or willful misconduct.
9.3 CONSULTATION WITH COUNSEL. The Agent and Co-Agent may consult with
legal counsel and any other professional advisors or consultants deemed
necessary or appropriate and selected by Agent and Co-Agent and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel.
9.4 DOCUMENTS. Neither the Agent nor the Co-Agent shall be under a duty
to examine into or pass upon the effectiveness, genuineness or validity of this
Agreement or any of the Revolving Credit Notes, Term Notes, or any other
instrument or document furnished pursuant hereto or in connection herewith, and
the Agent and Co-Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be. In addition, neither the
Agent nor the Co-Agent shall be liable for failing to make any inquiry
concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument or document.
9.5 RIGHTS AS A BANK. With respect to its applicable Pro Rata Percentage
of the Credit Facility, the Agent and Co-Agent shall each have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent and Co-Agent in their individual
capacity. Subject to the provisions of this Agreement, the Agent and Co-Agent
each may accept deposits from, lend money to and generally engage in any kind
of banking or trust business with Borrower and its Affiliates as if it were not
the Agent or Co-Agent respectively.
9.6 RESPONSIBILITY OF AGENT/CO-AGENT. It is expressly understood and
agreed that the obligations of the Agent and Co-Agent hereunder are only those
expressly set forth in this Agreement and that neither the Agent nor the Co-
Agent shall be entitled to assume that no Event of Default and no Unmatured
Event of Default has occurred and is continuing, unless the Agent has actual
knowledge of such fact. Except to the extent Agent or Co-Agent is required by
the Lenders pursuant to the express terms hereof to take a specific action,
neither the Agent nor the Co-Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions that it may be able to take under or in respect of, this Agreement
and the Loan Documents. Neither the Agent nor the Co-Agent shall incur any
liability under or in respect of this Agreement and the Loan Documents by acting
upon any notice, consent, certificate, warranty or other paper or instrument
believed by it to be genuine or authentic or to be signed by the proper party
or parties, or with respect to anything that either of them may do or refrain
from doing in the reasonable exercise of its judgment, or that may seem to them
to be necessary or desirable under the circumstances. It is agreed among the
Agent, Co-Agent and the Lenders that neither the Agent nor the Co-Agent shall
have any responsibility to carry out field examinations or otherwise examine the
books and records or properties of Borrower, except as the Agent and Co-Agent
in either of their sole discretion deems appropriate. The relationship between
the Agent, the Co-Agent and each Lender is and shall be that of agent and
principal only and nothing herein shall be construed to constitute the Agent or
the Co-Agent a joint venturer with any Lender, a trustee or fiduciary for any
of the Lenders or for the holder of a participation therein nor impose on the
Agent or the Co-Agent duties and obligations other than those set forth herein.
9.7 COLLECTIONS AND DISBURSEMENTS.
(a) The Agent will have the right to collect and receive all payments
of the Obligations, together with all fees, charges and other amounts due under
this Agreement and the Loan Documents, and the Agent will remit to each Lender
according to applicable Pro Rata Percentages all such payments actually received
by Agent (subject to any required clearance procedures) on the same Business Day
of receipt thereof (but if such payments shall not have been received by the
Agent prior to 12:00 noon Eastern Time on such Business Day then, on the next
Business Day).
(b) On the Business Day for which notice is given Lenders by Agent
with respect to requested Advances (which notice shall state the date and amount
of such payment), each Lender shall remit to the Agent its Pro Rata Percentage
of the payment in respect to such Advance. The obligations of Lenders hereunder
are unconditional, not subject to set-off, and irrevocable and may not be
terminated at any time.
(c) If any such payment received by the Agent is rescinded,
determined to be unenforceable or invalid or is otherwise required to be
returned for any reason at any time, whether before or after termination of this
Agreement and the Loan Documents, each Lender will, upon written notice from the
Agent, promptly pay over to the Agent its Pro Rata Percentage of the amount so
rescinded, held unenforceable or invalid or required to be returned, together
with interest and other fees thereon if also required to be rescinded or
returned.
