CREDIT AGREEMENT
Dated as of June 28, 2000
This Credit Agreement is entered into as of June 28, 2000, by and
between THE KING MANAGEMENT CORPORATION, a Minnesota corporation ("BORROWER"),
located at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxxxx, Xxxxxxxxx, 00000
and LASALLE BANK NATIONAL ASSOCIATION, a national banking association ("BANK"),
located at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
RECITALS
WHEREAS, Borrower is a Minnesota corporation formed as of June 28,
2000;
WHEREAS, Borrower is the owner of 100% of the outstanding shares of
Sunrise International Leasing Corporation ("SUNRISE"), a Minnesota corporation;
WHEREAS, Sunrise is the surviving entity of a merger between King
Management Corporation, a Minnesota corporation ("KMC") and Sunrise
International Leasing Corporation, a Delaware corporation ("SILC"), (the
"MERGER") pursuant to an Agreement and Plan of Merger dated as of January 31,
2000 (the "MERGER AGREEMENT");
WHEREAS, as part of the Merger, Borrower shall contribute the proceeds
of the loan to Sunrise as capital for the acquisition of outstanding SILC
shares; and
WHEREAS, Bank is providing the Loan to Borrower to finance the Merger.
NOW, THEREFORE, Borrower and Bank hereby agree as follows.
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to singular and plural forms of the terms defined):
"Affiliate" means any of the following Persons: (i) any director,
officer or employee of the Borrower; (ii) any person who, individually or with
his immediate family, beneficially owns or holds 5% or more of voting interest
of Borrower; or (iii) any company in which any Person described above owns a 5%
or greater equity interest.
"Business Day" means any day other than a Saturday, Sunday or a public
holiday or the equivalent under the laws of the State of Illinois, the State of
Minnesota or the United States of America.
"Cash Settlement Certificate" means a certificate of Borrower to Bank
in the form of EXHIBIT A, delivered to Bank pursuant to Section 5.1(a).
"Collateral" has the meaning contained in the Hypothecation Agreement.
"Compliance Certificate" means a certificate of Borrower and Guarantor
to Bank substantially in the form of EXHIBIT B, delivered to Bank pursuant to
Section 5.1(d).
"Debt" means (i) indebtedness for borrowed money or for the deferred
purchase price of property or services, (ii) obligations as lessee under leases
which shall have been or should be, in accordance with GAAP, recorded as capital
leases, (iii) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (i) or (ii) above, and
(iv) liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA.
"Equipment" means the personal property that is the subject of an
Equipment Lease.
"Equipment Lease" means a lease or installment sales contract
designated from time to time by Borrower or Guarantor and acceptable to Bank on
EXHIBIT A to the Hypothecation Agreement and (i) as of the time of such
designation, has received at least three consecutive payments, (ii) is not more
than sixty (60) days past due on a contractual basis (Equipment Leases replacing
those that are sixty (60) days past due will have had received at least one
payment), (iii) has not been prepaid, and (iv) the lessee of which has not filed
for bankruptcy protection. "Equipment Leases" means all of the Equipment Leases.
"Event of Default" means one of the events specified in Section 6.1
hereof.
"GAAP" means generally accepted accounting principles as in effect from
time to time, consistently applied from year to year.
"Guarantor" means Sunrise under the Guaranty.
"Guaranty" means the Unconditional Guaranty of the Loan delivered by
Sunrise to Bank, dated of even date herewith.
"Hypothecation Agreement" means the Hypothecation Agreement dated as of
even date herewith by and among Sunrise, as pledgor, and Bank, as secured party,
pursuant to which, among other things, Sunrise has granted a security interest
in the Collateral to Bank.
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"Interest Coverage Ratio" for any time period means a ratio the
numerator of which is, at the Bank's option, the sum of Guarantor's or, on a
consolidated basis, Borrower's net income during that period plus interest,
depreciation, amortization and income tax expense during that period and the
denominator of which is interest expense for such Person during that period, all
as determined in accordance with GAAP.
"King Affiliate" means any legal entity, the majority of which is owned
or controlled, directly or indirectly, by Xxxxx X. Xxxx.
"Loan" has the meaning contained in Section 2.1.
"Loan Amount" means an amount equal to 85% of the Net Book Value of the
Equipment Leases designated, from time to time, on EXHIBIT A to the
Hypothecation Agreement.
"Loan Amount Certificate" means a certificate in the form of EXHIBIT C
signed by the chief financial officer or corporate controller of Borrower and
Guarantor which is delivered to Bank pursuant to Section 3.2(k) or Section
5.1(p) which shows as of the date indicated in the Certificate, the Net Book
Value with respect to the Equipment Leases and the original cost and the
accumulated depreciation of the Equipment used to calculate the Net Book Value.
"Loan Amount Value" for any Equipment Lease means the portion of the
Loan Amount attributable to such Equipment Lease.
"Loan Documents" means this Agreement, the Note, the Hypothecation
Agreement, the Guaranty, any financing statements or assignments of financing
statements made by Borrower, and all other documents, certificates and
agreements to be executed in connection with this Agreement.
"Loan Party" means any Person obligated under any Loan Document.
"Loan Request" means a request for a Loan from Borrower and Guarantor
to Bank in the form of EXHIBIT D, delivered to Bank pursuant to Section 3.1.
"Maturity Date" means June 1, 2003.
"Net Book Value" means, at any time, with respect to any Equipment
Lease and the related Equipment and other Collateral, the net book value
calculated in accordance with GAAP.
"Note" means the promissory note described in Section 2.1, together
with any renewals, modifications, amendments or replacements thereof.
"Payments" means any and all moneys due or to become due to Borrower or
Guarantor under each Equipment Lease, including but not limited to rental
payments during the initial term of the Equipment Lease, renewal rents after the
expiration of the initial lease term, proceeds from
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the sale or re-lease of Equipment subject to the Equipment Lease, and proceeds
from insurance on Equipment subject to the Equipment Lease (excepting only
shipping costs and taxes, including but not limited to sales, use and personal
property taxes, which are payable to the lessor).
"Permitted Encumbrances" means all security interests and other
encumbrances on the Collateral as of the date hereof as disclosed in writing to
Bank contemporaneously with this Agreement or which arise in the future in the
ordinary course of Borrower's or Guarantor's business and are consented to by
Bank in advance in writing.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization or
governmental agency or political subdivision thereof.
"Senior Recourse Debt" means the aggregate of the consolidated debt for
borrowed money of Borrower (not including subordinated debt payable to any King
Affiliate and other subordinated debt approved by Bank), determined and computed
in accordance with GAAP.
"Subsidiary" means any corporation of which more than 50% of the
outstanding capital stock having ordinary voting power to elect a majority of
the Board of Directors of such corporation (irrespective of whether or not at
the time capital stock or any other class or classes of stock of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by Borrower, by
Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries.
