AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement is entered into as
of October 28, 1998 between PDS FINANCIAL CORPORATION - NEVADA ("Borrower"),
a Nevada corporation, having its principal place of business at 0000 XxXxxx
Xxxxx, Xxx Xxxxx, Xxxxxx 00000, and XXXXXX FINANCIAL, INC., a Delaware
corporation ("Lender").
WHEREAS, Borrower and Lender have heretofore entered into a Loan and
Security Agreement dated as of June 20, 1997 (the "Original Loan Agreement");
and
WHEREAS, Borrower and Lender desire to amend said Original Loan
Agreement by amending and restating it in its entirety;
NOW, THEREFORE, in consideration of the parties' mutual undertakings,
hereby evidenced, and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that the
provisions of the Original Loan Agreement are hereby amended and restated, so
as to be and read in their collective entirety as follows:
PRELIMINARY STATEMENT:
Lender understands that Borrower is engaged in the sale or lease of
various Eligible Equipment (this and all other capitalized terms are defined
in Section 1.1 below), and that Borrower may from time to time offer to
Lender the opportunity to finance leases, installment sale contracts and
other chattel paper arising out of such business. This Agreement sets forth
the terms and conditions which will be applicable to any leases, installment
sale contracts and other chattel paper that Lender may, in its sole
discretion, elect to finance under an ongoing lease discounting facility, a
residual financing facility, and/or a non-recourse facility.
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement and in the other Loan
Documents, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such definitions to be
applicable both to the singular and plural terms defined):
AAA: American Appraisal Associates.
ACH: Automated Clearing House.
ACQUISITION COST: all costs and expenses incurred by an End-User
(in the case of installment/conditional sales contracts) or by Borrower
(in the case of any Leases with Borrower as lessor) in connection with
the acquisition of any Eligible Equipment, including, without
limitation, sales or use taxes, freight or installation costs, and
license fees, but excluding any deposits (including security deposits)
or down/advance payments made by End-User, or manufacturer's discounts.
ADVANCE: a loan which is part of the Facility.
AFFILIATE: any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common
control with another Person. The term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise. For the purposes hereof,
any Person which owns or controls, directly or indirectly, 51% or more
of the securities of another Person shall be deemed to "control" such
Person.
AGREEMENT or LOAN AND SECURITY AGREEMENT: this Amended and
Restated Loan and Security Agreement, as amended or supplemented at any
time.
AMORTIZATION SCHEDULE: a schedule approved by Lender for the
repayment of each Advance.
APPROVED CONTRACT TERM: without the prior written approval of
Lender, a period of time not less than 24 months and not more than 48
months.
ASSIGNMENT: an assignment of Contracts and Liens in the form of
EXHIBIT A executed by Borrower from time to time in favor of Lender in
conjunction with each Advance.
BANK: First Bank National Association.
BLOCKED ACCOUNT: the account at the Bank subject to the Blocked
Account Agreement, to which ACH payments from certain End-Users through
the Bank's EFT service are directed.
BLOCKED ACCOUNT AGREEMENT: the arrangement between Lender,
Borrower and the Bank in the form of EXHIBIT J, covering ACH billing of
payments from certain End-Users using the Bank's EFT service, directed
to the Blocked Account.
BORROWER LIEN: a Lien on Collateral granted by an End-User to
Borrower, which Lien has been assigned by Borrower to Lender pursuant to
an Assignment.
BORROWER'S OBLIGATIONS: (i) all liabilities, obligations and
covenants imposed upon Borrower pursuant to the terms of the Loan
Documents, and (ii) all costs of litigation, collection, reasonable
attorneys' fees and other costs expended or incurred in connection with
the enforcement of Lender's rights hereunder and with respect to the
Contracts and the Facility Equipment.
BUSINESS DAY: any day other than (i) a Saturday, (ii) Sunday or
(iii) other day on which The First National Bank of Chicago, Chicago,
Illinois is closed.
CASUALTY: an event in which any item of Facility Equipment or any
portion thereof is lost, damaged (and such damage cannot reasonably be
repaired by Borrower or an End-User of such Facility Equipment within 60
days), destroyed, stolen, confiscated, requisitioned or condemned
regardless of cause.
CASUALTY PAYMENTS: all proceeds of the Collateral which arise out
of any Casualty, including, without limitation, insurance claims, tort
claims, or reimbursement payments with respect to claims for indemnity.
CERTIFICATE OF ACCEPTANCE: a certificate of delivery and
acceptance executed by an End-User pursuant to a Contract with respect
to Facility Equipment, substantially in the form included in SCHEDULE
4.1.2.
CLOSING: the execution by Borrower and Lender of the Loan
Documents.
CLOSING CERTIFICATE: a certificate in the form of EXHIBIT C
executed by a Responsible Officer on behalf of Borrower.
CLOSING DATE: the date upon or as of which the Closing occurs.
COLLATERAL: the Property described in Section 3.2.
CONTRACT: (i) a lease of Eligible Equipment by and between
Borrower, as lessor, and an End-User, as lessee, or (ii) a note and
security agreement/conditional sale contract by and between Borrower, as
secured party, and an End-User, as debtor.
CONTRACT EVENT OF DEFAULT: the Event of Default described in
Section 8.3.1.
CONTRACT FUNDING REQUEST: a request for an Advance in the form of
EXHIBIT E delivered by Borrower to Lender, with all attachments as
specified therein.
CONTRACT PAYMENT LETTER: a letter in the form of EXHIBIT F.
CONTRACT PROCEEDS: funds received by Borrower with respect to any
Facility Contract or any Facility Equipment which is the subject of a
Facility Contract.
DEFAULT RATE: an annual rate equal to 2% plus the Facility Rate,
as applicable.
DEFAULT RATE PERIOD: a period of time commencing on the date that
Lender declares in writing to Borrower that a Borrower Event of Default
has occurred and that the Default Rate is applicable and ending on the
date that such Borrower Event of Default is cured or waived.
DISBURSEMENT DATE: any date on or after the Closing Date upon
which the proceeds of any Advance are disbursed.
EFT: Electronic Funds Transfer.
ELIGIBLE CONTRACT: a Contract (i) as to which the applicable
Facility Funding Amount will not exceed the sum of $2,000,000.00 nor be
less than $250,000.00 without the prior written approval of Lender, (ii)
which conforms to Lender's credit underwriting standards, and (iii)
meets all of the requirements set forth in Section 5.9 and all
subsections thereunder, and (iv) which is in all other respects
acceptable to Lender.
ELIGIBLE END-USER: an End-User (i) which is not in bankruptcy or
receivership or subject to a reorganization proceeding of any kind or
insolvent, (ii) which is not in default or breach under any of the terms
of the applicable Contract, and (iii) which, pursuant to underwriting
standards jointly agreed upon in writing between Borrower and Lender, is
a financially responsible and creditworthy commercial, Native American
or institutional entity (other than a Governmental Body), PROVIDED,
HOWEVER, that unless otherwise approved by Lender, Native American
End-Users shall not be considered Eligible End-Users under the
Non-Recourse Facility.
ELIGIBLE EQUIPMENT: gaming or other equipment (i) which is new or
used, (ii) which is in good condition, repair and working order, (iii)
which is insured in the manner provided in the applicable Contract, (iv)
(A) which is owned by Borrower free and clear of all Liens except a
Lender Lien, or (B) in which the End-User thereof has granted Borrower a
security interest free and clear of all Liens except Permitted Liens,
(v) which is located within the continental United States, (vi) which is
subject to an Eligible Contract, and (vii) which is otherwise approved
by Lender; PROVIDED, HOWEVER, that under the Residual Financing
Facility, new slot machines shall be considered an additional Eligible
Equipment criterion.
END-USER: the end-user under a Contract.
EQUIPMENT: equipment which has been approved by Lender, free and
clear of all liens and encumbrances, together with all substitutions and
replacements for such equipment, and all accessories, attachments,
parts, upgrades, features and peripheral equipment now or hereafter
attached to or used in connection therewith.
ESTIMATED RESIDUAL: as reflected on the Amortization Schedule to
each Promissory Note executed in conjunction with the Residual Financing
Facility, Borrower's estimated value, as of the end of the related
primary Contract term, of Facility Equipment.
EVENT OF DEFAULT: any Borrower Event of Default or Contract Event
of Default.
EVIDENCE OF INSURANCE: either (i) an original certificate of
insurance, (ii) documentation sufficient to establish coverage under a
previously approved policy of Borrower, or (iii) if approved in writing
by Lender, evidence of self-insurance by an End-User under a Facility
Contract.
FACILITY: the Advances which may be made by Lender to Borrower
under the Lease Discounting Facility, the Residual Financing Facility
and/or the Non-Recourse Facility, all pursuant to Article II and Section
4.2.
FACILITY CONTRACT: an Eligible Contract which is subject to an
Advance, along with all applicable related documentation. For the
purposes of this Agreement, all references to a schedule under a
Facility Contract shall be deemed to incorporate the terms and
conditions of the related master Lease.
FACILITY EQUIPMENT: any Eligible Equipment which is the subject
of a Facility Contract.
FACILITY FUNDING AMOUNT: with respect to Advances made on or
after October 28, 1998:
(i) with respect to each Eligible Contract which is proposed to be
made the subject of an Advance under the Lease Discounting
Facility or the Non-Recourse Facility, the lesser of:
(A) the Acquisition Cost for each item of Facility Equipment, or
(B) the present value of all assigned periodic payments due
thereunder for the Approved Contract Term of each such
Facility Contract, using a discount rate to determine such
present value equal to the Facility Rate;
(ii) with respect to each Eligible Contract which is proposed to
be made the subject of an Advance under the Residual Financing
Facility, the lesser of:
(A) the difference between
(I) the present value of all assigned periodic payments due
thereunder for the Approved Contract Term of each such
Facility Contract, using a discount rate to determine
such present value equal to the Facility Rate, and
(II) the Acquisition Cost for the related items of Eligible
Equipment; or
(B) with respect to Eligible Contracts deemed "Core Credits" by
Lender, fifteen percent (15%) of the related Eligible
Equipment Acquisition Cost; with respect to Eligible
Contracts deemed "High
Quality Credits" by Lender, thirty percent (30%) of the
related Eligible Equipment Acquisition Cost.
With respect to Advances made prior to October 28, 1998, the principal
amount set forth in the applicable Facility Note.
FACILITY NOTE: a full recourse promissory note in the form of
EXHIBIT G or a non-recourse promissory note in the form of EXHIBIT G1,
as applicable, executed by Borrower in favor of Lender in conjunction
with each Advance.
FACILITY RATE: unless otherwise agreed to in writing by and
between Lender and Borrower with respect to a particular Advance,
(i) with respect to each Lease Discounting Facility Advance made on
or after October 28, 1998, for the group of Eligible Contracts
deemed "High Quality" by Lender, a fixed per annum interest rate
equal to the sum of (A) 1.90%; PLUS (B) the all-in rate for a
maturity equal to the weighted average term of the Contracts
subject to the applicable Advance, as set forth in Lender's HFI
CAPITAL MARKETS INDICATIONS report for the week in which the
applicable Disbursement Date occurs;
(ii) with respect to (1) each Lease Discounting Facility Advance made
on or after October 28, 1998, for the group of Eligible Contracts
deemed "Core Quality" by Lender, and (2) each Residual Financing
Facility Advance made on or after October 28, 1998, a fixed per
annum interest rate equal to the sum of (A) 2.40%; PLUS (B) the
all-in rate for a maturity equal to the weighted average term of
the Contracts subject to the applicable Advance, as set forth in
Lender's HFI CAPITAL MARKETS INDICATIONS report for the week in
which the applicable Disbursement Date occurs;
(iii) with respect to each Advance made prior to October 28, 1998, as
reflected on the applicable Facility Note for each Advance; and
(iv) with respect to each Non-Recourse Facility Advance, a rate as
Lender shall determine in its sole discretion on a Eligible
Contract by Eligible Contract basis.
FULL RECOURSE FACILITY: the Lease Discounting Facility and/or the
Residual Financing Facility.
GAAP: generally accepted accounting principles as in effect from
time to time, which shall include the official interpretations thereof
by the Financial Accounting Standards Board, consistently applied.
GAMING AUTHORITIES: the governmental agencies and/or commissions
having jurisdiction over Borrower in the various states in which
Borrower does business.
GAMING LAWS: the statutes and regulations relating to gaming and
the operation of Gaming Device Goods promulgated by the various states
and Gaming Authorities in which Borrower does business.
GAMING DEVICE GOODS: Equipment consisting of electronic and
mechanical gaming devices with integral attachments.
GOOD FUNDS: United States dollars available to Lender in Federal
funds at or before 2:00 p.m. Chicago time on a Business Day.
