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EXHIBIT 10.2
[EXECUTION VERSION]
LOAN AND SECURITY AGREEMENT
by and between
CONGRESS FINANCIAL CORPORATION
as Lender
and
GOLDEN EAGLE LEASING, INC.
as Borrower
Dated: August 28, 2001
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS ....................................................................... 1
SECTION 2. LOANS ............................................................................. 15
SECTION 3. INTEREST AND FEES ................................................................. 17
3.1 Interest .................................................................... 17
3.2 Closing Fee ................................................................. 18
3.3 Syndication Fee ............................................................. 18
3.4 Servicing Fee ............................................................... 18
3.5 Unused Line Fee ............................................................. 18
3.6 Changes in Laws and Increased Costs of Loans ................................ 18
SECTION 4. CONDITIONS PRECEDENT .............................................................. 19
4.1 Conditions Precedent to First Loan .......................................... 19
4.2 Conditions Precedent to All Loans ........................................... 22
SECTION 5. GRANT OF SECURITY INTEREST ........................................................ 24
5.1 Collateral .................................................................. 24
5.2 Additional Collateral Leases ................................................ 25
5.3 Reassigned Additional Collateral Leases ..................................... 25
5.4 Perfection of Security Interests ............................................ 25
SECTION 6. COLLECTION AND ADMINISTRATION ..................................................... 28
6.1 Borrower's Loan Account ..................................................... 28
6.2 Statements .................................................................. 28
6.3 Collection of Lease Receivables and Other Collateral ........................ 28
6.4 Payments .................................................................... 30
6.5 Authorization to Make Loans ................................................. 30
6.6 Use of Proceeds ............................................................. 31
SECTION 7. COLLATERAL REPORTING AND COVENANTS ................................................ 31
7.1 Collateral Reporting ........................................................ 31
7.2 Assigned Lease Covenants .................................................... 31
7.3 Inventory Covenants ......................................................... 33
7.4 Power of Attorney ........................................................... 33
7.5 Right to Cure ............................................................... 33
7.6 Access to Premises .......................................................... 34
(i)
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SECTION 8. REPRESENTATIONS AND WARRANTIES .................................................... 34
8.1 Corporate Existence, Power and Authority; Subsidiaries ...................... 34
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations ... 35
8.3 Financial Statements; No Material Adverse Change ............................ 35
8.4 Chief Executive Office; Collateral Locations ................................ 35
8.5 Priority of Liens; Title to Properties ...................................... 35
8.6 Tax Returns ................................................................. 36
8.7 Litigation .................................................................. 36
8.8 Compliance with Other Agreements and Applicable Laws ........................ 36
8.9 Assigned Leases ............................................................. 36
8.10 Employee Benefits .......................................................... 37
8.11 Bank Accounts .............................................................. 38
8.12 Intellectual Property ...................................................... 38
8.13 Capitalization ............................................................. 38
8.14 Labor Disputes ............................................................. 39
8.15 Corporate Name; Prior Transactions ......................................... 39
8.16 Restrictions on Subsidiaries ............................................... 39
8.17 Material Contracts ......................................................... 39
8.18 Payable Practices .......................................................... 40
8.19 Accuracy and Completeness of Information ................................... 40
8.20 Survival of Warranties; Cumulative ......................................... 40
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS ................................................ 40
9.1 Maintenance of Existence .................................................... 40
9.2 New Collateral Locations .................................................... 41
9.3 Compliance with Laws, Regulations, Etc ...................................... 41
9.4 Payment of Taxes and Claims ................................................. 41
9.5 Insurance ................................................................... 41
9.6 Financial Statements and Other Information .................................. 42
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. .................... 43
9.8 Encumbrances ................................................................ 44
9.9 Indebtedness ................................................................ 44
9.10 Loans, Investments, Guarantees, Etc. ....................................... 45
9.11 Dividends and Redemptions .................................................. 46
9.12 Transactions with Affiliates ............................................... 47
9.13 Additional Bank Accounts ................................................... 47
9.14 Compliance with ERISA ...................................................... 47
9.15 End of Fiscal Years: Fiscal Quarters ....................................... 47
(ii)
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9.17 Limitation of Restrictions Affecting Subsidiaries .......................... 48
9.18 Costs and Expenses ......................................................... 48
9.19 Further Assurances ......................................................... 48
9.21 Adjusted Tangible Net Worth ................................................ 49
SECTION 10. EVENTS OF DEFAULT AND REMEDIES ................................................... 49
10.1 Events of Default .......................................................... 49
10.2 Remedies ................................................................... 51
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW ..................... 54
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver ...... 54
11.2 Waiver of Notices .......................................................... 55
11.3 Amendments and Waivers ..................................................... 56
11.4 Waiver of Counterclaims .................................................... 56
11.5 Indemnification ............................................................ 56
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS ................................................. 56
12.1 Term ....................................................................... 56
12.2 Interpretative Provisions .................................................. 58
12.3 Notices .................................................................... 60
12.4 Partial Invalidity ......................................................... 60
12.5 Successors ................................................................. 60
12.6 Entire Agreement ........................................................... 60
(iii)
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INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment
Exhibit B Form of Reassignment
Exhibit C Information Certificate
Exhibit D Form of Waiver, Disclaimer and Release Agreement
Exhibit E Software License Agreement
Schedule 4.2 UCC-3 Amendments
Schedule 5.1(a) Borrowing Base Leases
Schedule 5.1(b) Additional Collateral Leases
Schedule 7.1(a)(i) Form of Summary of Cumulative Assigned Leases in Bi-
Weekly Servicer Report (ACH Activity)
Schedule 7.1(a)(ii) Form of Summary of Cumulative Assigned Leases in Bi-
Weekly Servicer Report (ACH Reconciliation)
Schedule 7.1(a)(iii) Form of Schedule of Individual Assigned Leases in Bi-
Weekly Servicer Report
Schedule 8.5 Permitted Liens
Schedule 8.11 Bank Accounts
Schedule 8.12 Intellectual Property
Schedule 8.17 Material Contracts
Schedule 9.10(f) Existing Loans, Advances and Guarantees
(iv)
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated August 28, 2001 is entered into by
and between Congress Financial Corporation, a Delaware corporation ("Lender")
and Golden Eagle Leasing Inc., an Arizona corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter into certain financing
arrangements with Borrower pursuant to which Lender may make loans to Borrower;
and
WHEREAS, Lender is willing to make such loans on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "ACH Charges Schedule" shall have the meaning set forth in Section 7.1
hereof.
1.2 "Additional Collateral Leases" shall mean, individually and
collectively, Leases (including Replacement Additional Collateral Leases) which
are described on Schedule 5.1(b) hereof or which are now or hereafter
specifically assigned by Borrower to Lender under a separate Assignment executed
by Borrower and delivered to Lender, which contains the completed information
for each of such Leases as set forth on the Schedule of Assigned Leases attached
to such Assignment and which designates such Leases as Additional Collateral
Leases, but shall not include Reassigned Additional Collateral Leases.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the
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proceeds of such deposit, whether or not the Reference Bank actually holds or
has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
1.4 "Adjusted Tangible Net Worth" shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (if any),
the amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its Subsidiaries, calculating the book value of
Inventory for this purpose on a first-in-first-out basis, after deducting from
such book values all appropriate reserves in accordance with GAAP (including all
reserves for doubtful receivables, obsolescence, depreciation and amortization)
and (b) the aggregate amount of the Indebtedness and other liabilities of such
Person and its Subsidiaries (including tax and other proper accruals).
1.5 "Affiliate" shall mean, with respect to a specified Person, any other
Person (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person; (b) which beneficially owns or holds five (5%) percent or more of any
class of the voting stock or other equity interest of such specified person; or
(c) of which five (5%) percent or more of the voting stock or other equity
interest is beneficially owned or held by such specified person or a Subsidiary
of such specified person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") when used with respect to any specified person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting stock, by agreement or otherwise.
1.6 "Approved Financing Transaction" shall mean any financing transaction
in form and substance acceptable to Lender in its good faith discretion in which
Borrower transfers, pledges or assigns as security any right, title or interest
in any Leases.
1.7 "Assigned Leases" shall mean, individually and collectively, the
Additional Collateral Leases and Borrowing Base Leases.
1.8 "Assignments" shall mean, individually and collectively, the
assignments now and hereafter executed by Borrower and delivered to Lender of
Additional Collateral Leases and Borrowing Base Leases, substantially in the
form of the Assignment set forth in Exhibit A hereto.
1.9 "Bi-Weekly Servicer Report" shall have the meaning set forth in
Section 7.1 hereof.
1.10 "Borrowing Base Lease Pool" shall mean a group of Borrowing Base
Leases (but which shall not include Additional Collateral Leases or Replacement
Borrowing Base Leases) assigned to Lender by Borrower on any single date and
based upon which Lender makes a loan to Borrower pursuant to Section 2(a)(i)
hereof.
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1.11 "Borrowing Base Leases" shall mean, individually and collectively,
Leases (including Replacement Borrowing Base Leases) which are described on
Schedule 5.1(a) hereto, as amended, or which are now or hereafter specifically
assigned by Borrower to Lender under a separate Assignment executed by Borrower
and delivered to Lender, which contains the completed information for each of
such Leases as set forth in the Schedule annexed to such Assignment and which
have not been designated by Borrower as an Additional Collateral Lease, but
shall not include Reassigned Borrowing Base Leases, unless such Reassigned
Borrowing Base Leases are subsequently assigned by Borrower to Lender in
compliance with the terms set forth in this Section 1.11 and the other terms of
this Agreement relating to Borrowing Base Leases.
1.12 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which the Reference Bank and Lender are open for the transaction of business,
except that if a determination of a Business Day shall relate to any Eurodollar
Rate Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market.
1.13 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.14 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock, partnership interests or limited liability company
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
1.15 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America of any agency or instrumentality thereof; provided, that, the full faith
and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers' acceptances with a maturity of one hundred
eighty (180) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $250,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued by
a corporation (except an Affiliate of Borrower) organized under the laws of any
State of the United States of America or the District of Columbia and rated at
least A-1 by Standard & Poor's Ratings Service, a division of The XxXxxx-Xxxx
Companies, Inc. or at least P-1 by Xxxxx'x Investors Service, Inc.; (d)
repurchase obligations with a term of not more than thirty (30) days for
underlying securities of the types described in clause (a) above entered into
with any financial institution having combined capital and surplus and undivided
profits of not less than $250,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of
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America or issued by any governmental agency thereof and backed by the full
faith and credit to the United States of America, in each case maturing within
one hundred eighty (180) days or less from the date of acquisition; provided,
that, the terms of such agreements comply with the guidelines set forth in the
Federal Financial Agreements of Depository Institutions with Securities Dealers
and Others, as adopted by the Comptroller of the Currency on October 31, 1985;
and (f) investments in money market funds and mutual funds which invest
substantially all of their assets in securities of the types described in
clauses (a) through (e) above.
1.16 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of
Borrower to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act); (b) the liquidation or dissolution of Borrower or the adoption of
a plan by the stockholders of Borrower relating to the dissolution or
liquidation of Borrower; (c) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of Borrower (together with any new directors who have been appointed
by any Permitted Holder, or whose nomination for election by the stockholders of
Borrower, as the case may be, was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Borrower then still in office; or (d) the
failure of the Permitted Holders to own one hundred (100%) percent of the voting
power of the total outstanding Voting Stock of Borrower.
1.17 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.18 "Collateral" shall have the meaning set forth in Section 5.1 hereof.
1.19 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Lender, from any lessor of premises to
Borrower, or any other person to whom any Collateral (including Inventory,
Equipment, bills of lading or other documents of title) is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, pursuant
to which such lessor, consignee or other person, inter alia, acknowledges the
first priority security interest of Lender in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, have
against such Collateral, whether for processing, storage or otherwise, and
agrees to permit Lender access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Lender's rights and
remedies and otherwise deal with such Collateral and in the case of any person
who at any time has custody, control or possession of any bills of lading or
other documents of title, agrees to hold such bills of lading or other documents
as bailee for Lender and to follow all instructions of Lender with respect
thereto.
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1.20 "Collecting Bank" shall mean Xxxxxxx Bank or any replacement bank,
acceptable to Lender, where the Collection Account has been established.
1.21 "Collection Account" shall have the meaning set forth in Section 6.3
hereof.
1.22 "Collection Date" shall mean the date in each month specified on
which Borrower directs that an automated clearinghouse debit be initiated by the
Collecting Bank against the bank account of a Lessee obligated on an Assigned
Lease for the purpose of effecting payment of the monthly Lease Receivable owed
to Borrower by such Lessee under such Assigned Lease.
1.23 "Credit Rating Deficiency Amount" shall mean at, any applicable time
with respect to Eligible Lease Receivables outstanding at such time, any of the
following: (A) the amount (if any) by which the aggregate amount of all Eligible
Lease Receivables at such time actually owed by Lessees having a Credit Rating
of A or B is less than the minimum Required Credit Rating Amount for Lessees
having a Credit Rating of A or B set forth in Section 1.79 hereof, (b) the
amount (if any) by which the aggregate amount of all Eligible Lease Receivables
actually owed by Lessees having a Credit Rating of A, B or C is less than the
minimum Required Credit Rating Amount for Lessees having a Credit Rating of A,
B, or C set forth in Section 1.79 hereof, or (c) the amount (if any) by which
the aggregate amount of all Eligible Lease Receivables actually owed by Lessees
having a Credit Rating of D is greater than the Required Credit Rating Amount
for Lessees having a Credit Rating of D set forth in Section 1.79 hereof.
1.24 "Credit Rating" shall mean the most recent credit rating of A, B, C
or D assigned by Borrower to the Lessee obligated on a Borrowing Base Lease,
provided, that, the underwriting criteria used by Borrower to determine such
credit ratings shall be acceptable to Lender, in its determination.
1.25 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Lender, by and among Lender,
Borrower and Xxxxxxx Bank or any other bank at which any deposit account of
Borrower is at any time maintained and into which proceeds from any of the
Collateral is deposited.
1.26 "Eligible Additional Collateral Leases" shall mean Additional
Collateral Leases (a) which are not Ineligible Assigned Leases, (b) as to which
the Lease Receivables owed thereunder are due and payable in equal consecutive
monthly installments and one (1) of such monthly installments is due and payable
within one (1) month after the assignment by Borrower of such Lease to Lender
and (c) which comply with all representations and warranties set forth herein
with respect to Assigned Leases.
1.27 "Eligible Borrowing Base Leases" shall mean Borrowing Base Leases (a)
which are not Ineligible Assigned Leases, (b) as to which the Lease Receivables
owed thereunder are due and payable in equal consecutive monthly installments
and one (1) of such monthly installments is due and payable within one (1) month
after the assignment by Borrower of such Lease to Lender and (c) which comply
with all representations and warranties set forth herein with respect to
Assigned Leases.