"Tangible Net Worth" means the aggregate of the consolidated capital
stock, paid in surplus and retained earnings of Borrower and its Subsidiaries,
determined and computed in accordance with GAAP, less the book value of all
assets of Borrower that would be treated as intangibles under GAAP including
without limitation, such items as goodwill, trademarks, trade names, service
marks, copyrights, patents and licenses and less the book value of all
obligations owed to Borrower by any of its Affiliates. Tangible Net Worth also
includes subordinated debt payable to any King Affiliate and other subordinated
debt approved by Bank.
"UCC" means the Uniform Commercial Code as adopted in the State of
Illinois and the State of Minnesota.
"UCC Filing Event" means either an Event of Default as defined in
Section 6.1 of this Agreement, or any event which is, or which with the giving
of notice or the elapse of time will become, a default under any of the
provisions of this Agreement, including but not limited to, Sections 5.1(f),
5.1(g) and 5.1(h).
Section 1.2. ACCOUNTING AND OTHER TERMS. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
GAAP as such principles may change from time to time. Other terms defined herein
shall have the meanings ascribed to them herein.
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ARTICLE II
TERM LOAN
Section 2.1. TERM LOAN. Subject to and upon the terms, covenants and
conditions set forth in this Agreement, Bank agrees to make a loan (the "Loan")
to Borrower in the amount of FIFTEEN MILLION AND NO/100 DOLLARS
($15,000,000.00). The obligation to repay the Loan made pursuant to this Section
shall be evidenced by a promissory note payable to Bank, containing the terms
relating to the repayment, interest rate and other matters as set forth in
EXHIBIT E attached to and made a part of this Agreement ("Note"). The Loan shall
not be on a revolving credit basis and, accordingly, Borrower shall not be
entitled to reborrow upon any prepayment.
Section 2.2. PAYMENT. Beginning on the first day of the calendar month
which follows the month of the Loan, and on the first day of each month
thereafter, Borrower shall pay interest to Bank in arrears. Beginning on August
1, 2000, and on the first day of each month thereafter, Borrower shall be
required to pay to Bank a payment of principal and interest equal to one hundred
percent (100%) of the Payments received by Borrower and its Subsidiaries during
the immediately preceding month (the "Monthly Collections"); PROVIDED, HOWEVER,
that in no event shall the principal amount of such payment be less than
$416,666.67 (the "Minimum Monthly Principal Payment"). Each payment shall be
applied first to any fees or costs owing hereunder, then to interest due and
owing, then to principal outstanding under the Loan. Every six (6) months,
commencing January 1, 2001, Bank will recalculate the Minimum Monthly Principal
Payment by dividing (i) the total dollar amount of the remaining principal
balance scheduled to be paid on the Note prior to the Maturity Date by (ii) the
number of scheduled monthly payments on the Note remaining prior to the Maturity
Date. The entire indebtedness, if not sooner paid, shall be due and payable on
the Maturity Date. All payments of principal and interest under this Agreement
or the Note shall be made to Bank in immediately available funds. Borrower
agrees that the amount shown on the books and records of Bank as being the
aggregate amount of the Loans outstanding under the Note shall be prima facie
evidence of the principal amount of the Note then outstanding. Borrower hereby
authorizes Bank, and agrees to cause Guarantor to authorize Bank, if and to the
extent payment is not promptly made pursuant hereto, to charge against any
Borrower's or Guarantor's account with Bank all amounts equal to the accrued
interest and principal from time to time due and payable to Bank under the Note.
Section 2.3. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under the Note shall be stated to be due on a day that is not
a Business Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest on the Note.
Section 2.4. INTEREST. Borrower shall repay, and shall pay interest on,
the aggregate unpaid principal amount of the Loans in accordance with the Note,
except that to the extent allowed by law, after and during the continuance of an
Event of Default, Borrower shall pay interest on the Note at an annual rate
equal to two percent (2%) in excess of the rate of interest
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provided for under the Note. All payments of principal, interest and fees under
the Note and this Agreement shall be made when due to Bank even if Borrower or
Guarantor has not received payment from one or more of the lessees under one or
more Equipment Leases. All computation of interest shall be made by Bank on the
basis of the actual number of days elapsed in a year of 360 days.
Section 2.5. VOLUNTARY PREPAYMENT. The indebtedness evidenced by the
Note may be prepaid in accordance with the provisions of this Section 2.5 and
not otherwise. Borrower may prepay the Note in full or part, at par, at any
time, without any prepayment penalty. Such prepayment shall not suspend required
payments of principal and interest, and such prepayment shall be applied to
required payments of principal in the inverse order of their maturity.
Section 2.6. USE OF PROCEEDS. The proceeds of the Note shall be used by
Borrower and Guarantor exclusively to acquire the Sunrise outstanding shares
pursuant to the merger between Sunrise and King, as evidenced by the Merger
Agreement, and to pay costs and expenses of such transaction. To the extent that
Borrower contributes Collateral which is purchased with funds of Borrower other
than Note proceeds, Borrower may use the Note proceeds for any lawful corporate
purpose.
Section 2.7. TERMINATION. Bank's commitment under this Agreement will
terminate and Bank will be relieved from making the Loan, on the earliest to
occur of the following: (a) the Maturity Date; (b) an Event of Default; or (c)
upon the date specified in a written request of Borrower to Bank given no less
than ninety (90) days prior to Borrower's requested termination date. Bank will
provide Borrower not less than thirty (30) days Loan written notice of its
intention to extend the term of this Agreement and the conditions for such
extensions. Absent the written agreement of the parties to extend the term of
this Agreement, it will terminate and the Note will be due and payable in full
on the Maturity Date.
Section 2.8. CHANGE IN LEGALITY . Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for Bank to or
maintain the Loan or to give effect to its obligations as contemplated hereby
(an "ILLEGALITY"), or if Bank determines in its reasonable discretion that
maintenance of the Loan would cause it to implement or modify any reserve,
special deposit or assessment or other requirement, or impose any other
condition affecting the Loan (each of the foregoing circumstances called a
"REGULATORY ACTION"), then, upon five (5) days' prior written notice to
Borrower, Borrower shall pay to Bank, from time to time as specified by Bank,
additional amounts to compensate Bank in the light of such circumstances, to the
extent that Bank determines such change in legality to be allocable to the
existence of Bank's commitment to lend hereunder, and relates to such a change
that accrued not more than thirty (30) days prior to such notice. Bank will
notify Borrower of any change in legality within a reasonable period of time
following receipt by Bank of notification of such change.