GOVERNMENTAL BODY: any foreign, federal, state, municipal or
other government, or any department, commission, board, bureau, agency,
public authority or instrumentality thereof or any court or arbitrator.
GUARANTOR: PDS FINANCIAL CORPORATION
GUARANTY: the guaranty previously delivered by PDS FINANCIAL
CORPORATION in conjunction with the Original Loan Agreement, as amended,
supplemented or otherwise modified from time to time.
INCIPIENT DEFAULT: any event or condition which, with the giving
of notice or the lapse of time, or both, would become an Event of
Default.
INTANGIBLE COLLATERAL: as defined in Section 3.2(b).
LEASE: any lease agreement or master lease agreement pertaining
to Eligible Equipment between Borrower, as lessor and another Person, as
lessee.
LEASE DISCOUNTING FACILITY: the Lease Discounting Facility
described in SECTION 2.1.1.
LENDER LIEN: the Lien on the Collateral granted by Borrower to
Lender pursuant to Article III of this Agreement.
LIEN: any mortgage, deed of trust, hypothecation, pledge,
security interest, encumbrance, lien or charge of any kind
(including any agreement to give any of the foregoing), any conditional
sale or other title retention agreement or any lease in the nature of
any of the foregoing.
LOAN DOCUMENTS: this Agreement, the Notes, Guaranty, the
Assignments, the Contract Funding Requests, the Closing Certificate, UCC
financing statements, and all other documents, instruments, and
certificates executed by Borrower pursuant to this Agreement.
LOAN REPAYMENT AMOUNT: with respect to an Advance at any time,
the aggregate unpaid principal of, and accrued interest (including any
interest accrued at the Default Rate) computed in accordance with the
Simple Interest Method, on such Advance.
LOCKBOX: the arrangement with the Bank, who will act as the agent
for collection of all remittances and proceeds due to Borrower from
End-Users subject to Facility Contracts, and which shall be identified
as follows:
PDS Financial Corporation - Nevada
_________________________
LOCKBOX AGREEMENT: the agreement among Borrower, Guarantor,
Lender and Bank, substantially in the form attached hereto as EXHIBIT D,
which shall set forth the terms, conditions and provisions of the
Lockbox.
NATIVE AMERICAN: pertaining to any Indian tribe or
instrumentality or entity thereof covered by the Indian Gaming
Regulatory Act (IGRA), 25 U.S.C. Sections 2701-2721, or any similar
successor legislation.
NON-RECOURSE FACILITY: the Non-Recourse Facility set forth in
SECTION 9.13 hereof.
NOTES: the Facility Note executed in conjunction with each
Advance.
ORDINARY PREPAYMENT PREMIUM: (i) Five Percent (5%) of the amount
prepaid if prepaid prior to the first anniversary of the related
Disbursement Date, (ii) Four Percent (4%) of the amount prepaid if
prepaid after the first anniversary to the second anniversary of the
related Disbursement Date, (iii) Three Percent (3%) of the amount
prepaid if prepaid after the second anniversary to the third anniversary
of the related Disbursement Date; and (iv) Two Percent (2%) of the
amount prepaid if prepaid after the third anniversary of the related
Disbursement Date.
PDS LOAN AGREEMENT: that certain Amended and Restated Loan and
Security Agreement dated as of October 28, 1998 by and between Lender
and PDS FINANCIAL CORPORATION, as amended from time to time.
PERMITTED LIENS: any of the following Liens: (i) the Lender Lien;
(ii) the Contracts; (iii) any Borrower Lien; (iv) any Liens expressly
subordinate to (i), (ii) and/or (iii) above; and (v) Liens for taxes or
assessments and similar charges, which either are (A) not delinquent or
(B) being contested diligently and in good faith by appropriate
proceedings, and as to which Borrower has set aside adequate reserves on
its books.
PERMITTED SUBSTITUTION: the substitution by Borrower of an
Eligible Contract for a Facility Contract, in accordance with the
provisions of Section 3.3, using the form of Substitution Agreement set
forth in EXHIBIT M.
PERSON: any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party, Native American tribe or Governmental Body.
PROPERTY: all types of real, personal or mixed property and all
types of tangible or intangible property.
RATIFICATION OF GUARANTY: the ratification of Guaranty,
substantially in the form of Exhibit P attached hereto and incorporated
herein, to be delivered by PDS FINANCIAL CORPORATION in favor of Lender.
REPLACEMENT CONTRACT: a Facility Contract which is created by the
terminating of an existing Facility Contract and financing a portion of
the Eligible Equipment on a new Facility Contract with the same End-User
or an End-User meeting equivalent credit criteria as determined by
Lender.
RESIDUAL FINANCE FACILITY: the Residual Finance Facility
described in SECTION 2.1.2.
RESIDUALS: all proceeds (net of refurbishment costs, if any)
derived from the Equipment as a result of (i) extended or renewal
Contract payments, (ii) exercised purchase options, and/or (iii) sale or
lease of the Equipment to third parties; PROVIDED, HOWEVER, that with
respect to such extended or renewal Contract payments, or third-party
lease proceeds, such proceeds (including any estimated fair market value
purchase option at end of the renewal period as reflected in the most
recent AAA report referred to in Section 6.4(v) hereof) shall be
discounted to present value using a discount rate equal to the Facility
Rate in effect at the time of such re-lease.
RESPONSIBLE OFFICER: any of the Chairman, President, Treasurer,
Secretary or Vice President of Borrower.
SODAK: Sodak Gaming, Inc.
UCC: the Uniform Commercial Code.
1.2 TIME PERIODS. In this Agreement and the other Loan Documents, in
the computation of periods of time from a specified date to a later specified
date (i) the word "from" means "from and including," (ii) the words "to" and
"until" each mean "to, but excluding" and (iii) the words "through," "end of"
and "expiration" each mean "through and including." All references in this
Agreement and the other Loan Documents to "month," "quarter" or "year" shall
be deemed to refer to a calendar month, quarter or year.
1.3 ACCOUNTING TERMS. Unless otherwise specified in this Agreement, all
accounting terms used herein shall be construed, all accounting
determinations hereunder shall be made, and all financial statements required
to be delivered pursuant hereto shall be prepared in accordance with GAAP.
1.4 REFERENCES. All references in this Agreement to an "Article,"
"Section," "subsection," "subparagraph," "clause," "Schedule" or "Exhibit,"
unless otherwise indicated, shall be deemed to refer to an Article, Section,
subsection, subparagraph, clause, Schedule or Exhibit, as applicable, of or
to this Agreement.
1.5 LENDER'S DISCRETION. Whenever the terms "satisfactory to,"
"determined by," "acceptable to," "shall elect," "shall request," or similar
terms are used in this Agreement or any of the other Loan Documents to apply
to Lender, except as otherwise specifically provided herein or therein, such
terms shall mean satisfactory to, at the election of, determined by,
acceptable to, or requested by, Lender, in its sole, but reasonable,
discretion.
1.6 STATEMENTS AS TO KNOWLEDGE. Any statements, representations or
warranties which are based upon the best knowledge of Borrower shall be
deemed to have been made after due inquiry with respect to the matter in
question.
ARTICLE II
FACILITIES AND PAYMENT/PREPAYMENT TERMS
2.1 THE FACILITIES.
2.1.1 THE LEASE DISCOUNTING FACILITY. The Lease Discounting
Facility is one or more full recourse Advances made by Lender from time
to time at its sole discretion to fund Eligible Contracts, subject to
the provisions of Article II and Section 4.2. Notwithstanding anything
contained herein to the contrary, the maximum combined amount
outstanding under (i) the Lease Discounting Facility plus (ii) the Lease
Discounting Facility under the PDS Loan Agreement, plus (iii) the
Residual Financing Facility, plus (iv) the Residual Financing Facility
under the PDS Loan Agreement, at any one time shall not exceed Twenty
Five Million Dollars ($25,000,000.00).
2.1.2 THE RESIDUAL FINANCING FACILITY. The Residual Financing
Facility is one or more full recourse Advances made by Lender from time
to time at its sole discretion to fund Eligible Contracts, subject to
the provisions of Article II and Section 4.2. No Contract shall be
considered for an Advance under the Residual Financing Facility unless
it has already been approved for an Advance under the Lease Discounting
Facility. Notwithstanding anything contained herein to the contrary, the
maximum combined amount outstanding under (i) the Residual Financing
Facility plus (ii) the Residual Financing Facility under the PDS-Nevada
Loan Agreement, at any one time, shall not exceed Five Million Dollars
($5,000,000.00).
2.1.3 THE NON-RECOURSE FACILITY. The Non-Recourse Facility
shall be as described in SECTION 9.13.
2.2 VOLUNTARY TERMINATION OF FACILITY. Upon not less than sixty (60)
days' prior notice, either party may notify the other of its intention not to
seek/provide any further financing hereunder; PROVIDED, however, that
notwithstanding the foregoing, all of Borrower's Obligations shall survive
any expiration or termination of this Agreement and/or the termination of any
Facility Contract.
2.3 INTEREST RATE, COMPUTATION. Each Advance shall be indicated by a
Facility Note in the form of Exhibit G or G1, as applicable, which shall bear
interest at the Facility Rate noted thereon, which shall be computed on the
basis of a year consisting of 360 days and charged for the actual number of
days during the period for which interest is being charged.
2.4 SERVICING AND PAYMENTS. Borrower, at its sole cost and expense,
shall be responsible for the billing and collecting of the payments due under
any Facility Contract(s). All non ACH billing with respect to Facility
Contracts shall be accomplished by separate invoices (i.e., not included in
invoices to the same End-User for rentals or other payments due under any
other agreement between Borrower and End-User), and shall direct the
End-Users to forward all Facility Contract remittances (including, but not
limited to rents, renewal rents and Casualty Payments) to the Lockbox, which
shall be subject to the Lockbox Agreement, and at the Bank. All ACH billing
shall utilize the Bank's EFT service, with such ACH proceeds directed to a
suitable Blocked Account at the Bank, and subject to the Blocked Account
Agreement. The fees and expenses of such Lockbox and ACH/EFT service shall be
payable by Borrower. If the underlying End-Users in an Advance have a single
due date, Borrower shall pay to Lender the amounts due under the related
Facility Contracts within 15 days from such due date, whether or not such
amounts have been remitted by the respective End-Users. If the underlying
End-Users in an Advance have a multiple due dates, Borrower shall pay to
Lender the amounts due under the related Facility Contracts by the 10th of
the following month, whether or not such amounts have been remitted by the
respective End-Users. All payments made pursuant to this subsection 2.4 shall
be applied FIRST, to any accrued and unpaid fees and expenses then owed by
Borrower to Lender; SECOND, to accrued and unpaid interest then due Lender
calculated at the Facility Rate through the last date of such immediately
preceding month, and THIRD, to principal due Lender on the applicable
Advances until paid in full. With the prior, written consent of Lender,
Borrower may elect to utilize Guarantor for the servicing responsibilities
set forth in the paragraph. In the event (i) Borrower fails to perform the
foregoing billing and collecting duties in a manner satisfactory to Lender in
its sole discretion, or (ii) of a Contract Event of Default which remains
uncured for more than ninety (90) days, then Lender may terminate Borrower's
authorization under this Section (in the event of a Contract Event of
Default, such termination shall only relate to the specific Contract in
default) and send notice of same to the Bank.
2.5 PREPAYMENT.
2.5.1 VOLUNTARY PREPAYMENT. No voluntary prepayment by Borrower
of any Advances shall be permitted; however, after the first anniversary
of the initial Disbursement Date, Borrower shall be permitted to prepay
any Advance (without liability for the Ordinary Prepayment Premium) in
the event the Loan Repayment Amount with respect thereto falls to less
than Five Percent (5%) of the original principal amount set forth in the
applicable Note.
2.5.2 MANDATORY PREPAYMENT.
2.5.2.1 TERMINATION OF CONTRACT. If an End-User voluntarily
terminates a Facility Contract before its scheduled expiration by
exercising an option to purchase the Facility Equipment, Borrower
shall prepay the associated Advance within ten (10) Business Days
of such termination by paying to Lender the sum of (i) the Loan
Repayment Amount with respect to such Advance, (ii) the
applicable Ordinary Prepayment Premium, and (iii) any Residuals
payable pursuant to Section 2.7. Notwithstanding the foregoing,
if Borrower elects to exercise its right of Permitted
Substitution with respect to such terminated Facility Contract,
no Ordinary Prepayment Premium shall be payable with respect
thereto.