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1.28 "Eligible Lease Receivables" shall mean at any applicable time, Lease
Receivables owed, as applicable, pursuant to an Eligible Borrowing Base Lease or
Eligible Additional Collateral Lease.
1.29 "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.30 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.31 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.32 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.33 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (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 waived; (d) the filing pursuant to Section 412 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 occurrence of a "prohibited
transaction" with respect to which Borrower or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which Borrower or any of its Subsidiaries
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could otherwise be liable; (f) a complete or partial withdrawal by the Borrower
or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations
which is treated as such a withdrawal or notification that a Multiemployer Plan
is in reorganization; (g) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the Pension Benefit Guaranty
Corporation to terminate a Plan or Multiemployer Plan; (h) an event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan; (i) the imposition of any liability under Title IV
of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but
not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA
Affiliate; and (j) any other event or condition with respect to a Plan or
Multiemployer Plan or any Plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of Borrower.
1.34 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Lender) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrower.
1.35 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.36 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.37 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.38 "Existing Lenders" all existing lenders of Borrower other than
Lender.
1.39 "Financing Agreements" shall mean, collectively, this Agreement and
all Assignments, notes, guarantees, security agreements and other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by Borrower or any Obligor in connection with this Agreement.
1.40 "Foothill Agreements" shall mean, collectively, the Loan and Security
Agreement, dated July 31, 2001, by and between Guarantor, and certain of its
subsidiaries (exclusive of Borrower), as borrowers, Foothill Capital
Corporation, as Agent, and the lenders signatories thereto, and all
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agreements, documents and instruments at any time executed and/or delivered by
Guarantor or any other person with, to or in favor of Foothill Capital
Corporation in connection therewith or related thereto, as all of the foregoing
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.41 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied.
1.42 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.43 "Guarantor" shall mean Hypercom Corporation, an Arizona corporation.
1.44 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate) created,
incurred, assumed or guaranteed by such Person in the ordinary course of
business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances or similar documents or instruments
issued for such Person's account; and (g) all indebtedness of such Person in
respect of indebtedness of another Person for borrowed money or indebtedness of
another Person otherwise described in this definition which is secured by any
consensual lien, security interest, collateral assignment, conditional sale,
mortgage, deed of trust, or other encumbrance on any asset of such Person,
whether or not such obligations, liabilities or indebtedness are assumed by or
are a personal liability of such Person, all as of such time.
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1.45 "Ineligible Assigned Leases" shall mean Assigned Leases (a) as to
which the Lessee obligated thereon is delinquent in payment of two (2)
consecutive scheduled payments (including the basic monthly lease payment and
loss and damage waiver payment) due thereunder or (b) as to which any scheduled
lease payment is not paid within seventy-five (75) days after the original due
date thereof or (c) which does not comply with all of the representations and
warranties set forth herein with respect to Assigned Leases.
1.46 "Information Certificate" shall mean the Information Certificate of
Borrower constituting Exhibit C hereto containing material information with
respect to Borrower, its business and assets provided by or on behalf of
Borrower to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.47 "Intellectual Property" shall mean Borrower's now owned and hereafter
arising or acquired: patents, patent rights, patent applications, copyrights,
works which are the subject matter of copyrights, copyright registrations,
trademarks, trade names, trade styles, trademark and service xxxx applications,
and licenses and rights to use any of the foregoing; all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing; all rights to xxx for past, present and future infringement of any of
the foregoing; inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals, and operating
standards; goodwill; customer and other lists in whatever form maintained; and
trade secret rights, copyright rights, rights in works of authorship, domain
names and domain name registrations and contract rights relating to computer
software programs, in whatever form created or maintained.
1.48 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as Borrower may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, Borrower may
not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.49 "Interest Rate" shall mean, as to Prime Rate Loans, a rate equal to
three-quarters (3/4%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of three (3%) percent per annum in excess of the
Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower as in effect three (3) Business Days after
the date of receipt by Lender of the request of Borrower for such Eurodollar
Rate Loans in accordance with the terms hereof, whether such rate is higher or
lower than any rate previously quoted to Borrower); provided, that,
(a) the Interest Rate shall mean as to Prime Rate Loans, one-half of
one (1/2%) percent per annum in excess of the Prime Rate and as to Eurodollar
Rate Loans, the rate of two and three-quarters (2 3/4%) percent per annum in
excess of the Adjusted Eurodollar Rate, effective on the first day of the month
after each of the following conditions is satisfied as determined in good faith
by Lender: (i) the Pre-Tax Net Income of Borrower for the immediately preceding
fiscal year (commencing with the fiscal year ending on December 31, 2002) as set
forth in the audited financial
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statements of Borrower for such fiscal year delivered to Lender, together with
the unqualified opinion of the independent certified accountants, in accordance
with Section 9.6 hereof shall exceed $500,000 and (ii) no Event of Default or
act, condition or event which with notice or passage of time would constitute an
Event of Default shall exist or have occurred and be continuing; and
(b) notwithstanding anything to the contrary contained herein, the
Interest Rate shall mean the rate of two and three-quarters (2 3/4%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and the rate of five
(5%) percent per annum in excess of the Adjusted Eurodollar Rate as to
Eurodollar Rate Loans, at Lender's option, without notice, (c) either (i) for
the period on and after the date of termination or non-renewal hereof until such
time as all Obligations are indefeasibly paid and satisfied in full in
immediately available funds, or (ii) for the period from and after the date of
the occurrence of any Event of Default, and for so long as such Event of Default
is continuing as determined in good faith by Lender and (d) on the Loans at any
time outstanding in excess of the amounts available to Borrower under Section 2
(whether or not such excess(es) arise or are made with or without Lender's
knowledge or consent and whether made before or after an Event of Default).
1.50 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods which are the subject of or leased pursuant to an
Assigned Lease.
1.51 "Lease" shall mean a written lease between Borrower, as original
lessor, or as assignee of the original lessor, and a Lessee, as lessee, arising
from the actual and bona fide delivery of goods and lease thereof by Borrower to
such Lessee for the period specified in such Lease.
1.52 "Lease Bailee" shall mean First Union National Bank and its
successors and assigns.
1.53 "Lease Bailment Agreement" shall have the meaning ascribed thereto in
Section 4.1(f) hereof.
1.54 "Lease Receivables" shall mean, as to Assigned Leases the aggregate
amount equal to (a) the product of (i) the scheduled monthly lease payment
consisting of the fixed and unconditional monthly rental payment, but exclusive
of loss and damage waiver fees, sales, use and similar taxes and other charges,
owed by a Lessee to Borrower pursuant to the terms of an Assigned Lease between
Borrower and such Lessee for which Borrower has not received payment thereof
(including any rental and loss and damage waiver payments made prior to the due
date thereof) from or on behalf of such Lessee, multiplied by (ii) the number of
months (but not to exceed forty-eight (48) months from the commencement date of
such Assigned Lease except that, up to five (5%) percent of the Assigned Leases
in any Borrowing Lease Pool may be for fixed terms not in excess of sixty (60)
months) remaining in the fixed term of such Lease, minus (b) any security
deposits, if any, received by Borrower from or on behalf of such Lessee.
1.55 "Lessee" shall mean a Person who is a retail or service merchant and
who is the lessee pursuant to a Lease.
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1.56 "Loans" shall mean the loans now or hereafter made by Lender to or
for the benefit of Borrower as set forth in Section 2(a) hereof.
1.57 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of Borrower involving
monetary liability of or to any Person in an amount in excess of $1,000,000 in
any fiscal year and (b) any other contract or other agreement (other than the
Financing Agreements), whether written or oral, to which Borrower is a party as
to which the breach, nonperformance, cancellation or failure to renew by any
party thereto would have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations or prospects of
Borrower or the validity or enforceability of this Agreement, any of the other
Financing Agreements, or any of the rights and remedies of Lender hereunder or
thereunder.
1.58 "Maximum Credit" shall mean the amount of $10,000,000, provided,
that, if Lender is able to participate $10,000,000 of the Maximum Credit with
financial institutions acceptable to Lender in amounts and on terms acceptable
to Lender, the Maximum Credit, upon Lender's written notice to Borrower, shall
be increased to $20,000,000.
1.59 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by Borrower or any
ERISA Affiliate.
1.60 "Obligations" shall mean any and all Loans and all other obligations,
liabilities and indebtedness of every kind, nature and description owing by
Borrower to Lender, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to Borrower under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and however acquired by Lender.
1.61 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
1.62 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.63 "Permitted Holders" shall mean Guarantor.
1.64 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, limited liability company, corporation (including, without
limitation, any corporation which elects subchapter S
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status under the Internal Revenue Code of 1986, as amended), business trust,
unincorporated association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality or political
subdivision thereof.
1.65 "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which Borrower sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, or in the case of a Multiemployer Plan has
made contributions at any time during the immediately preceding six (6) plan
years.
1.66 "Pre-Tax Net Income" shall mean, with respect to any Person, for any
period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary or one-time gains) after deducting all
charges which should be deducted before arriving at the net income (loss) for
such period and before deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP, provided, that, (a) the net income of any
Person that is not a wholly-owned Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid or payable to Borrower or a wholly-owned
Subsidiary of such person; (b) the effect of any change in accounting principles
adopted by such Person or its Subsidiaries after the date hereof shall be
excluded; and (c) the net income (if positive) of any wholly-owned Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such wholly-owned Subsidiary to Borrower or to any other wholly-owned
Subsidiary of Borrower is not at the time permitted by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
of government regulation applicable to such wholly-owned Subsidiary shall be
excluded.
1.67 "Prime Rate" shall mean the rate from time to time publicly announced
by First Union National Bank, or its successors, as its prime rate, whether or
not such announced rate is the best rate available at such bank.
1.68 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.69 "Provision for Taxes" shall mean an amount equal to all taxes imposed
on or measured by net income, whether Federal, State or local, and whether
foreign or domestic, that are paid or payable by any Person and its Subsidiaries
in respect of such fiscal year on a consolidated basis in accordance with GAAP.
1.70 "Reassigned Additional Collateral Leases" shall have the meaning
ascribed to such term in Section 5.2 hereof.
1.71 "Reassigned Borrowing Base Leases" shall have the meaning ascribed to
such term in Section 2(b) hereof.
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1.72 "Reassigned Leases" shall mean, individually and collectively, the
Reassigned Additional Collateral Leases and the Reassigned Borrowing Base
Leases.
1.73 "Receivables" shall mean: (a) all Lease Receivables; (b) all amounts
at any time payable to Borrower in respect of the sale or other disposition by
Borrower of any Lease Receivable, Assigned Lease or other obligation for the
payment of money relating to a Lease Receivable or an Assigned Lease; (c) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Lease Receivable
and/or Assigned Lease; (d) all letters of credit, indemnities, guarantees,
security or other deposits and proceeds thereof issued payable to Borrower or
otherwise in favor of or delivered to Borrower in connection with any Lease
Receivable; or (e) all other contract rights, chattel paper, instruments, notes,
general intangibles and other forms of obligations owing to Borrower, whether
from the sale and lease of goods or other property, licensing of any property
(including Intellectual Property or other general intangibles), rendition of
services or from loans or advances by Borrower or to or for the benefit of any
third person (including loans or advances to any Affiliates or Subsidiaries of
Borrower) or otherwise associated with any Lease Receivable, Assigned Lease,
Inventory, or Equipment of Borrower relating to a Lease Receivable or an
Assigned Lease.
1.74 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any Lessee
obligated on an Assigned Lease, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Borrower with
respect to the foregoing maintained with or by any other person).
1.75 "Reference Bank" shall mean First Union National Bank, or such other
bank as Lender may from time to time designate.
1.76 "Renewal Date" shall have the meaning set forth in Section 12.1
hereof.
1.77 "Replacement Additional Collateral Leases" shall have the meaning
ascribed to such term in Section 5.2 hereof.
1.78 "Replacement Borrowing Base Leases" shall have the meaning ascribed
to such term in Section 2(b) hereof.
1.79 "Required Credit Rating Amount" shall mean, with respect to the
aggregate amount of all Eligible Lease Receivables in respect of Eligible
Borrowing Base Leases outstanding at any time shall be as follows: (a) at least
fifty-five (55%) percent or more of the aggregate amount of Eligible Lease
Receivables shall be owed by Lessees having a Credit Rating of A or B at such
time; (b) at least seventy-five (75%) percent or more of the aggregate amount of
Eligible Lease Receivables outstanding at such time shall be owed by Lessees
having a Credit Rating of A, B, or C at such time, and (c) no
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more than twenty-five (25%) percent of the aggregate amount of Eligible Lease
Receivables outstanding at such time shall be owed by Lessees having a Credit
Rating of D at such time.
1.80 "Reserves" shall mean as of any date of determination, such amounts
as Lender may from time to time establish and revise in good faith reducing the
amount of Loans which would otherwise be available to Borrower under the lending
formula(s) provided for herein: (a) to reflect events, conditions, contingencies
or risks which, as determined by Lender in good faith, adversely affect, or
would have a reasonable likelihood of adversely affecting, either (i) the
Collateral or any other property which is security for the Obligations or its
value, (ii) the assets, business or prospects of Borrower or any Obligor or
(iii) the security interests and other rights of Lender in the Collateral
(including the enforceability, perfection and priority thereof) or (b) to
reflect Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to Lender is or
may have been incomplete, inaccurate or misleading in any material respect or
(c) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default. Without limiting any other rights or remedies of
Lender hereunder or in the other Financing Agreements with respect to the
establishment of Reserves or otherwise, Lender may establish and revise Reserves
to reflect delinquent payments of Lease Receivables by Lessees in respect of any
Assigned Leases. To the extent Lender may revise the lending formulas used to
determine the Borrowing Base or establish new criteria or revise existing
criteria for Eligible Lease Receivables so as to address any circumstances,
condition, event or contingency in a manner satisfactory to Lender, Lender shall
not establish a Reserve for the same purpose. The amount of any Reserve
established by Lender shall have a reasonable relationship to the event,
condition or other matter which is the basis for such reserve as determined by
Lender in good faith.
1.81 "Securitization" shall mean a single related transaction (which
transaction shall be on a non-recourse basis to Borrower, other than contingent
obligations arising out of a breach of representations and warranties or a
breach of servicer obligations thereunder) in which (a) Borrower sells and
assigns all of its right, title and interest in a designated pool of Assigned
Leases having an aggregate unpaid amount of Lease Receivables of not less than
the entire amount of the outstanding Loans at such time together with the leased
goods thereunder, to a bankruptcy remote purchaser or other third party which is
not an Affiliate of the Borrower, and (b) concurrently therewith, Lender
receives a mutually agreed amount for the discharge and release of its security
interest and assignment of such Assigned Leases and goods.
1.82 "Software License Agreement" shall mean a Software License Agreement,
in the form annexed hereto as Exhibit E.