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Section 2.9. If, after the date hereof, either (i) the introduction of
or any change in or change in the interpretation of any law or regulation or
(ii) compliance by Bank with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by Bank
or any corporation controlling Bank and Bank determines that the amount of such
capital is increased solely by or solely based upon the existence of Bank's
commitment to lend hereunder and other commitments of this type, then, upon
demand by Bank, Borrower shall, within five (5) days of such demand, pay to
Bank, from time to time as specified by Bank, additional amounts sufficient to
compensate Bank in the light of such circumstances, to the extent that Bank
determines such increase in capital to be allocable to the existence of Bank's
commitment to lend hereunder. Bank will notify Borrower of any change in capital
requirements within a reasonable period of time following receipt by Bank of
notification of such change.
ARTICLE III
CONDITIONS OF LENDING
Section 3.1. LOAN. Subject to the satisfaction of the terms and
conditions set forth in Section 3.2, on or after the date of this Agreement,
Borrower may request Bank to disburse the proceeds of the Loan as set forth by
Borrower in the Loan Request.
Section 3.2. CONDITIONS PRECEDENT TO THE LOAN. The obligation of Bank
to make the Loan is subject to the condition precedent that Bank shall have
received on or before the day of the Loan all of the following, each dated
(unless otherwise indicated) such day, in form and substance satisfactory to
Bank:
(a) The Note, properly completed, executed and delivered
on behalf of Borrower.
(b) The Hypothecation Agreement, properly executed and
delivered on behalf of Sunrise, granting to Bank a security interest in, among
other things, all of the Equipment Leases, the Equipment subject to such
Equipment Leases and other property described therein as security for the
performance of Borrower's obligations under this Agreement and the Note,
together with any UCC-1 financing statements or other document deemed necessary
or desirable by Bank to perfect the security interest granted by the
Hypothecation Agreement.
(c) The Guaranty, properly executed and delivered on
behalf of Sunrise.
(d) A certified copy of the resolutions of the Board of
Directors of each of Borrower and Sunrise, approving the execution and delivery
of the Loan Documents to which it is a party and approving all other matters
contemplated by this Agreement.
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(e) A certificate by the Secretary or any Assistant
Secretary of each of Borrower and Sunrise certifying the names of the officer or
officers of each of Borrower and Sunrise authorized to sign the Loan Documents
to which each is a party, together with a sample of the true signature of such
officer.
(f) A copy of (i) the Articles or Certificate of
Incorporation of each of Borrower and Sunrise, certified by the appropriate
Secretary of State as of a date not more than twenty (20) days prior to the date
hereof, and (ii) copies of the Bylaws, and any amendments thereto, of each of
Borrower and Guarantor certified by each corporate Secretary.
(g) Good Standing Certificates for each of Borrower and
Guarantor in the State of Minnesota, the State of Illinois, and in each other
state in which Borrower and Guarantor has an office, keeps Collateral, or
otherwise where the failure of Borrower or Guarantor to be qualified to transact
business as a foreign corporation would have a material adverse impact on
Borrower or Guarantor, respectively; PROVIDED, HOWEVER, that in the event such
documents are not available from the respective Secretaries of State, Borrower
shall provide such documents as soon as the same are available, but in no event
more than 45 days from the date hereof.
(h) Copies of policies of insurance, duly executed.
(i) All representations and warranties of each of
Borrower and Guarantor hereunder or in any document provided to Bank shall be
true and correct as of the date hereof.
(j) A favorable opinion of counsel to Borrower and
Sunrise, as guarantor, in a form and as to such matters as Bank may request.
(k) A completed Loan Amount Certificate in the form of
EXHIBIT C.
(l) A form U-1.
(m) An executed Request for Loan in the form of EXHIBIT
D.
(n) An Intercreditor Agreement in form and substance
acceptable to Bank from any warehouse bank with respect to the Collateral.
(o) A Subordination Agreement in form and substance
acceptable to Bank.
(p) The conditions precedent to the Merger as set forth
in the Merger Agreement have been satisfied or waived, other than the payments
to the shareholders of SILC required thereunder, and Borrower shall have
provided reasonable evidence that the funds necessary (including those available
hereunder) have been irrevocably committed to make the payments required to be
made to SILC shareholders under the Merger Agreement.
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(q) A certificate of an officer of each of Borrower and
Guarantor stating that the value of Borrower's assets (including equity) is
greater than the amount required to pay its total liabilities, and Borrower is
able to pay its debts as they mature, Borrower will maintain such solvent
financial condition as long as Borrower is obligated to Bank under the Agreement
or in any other manner whatsoever.
(r) A certificate of an officer of Borrower stating that:
(i) no Event of Default has occurred or is continuing; (ii) no material adverse
change in the financial condition or operations of Borrower or Sunrise has
occurred; (iii) the representations, covenants and warranties of Borrower
contained herein are true and correct; and (iv) each condition precedent to the
consummation of the Loan required hereunder has been met or satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce Bank to make the Loan described in this Agreement, Borrower hereby
represents, warrants and certifies to Bank as follows:
(a) EXISTENCE OF BORROWER. Borrower and Guarantor are
each a corporation duly incorporated, validly existing and in good standing
under the laws of the state indicated at the beginning of this Agreement and are
duly licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary, except as
permitted by Section 3.2(g) hereto. Borrower and Guarantor have not, in the past
five years, operated under any name, including any trade name or assumed name,
other than the names indicated at the beginning of this Agreement, the names of
the Subsidiaries listed in Section 4.1(l) and the following names: Sunrise
Leasing Corporation, Sunrise Financial Resources, Sunrise Funding Corporation I,
Cisco Systems Capital Corporation, Digital Telecommunications Capital,
International Leasing Corporation, Internet Finance and Equipment Capital
Corporation, MicroSystem Solutions, Sonic Solutions Capital Corporation, Sun
Microsystems Finance, Symmetricom Capital, H.A. Technical Solutions, LLC, King
Leasing S. de X.X. de C.V., King Services Administrators S. de X.X. de C.V. and
Vanguard Investments LLC.
(b) LOCATIONS. Borrower and Guarantor operate an office
in the following location: 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxxxx
Xxxxxxxxx 00000.
(c) AUTHORITY TO EXECUTE. The execution, delivery and
performance by Borrower of the Loan Documents to which it is a party are within
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, do not and will not conflict with any provision of law or of
the charter or bylaws of Borrower or of any agreement or contractual restriction
binding upon or affecting Borrower or any of its property, and need no further
shareholder or creditor consent.
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(d) BINDING OBLIGATION. This Agreement is, and the other
Loan Documents when delivered hereunder will be, legal, valid and binding
obligations of the Loan Parties enforceable against such Persons in accordance
with their respective terms, except to the extent that the enforceability hereof
or thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
equitable principles (regardless of whether such enforceability is sought in
equity or at law).
(e) GOVERNMENTAL APPROVAL. No consent of, or filing with,
any governmental authority is required on the part of any Loan Party in
connection with the execution, delivery or performance of any Loan Documents,
except for UCC financing statements required to be filed to perfect the security
interests granted under the Hypothecation Agreement.