2.5.2.2 CASUALTY. If any Equipment subject to an Advance is
lost or damaged, and cannot be repaired or replaced with
substantially similar Equipment by the first due date occurring
not less than thirty (30) days after such loss or damage,
Borrower shall prepay the associated Advance within ten (10)
Business Days thereafter by paying to Lender the Loan Repayment
Amount with respect to such Advance AND, to the extent Borrower
is able to collect sufficient proceeds from the insurance carrier
and/or the End-User, an amount to additionally reimburse Lender
for costs incident to breaking its corresponding debt, which
shall not exceed three percent (3%) of the principal amount
prepaid, and which shall be evidenced by a certificate prepared
by Lender showing, in reasonable detail, the calculation of such
costs. No Ordinary Prepayment Premium shall be payable in respect
to a mandatory prepayment made pursuant to this subsection.
2.5.2.3 CONTRACT EVENT OF DEFAULT. If Borrower prepays an
Advance pursuant to Section 8.3.3 with respect
to a Contract Event of Default, no Ordinary Prepayment Premium
shall be payable by Borrower to Lender in connection with any
such prepayment, but Borrower shall continue to be liable to
Lender for any Residuals payable pursuant to Section 2.7.
2.5.2.4 EARLY TERMINATION WITHOUT END-USER BUYOUT. If a
Facility Contract is voluntarily terminated by a End-User prior
to the scheduled expiration, without the exercise of a purchase
option, Borrower shall prepay the associated Advance within
thirty (30) days of such event by paying to Lender the sum of:
(i) Loan Repayment Amount, (ii) the applicable Ordinary
Prepayment Premium, and (iii) any Residuals payable pursuant to
Section 2.7. Notwithstanding the foregoing, if Borrower elects to
exercise its right of Permitted Substitution with respect to such
terminated Facility Contract, no Ordinary Prepayment Premium
shall be payable with respect thereto.
2.5.2.5 UPGRADES AND ADDITIONS. Borrower may agree with an
End-User under a Facility Contract that certain Facility
Equipment subject thereto shall be upgraded or that additional
Eligible Equipment should be added, resulting in a new Facility
Contract or replacement Facility Contract, so long as (i) no
Event of Default shall have occurred or is continuing hereunder,
(ii) the End-User shall have sought and obtained Lender's prior,
written consent at the time of the upgrade, (iii) the End-User
shall be deemed to be a "High Quality Credit" by Lender in its
sole discretion, (iv) the Facility Contract in question contains
upgrade provisions pre-approved by Lender and acknowledged by
End-User at the inception thereof, (v) an upgrade under such
Facility Contract may take place no more often than once per
year, commencing with the first anniversary date of such Facility
Contract, (vi) a maximum of twenty five percent (25%) of the
Facility Equipment subject to such Facility Contract, calculated
using the Acquisition Cost thereof, is upgraded at any one time,
and (vii) the upgradeable Facility Equipment shall be limited to
new slot machines..
(a) AMENDMENT OF FACILITY CONTRACT SCHEDULE TO
INCORPORATE UPGRADES/ADDITIONS. If Borrower and such End-User
amend such Facility Contract to increase the payments payable
thereunder in consideration of such upgrade or addition,
Borrower may request that Lender finance the additional
Contract Proceeds arising under such amendment (the "Contract
Amendment") attributable to such increase in payments. Not
later than ten (10) Business Days after such request, Lender
shall give Borrower written advice as to whether Lender, in
its sole discretion, has elected to finance such additional
Contract Proceeds. If Lender fails to give such advice within
such ten (10) day period, Lender shall be deemed to have
declined to finance such additional Contract Proceeds and
shall so advise Borrower in writing. If Lender agrees to
finance such additional Contract Proceeds, Lender shall,
subject to satisfaction of the conditions precedent set forth
in Section 4.2, make an Advance in an amount as Lender shall
determine. The Disbursement Date with respect to such Advance
shall be a date agreed upon in writing by Lender and Borrower.
If Lender agrees to make such an Advance, the Contract
Amendment shall be considered a "Facility Contract" for all
purposes of this Agreement. If Borrower finances such upgrades
or additions through a source other than Lender and does not
prepay in accordance with this Section, Borrower covenants and
agrees that any security interest granted to a source other
than Lender shall not conflict with or prime Lender's security
interest.
(b) TERMINATION OF CONTRACT SCHEDULE/EXECUTION OF A
REPLACEMENT CONTRACT. If Borrower and such End-User agree that
the Equipment subject to a Facility Contract shall be
upgraded, and agree to terminate the related Facility Contract
and enter into a Replacement Contract schedule incorporating a
portion of the existing Equipment and the upgrade/additional
Equipment, Borrower shall offer Lender the right of first
refusal to finance the Replacement Contract. Not later than
ten (10) Business Days after such request, Lender shall give
Borrower written advice as to whether Lender, in its sole
discretion, has elected to finance such Replacement Contract.
If Lender fails to give such advice within such ten (10) day
period, Lender shall be deemed to have declined to finance
such additional Contract Proceeds and shall so advise Borrower
in writing. If Lender agrees to finance such Replacement
Contract, Borrower shall pay to Lender the Loan Repayment
Amount with respect to the existing Facility Contract, and
Lender shall, subject to satisfaction of the conditions
precedent set forth in Section 4.2, make an Advance in an
amount equal to the lesser of (i) the present value of all
payments due thereunder (with the exception of any
manufacturer's discounts, deposits (including security
deposits) or down/advance payments made by End-User) for the
Approved Contract Term of each such Facility Contract, using a
discount rate to determine such present value equal to the
Facility Rate, or (ii) the sum of (A) One Hundred percent
(100%) of the Acquisition Cost for each item of Facility
Equipment that was not previously
subject to the existing Facility Contract and (B) the Loan
Repayment Amount with respect to the existing Facility
Contract. The Disbursement Date with respect to such Advance
shall be a date agreed upon in writing by Lender and Borrower.
If Lender agrees to make such an Advance, the Replacement
Contract shall be considered a "Facility Contract" for all
purposes of this Agreement.
If Lender elects not to finance a Replacement Contract
pursuant to this Section 2.5.2.5(b), Borrower shall, prior to
the next Facility Contract due date, pay the Loan Repayment
Amount with respect thereto. No Ordinary Prepayment Premium
shall be payable with respect thereto so long as Borrower has
fully complied with the requirements of this Section
2.5.2.5(b).
2.5.3 NO OTHER PREPAYMENTS PERMITTED. No Advance may be prepaid
except as otherwise expressly provided in this Agreement.
2.5.4 INVOLUNTARY PREPAYMENT. Any prepayment of the Advances
received by Lender resulting from the exercise by Lender of any remedy
available to Lender subsequent to the occurrence of a Borrower Event of
Default and the acceleration of Borrower's Obligations shall be deemed to
be a mandatory prepayment, and the applicable Ordinary Prepayment Premium
shall be payable with respect thereto.
2.6 CONTRACT EXTENSIONS OR END-USER BUYOUT FINANCING. If, at the end
of the Approved Contract Term an End-User elects to (i) extend the Contract,
or (ii) purchase the Facility Equipment subject thereto with financing
provided by Borrower, Borrower shall offer to Lender the right of first
refusal to finance such Contract extension or such end-of-term purchase
option. Not later than ten (10) Business Days after such request, Lender
shall give Borrower written advice as to whether Lender, in its sole
discretion, has elected to provide such financing. If Lender fails to give
such advice within such ten (10) day period, Lender shall be deemed to have
declined such financing and shall so advise Borrower in writing. If Lender
agrees to provide such financing, Lender and Borrower shall mutually agree
regarding the terms thereof. All Contract Proceeds received by Borrower and
forwarded to Lender hereunder shall be subject to Section 2.7.
2.7 RESIDUAL PAYMENTS. Lender shall be entitled to receive 100% of
the Residuals attributable to any Facility Contract until Lender shall have
recovered the balloon payment/Estimated Residual amount set forth in the
applicable Amortization Schedule (which Lender shall have full recourse to
Borrower).
2.8 LATE CHARGES; DEFAULT RATE. If any payment of principal or
interest to be made by Borrower to Lender under the Facility becomes past due
for a period of 10 days, Borrower shall pay to Lender on demand a late charge
of five percent (5%) of the amount of such overdue payment. In addition,
during a Default Rate Period, Borrower's Obligations pertaining to the
Facility shall bear interest at the Default Rate.
2.9 PAYMENT AFTER BORROWER EVENT OF DEFAULT. Upon the occurrence and
during the continuation of a Borrower Event of Default, all Contract Proceeds
pertaining to Facility Contracts and/or Facility Equipment shall be applied
by Lender in such manner as Lender shall determine.
2.10 MAXIMUM INTEREST. Notwithstanding any provision to the contrary
herein contained, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Borrower to Lender in excess of the
maximum contract rate of interest permitted by applicable law. Lender and
Borrower have agreed that the interest laws of the state of Illinois shall
govern the relationship between them, but in the event of a final
adjudication to the contrary, NUNC PRO TUNC, Borrower shall be obligated to
pay to Lender only such interest as then shall be permitted by the applicable
laws of the state found to govern the contract relationship between Lender
and Borrower. All interest found in excess of that rate of interest allowed
and collected by Lender shall be applied to the Advances in such manner as to
prevent the payment and collection of interest in excess of the rate
permitted by applicable law.
2.11 METHOD OF PAYMENT; GOOD FUNDS. All payments which are to be made
by Borrower to Lender pursuant to the Loan Documents shall be made by wire
transfer to BANK OF AMERICA, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000; ABA #000000000, Xxxxxx Financial, Inc., Acct. #00-00000, Phone Advice
to Product Credit Manager -- Lease Portfolio Funding, Xxxxxx Sales Finance
and to Product Business Manager -- Lease Portfolio Funding, Xxxxxx Sales
Finance: 000-000-0000. Payment shall not be deemed to be received until
Lender is in receipt of Good Funds.
ARTICLE III
NOTES; SECURITY INTEREST
3.1 NOTES. Borrower's Obligations described in clause (i) of the
definition of such term shall be evidenced by the Notes.
3.2 GRANT OF SECURITY INTEREST. As security for the payment and
performance of Borrower's Obligations, Borrower hereby grants to Lender, subject
to all mandatory provisions of law, including without limitation, the Gaming
Laws, a Lien in the following described collateral (the "Collateral"), such Lien
to be superior and prior to all other Liens other than Permitted Liens:
(a) FACILITY EQUIPMENT. All of Borrower's right, title and
interest (including any residual interest) in and to the Facility
Equipment.
(b) THE CONTRACTS. All chattel paper and Contracts pertaining to
any Facility Equipment, including, without limitation, all of Borrower's
right, title and interest in, to and under each Facility Contract relating
to each item of Facility Equipment and the right to receive all payments
thereunder (collectively, the "Intangible Collateral").
(c) LOCKBOX, LOCKBOX AGREEMENT, BLOCKED ACCOUNT AND BLOCKED
ACCOUNT AGREEMENT. The Lockbox, Lockbox Agreement, Blocked Account and
Blocked Account Agreement.
(d) BOOKS AND RECORDS. All of the books and records of Borrower
pertaining to the Property described in subparagraphs (a) - (c) above.
(e) PROCEEDS. All attachments, additions, accessions, upgrades,
accessories and replacements pertaining to the items described in
subparagraphs (a) through (d) above, as applicable, including all cash and
non-cash proceeds (including Casualty Payments and other insurance
proceeds) pertaining thereto.
Lender shall not be required to look to the Collateral for the payment of
Borrower's Obligations under the Full Recourse Facility, but may proceed against
Borrower in such manner as Lender deems desirable. All of the Collateral
assigned to Lender hereunder shall secure the payment and performance of all of
Borrower's Obligations, and whether now existing or in the future; provided,
however, that upon the payment and performance in full of all of Borrower's
Obligations with respect to a Facility Contract (or the exercise of a Permitted
Substitution with respect thereto), the Loan Documents applicable to such
Facility Contract and such Facility Equipment shall automatically terminate,
Lender shall execute and deliver to Borrower such UCC termination statements and
other instruments as may be necessary to release the applicable Lender Lien(s)
in the related Collateral, and shall return all items of chattel paper to
Borrower with respect thereto.
ALL ADVANCES HERETOFORE MADE PURSUANT TO, AND SECURED BY, THE ORIGINAL LOAN
AGREEMENT SHALL HEREAFTER BE SECURED HEREBY, AND THE SECURITY INTEREST GRANTED
HEREBY SHALL BE DEEMED TO BE A CONTINUATION OF AN EXISTING SECURITY INTEREST,
RATHER THAN A RELEASE OR TERMINATION AND GRANT OF A NEW SECURITY INTEREST.