(d) All payments by the Agent and the Lenders to each other hereunder
shall be in immediately available funds. The Agent will at all times maintain
proper books of account and records reflecting the interest of each Lender in
the Credit Facility, in a manner customary to the Agent's keeping of such
records, which books and records shall be available for inspection by each
Lender at reasonable times during normal business hours, at such Lender's sole
expense. In the event that any Lender shall receive any payments in reduction
of the Obligations in an amount greater than its applicable Pro Rata Percentage
in respect of indebtedness to the Lenders evidenced hereby (including, without
limitation amounts obtained by reason of setoffs), such Lender shall hold such
excess IN TRUST for Agent (on behalf of all other Lenders) and shall promptly
remit to the Agent such excess amount so that the amounts received by each
Lender hereunder shall at all times be in accordance with its applicable Pro
Rata Percentage. To the extent necessary for each Lender's actual percentage
of all outstanding Loans to equal its applicable Pro Rata Percentage, the Lender
having a greater share of any payment(s) than its applicable Pro Rata Percentage
shall acquire a participation in the applicable outstanding balances of the Pro
Rata Shares of the other Lenders as determined by Agent.
9.8 INDEMNIFICATION. The Lenders hereby each indemnify the Agent and Co-
Agent ratably according to their respective Pro Rata Percentages, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by the Agent under or related to this
Agreement or the other Loan Documents or the Loans, provided that no Lender
shall be liable to Agent or Co-Agent as the case may be, for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's or Co-Agent's
gross negligence or willful misconduct. Agent and Co-Agent shall each have the
right to deduct, from any amounts to be paid by Agent to any Lender hereunder,
any amounts owing to Agent or Co-Agent by such Lender by virtue of this
paragraph. Provided all of the Obligations have been satisfied in full, if
Agent and/or Co-Agent shall have received any sums from any of the Lenders
pursuant to the terms of this Section and the indemnified Agent and/or Co-Agent,
as applicable, receives additional payments from the Collateral or elsewhere
which could be used by such party pursuant to the terms of this Agreement, the
other Loan Documents, at law or in equity to satisfy the liability, for which
such party was indemnified, such additional payments shall be applied against
the liabilities for which such party was reimbursed and an equal amount shall
be reimbursed to the Lenders on a pro-rata basis based on the respective amounts
of their payments to the Agent and/or Co-Agent, as applicable, made under this
Section.
9.9 EXPENSES.
(a) All out-of-pocket costs and out-of-pocket expenses incurred by
Agent or Co-Agent and not reimbursed on demand by Borrower, in connection with
the creation, amendment, administration, termination and enforcement of the
Loans (including, without limitation, field examination expenses, counsel fees
and expenditures to protect, preserve and defend Agent's, Co-Agent's and any
Lender's rights and interest under the Loan Documents) shall be shared and paid
on demand by Lenders pro rata, based on their applicable Pro Rata Percentage.
(b) Agent may deduct from payments or distributions to be made to
Lenders such funds as may be necessary to pay or reimburse Agent or Co-Agent for
such costs or expenses.
9.10 NO RELIANCE. By execution of or joining in this Agreement, each
Lender acknowledges that it has entered into this Agreement and the Loan
Documents solely upon its own independent investigation and is not relying upon
any information supplied by or any representations made by Agent or Co-Agent.
Each Lender shall continue to make its own analysis and evaluation of Borrower.
Neither Agent nor Co-Agent makes any representation or warranty nor assumes any
responsibility with respect to the financial condition or Property of Borrower,
any Lessee or any Collateral; the accuracy, sufficiency or currency of any
information concerning the financial condition, prospects or results of
operations of Borrower; or for sufficiency, authenticity, legal effect, validity
or enforceability of the Loan Documents. Neither Agent nor Co-Agent assumes any
responsibility or liability with respect to the collectibility of the
Obligations or the performance by Borrower of any obligation under the Loan
Documents.
