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EXHIBIT 10.24
CHATTEL LEASING
SECURITY AGREEMENT
SUTRO LEASING
This Chattel Leasing Agreement ("Agreement") is entered into as of
February 28, 1997 by and between Sutro Leasing, 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX 00000 (hereinafter called "Borrower") and BANCBOSTON LEASING INC.,
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter called
"BancBoston"). Borrower hereby grants to BancBoston to secure on a pro rata
basis (a) the payment of $11,782,274.97 plus interest and other charges as
provided in a certain Chattel Leasing Promissory Note of even date herewith from
Borrower to the order of BancBoston (as amended and in effect from time to time,
the "Note"), (b) the payment and performance of all of Borrower's obligations to
BancBoston under that certain Guaranty, dated as of the date hereof (as amended
and in effect from time to time, the "Guaranty"), delivered by Borrower to
BancBoston to guarantee the payment and performance of certain obligations of
T.A. Leasing Corp. to BancBoston, and (c) the payment and performance of all
other obligations of Borrower hereunder and the payment and performance of all
other obligations of Borrower to BancBoston whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising,
including in connection with any FUTURE ADVANCES (all of the foregoing, being
hereinafter called the "Obligations"), a continuing security interest in the
following personal property of Borrower wherever located, whether now owned or
hereafter acquired or arising, and any and all additions, substitutions,
accessions and proceeds thereto or thereof together with the right to any and
all manuals and other materials that contain technical data relating to the use,
operation or structure of the following (all of the same being hereinafter
called the "Collateral"):
All personal and fixture property of every kind and nature including
without limitation all furniture, fixtures, equipment, raw materials, inventory,
goods, accounts, contract rights (including rights under operating leases
wherein Borrower is lessor), rights to the payment of money, insurance refund
claims and all other insurance claims and proceeds, tort claims, chattel paper,
documents, instruments (including certified securities), deposit accounts and
all general intangibles including, without limitation, all uncertificated
securities, tax refund claims, license fees, patents, patent applications,
trademarks, trademark applications, trade names, copyrights, copyright
applications, rights to xxx and recover for past infringement of patents,
trademarks and copyrights, computer programs, computes software, engineering
drawings, service marks, customer lists, goodwill, and all licenses, permits,
agreements of any kind or nature pursuant to which Borrower possesses, uses or
has authority to possess or use property (whether tangible or intangible) of
others or others possess, use or have authority to possess or use property
(whether tangible or intangible) of Borrower, and all recorded data of any kind
or nature, regardless of the medium of recording including, without limitation,
all software, writings, plans, specifications and schematics.
All amounts owing with respect to the Obligations shall be secured pro
rata by the Collateral without distinction as to whether some Obligations are
then due and payable and other Obligations are not then due and payable.
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Borrower hereby warrants and covenants that:
1. LOCATION. The Collateral will be kept at the locations listed on
SCHEDULE 1 hereto and Borrower will not remove the Collateral from such
locations without providing at least 30 days prior written notice to BancBoston.
2. LIENS. Except for the security interest granted hereby, Borrower is
the sole legal and equitable owner of the Collateral free from all encumbrances
and will defend the same against the claims and demand of all persons claiming
the same interests or any interests adverse to BancBoston. Borrower has good
right and legal authority to create a security interest in the Collateral in the
manner herein contemplated. Borrower will not pledge, mortgage or create, or
suffer to exist, a security interest in the Collateral in favor of any person
other than BancBoston, except for liens to secure taxes, assessments and other
government charges in respect of obligations not overdue or liens on properties
to secure claims for labor, materials or supplies in respect of obligations not
overdue, and will promptly notify BancBoston of any lien or security interest
asserted or any attachment, levy, execution or other legal process levied
against or involving the Collateral, and will not sell or transfer the
Collateral or any interest therein without the prior written consent of
BancBoston.