(f) LEASES. For each Equipment Lease, (i) Sunrise is the
lessor and holds all financial servicing rights; (ii) the Equipment Lease has an
initial or remaining scheduled term of not more than 36 months or such longer
term as Bank has approved in writing contemporaneously with the execution of
this Agreement or at the time such Lease is designated hereunder as an Equipment
Lease; (iii) Borrower or Sunrise has delivered to Bank the original of the
Equipment Lease, and Sunrise will not execute any copies of the Equipment Lease
other than a copy for Sunrise and a copy for delivery to the lessee named in
such Equipment Lease and so designated as "Duplicate" (in the case of a master
lease, the original of the Equipment Lease shall mean the original of the
equipment schedule, plus an original or certified copy of any related master
lease agreement); (iv) the Equipment Lease has been approved by Bank in its sole
discretion as to form and content; (v) the Equipment Lease is subject to a first
perfected security interest in favor of only Sunrise as required by this
Agreement; (vi) the Equipment Lease relates to Equipment which is (A) owned by
Sunrise and (B) subject to a first perfected security interest in favor of only
Bank as required by this Agreement; (vii) Sunrise has directed the lessee that
all contract payments be made to a lockbox account under the control of State
Street Bank, or other depository acceptable to Bank; (viii) Sunrise has filed a
UCC-1 Financing Statement signed by the lessee, or equivalent document under
applicable law, to give public notice of Sunrise's interest in the Equipment
under the Equipment Lease; (ix) the lessee is required to obtain casualty
insurance on the related Equipment subject to the Equipment Lease; and (x) if
the Equipment Lease is subject to an encumbrance other than a Permitted
Encumbrance, Sunrise has obtained and delivered to Bank a recordable release of
that Equipment Lease from that encumbrance.
(g) FINANCIAL STATEMENTS. Audited financial statements as
of March 31, 2000 for SILC and as of December 31, 1999 for KMC have been
furnished to Bank, have been prepared in conformity with GAAP and present fairly
the financial condition of such company as of such dates, and the results of the
operations for the financial periods then ended, and since such dates, there has
been no materially adverse change in such financial condition.
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(h) LITIGATION. Except as described on SCHEDULE 4.1 (h)
hereto, and except for claims asserted by any former salesperson as disclosed to
Bank in connection with this Agreement, no litigation or governmental proceeding
is pending or threatened against Borrower or its Subsidiaries which may have a
materially adverse effect on the financial condition or operations of Borrower
or its Subsidiaries.
(i) TAXES. Borrower and its Subsidiaries have filed all
federal and state income and excess profits tax returns which are required to be
filed, and has paid all taxes shown on such returns to be due and all other tax
assessments received by it to the extent that such assessments have become due.
(j) ERISA. No plan (as that term is defined in the
Employee Retirement Income Security Act of 1974 ("ERISA")) of Borrower or its
Subsidiaries (a "Plan") which is subject to Part 3 of Subtitle B of Title 1 of
ERISA had an accumulated funding deficiency (as such term is defined in ERISA)
as of the last day of the most recent fiscal year of such Plan ended prior to
the date hereof, or would have had such an accumulated funding deficiency on
such date if such year were the first year of such Plan, and no material
liability to the Pension Benefit Guaranty Corporation has been, or is expected
by Borrower to be, incurred with respect to any such Plan. No Reportable Event
(as defined in ERISA) has occurred and is continuing in respect to any such
Plan.
(k) DEFAULTS. None of Borrower and its Subsidiaries are
in default in the payment of principal or interest on any indebtedness for
borrowed money and are not in default under any instrument or agreement under or
subject to which any indebtedness for borrowed money has been issued, and no
event has occurred and is continuing which, with or without the lapse of time or
the giving of notice, or both, constitutes or would constitute an event of
default under any such instrument or agreement or an Event of Default hereunder.
(l) SUBSIDIARIES. Borrower has no Subsidiaries other than
Sunrise.
(m) PATENTS, TRADEMARKS, ETC. To the best of their
knowledge, Borrower and Sunrise have good and marketable title to all patents,
trademarks, processes, copyrights, franchises and licenses title to which is
necessary for the operation of Sunrise's businesses.
(n) USE OF PROCEEDS FOR SECURITIES TRANSACTIONS. No
proceeds of the Loan will be used to acquire any security in any transaction
which is subject to Sections 13 and 14 of the Securities Exchange Act of 1934,
except as permitted under Section 2.6 hereof.
(o) REGULATION U. Borrower and its Subsidiaries are not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of the Loan will be
used in violation of any provision of Regulation U.
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(p) GOOD TITLE AND ABSENCE OF LIENS. Borrower and its
Subsidiaries are, and covenant to remain, the owners of the Collateral, free and
clear of all liens, encumbrances and security interests, except for Permitted
Encumbrances.
(q) LICENSES, COMPLIANCE WITH LAWS. Borrower and its
Subsidiaries have and will maintain all required federal, state, local licenses,
certificates or permits relating to Borrower, its Subsidiaries and their
respective facilities, businesses, assets, property, leaseholds and equipment
and is in substantial compliance with all applicable federal, state and local
laws, rules and regulations, the failure to comply with which would be
reasonably likely to have a material adverse effect on the financial condition,
operations, assets, business, properties or prospects of Borrower or its
Subsidiaries.
(r) IMPAIRMENT OF COLLATERAL. Borrower has no knowledge
of any default as to any Equipment Lease by any party, nor of anything would
impair the value of any Equipment Lease.
(s) LESSEES' DUTIES TO MAKE PAYMENTS. Each Equipment
Lease shall impose upon the related lessee thereunder a duty to make all
periodic payments set forth therein, which duty shall be absolute and
unconditional, and to the best knowledge of Borrower shall not be, nor be
claimed to be, subject to any setoffs, claims, defenses or rights of
counterclaim against Bank.
(t) ACCURACY OF INFORMATION. All written information
heretofore or contemporaneously furnished by or on behalf of Borrower or its
Subsidiaries to Bank for purposes of or in connection with this Agreement and
such other written information hereafter furnished by or on behalf of Borrower,
or its Subsidiaries, to Bank will be, true and accurate in every material
respect on the date as of which such information is dated or certified and when
taken in its entirety is not incomplete by omitting to state any material fact
necessary to make such information not misleading.
(u) SOLVENCY. Immediately prior to the issuance of the
Note and after giving effect thereto, the fair market value of Borrower's
consolidated assets (including equity) is greater than the amount required to
pay its total liabilities, and Borrower is able to pay its debts as they mature.
Borrower will maintain such solvent financial condition as long as Borrower is
obligated to Bank under this Agreement or under any document related hereof.
Borrower and its Subsidiaries have sufficient capital to carry on their business
and transactions as now conducted.