9.11 REPORTING. During the term of this Agreement, Agent will promptly
furnish each Lender such financial statements and reports as any Lender may
reasonably request. Agent and Co-Agent will notify Lenders within a reasonable
period of time (not to exceed ten (10) Business Days) after it receives actual
knowledge of any Event of Default under the Loan Documents.
9.12 REMOVAL OF AGENT/CO-AGENT.
(a) The Agent may resign at any time upon giving thirty (30) days
prior written notice thereof to Lenders and Borrower. The Agent may be removed
as Agent hereunder upon the written direction of all Lenders exclusive of the
Agent upon the following: (i) willful misconduct in the performance of Agent's
duties or responsibilities under this Agreement; or (ii) if a receiver, trustee
or conservator is appointed for Agent or any state or federal regulatory
authority assumes management or control of Agent or if, under applicable law,
the administrative or discretionary duties and responsibilities of Agent
hereunder become controlled by or subject to the approval of any state or
federal regulatory authority. Upon any resignation or permitted removal of
Agent, Co-Agent shall become the Agent. If Co-Agent is unwilling to serves as
Agent, the Lenders shall have the right to appoint a successor Agent by majority
vote of the other Lenders (based upon the percentages of the total Pro Rata
Shares of the Lenders other than the Lender which is the Agent). Upon the
acceptance of the appointment as a successor Agent hereunder by such successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all rights, powers, obligations and duties of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations hereunder.
(b) The Co-Agent may resign at any time upon giving thirty (30) days
prior written notice thereof to Agent, Lenders and Borrower. The Co-Agent may
be removed as Co-Agent hereunder upon the written direction of all Lenders
exclusive of the Co-Agent upon the following: (i) willful misconduct in the
performance of Co-Agent's duties or responsibilities under this Agreement; or
(ii) if a receiver, trustee or conservator is appointed for Co-Agent or any
state or federal regulatory authority assumes management or control of Co-Agent
or if, under applicable law, the administrative or discretionary duties and
responsibilities of Co-Agent hereunder become controlled by or subject to the
approval of any state or federal regulatory authority. So long as Agent
continues to serve as agent or a successor Agent has been appointed pursuant to
Section 9.12(a), no successor Co-Agent shall become Co-Agent upon the
resignation or removal of the Co-Agent.
9.13 ACTION ON INSTRUCTIONS OF LENDERS. With respect to any provision of
this Agreement, or any issue arising thereunder, concerning which the Agent is
authorized to act or withhold action by direction of one or more Lenders, the
Agent and Co-Agent shall in all cases be fully protected in so acting, or in so
refraining from acting, hereunder in accordance with written instructions signed
by the requisite Lenders. Such instructions and any action taken or failure to
act pursuant thereto shall be binding on all Lenders and on all holders of the
Revolving Credit Notes and Term Notes.
9.14 SEVERAL OBLIGATIONS. The obligation of each Lender is several, and
neither the Agent, Co-Agent nor any other Lender shall be responsible for any
obligation or commitment hereunder of any other Lender.
9.15 CONSENT OF BANKS.
(a) Subject to this Section 9.15, Agent shall have the sole and
exclusive right to service, administer and monitor the Loans and the Loan
Documents, including without limitation, the right to exercise all rights,
remedies, privileges and options under the Loan Documents, provided, however,
the determination as to whether Advances should be made under this Agreement and
the determination as to the basis on which and extent to which Advances shall
be jointly made by Agent and Co-Agent.