3. PERSONAL PROPERTY. The Collateral shall remain personal property and
not be deemed to be a fixture irrespective of the manner of its attachment to
any real estate. If the Collateral is attached to real estate, Borrower will
promptly notify BancBoston, and will, on demand of BancBoston, use commercially
reasonable efforts to furnish to BancBoston a waiver or disclaimer signed by
each person having an interest in the real estate, of any interest in the
Collateral. Borrower will notify BancBoston in writing of any intended sale,
mortgage or of the terms and conditions of this Agreement to any prospective
purchaser, mortgagee, grantee or other transferee of the real estate or any
interest therein. Borrower will use commercially reasonable efforts to deliver
to BancBoston, no later than ninety (90) days after the date hereof, a waiver in
the form of SCHEDULE 3(a) hereto executed by each record owner and mortgagee of
real estate where the Collateral is located. The Collateral shall be used solely
by Borrower and its affiliates, and if the Collateral is used by an affiliate of
Borrower, Borrower shall lease the Collateral to such person pursuant to a
written lease in the form of SCHEDULE 3(b) hereto containing terms satisfactory
to BancBoston, shall deliver a manually signed original of such executed lease
to BancBoston, shall obtain and file signed financing statements in form and
substance satisfactory to BancBoston covering the Collateral so leased and shall
assign such financing statements to BancBoston.
4. CHANGE OF ADDRESS; FURTHER ASSURANCES. Borrower will promptly notify
BancBoston in writing of any change in address from that shown in this
Agreement, shall at all reasonable times and from time to time allow BancBoston,
by or through any of its officers, agents, attorneys or accountants, to examine,
inspect or make extracts from Borrower's books and records or inspect the
Collateral wherever located, and shall do, make, execute and deliver all such
additional and further acts, things, deeds, assurances and instruments as
BancBoston may reasonably require more completely to vest in and assure to
BancBoston its rights hereunder or in any of the Collateral.
5. INSURANCE. Borrower will keep the Collateral at all times insured by
such insurance satisfactory to BancBoston, and in any event and without specific
request by BancBoston, will insure the Collateral on an "all-risk" basis
including so-called extended coverage against fire, theft, and, in the case of
any motor vehicle, collision, and, without limiting the requirements of this
Section 5, in accordance with the insurance requirements set forth on SCHEDULE 5
hereto. All policies of insurance shall be with such insurance companies
satisfactory to BancBoston, and shall state that loss thereon is payable to
BancBoston (as loss
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payee and additional insured) and Borrower as their respective interests may
appear. All policies of insurance shall provide for not less than thirty (30)
days' notice of cancellation or change in form or nonrenewal to BancBoston and
shall insure the interest of BancBoston regardless of any breach or violation by
the Borrower or other person of the warranties, declarations or covenants
contained in such policies and, if requested by BancBoston, shall be delivered
to and held by it until all of the Obligations have been fully performed.
Borrower expressly authorizes BancBoston, after a default under Section 8 of
this Agreement, to adjust and settle claims under any insurance policy relating
to the Collateral. After a default under Section 8 of this Agreement, BancBoston
may act as attorney for Borrower in making and settling claims under any
insurance covering the Collateral.
6. MAINTENANCE; TAXES. Borrower will keep the Collateral in good order
and repair, reasonable wear and tear excepted, and will not use the same in
violation of law or any policy of insurance thereon. Borrower will pay promptly
when due all taxes and assessments upon the Collateral or for its use or
operation or upon this Agreement, except for taxes and assessments being
contested by Borrower in good faith and with respect to which adequate reserves
have been established.
7. DISCHARGE OF ENCUMBRANCES. In the exercise of its reasonable
discretion, BancBoston may pay or discharge taxes and other encumbrances at any
time levied or placed on the Collateral, make repairs thereof and place and pay
for insurance thereon and pay any necessary filing fees. Borrower agrees to
reimburse BancBoston on demand for any and all expenditures so made, and until
paid the amount thereof shall be an Obligation secured by the Collateral and
bear interest until paid at the rate for overdue payments under the Note.
BancBoston shall have no obligation to Borrower to make any such expenditures
nor shall the making thereof relieve Borrower of any default.