1.83 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority of the outstanding Capital
Stock or other interests entitled to vote in the election of the board of
directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such
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corporation shall have or might have voting power by reason of the happening of
any contingency), managers, trustees or other controlling persons, or an
equivalent controlling interest therein, of such Person is, at the time,
directly or indirectly, owned by such Person and/or one or more subsidiaries of
such Person.
1.84 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Lender may otherwise determine).
1.85 "Working Capital" shall mean as to any Person, at any time, in
accordance with GAAP, on a consolidated basis for such Person and its
Subsidiaries (if any), the amount equal to the difference between: (a) the
aggregate net book value of all current assets of such Person and its
Subsidiaries (as determined in accordance with GAAP), calculating the book value
of Inventory for this purpose on a first-in-first-out basis, and (b) all current
liabilities of such Person and its Subsidiaries (as determined in accordance
with GAAP), provided, that, as to Borrower, for purposes of Section 9.19, the
liabilities of Borrower and its Subsidiaries to Lender under this Agreement and
the liabilities of Borrower and its Subsidiaries to Guarantor shall not be
considered current liabilities (whether or not classified as current liabilities
in accordance with GAAP).
SECTION 2. LOANS
(a) Subject to, and upon the terms and conditions contained herein,
Lender agrees to make loans to Borrower from time to time requested by Borrower
of (i) a single loan of not less than $650,000, based on each Borrowing Base
Lease Pool and in an amount not to exceed sixty-five (65%) percent of the
aggregate amount of the Eligible Lease Receivables for the Eligible Borrowing
Base Leases included in such Borrowing Base Lease Pool less any Reserves plus
(ii) additional loans within three (3) Business Days after Lender has received
in the Payment Account (as hereinafter defined) ninety-five (95%) percent of all
funds received or deposited into the Collection Account in accordance with the
provisions of Section 6.3(a)(ii) hereof. Such additional loans will be in an
amount not greater than ninety-five (95%) percent of the sum of loss and damage
waiver fees, sales, use and similar taxes and other charges deposited in the
Collection Account and shown on the ACH Charges Schedule.
(b) Except in Lender's good faith discretion, the aggregate amount
of the Loans outstanding at any time shall not exceed (i) sixty-five (65%)
percent of the then aggregate remaining amount of unpaid Lease Receivables for
all Eligible Borrowing Base Leases or (ii) the Maximum Credit. At any time that
the aggregate amount of the outstanding Loans exceeds sixty-five (65%) percent
of the then aggregate remaining amount of unpaid Lease Receivables owed under
all Eligible Borrowing Base Leases or the Maximum Credit, as applicable, Lender
shall not be obligated to make any additional Loans and such event shall not
limit, waive or otherwise affect any rights of Lender in that circumstance or on
any future occasions. For purposes of calculating the "aggregate remaining
amount of unpaid Lease Receivables owed under all Eligible Borrowing Base
Leases" (or similar language)
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there shall be deducted from such amount any Credit Rating Deficiency Amount
which then exists. To the extent that the aggregate outstanding Loans either
exceeds sixty-five (65%) of the remaining aggregate amount of unpaid Lease
Receivables owed under all Eligible Borrowing Base Leases as a result of such
deduction for a Credit Rating Deficiency Amount, within five (5) days after
written notice by Lender to Borrower of such excess, Borrower shall either (A)
assign additional Eligible Borrowing Base Leases to Lender, not previously
assigned by Borrower to Lender unless such additional Leases had been previously
reassigned by Lender to Borrower (individually and collectively, the
"Replacement Borrowing Base Leases"), as to which remaining aggregate amount of
unpaid Eligible Lease Receivables owed thereunder is not less than one hundred
fifty-four (154%) percent of the amount of such excess or (B) repay to Lender
the entire amount of such excess. If the outstanding Loans exceed the Maximum
Credit, Borrower shall, upon demand by Lender, which may be made at any time or
from time to time, immediately repay to Lender the entire amount of any such
excess for which payment is demanded. If a previously Eligible Borrowing Base
Lease shall at any time be deemed an Ineligible Borrowing Base Lease, within
five (5) days of written notice by Lender to Borrower of same, Borrower shall
either deliver a Replacement Borrowing Base Lease or deposit cash collateral
with Lender pursuant to a cash collateral agreement between Borrower and Lender
in form and substance satisfactory to Lender, in an amount equal to sixty-five
(65%) percent of the remaining unpaid rentals under such Borrowing Base Lease.
No Loans will be made by Lender with respect to Replacement Borrowing Base
Leases or Additional Collateral Leases. Borrower shall assign such Replacement
Borrowing Base Leases to Lender by a separate Assignment without inclusion
therein of any other types of Assigned Leases. At the request of Borrower, if no
Event of Default or condition or event which, with notice or the passage of time
or both, would constitute an Event of Default then exists or would result
therefrom, after the assignment of such Replacement Borrowing Base Leases to
Lender by Borrower, Lender will reassign all Borrowing Base Leases which are
Ineligible Assigned Leases to Borrower without representations, warranties or
recourse other than a representation that Lender has not created any lien,
security interest or encumbrance thereon (individually and collectively, with
the Borrowing Base Leases reassigned by Lender to Borrower pursuant to clause
(c) of this Section 2, the "Reassigned Borrowing Base Leases") pursuant to an
Assignment substantially in the form of Exhibit B hereto.
(c) Borrower shall have the right to prepay the outstanding Loans in
whole or in part, without premium or penalty (except in connection with the
termination of the Financing Agreements provided in Section 12.1(c) hereof) in
accordance with Section 2(d) hereof at any time or from time to time, but each
such prepayment shall be in the amount of not less than the outstanding Loans.
(d) In the event there are either (i) no Loans outstanding for at
least thirty (30) consecutive days or (ii) Borrower notifies Lender that it
intends to close a Securitization, Approved Financing Transaction and/or a sale
to a third party which is not an Affiliate of the Borrower (in each case on a
non-recourse basis to Borrower, other than contingent obligations arising out of
a breach of representations and warranties or a breach of servicer obligations
thereunder) and repay all of the outstanding Loans with the proceeds of such
Securitization, Approved Financing Transaction or sale, then Lender shall upon
written request of Borrower received no later than five (5) Business Days prior
to the closing of any such Securitization, Approved Financing Transaction or
sale, reassign to Borrower
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all Borrowing Base Leases and Additional Collateral Leases then being held by
Lender as Collateral and will, at Borrower's expense, (A) reassign to Borrower
(without representations, warranties or recourse other than a representation
that Lender has not created any lien, security interest or encumbrance thereon)
such Borrowing Base Leases and Additional Collateral Leases, (B) deliver to
Borrower executed UCC-3 Partial Releases with respect to the Collateral relating
to such Reassigned Borrowing Base Leases which refer to the UCC-1 financing
statements relating to such Reassigned Borrowing Base Leases naming Borrower, as
debtor, and Lender, as secured party, filed with respect thereto in the office
of the Arizona Secretary of State, and (c) direct the Lease Bailee to deliver
the original executed copies of such Reassigned Borrowing Base Leases pursuant
to the instructions of Borrower. Notwithstanding any such prepayment, this
Agreement shall continue in full force and effect in accordance with its terms;
provided, that, once all Additional Collateral Leases have been released, no
Loans shall be made hereunder unless, in addition to satisfaction of each of the
other conditions precedent set forth in Section 4 hereof, Section 4.2(b) hereof
is satisfied with respect to each such Loan.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Lender interest on the outstanding
principal amount of the Loans at the Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or termination or
non-renewal hereof shall be payable on demand.
(b) Borrower may from time to time request Eurodollar Rate Loans or
may request that Prime Rate Loans be converted to Eurodollar Rate Loans or that
any existing Eurodollar Rate Loans continue for an additional Interest Period.
Such request from Borrower shall specify the amount of the Eurodollar Rate Loans
or the amount of the Prime Rate Loans to be converted to Eurodollar Rate Loans
or the amount of the Eurodollar Rate Loans to be continued (subject to the
limits set forth below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions contained herein,
three (3) Business Days after receipt by Lender of such a request from Borrower,
such Prime Rate Loans shall be converted to Eurodollar Rate Loans or such
Eurodollar Rate Loans shall continue, as the case may be, provided, that, (i) no
Event of Default, or act, condition or event which with notice or passage of
time or both would constitute an Event of Default shall exist or have occurred
and be continuing, (ii) no party hereto shall have sent any notice of
termination or non-renewal of this Agreement, (iii) Borrower shall have
complied with such customary procedures as are established by Lender and
specified by Lender to Borrower from time to time for requests by Borrower for
Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods may be in
effect at any one time, (v) the aggregate amount of the Eurodollar Rate Loans
must be in an amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, (vi) the maximum amount of the Eurodollar Rate
Loans at any time requested by Borrower shall not exceed the amount equal to
eighty (80%) percent of the lowest principal amount of the Loans which it is
anticipated will be outstanding during the applicable Interest Period, in each
case as determined by Lender (but with no obligation of
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Lender to make such Loans), and (vii) Lender shall have determined that the
Interest Period or Adjusted Eurodollar Rate is available to Lender through the
Reference Bank and can be readily determined as of the date of the request for
such Eurodollar Rate Loan by Borrower. Any request by Borrower for Eurodollar
Rate Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Lender and Reference
Bank shall not be required to purchase United States Dollar deposits in the
London interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if
Lender and Reference Bank had purchased such deposits to fund the Eurodollar
Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Lender
has received and approved a request to continue such Eurodollar Rate Loan at
least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice
by Lender to Borrower, convert to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrower shall pay to Lender, upon
demand by Lender (or Lender may, at its option, charge any loan account of
Borrower) any amounts required to compensate Lender, the Reference Bank or any
participant with Lender for any loss (including loss of anticipated profits),
cost or expense incurred by such person, as a result of the conversion of
Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrower to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrower to Lender exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrower shall pay to Lender as a non-refundable closing
fee the amount of $150,000, which shall be fully earned and payable as of the
date hereof.
3.3 Syndication Fee. Borrower shall pay to Lender a non-refundable
syndication fee in the amount of $50,000, which shall be fully earned and
payable on the date hereof, whether or not Lender's syndication efforts are
successful.
3.4 Servicing Fee. Borrower shall pay to Lender monthly a servicing fee in
an amount equal to $2,000 in respect of Lender's services for each month (or
part thereof) while this Agreement remains in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be fully earned as of
and payable in advance on the date hereof and on the first day of each month
hereafter.
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3.5 Unused Line Fee. Borrower shall pay to Lender monthly an unused line
fee at a rate equal to three-eighths (3/8%) percent per annum calculated upon
the amount by which the Maximum Credit exceeds the average daily principal
balance of the outstanding Loans during the immediately preceding month (or part
thereof) while this Agreement is in effect and for so long thereafter as any of
the Obligations are outstanding, which fee shall be payable on the first day of
each month in arrears.
3.6 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to Borrower, convert to Prime
Rate Loans in the event that (i) any change in applicable law or regulation (or
the interpretation or administration thereof) shall either (A) make it unlawful
for Lender, Reference Bank or any participant with Lender to make or maintain
Eurodollar Rate Loans or to comply with the terms hereof in connection with the
Eurodollar Rate Loans, or (B) shall result in the increase in the costs to
Lender, Reference Bank or any participant of making or maintaining any
Eurodollar Rate Loans by an amount deemed by Lender to be material, or (C)
reduce the amounts received or receivable by Lender in respect thereof, by an
amount deemed by Lender to be material or (ii) the cost to Lender, Reference
Bank or any participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by Lender to be material. Borrower shall
pay to Lender, upon demand by Lender (or Lender may, at its option, charge any
loan account of Borrower) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any loss (including loss of
anticipated profits), cost or expense incurred by such person as a result of the
foregoing, including, without limitation, any such loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such person to make or maintain the Eurodollar Rate Loans or any
portion thereof. A certificate of Lender setting forth the basis for the
determination of such amount necessary to compensate Lender as aforesaid shall
be delivered to Borrower and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, Borrower shall
pay to Lender upon demand by Lender (or Lender may, at its option, charge any
loan account of Borrower) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any additional loss (including
loss of anticipated profits), cost or expense incurred by such person as a
result of such prepayment or payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
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SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to First Loan. Each of the following is a
condition precedent to Lender making the first Loan to Borrower hereunder:
(a) Lender shall have received an Assignment of Additional
Collateral Leases, which Assignment shall not include therein any other types of
Assigned Leases, having aggregate unpaid Eligible Lease Receivables equal to the
greater of (i) twenty-five (25%) percent of the amount of the initial Loan to be
made hereunder or (ii) $500,000 with at least one monthly payment having been
made thereunder and with none of such payments being past due as of the date of
such Assignment;
(b) Lender shall have received an Assignment of the Eligible
Borrowing Base Leases included in the first Borrowing Base Lease Pool
concurrently with or prior to the initial Loan being made with respect thereto
pursuant to Section 2(a)(i) hereof;
(c) Lender shall have received UCC-1 financing statements naming
Borrower, as debtor, and Lender, as secured party, executed by Borrower and
filed in the State of Arizona and UCC search results, performed by a search
company acceptable to Lender, in the appropriate filing offices evidencing that
Lender has valid perfected and first priority security interests in and liens
upon the Collateral and any other property which is intended to be security for
the Obligations or the liability of any Obligor in respect thereof;
(d) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(e) no material adverse change shall have occurred in the assets,
business or prospects of Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair the
ability of Borrower or any Obligor to perform its obligations hereunder or under
any of the other Financing Agreements to which it is a party or of Lender to
enforce the Obligations or realize upon the Collateral;
(f) Lender shall have received, in form and substance satisfactory
to Lender, an agreement among Lender, Borrower and the Lease Bailee (the "Lease
Bailment Agreement") agreeing that (i) the Lease Bailee shall receive possession
of the original signed copy of each of the Assigned Leases, and, (ii) the Lease
Bailee shall hold such original Assigned Leases, as bailee for Lender, (iii) the
Lease Bailee shall permit Lender to inspect such Assigned Leases or the Lease
Bailee shall verify its possession thereof to Lender, (iv) the Lease Bailee
shall not release such Assigned Leases without Lender's written consent, (v) the
Lease Bailee shall verify to Lender the Lessee's name and the Lease number of
each such Lease, and (v) the Lease Bailee shall confirm that each such Assigned
Lease is
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executed by all parties thereto (without authenticating the signatures),
including Borrower, the Lessee, the vendor to Borrower of the leased Inventory
and any guarantors;
(g) the Lease Bailee shall have confirmed in writing to Lender that
the Eligible Leases included in the first Borrowing Base Lease Pool and the
Additional Collateral Leases are in the possession of the Lease Bailee, the
Lease numbers and names of the Lessees with respect thereto, and the execution
thereof as provided in and pursuant to the Lease Bailment Agreement;
(h) Lender shall have received, in form and substance satisfactory
to Lender, a guarantee by Guarantor of payment and performance of the
Obligations of Borrower;
(i) Lender shall have received, in form and substance satisfactory
to Lender, a Deposit Account Control Agreement with the Collecting Bank;
(j) Lender shall have received, in form and substance satisfactory
to Lender, such opinion letters of counsel to Borrower with respect to the
Financing Agreements and such other matters as Lender may request;
(k) Lender shall have received, in form and substance satisfactory
to Lender, (i) evidence that Guarantor has, prior to the execution of this
Agreement, refinanced its existing working capital facility with a financial
institution other than Bank One and otherwise acceptable to Lender (the "New
Hypercom Lender") on terms and conditions acceptable to Lender, and its counsel,
such terms and conditions shall include, among others, the following: (A)
Guarantor shall be permitted to make loans and advances to Borrower without
restrictions (including without limitation, the right of Guarantor to defer
payment of any such loans and advances beyond the termination date of the Credit
Facility), and (B) the specific allowance by the New Hypercom Lender of
Guarantor's guarantee of Borrower's obligations under the Financing Agreements
and (ii) true and complete copies of all of the agreements related to the new
credit facility;
(l) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender;
(m) Lender shall have received, true and correct copies of all
agreements between Borrower and its Existing Lenders, which agreements shall be
in form and substance satisfactory to it, and which agreements shall not provide
for a lien on the Collateral and shall not include any terms and conditions
which in any manner adversely affect Lender or any rights of Lender as
determined in good faith by Lender with respect to the Collateral or Borrower;
(n) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
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(o) Lender shall have received evidence in form and substance
satisfactory to Lender that Borrower's guaranty of the obligations of Guarantor
to Foothill Capital Corporation under the Foothill Agreements and otherwise and
related security interests in the property of Borrower, shall have been
released;
(p) Lender shall have completed a field review of the Records and
such other information with respect to the Collateral as Lender may require to
determine the amount of Loans available to Borrower, the results of which each
case shall be satisfactory to Lender, not more than three (3) Business Days
prior to the date hereof;
(q) Lender shall have received, in form and substance satisfactory
to Lender, all consents, waivers, acknowledgments and other agreements from
third persons which Lender may deem necessary or desirable in order to permit,
protect and perfect its security interests in and liens upon the Collateral or
to effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrower and by
warehouses at which Collateral is located;
(r) The accounts payable of Borrower shall be at a level and in a
condition acceptable to Lender;
(s) Lender shall have received, in form and substance satisfactory
to Lender, a subordination agreement, between Guarantor and Lender, as
acknowledged and agreed to by Borrower, duly authorized, executed and delivered
by Guarantor, providing for among other things, that all amounts at any time
owing by Borrower to Guarantor are unsecured and subordinate in right of payment
to the indefeasible payment in full of all obligations (contingent or otherwise)
of Borrower to Lender and related matters, and that Borrower will not make and
Guarantor will not accept any payment of such amounts without the prior written
consent of Lender. At closing, the amount owed by Borrower to Guarantor shall be
at least equal to $20,000,000;
(t) Lender shall have received, in form and substance satisfactory
to it, any intercreditor agreements or other agreements between third parties
and it, which Lender may deem necessary or desirable, as acknowledged and agreed
to by Borrower, duly authorized, executed and delivered by such third parties
and Borrower, providing for such parties' relative rights and priorities with
respect to the assets and properties of Borrower and related matters;
(u) Lender shall have received confirmation satisfactory to Lender
that Borrower's lending relationship with existing and prior lenders was
satisfactory;
(v) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan and after giving effect
thereto; and
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(w) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
and after giving effect thereto.