(b) Notwithstanding anything to the contrary contained in
subparagraph (a) above, Agent and Co-Agent shall not, without the prior written
consent of all Lenders: (i) extend or renew the Current Term or, any payment
date under the Credit Facility, (ii) decrease any interest rate on the Credit
Facility, (iii) compromise or settle all or a portion of the Obligations, (iv)
release any obligor from the Obligations except in connection with termination
of the Credit Facility and full payment and satisfaction of all Obligations, (v)
increase the Borrowing Base advance rate, (vi) modify Section 9.15(b) or (c),
or (vii) increase the Maximum Credit Limit; provided however that Agent and Co-
Agent may increase the Maximum Credit Limit by first offering the amount of any
such increase to each of the Lenders in accordance with their respective Pro
Rata Percentage. To the extent any Lender(s) may choose not to increase
its/their respective Pro Rata Shares by the amount attributable to its/their Pro
Rata Percentage of such increase, such amount will be offered to the other
Lenders on such sharing basis as Agent and Co-Agent may reasonably establish.
After each Lender choosing to increase its Pro Rata Share has agreed to do so,
and in conjunction with the modification of this Agreement to reflect such
increase executed by those Lenders sharing in the increase of the Credit
Facility, the Lenders' Pro Rata Percentages will be adjusted accordingly and all
Lenders (whether or not sharing in such increase) shall be bound by such
modification.
(c) Notwithstanding anything to the contrary contained in
subparagraph (a) above and subject to the terms of subparagraph (b) above,
neither Agent nor Co-Agent shall, without the prior written consent of the
other: (i) enter into any written amendment to any of the Loan Documents; (ii)
waive Borrower's compliance with the terms and conditions of the Loan Documents
or any Event of Default hereunder or thereunder; (iii) consent to Borrower
taking any action which, if taken, would constitute an Event of Default under
this Agreement or under any of the Loan Documents; or (iv) release any
Collateral other than Collateral which Borrower seeks to have released from the
Agent's lien (for the benefit of Lenders) in the ordinary course of Borrower's
business.
(d) After an acceleration of the Obligations, Agent and Co-Agent
shall have the sole and exclusive right, with communication (to the extent
reasonably practicable under the circumstances) with all Lenders, to exercise
or refrain from exercising any and all rights, remedies, privileges and options
under the Loan Documents and available at law or in equity to protect and
enforce the rights of the Lenders and collect the Obligations, including,
without limitation, instituting and pursuing all legal actions against Borrower
or to collect the Obligations, or defending any and all actions brought by
Borrower or other Person; or incurring Expenses or otherwise making expenditures
to protect the Loans, the Collateral or Lenders' rights or remedies.
(e) To the extent Agent or Co-Agent is required to obtain or
otherwise elects to seek the consent of the other or Lenders to an action Agent
or Co-Agent desires to take, if Agent or Co-Agent or any Lender fails to notify
such Person, in writing, of its consent or dissent to any request of Agent or
Co-Agent hereunder within seven (7) Business Days of such Person's actual
receipt of such request, the Person whose consent is sought, shall be deemed to
have given its consent thereto.
(f) No provision in Section 9 of this Agreement may be amended
without Agent's prior written consent.