8. DEFAULT; REMEDIES. Borrower may have possession and use of the
Collateral until default. Upon the happening of any of the following events or
conditions (each a "default"), namely: (a) default (i) in the payment of any
installment of principal or interest under the Note when the same becomes due
and payable, whether on the scheduled date or any accelerated date, (ii) in the
payment of any Obligation (other than those in the preceding clause (1)) within
three (3) days after the same becomes due and payable, whether when ordinarily
payable or upon acceleration, (iii) in the payment to BancBoston of any monetary
obligation within three (3) days after the same becomes due by any endorser,
guarantor or surety of or for any of the Obligations, (iv) in the performance by
Borrower of any covenant contained herein or in the Note (other than the
covenants in ss.ss.5, 10 and 12 hereof, as to which no grace period shall
apply), which default remains unremedied for twenty (20) days, (v) in the
performance by any guarantor of the Obligations of any covenant in such
guarantor's guaranty, after giving effect to all applicable grace periods, (vi)
in the performance of any obligation or covenant of Borrower to BancBoston under
the Guaranty or any other note or security agreement, or any obligation to
BancBoston of any endorser, guarantor or surety for any of Borrower's
obligations thereunder, after giving effect to all applicable grace periods,
(vii) in the performance of any obligation or covenant of T.A. Leasing Corp. to
BancBoston under that certain Amended and Restated Chattel Leasing Promissory
Note dated November 29, 1996 and amended and restated as of February 28, 1997,
as the same may be amended and in effect from time to time, (b) default in the
payment or performance of (i) any promissory note, credit agreement, loan
agreement, conditional sales contract, guaranty, lease, indenture, bond;
debenture or other material obligation whatsoever to which Borrower is a party
or by which Borrower is bound in excess of $3,000,000 as a result of which
default a party thereto or a holder thereof is entitled to accelerate the
obligations of Borrower thereunder, and such default has not been waived or
cured in accordance with the terms of the contract pursuant to which it is
payable, or (ii) any trade, tax or other current obligation of Borrower in
excess of $3,000,000 as they mature, unless
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such obligations are being contested diligently and in good faith; (c) any
representation or warranty of Borrower in this Agreement or the Guaranty proves
false, erroneous or misleading in any material respect; (d) loss, theft,
material damage or destruction of or to any of the Collateral to the extent not
covered by insurance (provided that the occurrence of the events described in
this clause (d) shall not constitute a default for purposes of this clause (d)
until such time as the aggregate book value of Collateral subject to events
described in this clause (d) which is not covered by insurance equals or exceeds
$1,000,000, and in such event shall constitute a default only if after such
aggregate book value of Collateral not covered by insurance exceeds such amount
Borrower does not immediately prepay the Obligations under the Note in an amount
equal to the amount of the loss, theft, damage or destruction or replace such
Collateral with assets of equivalent value reasonably acceptable to BancBoston);
(e) involuntary liens on any Collateral which do not secure any obligation which
is otherwise prohibited by this Agreement and which are removed or discharged
within thirty (30) days so long as (i) Borrower immediately (and in any event
within ten days of imposition of the lien) gives BancBoston written notice of
the lien, (ii) Borrower in BancBoston's reasonable judgment is taking all
reasonable steps to remove the lien, (iii) in BancBoston's reasonable judgment
there is a reasonable likelihood the lien will be removed and (iv) no
foreclosure proceedings are instituted or execution levied; (f) dissolution,
termination of existence, insolvency, business failure, appointment of a
receiver of any part of the property of, assignment for the benefit of creditors
by, or the commencement of any proceeding under any bankruptcy or insolvency
laws by or against Borrower, any lessee of Collateral pursuant to a lease
described in Section 3, or any endorser, guarantor or surety of or for any
Obligation (provided that nothing herein shall be deemed to cause a default if
any lessee of Collateral or endorser, guarantor (other than JHFSC Acquisition
Corp.) or surety of or for any Obligation terminates its existence or dissolves
and such action is, in the judgment of Borrower, desirable and does not have a
material adverse effect on the business, operations or condition (financial or
otherwise) of Borrower) and, in the case of any bankruptcy or insolvency
proceeding commenced against Borrower, any lessee of Collateral pursuant to a
lease described in Section 3, or any endorser, guarantor or surety of or for any
Obligation, Borrower or any such other person shall indicate its approval
thereof, consent thereto or acquiescence therein or such proceeding shall not
have been dismissed within sixty (60) days following the filing thereof; (g)
such a change in the ownership of Borrower by JHFSC Acquisition Corp. as in the
opinion of BancBoston increases its risk; (h) any default under any lease
entered into by Borrower pursuant to Section 3 hereof (provided that so long as
no default exists hereunder or would exist after giving effect to any such
waiver, Borrower may waive defaults (other than insolvency defaults) under any
such lease); or (i) any Event of Default under and as defined in that certain
Revolving Credit Agreement dated as of November 29, 1996, by and among JHFSC
Acquisition Corp., the other lenders named therein and The First National Bank
of Boston for itself and as agent shall have occurred; thereupon, and as long as
such event continues, BancBoston may immediately without notice or demand
declare all of the Obligations to be due and payable, and BancBoston shall then
have in any jurisdiction where enforcement hereof is sought, in addition to all
other rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code of Massachusetts, including without limitation, the
right to take immediate possession of the Collateral, and for such purpose
BancBoston may, so far as Borrower can give authority therefor, enter upon any
premises on which the Collateral, or any part thereof, may be situated and
remove the same therefrom without liability to Borrower for damages related
thereto.