4.2 Conditions Precedent to All Loans. Each of the following is an
additional condition precedent to Lender making each Loan hereunder to Borrower
after the first Loan hereunder:
(a) Lender shall have received Assignments of the Eligible Borrowing
Base Leases included in each Borrowing Base Lease Pool concurrently with or
prior to the Loan being made with respect thereto pursuant to Section 2(a)
hereof;
(b) Lender shall have received Additional Collateral Leases having
aggregate unpaid Lease Receivables equal to the greater of (i) twenty-five (25%)
percent of the amount of the Loan requested or (ii) (A) $500,000 until such time
as the aggregate unpaid Lease Receivables with respect to all outstanding
Additional Collateral Leases is equal to $2,500,000, to the extent that the
Maximum Credit is equal to $10,000,000 or (B) $500,000 until such time as the
aggregate unpaid Lease Receivables with respect to all outstanding Additional
Collateral Leases is equal to $5,000,000, to the extent that the Maximum Credit
is equal to $20,000,000;
(c) Lender shall have received UCC-3 Amendments or Terminations, in
the form set forth in Schedule 4.2 hereto, with respect to the Collateral
amending the original UCC-1 financing statements filed in only the offices of
the Arizona Secretary of State, executed by Borrower, as debtor, and containing
a description of the Eligible Borrowing Base Leases included in each Borrowing
Base Lease Pool concurrently with or prior to the Loan being made with respect
thereto pursuant to Section 2.1(a) hereof;
(d) Lender shall have received, in form and substance satisfactory
to Lender, all consents, waivers, acknowledgements and other agreements from
third persons (other than Lessees) which Lender may deem necessary or desirable
in order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements;
(e) the Lease Bailment Agreement shall be in full force and effect
and shall not have been terminated by the Lease Bailee or Borrower;
(f) the Lease Bailee shall have confirmed in writing to Lender
before any Loan is made by Lender with respect to the Eligible Leases included
in any Borrowing Base Lease Pool that such Eligible Leases are in the possession
of the Lease Bailee, the Lease numbers and names of the Lessees with respect
thereto, and the execution thereof as provided in and pursuant to the Lease
Bailment Agreement;
(g) either (i) the Deposit Account Control Agreement with the
Collecting Bank is in full force and effect and shall not have been terminated
or (ii) any other blocked account or lockbox
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agreement, in form and substance satisfactory to Lender and substantially
similar to the agreement with Collecting Bank, with any other bank acceptable to
Lender shall be in full force and effect;
(h) no material adverse change shall have occurred in the assets,
business or prospects of Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair (i)
the ability of Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Lender
to enforce the Obligations or realize upon the Collateral or (ii) the perfection
or priority of Congress' security interest in the Collateral;
(i) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan and after giving effect
thereto; and
(j) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
and after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
5.1 Collateral. To secure payment and performance of all Obligations,
Borrower hereby grants to Lender a continuing security interest in, a lien upon,
and a right of set off against, and hereby assigns to Lender as security, the
following property and interests in property of Borrower, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Lender, collectively, the "Collateral"):
(a) all present and future Leases, chattel paper, documents and
instruments now and hereafter assigned to Lender or in which Lender has been
granted a security interest by Borrower and identified in each Assignment;
(b) all present and future rental, lease and other payments and
charges owed to Borrower under Assigned Leases;
(c) Inventory leased by Borrower to Lessees under Assigned Leases;
(d) guaranties by third parties of Assigned Leases;
(e) Records;
(f) Receivables;
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(g) all other present and future general intangibles (including
Intellectual Property and existing and future leasehold interests in equipment,
real estate and fixtures), chattel paper, documents, instruments, investment
property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity
accounts), letters of credit, bankers' acceptances and guaranties arising out
of, in respect of or relating to any Assigned Leases;
(h) all present and future monies, securities, credit balances,
deposits, deposit accounts and other property of Borrower now or hereafter held
or received by or in transit to Lender or its Affiliates or at any other
depository or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Receivables and other Collateral, including
(i) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, (ii) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (iii) goods described in invoices, documents, contracts or instruments
with respect to, or otherwise representing or evidencing, Receivables or other
Collateral, including returned, repossessed and reclaimed goods, and (iv)
deposits by and property of account debtors or other persons securing the
obligations of account debtors arising out of, in respect of or relating to any
Assigned Leases;
(j) all commercial tort claims arising in connection with or out of
the Assigned Leases, including, without limitation, those identified in the
Information Certificate;
(i) Equipment leased by Borrower to Lessees under Assigned Leases;
and
(k) all products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and all claims against third
parties for loss or damage to or destruction of any or all of the foregoing.
5.2 Additional Collateral Leases. (a) Once the aggregate outstanding
balance of Lease Receivables in respect of Additional Collateral Leases equals
or exceeds $2,500,000 (to the extent that the Maximum Credit is equal to
$10,000,000) or $5,000,000 (to the extent that the Maximum Credit is equal to
$20,000,000), then the aggregate outstanding balance of Lease Receivables may
decrease from time to time, provided, that, if either (i) any Additional
Collateral Lease becomes an Ineligible Assigned Lease or (ii) the aggregate
outstanding balance of Lease Receivables in respect of Additional Collateral
Leases at any time is less than $2,000,000 (to the extent that the Maximum
Credit is equal to $10,000,000) or $4,000,000 (to the extent that the Maximum
Credit is equal to $20,000,000) (the "Minimum Additional Collateral Lease
Value"), within five (5) days after written notice thereof by Lender to
Borrower, Borrower shall assign Eligible Additional Collateral Leases to Lender,
not previously assigned by Borrower to Lender, (individually and collectively,
"Replacement Additional Collateral Leases"), as to which the remaining aggregate
amount of unpaid Eligible Lease Receivables owed thereunder is not less than the
aggregate amount of unpaid Lease Receivables under such Ineligible Assigned
Leases and/or assign to Lender Additional Collateral Leases such that the
Minimum Additional Collateral Lease Value is maintained, as the case may be. At
the request of Borrower, if no
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Event of Default or condition or event which with notice or the passage of time
or both would constitute an Event of Default then exists, after compliance by
Borrower with either requirement of the immediately preceding sentence, Lender
will assign such Ineligible Assigned Leases to Borrower without representations,
warranties or recourse other than a representation that Lender has not created
any lien, security interest or encumbrance thereon (individually and
collectively, "Reassigned Additional Collateral Leases") pursuant to an
Assignment substantially in the form of Exhibit B hereto.
5.3 Reassigned Additional Collateral Leases. Unless an Event of Default or
condition or event which, with notice or the passage of time or both, would
constitute an Event of Default then exists, at Borrower's expense, at the
request of Borrower, Lender shall (a) deliver to Borrower executed UCC-3
Partial Releases with respect to the Collateral relating to such Reassigned
Additional Collateral Leases which refer to the UCC-1 financing statements
relating to such Reassigned Additional Collateral Leases naming Borrower, as
debtor, and Lender, as secured party, filed with respect thereto in the offices
of the Arizona Secretary of State as Borrower shall designate, and (b) direct
the Lease Bailee to deliver the original executed copies of such Reassigned
Additional Collateral Leases pursuant to the instructions of Borrower.
5.4 Perfection of Security Interests.
(a) Borrower irrevocably and unconditionally authorizes Lender (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Lender or its designee as the secured
party and Borrower as debtor, as Lender may require, and including any other
information with respect to Borrower or otherwise required by part 5 of Article
9 of the UCC of such jurisdiction as Lender may determine, together with any
amendment and continuations with respect thereto, which authorization shall
apply to all financing statements filed on, prior to or after the date hereof.
Borrower hereby ratifies and approves all financing statements naming Lender or
its designee as secured party and Borrower as debtor with respect to the
Collateral (and any amendments with respect to such financing statements) filed
by or on behalf of Lender prior to the date hereof and ratifies and confirms the
authorization of Lender to file such financing statements (and amendments, if
any). Borrower hereby authorizes Lender to adopt on behalf of Borrower any
symbol required for authenticating any electronic filing. In the event that the
description of the collateral in any financing statement naming Lender or its
designee as the secured party and Borrower as debtor includes assets and
properties of Borrower that do not at any time constitute Collateral, whether
hereunder, under any of the other Financing Agreements or otherwise, the filing
of such financing statement shall nonetheless be deemed authorized by Borrower
to the extent of the Collateral included in such description and it shall not
render the financing statement ineffective as to any of the Collateral or
otherwise affect the financing statement as it applies to any of the Collateral.
In no event shall Borrower at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Lender or
its designee as secured party and Borrower as debtor.
(b) As of the date hereof, Borrower does not have any duplicate
originals of any chattel paper (whether tangible or electronic) or instruments
related to the Assigned Leases. In the event that
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Borrower shall be entitled to or shall receive any chattel paper or instrument
after the date hereof related to the Assigned Leases, Borrower shall promptly
notify Lender thereof in writing. Promptly upon the receipt thereof by or on
behalf of Borrower (including by any agent or representative) and except as set
forth in the Lease Bailment Agreement, Borrower shall deliver, or cause to be
delivered to Lender, all tangible chattel paper and instruments related to the
Assigned Leases that Borrower may at any time acquire, accompanied by such
instruments of transfer or assignment duly executed in blank as Lender may from
time to time specify, in each case except as Lender may otherwise agree. From
and after the occurrence of an Event of Default or any act, condition or event
which with notice or passage of time would constitute an Event of Default, at
Lender's option, Borrower shall, or Lender may on behalf of Borrower, cause the
original of any such instrument or chattel paper to be conspicuously marked in a
form and manner acceptable to Lender with the following legend referring to
chattel paper or instruments as applicable: "This [chattel paper][instrument] is
subject to the security interest of Congress Financial Corporation and any sale,
transfer, assignment or encumbrance of this [chattel paper][instrument] violates
the rights of such secured party."
(c) In the event that Borrower shall at any time hold or acquire an
interest in any electronic chattel paper or any "transferable record" (as such
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) related to the
Assigned Leases, Borrower shall promptly notify Lender thereof in writing.
Promptly upon Lender's request, Borrower shall take, or cause to be taken, such
actions as Lender may reasonably request to give Lender control of such
electronic chattel paper under Section 9-105 of the UCC and control of such
transferable record under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act, as in effect in such jurisdiction.
(d) Borrower does not have any deposit accounts as of the date
hereof, except as set forth in the Information Certificate. Borrower shall not,
directly or indirectly, after the date hereof open, establish or maintain any
deposit account into which Collateral shall be deposited unless each of the
following conditions is satisfied: (i) Lender shall have received not less than
five (5) Business Days prior written notice of the intention of Borrower to open
or establish such account which notice shall specify in reasonable detail and
specificity acceptable to Lender the name of the account, the owner of the
account, the name and address of the bank at which such account is to be opened
or established, the individual at such bank with whom Borrower is dealing and
the purpose of the account, (ii) the bank where such account is opened or
maintained shall be acceptable to Lender, and (iii) on or before the opening of
such deposit account, Borrower shall as Lender may specify either (A) deliver to
Lender a Deposit Account Control Agreement with respect to such deposit account
duly authorized, executed and delivered by Borrower and the bank at which such
deposit account is opened and maintained or (B) arrange for Lender to become the
customer of the bank with respect to the deposit account on terms and conditions
acceptable to Lender. The terms of this subsection (d) shall not apply to
deposit accounts specifically and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of Borrower's
salaried employees.