9.16 PARTICIPATIONS AND ASSIGNMENTS: Borrower hereby acknowledges and
agrees that a Lender may at any time:
(a) grant participations in up to forty-nine percent (49%) (up to 100%
to an Affiliate of such Lender) of its Pro Rata Percentage and Pro Rata Share
or of its right, title and interest therein or in or to this Agreement
(collectively, "Participations") or to any other bank, lending institution or
other entity which the granting Lender reasonably determines has the requisite
sophistication to evaluate the merits and risks of investments in participations
("Participants"); provided, however, that: (i) all amounts payable by the
Borrower to each Lender hereunder shall be determined as if such Lender had not
granted such Participation; and (ii) any agreement pursuant to which any Lender
may grant a Participation: (A) shall provide that such Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrower
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provisions of this Agreement; (B) such
participation agreement may provide that such Lender will not agree to any
modification, amendment or waiver of this Agreement without the consent of the
Participant if such amendment, modification or waiver would reduce the principal
of or rate of interest on the Loans, increase the amount of the Maximum Credit
Limit, postpone the date fixed for any scheduled payment of principal of or
interest on the Loans or release Collateral for the Loans, subject to Section
9.15 hereof; and (C) shall not relieve such Lender from its obligations, which
shall remain absolute, to make Advances hereunder; and
(b) assign all or any portion of its Pro Rata Share (together with its
rights and obligations with respect thereto), and its right, title and interest
therein or in and to this Agreement and the other Loan Documents to a Lender or
any affiliate of a Lender; or to any other bank or financial institution, in
each case with thirty (30) days prior written notice to Agent and subject to the
prior written consent of the Agent which consent shall not be unreasonably
withheld; provided however that (i) such assignment shall not result in either
the assigning or acquiring Lender having a Pro Rata Share of less than
$5,000,000 and (ii) the parties to such assignment shall execute such assignment
or other documents reasonably requested by Agent and Borrower shall execute such
replacement Revolving Credit Notes as may be requested by Agent, and (iii) the
parties to the assignment shall pay Agent a processing fee of $2,500 in
conjunction with such assignment. All Participations and assignments hereunder
shall be of the Pro Rata Percentage or Pro Rata Share of the Lender making the
assignment or granting the Participation. Notwithstanding the foregoing or
anything else contained in this Agreement or any of the other Loan Documents,
any Lender may assign or pledge all or any portion of its Pro Rata Share
(including, without limitation, its rights with respect thereto), and its right,
title and interest therein or in and to this Agreement and the other Loan
Documents to a Federal Reserve Bank in support of borrowings made by such Lender
from such Federal Reserve Bank.
SECTION 10. MISCELLANEOUS
10.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND
DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN
ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL
CONTINUE IN FULL FORCE AND EFFECT.
10.2 INTEGRATED AGREEMENT: The Revolving Credit Notes, the other Loan
Documents, all related agreements, and this Agreement shall be construed as
integrated and complementary of each other, and as augmenting and not
restricting Lenders' and Agent's rights and remedies. If, after applying the
foregoing, an inconsistency still exists, the provisions of this Agreement shall
constitute an amendment thereto and shall control.
10.3 WAIVER:
(a) No omission or delay by Agent, Co-Agent or Lenders in exercising
any right or power under this Agreement or any related agreements and documents
will impair such right or power or be construed to be a waiver of any default,
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or power will not preclude other or further exercise
thereof or the exercise of any other right, and as to Borrower no waiver will
be valid unless in writing and signed by Agent and then only to the extent
specified.
(b) Borrower releases and shall indemnify, defend and hold harmless
Agent, Co-Agent and Lenders, and their respective officers, employees and
agents, of and from any claims, demands, liabilities, obligations, judgments,
injuries, losses, damages and costs and expenses (including, without limitation,
reasonable legal fees) resulting from (i) acts or conduct of Borrower or under,
pursuant or related to this Agreement and the other Loan Documents, (ii)
Borrower's breach or violation of any representation, warranty, covenant or
undertaking contained in this Agreement or the other Loan Documents, and (iii)
Borrower's failure to comply with any or all laws, statutes, ordinances,
governmental rules, regulations or standards, whether federal, state or local,
or court or administrative orders or decrees, (including without limitation
environmental laws, etc.) and all costs, expenses, fines, penalties or other
damages resulting therefrom, unless resulting solely from acts or conduct of
Lenders constituting wilful misconduct or gross negligence.
10.4 TIME: Whenever Borrower shall be required to make any payment, or
perform any act, on a day which is not a Business Day, such payment may be made,
or such act may be performed, on the next succeeding Business Day. Time is of
the essence in Borrower's performance under all provisions of this Agreement and
all related agreements and documents.