All representations, warranties and agreements herein contained on the part of
Borrower and its Subsidiaries, shall survive the making of the Loan hereunder
and all such representations, warranties and agreements shall be effective so
long as the obligations of Borrower arising pursuant to the terms of this
Agreement remain unpaid or for such longer periods as may be expressly stated
therein.
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ARTICLE V
COVENANTS OF BORROWER
Section 5.1. AFFIRMATIVE COVENANTS. So long as the Note shall remain
unpaid, Borrower will, and will cause its Subsidiaries to, unless Bank shall
give its prior written consent:
(a) FINANCIAL REPORTING. Furnish to Bank: (i) as soon as
available and in any event within 45 days after the end of each month, balance
sheets of Borrower and each Subsidiary as of the end of such quarter and
statements of income and retained earnings of Borrower and each Subsidiary for
the period commencing at the end of the previous fiscal year and ending with the
end of such quarter, certified by the chief financial officer or corporate
controller of Borrower; (ii) as soon as available and in any event within 120
days after the end of each fiscal year of Borrower and each Subsidiary, (A) a
copy of the Form 10-K for such year for Borrower and each Subsidiary (or, in the
event a form 10-K is not required to be prepared, an audited financial
statement), containing financial statements for such year certified in a manner
acceptable to Bank by independent public accountants acceptable to Bank and (B)
if available, a budget and projections prepared by Borrower and each Subsidiary
in a form acceptable to Bank for the following fiscal year; (iii) promptly upon
the sending or filing thereof copies of all public reports issued by Borrower
and each Subsidiary to any of its security holders, to the Securities and
Exchange Commission or to any national securities exchange; (iv) promptly upon
the filing or receiving thereof, copies of all reports which Borrower and each
Subsidiary files under ERISA or which Borrower or Subsidiary receives from the
Pension Benefit Guaranty Corporation if such reports show any material violation
or potential violation by Borrower or any Subsidiary of its obligations under
ERISA; (v) such other information concerning the conditions or operations,
financial or otherwise, of Borrower and each Subsidiary as Bank from time to
time may reasonably request; (vi) on or before the tenth (10th) day of each
month a Cash Settlement Certificate (for the period with respect to which
principal payments due on such date are being calculated) appropriately
completed (in the form of EXHIBIT A), and (vii) within 30 days following each
month end, a portfolio report including (A) monthly agings (current, 30+ days,
60+ days, 90+ days, and 120+ days past due), showing Borrower's and each
Subsidiary's total portfolio and the Bank's Collateral pool; (B) cash
collections and expected receipts for Borrower's and each Subsidiary's total
portfolio and the Bank's Collateral pool, (C) a static pool analysis showing
Borrower's and each Subsidiary's total portfolio and the Bank's Collateral pool
(to be provided as of March 31 and September 30 of each year) and (D)
repossessed equipment and recoveries (beginning from April 1, 2000).
(b) INSPECTION RIGHTS. At any reasonable time and from
time to time, permit Bank or any agents or representatives thereof, to examine
and make copies of and abstracts from the records and books of account of, and
inspect the properties of, Borrower or any of its Subsidiaries, and to discuss
the affairs, finances and accounts of Borrower or any of its Subsidiaries with
any of their respective officers or directors. Borrower will reimburse Bank for
its reasonable costs and expenses of conducting such periodic examinations,
provided that, in the absence of an Event of Default, Borrower will be required
to compensate Bank for costs of no more than $5,300 annually.
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(c) NOTIFICATION OF DEFAULT, ETC. Notify Bank as promptly
as practicable (but in any event not later than five Business Days) after
Borrower obtains knowledge of (i) the occurrence of any event which constitutes
an Event of Default or which would constitute an Event of Default with the
passage of time or the giving of notice or both; or (ii) the commencement of any
litigation or governmental proceedings of any type which reasonably foreseeably
would materially adversely affect the financial condition or business operations
of Borrower or any of its Subsidiaries.
(d) COMPLIANCE CERTIFICATE. At the time each financial
statement is required to be provided to Bank under this Agreement, Borrower will
provide to Bank a Compliance Certificate signed by its chief financial officer
or corporate controller substantially in the form of EXHIBIT B attached hereto
(appropriately completed). If the Compliance Certificate shows that an Event of
Default or any event which would constitute an Event of Default with the passage
of time or the giving of notice or both, has occurred, the Compliance
Certificate shall state in reasonable detail the circumstances surrounding such
event and action proposed by Borrower to cure such event.
(e) KEEPING OF FINANCIAL RECORDS AND BOOKS OF ACCOUNT.
Except as set forth on SCHEDULE 5.1(2) hereto, maintain proper financial records
in accordance with GAAP which fully and correctly reflect all financial
transactions and all assets and liabilities of Borrower and each of its
Subsidiaries.
(f) TANGIBLE NET WORTH. Maintain at all times
consolidated Tangible Net Worth of not less than $37,000,000.00 plus 75% of
positive net income (after tax, and excluding accruals made for distributions to
subchapter S shareholders for subchapter S tax liability) earned by Borrower and
its Subsidiaries in each fiscal year starting July 1, 2000, calculated on a
cumulative basis.
(g) DEBT RATIO. Maintain at all times a consolidated
ratio of Senior Recourse Debt to Tangible Net Worth of not more than 5.0 to 1.
(h) INTEREST COVERAGE RATIO. Maintain as of the end of
each fiscal quarter commencing September 30, 2000, a consolidated Interest
Coverage Ratio of not less than 4.5 to 1 as calculated on a rolling four-quarter
basis (or if shorter, the period from July 1, 2000 to the then most recent
quarter end).
(i) MINIMUM EQUIPMENT RESERVE. Maintain a minimum
equipment reserve of 1.5% of net book value of the non-defaulted portfolio,
measured monthly.
(j) INSURANCE. Borrower, and each Subsidiary, will
maintain or cause to be maintained with responsible insurance companies
insurance with respect to the Collateral, its properties and business, including
personal property which secures the obligations of a related lessee under any
Lease, as applicable, against such casualties and contingencies and of such
types and in such amounts and deductibles as is customary in the case of similar
businesses, and
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will furnish to Bank prior to the initial Loan and upon request by Bank annually
thereafter, a certificate of an Officer of Borrower, as well as independent
evidence of such coverage, setting forth the nature and extent of all insurance
policies maintained by Borrower or lessors in accordance with this subsection;
provided that the policies may be materially altered or cancelled by the insurer
only after thirty (30) days' prior written notice to Bank. After the occurrence
and during the continuance of an Event of Default, Borrower hereby appoints Bank
as attorney-in-fact for Borrower to prove and adjust any losses and to endorse
any loss drafts in connection with such policies, to the extent covering losses
on Collateral. Borrower, and each Subsidiary, hereby assign to Bank all sums
which may become payable under such insurance with respect to the Collateral,
and Borrower shall give immediate written notice to Bank and to the insurers of
any significant loss or damage to the Collateral and shall promptly file proofs
of loss with such insurers.