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(e) Borrower shall take any other actions reasonably requested
by Lender from time to time to cause the attachment, perfection and first
priority of, and the ability of Lender to enforce, the security interest of
Lender in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that Borrower's signature thereon is required therefor, (ii)
causing Lender's name to be noted as secured party on any certificate of title
for a titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Lender to enforce, the security interest of Lender in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
Lender to enforce, the security interest of Lender in such Collateral, (iv)
obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.
(f) Borrower has no commercial tort claims as of the date
hereof, except as set forth in the Information Certificate. In the event that
Borrower shall at any time after the date hereof have any commercial tort claims
in respect of relating to the Assigned Leases, Borrower shall promptly notify
Lender thereof in writing, which notice shall (i) set forth in reasonable detail
the basis for and nature of such commercial tort claim and (ii) include the
express grant by Borrower to Lender of a security interest in such commercial
tort claim (and the proceeds thereof). In the event that such notice does not
include such grant of a security interest, the sending thereof by Borrower to
Lender shall be deemed to constitute such grant to Lender. Upon the sending of
such notice, any commercial tort claim described therein shall constitute part
of the Collateral and shall be deemed included therein. Without limiting the
authorization of Lender provided in Section 5.4(a) hereof or otherwise arising
by the execution by Borrower of this Agreement or any of the other Financing
Agreements, Lender is hereby irrevocably authorized from time to time and at any
time to file such financing statements naming Lender or its designee as secured
party and Borrower as debtor, or any amendments to any financing statements,
covering any such commercial tort claim as Collateral. In addition, Borrower
shall promptly upon Lender's request, execute and deliver, or cause to be
executed and delivered, to Lender such other agreements, documents and
instruments as Lender may reasonably require in connection with such commercial
tort claim.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans and other
Obligations and the Collateral, (b) all payments made by or on behalf of
Borrower and (c) all other appropriate debits and credits as provided in this
Agreement, including, without limitation, fees, charges, costs, expenses and
interest. All entries in the loan account(s) shall be made in accordance with
Lender's customary practices as in effect from time to time.
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6.2 Statements. Lender shall render to Borrower each month a statement
setting forth the balance in the Borrower's loan account(s) maintained by Lender
for Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and conclusively binding
upon Borrower as an account stated except to the extent that Lender receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written statement as
provided above, the balance in Borrower's loan account(s) shall be presumptive
evidence of the amounts due and owing to Lender by Borrower.
6.3 Collection of Lease Receivables and Other Collateral.
(a) (i) Borrower shall, on each Collection Date, which shall
occur not less than once each month, at Borrower's expense, initiate an
automated clearinghouse debit transaction through the Collecting Bank against
the designated bank account of the Lessee obligated on each Borrowing Base
Lease, and, after an Event of Default, the Additional Collateral Leases, for the
monthly lease payment(s) then due thereunder. Borrower shall deposit or cause to
be deposited all proceeds of such automated clearinghouse debits (including,
without limitation, rentals, insurance and loss and damage waiver payments,
sales, use and similar tax payments and other charges owed by such Lessee)
received by Collecting Bank from such Lessee's bank account to the Collection
Account as provided in Section 6.3(a)(ii) below. Until occurrence of an Event of
Default, Borrower may receive and retain all collections on the Additional
Collateral Leases.
(ii) Unless Lender otherwise agrees, Borrower shall
establish and maintain, at its expense, a blocked account or lockbox and related
blocked account (in either case, a "Collection Account"), as Lender may specify,
either with the Collecting Bank or with such other banks as are acceptable to
Lender into which Borrower shall either cause the Collecting Bank to deposit all
amounts received by the Collecting Bank from such automated clearinghouse debits
against the bank accounts of the Lessees or shall itself deposit or cause to be
deposited in the Collection Account all payments of Lease Receivables received
by Borrower and owed on Borrowing Base Leases and, after an Event of Default, on
Additional Collateral Leases and all payments constituting proceeds of other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. The bank at which the Collection Account is
established shall enter into a Deposit Account Control Agreement with Lender.
The Collecting Bank or such other depository bank where the Collection Account
is maintained shall wire, or otherwise transfer, immediately available funds, on
the 2nd and 16th calendar days of each calendar month (or if such days are not
Business Days, then the Business Day immediately succeeding such day)
ninety-five (95%) percent of all funds then received or deposited into the
Collection Account to such bank account of Lender as Lender may from time to
time designate for such purpose ("Payment Account"). Borrower agrees that all
payments made to such Collection Account or other funds received and collected
by Lender, whether on the Lease Receivables or as proceeds of other Collateral
or otherwise shall be the property of Lender.
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(b) For purposes of calculating the amount of the Loans
available to Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Lender of
immediately available funds in the Payment Account, if such payments and notice
thereof are received within sufficient time (in accordance with Lender's usual
and customary practices as in effect from time to time) to credit Borrower's
loan account on such day, and if not, then on the next Business Day.
(c) For the purposes of calculating interest on the
Obligations, such payments or other funds received will be applied (conditional
upon final collection) to the Obligations one (1) Business Day following the
date of receipt of immediately available funds by Lender in the Payment Account
provided such payments or other funds and notice thereof are received in
accordance with Lender's usual and customary practices as in effect from time to
time and within sufficient time to credit Borrower's loan account on such day,
and if not, then on the next Business Day.
(d) Borrower and all of its Affiliates, Subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Lease Receivables owed on
Borrowing Base Leases and, after an Event of Default, on Additional Collateral
Leases or other Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Collection Account, or remit the same or cause the same to
be remitted, in kind, to Lender. In no event shall the same be commingled with
Borrower's own funds. Borrower agrees to reimburse Lender on demand for any
amounts owed or paid to any bank at which a Collection Account is established or
any other bank or person involved in the transfer of funds to or from the
Collection Account. The obligation of Borrower to reimburse Lender for such
amounts pursuant to this Section 6.3 shall survive the termination or
non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account
as provided in Section 6.3 or such other place as Lender may designate from time
to time. Lender shall apply payments received or collected from Borrower or for
the account of Borrower (including, without limitation, the monetary proceeds of
collections or of realization upon any Collateral) to such of the Obligations,
whether or not then due, in such order and manner as Lender determines. At
Lender's option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements may be
charged directly by Lender to the loan account(s) of Borrower. Borrower shall
make all payments to Lender on the Obligations free and clear of, and without
deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the Obligations, Lender
is required to surrender or return such payment or proceeds to any Person for
any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Lender. Borrower shall be liable to pay to Lender, and does hereby indemnify and
hold Lender harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4 shall remain effective notwithstanding any contrary
action which may be taken by Lender in reliance
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upon such payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the Loans
based upon telephonic or other instructions received from anyone purporting to
be an officer of Borrower or other authorized person or, at the discretion of
Lender, if such Loans are necessary to satisfy any Obligations. All requests for
Loans hereunder shall specify the date on which the requested advance is to be
made, subject to satisfaction of the conditions precedent set forth in Section
4.2 hereof (which day shall be a Business Day) and the amount of the requested
Loan. Requests received after 11:00 a.m. New York time on any day shall be
deemed to have been made as of the opening of business on the immediately
following Business Day. All Loans under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of,
Borrower when deposited to the credit of Borrower or otherwise disbursed or
established in accordance with the instructions of Borrower or in accordance
with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrower shall use the proceeds of all loans
provided by Lender to Borrower pursuant to the provisions hereof only for
general operating, working capital and other proper corporate purposes of
Borrower not otherwise prohibited by the terms hereof. None of the proceeds will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) (i) on or before the
2nd and 16th calendar days of each calendar month (or if such days are not
Business Days, then the Business Day immediately succeeding such day), a summary
report in writing, substantially in the form set forth in Schedule 7.1(a)(i)
hereof, setting forth cumulatively for both the Borrowing Base Leases and
Additional Collateral Leases (A) the aggregate outstanding amount of Lease
Receivables owed thereunder, (B) the total number of Leases included therein,
and (C) a schedule of the aggregate amount of sales, use and similar taxes in
connection with the Assigned Leases deposited by Borrower in the Collection
Account on the 1st and 15th days of such calendar month, as applicable (the "ACH
Charges Schedule"), (ii) on or before the 3rd and 17th calendar days of each
calendar month (or if such days are not Business Days, then the Business Day
immediately succeeding such day), a summary report in writing, substantially in
the form set forth in Schedule 7.1(a)(ii) hereof, setting forth cumulatively for
both the Borrowing Base Leases and Additional Collateral Leases (A) the
aggregate outstanding amount of Lease Receivables owed thereunder, (B) the total
number of Leases included therein, and (C) a reconciliation schedule setting
forth the amount of loss and damage waiver fees, sales, use and similar taxes
and other charges in connection with the Assigned Leases actually collected by
Borrower and deposited in the Collection
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Account for the preceding two week period, after settlement of all returned
checks and rejected ACHs in accordance with Section 6 of the Deposit Account
Control Agreement, and (iii) a separate schedule, each substantially in the form
set forth in Schedule 7.1(a)(iii) hereof, delivered in an electronic media
format acceptable to Lender, of all Borrowing Base Leases and Additional
Collateral Leases setting forth separately for each such Assigned Lease the name
and address of the Lessee obligated thereon, the lease number thereof, the
outstanding amount of Lease Receivables owed thereunder, and the agings thereof
by month (the foregoing summary reports and schedules being collectively
referred to herein as the "Bi-Weekly Servicer Report"); and (b) such other
reports as to the Collateral as Lender shall reasonably request from time to
time. If any of Borrower's records or reports of the Collateral are prepared or
maintained by an accounting service, data processing service or other agent,
Borrower hereby irrevocably authorizes each such service or other agent to
deliver such records, reports, and related documents to Lender and to follow
Lender's instructions with respect to further services at any time that an Event
of Default exists or has occurred and is continuing.
7.2 Assigned Lease Covenants.
(a) Borrower shall notify Lender promptly of any event or
circumstance which, to Borrower's knowledge would adversely affect in any
material respect the collectibility or value of any material portion of the
Borrowing Base Leases or the Additional Collateral Leases. Borrower shall not
reduce or waive the monthly payment due on any of the Assigned Leases, without
Lender's prior written consent. So long as no Event of Default exists or has
occurred and is continuing, Borrower may settle, adjust or compromise any claim,
offset, counterclaim or dispute with any. At any time that an Event of Default
exists or has occurred and is continuing, Lender shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset, counterclaim
or dispute with Lessees or grant any credits, discounts or allowances.
(b) With respect to each Assigned Lease: (i) the amounts shown
on any Assignment delivered to Lender or schedule thereof delivered to Lender
shall be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to Lender pursuant to the terms of this
Agreement, (iii) no credit, discount, allowance or extension or agreement for
any of the foregoing shall be granted to any Lessee except in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of Borrower's business in accordance with
practices and policies previously disclosed to Lender, (iv) at the time of the
assignment thereof to Lender there shall be no setoffs, deductions, contras,
defenses, counterclaims or disputes existing or asserted with respect thereto
except as reported to Lender in accordance with the terms of this Agreement, (v)
none of the transactions giving rise thereto will violate any applicable local,
State or Federal laws or regulations, all documentation relating thereto will be
legally sufficient under such laws and regulations and all such documentation
will be legally enforceable in accordance with its terms.
(c) Lender shall have the right at any time or times, in
Lender's name or in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Lease assigned to
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Lender or other Collateral, by mail, telephone, facsimile transmission or
otherwise in accordance with Lender's customary practices.
(d) Borrower shall deliver to the Lease Bailee, without
endorsement and assignment language thereon, the original signed copies of all
Assigned Leases, except as Lender may otherwise agree in writing. Borrower shall
not retain possession of any copies of any Assigned Leases except for carbon
copies or photocopies thereof.
(e) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all Lessees of
Assigned Leases that the Lease with such Lessee has been assigned to Lender and
that Lender has a security interest therein and Lender may direct any or all
Lessees to make payments thereunder directly to Lender, (ii) extend the time of
payment of, compromise, settle or adjust for cash, credit, return of merchandise
or otherwise, and upon any terms or conditions, any and all lease payments
thereunder and thereby discharge or release the Lessee or any other party or
parties in any way liable for payment thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Lease Receivables
or such other obligations, but without any duty to do so, and Lender shall not
be liable for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Lender may deem necessary or desirable for the protection
of its interests.
(f) Borrower shall not transfer, pledge, assign as security,
sell or otherwise dispose of any right, title or interest in any Leases to a
third party if the Lessee under any of such Leases is a Lessee under any
Assigned Leases.
7.3 Inventory Covenants. With respect to the Inventory upon which
Lender has received a security interest: (a) Borrower shall not lease Inventory
to any Lessee under an Assigned Lease on approval, or any other basis which
entitles such Lessee to return or may obligate Borrower to accept such Inventory
prior to the scheduled termination of such Lease and (b) Borrower shall not,
without prior written notice to Lender, acquire or accept any Inventory on
consignment or approval.
7.4 Power of Attorney. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default or event, act or condition which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing (i) demand payment on delinquent Lease
Receivables of Assigned Leases or other proceeds of other Collateral, (ii)
enforce payment of Lease Receivables of Assigned Leases by legal proceedings or
otherwise, (iii) exercise all of Borrower's rights and remedies to collect any
Lease Receivables of Leases assigned to Lender or other Collateral, (iv) sell or
assign any Assigned Leases or any Lease Receivables of Assigned Leases upon such
terms, for such amount and at such time or times as the Lender deems advisable,
and subject to the terms set forth in Section 10.2(b)(vi) hereof, (v) settle,
adjust, compromise, extend or renew any Assigned Leases or Lease Receivables
owed under Assigned Leases, (vi) discharge and release any Lease Receivables
owed under Assigned Leases, (vii) prepare, file and sign Borrower's name on any
proof of claim in bankruptcy or other similar document
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against a Lessee, (viii) notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated by Lender, and
open and dispose of all mail addressed to Borrower, (ix) do all acts and things
which are necessary, in Lender's good faith determination, to fulfill Borrower's
obligations under this Agreement and the other Financing Agreements and (b) (i)
take control in any manner of any item of payment or proceeds thereof relating
to the Collateral, (ii) have access to any lockbox or postal box into which
Borrower's mail relating to the Collateral is deposited, (iii) endorse
Borrower's name upon any items of payment or proceeds relating to the Collateral
and deposit the same in the Lender's account for application to the Obligations,
(iv) endorse Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement received by Lender relating to any
Assigned Lease or any goods pertaining thereto or any other Collateral, (v) sign
Borrower's name on any verification of Assigned Leases and notices thereof to
Lessees and (c) to execute in Borrower's name and file any UCC financing
statements or amendments thereto relating to the Collateral. Borrower hereby
releases Lender and its officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in furtherance
thereof, whether of omission or commission, except as a result of Lender's own
gross negligence or wilful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.5 Right to Cure. Lender may, at its option, (a) cure any default by
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in the exercise of Lender's good faith judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Lender with respect thereto. Lender may add any amounts so expended to
the Obligations and charge Borrower's account therefor, such amounts to be
repayable by Borrower on demand. Lender shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of Borrower. Any payment made or other
action taken by Lender under this Section shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Lender, at
the cost and expense of Borrower, (a) Lender or its designee shall have complete
access to all of Borrower's premises during normal business hours and after
reasonable notice to Borrower, or at any time and without notice to Borrower if
an Event of Default exists or has occurred and is continuing, for the purposes
of inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, including, without limitation, the Records, and (b) Borrower
shall promptly furnish to Lender such copies of such books and records or
extracts therefrom as Lender may request, and (c) use during normal business
hours such of Borrower's personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Lease Receivables of Assigned
Leases and realization of other Collateral.