In addition, after the occurrence of a default, the following
provisions shall apply: Borrower will upon demand make the Collateral available
to BancBoston at a place and time designated by BancBoston which is reasonably
convenient to both parties. BancBoston may sell, lease or otherwise dispose of
the Collateral at public or private sale with or without having the Collateral
at the place of sale and upon terms and in such manner as BancBoston may
determine and, unless prohibited by applicable law, BancBoston may purchase any
Collateral at
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such sale. Upon such sale the Collateral shall be held by the purchaser
absolutely free of any claims or rights whatsoever, all such rights or claims
hereof being waived and released by the Borrower. Prior to disposition of
Collateral pursuant to this Agreement, BancBoston may, at its option, cause any
of the Collateral to be repaired or reconditioned, but not upgraded unless
mutually agreed, in such manner and to such extent as to make such Collateral
saleable, and all reasonable sums expended therefor by BancBoston shall be
repaid by Borrower and be part of the Obligations secured hereby. Unless the
Collateral threatens to decline rapidly in value, BancBoston will give Borrower
at least five days' prior written notice of the time and place of any public
sale of the Collateral or of the time after which any private sale thereof is to
be made. From the proceeds of the sale, BancBoston shall be entitled to retain
(i) all sums secured hereby, (ii) its reasonable expenses of retaking, holding,
preparing for sale and selling, and (iii) reasonable legal expenses incurred by
it in connection herewith and with such sale.
9. WAIVERS. Borrower waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect both to the Obligations and
the Collateral, Borrower assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
Collateral, to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as BancBoston may deem advisable. BancBoston shall have no
duty (other than the duty of reasonable care) as to the collection or protection
of the Collateral or any income thereon, nor as to the preservation of rights
against prior parties or relating to the Collateral. BancBoston may exercise its
rights with respect to the Collateral without resorting or regard to other
collateral or sources of reimbursement for liability. BancBoston shall not be
deemed to have waived any of its rights relating to the Obligations or the
Collateral unless such waiver is in writing and signed by BancBoston. No delay
or omission on the part of BancBoston in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of BancBoston relating to the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, shall be
cumulative and may be exercised separately or concurrently. At any time upon
written request of BancBoston, at the sole expense of the Borrower, the Borrower
will promptly and duly execute and deliver any and such further instruments and
documents and take such further action as BancBoston may reasonably deem
desirable in obtaining the full benefit of this Agreement and of the rights and
powers herein granted. The Borrower also authorizes BancBoston to act as
Borrower's agent in order to file any financing statement or continuation
statement under the Uniform Commercial Code without the signature of Borrower in
order to effectuate the purposes of this Agreement.