(k) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve
all of its properties, necessary or useful in the proper conduct of its
business, in good working order and condition, ordinary wear and tear excepted,
and except to the extent replaced in the ordinary course of business.
(l) PAYMENT OF TAXES. Pay all taxes, assessments and
governmental charges of any kind payable by it as such taxes, assessments and
charges become due and before any penalty shall be imposed, except as Borrower
shall contest in good faith and by appropriate proceedings providing such
reserves as are required by GAAP.
(m) COMPLIANCE WITH ERISA. Cause each Plan to comply and
be administered in material accordance with those provisions of ERISA which are
applicable to such Plan.
(n) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve
and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
of its properties and where the failure to be so qualified would have a material
adverse effect.
(o) UCC FILING EVENT. Within five Business Days after
Bank notifies Borrower of a UCC Filing Event, Borrower will deliver to Bank (A)
executed and recordable UCC-3 assignments (or equivalent documents under
applicable law) assigning to Bank all of the UCC-1 Financing Statements or
equivalent documents held by Borrower as described in Section 4.1(f)(viii) with
respect to Equipment Leases and (B) all originals of all Equipment Leases.
Notwithstanding the foregoing, Bank shall have the right to request, and
Borrower shall immediately provide to Bank, at any time after an Event of
Default, such executed and recordable UCC-3 assignments and/or original
Equipment Leases as Bank may request.
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(p) MONTHLY LOAN AMOUNT CERTIFICATES. At the time each
monthly financial statement is required to be provided to Bank under this
Agreement, Borrower will provide to Bank a Loan Amount Certificate
(appropriately completed). If the Loan Amount Certificate shows that the
outstanding principal balance of the Note is greater than the then effective
Loan Amount with respect to all of the Equipment Leases, Borrower shall either
prepay the Note or pledge additional Collateral to Bank in an amount sufficient
to correct the shortfall.
(q) REPLACEMENT OF COLLATERAL OR MANDATORY PREPAYMENT
WITH RESPECT TO CERTAIN DEFAULTED EQUIPMENT LEASES AND CERTAIN EQUIPMENT. In the
event that (A) a default, including, without limitation, any payment default,
occurs under one or more Equipment Leases and such default is not cured within
60 days or (B) the Equipment subject to any Equipment Lease ceases for any
reason to be subject to that Equipment Lease, Borrower shall, within 30 days of
that event, either (i) prepay the Note in an amount equal to the Loan Amount
Value of that particular Equipment Lease, or (ii) replace the Equipment Lease
with a replacement Equipment Lease or Equipment Leases with a Net Book Value
equal to or greater than the replaced Equipment Lease. In the event that the
lessee of an Equipment Lease prepays any amount on that Equipment Lease, whether
through insurance proceeds, voluntary payments or otherwise, all such
prepayments shall immediately be paid to Bank to be applied to the Note. Upon
any prepayment or release under this Section, Bank will release its security
interest in the related Equipment Lease and Equipment subject to that Equipment
Lease, provided that in case of any such prepayment the Equipment Lease is paid
in full.
Section 5.2. NEGATIVE COVENANTS. So long as the Note shall remain
unpaid, Borrower will not, and will not permit its Subsidiaries to, unless Bank
shall give its prior written consent:
(a) LIENS. Create or suffer to exist any mortgage,
pledge, lien, security interest or other encumbrance with respect to any
Collateral under the Hypothecation Agreement except Permitted Encumbrances.
(b) MERGER, ETC. Merge or consolidate with any other
Person other than a King Affiliate; sell, divest, transfer, convey, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or a substantial portion of its assets (whether now owned or hereafter
acquired) to any other Person; provided, however, in the event that a merger or
consolidation with a King Affiliate would result in the surviving entity being
an entity other than Borrower or one of its Subsidiaries, then, upon such merger
or consolidation, the surviving entity shall be required to assume the
obligations of Borrower hereunder in writing in form and substance satisfactory
to Bank.
(c) TRANSACTIONS WITH AFFILIATES. Engage in any
transaction (including, without limitation, loans or financial accommodation of
any kind) with any Affiliate provided that such transactions are permitted if
they are on terms no less favorable to Borrower than would be obtainable if no
such relationship existed.
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(d) CHANGE IN NATURE OF BUSINESS. Make any material
change in the nature of the business of Borrower or any of its Subsidiaries,
taken as a whole, as carried on at the date hereof, or sell or divest any line
or division of its business.
(e) CONCENTRATION OF LESSEES. Permit any single lessee
under one or more Equipment Leases to be the lessee under Equipment Leases with
respect to Collateral having an aggregate Net Book Value greater than 7% of the
outstanding principal balance of the Loan; or permit the aggregate number of
lessees under Equipment Leases with the SunMicro Systems vendor program to have
an aggregate Net Book Value greater than 50% of the outstanding principal
balance of the Loan.
(f) SALE, TRANSFER OR ENCUMBRANCE OF ASSETS. Neither
Borrower nor any of its Subsidiaries will, without the prior written consent of
Bank, sell, lease, pledge, encumber, grant a security interest in (other than
(i) to Bank, or (ii) Permitted Encumbrances), or otherwise dispose of, move,
relocate, or transfer, whether by sale or otherwise, any of the Collateral,
except for the movement of Collateral in the ordinary course of business to
locations disclosed to Bank and where Borrower or any of its Subsidiaries have
executed and tendered to Bank appropriate UCC-1 financing statements for filing
or taken other steps required to enable Bank to perfect its lien.
(g) DISTRIBUTIONS, ISSUANCE OF STOCK, MANAGEMENT FEES.
Neither Borrower nor any of its Subsidiaries will issue, purchase, redeem or
retire any of its capital stock of any class, or any warrants or options to
acquire capital stock, whether now or hereafter outstanding, pay any management
fees or pay any dividends or distributions in cash, stock or other securities or
property, except for (i) stock issuances to employees pursuant to any Plan, (ii)
any payments covering Borrower's liability for subchapter S corporation taxes,
and (iii) distributions to Borrower by any wholly-owned Subsidiary.
(h) LOAN AND LOANS. Neither Borrower nor any of its
Subsidiaries will make any loans to any Person; guarantee any debt or other
obligation of any other Person; or loan to any employee, customer or other
Person any funds other than (i) loans in the ordinary course of Borrower's or
its Subsidiaries' business as a finance company, and (ii) loans of reasonable
out-of-pocket travel and related business expenses incurred by employees on
business pertaining to Borrower or its Subsidiaries.