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SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans by Lender to
Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower is
a corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Borrower's financial condition,
results of operation or business or the rights of Lender in or to any of the
Collateral. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder
are (a) all within Borrower's corporate powers, (b) have been duly authorized,
(c) are not in contravention of law or the terms of Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower is a party or by which Borrower or
its property are bound and (d) will not result in the creation or imposition of,
or require or give rise to any obligation to grant any lien, security interest,
charge or other encumbrance upon any property of Borrower. This Agreement and
the other Financing Agreements constitute legal, valid and binding obligations
of Borrower enforceable in accordance with their respective terms. Except as set
forth on the Information Certificate, Borrower does not have any Subsidiaries
other than bankruptcy remote Subsidiaries formed or to be formed in connection
with a Securitization.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of Borrower is as set forth on the
signature page of this Agreement and in the Information Certificate. Borrower
has not, during the past five years, been known by or used any other corporate
or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in the Information Certificate.
(b) Borrower is an organization of the type and organized in
the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
Borrower or accurately states that Borrower has none and accurately sets forth
the federal employer identification number of Borrower.
(c) The chief executive office and mailing address of Borrower
and Borrower's Records concerning Accounts are located only at the address
identified as such in Schedule 8.2 to the Information Certificate and its only
other places of business and the only other locations of Collateral, if any, are
the addresses set forth in Schedule 8.2 to the Information Certificate, subject
to the right of
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Borrower to establish new locations in accordance with Section 9.2 below. The
Information Certificate correctly identifies any of such locations which are not
owned by Borrower and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Lender have been prepared in accordance with GAAP and fairly present
the financial condition and the results of operation of Borrower as at the dates
and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Borrower to Lender prior to the date of this
Agreement, there has been no material adverse change in the assets, liabilities,
properties and condition, financial or otherwise, of Borrower, since the date of
the most recent audited financial statements furnished by Borrower to Lender
prior to the date of this Agreement.
8.4 Chief Executive Office; Collateral Locations. The chief executive
office of Borrower and Borrower's Records are located only at the address set
forth on the signature page below and its only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of Borrower to establish new
locations in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by Borrower and
sets forth the owners and/or operators.
8.5 Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.5
hereto and the other liens permitted under Section 9.8 hereof. Borrower has good
and marketable title to all of its properties and assets subject to no liens,
mortgages, pledges, security interests, encumbrances or charges of any kind,
except those granted to Lender and such others as are specifically listed on
Schedule 8.5 hereto or permitted under Section 9.8 hereof.
8.6 Tax Returns. Borrower has filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by it. All information in such tax returns, reports and declarations is complete
and accurate in all material respects. Borrower has paid or caused to be paid
(a) all taxes due and payable or claimed to be due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books,
and (b) all sales, use and similar taxes due and payable with respect to
Assigned Leases. Adequate provision has been made for the payment of all accrued
and unpaid Federal, State, county, local, foreign and other taxes whether or not
yet due and payable and whether or not disputed. Borrower has collected and
remitted when due to the appropriate tax authority all sales and/or use taxes
applicable to its business required to be collected under the laws of the United
States and each possession or territory thereof, and each State or political
subdivision thereof, including any State in which Borrower owns any Inventory or
owns or leases any other property.
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8.7 Litigation. Except as set forth on the Information Certificate,
there is no present investigation by any Governmental Authority pending, or to
the best of Borrower's knowledge threatened, against or affecting Borrower, its
assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of Borrower's knowledge threatened, against
Borrower or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against Borrower
would result in any material adverse change in the assets, business or prospects
of Borrower or would impair the ability of Borrower to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or of Lender to enforce any Obligations or realize upon any Collateral.
8.8 Compliance with Other Agreements and Applicable Laws. Borrower is
not in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound where such default or violation would have a material adverse effect on
the Collateral or the ability of Borrower to perform its obligations hereunder
or under any of the other Financing Agreements, and Borrower is in compliance in
all material respects with all applicable provisions of laws, rules,
regulations, licenses, permits, approvals and orders of any foreign, Federal,
State or local Governmental Authority.
8.9 Assigned Leases. Each of the Assigned Leases (a) has been assigned
by Borrower to Lender either hereunder or in a separate Assignment and are,
together with Inventory leased thereunder, subject to the first priority, valid
and perfected security interest of Lender and such Assignment does not conflict
with or constitute a breach of any agreement of Borrower with any other Person;
(b) is valid, binding and enforceable upon Borrower and the Lessee thereunder in
accordance with its terms and represents valid obligations thereunder of such
Lessee; (c) is in full force and effect and, together with the Inventory leased
thereunder, is owned by Borrower free and clear of any liens or security
interests except in favor of Lender; (d) at the time of the Assignment to
Lender, is not in default; (e) has been executed by the Lessee obligated on such
Lease or, if any, the assignee thereof to Borrower, which execution has been
confirmed by Borrower and the Lease Receivables owed thereunder are payable
monthly (in equal monthly installments) and are unconditionally owed by the
Lessee thereunder to Borrower; (f) is with a Lessee obligated on such Lease
whose credit worthiness has been reviewed and approved by Borrower in accordance
with its customary business practices; (g) is described either in Schedule
5.1(a), Schedule 5.1(b) or in the Schedule to each separate Assignment now or
hereafter executed and delivered by Borrower to Lender and the information set
forth therein is true and correct; (h) contains an irrevocable consent by the
Lessee to Borrower for the initiation of an automatic monthly automated
clearinghouse debit from such Lessee's bank account for each monthly payment
owed by such Lessee to Borrower under such Lease (including the rent, the
insurance waiver, the applicable sales tax and any late charges); (i) the only
original executed copy of each such Lease has been delivered by Borrower to the
Lease Bailee pursuant to the Lease Bailment Agreement and is at all times in the
possession of the Lease Bailee pursuant to the Lease Bailment Agreement and
Borrower has no other original executed copy thereof in its possession; (j) is
described on a schedule to a UCC-1 financing statement or UCC-3 amendment
executed by Borrower, as debtor, and delivered to Lender; (k) is not with a
Lessee whose chief executive office is located outside the Xxxxxx
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Xxxxxx xx Xxxxxxx; (l) involves a lease of Inventory consisting of only point of
service credit card terminals and equipment ancillary to such terminals but not
virtual equipment software; (m) is for a fixed term not in excess of forty-eight
(48) months, except that, up to five (5%) percent of the Assigned Leases in any
Borrowing Lease Pool may be for fixed terms not in excess of sixty (60) months,
(n) the lease factor rate for each lessee is acceptable to Lender, (o) the
lessee is not an employee or affiliate of Borrower, (p) if such Assigned Lease
is a Borrowing Base Lease, has been executed by Borrower and such Lessee after
July 1, 2001, and (q) shall not be with a Lessee in respect of which, Borrower
has entered into other Leases, which other Leases have been transferred,
pledged, assigned as security, sold or otherwise disposed of to a third party
pursuant to a Securitization, Approved Financing Transaction or otherwise.
8.10 Employee Benefits.
(a) Each Plan is in compliance with the applicable provisions
of ERISA, the Code and other federal or state law. Each Plan which is intended
to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best of
Borrower's knowledge, nothing has occurred which would cause the loss of such
qualification. Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or to the best of Borrower's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) are not less than such Plan's liabilities under Section 4001(a)(16) of
ERISA; (iii) Borrower and its ERISA Affiliates have not incurred and do not
reasonably expect to incur, any liability under Title IV of ERISA with respect
to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) Borrower and its ERISA Affiliates have not incurred and do not
reasonably expect to incur, any liability (and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) Borrower and its ERISA Affiliates have not engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.11 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrower maintained at any bank or
other financial institution are set forth on Schedule 8.11 hereto, subject to
the right of Borrower to establish new accounts in accordance with Section 9.13
below.
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8.12 Intellectual Property. Borrower owns or licenses or otherwise has
the right to use all Intellectual Property necessary for the operation of its
business as presently conducted or proposed to be conducted. As of the date
hereof, Borrower does not have any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office or any
similar office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 hereto and has not granted any licenses with respect thereto other
than as set forth in Schedule 8.12 hereto. No event has occurred which permits
or would permit after notice or passage of time or both, the revocation,
suspension or termination of such rights. To the best of Borrower's knowledge,
no slogan or other advertising device, product, process, method, substance or
other Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by Borrower infringes any
patent, trademark, servicemark, tradename, copyright, license or other
Intellectual Property owned by any other Person presently and no claim or
litigation is pending or threatened against or affecting Borrower contesting its
right to sell or use any such Intellectual Property. Schedule 8.12 sets forth
all of the agreements or other arrangements of Borrower pursuant to which
Borrower has a license or other right to use any trademarks, logos, designs,
representations or other Intellectual Property owned by another person as in
effect on the date hereof and the dates of the expiration of such agreements or
other arrangements of Borrower as in effect on the date hereof (collectively,
together with such agreements or other arrangements as may be entered into by
Borrower after the date hereof, collectively, the "License Agreements" and
individually, a "License Agreement"). No trademark, servicemark or other
Intellectual Property at any time used by Borrower which is owned by another
person, or owned by Borrower subject to any security interest, lien, collateral
assignment, pledge or other encumbrance in favor of any person other than
Lender, is affixed to any Eligible Inventory, except to the extent permitted
under the term of the license agreements listed on Schedule 8.12 hereto.
8.13 Capitalization.
(a) The issued and outstanding shares of Capital Stock of
Borrower are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Lender.
(b) Borrower is solvent and will continue to be solvent after
the creation of the Obligations, the security interests of Lender and the other
transaction contemplated hereunder, is able to pay its debts as they mature and
has (and has reason to believe it will continue to have) sufficient capital (and
not unreasonably small capital) to carry on its business and all businesses in
which it is about to engage. The assets and properties of Borrower at a fair
valuation and at their present salable value are, and will be, greater than the
Indebtedness of Borrower, and including subordinated and contingent liabilities
computed at the amount which, to the best of Borrower's knowledge, represents an
amount which can reasonably be expected to become an actual or matured
liability.
8.14 Labor Disputes.
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(a) There are no collective bargaining or similar agreements
between or applicable to Borrower and any union, labor organization or other
bargaining agent in respect of the employees of Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice
complaint pending against Borrower or, to the best of Borrower's knowledge,
threatened against it, before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
Borrower or, to best of Borrower's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Borrower or, to the best of Borrower's knowledge, threatened against Borrower.
8.15 Corporate Name; Prior Transactions. Borrower has not, during the
past five years, been known by or used by any other corporate or fictitious name
or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person, or acquired any of its property or assets out
of the ordinary course of business, except as set forth in the Information
Certificate.
8.16 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of Borrower
permitted hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on Borrower or any of its Subsidiaries which prohibit or
otherwise restrict (a) the transfer of cash or other assets (i) between Borrower
and any of its Subsidiaries or (ii) between any Subsidiaries of Borrower or (b)
the ability of Borrower or any of its Subsidiaries to incur Indebtedness or
grant security interests to Lender in the Collateral.
8.17 Material Contracts. Schedule 8.17 hereto sets forth all Material
Contracts to which Borrower is a party or is bound as of the date hereof.
Borrower has delivered true, correct and complete copies of such Material
Contracts to Lender on or before the date hereof. Borrower is not in breach of
or in default under any Material Contract and has not received any notice of the
intention of any other party thereto to terminate any Material Contract.
8.18 Payable Practices. Borrower has not made any material change in
the historical accounts payable practices from those in effect immediately prior
to the date hereof.
8.19 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Lender in connection with
this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate, the Bi-Weekly Servicer Report, each Assignment
and each Schedule annexed hereto and thereto is true and correct in all respects
on the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a material adverse affect on the business, assets or prospects of
Borrower, which has not been fully and accurately disclosed to Lender in
writing.
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8.20 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing
hereunder and shall be conclusively presumed to have been relied on by Lender
regardless of any investigation made or information possessed by Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now or
hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Borrower shall at all times preserve, renew and keep in
full, force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all permits, licenses,
trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be conducted.
(b) Borrower shall not change its name unless each of the
following conditions is satisfied: (i) Lender shall have received not less than
thirty (30) days prior written notice from Borrower of such proposed change in
its corporate name, which notice shall accurately set forth the new name; and
(ii) Lender shall have received a copy of the amendment to the Certificate of
Incorporation of Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of
Borrower as soon as it is available.
(c) Borrower shall not change its chief executive office or
its mailing address or organizational identification number (or if it does not
have one, shall not acquire one) unless Lender shall have received not less than
thirty (30) days' prior written notice from Borrower of such proposed change,
which notice shall set forth such information with respect thereto as Lender may
require and Lender shall have received such agreements as Lender may reasonably
require in connection therewith. Borrower shall not change its type of
organization, jurisdiction of organization or other legal structure.
9.2 New Collateral Locations. Borrower may only open any new location
within the continental United States provided Borrower (a) gives Lender thirty
(30) days prior written notice from Borrower of the intended opening of any such
new location and (b) executes and delivers, or causes to be executed and
delivered, to Lender such agreements, documents, and instruments as Lender may
deem necessary or desirable to protect its interests in the Collateral at such
location.
9.3 Compliance with Laws, Regulations, Etc. Borrower shall, and shall
cause any Subsidiary to, at all times, comply in all material respects with all
laws, rules, regulations, licenses, permits, approvals and orders applicable to
it and duly observe all requirements of any foreign, Federal, State or local
Governmental Authority, including ERISA, the Code, the Occupational Safety and
Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules,
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regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws.
9.4 Payment of Taxes and Claims. Borrower shall, and shall cause any
Subsidiary to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, including,
without limitation, sales, use and similar taxes, relating to the Assigned
Leases and the payments thereunder, except for taxes the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Subsidiary, as the case may be, and with respect
to which adequate reserves have been set aside on its books. Borrower shall be
liable for any tax or penalties imposed on Lender as a result of the financing
arrangements provided for herein and Borrower agrees to indemnify and hold
Lender harmless with respect to the foregoing, and to repay to Lender on demand
the amount thereof, and until paid by Borrower such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrower to pay any income or franchise taxes attributable
to the income of Lender from any amounts charged or paid hereunder to Lender.
The foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
9.5 Insurance. Borrower shall, and shall cause any Subsidiary to, at
all times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be satisfactory to Lender
as to form, amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such insurance, and,
if Borrower fails to do so, Lender is authorized, but not required, to obtain
such insurance at the expense of Borrower. All policies shall provide for at
least thirty (30) days prior written notice to Lender of any cancellation or
reduction of coverage and that Lender may act as attorney for Borrower in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Borrower
shall cause Lender to be named as a loss payee and an additional insured (but
without any liability for any premiums) under such insurance policies and
Borrower shall obtain non-contributory lender's loss payable endorsements to all
insurance policies in form and substance satisfactory to Lender. Such lender's
loss payable endorsements shall specify that the proceeds of such insurance
shall be payable to Lender as its interests may appear and further specify that
Lender shall be paid regardless of any act or omission by Borrower or any of its
Affiliates. At its option, Lender may apply any insurance proceeds received by
Lender at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such
manner as Lender may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall, and shall cause any Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
Borrower and its Subsidiaries in accordance with GAAP. Borrower
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shall promptly furnish to Lender all such financial and other information as
Lender shall reasonably request relating to the Collateral and the assets,
business and operations of Borrower, and to notify the auditors and accountants
of Borrower that Lender is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrower shall furnish or cause to be
furnished to Lender, the following: (i) within thirty (30) days after the end of
each fiscal month, monthly unaudited consolidated financial statements of
Borrower and its Subsidiaries (including balance sheets, statements of income
and loss, statements of cash flow, and statements of shareholders' equity), all
in reasonable detail, fairly presenting the financial position and the results
of the operations of Borrower and its Subsidiaries as of the end of and through
such fiscal month, certified to be correct by the chief financial officer of
Borrower, subject to normal year-end adjustments and accompanied by a compliance
certificate substantially in the form of Exhibit B hereto, and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements of Guarantor, Borrower and Borrower's Subsidiaries and
audited consolidating financial statements of Guarantor (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Guarantor, Borrower and Borrower's Subsidiaries as of the end
of and for such fiscal year, together with the unqualified opinion of
independent certified public accountants, which accountants shall be an
independent accounting firm selected by Borrower and reasonably acceptable to
Lender, that such financial statements have been prepared in accordance with
GAAP, and present fairly the results of operations and financial condition of
Borrower and its Subsidiaries as of the end of and for the fiscal year then
ended.
(b) Borrower shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in Borrower's
business, properties, assets, goodwill or condition, financial or otherwise,
(ii) any Material Contract of Borrower being terminated or amended or any new
Material Contract entered into (in which event Borrower shall provide Lender
with a copy of such Material Contract), (iii) any order, judgment or decree in
excess of $250,000 shall have been entered against Borrower or any of its
properties or assets, (iv) any notification of violation of laws or regulations
received by Borrower, (v) any ERISA Event, and (vi) the occurrence of any Event
of Default or act, condition or event which, with notice or the passage of time
or giving of notice or both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports which
Guarantor sends to its stockholders generally and copies of all reports and
registration statements which Guarantor files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other Government Authority or to any participant or
assignee or prospective participant or assignee.
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Borrower hereby irrevocably authorizes and directs all accountants or auditors
to deliver to Lender, at Borrower's expense, copies of the financial statements
of Borrower and any reports or management letters prepared by such accountants
or auditors on behalf of Borrower and to disclose to Lender such information as
they may have regarding the business of Borrower. Any documents, schedules,
invoices or other papers delivered to Lender may be destroyed or otherwise
disposed of by Lender one (1) year after the same are delivered to Lender,
except as otherwise designated by Borrower to Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly,
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it; or
(b) sell, assign, lease, transfer, abandon or otherwise
dispose of any Capital Stock or Indebtedness related to Assigned Leases to any
other Person or any of its assets to any other Person, except for (i)
dispositions of Leases (other than Assigned Leases) in connection with a
Securitization, (ii) non-recourse sales of Leases (other than Assigned Leases)
to a third party which is not an Affiliate of the Borrower, (iii) assignments or
transfers of Leases (other than Assigned Leases) in connection with an Approved
Financing Transaction, (iv) sales of Inventory in the ordinary course of
business, and (v) the issuance and sale by Borrower of Capital Stock of Borrower
after the date hereof; provided, that, (A) Lender shall have received not less
than ten (10) Business Days prior written notice of such issuance and sale by
Borrower, which notice shall specify the parties to whom such shares are to be
sold, the terms of such sale, the total amount which it is anticipated will be
realized from the issuance and sale of such stock and the net cash proceeds
which it is anticipated will be received by Borrower from such sale, (B)
Borrower shall not be required to pay any cash dividends or repurchase or redeem
such Capital Stock or make any other payments in respect thereof, (C) the terms
of such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the right of
Borrower to request or receive Loans or the right of Borrower to amend or modify
any of the terms and conditions of this Agreement or any of the other Financing
Agreements or otherwise in any way relate to or affect the arrangements of
Borrower with Lender or are more restrictive or burdensome to Borrower than the
terms of any Capital Stock in effect on the date hereof, and (D) as of the date
of such issuance and sale and after giving effect thereto, no Event of Default
or act, condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred; or
(c) form any Subsidiaries other than bankruptcy remote
Subsidiaries formed in connection with a Securitization;
(d) wind up, liquidate or dissolve; or
(e) agree to do any of the foregoing.
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9.8 Encumbrances. Borrower shall not, and shall permit any Subsidiary
to, create, incur, assume, suffer or permit to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
the Collateral, except: (a) the security interests and liens of Lender; (b)
liens securing the payment of taxes, either not yet overdue or the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower or such Subsidiary, as the case may be and
with respect to which adequate reserves have been set aside on its books; (c)
non-consensual statutory liens (other than liens securing the payment of taxes)
arising in the ordinary course of Borrower's or such Subsidiary's business to
the extent: (i) such liens secure Indebtedness which is not overdue or (ii) such
liens secure Indebtedness relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at the sole risk of
the insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower or such Subsidiary, in each case
prior to the commencement of foreclosure or other similar proceedings and with
respect to which adequate reserves have been set aside on its books.
9.9 Indebtedness. Borrower shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, suffer or permit to exist, any Indebtedness or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly) the
performance, dividends or other obligations of any Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases)
arising after the date hereof to the extent secured by purchase money security
interests in Equipment (including Capital Leases) and purchase money mortgages
on real estate not to exceed $1,000,000 in the aggregate at any time outstanding
so long as such security interests and mortgages do not apply to any property of
Borrower other than the Equipment or real estate so acquired, and the
Indebtedness secured thereby does not exceed the cost of the Equipment or real
estate so acquired, as the case may be;
(c) guarantees by any Subsidiaries of Borrower of the
Obligations in favor of Lender;
(d) Indebtedness of Borrower under interest swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
exchange agreements and similar contractual agreements entered into for the
purpose of protecting a Person against fluctuations in interest rates; provided,
that, such arrangements are with banks or other financial institutions that have
combined capital and surplus and undivided profits of not less than $250,000,000
and are not for speculative purposes and such Indebtedness shall be unsecured;
(e) unsecured Indebtedness of Borrower owing to Guarantor,
provided, that, (i) such Indebtedness is subject and subordinate in right of
payment to the right of Lender to receive the prior indefeasible payment and
satisfaction in full payment of all of the Obligations, (ii) Borrower shall not,
directly or indirectly, make, or be required to make, any payments in respect of
such Indebtedness, including, but not limited to, any prepayments or other
non-mandatory payments, except as Lender may otherwise agree in writing, (iii)
Borrower shall not, directly or indirectly, (A) amend, modify, alter or
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change the terms of such Indebtedness or any agreement, document or instrument
related thereto, except, that, Borrower may, after prior written notice to
Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness (except pursuant to regularly scheduled payments permitted herein),
or set aside or otherwise deposit or invest any sums for such purpose, and (iv)
Borrower shall furnish to Lender all notices or demands in connection with such
Indebtedness either received by Borrower or on its behalf promptly after the
receipt thereof, or sent by Borrower or on its behalf concurrently with the
sending thereof, as the case may be; and
(f) Indebtedness owing to Persons other than Affiliates of
Borrower in respect of other lease financing arrangements whereby Leases are
included as collateral, provided that (i) such Indebtedness is incurred in
connection with a Securitization, sale of Leases or an Approved Financing
Transaction, and (ii) on the date of incurring such Indebtedness, (A) Lender
shall have received not less than ten (10) Business Days' prior written notice
of the intention to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Lender, the amount of such Indebtedness and
such other information with respect thereto as Lender may reasonably request,
(B) promptly upon Lender's request, Lender shall have received true, correct and
complete copies of all agreements, documents and instruments evidencing or
otherwise related to such Indebtedness, as duly executed and delivered by the
parties thereto, (C) no Event of Default or act, condition or event which with
notice or passage of time would constitute an Event of Default shall exist or
have occurred and be continuing; (D) such arrangements and agreements do not
provide for a lien on any Collateral, and (E) if Lender requires, such new
lender shall execute a Waiver, Disclaimer and Release Agreement (a form of which
is annexed hereto as Exhibit D) in form and substance satisfactory to Lender.
9.10 Loans, Investments, Guarantees, Etc. Borrower shall not, and shall
not permit any Subsidiary to, directly or indirectly, make, or suffer or permit
to exist, any loans or advance money or property to any person, or any
investment in (by capital contribution, dividend or otherwise) or purchase or
repurchase the Capital Stock or Indebtedness or all or a substantial part of the
assets or property of any person, or form or acquire any Subsidiaries other than
bankruptcy remote Subsidiaries formed in connection with a Securitization, or
agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit
in the ordinary course of business;
(b) investments in cash or Cash Equivalents;
(c) the existing equity investments of Borrower as of the date
hereof in its Subsidiaries, provided, that, Borrower shall have no obligation to
make any other investment in, or loans to, or other payments in respect of, any
such Subsidiaries;
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(d) stock or obligations issued to Borrower by any Person (or
the representative of such Person) in respect of Indebtedness of such Person
owing to Borrower in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Lender, upon Lender's
request, together with such stock power, assignment or endorsement by Borrower
as Lender may request;
(e) obligations or account debtors to Borrower arising from
Accounts which are past due evidenced by a promissory note made by such account
debtor payable to Borrower; provided, that, promptly upon the receipt of the
original of any such promissory note by Borrower, such promissory note shall be
endorsed to the order of Lender by Borrower and promptly delivered to Lender as
so endorsed; and
(f) the loans and advances set forth on Schedule 9.10(f)
hereto; provided, that, as to such loans and advances, (i) Borrower shall not,
directly or indirectly, amend, modify, alter or change the terms of such loans
and advances or any agreement, document or instrument related thereto and (ii)
Borrower shall furnish to Lender all notices or demands in connection with such
loans and advances either received by Borrower or on its behalf, promptly after
the receipt thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be.
9.11 Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
capital stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of capital stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or make any
other distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing.
9.12 Transactions with Affiliates. Borrower shall not, directly or
indirectly, (a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director, agent or other person
affiliated with Borrower, except (i) in the ordinary course of and pursuant to
the reasonable requirements of Borrower's business and upon fair and reasonable
terms no less favorable to the Borrower than Borrower would obtain in a
comparable arm's-length transaction with an unaffiliated person or (ii) in an
arms-length transaction with an Affiliate in connection with a Securitization,
or (b) make any payments of management, consulting or other fees for management
or similar services, or of any Indebtedness owing to any officer, employee,
shareholder, director or other Affiliate of Borrower except reasonable
compensation to officers, employees and directors for services rendered to
Borrower in the ordinary course of business.
9.13 Additional Bank Accounts. Borrower shall not, directly or
indirectly, open, establish or maintain any deposit account, investment account
or any other account with any bank or other financial institution, other than
the Collection Accounts and the accounts set forth in Schedule 8.11 hereto,
except: (a) new or additional Collection Accounts and other new or additional
accounts which do not,
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and will not, contain any Collateral or proceeds thereof, and (b) as to any
accounts used by Borrower to make payments of payroll, taxes or other
obligations to third parties, after prior written notice to Lender.
9.14 Compliance with ERISA. Borrower shall and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any liability to the Pension Benefit Guaranty Corporation; (d) not
allow or suffer to exist any prohibited transaction involving any of such Plans
or any trust created thereunder which would subject Borrower or such ERISA
Affiliate to a tax or penalty or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA; (e) make all required
contributions to any Plan which it is obligated to pay under Section 302 of
ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or
suffer to exist any accumulated funding deficiency, whether or not waived, with
respect to any such Plan; or (g) not allow or suffer to exist any occurrence of
a reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such Plan
that is a single employer plan, which termination could result in any liability
to the Pension Benefit Guaranty Corporation.
9.15 End of Fiscal Years: Fiscal Quarters. Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
fiscal years to end on December 31 of each year and (b) fiscal quarters to end
on March 31, June 30, September 30 and December 31 of each year.
9.16 Change in Business. Borrower shall not engage in any business
other than the business of Borrower on the date hereof and any business
reasonably related, ancillary or complimentary to the business in which Borrower
is engaged on the date hereof.
9.17 Limitation of Restrictions Affecting Subsidiaries. Borrower shall
not, directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower to (a) pay dividends or make other distributions or pay
any Indebtedness owed to Borrower or any Subsidiary of Borrower; (b) make loans
or advances to Borrower or any Subsidiary of Borrower, (c) transfer any of its
properties or assets to Borrower or any Subsidiary of Borrower; or (d) create,
incur, assume or suffer to exist any lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of Borrower or any of its Subsidiaries, (iv) customary
restrictions on dispositions of real property interests found in reciprocal
easement agreements of Borrower or its Subsidiary, (v) any agreement relating to
permitted Indebtedness incurred by a Subsidiary of Borrower prior to the date on
which such Subsidiary was acquired by Borrower and outstanding on such
acquisition date, (vi) a Securitization, and (vii) the extension or continuation
of contractual obligations in existence on the date hereof; provided, that, any
such encumbrances or restrictions contained in such extension or continuation
are no less favorable to
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Lender than those encumbrances and restrictions under or pursuant to the
contractual obligations so extended or continued.
9.18 Costs and Expenses. Borrower shall pay to Lender on demand all
reasonable costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
UCC financing statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable); (b) costs and
expenses and fees for insurance premiums, environmental audits, surveys,
assessments, engineering reports and inspections, appraisal fees and search
fees, costs and expenses of remitting loan proceeds, collecting checks and other
items of payment, and establishing and maintaining the Collection Accounts,
together with Lender's customary charges and fees with respect thereto; (c)
costs and expenses of preserving and protecting the Collateral; (d) costs and
expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Lender, selling or
otherwise realizing upon the Collateral, and otherwise enforcing the provisions
of this Agreement and the other Financing Agreements or defending any claims
made or threatened against Lender arising out of the transactions contemplated
hereby and thereby (including preparations for and consultations concerning any
such matters); (e) all out-of-pocket expenses and costs heretofore and from time
to time hereafter incurred by Lender during the course of periodic field
examinations of the Collateral and Borrower's operations, plus a per diem charge
at the rate of $750 per person per day for Lender's examiners in the field and
office; and (f) the fees and disbursements of counsel (including legal
assistants) to Lender in connection with any of the foregoing.