3.3 SUBSTITUTION OF CONTRACTS. Within One Hundred Twenty (120) days
after a Contract Event of Default occurs, or immediately in the event of a
prepayment by an End-User with respect to a Facility Contract, or with the
prior, written agreement of Lender, in addition to any other remedy available
hereunder to Borrower with respect thereto, Borrower may substitute another
Eligible Contract for an existing Facility Contract ("Existing Facility
Contract"), provided (i) that Lender shall have the right to approve such
Eligible Contract at its sole discretion, (ii) that the present value
(determined using a discount rate which is equal to the Facility Rate which is
applicable to the Existing Facility Contract) of the payments remaining under
such Substitute Contract, is equal to or greater than the present value
(calculated as described above) of the remaining payments of such Existing
Facility Contract, including any payments which are past due under such Existing
Facility Contract; and (iii) that the number of payments remaining under such
Substitute Contract equals or exceeds the number of payments remaining under the
Existing Facility Contract. If such substitution occurs as a result of a
Contract Event of Default, such substitution shall be deemed to cure such
Contract Event of Default. As a
precondition to any Permitted Substitution, Lender shall have the right to
verify the existence and terms of such Substitute Contract with the
applicable End-User.
ARTICLE IV
CONDITIONS OF CLOSING; ADVANCES
4.1 CONDITIONS OF CLOSING. The Closing shall not take place unless all
of the conditions set forth in this Section 4.1 have been satisfied in a manner,
form and substance satisfactory to Lender:
4.1.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date, the
representations and warranties of Borrower set forth in the Loan Documents
shall be true and correct in all material respects.
4.1.2 DELIVERY. The following shall have been delivered to Lender,
each duly authorized and/or executed, as applicable:
(a) the Agreement, with all Exhibits and Schedules; the
Ratification of Guaranty and the Closing Certificate;
(b) a certificate of the Secretary or an Assistant Secretary of
Borrower in the form of EXHIBIT H, with all attachments
noted therein;
(c) a certified copy of the forms of Contract used by Borrower,
to be attached to the Agreement as SCHEDULE 4.1.2;
(d) the Lockbox Agreement and the Blocked Account Agreement; and
(e) such additional instruments, documents, certificates,
consents, financing statements, waivers and opinions as
Lender reasonably may request, including, but not limited
to, a Trust Agreement substantially in the form of EXHIBIT N
hereto, in the event that Borrower will be retaining
possession of any original master leases comprising Facility
Contracts.
4.1.3 SECURITY INTERESTS. All UCC financing statements, including
UCC-1(s) naming Borrower as debtor and Lender as secured party to be filed
where applicable, using the collateral description substantially in the
form attached hereto as EXHIBIT B, shall have been filed and confirmation
thereof received by Lender.
4.1.4 OPINION OF COUNSEL. Lender shall have received (i) from
XXXXXX & XXXXXXX, LLP, counsel to Borrower, an updated opinion dated as of
the Closing Date, addressed to Lender, in substantially the form previously
furnished to Lender by Xxxxxx & Whitney, LLP in conjunction with the
Original Loan Agreement, and (ii) from external counsel jointly acceptable
to Borrower and Lender, opinions in form and content acceptable to Lender,
addressed to Lender, and covering Borrower's compliance with Gaming Laws
and Gaming Authorities in the states of Nevada, Indiana, New Jersey and
Mississippi, and covering the necessary procedures to be followed by Lender
with respect to the exercise of the remedies set forth in this Agreement.
4.1.5 PERFORMANCE; NO DEFAULT. Borrower shall have performed and
complied with all agreements and conditions contained in the Loan Documents
to be performed by or complied with prior to or at the Closing Date.
4.1.6 APPROVAL OF LOAN DOCUMENTS AND SECURITY INTERESTS. The
approval and/or consent shall have been obtained from all Governmental
Bodies, Gaming Authorities and all other Persons whose approval or consent
is necessary or required to enable Borrower to (i) enter into and perform
its obligations under the Loan Documents, (ii) grant to Lender the Lender
Lien and (iii) consummate the Advances.
4.1.7 MATERIAL ADVERSE CHANGE. Since the issuance of Borrower's
most recent fiscal year-end financial statements, no event shall have
occurred which has a material adverse effect on (i) the financial
condition, Property, business, operations, ownership, structure, prospects
or profits of Borrower, (ii) the ability of Borrower to perform
its obligations under the Loan Documents, or (iii) the Collateral.
4.2 PROCEDURES FOR AND CONDITIONS TO ADVANCES
4.2.1 DISCRETIONARY BORROWING/LENDING. NOTWITHSTANDING THE OTHER
PROVISIONS OF THIS AGREEMENT, ADVANCES SHALL BE MADE ONLY WHEN BOTH (I)
BORROWER, IN ITS SOLE DISCRETION, DESIRES TO BORROW MONEY FROM LENDER, AND
(II) LENDER, IN ITS SOLE DISCRETION, DESIRES TO LOAN MONEY TO BORROWER; IT
BEING AGREED THAT THIS AGREEMENT SHALL NOT BE CONSTRUED AS IMPOSING ANY
DUTY ON BORROWER TO BORROW FROM LENDER, NOR ANY DUTY ON LENDER TO LOAN TO
BORROWER. IN CONSTRUING THE PURPOSE AND INTENT OF THIS AGREEMENT, THIS
SECTION 4.2.1 SHALL TAKE PRECEDENCE OVER ALL OTHER PROVISIONS.
4.2.2 PROCEDURE FOR ADVANCE(S). Subject to the satisfaction of the
terms and conditions set forth in this Section 4.2, on or after the Closing
Date Borrower may request Lender to disburse the proceeds of any Advance as
set forth by Borrower in the related Contract Funding Request. The Contract
Funding Request shall specify: (A) the date such Advance is to be made,
which shall be a Business Day not less than 5 Business Days after the
delivery to Lender of such Contract Funding Request, (B) the amount of
Advance, which shall not exceed the applicable Facility Funding Amount, and
without the written consent of Lender, be not less than $500,000.00, and
(C) the names of any unpaid vendors or suppliers of the Eligible Equipment
subject to the Contracts included in the Contract Funding Request, and the
amounts with respect thereto. Lender shall not be obligated to consider
making any Advance (i) if an Incipient Default or Event of Default exists
or will occur if the requested Advance is made, (ii) any more frequently
than twice each month under the Facility, (iii) with respect to any
Contract which Lender determines is not an Eligible Contract or for an
End-User which Lender determines is not an Eligible End-User; or (iv) if,
as a result of such Advance, any guideline set forth in SCHEDULE 4.2.2, as
jointly amended by Borrower and Lender from time to time, would be violated
as a result thereof.
4.2.3 CONDITIONS OF ADVANCES. Lender shall not be obligated to
consider making any Advance(s) on or after the Closing Date unless all of
the conditions set forth in this Section 4.2 have been satisfied in a
manner, form and substance satisfactory to Lender, including the following:
4.2.3.1 REPRESENTATIONS AND WARRANTIES. On the date of such
Advance, the representations and warranties of Borrower set forth
in the Loan Documents shall be true and correct in all material
respects. Lender shall have the right, as a precondition to any
Advance made more than one year after the Closing Date, to require
updated evidence of Borrower's and Borrower's officers' authority
to execute Advance documentation.
4.2.3.2 DELIVERY OF DOCUMENTS. In addition to the documents
previously delivered to Lender pursuant to Section 4.1, the
following shall have been delivered to Lender, each duly authorized
and executed:
(a) the Contract Funding Requests for the Advances to be
made, with all attachments noted therein;
(b) a Gaming Device Goods remarketing agreement in form and
content acceptable to Xxxxxx, from Sodak or
another Gaming Device Goods distributor acceptable
to Lender; and
(c) such additional instruments, documents, certificates,
consents, financing statements, waivers and
opinions as Lender reasonably may request,
including any opinions of outside counsel of the
type described in Section 4.1.4(ii) if the
Eligible Equipment subject to such Advance
pertains to a state for which an opinion has not
previously been furnished.
The requirement of the Gaming Device Goods remarketing agreement
set forth in Section 4.2.3.2 shall be waived for any Advance made
prior to sixty (60) days from the Closing Date so long as the
aggregate Loan Repayment Amount for all such Advances does not
exceed Twelve Million Dollars ($12,000,000.00); PROVIDED,
HOWEVER, that in the event Borrower fails to deliver to Lender
such Gaming Device Goods remarketing agreement by sixty (60) days
from the Closing Date, or in the event that such Gaming Device
Goods remarketing agreement expires or is terminated by any party
thereto, and is not replaced with a similar agreement acceptable
to Xxxxxx within sixty (60) days from the effective date of such
termination or expiration, Lender shall have all or any of the
following options and/or remedies, in addition to its other
remedies set forth in this Agreement:
(a) immediately declare that no further Advances be made
hereunder or under the PDS Loan Agreement; and
(b) immediately require that Borrower make a Mandatory
Prepayment (including payment of the related
Ordinary Prepayment Premium) of any Facility
Contracts as to which Borrower has failed to
provide any required instruments, documents,
certificates, consents, financing statements,
waivers and opinions as set forth by Lender; and
(c) immediately require that Borrower make a Mandatory
Prepayment (including payment of the related
Ordinary Prepayment Premium) of one or more
Advances, in the inverse order of maturity, to the
extent necessary to reduce the aggregate Loan
Repayment Amount for all remaining Advances to Ten
Million Dollars ($10,000,000.00). Borrower's
obligation to make such Mandatory Prepayment shall
be in addition to Borrower's obligation pursuant
to Section 8.3.3 to continue to prepay Facility
Contracts as to which Contract Events of Default
have occurred.
4.2.3.3 SECURITY INTERESTS. All UCC financing statements,
including, but not limited to:
(a) in the case of Facility Contracts under which Borrower
is deemed by Lender to be the owner of the
Equipment, UCC-1(s) naming Borrower as debtor, and
Lender as secured party, to be filed where the
Equipment is located and at Borrower's principal
place of business,
(b) UCC-1(s) naming End-User as debtor or lessee, and
Borrower as secured party or lessor, to be filed
in the state(s) where the Equipment is located,
(c) In the event that Lender has not been named as assignee
on the UCC-1(s) referred to in
subsection 4.2.3.3(b), UCC-3(s), as required,
naming Lender as assignee to be filed in the
jurisdiction(s) where the UCC-1(s) referred to in
subsection 4.2.3.3(b) are filed, and
(d) all other filings and actions necessary to perfect and
maintain the Lender Lien as a valid and perfected
Lien in the Collateral,
shall have been filed and confirmation thereof received by
Lender.
4.2.3.4 CONFIRMATION WITH END-USERS AND VENDORS. Lender or
its agents, at Lender's discretion, shall have verified with all
End-Users the existence and terms of the related Facility Contract,
the delivery of the Facility Equipment, and shall have verified that
the vendors and/or Facility Equipment suppliers have been paid,
PROVIDED, HOWEVER, that at Lender's discretion, Lender shall have
the option to require the foregoing proof of payment subsequent to
the Disbursement Date of an Advance.
4.2.3.5 NO MATERIAL OMISSION ITEMS ON PREVIOUS ADVANCES. All
material missing and/or incomplete items to be furnished by
Borrower with respect to previous Advances shall have been
completed to Lender's reasonable satisfaction.
4.2.3.6 ADDITIONAL CONDITIONS. Borrower shall have re-satisfied
the conditions set forth in Sections 4.1.5 (PERFORMANCE; NO
DEFAULT), 4.1.6 (APPROVAL OF LOAN DOCUMENTS AND SECURITY
INTERESTS), and 4.1.7 (MATERIAL ADVERSE CHANGE) with respect to the
requested Advance(s).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
5.1 ORGANIZATION, POWER, AUTHORITY, ETC. Borrower (i) is duly
organized, validly existing and in good standing under the laws of the state of
Nevada, (ii) is qualified to do business in every jurisdiction in which the
character of the Property owned or leased by it or the business conducted by it
makes such qualification necessary and the failure to so qualify would
permanently preclude Borrower from enforcing its rights with respect to any
Facility Contract or Facility Equipment or would expose Borrower to any material
loss or liability, (iii) has the power and authority to carry on its business,
(iv) has the power and authority to execute and perform this Agreement and the
other Loan Documents, and (v) has duly authorized the execution, delivery and
performance of this Agreement and the other Loan Documents.