10. CHANGE IN NAME OR CORPORATE STRUCTURE. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, has all requisite corporate power to own its property and
conduct its business as now conducted and as presently contemplated, and is in
good standing as a foreign corporation and is duly authorized to do business in
each jurisdiction where such qualification is necessary. Borrower will not
change its name, identity or corporate structure in any manner which might make
any financing or continuation statement filed hereunder seriously misleading
within the meaning of Section 9-402(7) of the Uniform Commercial Code (or any
other then applicable provision of the Code) unless Borrower shall have given
BancBoston at least thirty (30) days' prior written notice thereof or shall have
delivered to BancBoston acknowledgment copies of UCC-3 Financing Statements
reflecting such change duly executed and duly filed in each jurisdiction in
which UCC-1 filings were required in order to perfect the security interest
granted by this Agreement in the Collateral and shall have taken all action (or
made arrangements to take such
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action concurrently with such change if it is impossible to take such action in
advance) necessary or reasonably requested by BancBoston to amend such financing
statement or continuation statement so that it is not seriously misleading.
11. SECURITY INTEREST. The Borrower represents that this Agreement
constitutes a valid and continuing first lien on and first perfected security
interest in favor of BancBoston in the Collateral, prior to all other liens,
encumbrances, security interests and rights of others and is enforceable as such
against creditors of the Borrower, any owner of the real property where any of
the Collateral is located, any purchaser of such real property and any present
or future creditor obtaining a lien on such real property. Other than Uniform
Commercial Code financing statements executed in favor of BancBoston in
connection with this Agreement, no financing statements under the Uniform
Commercial Code of any state or other instrument evidencing a lien which names
Borrower as debtor is on file and Borrower has not signed any such document or
any security agreement authorizing any secured party thereunder to file any such
financing statement or instrument. Borrower agrees that if Borrower wishes to
enter into additional financing arrangements for capital assets BancBoston shall
have the opportunity to provide such financing arrangements before Borrower
shall seek financing from another lender. If BancBoston declines to provide such
financing on terms reasonably satisfactory to Borrower, BancBoston will release,
pursuant to documents satisfactory to BancBoston, from the lien of this
Agreement the capital assets to be so financed by the other lender; PROVIDED
that the terms of any such other financing shall be no more unfavorable to
Borrower than the terms offered by BancBoston.
12. FINANCIAL STATEMENTS. Borrower shall annually, within ninety (90)
days after the close of the fiscal year for Borrower, furnish to BancBoston
financial statements of Borrower and JHFSC Acquisition Corp., including a
balance sheet as of the close of such year and statements of income and retained
earnings for such year, prepared in accordance with generally accepted
accounting principles, consistently applied from year to year, and certified by
Borrower's chief financial officer, in the case of Borrower's statements, and by
independent public accountants for JHFSC Acquisition Corp., in the case of its
financial statements. If requested by BancBoston, Borrower shall also provide
quarterly financial statements of Borrower, similarly prepared for each of the
first three quarters of each fiscal year, certified (subject to normal year-end
audit adjustments and the absence of footnotes) by the chief financial officer
of Borrower and furnished to BancBoston within sixty (60) days following the end
of the quarter, and such other financial information as may be reasonably
requested by BancBoston.
13. MISCELLANEOUS. This Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of The Commonwealth of Massachusetts. This Agreement is
intended to take effect as a sealed instrument. Captions are intended for
convenience only and are not to be considered as part of the text of this
Agreement. If any provision of this Agreement shall be held by any court of
competent jurisdiction to be unenforceable, such holding shall not affect or
impair any other provision hereof.
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IN WITNESS WHEREOF, Borrower has duly executed four original
counterparts of this Agreement as of the date first written above.
SUTRO LEASING
By: /s/ Xxxx Xxxx Xxxxxxx
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Title: CFO, Secretary
--------------------------------
Hereunto Duly Authorized
Accepted:
BANCBOSTON LEASING INC.
By:___________________________
Title:
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IN WITNESS WHEREOF, Borrower has duly executed four original
counterparts of this Agreement as of the date first written above.
SUTRO LEASING
By:
-----------------------------------
Title:
--------------------------------
Hereunto Duly Authorized
Accepted:
BANCBOSTON LEASING INC.
By: /s/ Xxxxxxxxx X. Wamen
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Title: Assistant Vice President
BOS-BUS:341415.4