(i) INCONSISTENT FINANCING STATEMENTS. Neither Borrower
nor any of its Subsidiaries will file, nor allow to remain on file, and
unreleased, any financing statement or other document which perfects or purports
to perfect any security interest in favor of any other Person which is
inconsistent with subsection (a) of this Section.
(j) MODIFICATION OF LEASE TERMS. Neither Borrower nor any
of its Subsidiaries will modify the terms of any Equipment Lease which
constitutes Collateral to the extent that such modification would make an
ineligible Equipment Lease eligible, without the prior written consent of Bank.
17
(k) SUBORDINATED INDEBTEDNESS. Neither Borrower nor any
of its Subsidiaries shall make any payment of any subordinated indebtedness not
permitted by the terms thereof as approved by Bank.
(l) MODIFICATION OF CERTAIN AGREEMENTS. Neither Borrower
nor any of its Subsidiaries shall consent to or enter into any amendment,
supplement or other modification of (a) any term, provision or agreement
contained in any agreement governing or relating to any other material
liabilities, if such amendment, supplement or other modification would be
materially adverse to Bank in its sole judgment; or (b) Borrower's or its
Subsidiaries' accounting policies regarding Leases, in either case if the
amendment, supplement or other modification would cause Borrower to not be in
compliance with the covenants hereunder, when Borrower otherwise would be in
compliance if the amendment, supplement or other modification had not been made.
ARTICLE VI
DEFAULT
Section 6.1. EVENTS OF DEFAULT. "Event of Default" in this Agreement
means any of the following events:
(a) Failure of Borrower to pay the principal of the Note
when due or, if payable on demand, upon demand, provided that Borrower may use a
five day grace period with respect to such a failure not more frequently than
twice in each calendar year (and in no event shall such grace periods be applied
to the same payment default);
(b) Failure of Borrower to pay any interest or fees
required to be paid hereunder or under the Note when due, provided that Borrower
may use a five day grace period with respect to such a failure not more
frequently than twice in each calendar year (and in no event shall such grace
periods be applied to the same payment default);
(c) Any representation or warranty made by, or on behalf
of, any Loan Party (other than the Bank) in, or pursuant to, any Loan Document
shall prove to, have been incorrect in any material respect when made;
(d) Default in performance of any other covenant or
agreement of any Loan Party (other than the Bank) in, or pursuant to, any Loan
Document and continuance of such default or breach for a period of 30 days after
written notice thereof to such Person by Bank;
18
(e) Any Loan Party (other than the Bank) shall generally
not pay its or his debts as such debts become due, or shall admit in writing its
or his inability to pay its or his debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any Loan Party (other than the Bank) seeking to adjudicate it or
him a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, custodianship, protection, relief, or composition of it
or him or its or his debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief, or the appointment of a receiver, custodian, trustee, or other similar
official for it or him or for any substantial part of its or his property; or
any Loan Party (other than the Bank) shall take any corporate action to
authorize any of the actions set forth above in this subsection; and in the case
of a proceeding of the type described in this paragraph commenced against any
Loan Party, that proceeding shall not be dismissed within 60 days or such Loan
Party (other than the Bank) shall consent to that proceeding;
(f) Borrower shall fail to pay any Debt (but excluding
Debt evidenced by the Note or Debt subordinated to the Note) of Borrower or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other default under any agreement or
instrument relating to any such Debt, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such default or event is to cause the automatic
acceleration of the maturity of such Debt; or any such Debt shall be declared to
be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
(g) The entry against Borrower or any Subsidiary of a
final judgment, decree or order for the payment of money in excess of
$100,000.00 and the continuance of such judgment, decree or order unsatisfied
for a period of 30 days without a stay of execution;
(h) Any Reportable Event (as defined in ERISA) shall have
occurred and continue for 30 days; or any Plan shall have been terminated by any
Borrower not in compliance with ERISA, or a trustee shall have been appointed by
a court to administer any Plan, or the Pension Benefit Guaranty Corporation
shall have instituted proceedings to terminate any Plan or to appoint a trustee
to administer any Plan;
(i) Borrower shall suspend the transaction of business or
is enjoined, restrained or in any prevented by court order from continuing to
conduct all or any material part of its business affairs.
(j) The failure by Borrower and Sunrise to consummate the
Merger as provided in the Merger Agreement.
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Section 6.2. RIGHTS AND REMEDIES. If any Event of Default shall occur
and be continuing, Bank may exercise any or all of the following rights and
remedies:
(a) Declare the Note, all interest thereon, and all other
obligations under, or pursuant to, any Loan Document to be immediately due and
payable, and upon such declaration such Note, interest and other obligations
shall immediately be due and payable, without presentment, demand, protest or
any notice of any kind, all of which are expressly waived;
(b) Exercise any right or remedy under the Hypothecation
Agreement, the Guaranty or any other right or remedy of a secured party under
the UCC.
(c) Exercise any other right or remedy available to Bank
at law or in equity.
Section 6.3. INDEMNIFICATION AND EXPENSES. Borrower agrees to hold Bank
harmless from and indemnify Bank against all liabilities, losses, damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against Bank (collectively, the "Costs") which arises out of this
Agreement, any other Loan Document or any transaction contemplated hereby or
thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, any other Loan Document, or any
transaction contemplated hereby or thereby, that, in each case, results from
anything other than the Bank's gross negligence or willful misconduct. The Bank
will notify Borrower of any event requiring indemnification within ten (10)
Business Days following the Bank's receipt of notice of commencement of any
action or proceeding against Bank, or following such time as Bank should
reasonably determine that the occurrence of an event is likely to give rise to a
claim for indemnification hereunder. Borrower will be entitled (but not
obligated) to assume the defense or settlement of any such action or proceeding
or to participate in any negotiations to settle or otherwise resolve any claim
using counsel of its choice; provided such counsel is reasonably satisfactory to
Bank. If Borrower elects to assume the defense or settlement of any such action
or proceeding, Bank (and its counsel) may continue to participate at its own
expense in such action or proceeding. Borrower also agrees to reimburse Bank as
and when billed by Bank for all the Bank's costs and expenses incurred in
connection with the enforcement or the preservation of the Bank's rights
under this Agreement, any other Loan Document or any transaction contemplated
hereby or thereby, including without limitation the reasonable fees and
disbursements of its counsel. Borrower's obligations under this Section 6.3
shall survive repayment of the Loan.
Section 6.4. DISCLAIMER FOR NEGLIGENCE. THE BANK SHALL NOT BE LIABLE
FOR ANY CLAIMS, DEMANDS, LOSSES OR DAMAGES MADE, CLAIMED OR SUFFERED BY
Borrower, excepting such as may arise through or could be caused by the Bank's
gross negligence or willful misconduct, but specifically including any liability
of Bank to Borrower arising or claimed to have arisen out of the Bank's ordinary
negligence.