9.19 Further Assurances. At the request of Lender at any time and from
time to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Lender may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Loans
contained herein are satisfied. In the event of such request by Lender, Lender
may, at its option, cease to make any further Loans until Lender has received
such certificate and, in addition, Lender has determined in good faith that such
conditions are satisfied. Where permitted by law, Borrower hereby authorizes
Lender to execute and file one or more UCC financing statements signed only by
Lender.
9.20 Software License Agreement. Borrower shall not enter into any
agreement with any Person with respect to software collection support services
(each a "Software Provider") unless prior to or simultaneously with Borrower
entering into such agreement, Lender shall have received a duly authorized and
executed Software License Agreement by such Software Provider.
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9.21 Adjusted Tangible Net Worth. Borrower shall, at all times,
maintain Adjusted Tangible Net Worth of not less than $26,000,000.
9.22 Working Capital. Borrower shall, at all times, maintain Working
Capital of not less than $4,750,000.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) Borrower fails to pay when due any of the Obligations or
fails to perform any of the terms, covenants, conditions or provisions contained
in this Agreement or any of the other Financing Agreements;
(b) any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $250,000 in any one case or in excess of
$500,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against Borrower or
any Obligor or any of their assets;
(e) any Obligor (being a natural person or a general partner
of an Obligor which is a partnership) dies or Borrower or any Obligor, which is
a partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) Borrower or any Obligor becomes insolvent (however defined
or evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt,
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dissolution or liquidation law or statute of any jurisdiction now or hereafter
in effect (whether at law or in equity) is filed against Borrower or any Obligor
or all or any part of its properties and such petition or application is not
dismissed within thirty (30) days after the date of its filing or Borrower or
any Obligor shall file any answer admitting or not contesting such petition or
application or indicates its consent to, acquiescence in or approval of, any
such action or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property; or
(i) any default by Borrower or any Obligor under any
agreement, document or instrument relating to any Indebtedness for borrowed
money owing to any person other than Lender, or any capitalized lease
obligations, contingent Indebtedness in connection with any guarantee, letter of
credit, indemnity or similar type of instrument in favor of any person other
than Lender, in any case in an amount in excess of $250,000, which default
continues for more than the applicable cure period, if any, with respect
thereto, or any default by Borrower or any Obligor under any material contract,
lease, license or other obligation to any person other than Lender, which
default continues for more than the applicable cure period, if any, with respect
thereto;
(j) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of Borrower in an aggregate amount
in excess of $50,000;
(k) any Change of Control;
(l) the indictment by any Governmental Authority, or as Lender
may reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of Borrower of which Borrower or Lender receives notice,
in either case, as to which there is a reasonable possibility of an adverse
determination, in the good faith determination of Lender, under any criminal
statute, or commencement or threatened commencement of criminal or civil
proceedings against Borrower, pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of (i) any of the
Collateral or (ii) any other property of Borrower which is necessary or material
to the conduct of its business;
(m) there shall be a material adverse change in the business,
assets or prospects of Borrower or any Obligor after the date hereof;
(n) any bank at which any deposit account of Borrower is
maintained and into which proceeds from any of the Collateral is deposited shall
fail to comply with any of the terms of any Deposit Account Control Agreement to
which such bank is a party or any securities intermediary, commodity
intermediary or other financial institution at any time in custody, control or
possession of any investment property of Borrower shall fail to comply with any
of the terms of any Investment Property Control Agreement to which such person
is a party;
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(o) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Lender) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);
(p) there shall be an event of default under a Securitization
or Approved Financing Transaction;
(q) there shall be an event of default under any of the other
Financing Agreements; or
(r) there shall be an event of default under any of the
Foothill Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the UCC and other applicable law, all
of which rights and remedies may be exercised without notice to or consent by
Borrower or any Obligor, except as such notice or consent is expressly provided
for hereunder or required by applicable law. All rights, remedies and powers
granted to Lender hereunder, under any of the other Financing Agreements, the
UCC or other applicable law, are cumulative, not exclusive and enforceable, in
Lender's discretion, alternatively, successively, or concurrently on any one or
more occasions, and shall include, without limitation, the right to apply to a
court of equity for an injunction to restrain a breach or threatened breach by
Borrower of this Agreement or any of the other Financing Agreements. Lender may,
at any time or times, proceed directly against Borrower or any Obligor to
collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting
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the sale, foreclosure or other disposition thereof or for any other purpose,
(vi) sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including entering into contracts with respect thereto, public or
private sales at any exchange, broker's board, at any office of Lender or
elsewhere) at such prices or terms as Lender may deem reasonable, for cash, upon
credit or for future delivery, with the Lender having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrower, which
right or equity of redemption is hereby expressly waived and released by
Borrower and/or (vii) terminate this Agreement. If any of the Collateral is sold
or leased by Lender upon credit terms or for future delivery, the Obligations
shall not be reduced as a result thereof until payment therefor is finally
collected by Lender. If notice of disposition of Collateral is required by law,
ten (10) days prior notice by Lender to Borrower designating the time and place
of any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrower waives any other notice. In the event Lender institutes an
action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrower waives the posting of any bond which might
otherwise be required.
(c) For the purpose of enabling Lender to exercise the rights
and remedies hereunder, Borrower hereby grants to Lender, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to Borrower) to use, assign, license or
sublicense any of the trademarks, service-marks, trade names, business names,
trade styles, designs, logos and other source of business identifiers and other
Intellectual Property and general intangibles now owned or hereafter acquired by
Borrower, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
(d) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, enforce Borrower's rights against any
account debtor, secondary obligor or other obligor in respect of any of the
Accounts or other Receivables. Without limiting the generality of the foregoing,
Lender may at such time or times (i) notify any or all account debtors,
secondary obligors or other obligors in respect thereof that the Receivables
have been assigned to Lender and that Lender has a security interest therein and
Lender may direct any or all accounts debtors, secondary obligors and other
obligors to make payment of Receivables directly to Lender, (ii) extend the time
of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all
Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Lender shall not be liable for its failure to
collect or enforce the payment thereof nor for the negligence of its agents or
attorneys with respect thereto and (iv) take whatever other action Lender may
deem necessary or desirable for the protection of its interests. At any time
that an Event of Default exists or has occurred and is continuing, at Lender's
request, all invoices and statements sent to any account debtor shall state that
the Accounts and such other obligations have been assigned to Lender and are
payable directly and only to Lender and Borrower shall deliver to Lender such
originals of documents evidencing the sale and delivery of
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goods or the performance of services giving rise to any Accounts as Lender may
require. In the event any account debtor returns Inventory when an Event of
Default exists or has occurred and is continuing, Borrower shall, upon Lender's
request, hold the returned Inventory in trust for Lender, segregate all returned
Inventory from all of its other property, dispose of the returned Inventory
solely according to Lender's instructions, and not issue any credits, discounts
or allowances with respect thereto without Lender's prior written consent.
(e) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(f) To the extent that applicable law imposes duties on Lender
to exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), Borrower acknowledges and agrees that it is not
commercially unreasonable for Agent and Lenders (i) to fail to incur expenses
reasonably deemed significant by Agent or any Lender to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as Borrower for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Lender against risks
of loss, collection or disposition of Collateral or to provide to Lender a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by Lender, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist
Lender in the collection or disposition of any of the Collateral. Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Borrower would not be commercially
unreasonable in Lender's exercise of remedies against the Collateral and that
other actions or omissions by Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation of the foregoing, nothing contained in this Section shall be
construed to grant any rights to Borrower or to
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impose any duties on Lender that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this Section.
(g) Without limiting the foregoing, upon the occurrence of an
Event of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or reduce the lending formulas or amounts of Loans available
to Borrower and/or (ii) terminate any provision of this Agreement providing for
any future Loans to be made by Lender to Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New York for the
County of New York and the United States District Court for the Southern
District of New York, whichever Lender may elect and waive any objection based
on venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing Agreements or
the transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Lender shall have the right to bring any
action or proceeding against Borrower or its property in the courts of any other
jurisdiction which Lender deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Borrower or its
property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's option, by service upon Borrower in any other manner provided under
the rules of any such courts. Within thirty (30) days after such service,
Borrower shall appear in answer to such process, failing which Borrower shall be
deemed in default and judgment may be entered by Lender against Borrower for the
amount of the claim and other relief requested.
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(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND LENDER
EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR
LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower (whether
in tort, contract, equity or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations or the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Lender may elect to give shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender, and as to amendments signed by an authorized officer of the Borrower.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
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11.4 Waiver of Counterclaims. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Borrower shall indemnify and hold Lender, and its
directors, agents, employees and counsel (each an "Indemnified Party"), harmless
from and against any and all losses, claims, damages, liabilities, costs or
expenses imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
reasonable fees and expenses of counsel. Borrower will not, however, be
responsible to any Indemnified Party hereunder for any claim to the extent that
a court having jurisdiction shall have determined by a final non-appealable
judgment that any such claim shall have arisen out of or resulted from actions
taken or omitted to be taken by such Indemnified Party which constitute gross
negligence or willful misconduct of such Indemnified Xxxxx.Xx the extent that
the undertaking to indemnify, pay and hold harmless set forth in this Section
may be unenforceable because it violates any law or public policy, Borrower
shall pay the maximum portion which it is permitted to pay under applicable law
to Lender in satisfaction of indemnified matters under this Section. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Lender or Borrower may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; and in addition,
Borrower may, at any time, upon ten (10) Business Days' prior written notice to
Lender, terminate this Agreement; provided, that, in each case, this Agreement
and all other Financing Agreements must be terminated simultaneously. Lender may
terminate this Agreement at any time upon and after the occurrence of an Event
of Default. Upon the effective date of termination or non-renewal of this
Agreement, Borrower shall pay to Lender, in full, all outstanding and unpaid
Obligations and shall furnish cash collateral to Lender in such amounts as
Lender determines are reasonably necessary to secure Lender from loss, cost,
damage or expense, including attorneys' fees and legal expenses, in connection
with any contingent Obligations and checks or other payments provisionally
credited to the Obligations and/or as to which Lender has not yet received final
and indefeasible payment. Such
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payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to such bank account of Lender, as Lender may, in
its discretion, designate in writing to Borrower for such purpose. Interest
shall be due until and including the next business day, if the amounts so paid
by Borrower to the bank account designated by Lender are received in such bank
account later than 12:00 noon, New York time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the rights and
remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, Borrower waives any rights
which it may have under the UCC to demand the filing of termination statements
with respect to the Collateral, and Lender shall not be required to send such
termination statements to Borrower, or to file them with any filing office,
unless and until this Agreement is terminated in accordance with its terms and
all Obligations paid in immediately available funds.
(c) If for any reason this Agreement is terminated prior to
the end of the then current term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits as a result thereof, Borrower agrees to pay to Lender, upon the
effective date of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period indicated:
Amount Period
------ ------
(i) 1 1/2% of Maximum Credit From August 28, 2001 to and
including August 28, 2002;
(ii) 1% of Maximum Credit From August 29, 2002 to and
including August 28, 2003;
(iii) 1/2% of Maximum Credit From August 29, 2003 to and
including August 27, 2004 or if
the term of this Agreement is
extended, at any time prior to
the end of the then current term.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise its right to terminate this Agreement, but elects, at
its option, to provide financing to Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.
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(d) Notwithstanding anything to the contrary contained in
Section 12.1(c) above, in the event of the termination of this Agreement at the
request of Borrower prior to the end of the term of this Agreement and the full
and final repayment of all Obligations and the receipt by Lender of cash
collateral all as provided in Section 12.1(a) above, Borrower shall not be
required to pay to Lender an early termination fee if each of the following
conditions is satisfied as determined by Lender: (i) Lender shall have received
not less than sixty (60) days prior written notice of the intention of Borrower
to so terminate this Agreement, (ii) within sixty (60) days of receipt of such
notification, the Agreement shall be terminated and Lender shall have received
full and final repayment of all of the Obligations and the cash collateral as
provided in Section 12.1(a) above with the initial proceeds of a secured
revolving credit facility provided by First Union National Bank to Borrower, on
terms and conditions substantially similar to those contained in this Agreement
and the other Financing Agreements, and provided, that the term of such facility
shall be for at least the greater of (A) the remaining term of the Loan
Agreement or (B) one year; and (iii) no Event of Default or act, condition which
with notice, lapse of time or both would constitute an Event of Default shall
exist or have occurred.
(e) In the event that there are no Loans outstanding for a
period of ninety (90) consecutive days following Borrower's exercise of its
rights to prepay Loans in accordance with Section 2(d) hereof, then on the
ninety-first (91st) day following such prepayment, this Agreement shall be
deemed automatically terminated by Borrower, without any further notice by
Borrower and the early termination fee set forth in Section 12.1(c) hereof shall
be immediately due and payable.
12.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to Borrower and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
(d) All references to the term "good faith" used herein when
applicable to Lender shall mean, notwithstanding anything to the contrary
contained herein or in the UCC, honesty in fact in the conduct or transaction
concerned. Borrower shall have the burden of proving any lack of good faith on
the part of Lender alleged by Borrower at any time.
(e) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
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(f) The word "including" when used in this Agreement shall
mean "including, without limitation".
(g) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Lender, if such Event of Default is
capable of being cured as determined by Lender.
(h) Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Lender prior to the date hereof.
(i) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including", the
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including".
(j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Lender and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.
12.3 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Borrower at
its chief executive office set forth below, or to such other address as either
party may designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation
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of receipt; if by nationally recognized overnight courier service with
instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.
12.4 Partial Invalidity. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.5 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrower and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Lender. Lender may,
after notice to Borrower, assign its rights and delegate its obligations under
this Agreement and the other Financing Agreements and further may assign, or
sell participations in, all or any part of the Loans, or any other interest
herein to another financial institution or other person, in which event, the
assignee or participant shall have, to the extent of such assignment or
participation, the same rights and benefits as it would have if it were the
Lender hereunder, except as otherwise provided by the terms of such assignment
or participation.
12.6 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
12.7 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Lender and Borrower have caused these presents to
be duly executed as of the day and year first above written.
LENDER BORROWER
CONGRESS FINANCIAL CORPORATION GOLDEN EAGLE LEASING, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
_____________________________ _____________________________
Title: First Vice President Title: President
__________________________ __________________________
Address: Chief Executive Office:
1133 Avenue of the Americas 00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxxxxx, Xxxxxxxxxxx 00000