5.2 VALIDITY, ETC., OF LOAN DOCUMENTS. This Agreement and the other
Loan Documents constitute the legal, valid and binding obligations of Borrower
and are enforceable against Borrower in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by equitable principles (whether or not any
action to enforce such document is brought at law or in equity). The execution,
delivery and performance of the Loan Documents by Borrower (i) has not violated
and will not violate any provision of law, any order of any Governmental Body,
or the Certificate of Incorporation or Bylaws of Borrower (or the equivalent of
the foregoing if Borrower is not a corporation), or any indenture, agreement or
other instrument to which Borrower is a party, (ii) is not in conflict with,
will not result in a breach of or, with the giving of notice, or the passage of
time, or both, will not constitute a default under any such indenture, agreement
or other instrument, and (iii) will not result in the creation or imposition of
any Lien of any nature whatsoever upon any of the Property of Borrower, except
for Permitted Liens.
5.3 OTHER AGREEMENTS. Borrower is not a party to any agreement or
instrument materially adversely affecting its present or proposed business,
properties, or assets, and Borrower is not in default in the performance,
observance or fulfillment of any material obligation, covenant or condition set
forth in any agreement or instrument to which it is a party, which default would
have a material adverse effect on the ability of Borrower to consummate any of
the transactions contemplated by the Loan Documents or to perform any of its
obligations under any of the Loan Documents.
5.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business of
Borrower and its chief executive office are at 0000 XxXxxx Xxxxx, Xxx Xxxxx,
Xxxxxx 00000. Borrower has not done business under any name other than PDS
FINANCIAL CORPORATION - NEVADA.
5.5 PRIORITY. The Lender Lien is subject to no prior Liens other than
Permitted Liens, and all Borrower Liens have been or will be assigned to Lender
pursuant to an Assignment.
5.6 FINANCIAL STATEMENTS. Borrower has delivered to Lender the
financial statements described on SCHEDULE 5.6. Such financial statements
present fairly the financial condition and results of operations of Borrower as
of the dates and for the periods indicated therein. All of the foregoing
financial statements, except as otherwise indicated therein, have been prepared
in accordance with GAAP.
5.7 LITIGATION. Except as set forth in SCHEDULE 5.7, there are no
actions, suits, arbitrations, proceedings or claims (whether or not purportedly
on behalf of Borrower) pending or to the best knowledge of Borrower, threatened,
against Borrower or maintained by Borrower, at law or in equity or before any
Governmental Body which, if adversely determined, would have a material adverse
effect on the ability of Borrower to consummate any of the transactions
contemplated by the Loan Documents or perform any of its obligations under any
of the Loan Documents.
5.8 NECESSARY PROPERTY. Borrower has all necessary rights in its
Property (including all patents or trademarks) which are necessary to conduct
the business of Borrower as now conducted.
5.9 VALIDITY AND ENFORCEABILITY OF CONTRACTS. At the time a Contract is
assigned to Lender (and thereupon
becomes a Facility Contract) and, unless expressly limited to that
point in time, at all future times with respect to each of the Facility
Contracts, all rights assigned as part of the Facility Contracts, including
without limitation all Facility Equipment covered thereby:
(i) Any modifications of a Contract from the form approved by
Lender, as attached to this Agreement as part of SCHEDULE 4.1.2, are
identified in the Contract by amendment or conspicuous markings, letterings
or title heading (E.G., "Additional Provisions"), and the existence of such
modifications are noted by Borrower in the related Contract Funding
Request; all Contracts with non-Native American End-Users have been
originated by Borrower (or other entity acceptable to Lender) as either
lessor or secured party; all Contracts with Native American End-Users have
been originated either by Borrower, Sodak (or other entity acceptable to
Lender) as either lessor or secured party; all Contracts arise from a bona
fide non-cancelable contract for Eligible Equipment with an Eligible
End-User for an Approved Contract Term; and all Equipment described in the
Contracts is in all respects in accord with the requirements of the
Contracts and has been delivered to and unqualifiedly accepted by the
End-User thereunder; unless specifically agreed to by Lender in writing,
none of the Equipment, after delivery and acceptance by the End-User, is a
fixture under the applicable laws of any state where such Equipment is or
may be located nor is located outside the United States;
(ii) All Contracts and related Equipment comply with all
applicable laws and regulations, including, without limitation,
interest/usury, truth-in-lending, Gaming Laws and disclosure laws; all
Contracts are genuine, valid, binding and enforceable in accordance with
their terms, accurately describe the related Equipment and the Payments due
under the Contracts, and are in all respects what they purport to be; all
Contracts, the related Equipment and all proceeds thereof are not subject
to any lien, claim or security interest except the interest of the
End-User, which shall be assigned to Lender contemporaneously herewith, and
Permitted Liens; all Contracts, and related rights, agreements, documents
and instruments are assignable to Lender without consent of any person,
including without limitation, any End-User or any Governmental Body or
agency and no such assignment will delegate, create or impose any duty,
obligation or liability on Lender; and all Contracts with a Native American
End-User contain valid and enforceable (i) waivers of sovereign immunity,
(ii) representations and warranties from Sodak (or another Native American
gaming lessor acceptable to Lender) enforceable by Lender in the event that
sovereign immunity is asserted by the Native American End-User as a defense
to payment or enforcement proceedings, and (iii) opinion(s) of counsel to
such Native American End-User in form acceptable to Borrower and Lender;
(iii) At the time of Borrower's assignment of the Contracts, and
subject to compliance with all mandatory provisions of law, including
without limitation, the Gaming Laws, Borrower has (A) good title to all of
the Contracts, including the right to receive the payments due thereunder,
(B) either good title to or a first, prior and perfected lien in all
related Equipment; (B) all legal power, right and authority to sell the
Contracts and grant the security interest described herein to Lender; (C)
not sold, transferred, encumbered, assigned or pledged any part of the
Contracts or related Equipment to any other Person; and (D) paid in full
all vendors of the Equipment subject to the Contracts, or will agree to
have Lender pay such vendors with the proceeds of the applicable Advance;
(iv) All counterparts of all Contracts have been clearly marked
to indicate that only one thereof is the "Original" and assignable, and
such counterpart shall be the counterpart delivered to Lender at the time
of Borrower's assignment of the Contract;
(v) Except for any master leases, Borrower has provided Lender
with an original of all material agreements entered into in connection with
the Contracts, and the Equipment related to such Contracts; the Contract
constitutes the entire agreement and there are no oral representations,
warranties or agreements related thereto; the Contracts employ
substantially standard pricing and documentation (including, without
limitation, provisions concerning payment terms, assignment, maintenance,
termination, renewal, insurance and stipulated loss provisions) which have
been approved by Lender; the Contracts contain no purchase option to the
End-User which has not been disclosed in writing to Lender;
(vi) Each party to each Contract has all the legal capacity,
power and right required for it to enter into such Contract and any
supplemental agreements, and to perform its obligations thereunder; all
such actions have received all corporate or governmental authorization
required by any applicable charter, by-law constitution, law, rule or
regulation;
(vii) None of the following existed at the time of Borrower's
assignment to Lender of the Contracts: (i) any payment owing with respect
to any Contract is past due more than ten (10) days, (ii) any End-User is
otherwise in default under a Contract, or (iii) any End-User has canceled
or terminated or given notice of or attempted to cancel or terminate any
Contract;
(viii) There exist no setoffs, abatements, recoupments, claims,
counterclaims or defenses on the part of any End-User under the Contracts
to any claims against or obligations of any End-User thereunder, nor do the
Contracts by their terms give rise to any such right of setoff, abatement,
recoupment, claims, counterclaims or defenses against Borrower or assignee
of Borrower;
(ix) Borrower has not done anything that might impair the value
of the Contracts or any Equipment covered by the Contracts;
(x) All sales, gross receipts, property or other taxes,
assessments, fines, fees and other liabilities relating to the Contracts,
the related Equipment, or the proceeds thereof have been paid when due and
all filings in respect of any such taxes, assessments, fines, fees and
other liabilities have been timely made;
(xi) Borrower is not in default which has continued beyond any
applicable grace periods or cure rights of any of its obligations under the
Contracts, including without limitation, any obligation to repair, maintain
or replace any Equipment or to provide service as provided in the
Contracts;
(xii) The Contracts have not been altered, modified, changed or
amended except as such alterations, modifications, changes or amendments
are set forth in writing and provided to Lender prior to Borrower's
assignment of the Contracts; nor will Borrower agree to any alterations,
modifications, changes or amendments after Borrower's assignment without
Lender's prior written consent or as specifically set forth in this
Agreement with respect to upgrades or early terminations;
(xiii) At the time of Borrower's assignment of the Contracts, no
amounts have been prepaid on the Contracts except advance payments which
are required by the express written terms of the Contracts;
(xiv) Borrower has not withheld any information or material facts
in connection with any Contracts or Equipment which would make any
information furnished to Lender misleading and Borrower has no knowledge of
any Contract Event of Default or of any fact which may impair the validity,
value or enforceability of any Contract or Equipment;
(xv) To the best of Borrower's knowledge, any credit information
provided to Lender by Borrower with respect to any End-User is true and
correct in all material respects;
(xvi) All Equipment covered by the Contract (A) is in good
condition and repair and suitable for the purposes for which it is
intended; (B) is covered by comprehensive physical damage insurance for the
full insurable value thereof, unless otherwise mutually agreed to by
Borrower and Lender, and, if applicable, general public liability coverage.
Borrower, "its assigns and/or collateral assigns" have been named as "Loss
Payee" and, if applicable, as "Additional Insured" on any policies procured
by the End-User. Said insurance is in full force and effect, and has not
lapsed or been cancelled by the End-User or the respective insurers;
(xvii) The Contract will not be canceled or terminated or attempted
to be canceled or terminated prior to the full term indicated for such
Contract, except as may be specifically set forth in this Agreement;
(xviii) Borrower has not breached any representation, warranty
or guarantee under the Contract or any agreement, document or instrument
related thereto;
(xix) Upon recording financing statements with respect to the
Contracts and the related Equipment, and Lender's possession of the
original chattel paper with respect thereto, Lender's security interest
therein shall be perfected and shall have priority over all other liens,
claims, rights of other persons and security interests with respect
thereto; and
(xx) Borrower has not filed any UCC-1 or other document in the
public records against any End-User or End-
User guarantor concerning any proposed Facility Contract or
Equipment EXCEPT those which have been disclosed and either assigned
or subordinated to Lender's interest in the Facility Contracts and
the related Equipment and Proceeds, and there are no other UCC-1's or
other public record filings concerning any part of any Facility
Contracts or Equipment whether executed by or in favor of Borrower.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees with Lender as follows:
6.1 PAYMENT OF BORROWER'S OBLIGATIONS. Borrower shall pay and perform
all of Borrower's Obligations as and when the same become due, payable and/or
performable, as applicable.
6.2 PRESERVATION OF EXISTENCE. Borrower shall maintain its existence
and rights in full force and effect to the extent necessary to perform its
obligations under the Loan Documents.
6.3 LEGAL REQUIREMENTS. Borrower (i) promptly and faithfully shall
comply with, conform to and obey all applicable present and future laws,
ordinances, rules, regulations and other requirements that could materially
adversely affect the conduct of its operations, including, but not limited to,
maintain its gaming licenses in the States where it is currently operating its
business, and (ii) shall use or cause the portion of the Collateral consisting
of Facility Equipment to be used in a manner and for the use contemplated by the
manufacturer thereof, and in material compliance with all laws, rules and
regulations of every Governmental Body having jurisdiction over such Facility
Equipment.
6.4 FINANCIAL STATEMENTS AND OTHER REPORTS/MATERIALS. Borrower shall
maintain full and complete books of account and other records reflecting the
results of Borrower's operations, all in accordance with GAAP, and shall furnish
or cause to be furnished to Lender:
(i) Within 30 days after the end of each quarter, (I) computer
diskettes/tapes containing all backup data regarding Facility Contracts
and Facility Equipment, in format set forth in EXHIBIT K, and (II) an aged
inventory report and asset tracking report in such form as reasonably
acceptable to Lender;
(ii) Within 30 days after the end of each month: (I) a
delinquency report in the form attached hereto as EXHIBIT L, (II) a true
and correct copy of the Bank, Lockbox and ACH statements for the preceding
month, (III) if applicable, a report setting forth any change in the
identity or location of Facility Equipment from that previously disclosed
to Lender; (IV) a report setting forth leasing, remarketing activities and
insurance settlements with respect to Facility Equipment, and (V) a report
identifying the Facility Contracts which terminated during the previous
thirty (30) days;
(iii) Every 18 months, commencing the Closing Date, at Borrower's
expense, a new report from AAA or another appraisal firm acceptable to
Lender, setting forth current Fair Market and Orderly Liquidation Values of
the principal types of Eligible Equipment subject to this Agreement, which
Lender may utilize in its sole, but reasonable, discretion in determining
an acceptable Estimated Residual therefor;
(iv) Within 10 days after receipt thereof by Borrower, copies of
all financial statements from any End-User(s) who comprise greater than ten
percent (10%) of the aggregate Loan Repayment Amount on all Facility
Contracts; and
(v) promptly at Lender's request, such additional information,
documents, downloads and reports as Lender shall advise Borrower from time
to time.