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Section 6.5. LIMITATION ON THE BANK'S LIABILITY. Borrower's sole remedy
for any breach of contract, tort (excluding the Bank's gross negligence or
willful misconduct), or any wrong arising from the establishment, administration
or collection of the Loan shall be limited to Borrower's actual damages.
ARTICLE VII
MISCELLANEOUS
Section 7.1. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the
part of Bank in exercising any right or remedy under, or pursuant to, any Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy or power preclude other or further exercise
thereof, or the exercise of any other right, remedy or power. The remedies in
the Loan Documents are cumulative and are not exclusive of any remedies provided
by law.
Section 7.2. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of any Loan Document shall be effective unless such amendment or
waiver is in writing and is signed by Bank, and such amendment or waiver shall
be effective only in the specific instance and for the specific purpose for
which it was given.
Section 7.3. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telecopier communication)
and mailed or telecopied or delivered, if to Borrower, at its address stated in
the preamble hereof, Attention: Xxxxxxx X. Xxxxxxxx, and if to Bank, at its
address stated in the preamble hereof, Attention: Xxxxxx Xxxxxx; or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other party. All such notices and communications shall, when
mailed or telecopied, be effective when deposited in the mails or transmitted by
telecopier, respectively, addressed as aforesaid, except that notices to Bank
pursuant to the provisions of Article II shall not be effective until received
by Bank.
Section 7.4. COSTS AND EXPENSES. Borrower agrees to pay on demand all
costs and expenses of Bank in connection with the preparation of the Loan
Documents (including any and all Loans), including reasonable attorneys fees up
to $15,000.00 (assuming customary negotiations) and related legal expenses, as
well as all costs and expenses of Bank, including reasonable attorneys fees and
expenses, in connection with the administration and enforcement of the Loan
Documents (whether suit is commenced or not).
Section 7.5. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, Bank is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by Bank to or for the
credit or the account of Borrower or its Subsidiaries and arising under the Loan
Documents against any and all of the obligations of Borrower or its Subsidiaries
now or hereafter
21
existing under any Loan Document, irrespective of whether or not Bank shall have
made any demand under any Loan Document and although such obligations may be
unmatured. Bank agrees promptly to notify Borrower or its Subsidiaries after any
such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
Bank under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which Bank may have.
Section 7.6. GOVERNING LAW. All Loan Documents shall be governed by the
laws of the State of Illinois. Any term used in this Agreement and not otherwise
defined shall have the definition given that term, in the Uniform Commercial
Code as in effect in the State of Illinois from time to time. If any term in
this Agreement shall be held to be illegal or unenforceable, the remaining
portions of this Agreement shall not be affected, and this Agreement shall be
construed and enforced as if this Agreement did not contain the term held to be
illegal or unenforceable. Borrower hereby irrevocably submits to the
jurisdiction of the Circuit Court of Xxxx County, for the State of Illinois and
any United States District Court in the State of Illinois, over any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court.
Section 7.7. BINDING EFFECT; ASSIGNMENT. All Loan Documents shall be
binding upon and inure to the benefit of the Loan Parties and Bank and their
respective successors and assigns. Borrower shall not have the right to assign
its rights or interest under any such agreement without the prior written
consent of Bank.
Section 7.8. NO OBLIGATION TO RENEW. Borrower understands and expressly
agrees that Bank is under no obligation to renew or extend this Agreement, or
the Note, or provide any other or additional financing. The Bank's decision with
respect to any renewals, extensions or additional financing will be a separate,
independent decision and may involve factors other than, or in addition to,
Borrower's creditworthiness or prior relationship with Bank.
Section 7.9. FURTHER ASSURANCES. Borrower agrees to do such further
acts and things and execute and deliver such agreements, powers and instruments
as Bank may reasonably require or deem necessary to carry into effect the
purposes of this Agreement.
Section 7.10. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
Section 7.11. RELATIONSHIP. The Bank is acting in its sole capacity as
a lending institution with respect to Borrower and there is no partnership or
agency relationship created. The Bank assumes no fiduciary duty and no
conditions or suggestions of action or inaction shall be deemed to constitute
participation by Bank in the business of Borrower.
22
Section 7.12. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and shall not in any way be modified, varied or
amended unless in writing signed by the parties.
Section 7.13. HEADINGS. Such headings used in this Agreement are for
the convenience of reference only and shall not affect the construction of this
Agreement.
Section 7.14. WAIVER OF JURY. In the interest of expediting any
disputes that might arise between the parties to this Agreement, the parties
hereby waive their respective rights to a trial by jury of any dispute or claim
concerning this Agreement, the Note, the other Loan Documents and any other
documents or agreements contemplated by or executed in connection with this
Agreement.
Section 7.15. INTEREST LIMITATION. All agreements between Bank and
Borrower are expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of maturity or prepayment of the obligations
of Borrower owing Bank, shall the amount of interest paid or agreed to be paid
to Bank for the use, forbearance, loaning or retention of the obligations of
Borrower owing Bank exceed the maximum permissible interest rate under
applicable law. If, from any circumstances whatsoever, fulfillment of any
provisions of the Note or Loan Documents shall involve transcending the limit of
validity prescribed by law, then the obligation to be fulfilled shall
automatically be reduced to the limit of such validity. If, from any
circumstances, Bank should ever receive as interest an amount which would exceed
the highest lawful interest rate, such amount which would be in excess of such
highest lawful interest rate shall be applied to reduction of the principal
balance evidenced by the Note and not to the payment of interest. This provision
shall control every other provision of the Note and Loan Documents between Bank
and Borrower and shall be binding upon and available to any subsequent holder of
the Note.
Section 7.16. PARTICIPATION INTERESTS. Borrower acknowledges and agrees
that Bank may, and shall have the right to, upon three (3) days prior notice to
Borrower, sell participation interests in the Loan. Borrower agrees that Bank
may furnish any financial or other information concerning Borrower heretofore or
hereafter provided by Borrower to Bank, pursuant to this Agreement or otherwise,
to any prospective or actual purchaser of any participation or other interest in
any of the loans made by Bank to Borrower (whether under this Agreement or
otherwise), provided Bank has obtained a written confidentiality agreement from
such party, in form and substance satisfactory to Bank and Borrower.
Notwithstanding the foregoing, if Bank proposes to sell a participation interest
to a financial institution not a commercial bank affiliated with Bank, Bank will
first request the written approval of Borrower.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Credit Agreement to be
executed by their duly authorized officers as of the date first above written.
BORROWER:
THE KING MANAGEMENT CORPORATION
Attest:
/s/ By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------- ---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------------------
Secretary Its: Executive Vice President and CFO
--------------------------------------------
BANK:
LASALLE BANK NATIONAL ASSOCIATION
Attest:
/s/ By: /s/
------------------------- ---------------------------------------------
Secretary Name:
-------------------------------------------
Its:
--------------------------------------------
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