10.5 EXPENSES OF AGENT AND LENDERS: At Closing and from time to time
thereafter, Borrower will pay all reasonable expenses of Agent (and after the
occurrence of an Event of Default, all expenses of Lenders Agent and Co-Agent,
or any of them) on demand (including, without limitation, search costs, audit
fees, appraisal fees, environmental fees and the fees and expenses of legal
counsel for Agent, Co-Agent and Lender(s), if applicable) relating to this
Agreement, and all related agreements and documents, including, without
limitation, expenses incurred in the analysis, negotiation, preparation,
closing, administration and enforcement of this Agreement and the other Loan
Documents, the enforcement, protection and defense of the rights of Agent, Co-
Agent and Lenders in and to the Loans and Collateral or otherwise hereunder, and
any expenses relating to extensions, amendments, waivers or consents pursuant
to the provisions hereof, or any related agreements and documents or relating
to agreements with other creditors, or termination of this Agreement
(collectively, the "Expenses").
10.6 BROKERAGE: This transaction was brought about and entered into by
Agent, Lenders and Borrower acting as principals and without any brokers, agents
or finders being the effective procuring cause hereof. Borrower represents that
it has not committed Agent or any Lender to the payment of any brokerage fee,
commission or charge in connection with this transaction.
10.7 NOTICES:
(a) Any notices or consents required or permitted by this Agreement
shall be in writing and shall be deemed given if delivered in person or if sent
by telecopy or by nationally recognized overnight courier, or via first class,
Certified or Registered mail, postage prepaid, as follows, unless such address
is changed by written notice hereunder:
If to Agent to: CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx D'Xxxxxxx
Telecopy No.: 215/768-7744
If to Co-Agent to: First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
Vice President
Telecopy No.: 215/985-3555
In either case:
with copies to: Blank Rome Xxxxxxx & XxXxxxxx
Four Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, XX, Esquire
Telecopy No.: 215/569-5555
If to Borrower to: Fidelity Leasing, Inc.
0 X. Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Attn:
Telecopy No.:
With copies to: Xxxxxxx Abt, Esquire
Ledgwood Law Firm, P.C.
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy No.: 215/735-2513
If to Lenders: to the addresses set forth on Schedule A
(b) Any notice sent by Agent, any Lender or Borrower by any of the
above methods shall be deemed to be given when so received.
(c) Agent shall be fully entitled to rely upon any facsimile
transmission or other writing purported to be sent by any Authorized Officer
(whether requesting an Advance or otherwise) as being genuine and authorized.
10.8 HEADINGS: The headings of any paragraph or Section of this Agreement
are for convenience only and shall not be used to interpret any provision of
this Agreement.
10.9 SURVIVAL: All warranties, representations, and covenants made by
Borrower herein, or in any agreement referred to herein or on any certificate,
document or other instrument delivered by it or on its behalf under this
Agreement, shall be considered to have been relied upon by Agent and Lenders,
and shall survive the delivery to Lenders of the Revolving Credit Notes,
regardless of any investigation made by Lenders or on their behalf. All
statements in any such certificate or other instrument prepared and/or delivered
for the benefit of Agent and any and all Lenders shall constitute warranties and
represen-tations by Borrower hereunder. Except as otherwise expressly provided
herein, all covenants made by Borrower hereunder or under any other Loan
Document shall be deemed continuing until all Obligations under or in connection
with this Agreement are satisfied in full.
10.10 SUCCESSORS AND ASSIGNS: This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties.
Borrower may not transfer, assign or delegate any of its duties or obligations
hereunder.
10.11 COUNTERPARTS: Two or more duplicate originals of this Agreement may
be signed by the parties, each of which shall constitute an original but all of
which together shall constitute one and the same instrument. This Agreement may
be executed in counterparts, all of which counterparts taken together shall
constitute one completed fully executed document.
10.12 MODIFICATION: No modification hereof or any agree-ment referred to
herein shall be binding or enforceable unless in writing and signed by Borrower,
Agent and the Lenders and except as provided in Section 9 hereof. Any
modification in accordance with the terms hereof shall be binding on all parties
hereto, whether or not each is a signatory thereto.