All of the items described in clauses (i), (ii) and (v) of this Section 6.4
shall be certified by a Responsible Officer.
6.5 REMOVAL OF FACILITY EQUIPMENT. Promptly after a Responsible Officer
learns that any Facility Equipment has been moved by a End-User from one
location to another, Borrower will inform Lender or will cause such End-User to
inform Lender of such move and will execute such additional financing statements
as Lender reasonably may request.
6.6 DAMAGE TO EQUIPMENT. Promptly after a Responsible Officer learns
that any Facility Equipment is damaged, and if such Facility Equipment can be
repaired in accordance with the terms of the applicable Facility Contract so as
to restore the same to good and working order, Borrower shall cause such repairs
to be made in accordance with the terms of such Facility Contract.
6.7 BOOKS AND RECORDS; INSPECTIONS.
6.7.1 BOOKS AND RECORDS. Borrower shall keep and maintain, or
cause to be kept and maintained, complete and accurate books and records
and make all necessary entries therein to reflect the transactions
contemplated hereby and all payments, credits, adjustments and calculations
relative thereto.
6.7.2 INSPECTIONS/AUDITS. Upon reasonable prior notice, Lender
shall have full and complete access to the books and records of Borrower
pertaining to the Collateral. In addition, from time to time, but not more
often than twice each year (and upon the occurrence and during the
continuation of a Borrower Event of Default as often as Lender in its sole
discretion deems necessary in order to monitor the business activities of
Borrower), representatives of Lender shall have the right to conduct an
audit of the books and records of Borrower. Borrower shall pay to Lender on
demand the actual, reasonable, out-of-pocket travel expenses incurred by
Lender for any employee of Lender who may conduct or assist in conducting
any such audit.
6.8 MAINTENANCE. Borrower, pursuant to the applicable Facility
Contract, shall cause all Facility Equipment to be maintained and serviced so
as to keep such Facility Equipment in good operating condition, ordinary wear
and tear from normal use excepted.
6.9 NOTICE OF DEFAULTS; CHANGE IN BUSINESS AND ADVERSE EVENTS.
Borrower, immediately after any Responsible Officer becomes aware thereof,
shall give Lender written notice of the occurrence of (i) any Event of
Default or any Incipient Default, accompanied by a statement of such
Responsible Officer setting forth what action Borrower proposes to take in
respect thereof, (ii) any change in the (A) executive officers or key
employees of Borrower, or (B) location of the chief place of business of
Borrower or any sale or purchase outside the regular course of business of
Borrower, (iii) any event which may have a material adverse effect on the (A)
enforceability of the Lender Lien, (B) ability of Borrower to perform any of
its obligations under any of the Loan Documents or (C) Borrower's compliance
with the Gaming Laws of any state and/or Lender's ability to exercise its
remedies hereunder with respect to any Facility Equipment constituting Gaming
Device Goods, (iv) any material default in payment or performance by
Borrower or any End-User under any Facility Contract or (v) any material
damage to or irreparable malfunction of any Facility Equipment.
6.10 INSURANCE/MAINTENANCE. All Facility Equipment shall be covered by
comprehensive physical damage insurance for the full insurable value thereof,
unless otherwise mutually agreed to by Borrower and Lender, and general
public liability coverage, and Borrower "and/or its assigns, including
collateral assigns," shall be named and continue to be named as "Loss Payee"
and "Additional Insured" as its interests may appear. Said insurance shall
continue to be in full force and effect, and shall not lapse or be cancelled
by the End-Users. Borrower, pursuant to the applicable Facility Contract,
will cause the End-User under each Facility Contract to maintain all Facility
Equipment in accordance with the terms of all insurance policies which are or
may be in effect with respect thereto so as not to alter or impair any of the
benefits or coverage to which Borrower or the applicable End-User is entitled
under any such insurance policies.
6.11 TAXES. Pursuant to the Contracts, Borrower or End-Users will pay
the personal property taxes levied or assessed on the Facility Equipment, and
Borrower shall cause the End-Users to file all personal property tax returns
relating to the Equipment. Borrower will xxxx and collect from the End-Users
all sales and use tax that is due and payable during the terms of the
Facility Contracts, and shall remit any sales and use taxes it receives from
the End-Users to the appropriate taxing jurisdiction. Notwithstanding the
above, in the event an End-User shall fail to remit the necessary taxes to
the taxing jurisdiction or to Borrower within the time prescribed or file the
necessary tax returns, Borrower promptly shall remit to the appropriate
taxing jurisdiction the amount of such overdue taxes, and shall indemnify and
hold harmless Lender for all such overdue and/or unpaid taxes, and any fines,
penalties and late charges related thereto, or related to a failure or delay
in filing the related tax returns.
6.12 CONTRACTS. With respect to each of the Contracts, Borrower shall:
(i) perform all acts necessary to preserve
the validity and enforceability of each such Contract; (ii) take all actions
reasonably necessary to assist Lender in collecting when due all amounts
owing to Borrower with respect to each such Contract; (iii) at all times keep
accurate and complete records of performance by Borrower and the End-User
under each such Contract; and (iv) upon request of Lender verify with the
End-User under each Facility Contract the payments due to Borrower under such
Facility Contract, except that (A) prior to the occurrence of a Borrower
Event of Default or Incipient Default, such requests shall not occur any more
frequently than once each year and (B) after the occurrence and during the
continuation of an Incipient Default or a Borrower Event of Default, such
requests may occur as often as Lender shall require.
ARTICLE VII
NEGATIVE COVENANTS
Until Borrower's Obligations are paid and performed in full, Borrower:
7.1 LIENS. Shall not create or incur or suffer to exist any Lien on
the Collateral other than Permitted Liens.
7.2 BORROWING. Shall not create, incur, assume or suffer to exist any
indebtedness which is secured by Liens on the Collateral other than the
Advances or Permitted Liens.
7.3 MODIFICATIONS OF FACILITY CONTRACTS. Shall not, without the
prior, written consent of Lender: amend, supplement, modify, compromise or
waive any of the terms of any Facility Contract (i) if the effect of such
amendment, supplement, modification, compromise or waiver is to (A) reduce or
waive the amount of any payment thereunder, (B) extend the term thereof
(except as otherwise permitted pursuant to Section 7.4), or (C) waive any
provisions thereof with respect to taxes, insurance or maintenance, or (ii)
unless such amendment, supplement, modification, compromise or waiver is with
respect to (A) the removal of any Facility Equipment and, in connection with
such removal, Borrower complies with the provisions of Section 6.5, (B) a
Permitted Substitution and if, in connection with such Permitted Substitution
any prepayment of any portion of the Facility shall occur, Borrower shall
comply with the terms of subsection 2.5; or (C) an upgrade or early
termination permitted by Section 2.5.2.
7.4 EXTENSIONS OF FACILITY CONTRACTS; FUTURE CONTRACTS OF FACILITY
EQUIPMENT. Shall not, without the prior written consent of Lender: (i) extend
the term of any Facility Contract unless as of the end of the Approved
Contract Term of such Facility Contract, such Contract no longer will be a
Facility Contract as a result of any such extension or (ii) re-lease any
Facility Equipment unless such re-lease is for the purpose of mitigating
damages arising from a Contract Event of Default.
7.5 MAINTENANCE OF PERFECTED LENDER LIEN. Shall not change the
location of its chief executive office or principal place of business, except
if Borrower has (i) given Lender at least 30 days prior written notice
thereof and (ii) caused to be filed all UCC financing statements which in the
opinion of Lender are necessary or advisable to maintain the perfection of
the applicable Lender Lien.
7.6 MERGER AND ACQUISITION. Shall not, without the prior, written
consent of Lender, which consent will not be unreasonably withheld or
delayed, consolidate with or merge into any Person, or acquire all or
substantially all of the stock or Property of any Person.
7.7 SALE OR TRANSFER OF ASSETS. Shall not sell, lease, assign,
exchange, transfer or otherwise dispose of any Property except (i)
dispositions of Property (other than Equipment), which is not necessary to
the continued operation of the business of Borrower, (ii) disposition of the
real estate now owned or hereafter acquired by Borrower, provided no
Incipient Default or Event of Default is in existence or will occur as a
result of the consummation of any such sale, (iii) the leasing of real
property, (iv) dispositions of Property in the ordinary course of Borrower's
business, or (v) disposition of any obsolete or unusable Property, provided
that if such Property is necessary to the continued operation of the business
of Borrower, such Property promptly is replaced with Property of like
function and value to such Property when the same was not obsolete or
unusable, as applicable.
7.8 DELINQUENCY COVENANT. Shall not allow Facility Contract Total
Delinquency to be greater than twelve percent
(12%) of the Aggregate Portfolio Outstandings. All terms in this subsection
not otherwise defined shall have the meanings set forth in EXHIBIT L (Form of
Monthly Delinquency Report).
7.9 TRANSACTIONS WITH AFFILIATES. Shall not, except for (i)
transactions in the normal course of business, which transactions comply with
the provisions of clauses (y) and (z) of this Section 7.9, and (ii) purchases
of Equipment from PDS FINANCIAL CORPORATION, which purchases shall comply
with the provisions of clauses (y) and (z) of this Section 7.9, sell, lease,
assign, transfer or otherwise dispose of any Property to any Affiliate or
lease Property, render or receive services or purchase assets from any
Affiliate, except with the prior written consent of Lender, which consent
shall not unreasonably be withheld or delayed, and except that Borrower may
enter into any such transaction with any such Affiliate in the ordinary
course of business if (y) the monetary or business consideration arising
therefrom would be substantially as advantageous to Borrower as the monetary
or business consideration which would be obtained by Borrower in a comparable
arm's-length transaction with a Person which is not an Affiliate and (z) no
other provision of this Agreement would be violated as a result thereof.
7.10 RESIDUAL ADVANCE LOAN REPAYMENT AMOUNT TO ACQUISITION COST RATIO.
Shall not allow the aggregate Loan Repayment Amount with respect to Residual
Financing Facility Advances, at any time, measured quarterly, to exceed
twenty percent (20%) of Acquisition Cost of the related Residual Financing
Facility Equipment. In such case, not later than the next due date under the
related Residual Financing Facility Note(s), Borrower will be required to
remit a principal payment on the related Residual Financing Facility
Advance(s) in the amount of any such shortfall. At Borrower's request, Lender
shall furnish to Borrower a schedule setting forth, in reasonable detail,
Lender's calculation of such amounts to satisfy the foregoing covenant.
7.11 INVENTORY FINANCE LINE. Shall maintain, in conjunction with PDS
FINANCIAL CORPORATION, an inventory finance line with a financial institution
reasonably acceptable to Lender and Borrower in an amount not less than Three
Million Dollars ($3,000,000.00).
ARTICLE VIII
BORROWER AND CONTRACT EVENTS OF DEFAULT -- DEFINITIONS AND REMEDIES
8.1 BORROWER EVENTS OF DEFAULT -- DEFINITION. The occurrence of any
of the following shall constitute a Borrower Event of Default hereunder:
(a) DEFAULT IN PAYMENT. If Borrower shall fail to remit to
Lender when due any payment that Borrower is required to make hereunder,
when and as the same shall become due and payable, and such failure shall
continue for a period of 10 days after such payment becomes due.
(b) BREACH OF REPRESENTATION OR WARRANTY. If any representation
made by Borrower to Lender in any Loan Document or in any report,
certificate, opinion, financial statement (other than those financial
statements provided by and pertaining to any End-User) or other document or
statement furnished pursuant thereto, shall be false or misleading in any
material respect when made, or any warranty given by Borrower shall be
breached by Borrower, unless (i) the fact, circumstance or condition is
made true within ten (10) Business Days after notice thereof is given to
Borrower by Lender, and (ii) in Lender's judgment, such cure removes any
adverse effect on Lender.
(c) BREACH OF COVENANT. If Borrower shall fail to duly observe
or perform any covenant, condition or agreement set forth in Articles VI or
VII of the Agreement, on its part to be performed or observed for ten (10)
Business Days after a Responsible Officer has knowledge thereof.
(d) BANKRUPTCY, RECEIVERSHIP, INSOLVENCY, ETC.
(i) If Borrower or Guarantor shall (A) apply for or consent to
the appointment of a receiver, trustee or liquidator for it or any
of its Property, (B) be unable to pay its debts as they mature, (C)
make a general assignment for the benefit of creditors, (D) be
adjudicated a bankrupt or insolvent or (E) file a voluntary
petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or to take
advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or
file an answer admitting the material allegations of a petition
filed against it in any proceeding under any such law, or if action
shall be taken by Borrower or Guarantor for the purpose of
effecting any of the foregoing, or
(ii) If any Governmental Body of competent jurisdiction shall
enter an order appointing, without consent of Borrower or
Guarantor, a custodian, receiver, trustee or other officer with
similar powers with respect to Borrower or Guarantor or with
respect to any substantial part of the Property belonging to
Borrower or Guarantor, or if an order for relief shall be entered
in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of
any jurisdiction, or ordering the dissolution, winding-up or
liquidation of Borrower or Guarantor, or if any petition for any
such relief shall be filed against Borrower or Guarantor, and such
petition shall not be dismissed within 45 days.
(e) NON-PAYMENT OF OTHER INDEBTEDNESS. Default by Borrower or
Guarantor (other than in payment of Borrower's Obligations) in the (i)
payment when due (subject to any applicable grace period or cure period),
whether by acceleration or otherwise, of any indebtedness, where the amount
thereof is in excess of $500,000, or (ii) performance or observance of any
obligation or condition with respect to any indebtedness of Borrower or
Guarantor, where the amount of such indebtedness is in excess of $500,000
(other than in payment of Borrower's Obligations) if the effect of such
default is to accelerate the maturity of any such indebtedness or to permit
the holder thereof to cause such indebtedness to become due and payable
prior to its expressed maturity.
(f) OTHER MATERIAL OBLIGATIONS. Default in the payment when due,
or in the performance or observance of, any material obligation of, or
condition agreed to by, Borrower or Guarantor with respect to any purchase
or lease of goods or services, where (i) the amount with respect to any
such purchase or lease of goods or services is in excess of $500,000 and
(ii) any grace period or cure period with respect to any such payment,
performance or observance has lapsed (except such default in payment,
performance or observance shall not be deemed to constitute a default
hereunder if the existence of any such default is being contested by
Borrower or Guarantor in good faith and by appropriate proceedings
diligently pursued).
(g) GUARANTY/GUARANTOR. If a Default or an Event of Default
shall occur under the PDS Loan Agreement or the Guaranty.
In any such event, in addition to Lender's other remedies under this
Agreement, Lender, by notice to Borrower, may declare that no further
Advances shall be made.
8.2 BORROWER EVENTS OF DEFAULT -- REMEDIES. If a Borrower Event of
Default shall have occurred, and has not been cured by Borrower (or by
Lender, at its option) within an applicable cure period, or a Material
Adverse Change occurs of the type set forth in Section 4.1.7 (i) or (ii),
then Lender shall have the right to do any or all of the following:
(a) If Lender has not already done so pursuant to Section 2.4,
complete and deliver to the End-Users the Contract Payment Letters to
commence direct billing and collection with respect to the Facility
Contracts (including directing the Bank to sweep any ACH payments from
End-Users under Facility Contracts to an account controlled by Lender), and
deduct from such receipts and remittances a fee equal to five percent (5%)
of the aggregate monthly receipts ("Administration Fee") from the payment
on the Facility Contracts as compensation for the additional administrative
burden;
(b) (i) exercise of any of Borrower's rights under any of the
Facility Contracts, or (ii) by written notice, require Borrower to exercise
on behalf of Lender as secured party under this Agreement any and all of
the rights available to Borrower under any Facility Contract to the extent
not already exercised by Borrower, whereupon Borrower shall immediately
take all requested action;
(c) proceed against Borrower and/or Guarantor for all rights and
remedies Lender may have in law or in equity
under the Loan Documents;
(d) declare the entire amount of Borrower's Obligations and
Administration Fee due and payable immediately, and exercise in respect of
the Facility Equipment all the rights and remedies of a secured party upon
default under the UCC, including, at any reasonable time, to enter
Borrower's premises and take physical possession of any master leases to
which the related Facility Contracts pertain.
Lender shall not take any action or exercise any right that would
disturb any End-User's full and quiet enjoyment of all of such End-User's
rights under that Facility Contract. Lender will give Borrower reasonable
notice of the time and place of any public sale of any Collateral or of the
time after which any public or private sale of such Collateral or any other
intended disposition thereof is to be made. Unless otherwise provided by law,
the requirement of reasonable notice shall be met if such notice is delivered
at least ten (10) days before, or mailed, postage prepaid, to Borrower, at
least twenty (20) days before the time of such sale or disposition.
Notwithstanding the foregoing, to the extent that a breach occurs
under Section 8.1(b), and such breach relates to a single Facility Contract,
Borrower shall have twenty (20) days from receipt of demand by Lender to
prepay the Facility Contract pursuant to the terms of the Mandatory
Prepayment clause set forth at Section 2.5.4. Borrower's failure to prepay
such Facility Contract within said twenty (20) day period shall then
constitute a Borrower Event of Default under Section 8.1(a). Furthermore, if
the Borrower Event of Default pertains solely to a breach of a covenant set
forth in Section 7.8 (Delinquency Covenants), Lender's sole remedy shall be
to commence direct billing and collection of Facility Contracts, subject to
all mandatory provisions of law, including without limitation, the Gaming
Laws, as set forth more fully in Section 8.2 (a) and (b).
All actual costs and expenses incurred by Lender in connection
with the enforcement and/or exercise of any of its rights or remedies
(including, without limitation, reasonable attorneys fees) hereunder shall
(i) be payable by Borrower to Lender immediately upon demand, (ii) constitute
a portion of Borrower's Obligations and (iii) be secured by the Lender Lien.
8.3 CONTRACT EVENTS OF DEFAULT.
8.3.1 DEFINITION: The occurrence of a default by any End-User
pursuant to the terms of a Facility Contract, which default entitles
Borrower to accelerate or terminate such Facility Contract or to repossess
the related Facility Equipment, shall constitute a Contract Event of
Default.
8.3.2 ACCELERATION. Upon the occurrence of a Contract Event of
Default, Lender, at any time (unless such Contract Event of Default shall
have been cured by Borrower), at its option, by notice to Borrower and/or
End-User, may terminate such Facility Contract and accelerate all payments
due thereunder.
8.3.3 CONTRACT EVENT OF DEFAULT -- REMEDIES. Upon the occurrence
of a Contract Event of Default, Borrower shall, if known to Borrower,
immediately deliver to Lender written notice thereof, which notice shall
identify the Facility Contract which is in default and the applicable
Advance, and describe the nature of such default and the actions Borrower
proposes to undertake with respect to such default. If any payment(s) under
a Facility Contract becomes 120 days past due, whether or not such
payment(s) have been cured by Borrower, then Borrower shall prepay in full
the unpaid portion of the Advance pertaining to such Facility Contract and
remit to Lender such Residuals as may be due pursuant to Section 2.7, or
exercise its right of substitution pursuant to Section 3.3.
Lender, with respect to the Facility Equipment subject to such
Facility Contract, shall have and may exercise against Borrower all the
rights and remedies of a secured party under the Illinois UCC and/or the
UCC applicable to the location of the related Facility Equipment, and any
other applicable laws, subject to all mandatory provisions of law,
including without limitation, the Gaming Laws. Lender will give Borrower
reasonable notice of the time and place of any public sale of any
Collateral or of the time after which any public or private sale of such
Collateral or any other intended disposition thereof is to be made. Unless
otherwise provided by law, the requirement of reasonable notice shall be
met if such notice is delivered at least ten (10) days before, or mailed,
postage prepaid, to Borrower at least twenty (20) days before the time of
such sale or disposition. Solely with respect to the Full Recourse Facility
(and with respect to the Non-Recourse Facility only as set forth in SECTION
9.13), Lender shall have full recourse to
Borrower for any deficiency between the Sale Proceeds thereof
and the Loan Repayment Amount for the related Advance. For the
purposes hereof, Sale Proceeds shall mean the gross proceeds received
by Borrower with respect to any sale of Facility Equipment, less any
reasonable remarketing fees paid or reasonable costs incurred by
Borrower with respect to any such sale. In addition to the foregoing,
at Lender's election, Lender may complete and deliver one or more
Contract Payment Letters in order to commence direct billing and
collection with respect to one or more Contracts subject to a
Contract Event of Default, and deduct the Administration Fee with
respect thereto. Furthermore:
(i) Lender only shall be entitled to exercise the rights
and remedies set forth in this Section 8.3.3 with respect to the
Facility Contract, the End-User and the Facility Equipment which
are the subject of such Contract Event of Default;
(ii) the expenses and other payments to which any proceeds of the
Collateral shall be applied in accordance with the provisions of
subsections 8.6 & 8.7 shall be so applied to payment of Borrower's
Obligations pertaining to the Facility Contract which is the
subject of such Contract Event of Default, and
(iii) upon payment and performance in full of all of
Borrower's Obligations pertaining to the Facility Contract which is
the subject of such Contract Event of Default, both (A) the
Contract Event of Default with respect to such Facility Contract,
and (B) any related Borrower Event of Default shall be deemed to be
cured.
8.5 POWER OF ATTORNEY. In order to permit Lender to exercise the rights
and remedies set forth herein, Borrower hereby irrevocably appoints Lender as
its attorney-in-fact and agent with full power of substitution, in the name of
Lender or in the name of Borrower, to perform any of the following acts upon the
occurrence of a Borrower Event of Default, subject to all mandatory provisions
of law, including without limitation, the Gaming Laws: (i) receive, open and
examine all mail addressed to Borrower and retain any such mail relating to the
Collateral and return to Borrower only that mail which is not so related; (ii)
endorse the name of Borrower on any checks or other instruments or evidences of
payment or other documents, drafts, or instruments arising in connection with or
pertaining to the Collateral, to the extent that any such items come into the
possession of Lender; (iii) compromise, prosecute or defend any action, claim,
or proceeding concerning the Collateral; (iv) perform any and all acts which
Borrower is obligated to perform under the Loan Documents; (v) exercise such
rights as Borrower might exercise with respect to the Collateral, including,
without limitation, the leasing or other utilization thereof and the collection
of any such rents or other payments applicable thereto; (vi) give notice of the
existence of the Lender's Lien, including, without limitation, notification to
End-Users and/or other account debtors of the existence of such Lender's Lien
with respect to the rents and other payments due to Borrower relative to the
Collateral; or (vii) execute in Borrower's name and file any notices, financing
statements and other documents or instruments Lender determines are necessary or
required to carry out fully the intent and purpose of the Loan Documents or to
perfect the Lender Lien.
Borrower hereby ratifies and approves all that Lender shall do or
cause to be done by virtue of the power of attorney granted herein and agrees
that neither Lender nor any of Lender's employees, agents, officers, or its
attorneys will be liable for any acts or omissions or for any error of judgment
or mistake of fact or law made while acting in good faith pursuant to the
provisions of this subparagraph, unless such act, omission, error of judgment or
mistake of fact or law is determined by a court of competent jurisdiction in a
decision which no longer is subject to appeal to be the result of the gross
negligence or the willful or wanton misconduct of Lender or any such employees,
agents, officers or attorneys of Lender. The appointment of Lender as Borrower's
attorney-in-fact is a power coupled with an interest, and therefore shall remain
irrevocable until all of Borrower's Obligations have been paid and performed in
full.
8.6 EXPENSES. All actual costs and expenses incurred by Lender in
connection with the enforcement and/or exercise of any of its rights or remedies
(including, without limitation, reasonable attorneys fees) hereunder shall (i)
be payable by Borrower to Lender immediately upon demand, (ii) constitute a
portion of Borrower's Obligations and (iii) be secured by the Lender Lien.
8.7 APPLICATION OF FUNDS. Any funds received by Lender pursuant to the
exercise of any rights accorded to Lender pursuant to or by the operation of any
of the terms of any of the Loan Documents shall be applied by Lender in the
following order of priority:
(i) EXPENSES: First to the payment of all (A) actual fees and
expenses, including, without limitation, court costs,
fees of appraisers, title charges, costs of maintaining and
preserving the Collateral, costs of sale, reasonable attorney's fees,
and all other costs incurred by Lender in exercising any rights
accorded to Lender pursuant to the Loan Documents or by applicable
law and (B) Liens superior to the Liens of Lender, except such
superior Liens subject to which any sale of the Collateral may have
been made;
(ii) BORROWER'S OBLIGATIONS. Next, to the payment of Borrower's
Obligations, in such order as Lender may determine; and
(iii) SURPLUS. Any surplus, to the Person or Persons legally
entitled thereto.
ARTICLE IX
MISCELLANEOUS
9.1 RIGHTS, REMEDIES AND POWERS. Each and every right, remedy and power
granted to Lender hereunder shall be cumulative and in addition to any other
right, remedy or power not specifically granted herein or now or hereafter
existing in equity, at law, by virtue of statute or otherwise and may be
exercised by Lender from time to time concurrently or independently as often and
in such order as Lender may deem expedient. Any failure or delay on the part of
Lender in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Lender's right thereafter to exercise the same, and any single
or partial exercise of any such right, remedy or power shall not preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power. Acceptance of payments in arrears shall not waive or affect any right to
accelerate Borrower's Obligations.
9.2 MODIFICATIONS, WAIVERS AND CONSENTS. Any modification or waiver of
any provision of this Agreement, or any consent to any departure by Borrower
therefrom, shall not be effective in any event unless the same is in writing and
signed by Lender, and then such modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose given. Any
notice to or demand on Borrower in any event not specifically required of Lender
hereunder shall not entitle Borrower to any other or further notice or demand in
the same, similar or other circumstances unless specifically required hereunder.
9.3 COMMUNICATIONS. All notices, consents, approvals and other
communications under the Loan Documents shall be in writing and shall be (i)
delivered in person, (ii) sent by telephonic facsimile ("FAX") or (iii) mailed,
postage prepaid, either by (A) registered or certified mail, return receipt
requested, or (B) overnight express carrier, addressed in each case as follows:
To Lender: Xxxxxx Financial, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Executive Vice President - Xxxxxx Sales Finance,
LPF
FAX No.: (000) 000-0000
Borrower: PDS Financial Corporation - Nevada
Attention: Xxxxx Xxxxxx, CEO and President
0000 XxXxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
FAX No.: (000) 000-0000
with a copy to: Xxxxxx & Whitney, LLP
Attention: Xxxxx X. Xxxxxxx, Esq.
Pillsbury Center South
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
FAX No.: (000) 000-0000
Xxxxxx & Xxxxxxxx
Attention: Xxxx Xxxxxx, Esq.
000 X. Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx, Xxxxxx 00000
FAX No.: (000) 000-0000
or to such other address, as to either of the parties hereto, as such party
shall designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section 9.3 shall be deemed received (i) if sent
by FAX during regular business hours, on the day sent if a Business Day, or if
such day is not a Business Day (or a Business Day after regular business hours),
then on the next Business Day, (ii) if sent by overnight, express carrier, on
the next Business Day immediately following the day sent, or (iii) if sent by
registered or certified mail, on the fifth Business Day following the day sent.
9.4 SEVERABILITY. If any provision of this Agreement is prohibited by,
or is unlawful or unenforceable under, any applicable law of any jurisdiction,
such provision, as to such jurisdiction, shall be ineffective to the extent of
such prohibition without invalidating the remaining provisions hereof; provided,
however, that where the provisions of any such applicable law may be waived,
they hereby are waived by Borrower to the full extent permitted by law so that
this Agreement shall be deemed to be an agreement which is valid and binding in
accordance with its terms.
9.5 SURVIVAL. The warranties, representations, covenants and agreements
set forth herein shall survive the making of the Advances and the execution and
delivery of the Loan Documents and shall continue in full force and effect until
Borrower's Obligations have been paid and performed in full.
9.6 ATTORNEYS' FEES AND OTHER EXPENSES. Borrower agrees to pay to
Lender on demand any actual out-of-pocket costs or expenses, together with
reasonable attorneys' fees, incurred by Lender in connection with the
enforcement or collection against Borrower of any provision of any of the Loan
Documents, whether or not suit is instituted, including, but not limited to,
such actual costs or expenses arising from the enforcement or collection against
Borrower of any provision of any of the Loan Documents in any state or Federal
bankruptcy or reorganization proceeding. In addition, in the event that Borrower
elects to submit a Contract Funding Request containing one or more Contracts
which have deviations from the standard form approved by Lender and attached to
this Agreement as part of SCHEDULE 4.1.2, Lender reserves the right to charge a
reasonable fee, based on a rate of $125.00 per hour, as an offset against the
related Advance, for its internal counsel to review such Contract(s).
9.7 INDEMNITY. Borrower agrees to indemnify and save Lender and its
successors, assigns, agents and servants harmless of and from any claims,
actions, suits, losses, costs, liabilities, damages or expenses (including
actual expenses and reasonable attorneys' fees) incurred by Lender in connection
with the transactions contemplated by this Agreement, including without
limitation: (i) any loss, cost, liability, damage or expense (including actual
expenses and reasonable attorneys' fees) incurred in connection with the
Facility Contracts; (ii) the delivery, ownership, alteration, operation,
maintenance, return or other disposition of the Collateral, including, without
limitation, disposition and/or remarketing pursuant to the Gaming Device Goods
remarketing agreement referenced in Section 4.2.3.2(b); (iii) from any
documentation deficiencies or changes to the basic format of the Facility
Contract; (iv) from the existence of any party having an interest, lien or claim
in the Facility Contract(s), and/or the Facility Equipment covered thereby,
and/or the proceeds thereof, which interest, lien or claim is prior to the
interest therein assigned to Lender hereby; (v) the construction of Lender and
Borrower as having the relationship of joint venturers or partners, or (vi) the
determination that Lender or Borrower has acted as agent for the other.
Borrower's obligations with respect to the indemnity set forth in this
Section 9.7 shall survive repayment of all amounts due pursuant to the Loan
Documents, the cancellation of the Notes and the release and/or cancellation of
any and all of the Loan Documents. Lender agrees to promptly notify Borrower of
any matters in respect of which this indemnity may apply. If notified in writing
of any action or claim brought or threatened against Lender based on a claim for
which Borrower is to provide indemnity and given full authority, information,
and assistance for the defense of same by Lender, Borrower shall, without
limitation, defend those actions or claims at its expense and pay the costs and
damages and attorneys' fees awarded in any such action or arising from any such
claim, provided that Borrower shall have the right to control the defense and
settlement of all such actions and claims. Lender will take all such actions (at
the expense of Borrower) as may be reasonably requested by Borrower to assist
Borrower in connection with such defense or settlement. Nothing herein is
intended to indemnify Lender for
consequences of its actions or failure to act.
9.8 BINDING EFFECT. This Agreement shall be binding upon the successors
and assigns of Borrower and shall inure to the benefit of the successors and
assigns of Lender.
9.9 ASSIGNMENTS; PARTICIPATIONS. Lender shall be entitled to sell,
securitize, assign or transfer any portion of its interest in the Facility;
provided, however, Lender hereby agrees to deliver to Borrower notice of such
proposed sale, securitization, assignment or transfer not less than 30 days
prior to the proposed date for the consummation thereof, which notice shall
include, if available, a description of the financial institution(s) to which
such sale, securitization, assignment or transfer is proposed to be made. In
connection with any such sale, securitization, assignment or transfer, Lender
may disclose such information with respect to Borrower, its business and
financial affairs and the Facility as Lender reasonably deems necessary, unless
any such information which has been provided by Borrower to Lender is
confidential in nature, in which case such confidential information shall not be
disclosed without the prior written consent of Borrower, which consent shall not
unreasonably be withheld or delayed.
9.10 FURTHER ASSURANCES. Each of Borrower and Lender agrees that upon
the request of the other party hereto at any time and from time to time after
the execution of this Agreement it shall execute and deliver such further
instructions, documents, and certificates and take such further actions as such
party reasonably may request.
9.11 GOVERNING LAW, CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EXCEPT WITH RESPECT TO ENFORCEMENT OF SECURITY INTERESTS IN GAMING DEVICE GOODS
(WHICH SHALL BE GOVERNED BY THE STATE IN WHICH SUCH GAMING DEVICE GOODS ARE
SITUATED), THIS AGREEMENT, EACH OF THE OTHER LOAN DOCUMENTS, AND ANY ASSIGNMENT
EXECUTED IN CONNECTION THEREWITH SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED
ENTIRELY WITHIN THE STATE OF ILLINOIS. BORROWER DOES HEREBY SUBMIT, AT LENDER'S
ELECTION, TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE
OR LOCAL) HAVING A SITUS WITHIN THE COUNTY OF XXXX AND THE STATE OF ILLINOIS
WITH RESPECT TO ANY DISPUTE, CLAIM, OR SUIT, WHETHER DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY RELATED NOTE OR ANY OF
BORROWER'S OBLIGATIONS OR INDEBTEDNESS HEREUNDER. BORROWER EXPRESSLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE
PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE
DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF.
BORROWER HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF XXXX, STATE OF
ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS
WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR
PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON
CONVENIENS OR OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL
NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN
SUCH FORUM OR THE TAKING OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY
OTHER APPROPRIATE JURISDICTION.
9.12 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. THIS
WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH ARISE OUT
OF ANY OF THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS CONTEMPLATED
THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS.
9.13 NON-RECOURSE FACILITY. At Lender's discretion, from time to time
Lender may consider the financing of individual Eligible Contracts on a
non-recourse basis, PROVIDED, HOWEVER, that at no time shall the sum of:
(i) the Loan Repayment Amount with respect to the Non-Recourse
Facility, and
(ii) any amounts outstanding under that certain Limited Recourse
Promissory Note dated August 27, 1997 executed by PDS FINANCIAL
CORPORATION in Lender's favor, in the original principal amount
of $9,477,427.68,
exceed Fifteen Million Dollars ($15,000,000). In the event that Lender elects to
make an Advance with respect to such Contracts, all of the provisions of this
Agreement with respect to the Facility and Advances thereunder shall apply to
such non-recourse Advances (including, without limitation, all of the
conditions, representations, warranties and covenants set forth in Articles III,
IV, V, VI and VII hereof, Borrower's servicing obligations, and all of the
definitions applicable to Non-Recourse Facility Advances), with the specific
exception of the following, which shall control in the event of any conflict:
9.13.1 NON-RECOURSE NOTE. In conjunction with each non-recourse Advance,
the form of Non-Recourse Note set forth in Exhibit G1 ("Non-Recourse Note")
shall be utilized.
9.13.3 BORROWER'S LIABILITY. Anything in this Agreement or any
exhibits hereto, any certificate, opinion or documents of any nature
whatsoever to the contrary notwithstanding, neither Lender nor its
successors or assigns shall have any claim, remedy or right to proceed (at
law or in equity) against Borrower or any incorporator, shareholder,
director, officer, or employee of Borrower for the payment of any
deficiency or any other sum owing on account of the indebtedness evidenced
by any Non-Recourse Note or for the payment of any liability of any nature
whatsoever with respect to any Non-Recourse Note, Non-Recourse Facility
Contract or Non-Recourse Facility Equipment or any obligations of Borrower
under this Agreement with respect to any Non-Recourse Note, Non-Recourse
Facility Contract or Non-Recourse Facility Equipment (EXCEPT THAT LENDER
SHALL NOT BE PROHIBITED FROM ASSERTING A CLAIM AGAINST BORROWER PERSONALLY
WHICH CLAIM IS FOR ACTUAL DAMAGES DIRECTLY RESULTING FROM THE BORROWER'S
FAILURE TO REMIT ANY CONTRACT PROCEEDS TO LENDER, OR THE OTHER BORROWER
EVENTS OF DEFAULT DESCRIBED IN SUBSECTIONS (b) AND (c) OF SECTION 8.1),
from any source other than the Collateral pertaining to such Non-Recourse
Facility Contract, including the sums due and to become due under any
Non-Recourse Facility Contract; and Lender by acceptance of a Non-Recourse Note
waives and releases any liability of Borrower for and on account of such
indebtedness or such liability, EXCEPT AS PROVIDED ABOVE, and Lender, its
successors and assigns and the holders of any Non-Recourse Note agree to
look either to the End-User pertaining to such Non-Recourse Facility
Contract or to the Collateral pertaining to such Non-Recourse Facility
Contract, including the sums due and to become due under such Non-Recourse
Facility Contract for the payment of said indebtedness or the satisfaction
of such liability.
9.13.4 AGGREGATE TO TOTAL FACILITY. No Advances made pursuant to
this Section 9.13 shall aggregate towards the maximum available amounts
under any other Facility hereunder.
9.13.5 ADDITIONAL ELIGIBILITY CRITERIA. Solely with respect to the
Non-Recourse Facility, (i) the Eligible Contract criteria/definition shall
additionally include a requirement that the related End-User has been
notified of, and has acknowledged, the collateral assignment of such
Contract to Lender, and (ii) Native American End-Users shall not be
considered Eligible End-Users.
This Agreement has been executed and delivered by each of the parties hereto by
a duly authorized officer of each such party on the date first set forth above.
XXXXXX FINANCIAL, INC. PDS FINANCIAL CORPORATION - NEVADA
By: /s/ By: /s/ Xxxxx Xxxxxx
_________________________ ___________________________
Xxxxx Xxxxxx
Title: Senior Vice President Title: CEO and President
