CREDIT AGREEMENT AMONG SOVEREIGN BANK, as Agent THE LENDERS PARTY HERETO AND TIMEPAYMENT CORP. Dated: August 2, 2007
Exhibit 10.1
AMONG
SOVEREIGN BANK, as Agent
THE LENDERS PARTY HERETO
AND
TIMEPAYMENT CORP.
Dated:
August 2, 2007
THIS CREDIT AGREEMENT is made as of August 2, 2007, by and among TIMEPAYMENT CORP., a Delaware
corporation having its chief executive office at 00-X Xxxxxxxx Xxx, Xxxxxx, XX 00000 (the
“Borrower”); SOVEREIGN BANK, having an office at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 (“Sovereign”); the other financial institutions from time to time parties hereto as
Lenders (together with Sovereign, the “Lenders”); and SOVEREIGN BANK, as agent for the
Lenders (in such capacity, the “Agent”).
WHEREAS, the Borrower has requested the Lenders to extend credit in the form of loans, and the
Lenders are willing to make loans to the Borrower on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
SECTION I
DEFINITIONS
1.1 Definitions.
All capitalized terms used in this Agreement, in the Notes, in the other Loan Documents or in
any certificate, report or other document made or delivered pursuant to this Agreement (unless
otherwise defined therein) shall have the meanings assigned to them below:
Adjusted Cost. The Original Cost less any dealer reserve, hold backs and discounts to
the Borrower applicable to any Equipment.
Affected Loans. See Section 2.11(a).
Affiliate. With reference to any Person, (i) any director, officer or employee of
that Person, (ii) any other Person controlling, controlled by or under direct or indirect common
control of that Person, (iii) any other Person directly or indirectly holding 5% or more of any
class of the capital stock or other equity interests (including options, warrants, convertible
securities and similar rights) of that Person and (iv) any other Person 5% or more of any class of
whose capital stock or other equity interests (including options, warrants, convertible securities
and similar rights) is held directly or indirectly by that Person.
Affiliate Guarantees. Guarantees of all Obligations dated the Closing Date made by
each Guarantor in favor of the Agent.
Agreement. This Credit Agreement, including the Exhibits and Schedules hereto, as the
same may be supplemented, amended or restated from time to time.
Assignee. See Section 9.1(a).Base Rate. The rate per annum, expressed as a
percentage, from time to time established by the Agent as its “Prime Rate” and made available by
the Agent at its main office or, in the discretion of the Agent, the base, reference or other rate
then designated by the Agent for general commercial loan reference purposes, it being understood
that such rate is a reference rate, not necessarily the lowest, established from time to time,
which serves as the basis upon which effective interest rates are calculated for loans making
reference thereto. Any change in the Base Rate shall be effective from and including the effective
date of such change.
Base Rate Loan. Any Loan bearing interest determined with reference to the Base Rate.
Borrower. See Preamble.
Borrower Security Agreement. The Security Agreement dated the Closing Date made by
the Borrower in favor of the Agent.
Borrower’s Accountants. Xxxxxx, Xxxxxxxx & Company, Ltd. or such other independent
certified public accountants as are selected by the Borrower and reasonably acceptable to the
Agent.
Borrowing Base. As at the date of any determination thereof, an amount equal to the
lesser of (i) 75% of the aggregate Net Present Value of Lease Receivables (determined on a Lease by
Lease basis) that are Eligible Lease Receivables, and (ii) 100% of the Adjusted Cost of the
Eligible Equipment subject to Eligible Leases; provided, however, that
notwithstanding the foregoing, there shall be excluded from the Borrowing Base the Receivables due
under any Limited Quality Lease to the extent that, as of the date of determination of the
Borrowing Base, the Receivables due pursuant to such Limited Quality Lease, when added to the total
of Receivables due pursuant to all other Limited Quality Leases, would exceed 15% of Gross Lease
Installments; and provided, further that the Agent may, from time to time in its
reasonable discretion, upon seven (7) days’ prior notice to the Borrower, establish lower
percentages for the advance rates set forth in clauses (i) and (ii) above.
Borrowing Base Report. A report with respect to the Borrowing Base signed by any
Responsible Officer of the Borrower and in a form reasonably satisfactory to the Agent.
Business Day. (i) For all purposes other than as covered by clause (ii) below, any day
other than a Saturday, Sunday or legal holiday on which banks in Boston, Massachusetts are open for
the conduct of a substantial part of their commercial banking business; and (ii) with respect to
all notices and determinations in connection with, and payments of principal and interest on, LIBOR
Loans, any day that is a Business Day described in clause (i) and that is also a day on which
dealings in U.S. dollar deposits are also carried on in the London interbank market and banks are
open for business in London.
Capital Expenditures. Without duplication, any expenditure by the Borrower or any of
their Subsidiaries for fixed or capital assets, leasehold improvements, Capitalized Leases,
installment purchases of machinery and equipment, acquisitions of real estate and other similar
expenditures including (i) in the case of a purchase, the entire purchase price, whether or not
paid during the fiscal period in question, (ii) in the case of a Capitalized Lease, the capitalized
amount
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(as determined under GAAP) of the obligations under such lease to pay rent and other
amounts, and (iii) expenditures in any construction in progress account of the Borrower.
Capitalized Leases. All leases that have been or should be, in accordance with GAAP,
recorded as capitalized leases.
Change of Control. (a) Either Xxxxxxx X. Xxxxxx or Xxxxx X. Xxxxxxx Xx. shall have
ceased to hold the offices, and engage in the duties and have the responsibilities thereof, in the
Borrower and the Parent that he holds as of the date hereof, or any material restriction shall have
been imposed on either’s right to exercise the powers and authority of such offices and to manage
the financial affairs of the Borrower in a manner consistent with past practices, and a successor
reasonably satisfactory to the Majority Lenders shall not have been appointed within 90 days
thereafter; (b) more than one-third of the members of the Board of Directors of the Parent or of
the Borrower at the beginning of any year fail to remain in office throughout such year, unless
such former members of the Board of Directors are replaced with Persons reasonably acceptable to
the Majority Lenders within 90 days; or (c) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Commission under
the Securities Exchange Act of 1934, as amended) of more than 51% of the fully diluted equity
interests of the Borrower or either Guarantor outstanding on the date hereof.
Closing Date. The first date on which the conditions set forth in Sections 3.1 and
3.2 have been satisfied and any Loans are to be made hereunder.
Code. The Internal Revenue Code of 1986 and the rules and regulations thereunder,
collectively, as the same may from time to time be supplemented or amended and remain in effect.
Collateral. All of the property, rights and interests of the Borrower and its
Subsidiaries that are or are intended to be subject to the security interests and liens created by
the Security Documents.
Collateral Account. See Section 3.9 of the Borrower Security Agreement.
Commitment. In relation to any particular Lender, the maximum dollar amount which
such Lender has agreed to loan to the Borrower upon the terms and subject to the conditions of this
Agreement, initially as set forth on Schedule 1 attached hereto, as such Lender’s Commitment may be modified pursuant hereto and in effect from time to time. Schedule
1 shall be amended from time to time to reflect any changes in the Commitments of the Lenders.
Commitment Percentage. In relation to any particular Lender, the percentage which
such Lender’s Commitment represents of the aggregate Commitments of all the Lenders, initially as
set forth on Schedule 1 attached hereto, as such Lender’s Commitment Percentage may be
modified pursuant hereto and in effect from time to time. Schedule 1 shall be amended from
time to time to reflect any changes in the Commitment Percentages of the Lenders.
Consolidated EBIT. At any date of determination, an amount equal to Consolidated Net
Income for the most recently completed fiscal period plus (a) the following to the extent
excluded or deducted in calculating such Consolidated Net Income: (i) Consolidated Interest
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Expense, (ii) the provision for Federal, state, local and foreign income taxes payable, (iii) other
non-recurring expenses reducing such Consolidated Net Income that do not represent a cash item in
such period or any future period (in each case for such period), minus (b) the following to
the extent included in calculating such Consolidated Net Income: (i) Federal, state, local and
foreign income tax credits and (ii) all non-recurring items increasing such Consolidated Net Income
(in each case for such period).
Consolidated Interest Expense. For any fiscal period, the sum of (a) all interest
(including, with respect to Subordinated Debt, all interest paid in cash, interest accrued but not
paid in cash and PIK Interest), premium payments, debt discount, fees, charges and related expenses
in connection with borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case to the extent treated as interest in accordance
with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the
portion of rent expense under Capitalized Leases that is treated as interest in accordance with
GAAP, in each case, of or by the Parent and its Subsidiaries.
Consolidated Net Income. For any fiscal period, the consolidated net income of the
Parent and its Subsidiaries for such period, as determined in accordance with GAAP, except that in
no event shall such consolidated net income include: (a) any extraordinary or nonrecurring gains;
(b) the net income of any Subsidiary during such period to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary of such income is not permitted by
operation of the terms of its organizational documents or any agreement, instrument or law
applicable to such Subsidiary during such period, except that Parent’s equity in any net loss of
any such Subsidiary for such period shall be included in determining Consolidated Net Income; (c)
any income (or loss) for such period of any Person if such Person is not a Subsidiary of Parent or
its Subsidiaries, except that Parent’s or its Subsidiaries equity in the net income of any such
Person for such period shall be included in Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such Period to Parent or its Subsidiaries as a
dividend or other distribution (and in the case of a dividend or other distribution to a
Subsidiary, such Subsidiary is not precluded from further distributing such amount to Parent as
described in clause (b) of this proviso); (d) any gain or loss arising from any write-up of assets
or “gain-on-sale” accounting (including without limitation with respect to sales to a Special
Purpose Subsidiary), except to the extent inclusion thereof shall be approved in writing by the
Agent; (e) earnings of any Subsidiary accrued prior to the date it became a Subsidiary; (f) any
non-cash stock based compensation income or expense related to restricted stock or stock options;
(g) any deferred or other credit representing any excess of the equity of any Subsidiary at the
date of acquisition thereof over the amount invested in such Subsidiary; (h) the proceeds of any
life insurance policy; and (i) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall be made from income arising during such period.
Consolidated Tangible Capital Base. At any date as of which the amount thereof shall
be determined, the sum of (i) Consolidated Tangible Net Worth, plus (ii) Subordinated Debt.
Consolidated Tangible Net Worth. At any date as of which the amount thereof shall be
determined, the consolidated total assets of the Parent and its Subsidiaries, with inventory and
cost of goods determined on a “first in, first out” basis, minus (a) Consolidated Total
Liabilities, and minus (b) the sum of any amounts attributable to (i) the book value, net
of applicable
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reserves, of all intangible assets of the Parent and its Subsidiaries, including,
without limitation, goodwill, trademarks, copyrights, patents and any similar rights, and
unamortized debt discount and expense, (ii) all reserves not already deducted from assets or
included in Consolidated Total Liabilities, (iii) any write-up in the book value of assets
resulting from any revaluation thereof subsequent to the date of the Initial Financial Statements,
(iv) gain-on-sale accounting, (v) the value of any minority interests in Subsidiaries, (vi)
intercompany accounts with Subsidiaries and Affiliates (including receivables due from Subsidiaries
and Affiliates), (vii) the value, if any, attributable to any capital stock or other equity
interests of the Parent or any Subsidiary held in treasury, and (viii) the value, if any,
attributable to any notes or subscriptions receivable due from equity holders in respect of capital
stock or other equity interests.
Consolidated Total Liabilities. At any date as of which the amount thereof shall be
determined, all obligations that should, in accordance with GAAP, be classified as liabilities on
the consolidated balance sheet of the Parent and its Subsidiaries, including in any event all
Indebtedness.
Credit Scoring System. The Borrower’s credit scoring system used in making its credit
decisions as in effect as of the date hereof with such changes as are permitted hereunder.
Dealer. A Person who (i) is domiciled in the United States of America, (ii) is not
the subject of and is not taking any action described in subsections (g) and (h) of Section 8.1
(substituting such Person for “Borrower” in such subsections) and (iii) is engaged in the business
of selling, servicing and installing Equipment or who is a broker engaged in the business of
brokering the financing of Equipment.
Default. An Event of Default or any event or condition that, but for the requirement
that time elapse or notice be given, or both, would constitute an Event of Default.
Designated Person. See Section 4.21(b).
Discount Rate. The Base Rate, which rate shall change contemporaneously with any
change in the Base Rate.
Drawdown Date. The Business Day on which any Loan is made or is to be made.
Eligible Equipment. Equipment:
| (a) | Either (i) to which the Borrower has good and marketable title or (ii) in which the Borrower has a security interest and, if the Original Cost of such Equipment is $10,000 or greater, the Borrower has a perfected first priority security interest; | ||
| (b) | Which, except to the extent set forth in clause (a), is not subject to any Encumbrance other than that in favor of the Agent for the benefit of the Lenders and, if the Original Cost of such Equipment is $10,000 or greater, in which the Agent has a duly perfected first priority security interest under the UCC or other similar law; | ||
| (c) | Which is to be used primarily in the ordinary course of business by the Borrower’s lessees; |
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| (d) | Which is subject to an Eligible Lease; | ||
| (e) | Which is insured by either the Borrower in accordance with current practice or the lessee thereof in accordance with industry standards; and | ||
| (f) | Which, if acquired as part of a Permitted Acquisition, shall have been approved by the Majority Lenders pursuant to the proviso in Section 7.8(f). |
provided that in no event shall Equipment include stand-alone software.
Eligible Interest Rate Contracts. Interest Rate Contracts purchased by Borrower from
a Lender and approved by the Agent (such approval not to be unreasonably withheld or delayed).
Eligible Lease. A Lease:
| (a) | Which is in full force and effect, has not continued beyond the original term of the Lease and is not on a month-to-month basis; | ||
| (b) | The lessor under which is the Borrower; | ||
| (c) | Which is assignable by the lessor thereunder; | ||
| (d) | Which is non-cancelable and provides that the lessee’s obligations thereunder are absolute and unconditional, and not subject to defense, deduction, set-off or claim and as to which no defenses, set-offs, claims or counterclaims exist or have been asserted; | ||
| (e) | Which is not subject to any Encumbrance other than that in favor of the Agent for the benefit of the Lenders, and in which the Agent has a duly perfected first priority security interest under the UCC; | ||
| (f) | The lessee under which (i) is domiciled in the United States of America, (ii) is not the subject of and has not taken any action described in subsections (g) and (h) of Section 8.1 (substituting such Person for “Borrower” in such subsections), (iii) is not an Affiliate of the Borrower, (iv) is not the obligor for more than $300,000 of Eligible Lease Receivables, and (v) has not otherwise been determined by the Agent to be unacceptable; | ||
| (g) | Which is in a form substantially in accordance with Exhibit F attached hereto or otherwise approved by the Agent; | ||
| (h) | Under which no payment is more than 90 days past due; | ||
| (i) | More than 80% of the Receivables owing from the lessee of such Lease are Eligible Lease Receivables; | ||
| (j) | Under which no default has occurred other than to the extent permissible under clause (i) immediately above; | ||
| (k) | Which covers Eligible Equipment; |
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| (l) | Which arose and was entered into in the ordinary course of business of the Borrower or its predecessor in interest, provided that if the Borrower was not the original lessor under such Lease but acquired such Lease by purchase or otherwise, such Lease has been approved by the Agent (such approval not to be unreasonably withheld or delayed); | ||
| (m) | Which was not originated by an Ineligible Dealer; | ||
| (n) | Which has not been modified, amended, restated or otherwise rewritten with respect to terms of payment, term or in any other material respect; and | ||
| (o) | Which, if acquired as part of a Permitted Acquisition, shall have been approved by the Majority Lenders pursuant to the proviso in Section 7.8(f). |
Eligible Lease Receivables. As at the date of determination thereof, Receivables
arising under and due and unpaid pursuant to an Eligible Lease.
Encumbrances. Any interest granted by a Person in any real or personal property,
asset or other right owned or being purchased or acquired by such Person that secures payment or
performance of any obligation, including, without limitation, any mortgage, pledge, security
interest, lien, retained security title of a conditional vendor or other charge or encumbrance of
any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.
Environmental Laws. Any and all applicable federal, state and local environmental,
health or safety statutes, laws, regulations, rules and ordinances (whether now existing or
hereafter enacted or promulgated), and all applicable judicial, administrative and regulatory
decrees, judgments and orders, including common law rulings and determinations, relating to injury
to, or the protection of, real or personal property or human health or the environment, including,
without limitation, all requirements pertaining to reporting, licensing, permitting, investigation,
remediation and removal of emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of such Hazardous Materials.
Equipment. Equipment owned and leased or sold by the Borrower to third party users.
ERISA. The Employee Retirement Income Security Act of 1974 and the rules and
regulations thereunder, collectively, as the same may from time to time be supplemented or amended
and remain in effect.
ERISA Affiliate. Any trade or business, whether or not incorporated, that is treated
as a single employer with the Borrower under Section 414(b), (c), (m) or (o) of the Code and
Section 4001(a)(14) of ERISA.
ERISA Event. (a) Any “reportable event,” as defined in Section 4043 of ERISA or the
regulations issued thereunder, with respect to a Plan unless the 30-day notice requirement with
respect to such event has been waived by the PBGC; (b) the adoption of any amendment to a Plan that
would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
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waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (f)
the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (g) the receipt by the Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability (as defined in Part I of Subtitle E of Title IV
of ERISA) with respect to any Multiemployer Plan or a determination that a Multiemployer Plan is,
or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h)
the occurrence of a “prohibited transaction” with respect to which the Borrower or any of the
Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or with
respect to which the Borrower or any such Subsidiary could otherwise be liable; and (i) any other
event or condition with respect to a Plan or Multiemployer Plan that could reasonably be expected
to result in liability of the Borrower.
Event of Default. Any event described in Section 8.1.
Executive Orders. See Section 4.21(a).
Existing Credit Agreement. The Revolving Credit Agreement, dated as of September 29,
2004, as amended, among the Borrower, Leasecomm, The CIT Group/Commerical Services, Inc. and the
other parties thereto.
Federal Funds Effective Rate. For any day, a fluctuating interest rate per annum
equal to the weighted average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business Day, the average of
the quotations for such day on such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent.
GAAP. Generally accepted accounting principles, consistently applied.
Gross Lease Installments. The total amount of Receivables due to the Borrower from
all Leases of Equipment.
Guarantees. As applied to any Person (the “guarantor”), all guarantees, endorsements
and other contingent or surety obligations with respect to Indebtedness or other obligations of any
other Person (the “primary obligor”), whether or not reflected on the consolidated balance sheet of
the guarantor, including any obligation of the guarantor, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other
obligation or to purchase (or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
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other obligation or
(d) as an account party in respect of any letter of credit or letter of guaranty issued to support
such Indebtedness or other obligation.
Guarantors. Each of the Parent and Leasecomm.
Hazardous Material. Any substance (i) the presence of which requires or may hereafter
require notification, investigation, removal or remediation under any Environmental Law; (ii) which
is or becomes defined as a “hazardous waste”, “hazardous material” or “hazardous substance” or
“pollutant” or “contaminant” under any present or future Environmental Law or amendments thereto
including, without limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601 et seq.) and any applicable local statutes and the regulations
promulgated thereunder; (iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and which is or becomes regulated
pursuant to any Environmental Law by any governmental authority, agency, department, commission,
board, agency or instrumentality of the United States, any state of the United States, or any
political subdivision thereof; or (iv) without limitation, which contains gasoline, diesel fuel or
other petroleum products, asbestos or polychlorinated biphenyls (“PCB’s”).
Indebtedness. As applied to any Person, without duplication, (i) all obligations for
borrowed money and other extensions of credit, whether secured or unsecured, absolute or
contingent, and whether or not evidenced by bonds, notes, debentures or other similar instruments,
(ii) all obligations representing the deferred purchase price of property, other than accounts
payable arising in the ordinary course of business, (iii) all obligations secured by any
Encumbrance on property owned or acquired by such Person, whether or not the obligations secured
thereby shall have been assumed, (iv) that portion of all obligations arising under Capitalized
Leases that is required to be capitalized on the consolidated balance sheet of the such Person, (v) all Guarantees, (vi) all obligations, contingent or otherwise, with respect to the
face amount of all letters of credit (whether or not drawn) and banker’s acceptances issued for the
account of or on behalf of any of such Person, (vii) all obligations that are immediately due and
payable out of the proceeds of or production from property now or hereafter owned or acquired by
such Person, (viii) obligations in respect of Interest Rate Contracts, and (ix) all other
obligations which, in accordance with GAAP, would be included as a liability on the consolidated
balance sheet of such Person, but excluding anything in the nature of capital stock, capital
surplus and retained earnings.
Ineligible Dealer. A Dealer who has originated five (5) or more Leases, 50% or more
of which are not Eligible Leases.
Initial Financial Statements. See Section 4.6(a).
Interest Period. With respect to each LIBOR Loan, the period commencing on the date
of the making or continuation of or conversion to such LIBOR Loan and ending one (1), two (2) or
three (3) months thereafter, as the Borrower may elect in the applicable Notice of Borrowing or
Conversion; provided that:
(i) any Interest Period (other than an Interest Period determined pursuant to clause
(iii) below) that would otherwise end on a day that is not a Business Day shall be
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extended to the next succeeding Business Day unless such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the immediately preceding Business
Day;
(ii) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall, subject to clause (iii) below, end on the last Business
Day of a calendar month;
(iii) any Interest Period that would otherwise end after the Maturity Date shall end
on the Maturity Date; and
(iv) notwithstanding clause (iii) above, no Interest Period shall have a duration of
less than one month, and if any Interest Period applicable to a Loan would be for a shorter
period, such Interest Period shall not be available hereunder.
Interest Rate Contracts. Any and all (a) rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master agreement, and (b)
transactions of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with any related schedules, a
“Master Agreement”), including any such obligations or liabilities under any Master
Agreement.
Investment. As applied to the Borrower and its Subsidiaries, the purchase,
acquisition or ownership of any share of capital stock, partnership or limited liability company
interest, evidence of indebtedness or other equity security of any other Person (including any
Subsidiary); any loan, advance or extension of credit (excluding Receivables arising in the
ordinary course of business) to, or contribution to the capital of, any other Person (including any
Subsidiary); any real estate held for sale or investment; any securities or commodities futures
contracts held; any other investment in any other Person (including any other Borrower or any
Subsidiary); and the making of any commitment or the acquisition of any option to make an
Investment.
Lease. Any lease agreement, installment sales contract or other agreement (including
any and all schedules, supplements and amendments thereon and modifications thereof) entered into
by the Borrower as lessor or seller with respect to Equipment.
Leasecomm. Leasecomm Corporation, a Massachusetts corporation.
Lenders. Sovereign, the other financial institutions parties hereto and listed on
Schedule 1 attached hereto and each other Person that may after the date hereof become an Assignee
and,
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thereby, a party to this Agreement as a “Lender” hereunder, but from and after the effective
date that any Person shall have assigned its entire Commitment pursuant to Section 9.1, “Lenders”
shall no longer include such Person.
Leverage Ratio. The ratio of (i) Consolidated Total Liabilities, minus
Subordinated Debt to (ii) Consolidated Tangible Net Worth, plus Subordinated Debt.
LIBOR Loan. Any Loan bearing interest at a rate determined with reference to the
LIBOR Rate.
LIBOR Rate. With respect to any LIBOR Loan for any Interest Period, the rate per
annum, expressed as a percentage, as determined by the Agent on the basis of the offered rates for
deposits in U.S. dollars, for a period of time comparable to such Interest Period, which appears on
the Reuters page LIBOR01 (formerly Telerate page 3750) as of 11:00 a.m. London time on the day that
is two Business Days preceding the first day of such Interest Period; provided, however, that if the rate described above does not appear on the Reuters System on
any applicable interest determination date, the LIBOR Rate shall be the rate (rounded upward, if
necessary, to the nearest one hundred-thousandth of a percentage point) determined on the basis of
the offered rates for deposits in U.S. dollars for a period of time comparable to such Interest
Period which are offered by four major banks in the London interbank market at approximately 11:00
a.m. London time, on the day that is two (2) Business Days preceding the first day of such Interest
Period as selected by the Agent. The principal London office of each of the four major London
banks will be requested to provide a quotation of its U.S. dollar deposit offered rate. If at
least two such quotations are provided, the LIBOR Rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate for that date
will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to such Interest Period offered by major banks in New York
City at approximately 11:00 a.m. New York City time, on the day that is two Business Days preceding
the first day of such Interest Period.
LIBOR Reserve Percentage. For any Interest Period, the aggregate of the maximum
reserve percentages (including all basic, marginal, special, emergency and supplemental reserves),
expressed as a decimal, established by the Board of Governors of the Federal Reserve System and any
other banking authority, domestic or foreign, to which any Lender or the Bank is subject with
respect to “Eurocurrency Liabilities” (as defined in regulations issued from time to time by such
Board of Governors). The LIBOR Reserve Percentage shall be adjusted automatically on and as of the
effective date of any change in any such reserve percentage.
Limited Quality Lease. A Lease with a credit grade of “Q” or “U” as determined under
the Credit Scoring System.
Loan Parties. Collectively, the Borrower, each Guarantor, each Subsidiary that is
required hereunder to execute a Subsidiary Guarantee and any other endorser, guarantor or surety
for any Obligation.
Loan Documents. This Agreement, the Notes, the Affiliate Guarantees, any Subsidiary
Guarantees, the Security Documents and all agreements entered into pursuant to Section 5.10,
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together with any agreements, instruments or documents now or hereafter executed and delivered
pursuant to or in connection with any of the foregoing.
Loans. The loans made or to be made by the Lenders to the Borrower pursuant to
Section II of this Agreement.
Majority Lenders. As of any date, the holders of seventy percent (70%) of the
aggregate outstanding principal amount of Loans on such date; and if no such principal is
outstanding, the holders of seventy percent (70%) of the total Commitments.
Material Adverse Effect. Any of (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or
condition (financial or otherwise) of the Borrower individually or the Parent together with its
Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Agent or
any Lender under any Loan Document, or of the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan Document to which it
is a party.
Maturity Date. August 2, 2010.
Multiemployer Plan. Any plan which is a Multiemployer Plan as defined in Section
4001(a)(3) of ERISA.
Net Present Value of Lease Receivables. An amount (determined on a Lease by Lease
basis) equal to Gross Lease Installments, discounted to present value by a percentage equal to the
Discount Rate (which calculation shall not take into account rental payments due or payable under
any Eligible Lease beyond 60 months after the commencement date of such Eligible Lease).
Note Record. Any internal record, including a computer record, maintained by any
Lender with respect to any Loan.
Notes. See Section 2.2.
Notice of Borrowing or Conversion. The notice, substantially in the form of
Exhibit B hereto, to be given by the Borrower to the Agent to request a Loan or to convert
an outstanding Loan of one Type into a Loan of another Type, in accordance with Section 2.3.
Obligations. The aggregate outstanding principal balance of and interest (and
premium, if any) on the Loans (including, without limitation, interest accruing at the then
applicable rate provided herein after the maturity of the Loans and interest accruing at the then
applicable rate provided herein after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding) and all other
obligations of the Borrower to the Agent and the Lenders of every kind and description pursuant to
or in connection with the Loan Documents and Eligible Interest Rate Contracts, direct or indirect,
absolute or contingent, primary or secondary, due or to become due, now existing or hereafter
arising, regardless of how they arise or by what agreement or instrument, if any, in each case
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whether on account of principal, interest, premium, fees, indemnities, costs, expenses or otherwise
(including without limitation, with respect to ACH payments and all fees and disbursements of
counsel that are required to be paid by the Borrower pursuant to any of the Loan Documents), and including obligations to perform acts and refrain from taking action as
well as obligations to pay money.
OFAC. See Section 4.21(b).
Original Cost. The Borrower’s purchase price for any Equipment as invoiced by the
supplier thereof.
Overadvance. See Section 2.1(e).
Parent. MicroFinancial Incorporated, a Massachusetts corporation and sole stockholder
of the Borrower and Leasecomm.
Participant. See Section 9.2.
Patriot Act. The federal Uniting and Strengthening of America by Providing the
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to
time.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding to any or all
of its functions under ERISA.
Pension Plan. Any Plan which is an “employee pension benefit plan” (as defined in
ERISA).
Permitted Encumbrances. See Section 7.3.
Person. Any individual, corporation, partnership, limited liability company, trust,
unincorporated association, business or other legal entity, and any government or governmental
agency or political subdivision thereof.
PIK Interest. Interest added to the unpaid principal amount of Subordinated Debt
rather than paid in cash.
Plan. Any “employee pension benefit plan” or “employee welfare benefit plan” (each as
defined in Section 3 of ERISA) maintained by the Borrower or any Subsidiary.
Pledge Agreement. The Pledge Agreement dated the Closing Date with respect to all of
the issued and outstanding capital stock of the Borrower and Leasecomm made by the Parent in favor
of the Agent.
Prohibited Transaction. Any “prohibited transaction” within the meaning of Section
406 of ERISA or Section 4975 of the Code.
Qualified Investments. As applied to the Borrower and its Subsidiaries, Investments
in (i) notes, bonds or other obligations of the United States of America or any agency thereof that
as
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to principal and interest constitute direct obligations of or are guaranteed by the United
States of America and that have maturity dates not more than one year from the date of acquisition,
(ii) certificates of deposit, demand deposit accounts or other deposit instruments or accounts
maintained in the ordinary course of business with banks or trust companies organized under the
laws of the United States or any state thereof that have capital and surplus of at least
$100,000,000 which certificates of deposit and other deposit instruments, if not payable on demand,
have maturities of not more than 180 days from the date of acquisition, (iii) commercial paper
that, as of the date of acquisition, has the highest credit rating obtainable from Xxxxx’x
Investors Service, Inc. or Standard & Poor’s Corporation or their successors, and in each case
maturing not more than 270 days from the date of acquisition, and (iv) any repurchase agreement
secured by any one or more of the foregoing.
Receivables. All rights of the Borrower to payment of a monetary obligation (i) for
property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii)
for services rendered or to be rendered, (iii) for a secondary obligation incurred or to be
incurred, or (iv) arising out of the use of a credit or charge card or information contained on or
for use with the card; and all sums of money and other proceeds due or becoming due thereon, all
notes, bills, drafts, acceptances, instruments, documents and other debts, obligations and
liabilities, in whatever form, owing to the Borrower with respect thereto, all guarantees and
security therefor, and the Borrower’s rights pertaining to and interest in such property, including
the right of stoppage in transit, replevin or reclamation; all chattel paper; all amounts due from
Affiliates of the Borrower; all insurance proceeds; all other rights and claims to the payment of
money, under contracts or otherwise; and all other property constituting “accounts” as such term is
defined in the UCC.
Responsible Officer. The chief financial officer of the Parent or the Borrower, as
the case may be, and, in the case of the Borrower, any other officer of the Borrower designated by
the chief financial officer of the Borrower to sign Borrowing Base Reports and Notices of Borrowing
or Conversion.
Restricted Payment. Any dividend, distribution, loan, advance, guaranty, extension of
credit or other payment (whether in cash, securities or other property) to or for the benefit of
any Person who holds an equity interest in the Parent or any of its Subsidiaries, whether or not
such interest is evidenced by a security, and any other payment, whether in cash, securities or
other property, on account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any capital stock of the Parent or any of its Subsidiaries, whether now or hereafter
outstanding, or of any options, warrants or similar rights to purchase such capital stock or any
security convertible into or exchangeable for such capital stock.
Revolving Credit Loan. See Section 2.1(a).
Security Documents. Security agreements, including the Borrower Security Agreement,
one or more blocked account agreements, collateral assignments of trademarks, a memorandum of
copyright interest and the Pledge Agreement, each in favor of the Agent to secure Obligations and
dated the Closing Date, in each case as amended and/or restated and in effect from time to time,
and any additional documents evidencing or perfecting the Agent’s lien on the Collateral.
Sovereign. See Preamble.
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Special Purpose Subsidiary. A Subsidiary of the Parent or any of its Subsidiaries
that is a special purpose corporation organized in connection with a securitization and financing
of Leases and related Equipment and Receivables of the Borrower or either Guarantor, none of the
assets of which constitutes any part of the Collateral after giving effect to the release of the
Lenders’ Encumbrances on Collateral contemplated by Section 9 of the Borrower Security Agreement.
Subordinated Debt. Indebtedness of the Parent or any of its Subsidiaries which is
expressly subordinated and made junior to the payment and performance in full of the Obligations on
terms and conditions satisfactory to the Lenders.
Subsidiary. With respect to any Person, any corporation, association, joint stock
company, business trust, partnership, limited liability company or other similar organization of
which 50% or more of the ordinary voting power for the election of a majority of the members of the
board of directors or other governing body of such entity is held or controlled by such Person or a
Subsidiary of such Person; or any other such organization the management of which is directly or
indirectly controlled by such Person or a Subsidiary of such Person through the exercise of voting
power or otherwise; or any joint venture, whether incorporated or not, in which such Person has a
50% or greater ownership interest.
Subsidiary Guarantees. Guarantees of all Obligations, in form and substance
satisfactory to the Agent, made by each Subsidiary of the Borrower, other than a Special Purpose
Subsidiary, in favor of the Lenders.
Total Commitment. The sum of the Commitments of the Lenders as in effect from time to
time, which as of the Closing Date shall be $30,000,000 and which may be any lesser amount,
including zero, resulting from a termination or reduction of such amount in accordance with
Sections 2.1 and 8.2.
Total Outstandings. At any time, the aggregate outstanding principal balance of the
Loans at the time.
Type. A LIBOR Loan or a Base Rate Loan.
UCC. The Uniform Commercial Code as enacted in The Commonwealth of Massachusetts.
Unused Fee. See Section 2.6.
| 1.2 | Rules of Interpretation. |
(a) All terms of an accounting or financial character used herein but not defined herein shall
have the meanings assigned thereto by GAAP, as in effect from time to time, and all calculations
for the purposes of Section VI hereof shall be made in accordance with GAAP; provided that if any
time after the date hereof there shall occur any change in respect of GAAP from that used in the
preparation of the audited financial statements referred to in Section 4.6(a) in a manner that
would have a material effect on any matter which is material to Section VI, the Borrower and the
Lenders will, within 10 Business Days after notice from the Agent or the Borrower, as the case may
be to that effect, commence and continue in good faith
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negotiations with a view towards making appropriate amendments to the provisions hereof acceptable to the Lenders to reflect as narrowly as
possible the effect of such change on Section VI as in effect on the date hereof; provided,
further, that until such notice shall have been withdrawn or the relevant provisions amended in
accordance herewith, Section VI shall be interpreted on the basis of GAAP as in effect and applied
immediately before such change shall have become effective.
(b) All terms employing the capitalized word “Consolidated” refer to the Parent and the
Subsidiaries of the Parent consolidated with it, including the Borrower.
(c) Except as otherwise specifically provided herein, reference to any document or agreement
shall include such document or agreement as amended, modified or supplemented and in effect from
time to time in accordance with its terms and the terms of this Agreement.
(d) The singular includes the plural and the plural includes the singular. Whenever the
context may require, any pronoun shall include the corresponding masculine, feminine and neuter
forms.
(e) A reference to any Person includes its permitted successors and permitted assigns.
(f) The words “include”, “includes” and “including” are not limiting.
(g) The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this
Agreement as a whole and not to any particular section or subdivision of this Agreement.
(h) All terms not specifically defined herein or by GAAP that are defined in the UCC, shall
have the meanings assigned to them in the UCC.
SECTION II
DESCRIPTION OF CREDIT
2.1 Revolving Credit Loans.
(a) Upon the terms and subject to the conditions of this Agreement, and in reliance upon the
representations, warranties and covenants of the Borrower herein, each of the Lenders agrees,
severally and not jointly, to make revolving credit loans (the “Revolving Credit Loans”) to
the Borrower at the Borrower’s request from time to time from and after the Closing Date and prior
to the Maturity Date, provided that the Total Outstandings (after giving effect to all
requested Loans) shall not at any time exceed the lesser of (i) the Borrowing Base and (ii) the
Total Commitment, and provided, further that the sum of the aggregate principal
amount of outstanding Revolving Credit Loans made by each Lender shall not at any time (after
giving effect to all requested Loans) exceed such Lender’s Commitment. Subject to the terms and
conditions of this Agreement, the Borrower may borrow, repay, prepay and reborrow amounts, up to
the limits imposed by this Section 2.1, from time to time between the Closing Date and the Maturity
Date upon request given to the Agent pursuant to Section 2.3. Each request for a
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Revolving Credit Loan hereunder shall constitute a representation and warranty by the Borrower that the conditions
set forth in Sections 3.1 and 3.2 have been satisfied as of the date of such request.
(b) Each LIBOR Loan shall be in a minimum principal amount of $500,000 or in integral
multiples of $100,000 in excess of such minimum amount. No more than five (5) LIBOR Loans may be
outstanding at any time.
(c) Upon the terms and subject to the conditions and limitations of this Agreement, the
Borrower may convert all or a part of any outstanding Loan into a Loan of another Type on any
Business Day (which, in the case of a conversion of an outstanding LIBOR Loan shall be the last day
of the Interest Period applicable to such LIBOR Loan). The Borrower shall give the Agent prior
notice of each such conversion (which notice shall be effective upon receipt) in accordance with
Section 2.3.
(d) (i) All Commitments shall automatically terminate at 5:00 p.m. Boston time on the Maturity
Date.
(ii) Subject to the provisions of Sections 2.6(b) and 2.7, the Borrower shall have the right
at any time and from time to time upon five (5) Business Days’ prior written notice to the Agent to
reduce by $5,000,000, and in integral multiples of $1,000,000 if in excess thereof, the Total
Commitment or to terminate entirely the Lenders’ Commitments to make Loans hereunder, whereupon the Commitments of the Lenders shall be reduced pro rata in
accordance with their respective Commitment Percentages by the aggregate amount specified in such
notice or shall, as the case may be, be terminated entirely.
(iii) No such reduction or termination of any Commitment may be reinstated.
(e) Notwithstanding the provisions of Section 2.1(a), the Agent may, in its sole discretion,
advance Revolving Credit Loans on behalf of the Lenders to the Borrower at a time when Total
Outstandings exceed, or after giving effect to all requested Loans would exceed, the Borrowing Base
(any such Revolving Credit Loan or Loans being herein referred to individually as an
“Overadvance” and collectively, as “Overadvances”), provided that (i) the
Total Outstandings (after giving effect to all requested Loans (including Overadvances)) shall not
at any time exceed the Total Commitment, (ii) the outstanding Overadvances shall not at any time
exceed ten percent (10%) of the Borrowing Base, (iii) all Overadvances shall be Base Rate Loans,
(iv) no Overadvance may be made after the occurrence and during the continuation of a Default or an
Event of Default without the consent of all Lenders and (v) each Overadvance shall be payable on
the next Business Day after the Drawdown Date thereof.
2.2 The Notes. The Revolving Credit Loans shall be evidenced by separate promissory
notes for each Lender, each such note to be in substantially the form of Exhibit A hereto,
dated as of the Closing Date and completed with appropriate insertions (each such note being
referred to herein as a “Note” and collectively as the “Notes”). One Note shall be
payable to the order of each Lender in a principal amount equal to such Lender’s Commitment. The
Borrower irrevocably authorizes each of the Lenders to make or cause to be made, at or about the
time of the Drawdown Date of any Revolving Credit Loan or at the time of receipt of any payment of
principal on the Notes, an appropriate notation on its Note Record reflecting (as the
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case may be)
the making of such Revolving Credit Loan or the receipt of such payment. The outstanding amount of
the Revolving Credit Loans set forth on the Note Records shall be prima facie evidence of
the principal amount thereof owing and unpaid to such Lenders, but the failure to record, or any
error in so recording, any such amount on any Lender’s Note Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Note to make payments of principal of
or interest on any Note when due.
2.3 Notice and Manner of Borrowing or Conversion of Loans.
(a) The Borrower may obtain or continue a Loan hereunder or convert an outstanding Loan into a
Loan of another Type by giving the Agent a telephonic notice promptly confirmed by a written Notice
of Borrowing or Conversion, which telephonic notice shall be irrevocable and which must be received
no later than 2:00 p.m. Boston time (i) on the day on which the requested Loan is to be made as or
converted to a Base Rate Loan, and (ii) three Business Days before the day on which the requested
Loan is to be made or continued as or converted to a LIBOR Loan. Such Notice of Borrowing or
Conversion shall specify (i) the effective date and amount of each Loan or portion thereof requested to be made, continued or
converted, subject to the limitations set forth in Section 2.1, (ii) the interest rate option
requested to be applicable thereto, and (iii) the duration of the applicable Interest Period, if
any (subject to the provisions of the definition of the term “Interest Period”). If such Notice
fails to specify the interest rate option to be applicable to the requested Loan, then the Borrower
shall be deemed to have requested a Base Rate Loan. If the written confirmation of any telephonic
notification differs in any material respect from the action taken by the Agent, the records of the
Agent shall control absent manifest error.
(b) The presentment for payment of a check, draft or other item on, or a request made by the
Borrower for a wire transfer for funds from, any deposit account maintained by the Borrower with
the Agent shall be deemed to be a request pursuant to a Notice of Borrowing or Conversion by the
Borrower for a Base Rate Loan hereunder to the extent that such account has insufficient funds to
pay all such checks, drafts or items presented, or wire transfers requested, on any day in full.
(c) Subject to the provisions of the definition of the term “Interest Period” herein, the
duration of each Interest Period for a LIBOR Loan shall be as specified in the applicable Notice of
Borrowing or Conversion. If no Interest Period is specified in a Notice of Borrowing or Conversion
with respect to a requested LIBOR Loan, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration. If the Agent receives a Notice of Borrowing or Conversion
after the time specified in subsection (a) above, such Notice shall not be effective. If the Agent
does not receive an effective Notice of Borrowing or Conversion with respect to an outstanding
LIBOR Loan, or if, when such Notice must be given prior to the end of the Interest Period
applicable to such outstanding Loan, the Borrower shall have failed to satisfy any of the
conditions hereof, the Borrower shall be deemed to have elected to convert such outstanding Loan in
whole into a Base Rate Loan on the last day of the then current Interest Period with respect
thereto.
(d) Notwithstanding anything to the contrary contained in this Section II, if a Default shall
have occurred and be continuing, the Lenders shall have no obligation to make or continue any LIBOR
Loans to the Borrower.
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2.4 Funding of Loans.
(a) Revolving Credit Loans (including Overadvances) shall be made by the Lenders pro
rata in accordance with their respective Commitment Percentages, provided,
however that the failure of any Lender to make any Loan shall not relieve any other Lender
of its obligation to lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be made by such other
Lender).
(b) Each of the Lenders authorizes the Agent to advance all Revolving Credit Loans (including
Overadvances to the extent authorized under Section 2.1(e)) which are requested by the Borrower
during any calendar week, subject to the terms and conditions of this Agreement. In addition, the
Agent may, but shall not be obligated to, apply amounts from the Collateral Account to fund the
payment of checks, drafts and other items, or requests for wire transfers, deemed to be a request
for a Base Rate Loan pursuant to Section 2.3(b) hereof instead of, or in addition to, advancing a
Revolving Credit Loan hereunder. On such day or days as the Agent shall designate (each such day
being referred to herein as a “Settlement Date”), but at least once per week, whether or
not the Commitments have been terminated, a Default has occurred, the Obligations have been
accelerated or the Agent is proceeding to liquidate the Collateral, the Agent shall, as promptly as
practicable during normal business hours, effect a wire transfer of immediately available funds to
each Lender of the amount, if any, payable to such Lender, or each Lender shall transfer to the
Agent sufficient immediately available federal funds to reimburse the Agent for each such Lender’s
pro rata share of all Revolving Credit Loans made by the Agent since the previous
Settlement Date, in each case after taking into account payments and collections received by the
Agent and applied to the Revolving Credit Loans, so that after giving effect to such transfers by
the Agent to the Lenders or by the Lenders to the Agent, as the case may be, the Agent’s Note
Record shall correctly reflect each Lender’s pro rata share of outstanding
Revolving Credit Loans. All Revolving Credit Loans made by the Agent on behalf of the Lenders
shall be, for purposes of interest income and charges, considered to be Revolving Credit Loans from
such Lenders to the Borrower and reflected in the Note Records of the Agent and the Lenders (as
among the Agent and the Lenders) at such time as the Agent receives from such Lenders funds as
provided in this Section 2.4, and prior to such time such Revolving Credit Loans shall be
considered, for purposes of interest income and other charges, to be Revolving Credit Loans from
the Agent and so reflected in the Note Record of the Agent.
(c) The Agent may notify the Lenders of any proposed Revolving Credit Loan (including any
proposed Overadvance) and of the Drawdown Date thereof and the amount of each Lender’s pro rata
share of such Revolving Credit Loan. If such notice is given by the close of the Agent’s business
on the Business Day on which the Agent receives an effective Notice of Borrowing or Conversion, as
provided in Section 2.3, or in the case of Overadvances to the extent authorized under Section
2.1(e), if such notice is given by the close of Agent’s business on the Business Day immediately
preceding the proposed Drawdown Date, each Lender shall, not later than 1:00 p.m. (Boston time) on
the proposed Drawdown Date, make available to the Agent at its head office or at such other
location as the Agent may from time to time designate, in immediately available funds, the amount
of such Lender’s pro rata share of the amount of such proposed Revolving Credit Loan. Upon receipt
by the Agent of such amount, and upon the satisfaction of the conditions set forth in Section 3 (to
the extent applicable), the Agent will make available to the Borrower the aggregate amount of such
proposed Revolving Credit Loan.
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(d) The Agent may, unless notified to the contrary by any Lender prior to a Drawdown Date,
assume that each Lender has made available to the Agent on such Drawdown Date and the amount of such Lender’s Commitment Percentage of the Loans to be made on such
Drawdown Date, and the Agent may (but it shall not be required to), in reliance upon such
assumption, make available to the Borrower a corresponding amount. If any Lender makes available
to the Agent such amount on a date after such Drawdown Date, such Lender shall pay to the Agent on
demand an amount equal to the product of (i) the average, computed for the period referred to in
clause (iii) below, of the weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times (ii) the amount of
such Lender’s Commitment Percentage of any such Loans times (iii) a fraction, the numerator
of which is the number of days that elapse from and including such Drawdown Date to the date on
which the amount of such Lender’s Commitment Percentage of such Loans shall become immediately
available to the Agent, and the denominator of which is 365. A statement of the Agent submitted to
such Lender with respect to any amounts owing under this paragraph shall be prima
facie evidence of the amount due and owing to the Agent by such Lender. If the amount of
such Lender’s Commitment Percentage of such Loans is not made available to the Agent by such Lender
within three (3) Business Days following such Drawdown Date, the Agent shall be entitled to recover
such amount from the Borrower on demand, with interest thereon at the rate per annum applicable to
the Loans made on such Drawdown Date.
2.5 Interest Rates and Payments of Interest.
(a) Each Loan which is a Base Rate Loan shall bear interest on the outstanding principal
amount thereof at a rate per annum equal to the Base Rate, which rate shall change
contemporaneously with any change in the Base Rate, as provided below. Such interest shall be
payable monthly in arrears on the first Business Day of each month.
(b) Each Loan which is a LIBOR Loan shall bear interest on the outstanding principal amount
thereof, for each Interest Period applicable thereto, at a rate per annum equal to the LIBOR Rate
plus a margin of two and three quarters percent (2.75%) per annum. Such interest shall be payable
monthly in arrears on the first Business Day of each month.
(c) If a Default shall occur, then at the option of the Agent or the direction of the Majority
Lenders the unpaid balance of Loans shall bear interest, to the extent permitted by law, compounded
daily at an interest rate equal to a margin of four percent (4.00%) per annum above the interest
rate applicable to each such Loan in effect on the day such Default occurs, until such Default is
cured or waived.
(d) For the purpose of computing interest on the Loans, any items requiring clearance or
payment shall not be considered to have been credited against any Loans hereunder until two (2)
Business Days after receipt by the Agent of such items.
(e) So long as any Lender shall be required under regulations of the Board of Governors of the
Federal Reserve System (or any other banking authority, domestic or foreign, to which such Lender is subject) to maintain reserves with respect to liabilities or assets
consisting of or including “Eurocurrency Liabilities” (as defined in regulations issued from time
to time by such Board of Governors), the Borrower shall pay to the Agent for the account of each
such Lender additional interest on the unpaid principal amount of each LIBOR Loan made by
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such Lender from the date of such Loan until such principal amount is paid in full, at an interest rate
per annum equal at all times to the remainder (rounded upwards, if necessary, to the next higher
1/100 of 1%) obtained by subtracting (i) the LIBOR Rate for the Interest Period for such LIBOR Loan
from (ii) the rate obtained by dividing such LIBOR Rate by a percentage equal to 100% minus the
LIBOR Reserve Percentage of such Lender for such Interest Period. Such additional interest shall
be determined by such Lender and notified to the Borrower through the Agent, and shall be payable
on each date on which interest is payable on such LIBOR Loan.
(f) All agreements between the Borrower and the Lenders are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of acceleration of maturity of the
Obligations or otherwise, shall the amount paid or agreed to be paid to the Lenders for the use or
the forbearance of the Obligations exceed the maximum permissible under applicable law. As used
herein, the term “applicable law” shall mean the law of The Commonwealth of Massachusetts in effect
as of the date hereof; provided, however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then the Loan Documents shall be governed by such
new law as of its effective date. In this regard, it is expressly agreed that it is the intent of
the Borrower and the Lenders in the execution, delivery and acceptance of the Loan Documents to
contract in strict compliance with the laws of The Commonwealth of Massachusetts from time to time
in effect. If, under or from any circumstances whatsoever, fulfillment of any provision of any of
the Loan Documents at the time of performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if under or from
circumstances whatsoever the Lenders should ever receive as interest an amount which would exceed
the highest lawful rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance of the Obligations and not to the payment of interest. This
provision shall control every other provision of all Loan Documents.
2.6 Fees.
(a) The Borrower shall pay to the Agent for the benefit of the Lenders an unused line fee (the
“Unused Fee”), computed on a daily basis and payable monthly in arrears on the first
Business Day of each month, equal to one quarter of one percent (0.25%) per annum of the excess of
(i) the Total Commitment at the time over (ii) the Total Outstandings from time to time.
(b) If the Borrower prepays the Loans in full, other than (i) with the proceeds of a financing
arrangement where Sovereign is the agent or sole lender under such financing arrangement with a total commitment of no less than $20,000,000, (ii) with the proceeds of a
sale permitted under Section 7.4(c) or (iii) at a time when the percentages for the advance rates
set forth in clauses (i) or (ii) of the definition of “Borrowing Base” have been reduced by the
Agent, then at the time of such prepayment the Borrower shall also pay to the Agent, for the
benefit of the Lenders, an early termination fee of (A) three percent (3%) on or prior to the first
anniversary of the Closing Date, (B) two percent (2%) after the first anniversary of the Closing
Date and on or prior to the second anniversary of the Closing Date and (C) one percent (1%) after
the second anniversary of the Closing Date and prior to the third anniversary of the Closing Date,
in each case, of the Total Commitment at the time of repayment (without regard to any reductions in
the
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Total Commitment within six months prior to such repayment made pursuant to Section 2.1
(d)(ii)).
(c) The Borrower shall pay to the Agent, solely for the account of the Agent, such other fees
as the Borrower and the Agent shall agree in writing.
(d) The Borrower authorizes Agent and the Lenders to charge to their Note Records or to any
deposit account which the Borrower may maintain with any of them the interest, fees, charges, taxes
and expenses provided for in this Agreement, the other Loan Documents, any other document executed
or delivered in connection herewith or therewith or associated with any accounts maintained with
the Lenders, including with respect to account overdrafts.
2.7 Payments and Prepayments of the Loans.
(a) On the Maturity Date or the earlier termination of all Commitments pursuant to Section
2.1(d)(ii), the Borrower shall pay in full the unpaid principal of all outstanding Revolving Credit
Loans, together with all unpaid interest thereon and all fees and other amounts due with respect
thereto. Overadvances shall be due and payable as provided in Section 2.1(e).
(b) Revolving Credit Loans that are LIBOR Loans may be prepaid at any time, subject to the
provisions of Section 2.9, upon three (3) Business Days’ notice. Revolving Credit Loans that are
Base Rate Loans may be prepaid at any time, without premium or penalty. Any such notice of
prepayment shall be irrevocable. Prepayments of Revolving Credit Loans may be reborrowed to the
extent provided in Section 2.1.
(c) The Agent may, in its discretion, apply any amount held by the Agent in the Collateral
Account to reduce outstanding Loans. To the extent that the Agent so applies any such amount, then
for purposes of calculating Total Outstandings under Section 2.1(a) hereof, credit for such amount
shall be deemed to have been entered one Business Day after being received by the Agent. Such
credit shall be conditional upon final payment in cash or solvent credits of the items giving rise
thereto.
(d) Except as provided in Section 2.1(e), if at any time the Total Outstandings exceed the
lesser of (i) the Borrowing Base and (ii) the Total Commitment, the Borrower shall immediately pay
the amount of any such excess to the Agent for application to the Revolving Credit Loans.
2.8 Method and Allocation of Payments.
(a) All payments by the Borrower hereunder and under any of the other Loan Documents shall be
made in lawful money of the United States in immediately available funds, and shall be deemed to
have been made only when made in compliance with this Section. All such payments shall be made
without set-off or counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to
make such deduction or withholding. If any such obligation is
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imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other Loan Documents, the
Borrower will pay to each Lender such additional amount in U.S. Dollars as shall be necessary to
enable such Lender to receive the same net amount which such Lender would have received on such due
date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to
each Lender certificates or other valid vouchers or other evidence of payment reasonably
satisfactory to the Agent for all taxes or other charges deducted from or paid with respect to
payments made by the Borrower hereunder or under such other Loan Document. The Lenders may, and
the Borrower hereby authorizes the Lenders to, debit the amount of any payment not made by such
time to the demand deposit accounts of the Borrower with the Lenders or to their Note Records.
(b) All payments of principal of and interest in respect of Loans and of Unused Fees shall be
made to the Agent, for the pro rata benefit of the Lenders, in accordance with
their Commitment Percentages, and payments of any other amounts due hereunder shall be made to the
Agent to be allocated among the Agent and the Lenders as their respective interests appear. All
such payments shall be made at the Agent’s head office or at such other location as the Agent may
from time to time designate, in each case in immediately available funds.
(c) If the Commitments shall have been terminated or the Obligations shall have been declared
immediately due and payable pursuant to Section 8.2, all funds received from or on behalf of the
Borrower (including as proceeds of Collateral) by any Lender in respect of Obligations (except
funds received by any Lender as a result of a deemed purchase of a participant interest pursuant to
Section 2.8(d) below) shall be remitted to the Agent, and all such funds, together with all other
funds received by the Agent from or on behalf of the Borrower (including proceeds of Collateral) in
respect of Obligations, shall be applied by the Agent in the following manner and order: (i)
first, to reimburse the Agent and the Lenders, in that order, for any amounts payable pursuant to
Sections 11.2 and 11.3 hereof; (ii) second, to the payment of interest due on the Loans; (iii) third, to the payment of Unused Fees and any other fees
payable hereunder or any other Loan Documents and; (iv) fourth, to the payment of the outstanding
principal balance of the Loans, pro rata to the outstanding principal balance of
each; (v) fifth, to the payment of any other Obligations payable by the Borrower, pro
rata to the outstanding principal balance of each; and (vi) any remaining funds shall be
paid to whoever shall be entitled thereto or as a court of competent jurisdiction shall direct.
(d) Each of the Lenders and the Agent hereby agrees that if it should receive any amount
(whether by voluntary payment, by realization upon security, by the exercise of the right of
set-off or banker’s lien, by counterclaim or cross action, by the enforcement of any right under
the Loan Documents, or otherwise) in respect of principal of, or interest on, the Loans or any fees
which are to be shared pro rata among the Lenders, which, as compared to the
amounts theretofore received by the other Lenders with respect to such principal, interest or fees,
is in excess of such Lender’s Commitment Percentage of such principal, interest or fees, such
Lender shall share such excess, less the costs and expenses (including, reasonable attorneys’ fees
and disbursements) incurred by such Lender in connection with such realization, exercise, claim or
action, pro rata with all other Lenders in proportion to their respective
Commitment Percentages, and such sharing shall be deemed a purchase (without recourse) by such
sharing party of participant interests in the Loans or such fees, as the case may be, owed to the
recipients of such shared payments to the extent of such shared payments; provided,
however, that if all or any
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portion of such excess amount is thereafter recovered from such
Lender, such purchase shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.
2.9 LIBOR Indemnity. If the Borrower for any reason (including, without limitation,
pursuant to Sections 2.7, 2.11, 2.12 and 8.2 hereof) makes any payment of principal with respect to
any LIBOR Loan on any day other than the last day of an Interest Period applicable to such LIBOR
Loan, or fails to borrow or continue or convert to a LIBOR Loan after giving a Notice of Borrowing
or Conversion thereof pursuant to Section 2.3, or fails to prepay a LIBOR Loan after having given
notice thereof, the Borrower shall pay to the Agent for the benefit of the Lenders any amount
required to compensate the Lenders for any additional losses, costs or expenses which they may
reasonably incur as a result of such payment or failure, including, without limitation, any loss
(including loss of anticipated profits), costs or expense incurred by reason of the liquidation or
re-employment of deposits or other funds required by the Lenders to fund or maintain such LIBOR
Loan. Without limiting the foregoing, the Borrower shall pay to the Agent a “yield maintenance fee”
in an amount computed as follows: the current rate for United States Treasury securities (bills on
a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the
expiration of the Interest Period of the Loan as to which the prepayment is made, shall be
subtracted from the interest rate applicable (pursuant to Section 2.5(b)) to each LIBOR Loan in
effect at the time of prepayment. If the result is zero or a negative number, there shall be no
yield maintenance fee. If the result is a positive number, then the resulting percentage shall be
multiplied by the amount of the principal balance being prepaid. The resulting amount shall be
divided by 360 and multiplied by the number of days remaining in the Interest Period of the Loan as to which the prepayment is made. Said amount shall be
reduced to present value calculated by using the above referenced United States Treasury securities
rate and the number of days remaining in the Interest Period of the Loan as to which prepayment is
made. The resulting amount shall be the yield maintenance fee due to the Lenders upon the payment
of a LIBOR Loan under the circumstances described in the first sentence of this Section. The
Borrower shall pay such amount upon presentation by the Agent of a statement setting forth the
amount and the Agent’s (or the affected Lenders’) calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error. If the Obligations are declared
immediately due and payable pursuant to Section 8.2, then any amount provided for in this Section
shall be due and payable in the same manner as though the Borrower had made a prepayment of the
LIBOR Loans.
2.10 Computation of Interest and Fees; Due Date.
(a) Interest and all fees payable hereunder shall be computed daily on the basis of a year of
360 days and paid for the actual number of days for which due.
(b) If the due date for any payment of principal is extended by operation of law, interest
shall be payable for such extended time. If any payment required by this Agreement becomes due on
a day that is not a Business Day such payment may be made on the next succeeding Business Day
(subject to the definition of the term “Interest Period”), and such extension shall be included in
computing interest and fees in connection with such payment.
2.11 Changed Circumstances; Illegality.
(a) Notwithstanding any other provision of this Agreement, in the event that:
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(i) on any date on which the LIBOR Rate would otherwise be set the Agent shall have
determined in good faith (which determination shall be final and conclusive) that adequate
and fair means do not exist for ascertaining the LIBOR Rate, or
(ii) at any time the Agent or any Lender shall have determined in good faith (which
determination shall be final and conclusive and, if made by any Lender, shall have been
communicated to the Agent in writing) that:
(A) the making or continuation of or conversion of any Loan to a LIBOR Loan has been
made impracticable or unlawful by (1) the occurrence of a contingency that materially and
adversely affects the interbank LIBOR market or (2) compliance by the Agent or such Lender
in good faith with any applicable law or governmental regulation, guideline or order or
interpretation or change thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or directive of any such
governmental authority (whether or not having the force of law); or
(B) the LIBOR Rate shall no longer represent the effective cost to the Agent or such
Lender for U.S. dollar deposits in the interbank market for deposits in which it regularly
participates;
then, and in any such event, the Agent shall forthwith so notify the Borrower thereof. Until the
Agent notifies the Borrower that the circumstances giving rise to such notice no longer apply, the
obligation of the Lenders to allow selection by the Borrower of the Type of Loan affected by the
contingencies described in this Section (herein called “Affected Loans”) shall be
suspended. If, at the time the Agent so notifies the Borrower, the Borrower has previously given
the Agent a Notice of Borrowing or Conversion with respect to one or more Affected Loans but such
Loans have not yet gone into effect, such notification shall be deemed to be a request for Base
Rate Loans.
(b) In the event of a determination of illegality pursuant to subsection (a)(ii)(A) above, the
Borrower shall, with respect to the outstanding Affected Loans, prepay the same, together with
interest thereon and any amounts required to be paid pursuant to Section 2.9, on such date as shall
be specified in such notice (which shall not be earlier than the date such notice is given) and
may, subject to the conditions of this Agreement, borrow a Loan of another Type in accordance with
Section 2.1 hereof by giving a Notice of Borrowing or Conversion pursuant to Section 2.3 hereof.
2.12 Increased Costs. In case any change made after the Closing Date in any law,
regulation, treaty or official directive or the interpretation or application thereof by any court
or by any governmental authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority (whether or not having the
force of law):
(i) subjects any Lender to any tax with respect to payments of principal or interest
or any other amounts payable hereunder by the Borrower or otherwise with respect to the
transactions contemplated hereby (except for taxes on the overall net income of such Lender
imposed by the United States of America or any political subdivision thereof), or
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(ii) imposes, modifies or deems applicable any deposit insurance, reserve, special
deposit or similar requirement against assets held by, or deposits in or for the account of,
or loans by, any Lender (other than such requirements as are already included in the
determination of the LIBOR Rate), or
(iii) imposes upon any Lender any other condition with respect to its obligations or
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the Lender, reduce the income
receivable by such Lender or impose any expense upon such Lender with respect to any Loans or its
obligations under this Agreement, such Lender shall notify the Borrower and the Agent thereof. The
Borrower agrees to pay to such Lender the amount of such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is incurred or determined, upon
presentation by such Lender of a statement in the amount and setting forth in reasonable detail
such Lender’s calculation thereof and the assumptions upon which such calculation was based, which
statement shall be deemed true and correct absent manifest error.
2.13 Capital Requirements. If after the date hereof any Lender determines that (i)
the adoption of or change in any law, rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change in the interpretation or application thereof by
any governmental authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or directive of any such
entity regarding capital adequacy (whether or not having the force of law), has the effect of
reducing the return on such Lender’s or such holding company’s capital as a consequence of such
Lender’s Commitment to make Loans hereunder to a level below that which such Lender or such holding
company could have achieved but for such adoption, change or compliance (taking into consideration
such Lender’s or such holding company’s then existing policies with respect to capital adequacy and
assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be
material, then such Lender shall notify the Borrower and the Agent thereof. The Borrower agrees to
pay to such Lender the amount of such reduction of return on capital as and when such reduction is
determined, payable within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender’s calculation thereof and the assumptions upon
which such calculation was based (which statement shall be deemed true and correct absent manifest
error) unless within such 90 day period the Borrower shall have prepaid in full all Obligations to
such Lender, in which event no amount shall be payable to such Lender under this Section. In
determining such amount, such Lender may use any reasonable averaging and attribution methods.
SECTION III
CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Loans. The obligation of the Lenders to make the
initial Loans is subject to the satisfaction of the following conditions precedent on or prior to
the Closing Date:
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(a) The Agent shall have received the following agreements, documents, certificates and
opinions in form and substance satisfactory to the Agent and duly executed and delivered by the
parties thereto:
(i) This Agreement;
(ii) The Notes, substantially in the form of Exhibit A hereto;
(iii) The Affiliate Guarantees and any Subsidiary Guarantees;
(iv) The Security Documents and all deliveries required in connection therewith;
(v) UCC-1 Financing Statements;
(vi) UCC-3 Termination Statements, together with evidence satisfactory to the Agent
that the Existing Credit Agreement has been, or concurrently with the transactions
contemplated hereby is being, terminated, all Indebtedness thereunder has been paid or
satisfied and all Encumbrances securing such Indebtedness have been released;
(vii) Evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect, together with certificates of insurance or
insurance binders evidencing compliance with Section 5.3 hereof and the applicable
provisions of the other Loan Documents;
(viii) Borrowing Base Report as of a date within seven (7) days prior to the Closing
Date;
(ix) Notice of Borrowing or Conversion as of the Closing Date;
(x) A certificate of the Secretary or an Assistant Secretary of the Borrower and each
Guarantor with respect to resolutions of the Board of Directors authorizing the execution
and delivery of the Loan Documents to which such Person is a party and identifying the
officer(s) authorized to execute, deliver and take all other actions required the Loan
Documents to which such Person is a party, and providing specimen signatures of such
officers;
(xi) The Certificate of Incorporation of the Borrower and each Guarantor and all
amendments and supplements thereto, as filed in the office of the Secretary of State of such
Person’s jurisdiction of incorporation, certified by said Secretary of State as being a true
and correct copy thereof;
(xii) The Bylaws of the Borrower and each Guarantor and all amendments and supplements
thereto, certified by the Secretary or an Assistant Secretary of such Person as being a true
and correct copy thereof;
(xiii) A certificate of the Secretary of State of the Borrower’s and each Guarantor’s
jurisdiction of incorporation as to legal existence and good standing of such Person in such
state;
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(xiv) An opinion addressed to the Lenders from Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP,
counsel to the Borrower;
(xv) A certificate of a Responsible Officer of the Borrower as to the solvency of the
Borrower, the accuracy of the Borrower’s representations and warranties, the satisfaction of
the conditions contained in this Section III and such other matters as the Lender may
request;
(xvi) One or more deposit account control agreements satisfactory to the Agent; and
(xvii) Such other documents, agreements, instruments, opinions and certificates and
completion of such other matters, as the Agent may reasonably deem necessary or appropriate.
(b) No litigation, arbitration, proceeding or investigation shall be pending or threatened
which questions the validity or legality of the transactions contemplated by any Loan Document or
seeks a restraining order, injunction or damages in connection therewith, or which, in the judgment
of the Agent, might adversely affect the transactions contemplated hereby or might have a Material
Adverse Effect.
(c) All necessary filings and recordings against the Collateral shall have been completed and
the Agent’s liens on the Collateral shall have been perfected, as contemplated by the Security
Documents.
(d) The Borrower shall have paid to the Agent all fees to be paid hereunder (including
pursuant to Section 2.6(d) hereof) on or prior to the Closing Date.
(e) The Borrower, its Subsidiaries and the Guarantors shall have furnished the Agent such
documents and other information reasonably requested by the Lenders to comply with “know your
customer” and anti-money-laundering regulations, including the Patriot Act.
3.2 Conditions Precedent to all Loans. The obligation of the Lenders to make any
Loan, including the initial Loans, to continue LIBOR Loans or to convert Base Rate Loans to LIBOR
Loans is further subject to the following conditions:
(a) timely receipt by the Agent of the most recent Borrowing Base Report required by Section
5.1(d) and the Notice of Borrowing or Conversion with respect to any Loan;
(b) the outstanding Loans do not and, after giving effect to any requested Loan will not,
exceed the limitations set forth in Section 2.1;
(c) the representations and warranties contained in Section IV shall be true and accurate in
all material respects on and as of the date of such Notice of Borrowing or Conversion and on the
effective date of the making, continuation or conversion of each Loan as though made at and as of
each such date (except to the extent that such representations and warranties expressly relate to
an earlier date);
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(d) no Default or Event of Default shall have occurred and be continuing at the time of, and
immediately after the making of, such requested Loan;
(e) the resolutions referred to in Section 3.1 shall remain in full force and effect; and
(f) no change shall have occurred in any law or regulation or interpretation thereof that, in
the opinion of counsel for any Lender, would make it illegal or against the policy of any
governmental agency or authority for such Lender to make Loans hereunder.
The making, continuation or conversion of each Loan and shall be deemed to be a representation
and warranty by the Borrower on the date of the making, continuation or conversion of such Loan as
to the accuracy of the facts referred to in subsection (c) of this Section 3.2 and of the
satisfaction of all of the conditions set forth in this Section 3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement and to make Loans
hereunder, the Borrower represents and warrants to the Agent and the Lenders that except as set
forth on Exhibit C attached hereto:
4.1 Organization; Qualification; Business.
(a) Each of the Borrower and its Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has all
requisite corporate power to own its property and conduct its business as now conducted and as
presently contemplated and (iii) is duly qualified and in good standing as a foreign corporation
and is duly authorized to do business in each jurisdiction (all of which are listed on Exhibit
C attached hereto) where the nature of its properties or business requires such qualification,
except where the failure to be so qualified would not have a Material Adverse Effect.
(b) Since the date of the Initial Financial Statements, the Borrower has continued to engage
in substantially the same business as that in which it was then engaged and is engaged in no
unrelated business.
4.2 Corporate Authority; No Conflicts. The execution, delivery and performance of the
Loan Documents and the transactions contemplated hereby are within the corporate power and
authority of the Borrower and have been authorized by all necessary corporate proceedings, and do
not and will not (a) contravene any provision of the charter documents or by-laws of the Borrower
or any law, rule or regulation applicable to the Borrower, (b) contravene any provision of, or
constitute an event of default or event that, but for the requirement that time elapse or notice be
given, or both, would constitute an event of default under, any other agreement, instrument, order
or undertaking binding on the Borrower, or (c) result in or require the imposition of any
Encumbrance on any of the properties, assets or rights of the Borrower, except in favor of the
Agent and the Lenders.
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4.3 Valid Obligations. The Loan Documents and all of their respective terms and
provisions are the legal, valid and binding obligations of the Borrower, enforceable in accordance
with their respective terms except as limited by bankruptcy, insolvency, reorganization, moratorium
or other laws affecting the enforcement of creditors’ rights generally, and except as the remedy of
specific performance or of injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought. The Security Documents have effectively created in favor
of the Agent and the Lenders legal, valid and enforceable security interests in the Collateral and
such security interests are fully perfected first priority security interests.
4.4 Consents or Approvals. The execution, delivery and performance of the Loan
Documents and the transactions contemplated herein do not require any approval or consent of, or
filing or registration with, any governmental or other agency or authority, or any other Person,
except under or as contemplated by the Security Documents or filings required of the Parent
pursuant to any securities laws.
4.5 Title to Properties; Absence of Encumbrances. Each of the Borrower and its
Subsidiaries has good and marketable title to all of the properties, assets and rights of every
name and nature now purported to be owned by it, and good and valid leasehold title to all of the
properties, assets and rights of every name and nature now purported to be leased by it, including,
without limitation, such properties, assets and rights as are reflected in the Initial Financial
Statements (except such properties, assets or rights as have been disposed of in the ordinary
course of business since the date thereof), free from all Encumbrances except Permitted
Encumbrances, and, except as so disclosed, free from all defects of title that might cause a
Material Adverse Effect. All leases under which Borrower or its Subsidiaries is the lessor or
lessee are in full force and effect and there are no existing defaults or events that with the
giving of notice or passage of time or both could ripen into defaults by either party thereunder
which would have a Material Adverse Effect. No third parties possess any rights with respect to any
of Borrower’s or its Subsidiaries owned or leased properties, the exercise of which would have a
Material Adverse Effect. All real property owned or leased by the Borrower is described in
Exhibit C hereto.
4.6 Financial Statements; Indebtedness.
(a) The Borrower has furnished to the Lenders the Parent’s consolidated balance sheet as of
December 31, 2006 and its consolidated statements of income, changes in stockholders’ equity and
cash flow for the fiscal year then ended, and related footnotes, audited and certified without
qualification by the Parent’s Accountants. The Borrower has also furnished to the Lenders the
Parent’s unaudited consolidated balance sheet as of March 31, 2007 and its unaudited consolidated
statements of income, changes in stockholders’ equity and cash flow for the 3 months then ended
(the “Initial Financial Statements”), certified by the principal financial officer of the
Parent, subject to normal, recurring year-end adjustments that shall not in the aggregate be
material in amount. All such financial statements were prepared in accordance with GAAP applied on
a consistent basis throughout the periods specified and present fairly the financial position of
the Parent and its Subsidiaries as of such dates and the results of the operations of the Parent
and its Subsidiaries for such periods. The Borrower has also furnished to the Lenders the Parent’s
pro forma consolidated balance sheet as of the Closing Date and
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projections of its future consolidated results of operations, all of which were reasonable when made and continue to be
reasonable at the date hereof.
(b) At the date hereof, the Borrower has no Indebtedness or other material liabilities, debts
or obligations, whether accrued, absolute, contingent or otherwise, and whether due or to become
due, including, but not limited to, liabilities or obligations on account of taxes or other
governmental charges, that are not set forth on the Initial Financial Statements or on Exhibit
C hereto.
4.7 Changes. Since the date of the most recent financial statements delivered to the
Agent pursuant to Sections 4.6(a) or 5.1, there have been no changes in the operations, business,
properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Parent
or any of its Subsidiaries, other than changes in the ordinary course of business, the effect of
which has not, in the aggregate, caused a Material Adverse Effect.
4.8 Solvency. The Borrower has and, after giving effect to the Loans, will have,
assets (both tangible and intangible) having a fair saleable value in excess of the amount required
to pay the probable liability on its then-existing debts (whether matured or unmatured, liquidated
or unliquidated, fixed or contingent); the Borrower has and will have access to adequate capital
for the conduct of its business and the discharge of its debts incurred in connection therewith as
such debts mature; the Borrower was not insolvent immediately prior to the making of the Loans and
immediately after giving effect thereto, the Borrower will not be insolvent.
4.9 Defaults. As of the date of this Agreement, no Default exists.
4.10 Taxes. The Parent and each Subsidiary has filed all federal, state and other tax
returns required to be filed, and all taxes, assessments and other governmental charges due from
the Parent and each Subsidiary have been fully paid, except for such taxes, assessments or charges
that are being contested in good faith by appropriate proceedings and with respect to which (a)
adequate reserves have been established and are being maintained in accordance with GAAP and (b) no
lien has been filed to secure such taxes, assessments or charges. All such contests at the date
hereof are described on Exhibit C hereto. The Parent and its Subsidiaries have not
executed any waiver that would have the effect of extending the applicable statute of limitations
in respect of tax liabilities. The federal and state income tax returns of the Parent and each
Subsidiary have not been audited or otherwise examined by any federal or state taxing authority.
The Parent and each Subsidiary have established on their books reserves adequate for the payment of
all federal, state and other tax liabilities.
4.11 Litigation. There is no litigation, arbitration, proceeding or investigation
pending, or, to the knowledge of the Borrower’s or any Subsidiary’s officers, threatened, against
the Parent, the Borrower or any of their Subsidiaries that, if adversely determined, may reasonably
be expected to result in a material judgment not fully covered by insurance, may reasonably be
expected to result in a forfeiture of all or any substantial part of the property of the Parent,
the Borrower or any of their Subsidiaries, or may reasonably be expected to have a Material Adverse
Effect.
4.12 Subsidiaries. All the Subsidiaries of the Borrower are listed on Exhibit
C hereto, with any Special Purpose Subsidiaries being separately designated as such. The
Borrower or a
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Subsidiary of the Borrower is the owner, free and clear of all Encumbrances, of all
of the issued and outstanding stock or other equity interest of each Subsidiary. All shares of
such stock or other equity interest have been validly issued and are fully paid and nonassessable,
and no rights to subscribe to any additional shares have been granted, and no options, warrants or
similar rights are outstanding.
4.13 Investment Company Act. Neither the Borrower nor any of its Subsidiaries is
subject to regulation under the Investment Company Act of 1940, as amended.
4.14 Compliance. The Borrower has all necessary permits, approvals, authorizations,
consents, variances, licenses, franchises, registrations and other rights and privileges (including
patents, trademarks, trade names and copyrights) to allow it to own and operate its business and
properties without any violation of laws, regulations, authorizations and orders of public
authorities (including without limitation Environmental Laws) or the rights of others, except to
the extent that any such violation would not have a Material Adverse Effect. The Borrower and each
Subsidiary are duly authorized, qualified and licensed under, and the Borrower, each Subsidiary and
all real properties owned or leased by them are in compliance with, all applicable laws, regulations, authorizations and orders of public authorities, including, without
limitation, Environmental Laws, except to the extent that any such failure to be so authorized,
qualified, licensed or in compliance would not have a Material Adverse Effect. The Borrower and
each Subsidiary have performed all obligations required to be performed by it under, and is not in
default under or in violation of, its Certificate of Incorporation or By-Laws, or any agreement,
lease, mortgage, note, bond, indenture, license or other instrument or undertaking to which it is a
party or by which any of it or any of its properties are bound, except for violations none of
which, either individually or in the aggregate, would have any Material Adverse Effect.
4.15 ERISA. The Parent and each of its ERISA Affiliates are in compliance in all
material respects with ERISA and the provisions of the Code applicable to the Plans; neither the
Parent nor any of its ERISA Affiliates have engaged in a Prohibited Transaction which would subject
the Parent, any of its ERISA Affiliates or any Plan to a material tax or penalty imposed on a
Prohibited Transaction; no Plan has incurred any “accumulated funding deficiency” (as defined in
ERISA); except as set forth in the Initial Financial Statements, the aggregate fair market value of
all assets of the Plans which are single-employer plans is at least equal to the aggregate present
value of all accrued benefits under such Plans, both as determined in the most recent actuarial
reports for such Plans using the actuarial assumptions used for funding purposes therein; neither
the Parent nor any of its ERISA Affiliates has incurred any liability to the PBGC over and above
premiums required by law; and neither the Parent nor any of its ERISA Affiliates has terminated any
Plan in a manner which could result in the imposition of a lien on the property of the Parent, the
Borrower or any of their ERISA Affiliates.
4.16 Environmental Matters.
(a) The Borrower and each of its Subsidiaries have obtained all permits, licenses and other
authorizations and have made all filings, registrations and other submittals which are required
under all Environmental Laws, except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. The Borrower and each of its Subsidiaries
are in compliance with the terms and conditions of all such permits, licenses and authorizations,
and are also in compliance with all applicable orders, decrees,
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judgments and injunctions, issued, entered, promulgated or approved under any Environmental Law, except to the extent failure to
comply would not have a Material Adverse Effect.
(b) No written notice, notification, demand, request for information, citation, summons or
order has been issued and is outstanding, no complaint has been filed, no penalty has been assessed
and no investigation or review is pending or, to the best of the Borrower’s knowledge, threatened
by any governmental or other entity (i) with respect to any alleged failure by the Borrower or any
of its Subsidiaries to have any permit, license or authorization required in connection with the
conduct of its business or to comply with any Environmental Laws, or (ii) regarding the presence of
any Hazardous Material at, on or under any property now or previously owned, leased or used by the
Borrower or any of its Subsidiaries or any other location to which Hazardous Materials from such property had been transported or which they have been disposed
of.
(c) No material oral or written notification of a release of a Hazardous Material has been
filed by or on behalf of the Borrower or any of its Subsidiaries and no property now or previously
owned, leased or used by the Borrower or any of its Subsidiaries is listed or, to the best of the
Borrower’s knowledge, proposed for listing on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or on any similar state
list of sites requiring investigation or clean-up.
(d) There are no Encumbrances arising under or pursuant to any Environmental Law on any of the
real property or properties owned, leased or used by the Borrower or any of its Subsidiaries and no
governmental actions have been taken or, to the best of the Borrower’s knowledge, are in process
which could subject any of such properties to such liens or Encumbrances or, as a result of which
the Borrower or any of its Subsidiaries would be required to place any notice or restriction
relating to the presence of Hazardous Materials at any property owned by it in any deed to such
property.
4.17 Restrictions on the Borrower. The Borrower is not party to or bound by any
contract, agreement or instrument, nor subject to any charter or other corporate restriction which
will, under current or foreseeable conditions, cause a Material Adverse Effect.
4.18 Labor Relations. There is (i) no unfair labor practice complaint pending against
the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower, threatened,
before the National Labor Relations Board, and no grievance or arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened, except for such complaints,
grievances and arbitration proceedings which, if adversely decided, would not have a material and
adverse effect on the condition (financial or otherwise), properties, business or results of
operations of the Borrower or any of its Subsidiaries, (ii) no strike, labor dispute, slowdown or
stoppage pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries, except for any such labor
action as would not have a material and adverse effect on the condition (financial or otherwise),
properties, business or results of operations of the Borrower or any of its Subsidiaries and (iii)
to the best knowledge of the Borrower, no union representation question exists with respect to the
employees of the Borrower or any of their Subsidiaries and, to the best knowledge of the Borrower,
no union organizing activities are taking place, except for any such
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question or activities as
would not have a material and adverse effect on the condition (financial or otherwise), properties,
business or results of operations of the Borrower or any of its Subsidiaries.
4.19 Trade Relations. There exists no actual or, to the best knowledge of the
Borrower, threatened termination, cancellation or limitation of, or any material modification or
change in, the business relationship between the Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases, individually or in the aggregate, are material
to the business of the Borrower and its Subsidiaries, taken as a whole, or with any material
supplier, except in each case, where the same could not reasonably be expected to have a Material
Adverse Effect.
4.20 Margin Rules. The Borrower does not own or have any present intention of
purchasing or carrying, and no portion of any Loan shall be used for purchasing or carrying, any
“margin security” or “margin stock” as such terms are used in Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
4.21 Anti-Terrorism Laws.
(a) Neither the Borrower nor any Subsidiary of the Borrower is subject to (i) sanctions of the
United States government; (ii) in violation of any Laws relating to terrorism or money laundering,
including Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001) (the
“Terrorism Executive Order”) or any related enabling legislation or any other similar
Executive Orders (collectively with the Terrorism Executive Order, the “Executive Orders”)
and the Patriot Act; or (iii) any sanctions and regulations promulgated under authority granted by
the Trading with the Enemy Act, 50 U.S.C. App. 1-44, as amended from time to time, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, as amended from time to time,
the Iraqi Sanctions Act, Publ. L. No. 101-513; United Nations Participation Act, 22 U.S.C. § 287c,
as amended from time to time, the International Security and Development Cooperation Act, 22 U.S.C.
§ 2349 aa-9, as amended from time to time, The Cuban Democracy Act, 22 U.S.C. §§ 6001-10, as
amended from time to time, The Cuban Liberty and Democratic Solidarity Act, 18 U.S.C. §§ 2332d and
2339b, as amended from time to time, and The Foreign Narcotics Kingpin Designation Act, Publ. L.
No. 106-120, as amended from time to time.
(b) Neither the Borrower nor any Subsidiary of the Borrower is (i) listed on the Specially
Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control
(“OFAC”), Department of the Treasury, and/or on any other similar list maintained by the
OFAC pursuant to any authorizing statute, Executive Order or regulation; or (ii) a Person (a
“Designated Person”) either (A) included within the term “designated national” as defined
in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (B) designated under Sections 1(a),
1(b), 1(c) or 1(d) of the Terrorism Executive Order or a Person similarly designated under any
related enabling legislation or any other Executive Orders.
(c) Neither the Borrower nor any Subsidiary of the Borrower has knowingly (i) conducted any
business or engaged in making or receiving any contribution of funds, goods or services to or for the benefit of any Designated Person, (ii) dealt in, or otherwise engaged
in, any transaction relating to any property or interest in property blocked pursuant to any
Executive
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Order or the Patriot Act, or (iii) engaged in or conspired to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of
the prohibitions set forth in any Executive Order or the Patriot Act.
4.22 Bank Accounts. Exhibit C hereto contains a complete and correct list of
the names and locations of all banks in which the Parent and its Subsidiaries have accounts or safe
deposit boxes, the designation of each such account and safe deposit box, and the names of all
persons authorized to draw on or have access to each such account and safe deposit box.
4.23 Disclosure. No representation or warranty made by the Borrower in any Loan
Document and no document or information furnished to the Lenders by or on behalf of or at the
request of the Borrower in connection with any of the transactions contemplated by the Loan
Documents contains any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained therein taken as a whole not misleading in
light of the circumstances in which they are made.
SECTION V
AFFIRMATIVE COVENANTS
The Borrower covenants that so long as any Loan or other Obligation remains outstanding or the
Lenders have any obligation to make any Loan hereunder:
5.1 Financial Statements. The Borrower shall furnish to the Lenders:
(a) as soon as available to the Borrower, but in any event within 90 days after the end of
each fiscal year, the Parent’s consolidated balance sheet as of the end of and related consolidated
statements of income, retained earnings and cash flow for such year, prepared in accordance with
GAAP and audited and certified without qualification by the Borrower’s Accountants; and,
concurrently with such financial statements, a copy of the Borrower’s Accountants’ management
report and a written statement by the Borrower’s Accountants that, in the making of the audit
necessary for their report and opinion upon such financial statements they have obtained no
knowledge of any Default or, if in the opinion of such accountants any such Default exists, they
shall disclose in such written statement the nature and status thereof;
(b) as soon as available to the Borrower, but in any event within 45 days after the end of
each quarter, the Parent’s consolidated balance sheet as of the end of, and related consolidated
statements of income, retained earnings and cash flow for, the quarter then ended and portion of
the year then ended, certified by a Responsible Officer of the Parent and the Borrower, except for lack of footnotes and subject to normal, recurring year-end adjustments
that shall not in the aggregate be material in amount;
(c) as soon as available to the Borrower, but in any event within 30 days after the end of
each month, the Parent’s consolidated balance sheet as of the end of, and related consolidated
statements of income, retained earnings and cash flow for, the month then ended and the portion of
the year then ended, prepared in accordance with GAAP and certified by a Responsible Officer of the
Parent and the Borrower, except for lack of footnotes and subject to normal, recurring year-end
adjustments that shall not in the aggregate be material in amount;
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(d) concurrently with the delivery of the financial statements pursuant to subsections (a) and
(b) of this Section 5.1, a report in substantially the form of Exhibit D hereto signed on
behalf of the Parent and the Borrower by a Responsible Officer;
(e) as soon as available, but in any event within 10 Business Days after the end of each month
or more frequently as the Agent may elect, a Borrowing Base Report, together with such other
information regarding Eligible Leases as the Agent may require;
(f) within 10 Business Days after request by the Agent, but not more often than monthly absent
a Default, Receivables and accounts payable aging reports in form satisfactory to the Agent;
(g) within 10 Business Days after request by the Agent, but not more often than annually
absent a Default, a report detailing each Lease, account debtor, Dealer and other vendors of the
Borrower and its Subsidiaries,
(h) within 30 days after the first day of each fiscal year, the Parent’s and Borrower’s
projections for such fiscal year, prepared on a monthly basis and including consolidated balance
sheets, statements of income, retained earnings and cash flows and credit line availability and
assumptions made in connection with each of the foregoing;
(i) promptly after the receipt thereof by the Borrower, copies of any reports (including any
so-called management letters) submitted to the Parent or Borrower by independent public accountants
in connection with any annual or interim review of the accounts of the Parent or Borrower made by
such accountants;
(j) when filed with the Securities and Exchange Commission (or on the next Business Day if
filed after the close of business of the Agent), copies of all 10-K’s, 10-Q’s, 8-K’s, proxy
statements and any other financial statements and reports as the Parent or Borrower may file with
the Securities and Exchange Commission or any other governmental authority or send to Parent’s
stockholders;
(k) at least 30 days prior to the date any amendments or modifications are made to the
agreements and other instruments evidencing Indebtedness for borrowed money of the Borrower (other
than Obligations) which is not Subordinated Debt, notification setting forth in detail the proposed
amendments or modifications; and
(l) from time to time, such other financial data and information about the Parent, the
Borrower and their Subsidiaries as the Agent or the Lenders may reasonably request.
5.2 Conduct of Business; Compliance. The Borrower and each of its Subsidiaries shall:
(a) duly observe and comply in all material respects with all material contracts and with all
laws, regulations, decrees, orders, judgments and valid requirements of any governmental
authorities applicable to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets (including without limitation all Environmental Laws and
ERISA), and shall maintain and keep in full force and effect and
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comply in all material respects with all licenses and permits necessary to the proper conduct of its business;
(b) maintain its existence and remain or engage substantially in the same business as that in
which it is now engaged and in no unrelated business; and
(c) provide, to the extent commercially reasonable, such information and take such actions as
are reasonably requested by the Agent or any Lenders in order to assist the Agent and the Lenders
in maintaining compliance with the Patriot Act and similar laws or regulations.
5.3 Maintenance and Insurance.
(a) The Borrower and each of its Subsidiaries shall maintain their properties in good repair,
working order and condition as required for the normal conduct of their business.
(b) The Borrower shall maintain, or cause its lessees to maintain, with responsible insurance
companies such insurance on such of its properties, in such amounts and against such risks as are
customarily maintained by similar businesses in the micro leasing industry; provided, that
the Borrower may continue to self-insure Equipment in the manner in which it is currently
conducting its business; and provided, further, that the Borrower shall (x) not
materially change the manner in which it self-insures Equipment without the prior written consent
of the Agent; or (y) file with the Agent upon the request of the Agent a detailed list of the
insurance then in effect, stating, as applicable, the names of the insurance companies, the amounts
and rates of the insurance, dates of expiration thereof and the properties and risks covered
thereby each naming the Agent as “Mortgagee” and “Loss Payee” together with a Lender’s Loss Payable
Endorsement; and (z) within 45 days after notice in writing from the Agent, obtain such additional
insurance as the Agent may reasonably request including, without limitation, business interruption coverages and general and product liability coverages naming
the Agent as an “additional insured”.
5.4 Taxes. The Borrower shall pay or cause to be paid all taxes, assessments or
governmental charges on or against it or any of its Subsidiaries or its or their properties on or
prior to the time when they become due; except for any tax, assessment or charge that is being
contested in good faith by appropriate proceedings and with respect to which adequate reserves have
been established and are being maintained in accordance with GAAP if no Encumbrance shall have been
filed to secure such tax, assessment or charge.
5.5 Inspection. The Borrower shall permit the Agent, any Lender and their designees,
at any reasonable time and at reasonable intervals of time, and upon reasonable notice (or if a
Default shall have occurred and is continuing, at any time and without prior notice), to (i) visit
and inspect the properties of the Borrower and its Subsidiaries, (ii) examine and make copies of
and take abstracts from the books and records of the Borrower and its Subsidiaries, and (iii)
discuss the affairs, finances and accounts of the Borrower and its Subsidiaries with their
appropriate officers, employees and independent accountants, all at the reasonable expense of the
Borrower; provided that unless an Event of Default has occurred and is continuing (x) such
inspections and visits will not exceed four (4) times per year, and (y) the reimbursable expenses
payable by the Borrower under this Section 5.5 shall be limited to those incurred by the Agent.
Without limiting the generality of the foregoing, the Borrower will permit periodic reviews (as
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determined by the Agent) of the books and records of the Borrower and its Subsidiaries to be
carried out at the Borrower’s expense by commercial finance examiners (whether employed by the
Agent or by third parties) designated by the Agent. The Borrower shall also permit the Agent to
arrange for verification of Eligible Lease Receivables, under reasonable procedures, directly with
any account debtors or by other methods. The Borrower shall pay to the Agent examination fees of
$850.00 per day per examiner, subject to increases at the discretion of the Agent, plus
out-of-pocket expenses. The Agent will make commercially reasonable efforts to minimize its
examination expenses under this Section 5.5.
5.6 Maintenance of Books and Records. The Borrower and each of its Subsidiaries shall
keep adequate books and records of account, in which true and complete entries will be made
reflecting all of its business and financial transactions in accordance with GAAP and applicable
law.
5.7 Use of Proceeds.
(a) The Borrower will use the proceeds of Loans solely to finance Receivables arising from
Eligible Leases, to repay the outstanding extensions of credit under the Existing Credit Agreement,
for the working capital needs of the Borrower, to finance Permitted Acquisitions and for ongoing
general corporate purposes.
(b) No portion of any Loan shall be used for the “purpose of purchasing or carrying” any
“margin stock” or “margin security” as such terms are used in Regulations T, U and X of the Board
of Governors of the Federal Reserve System, or otherwise in violation of such regulations.
(c) No part of the proceeds of any Loan will be used, directly or indirectly, for any payments
to any governmental official or employee, political party, official of a political party, candidate
for political office or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the federal Foreign Corrupt
Practices Act of 1977, as amended.
5.8 Further Assurances. At any time and from time to time the Borrower shall, and
shall cause each of its Subsidiaries to, execute and deliver such further documents and take such
further action as may reasonably be requested by the Agent to effect the purposes of the Loan
Documents.
5.9 Notification Requirements. The Borrower shall furnish to the Agent:
(a) immediately upon becoming aware of the existence of any condition or event that
constitutes a Default, written notice thereof specifying the nature and duration thereof and the
action being or proposed to be taken with respect thereto;
(b) promptly upon becoming aware of any litigation, or of any investigative proceedings by a
governmental agency or authority, commenced or threatened against the Borrower or any of its
Subsidiaries of which they have notice, the outcome of which, individually or in the aggregate,
would or might have a Material Adverse Effect, written notice thereof and the action being or
proposed to be taken with respect thereto; and
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(c) promptly after any occurrence or after becoming aware of any condition affecting the
Borrower or any Subsidiary which might constitute a Material Adverse Effect.
5.10 Borrower’s Cash Accounts. Within 90 days after the Closing Date, the Borrower
and its Subsidiaries (other than any Special Purpose Subsidiary) will establish and maintain their
depository, blocked and disbursement accounts and treasury management relationships with the Agent
pursuant to agreements satisfactory to the Agent and transfer all of their funds held by other
banks into such accounts. Upon request of the Agent, at any time, the Borrower and such
Subsidiaries will use their best efforts to obtain account control agreements for the benefit of
the Agent and the Lenders from such other banks holding their accounts as the Agent shall specify.
5.11 ERISA Compliance and Reports.
(a) Each Plan shall comply in all material respects with ERISA and the Code, except to the
extent failure to comply in any instance would not have a Material Adverse Effect.
(b) With respect to any Plan, the Borrower shall, or shall cause its ERISA Affiliates to,
furnish to the Lender promptly (i) as soon as possible and in any event within 10 days after the
Borrower or any of its ERISA Affiliates knows that any ERISA Event has occurred or is expected to
occur, a statement of a Responsible Officer of the Borrower describing such ERISA Event, including
copies of any notice concerning such ERISA Event received from the PBGC, a plan administrator, or
from a Multiemployer Plan sponsor, and the action, if any, the Borrower or such ERISA Affiliate
proposes to take with respect thereto; and (ii) promptly after filing thereof, a copy of the annual
report of each Pension Plan (Form 5500 or comparable form) required to be filed with the IRS and/or
the Department of Labor. Promptly after the adoption of any Pension Plan, the Borrower shall
notify the Lender of such adoption.
5.12 Environmental Compliance.
(a) The Borrower and its Subsidiaries will comply in all material respects with all applicable
Environmental Laws in all jurisdictions in which any of them operates now or in the future, and the
Borrower and its Subsidiaries will comply in all material respects with all such Environmental Laws
that may in the future be applicable to the Borrower’s or any Subsidiary’s business, properties and
assets.
(b) If the Borrower or any Subsidiary shall (i) receive notice that any material violation of
any Environmental Law may have been committed or is about to be committed by the Borrower or any
Subsidiary, (ii) receive notice that any administrative or judicial complaint or order has been
filed or is about to be filed against the Borrower or any Subsidiary alleging a material violation
of any Environmental Law requiring the Borrower or any Subsidiary to take any action in connection
with the release of Hazardous Materials into the environment or (iii) receive any notice from a
federal, state or local government agency or private party alleging that the Borrower or any
Subsidiary may be liable or responsible for any material amount of costs associated with a response
to or cleanup of a release of Hazardous Materials into the environment or any damages caused
thereby, the Borrower or such Subsidiary shall provide the Agent with a copy of such notice within
five (5) days after the Borrower or such Subsidiary’s receipt thereof. Within fifteen (15) days
after the Borrower or any Subsidiary has learned of the
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enactment or promulgation of any Environmental Law which may result in any Material Adverse Effect, the Borrower or such Subsidiary
shall provide the Agent with notice thereof.
SECTION VI
FINANCIAL COVENANTS
The Borrower covenants that so long as any Loan or other Obligation remains outstanding or the
Lenders have any obligation to make any Loan hereunder:
6.1 Interest Coverage. The Borrower shall not permit the ratio of Consolidated EBIT
to Consolidated Interest Expense to be less than the ratios specified below as of the end of any
fiscal quarter during the respective periods specified below:
| Period | Minimum Ratio | |||
Closing Date through the end of the fourth fiscal quarter of
fiscal year 2007 |
1.50:1.00 | |||
Each fiscal quarter of fiscal year 2008 |
1.75:1.00 | |||
Each fiscal quarter of fiscal year 2009 |
1.65:1.00 | |||
Each fiscal quarter of fiscal year 2010 |
1.90:1.00 | |||
6.2 Consolidated Tangible Capital Base. The Borrower shall not permit Consolidated
Tangible Capital Base at any time to be less than (a) $45,000,000 from the date hereof through
September 29, 2007, (b) $48,500,000 as of September 30, 2007, and (c) during each fiscal quarter
ending after September 30, 2007, an amount equal to (i) the amount of Consolidated Tangible Capital
Base required to be maintained as of the end of the preceding fiscal quarter, plus (ii) the
greater of (x) fifty percent (50%) of Consolidated Net Income for the current fiscal quarter being
measured, and (y) one hundred percent (100%) of equity capital received by the Parent during the
current fiscal quarter being measured (for purposes of this clause (ii), only positive Consolidated
Net Income shall be included and any net losses shall be disregarded).
6.3 Leverage Ratio. The Borrower shall not permit the Leverage Ratio at any time to
exceed the ratios specified below during the respective periods specified below:
| Period | Maximum Leverage Ratio | |||
Closing Date through the end of the fourth fiscal
quarter of fiscal year 2007 |
3.00:1.00 | |||
Each fiscal quarter of fiscal year 2008 |
3.50:1.00 | |||
Each fiscal quarter of fiscal year 2009 |
3.75:1.00 | |||
Each fiscal quarter of fiscal year 2010 |
4.00:1.00 | |||
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6.4 Asset Quality. Borrower shall not at any time permit the amount of Receivables
over 90 days past due to exceed 18.75% of Gross Lease Installments.
SECTION VII
NEGATIVE COVENANTS
The Borrower covenants that so long as any Loan or other Obligation remains outstanding or the
Lenders have any obligation to make any Loan hereunder:
7.1 Indebtedness. Neither the Borrower nor any of its Subsidiaries shall create,
incur, assume, guarantee or be or remain liable with respect to any Indebtedness other than the
following:
(a) Obligations;
(b) Indebtedness existing as of the date of this Agreement and disclosed on Exhibit C
hereto and renewals and refinancings thereof, but not any increase in the principal amounts
thereof;
(c) Indebtedness for taxes, assessments or governmental charges to the extent that payment
therefor shall at the time not be required to be made in accordance with Section 5.4;
(d) current trade liabilities on open account for the purchase price of services, materials
and supplies incurred by the Borrower in the ordinary course of business (not as a result of
borrowing), so long as all of such open account Indebtedness shall be promptly paid and discharged
when due or in conformity with customary trade terms and practices, except for any such open
account Indebtedness which is being contested in good faith by the Borrower, as to which adequate
reserves required by GAAP have been established and are being maintained and as to which no
Encumbrance has been placed on any property of the Borrower or any of its Subsidiaries;
(e) Guarantees permitted under Section 7.2 hereof;
(f) Subordinated Debt; and
(g) Indebtedness assumed in connection with Permitted Acquisitions to the extent permitted by
Section 7.8(f)(ii).
7.2 Contingent Liabilities. Neither the Borrower nor any of its Subsidiaries shall
create, incur, assume, guarantee or be or remain liable with respect to any Guarantees other than
(i) Guarantees existing on the date of this Agreement and disclosed on Exhibit C hereto,
and (ii) Guarantees resulting from the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business.
7.3 Encumbrances. Neither the Borrower nor any of its Subsidiaries shall create,
incur, assume or suffer to exist any Encumbrance of any kind upon or with respect to any of their
property or assets, or assign or otherwise convey any right to receive income, including the sale
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or discount of Receivables with or without recourse, except the following (“Permitted
Encumbrances”):
(a) Encumbrances in favor of the Agent or any of the Lenders to secure Obligations;
(b) Encumbrances existing as of the date of this Agreement and disclosed in Exhibit C
hereto;
(c) liens for taxes, fees, assessments and other governmental charges to the extent that
payment of the same may be postponed or is not required in accordance with the provisions of
Section 5.4;
(d) landlords’ and lessors’ liens in respect of rent not in default or liens in respect of
pledges or deposits under workmen’s compensation, unemployment insurance, social security laws, or
similar legislation (other than ERISA) or in connection with appeal and similar bonds incidental to
litigation; mechanics’, warehouseman’s, laborers’ and materialmen’s and similar liens, if the
obligations secured by such liens are not then delinquent or are being contested in good faith;
liens securing the performance of bids, tenders, contracts (other than for the payment of money);
and liens securing statutory obligations or surety, indemnity, performance, or other similar bonds
incidental to the conduct of the Borrower’s or a Subsidiary’s business in the ordinary course and
that do not in the aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;
(e) judgment liens securing judgments that are fully covered by insurance, and shall not have
been in existence for a period longer than 10 days after the creation thereof or, if a stay of
execution shall have been obtained, for a period longer than 10 days after the expiration of such
stay;
(f) easements, rights of way, restrictions and other similar charges or Encumbrances relating
to real property and not interfering in a material way with the ordinary conduct of the Borrower’s
business;
(g) restrictions under federal and state securities laws regarding the transfer or issuance of
securities;
(h) liens constituting a renewal, extension or replacement of any Permitted Encumbrance; or
(i) sales permitted under Section 7.4(c) hereof.
7.4 Merger; Sale or Lease of Assets; Liquidation. Neither the Borrower nor any of its
Subsidiaries shall liquidate, merge or consolidate into or with any other person or entity, or
sell, lease or otherwise dispose of any assets or properties, other than
(a) the disposition of scrap, waste and obsolete or unusable items and Qualified Investments,
in each case in the ordinary course of business;
(b) Permitted Acquisitions;
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(c) sales of Leases and related Equipment and Receivables to a Special Purpose Subsidiary if
all of the following conditions are satisfied:
(i) the Borrower shall have given written notice to the Agent at least thirty (30) days prior
to such sale;
(ii) immediately prior to such sale and after giving effect thereto no Default shall have
occurred and be continuing;
(iii) the credit quality of the Eligible Receivables after giving effect to such sale shall be
at least as good as before giving effect to such sale as determined by the Agent, including,
without limitation, by reference to the Credit Scoring System;
(iv) copies of all documents relating to such sale and any other documents or information
(financial or otherwise) reasonably requested by the Agent shall have been delivered to the Agent
as an when requested; and
(v) one hundred percent (100%) of the proceeds of any such sale shall be applied to the
repayment of the Obligations.
7.5 Subsidiaries. The Borrower shall not create or acquire any Subsidiary, except a
Special Purpose Subsidiary, unless such Subsidiary executes and delivers to the Agent a Subsidiary
Guarantee. The Borrower shall not create or acquire any Subsidiary, including a Special Purpose
Subsidiary, unless simultaneously with such creation or acquisition, the Borrower pledges to the
Agent for the benefit of the Lenders all outstanding capital of such Subsidiary and delivers to the
Agent all stock certificates therefore. The Borrower shall not permit any of its Subsidiaries to
issue any additional shares of its capital stock or other equity securities, any options therefor
or any securities convertible thereto, other than to the Borrower, which shall be pledged to the
Agent for the benefit of the Lenders. Neither the Borrower nor any of its Subsidiaries shall sell,
transfer or otherwise dispose of any of the capital stock or other equity securities of a
Subsidiary, except to the Borrower or any of its wholly-owned Subsidiaries. The Borrower shall
not, and shall not permit any of its Subsidiaries to, create or suffer to exist any consensual
Encumbrances or restrictions on the ability of any Subsidiary to pay dividends or make any other
distributions on its equity interests held by the Borrower or pay any Indebtedness owed to the Borrower or any Subsidiary or to make loans or advances or transfer any of its
assets to the Borrower or any other Subsidiary.
7.6 Restricted Payments. Neither the Borrower nor any of its Subsidiaries shall pay,
make, declare or authorize any Restricted Payment other than:
(a) compensation paid to employees, officers and directors in the ordinary course of business
and consistent with past practices, including without limitation severance pay and bonuses approved
by the Parent’s Board of Directors;
(b) dividends payable solely in common stock;
(c) dividends paid by any Subsidiary to the Borrower; and
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(d) cash dividends paid by the Borrower to the Parent for distribution within 15 days to
Parent’s shareholders, not to exceed, in the aggregate in any fiscal year, an amount equal to fifty
percent (50%) of Consolidated Net Income for the immediately preceding fiscal year,
provided that both at the time such cash dividend is declared and paid, and after giving
effect to the payment thereof, no Default shall have occurred and be continuing.
7.7 Payments on Subordinated Debt. The Borrower shall not make any payment or
prepayment of principal of, or interest on or any other payment in respect of, Subordinated Debt,
except regularly scheduled payments of interest thereon at the rates and times specified in the
instruments evidencing the Subordinated Debt as delivered to the Agent along with the agreements
pursuant to which such Indebtedness is subordinated to the Obligations (but not any amendments
thereof without the consent of the Majority Lenders); provided that, both immediately prior
to making any such payment and after giving effect thereto no Default shall have occurred and be
continuing.
7.8 Investments; Purchases of Assets. Neither the Borrower nor any of its
Subsidiaries shall make or maintain any Investments or purchase or otherwise acquire any material
amount of assets other than:
(a) Investments existing on the date hereof in Subsidiaries;
(b) Qualified Investments;
(c) Capital Expenditures;
(d) purchases of Equipment, Leases and inventory in the ordinary course of business;
(e) normal trade credit extended in the ordinary course of business and consistent with
prudent business practice; and
(f) the purchase of all or substantially all of the assets or outstanding equity securities of
any other Person and the merger or consolidation of any other Person with or into the Borrower or a
Subsidiary of the Borrower, in each case if all of the following conditions are satisfied (a
“Permitted Acquisition”):
(i) if the proposed transaction involves a merger or consolidation, upon the completion of
such merger or consolidation the surviving party shall be the Borrower or a wholly-owned Subsidiary
of the Borrower;
(ii) the total consideration (including assumed Indebtedness) paid by the Borrower in
connection with all Permitted Acquisitions during the term hereof shall not exceed $10,000,000 in
the aggregate;
(iii) the assets, business or Person acquired in any Permitted Acquisition must be in the same
or a substantially similar line of business as that of the Borrower;
(iv) both immediately before and immediately after the consummation of any Permitted
Acquisition no Default shall have occurred and be continuing;
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(v) the Borrower shall have delivered to the Agent and the Lenders historical financials of
the proposed target and projections of consolidated cash flows prepared on a monthly basis for the
Parent and its Subsidiaries for the twelve (12) month period after the proposed acquisition, both
with and without giving effect to the proposed acquisition, and such projections shall demonstrate
to the reasonable satisfaction of the Agent that consolidated cash flows of the Parent and its
Subsidiaries for the twelve (12) month period after the proposed acquisition will be greater after
the proposed acquisition is consummated;
(vi) the Borrower shall have delivered to the Agent and the Lenders pro forma calculations
giving effect to the proposed acquisition demonstrating to the reasonable satisfaction of the Agent
the Borrower’s compliance with the covenants set forth in Section VI for the four (4) fiscal
quarters following the proposed acquisition;
(vii) immediately after consummation of each Permitted Acquisition, the Borrowing Base shall
exceed Total Outstandings by at least $5,000,000; and
(viii) the proposed transaction is accomplished by mutual agreement between the Borrower and
the Person to be acquired or whose assets or business is to be acquired and not as a result of a
tender offer or other type of so-called “hostile takeover” transaction;
provided, however, no Leases or Equipment acquired as part of a Permitted
Acquisition shall constitute Eligible Leases or Eligible Equipment unless such Leases and Equipment
have been approved by the Majority Lenders (such approval not to be unreasonably withheld), which
approval, or denial thereof, shall be notified to the Borrower by the Agent in writing within
fifteen (15) Business Days after all of the conditions set forth in this Section 7.8(f) have been
satisfied.
7.9 ERISA Compliance. Neither the Borrower nor any of its ERISA Affiliates nor any
Plan shall (i) engage in any Prohibited Transaction which would have a Material Adverse Effect,
(ii) incur any “accumulated funding deficiency” (within the meaning of Section 412(a) of the Code
and Section 302 of ERISA), whether or not waived, (iii) permit to exist any material amount of
“unfunded benefit liabilities” (within the meaning of Section 4001(a)(18) of ERISA), (iv) terminate
any Pension Plan in a manner which could result in the imposition of a lien on any property of the
Borrower or any of its Subsidiaries, (v) fail to make any required contribution to any
Multiemployer Plan or (vi) completely or partially withdraw from a Multiemployer Plan if such
complete or partial withdrawal will result in any material withdrawal liability under Title IV of
ERISA.
7.10 Transactions with Affiliates. The Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into any purchase, sale, lease or other
transaction with any Affiliate except (i) transactions in the ordinary course of business on terms
that are no less favorable to the Borrower than those which might be obtained at the time in a
comparable arm’s-length transaction with any Person who is not an Affiliate and (ii) employment
contracts with senior management of the Borrower entered into in the ordinary course of business
and consistent with prudent business practices. Notwithstanding the foregoing, the Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, pay any management, consulting,
overhead, indemnity, guarantee or other similar fee or charge to any Affiliate.
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7.11 Fiscal Year. The Borrower and its Subsidiaries shall not change their fiscal
years without the prior written consent of the Agent.
7.12 Underwriting Procedures. The Borrower shall not make any material change in its
underwriting and credit approval standards or procedures or the Credit Scoring System without the
prior written consent of the Majority Lenders.
7.13 Anti-Terrorism Laws Compliance. Neither the Borrower nor any Subsidiary of the
Borrower shall knowingly (i) conduct any business or engage in making or receiving any contribution
of funds, goods or services to or for the benefit of any Designated Person, (ii) deal in, or
otherwise engage in, any transaction relating to any property or interest in property blocked
pursuant to any Executive Order or the Patriot Act, or (iii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Executive Order or the Patriot Act.
SECTION VIII
DEFAULTS
8.1 Events of Default. There shall be an Event of Default hereunder if any of the
following events occurs:
(a) the Borrower shall fail to pay any principal of any Loan or any interest, fees or other
amounts owing under any Loan Document or in respect of any Obligation when the same shall become
due and payable, whether at maturity or at any accelerated date of maturity or at any other date
fixed for payment;
(b) the Borrower or any Subsidiary shall fail to perform or comply with any term, covenant or
agreement applicable to it contained in Sections 5.1, 5.2(b), 5.2(c), 5.5, 5.6, 5.7, 5.9, 6 and 7
of this Agreement and 3.8 and 3.9 of the Borrower Security Agreement; or
(c) the Borrower or any Subsidiary shall fail to perform or comply with any term, covenant or
agreement applicable to them (other than as specified in subsections 8.1(a) or (b) hereof)
contained in this Agreement or any other Loan Document and such default shall continue for thirty
(30) days; or
(d) any representation or warranty of the Borrower made in this Agreement or any other Loan
Document or in any certificate, notice or other writing delivered hereunder or thereunder shall
prove to have been false in any material respect upon the date when made or deemed to have been
made; or
(e) there shall occur a cessation of a substantial part of the business of the Borrower or its
Subsidiaries for a period which materially adversely affects Borrower’s or its Subsidiaries’
capacity to continue their business on a profitable basis; or the Borrower or any of its
Subsidiaries shall suffer the loss or revocation of any material license or permit now held or
hereafter acquired which is necessary to the continued or lawful operation of their business; or any Borrower or any of its Subsidiaries shall be enjoined, restrained or in any other way
prevented by a court, governmental or administrative order from conducting all or any material part
of its business; or
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(f) the Borrower or any of its Subsidiaries shall (i) fail to pay when due (after any
applicable period of grace) any amount payable under any Indebtedness exceeding $200,000 in
principal amount or under any agreement for the use of real or personal property requiring
aggregate payments in excess of $100,000 in any twelve month period, or (ii) fail to observe or
perform any term, covenant or agreement evidencing or securing such Indebtedness or relating to
such agreement for the use of real or personal property, the result of which failure under this
clause (ii) is to permit the holder of such Indebtedness to cause such Indebtedness to become due
prior to its stated maturity or to permit the other party to such agreement for the use of real or
personal property to terminate such agreement; or
(g) any of the Borrower or any of its Subsidiaries shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar official of itself or of all or a substantial part of its property, (ii) be generally not
paying its debts as such debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect), (v) take any action or commence any case or proceeding under any law relating
to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, or any
other law providing for the relief of debtors, (vi) fail to contest in a timely or appropriate
manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the
United States Bankruptcy Code or other law, (vii) take any action under the laws of its
jurisdiction of incorporation or organization similar to any of the foregoing, or (viii) take any
corporate action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced against any of the Borrower or any of its
Subsidiaries, without the application or consent of such Borrower or such Subsidiary in any court
of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of it or of all or any substantial part of its assets, or (iii) similar
relief in respect of it, under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed, or unstayed and in effect, for a
period of 60 days; or an order for relief shall be entered in an involuntary case under the Federal
Bankruptcy Code, against such Borrower or Subsidiary; or action under the laws of the jurisdiction
of incorporation or organization of any of the Borrower or any Subsidiary similar to any of the
foregoing shall be taken with respect to any of the Borrower or such Subsidiary and shall continue
unstayed and in effect for a period of 60 days; or
(i) a judgment or order for the payment of money shall be entered against any of the Borrower
or any of its Subsidiaries by any court, or a warrant of attachment or execution or similar process
shall be issued or levied against property of any of the Borrower or any Subsidiary, that in the
aggregate exceeds $250,000 in value, the payment of which is not fully covered by insurance in
excess of any deductibles not exceeding $100,000 in the aggregate, and such judgment, order,
warrant or process shall continue undischarged or unstayed for 30 days; or
(j) the Borrower or any ERISA Affiliate shall fail to pay when due any material amount that
they shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA, unless such
liability is being contested in good faith by appropriate proceedings, such Borrower or the ERISA
Affiliate, as the case may be, has established and is maintaining
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adequate reserves in accordance with GAAP and no lien shall have been filed to secure such liability; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; or
(k) any of the Loan Documents shall be canceled, terminated, revoked or rescinded otherwise
than in accordance with the express terms thereof or with the express prior written agreement,
consent or approval of the Lenders, or any action at law or in equity or other legal proceeding to
cancel, revoke or rescind any Loan Document shall be commenced by or on behalf of the Borrower, or
any court or other governmental or regulatory authority or agency of competent jurisdiction shall
make a determination that, or shall issue a judgment, order, decree or ruling to the effect that,
any one or more of the Loan Documents is illegal, invalid or unenforceable in accordance with the
terms thereof, or any Encumbrance in favor of the Lender created under any of the Loan Documents
shall at any time (other than by reason of the Lender relinquishing such Encumbrance) cease in any
material respect to constitute a valid and, to the extent applicable, perfected Encumbrance on any
material portion of the Collateral; or
(l) any Change in Control; or
(m) the occurrence of any Material Adverse Effect.
8.2 Remedies. Upon the occurrence of an Event of Default described in subsections
8.1(g) and (h), immediately and automatically, and upon the occurrence of any other Event of
Default, at any time thereafter while such Event of Default is continuing, at the option of the
Agent or the Majority Lenders and upon the Agent’s declaration:
(a) the obligation of the Lenders to make any further Loans hereunder shall terminate;
(b) the unpaid principal amount of the Loans together with accrued interest and all other
Obligations shall become immediately due and payable without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived; and
(c) the Agent and the Lenders may exercise any and all rights they have under this Agreement,
the other Loan Documents or at law or in equity, and proceed to protect and enforce their
respective rights by any action at law or in equity or by any other appropriate proceeding.
No remedy conferred upon the Agent and the Lenders in the Loan Documents is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or by any other provision of law. Without limiting the generality of the foregoing or
of any of the terms and provisions of any of the Security Documents, if and when the Agent
exercises remedies under the Security Documents with respect to Collateral, the Agent may, in its
sole discretion, determine which items and types of Collateral to dispose of and in what order and
may dispose of Collateral in any order the Agent shall select in its sole discretion, and the
Borrower consents to the foregoing and waives all rights of marshalling with respect to all
Collateral.
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SECTION IX
ASSIGNMENT AND PARTICIPATION
9.1 Assignment.
(a) Each Lender shall have the right to assign at any time any portion of its Commitment
hereunder and its interests in the risk relating to any Loans in an amount equal to or greater than
$5,000,000 to other Lenders or to banks or financial institutions reasonably acceptable to the
Agent (each an “Assignee”) and to furnish from time to time to prospective Assignees copies
of the Loan Documents and any information concerning the Borrower in its possession,
provided that any Lender which proposes to assign less than its total Commitment must
retain a Commitment of at least $5,000,000, and provided, further, that if no Default or
Event of Default shall have occurred and be continuing, each Assignee which is not a Lender, an
Affiliate of a Lender or a Federal Reserve Bank shall be subject to prior approval by the Borrower
(such approval not to be unreasonably withheld or delayed). Each Assignee shall execute and
deliver to the Agent and the Borrower a counterpart joinder in the form of Exhibit E hereto
and shall pay to the Agent, solely for the account of the Agent, an assignment fee of $3,500. Upon
the execution and delivery of such counterpart joinder, (a) such Assignee shall, on the date and to
the extent provided in such counterpart joinder, become a “Lender” party to this Agreement and the
other Loan Documents for all purposes of this Agreement and the other Loan Documents and shall have
all rights and obligations of a “Lender” with a Commitment as set forth in such counterpart joinder, and the transferor Lender shall, on the date and to the
extent provided in such counterpart joinder, be released prospectively from its obligations
hereunder and under the other Loan Documents to a corresponding extent (and, in the case of an
assignment covering all of the remaining portion of an assigning Lender’s rights and obligations
under this Agreement, such transferor shall cease to be a party hereto but shall continue to be
entitled to the benefits of Section 11.3 and to any fees accrued for its account hereunder and not
yet paid); (b) the assigning Lender, if it holds any Notes, shall promptly surrender such Notes to
the Agent for cancellation and delivery to the Borrower, provided that if the assigning Lender has
retained any Commitment, the Borrower shall execute and deliver to the Agent for delivery to such
assigning Lender a new Note in the amount of the assigning Lender’s retained Commitment; (c) the
Borrower shall issue to such Assignee a Note in the amount of such Assignee’s Commitment dated the
Closing Date or such other date as may be specified by such Assignee and otherwise completed in
substantially the form of Exhibit A; (d) this Agreement shall be deemed appropriately
amended to reflect (i) the status of such Assignee as a party hereto and (ii) the status and rights
of the Lender hereunder; and (e) the Borrower shall take such action as the Agent may reasonably
request to perfect any security interests or mortgages in favor of the Lenders, including any
Assignee which becomes a party to this Agreement.
(b) If the Assignee, or any Participant pursuant to Section 9.2 hereof, is organized under the
laws of a jurisdiction other than the United States or any state thereof, such Assignee shall
execute and deliver to the Borrower, simultaneously with or prior to such Assignee’s execution and
delivery of the counterpart joinder described above in Section 9.1(a), and such Participant shall
execute and deliver to the Lender granting the participation, a United States Internal Revenue
Service Form W-8ECI or W-8BEN (or any successor form), appropriately completed, wherein such
Assignee or Participant claims entitlement to complete exemption from United States Federal
Withholding Tax on all interest payments hereunder and
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all fees payable pursuant to any of the Loan
Documents. The Borrower shall not be required to pay any increased amount to any Assignee or other
Lender on account of taxes to the extent such taxes would not have been payable if the Assignee or
Participant had furnished one of the Forms referenced in this Section 9.1(b) unless the failure to
furnish such a Form results from (i) a condition or event affecting the Borrower or an act or
failure to act of the Borrower or (ii) the adoption of or change in any law, rule, regulation or
guideline affecting such Assignee or Participant occurring (x) after the date on which any such
Assignee executes and delivers the counterpart joinder, or (y) after the date such Assignee shall
otherwise comply with the provisions of Section 9.1(a), or (z) after the date a Participant is
granted its participation.
(c) Any Lender may at any time pledge all or any portion of its rights under the Loan
Documents, including any portion of any Note, to any of the twelve (12) Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or any
enforcement thereof shall release such Lender from its obligations under any of the Loan Documents.
9.2 Participations. Each Lender shall have the right at any time and from time to
time, without the consent of or notice to the Borrower, to grant participations to one or more
banks or other financial institutions (each a “Participant”) in all or any part of any
Loans owing to such Lender and the Note held by such Lender, and shall have the right to furnish
from time to time to prospective Participants copies of the Loan Documents and any information
concerning the Borrower in its possession. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of any provision of
the Loan Documents, provided that the documents evidencing any such participation may
provide that, except with the consent of such Participant, such Lender will not consent to (a) the
reduction in or forgiveness of the stated principal of or rate of interest on or Unused Fee with
respect to the portion of any Loan subject to such participation, (b) the extension or postponement
of any stated date fixed for payment of principal or interest or Unused Fee with respect to the
portion of any Loan subject to such participation, (c) the waiver or reduction of any right to
indemnification of such Lender hereunder, or (d) except as otherwise permitted or required
hereunder, the release of any Collateral. Notwithstanding the foregoing, no participation shall
operate to increase the Total Commitment hereunder or otherwise alter the substantive terms of this
Agreement. In the event of any such sale by a Lender of participating interests to a Participant,
such Lender’s obligations under this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the holder of such Note
for all purposes under this Agreement and the Borrower and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement.
SECTION X
THE AGENT
10.1 Appointment of Agent; Powers and Immunities.
(a) Each Lender hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents and to execute the Loan Documents (other than this
Agreement) and all other instruments relating thereto. Each Lender irrevocably
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authorizes the Agent to take such action on behalf of each of the Lenders and to exercise all such powers as are
expressly delegated to the Agent hereunder and in the other Loan Documents and all related
documents, together with such other powers as are reasonably incidental thereto. The obligations
of the Agent hereunder are only those expressly set forth herein. The Agent shall not have any
duties or responsibilities or any fiduciary relationship with any Lender except those expressly set
forth in this Agreement.
(b) Neither the Agent nor any of its directors, officers, employees or agents shall be
responsible for any action taken or omitted to be taken by any of them hereunder or in connection
herewith, except for their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, neither the Agent nor any of its Affiliates shall be
responsible to the Lenders for or have any duty to ascertain, inquire into or verify: (i) any
recitals, statements, representations or warranties made by the Borrower or any of its Subsidiaries
or any other Person whether contained herein or otherwise; (ii) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, the other Loan Documents or any other
document referred to or provided for herein or therein; (iii) any failure by the Borrower or any of
its Subsidiaries or any other Person to perform its obligations under any of the Loan Documents;
(iv) the satisfaction of any conditions specified in Section 3 hereof, other than receipt of the
documents, certificates and opinions specified in Section 3.1(a) hereof; (v) the existence, value,
collectibility or adequacy of the Collateral or any part thereof or the validity, effectiveness,
perfection or relative priority of the liens and security interests of the Lenders therein; or (vi)
the filing, recording, refiling, continuing or re-recording of any financing statement or other
document or instrument evidencing or relating to the security interests or liens of the Agent in
the Collateral.
(c) The Agent may employ agents, attorneys and other experts, shall not be responsible to any
Lender for the negligence or misconduct of any such agents, attorneys or experts selected by it
with reasonable care and shall not be liable to any Lender for any action taken, omitted to be
taken or suffered in good faith by it in accordance with the advice of such agents, attorneys and
other experts. Sovereign, in its separate capacity as a Lender shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise or refrain from exercising the
same as though it were not the Agent, and Sovereign and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower as if it were not the
Agent.
10.2 Actions by Agent.
(a) The Agent shall be fully justified in failing or refusing to take any action under this
Agreement as it reasonably deems appropriate unless it shall first have received such advice or
concurrence of the Lenders and shall be indemnified to its reasonable satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any of the Loan Documents in accordance with a
request of the Lenders, and such request and any action taken or failure to act pursuant thereto
shall be binding upon the Lenders and all future holders of the Notes.
(b) Whether or not an Event of Default shall have occurred, the Agent may from time to time
exercise such rights of the Agent and the Lenders under the Loan Documents
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as it determines may be necessary or desirable to protect the Collateral and the interests of the Agent and the Lenders
therein and under the Loan Documents. In addition, the Agent may, without the consent of the Lenders, if no Event of Default has occurred and is continuing, release Collateral valued by the Agent, in its sole discretion, of not more than $500,000 in any
fiscal year.
(c) Neither the Agent nor any of its directors, officers, employees or agents shall incur any
liability by acting in reliance on any notice, consent, certificate, statement or other writing
(which may be a bank wire, telex, facsimile or similar writing) believed by any of them to be
genuine or to be signed by the proper party or parties.
(d) Agent may, and the Borrower hereby authorizes the Agent to, include references to the
Borrower and its Subsidiaries, and utilize any logo or other distinctive symbol associated with the
Borrower or any of its Subsidiaries (subject to the Borrower’s prior review and written consent,
which shall not be unreasonably withheld or delayed) in connection with any advertising, promotion
or marketing undertaken by the Agent.
10.3 Indemnification by Lenders. Without limiting the obligations of the Borrower
hereunder or under any other Loan Document, the Lenders agree to indemnify the Agent, ratably in
accordance with their respective Commitment Percentages, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever which may at any time be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Agreement or any other Loan Document or any documents
contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby
or the enforcement of any of the terms hereof or thereof or of any such other documents;
provided that no Lender shall be liable for any of the foregoing to the extent they result
from the gross negligence or willful misconduct of the Agent.
10.4 Reimbursement. Without limiting the provisions of Section 10.3, the Lenders and
the Agent hereby agree that the Agent shall not be obliged to make available to any Person any sum
which the Agent is expecting to receive for the account of that Person until the Agent has
determined that it has received that sum. The Agent may, however, disburse funds prior to
determining that the sums which the Agent expects to receive have been finally and unconditionally
paid to the Agent if the Agent wishes to do so. If and to the extent that the Agent does disburse
funds and it later becomes apparent that the Agent did not then receive a payment in an amount
equal to the sum paid out, then any Person to whom the Agent made the funds available shall, on
demand from the Agent refund to the Agent the sum paid to that Person. If the Agent in good faith
reasonably concludes that the distribution of any amount received by it in such capacity hereunder
or under the other Loan Documents might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount
received and distributed by the Agent is to be repaid, each Person to whom any such distribution
shall have been made shall either repay to the Agent its proportionate share of the amount so
adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be
determined by such court.
10.5 Agency Provisions Relating to Collateral. Each Lender authorizes and ratifies
the Agent’s entry into the Security Documents for the benefit of the Lenders. Each Lender agrees
-52-
that any action taken by the Agent with respect to the Collateral in accordance with the provisions
of this Agreement or the Security Documents, and the exercise by the Agent of the powers set forth
herein or therein, together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all Lenders. The Agent is hereby authorized on behalf of all Lenders,
without the necessity of any notice to or further consent from any Lender, to take any action with
respect to any Collateral or the Loan Documents which may be necessary to perfect and maintain
perfected the Agent’s Encumbrances upon the Collateral, for its benefit and the ratable benefit of
the Lenders. The Lenders hereby irrevocably authorize the Agent, at its option and in its
discretion, to release any Encumbrance granted to or held by the Agent upon any Collateral (i) upon
termination of all Commitments and payment and satisfaction of all Obligations, (ii) in connection
with any foreclosure sale or other disposition of Collateral after the occurrence and during the
continuation of an Event of Default, (iii) if approved, authorized or ratified in writing by the
Agent at the direction of the Lenders or (iv) as otherwise provided in the other Loan Documents.
Upon request by the Agent at any time, the Lenders will confirm in writing Agent’s authority to
release particular types or items of Collateral pursuant hereto. The Agent shall have no
obligation whatsoever to any Lender or to any other Person to assure that the Collateral exists or
is owned by the Borrower or is cared for, protected or insured or has been encumbered or that the
Encumbrances granted to the Agent pursuant to the Security Documents have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of its rights, authorities and powers
granted or available to the Agent in this Section 10.5 or in any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion, but
consistent with the provisions of this Agreement, including given the Agent’s own interest in the
Collateral as a Lender and that the Agent shall have no duty or liability whatsoever to any Lender.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender represents that it has,
independently and without reliance on the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of the financial condition and
affairs of the Borrower and decision to enter into this Agreement and the other Loan Documents and
agrees that it will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own appraisals and decision in taking or not taking action under this Agreement or any other
Loan Document. The Agent shall not be required to keep informed as to the performance or
observance by the Borrower of this Agreement, the other Loan Documents or any other document
referred to or provided for herein or therein or by any other Person of any other agreement or to
make inquiry of, or to inspect the properties or books of, any Person. Except for notices, reports
and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information concerning any Person
which may come into the possession of the Agent or any of its affiliates. Each Lender shall have
access to all documents relating to the Agent’s performance of its duties hereunder at such
Lender’s request. Unless any Lender shall promptly object to any action taken by the Agent
hereunder (other than actions to which the provisions of Section 11.7(b) are applicable and other
than actions which constitute gross negligence or willful misconduct by the Agent), such Lender
shall conclusively be presumed to have approved the same.
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10.7 Resignation of Agent. The Agent may resign at any time by giving 30 days prior
written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Lenders
shall have the right to appoint a successor Agent which shall be reasonably acceptable to the
Borrower and shall be a financial institution having a combined capital and surplus in excess of
$150,000,000. If no successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within 30 days after the retiring Agent’s giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be reasonably acceptable to the Borrower and shall be a financial institution having a
combined capital and surplus in excess of $150,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent’s
resignation, the provisions of this Agreement shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as Agent.
SECTION XI
GENERAL
11.1 Notices. Unless otherwise specified herein, all notices hereunder to any party
hereto shall be in writing and shall be deemed to have been given when delivered by hand, or when
sent by electronic facsimile transmission, or on the first Business Day after delivery to any
overnight delivery service, freight pre-paid, or five (5) days after being sent by certified or
registered mail, return receipt requested, postage pre-paid, and addressed to such party at its
address indicated below:
If to the Borrower, at
TimePayment Corp.
c/o Microfinancial, Inc.
00-X Xxxxxxxx Xxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx and
Xxxxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
c/o Microfinancial, Inc.
00-X Xxxxxxxx Xxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx and
Xxxxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Agent or Sovereign, at
-00-
Xxxxxxxxx Xxxx
00 Xxxxx Xxxxxx
XX0-XXX-00-00
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Senior Vice President
Facsimile: (000) 000-0000
00 Xxxxx Xxxxxx
XX0-XXX-00-00
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Senior Vice President
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to any other Lender, to its address set forth on Schedule 1 attached hereto;
or at any other address specified by such party in writing.
11.2 Expenses. Whether or not the transactions contemplated herein shall be
consummated, the Borrower promises to reimburse the Agent on demand for all reasonable costs and
expenses incurred or expended in connection with the preparation, filing or recording,
interpretation or administration of this Agreement and the other Loan Documents, or any amendment,
modification, approval, consent or waiver hereof or thereof. The Borrower further promises to
reimburse the Agent (and after the occurrence and during the continuation of a Default, the
Lenders) for all reasonable costs and expenses incurred or expended in connection with the
enforcement of any Obligations, the exercise, preservation or enforcement of any rights, remedies or options of the Agent or the Lenders or the satisfaction of any Obligations, or in
connection with any litigation, proceeding or dispute in any way related to the credit hereunder,
including, without limitation, fees and disbursements of outside legal counsel and the allocated
costs of in-house legal counsel, accounting, consulting, brokerage or other similar professional
fees or expenses; any fees, charges (including the Agent’s per diem charges) or expenses relating
to any inspections, appraisals or examinations conducted in connection with the Loans or any
Collateral; and all costs and expenses relating to any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon any Collateral.
The amount of all such costs and expenses shall, until paid, bear interest at the rate applicable
to Base Rate Loans and shall be an Obligation secured by the Collateral.
11.3 Indemnification by Borrower. The Borrower agrees to indemnify and hold harmless
the Agent and the Lenders, as well as their respective shareholders, directors, officers, agents,
attorneys, subsidiaries and affiliates, from and against all damages, losses, settlement payments,
obligations, liabilities, claims, suits, penalties, assessments, citations, directives, demands,
judgments, actions or causes of action, whether statutorily created or under the common law, all
reasonable costs and expenses (including, without limitation, reasonable fees and disbursements of
attorneys, engineers and consultants) and all other liabilities whatsoever (including, without
limitation, liabilities under Environmental Laws) which shall at any time or times be incurred,
suffered, sustained or required to be paid by any such indemnified Person (except any of the
foregoing which result from the gross negligence or willful misconduct of the
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indemnified Person)
on account of or in relation to or any way in connection with any of the arrangements or
transactions contemplated by, associated with or ancillary to this Agreement, the other Loan
Documents or any other documents executed or delivered in connection herewith or therewith, all as
the same may be amended from time to time, whether or not all or part of the transactions
contemplated by, associated with or ancillary to this Agreement, any of the other Loan Documents or
any such other documents are ultimately consummated. In any investigation, proceeding or
litigation, or the preparation therefor, the Lenders shall select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and
expenses of such counsel. In the event of the commencement of any such proceeding or litigation,
the Borrower shall be entitled to participate in such proceeding or litigation with counsel of its
choice at its own expense, provided that such counsel shall be reasonably satisfactory to
the Agent (the Agent agrees that Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP shall be satisfactory to the
Agent). The Borrower authorizes the Agent and the Lenders to charge any deposit account or Note
Record which they may maintain with any of them for any of the foregoing. The covenants of this
Section 11.3 shall survive payment or satisfaction of payment of all amounts owing with respect to
the Notes, any other Loan Document or any other Obligation.
11.4 Survival of Covenants, Etc. All covenants, agreements, representations and
warranties made herein, in the other Loan Documents or in any documents or other papers delivered
by or on behalf of the Borrower pursuant hereto or thereto shall be deemed to have been relied upon by the Agent and the Lenders, notwithstanding any investigation heretofore or
hereafter made by any of them, and shall survive the making by the Lenders of the Loans as herein
contemplated and the termination of all Commitments, and shall continue in full force and effect so
long as any Obligation remains outstanding and unpaid or any Lender has any obligation to make any
Loans hereunder. Notwithstanding the foregoing, the provisions of Sections 11.2 and 11.3 shall
continue in full force and effect after the payment in full of all Obligations. All statements
contained in any certificate or other writing delivered by or on behalf of the Borrower pursuant
hereto or the other Loan Documents or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder.
11.5 Set-Off. Regardless of the adequacy of any Collateral or other means of
obtaining repayment of the Obligations, any deposits, balances or other sums credited by or due
from the head office of any Lender or any of its branch offices to the Borrower and any property of
any of the Borrower now or hereafter in the possession, custody, safekeeping or control of any
Lender or in transit to any Lender may, at any time and from time to time, without notice to the
Borrower or compliance with any other condition precedent now or hereafter imposed by statute, rule
of law, or otherwise (all of which are hereby expressly waived) be set off, appropriated and
applied by such Lender against any and all Obligations of the Borrower in such manner as the head
office of such Lender or any of its branch offices in its sole discretion may determine, and the
Borrower hereby grants each such Lender a continuing security interest in such deposits, balances,
other sums and property for the payment and performance of all such Obligations. ANY AND ALL
RIGHTS TO REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, BALANCES, OTHER SUMS AND PROPERTY OF THE BORROWER
-56-
ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED. Each Lender will provide prompt notice to the Borrower of any setoff
hereunder.
11.6 No Waivers. No failure or delay by the Agent or any Lender in exercising any
right, power or privilege hereunder, under the Notes or under any other Loan Document shall operate
as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No waiver shall extend to
or affect any Obligation not expressly waived or impair any right consequent thereon. No course of
dealing or omission on the part of the Agent or the Lenders in exercising any right shall operate
as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon the Borrower
shall entitle the Borrower to other or further notice or demand in similar or other circumstances.
The rights and remedies herein and in the Notes and the other Loan Documents are cumulative and not
exclusive of any rights or remedies otherwise provided by agreement or law.
11.7 Amendments, Waivers, etc.
(a) Neither this Agreement nor the Notes nor any other Loan Document nor any provision hereof
or thereof may be amended, waived, discharged or terminated except by a written instrument signed
by the Agent on behalf of the Lenders or, as the case may be, by the Lenders, and also, in the case
of amendments, by the Borrower.
(b) Except where this Agreement or any of the other Loan Documents authorizes or permits the
Agent to act alone or requires the automatic release of the Lenders’ Encumbrances on Collateral and
except as otherwise expressly provided in this Section 11.7(b), any action to be taken (including
the giving of notice) by the Lenders may be taken, and any consent or approval required or
permitted by this Agreement or any other Loan Document to be given by the Lenders may be given, and
any term of this Agreement, any other Loan Document or any other instrument, document or agreement
related to this Agreement or the other Loan Documents or mentioned therein may be amended, and the
performance or observance by the Borrower or any other Person of any of the terms thereof and any
Default or Event of Default (as defined in any of the above-referenced documents or instruments)
may be waived (either generally or in a particular instance and either retroactively or
prospectively), in each case only with the written consent of the Majority Lenders;
provided, however, that no such amendment, consent or waiver shall (i) increase the
Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan, or waive or excuse any payment thereof, or reduce the rate of interest thereon,
or reduce any premium or fees payable hereunder, without the written consent of each Lender
directly affected thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan, or any interest (or premium, if any) thereon or any fees payable hereunder, or postpone
the scheduled date of expiration of any Commitment, without the written consent of each Lender
directly affected thereby, (iv) amend this Section 11.7(b) or change the definition of “Majority
Lenders” or the number of Lenders which shall be required for the Lenders or any of them to take
any action under the Loan Documents, without the written consent of each Lender, (v) change the
definition of “Borrowing Base” set forth in Section 1.1, amend Section 2.1(a) or waive the
limitations set forth in Section 2.1(a), without the consent of each Lender, (vi) release any
Collateral, except as provided in Section 10.2(b) or as expressly set forth in any other Loan
Document, or amend Sections 2.5 or 2.6 hereof, without the consent of each Lender, or (vii) amend,
modify or otherwise affect the
-57-
rights or duties of the Agent hereunder or under any other Loan
Document without the written consent of the Agent.
11.8 Binding Effect of Agreement. This Agreement shall be binding upon and inure to
the benefit of the Borrower, the Agent, the Lenders and their respective successors and assigns;
provided that the Borrower may not assign or transfer its rights or obligations hereunder.
11.9 Lost Note, Etc. Upon receipt of an affidavit of an officer of any Lender as to
the loss, theft, destruction or mutilation of any Note or any Security Document which is not a
public record and, in the case of any such loss, theft, destruction or mutilation, upon
cancellation of such Note or Security Document, if available, the Borrower will issue, in lieu
thereof, a replacement Note or other Security Document in the same principal amount thereof and otherwise
of like tenor.
11.10 Captions; Counterparts. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. This Agreement and any
amendment hereof may be executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Agreement it shall not be necessary to
produce or account for more than one such counterpart signed by the party against whom enforcement
is sought.
11.11 Entire Agreement, Etc. The Loan Documents and any other documents executed in
connection herewith or therewith express the entire understanding of the parties with respect to
the transactions contemplated hereby and supersede all prior agreements (including the outline of
general terms of the financing arrangement dated April 4, 2007 between Agent and the Borrower) with
respect to the subject matter hereof, except for the letter agreement dated the date hereof,
between the Borrower and the Agent with respect to fees payable to the Agent, which letter
agreement shall continue in full force and effect and shall not be superseded by any of the Loan
Documents.
11.12 Waiver of Jury Trial. THE BORROWER AND EACH OF THE LENDERS HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE AGENT OR ANY LENDER RELATING TO THE ADMINISTRATION OR ENFORCEMENT OF
THE LOANS AND THE LOAN DOCUMENTS, AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS
PROHIBITED BY LAW, THE BORROWER AND EACH OF THE LENDERS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
-58-
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
THE BORROWER (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDERS HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF,
AMONG OTHER THINGS, THE BORROWER’S WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
11.13 Governing Law; Jurisdiction; Venue. THIS AGREEMENT AND EACH OF THE OTHER LOAN
DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH (EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER CONSENTS TO THE JURISDICTION OF
ANY OF THE FEDERAL OR STATE COURTS LOCATED IN SUFFOLK COUNTY IN THE COMMONWEALTH OF MASSACHUSETTS
IN CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS OF THE LENDERS UNDER THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS AND CONSENTS TO SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE BORROWER’S ADDRESS SET FORTH HEREIN. THE BORROWER IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN
THE COURTS REFERRED TO IN THIS SECTION AND IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY SUCH ACTION THAT SUCH ACTION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11.14 Severability. The provisions of this Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision,
or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.
[Remainder of page intentionally left blank.
The next page is the signature page.]
The next page is the signature page.]
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement under seal as of the date first above written.
| TIMEPAYMENT CORP. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | President | |||
| SOVEREIGN BANK, Individually and as Agent |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Senior Vice President | |||
| TD BANKNORTH, N.A. |
||||
| By: | /s/ Xxxx X. Xxxxx, Xx. | |||
| Name: | Xxxx X. Xxxxx, Xx. | |||
| Title: | Senior Vice President | |||
[SIGNATURE PAGE TO CREDIT AGREEMENT]
Table of Contents
| Page | ||||||
| SECTION I DEFINITIONS | 2 | |||||
1.1 |
Definitions | 2 | ||||
1.2 |
Rules of Interpretation | 15 | ||||
| SECTION II | 16 | |||||
| DESCRIPTION OF CREDIT | 16 | |||||
2.1 |
Revolving Credit Loans | 16 | ||||
2.2 |
The Notes | 17 | ||||
2.3 |
Notice and Manner of Borrowing or Conversion of Loans | 18 | ||||
2.4 |
Funding of Loans | 19 | ||||
2.5 |
Interest Rates and Payments of Interest | 20 | ||||
2.6 |
Fees | 21 | ||||
2.7 |
Payments and Prepayments of the Loans | 22 | ||||
2.8 |
Method and Allocation of Payments | 22 | ||||
2.9 |
LIBOR Indemnity | 24 | ||||
2.10 |
Computation of Interest and Fees; Due Date | 24 | ||||
2.11 |
Changed Circumstances; Illegality | 24 | ||||
2.12 |
Increased Costs | 25 | ||||
2.13 |
Capital Requirements | 26 | ||||
| SECTION III | 26 | |||||
3.1 |
Conditions Precedent to Initial Loans | 26 | ||||
3.2 |
Conditions Precedent to all Loans | 28 | ||||
| SECTION IV | 29 | |||||
4.1 |
Organization; Qualification; Business | 29 | ||||
4.2 |
Corporate Authority; No Conflicts | 29 | ||||
4.3 |
Valid Obligations | 30 | ||||
4.4 |
Consents or Approvals | 30 | ||||
4.5 |
Title to Properties; Absence of Encumbrances | 30 | ||||
4.6 |
Financial Statements; Indebtedness | 30 | ||||
4.7 |
Changes | 31 | ||||
4.8 |
Solvency | 31 | ||||
4.9 |
Defaults | 31 | ||||
4.10 |
Taxes | 31 | ||||
4.11 |
Litigation | 31 | ||||
4.12 |
Subsidiaries | 31 | ||||
4.13 |
Investment Company Act | 32 | ||||
4.14 |
Compliance | 32 | ||||
4.15 |
ERISA | 32 | ||||
4.16 |
Environmental Matters | 32 | ||||
4.17 |
Restrictions on the Borrower | 33 | ||||
4.18 |
Labor Relations | 33 | ||||
4.19 |
Trade Relations | 34 | ||||
4.20 |
Margin Rules | 34 | ||||
4.21 |
Anti-Terrorism Laws | 34 | ||||
i
Table of Contents
(continued)
(continued)
| Page | ||||||
4.22 |
Bank Accounts | 35 | ||||
4.23 |
Disclosure | 35 | ||||
| SECTION V | 35 | |||||
5.1 |
Financial Statements | 35 | ||||
5.2 |
Conduct of Business; Compliance | 36 | ||||
5.3 |
Maintenance and Insurance | 37 | ||||
5.4 |
Taxes | 37 | ||||
5.5 |
Inspection | 37 | ||||
5.6 |
Maintenance of Books and Records | 38 | ||||
5.7 |
Use of Proceeds | 38 | ||||
5.8 |
Further Assurances | 38 | ||||
5.9 |
Notification Requirements | 38 | ||||
5.10 |
Borrower’s Cash Accounts | 39 | ||||
5.11 |
ERISA Compliance and Reports | 39 | ||||
5.12 |
Environmental Compliance | 39 | ||||
| SECTION VI | 40 | |||||
6.1 |
Interest Coverage | 40 | ||||
6.2 |
Consolidated Tangible Capital Base | 40 | ||||
6.3 |
Leverage Ratio | 40 | ||||
6.4 |
Asset Quality | 41 | ||||
| SECTION VII | 41 | |||||
7.1 |
Indebtedness | 41 | ||||
7.2 |
Contingent Liabilities | 41 | ||||
7.3 |
Encumbrances | 41 | ||||
7.4 |
Merger; Sale or Lease of Assets; Liquidation | 42 | ||||
7.5 |
Subsidiaries | 43 | ||||
7.6 |
Restricted Payments | 43 | ||||
7.7 |
Payments on Subordinated Debt | 44 | ||||
7.8 |
Investments; Purchases of Assets | 44 | ||||
7.9 |
ERISA Compliance | 45 | ||||
7.10 |
Transactions with Affiliates | 45 | ||||
7.11 |
Fiscal Year | 46 | ||||
7.12 |
Underwriting Procedures | 46 | ||||
7.13 |
Anti-Terrorism Laws Compliance | 46 | ||||
| SECTION VIII | 46 | |||||
8.1 |
Events of Default | 46 | ||||
8.2 |
Remedies | 48 | ||||
| SECTION IX | 49 | |||||
9.1 |
Assignment | 49 | ||||
9.2 |
Participations | 50 | ||||
| SECTION X | 50 | |||||
10.1 |
Appointment of Agent; Powers and Immunities | 50 | ||||
10.2 |
Actions by Agent | 51 | ||||
ii
Table of Contents
(continued)
(continued)
| Page | ||||||
10.3 |
Indemnification by Lenders | 52 | ||||
10.4 |
Reimbursement | 52 | ||||
10.5 |
Agency Provisions Relating to Collateral | 52 | ||||
10.6 |
Non-Reliance on Agent and Other Lenders | 53 | ||||
10.7 |
Resignation of Agent | 54 | ||||
| SECTION XI | 54 | |||||
11.1 |
Notices | 54 | ||||
11.2 |
Expenses | 55 | ||||
11.3 |
Indemnification by Borrower | 55 | ||||
11.4 |
Survival of Covenants, Etc | 56 | ||||
11.5 |
Set-Off | 56 | ||||
11.6 |
No Waivers | 57 | ||||
11.7 |
Amendments, Waivers, etc. | 57 | ||||
11.8 |
Binding Effect of Agreement | 58 | ||||
11.9 |
Lost Note, Etc | 58 | ||||
11.10 |
Captions; Counterparts | 58 | ||||
11.11 |
Entire Agreement, Etc | 58 | ||||
11.12 |
Waiver of Jury Trial | 58 | ||||
11.13 |
Governing Law; Jurisdiction; Venue | 59 | ||||
11.14 |
Severability | 59 | ||||
SCHEDULES
SCHEDULE 1 — Commitments of the Lenders
EXHIBITS
EXHIBIT A — Form of Revolving Note
EXHIBIT B — Form of Notice of Borrowing or Conversion
EXHIBIT C — Disclosure
EXHIBIT D — Form of Report of Chief Financial Officer
EXHIBIT E — Assignment and Joinder Agreement
EXHIBIT F — Form of Lease
EXHIBIT B — Form of Notice of Borrowing or Conversion
EXHIBIT C — Disclosure
EXHIBIT D — Form of Report of Chief Financial Officer
EXHIBIT E — Assignment and Joinder Agreement
EXHIBIT F — Form of Lease
iii