10.13 SIGNATORIES: Each individual signatory hereto repre-sents and
warrants that he is duly authorized to execute this Agreement on behalf of his
principal and that he executes the Agreement in such capacity and not as a
party.
10.14 THIRD PARTIES: No rights are intended to be created hereunder, or
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental benefi-ciary of Borrower. Nothing contained in
this Agreement shall be construed as a delegation to Agent or any Lender of
Borrower's duty of performance, including, without limitation, Borrower's duties
under any Lease, account or contract with any other Person.
10.15 DISCHARGE OF TAXES, BORROWER'S OBLIGATIONS, ETC.: Agent, in its
sole discretion, shall have the right at any time, and from time to time, with
prior notice to Borrower, if Borrower fails to do so five (5) Business Days
after requested in writing to do so by Agent, to: (a) pay for the performance
of any of Borrower's obligations hereunder, and (b) discharge taxes or Liens,
at any time levied or placed on any of Borrower's Property in violation of this
Agreement unless Borrower is in good faith with due diligence by appropriate
proceedings contesting such taxes or Liens and maintaining proper reserves
therefor in accordance with GAAP. Expenses and advances shall be added to the
Revolving Credit, bear interest at the same rate applied to the Revolving
Credit, until reimbursed to Agent. Such payments and advances made by Agent
shall not be construed as a waiver by Agent or Lenders of an Event of Default
under this Agreement.
10.16 MOST FAVORED LENDERS: Borrower agrees to promptly notify Agent in
writing if any agreement for borrowed money to which Borrower is a party,
contains or is amended to contain, financial or performance covenants more
restrictive than those contained herein and upon Agent's request, Borrower
agrees to amend this Agreement accordingly so that covenants contained herein
are substantially the same as those contained in such other agreements for
borrowed money so long as such covenants remain applicable to Borrower pursuant
to such other agreements.
10.17 CONSENT TO JURISDICTION: Borrower and each Lender hereby
irrevocably consents to the jurisdiction of the Courts of Common Pleas of
Philadelphia, Commonwealth of Pennsylvania or the United States District Court
for the Eastern District of Pennsylvania in any and all actions and proceedings
whether arising hereunder or under any other agreement or undertaking and
irrevocably agree to service of process by certified mail, return receipt
requested to the address of the appropriate party set forth herein.
10.18 WAIVER OF JURY TRIAL: EACH OF BORROWER, LENDERS AND AGENT HEREBY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY
LITIGATION COMMENCED BY OR AGAINST AGENT OR ANY LENDER OR LENDERS WITH RESPECT
TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS.
10.19 INFORMATION TO PARTICIPANT: Agent and each Lender may divulge to
any participant, co-lender or assignee or prospective participant, co-lender or
assignee it may obtain in the Credit Facility, or any portion thereof, all
information, and furnish to such Person copies of any reports, financial state-
ments, certificates, and documents obtained under any provision of this
Agreement, or related agreements and documents; provided, however that any
potential participant, co-lender or assignee agrees to hold in confidence all
confidential or proprietary information provided to them by Borrower, Agent or
such Lender except (a) to the extent that the production of such information is
required pursuant to any statute, ordinance, regulation, rule or order or any
subpoena or any governmental inquiry or by reason of any bank regulation in
connection with any bank examination, and (b) such potential participant, co-
lender or assignee shall not be prohibited from disclosing any such information
to any of their agents, officers, employees, attorneys, accountants or
consultants who shall be informed of this provision.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
the day and year first above written.
FIDELITY LEASING, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
________________________________
Title: President
Attest:____________________________
(Corporate Seal)
CORESTATES BANK, N.A., as Agent and
Lender
By: /s/ Xxxxxx X. Xxxxxx
________________________________
Title:
FIRST UNION NATIONAL BANK, as Co-Agent
and Lender
By: /s/ Xxxxxxx X. XxXxxxxx
________________________________
Title:
