EXHIBIT 10.1(a)
THIRD AMENDED AND RESTATED LOAN AGREEMENT
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AGREEMENT, made as of the 22nd day of July, 1997, by and among:
LINC CAPITAL, INC. (formerly known as Scientific Leasing, Inc.),
a Delaware corporation ("LCI");
LINC QUANTUM ANALYTICS, INC., a Delaware corporation ("Quantum")
(each of LCI and Quantum are sometimes individually referred to herein as a
"Borrower" and collectively referred to herein as the "Borrowers");
The Banks which from time to time are parties to this Agreement
(individually, a "Bank" and collectively, the "Banks"); and
FLEET BANK, N.A. (formerly known as National Westminster Bank
USA) as Agent for itself and for the Banks, including Fleet Bank, N.A. as
Temporary Lender (in its individual capacity as a lender, "Fleet" and in its
capacity as agent, together with its successors in such capacity, the "Agent");
WITNESSETH:
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WHEREAS, LCI, LINC Equipment Services, Inc. ("LES"), Quantum, the
Banks and the Agent have entered into a Second Amended and Restated Loan
Agreement dated as of September 28, 1994, as amended (the "Second Restated
Agreement") pursuant to which the Banks agreed to make loans to LCI, LES and
Quantum in the aggregate principal sum of up to Fifty-Four Million Five Hundred
Thousand ($54,500,000) Dollars upon the terms and conditions set forth in the
Second Restated Agreement;
WHEREAS, the Borrowers have requested, and the Banks and the
Agent have agreed, to amend the Second Restated Loan Agreement in the manner set
forth herein;
NOW, THEREFORE, the parties hereto agree that the Second Restated
Agreement is amended and restated in its entirety to provide as follows:
Article 1. Definitions.
Section 1.1 General Definitions.
In addition to the terms defined elsewhere in this Agreement and
all terms relating to the Borrowing Base which are defined in Section 1.2
hereof, the following terms shall have the following meanings as used in this
Agreement (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Account Party" - LCI or Quantum.
"Additional Costs" - as defined in Section 2.16 hereof.
"Adjusted Tangible Net Worth" - at any time, the difference
between (a) the sum of (i) the non-current portion of Subordinated Debt
(excluding in full all portions of the LFC Subordinated Debt) (ii) the total of
shareholders' equity calculated in accordance with GAAP, provided, however, that
from and after the date of the occurrence of any default under the LFC
Subordinated Debt, there shall be deducted and excluded from shareholder's
equity an amount equal to the shareholder's equity of LFC and (iii) deferred
income tax credits, minus (b) the sum of (i) deferred charges (after tax), and
(ii) the total amount of any intangible assets which shall include, without
limitation, (A) unamortized debt discount after taxes, (B) prepaid expenses
after tax, (C) goodwill, and (D) the net amount of all accounts receivable owing
to LCI or any subsidiary of LCI from LINC Group.
"Affiliate" - as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event: (a) any Person which owns directly or indirectly 5% or more
of the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
(b) each shareholder, director and officer of any of the Borrowers shall be
deemed to be an Affiliate of the Borrowers.
"Agent" - Fleet in its capacity as agent for the Banks under this
Agreement or any successor Agent pursuant to Section 9.8 hereof.
"Agent's Lien" - the security interest granted to the Agent (or
any successor to the Agent) for the ratable benefit of the Banks pursuant to the
Security Documents.
"Agreement" or "this Agreement" - this Third Amended and Restated
Loan Agreement as originally executed including the Schedules and Exhibits
hereto, or if amended, supplemented, restated or modified from time to time as
so amended or supplemented or restated or modified and in force for the time
being.
"Amended and Restated LCI Assignment of Contracts" - as defined
in Section 2.21 hereof.
"Amended and Restated LCI Pledge Agreement" - as defined in
Section 2.21 hereof.
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"Amended and Restated LCI Security Agreement" - as defined in
Section 2.21 hereof.
"Amended and Restated LES Security Agreement" - as defined in
Section 2.21 hereof.
"Amended and Restated LES Assignment of Leases as defined in
Section 2.21 hereof.
"Amended and Restated LINC Group Pledge Agreement" - as defined
in Section 2.21 hereof.
"Amended and Restated Quantum Assignment of Leases" - as defined
in Section 2.21 hereof.
"Amended and Restated Quantum Security Agreement" - as defined in
Section 2.21 hereof.
"Amended and Restated Quantum Shareholder Pledge Agreements" - as
defined in Section 2.21 hereof.
"Annual EBDIT" - as at any date, the EBDIT for the immediately
preceding full twelve calendar months.
"Applicable Company" - the applicable Borrower or applicable
Foreign Leasing Subsidiary; provided that in respect of Finished Goods Inventory
Loans and Receivables Loans, "Applicable Company" shall be deemed to refer
solely to LCI.
"Applicable Lending Office" - with respect to each type of Loan,
the lending office as designated for such type of Loan below the name of the
Bank on the signature page hereof or such other office of the Bank or of an
affiliate of the Bank as the Bank may from time to time specify to the Borrowers
as the office at which its Loans of such type are to be made and maintained.
"Applicable Margin" - (a) as at any date of determination thereof
which determinations shall be made on each successive Applicable Margin
Determination Date, the applicable percentage set forth below shall apply if
such date of determination is prior to the Commitment Termination Date:
Applicable
Margin for Applicable Margin
Prime Rate for Eurodollar
Leverage Ratio Loans Loans
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Less than 3:1 0% 1.75%
3:1 or more but less than
3.5:1 .25% 2.00%
3.5:1 and over .50% 2.25%
(b) as at any date of determination thereof which determination
shall be made on each successive Applicable Margin Determination Date, the
applicable percentage set forth below shall apply if such date of determination
is on or after the Commitment Termination Date: the Applicable Margin for Prime
Rate Loans: 1.75% (175 basis points); and the Applicable Margin for Eurodollar
Loans: 3% (300 basis points).
"Applicable Margin Determination Date" - the date on which the
Applicable Margin is from time to time established, commencing on the date of
this Agreement, and thereafter on the first date of each successive month.
"Application Documents" - as defined in Section 2.33 hereof.
"Assignee" - as defined in Section 10.15 hereof.
"Assignment and Acceptance" - an agreement in substantially the
form of Exhibit A.
"Banks" - as defined in the Recitals herein.
"Basic Business" - the business of providing asset-based
financing and related services to business enterprises, including, but not
limited to equipment leasing and financing, accounts receivable purchase and
financing, finished goods inventory financing, renting, selling and leasing new
and reconditioned equipment, the purchase, financing or servicing of third party
originated lease and equipment loan portfolios and other services related to the
foregoing; provided that, in the case of Quantum, Basic Business shall mean
primarily the business of renting analytical instruments, but may also include
leasing and financing and selling new and reconditioned equipment.
"Basic Business Assets" - assets owned or acquired by any of the
Borrowers or any Subsidiary in the ordinary course of, and for the direct
purpose of conducting, the Basic Business.
"Beneficiary Documents" - as defined in Section 2.33 hereof.
"Borrower(s)" - as defined in the Recitals herein.
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"Borrowing Availability" - the difference between (a) the
Borrowing Capacity, minus (b) the aggregate outstanding balance of all Loans and
all Temporary Loans and all L/C Obligations.
"Borrowing Base" - as defined in Section 1.2 hereof.
"Borrowing Base Report" - a report substantially in the form of
Schedule 1 annexed hereto with appropriate insertions.
"Borrowing Base Report Certification" - a certificate of the
Borrowers signed by the president, chief financial officer or treasurer of each
Borrower substantially in the form of Schedule 1 annexed hereto with appropriate
insertions and which shall accompany each Borrowing Base Report.
"Borrowing Capacity" - as defined in Section 2.1 hereof
"Borrowing Computation" - a certificate of the Borrowers, signed
by the president, chief financial officer or treasurer of each Borrower,
substantially in the form of Schedule 2 annexed hereto with appropriate
insertions.
"Borrowing Notice" - as defined in Section 2.3 hereof
"Business Day" - any day other than Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required to close
under the laws of the State of New York.
"Cash Flow Coverage" - as of any date of determination, Cash
Receipts received during the prior 12 months, or such shorter period as
specified in subsection 6.9(c) hereof, divided by Cash Operating Expenses paid
during the prior 12 months, or such shorter period as specified in subsection
6.9(c) hereof.
"Cash Operating Expenses" - as of any date of determination, the
sum of the following items actually paid in cash by any of the Borrowers or
their Subsidiaries (but excluding LFC and its Subsidiaries) and arising out of
the conduct of their business in the ordinary course: (a) interest expense on
debt; (b) selling, general and administrative expenses and sales commissions;
(c) selling expenses which have been capitalized, and (d) all other operating
expenses paid in cash whether or not capitalized, including those cash expenses
permitted to be deferred hereunder; provided, however, that Cash Operating
Expenses shall not in any event include any bad debt expense.
"Cash Receipts" - as of any date of determination, the sum of the
following items actually received in cash by any of the Borrowers or their
Subsidiaries (but excluding LFC and its subsidiaries) and arising out of the
conduct of their business in the ordinary course: (a) profits from conditional
sales agreements; (b) profits from the sale of fair market value lease
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streams; (c) Lease rental payments; (d) the interest portion of payments from
leases held in the portfolio of any of the Borrowers or their Subsidiaries (but
excluding LFC and its Subsidiaries); (e) interest income; (f) Lease receipts;
(g) realized residual proceeds; (h) proceeds from sales of equipment; (i)
revenue received by Quantum from the servicing of Equipment; and (j) fees,
commissions and other miscellaneous income.
"Closing Date" - the date on which there shall have been
satisfied or waived all of the conditions precedent set forth in Article 4
hereof to the making of the initial Loans hereunder.
"Code" - the Internal Revenue Code of 1986, as amended.
"Collateral" - as defined in Section 2.21 hereof and in the
respective Security Documents.
"Commitment" - as to each Bank, the amount set forth opposite
such Bank's name on the signature pages hereof under the caption "Commitment" as
the same shall and/or may be reduced pursuant to Sections 2.1 and 2.2 hereof.
"Commitment Termination Date" - July 15, 1998 or such later date
to which the Commitment Termination Date shall have been extended in accordance
with subsection 2.1(b) hereof.
"Compliance Certificate" - a certificate executed by the
president, chief financial officer or treasurer of each of the Borrowers in the
form of Schedule 3 annexed hereto to the effect that, among other things, as of
the calculation date of the certificate, no Default or Event of Default under
this Agreement exists or would exist after giving effect to action intended to
be taken by any of the Borrowers, as described in such certificate, including,
without limitation, that the covenants set forth in Section 6.9 and the other
Sections referred to in Schedule 3 hereto would not be breached after giving
effect to such action, together with a calculation in reasonable detail, and in
form and substance satisfactory to the Majority Banks, of such compliance.
"Controlled Group" - all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any of the Borrowers, are treated as a
single employer under Section 414(b), 414(c) or 414(m) of the Code and Section
4001(a)(2) of ERISA.
"Convertible Subordinated Debt" - the balance (approximately
$7,759,000 in principal amount outstanding as of the date of this Agreement) of
the $25,000,000 in original face principal amount of 8-1/4% Convertible
Subordinated Debentures due 2003 issued by LCI pursuant to the Convertible
Subordinated Debt Documents.
"Convertible Subordinated Debt Documents" - as defined in Section
3.18 hereof.
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"Corporate Loan Party" - any Loan Party which is a corporation or
partnership.
"Credit Period" - the period commencing on the date of this
Agreement and ending on the Commitment Termination Date.
"Credit Policy Manual" - a copy of which has been delivered to
the Agent on the Closing Date.
"Credit Scoring Model" - the credit scoring model utilized by the
Borrowers and their Affiliates to assess the relative creditworthiness of
Lessees and other Obligors, a copy of which has been delivered to the Agent on
the Closing Date.
"Debt Instrument" - as defined in Section 8.4 hereof
"Debt Service" - as at any date, as to any Person, the sum of all
mandatory scheduled principal payments and interest on all items of Indebtedness
for money borrowed by such Person and all items of Indebtedness of any other
Person for which such Person is liable, directly or indirectly, as guarantor or
in any other capacity, which was paid and not refinanced, or, if required to
have been paid, was not paid or refinanced, in each case during the 365-day
period ending on such date, or such shorter period as specified in subsection
6.9(c) hereof, and payments of capitalized lease obligations due or paid during
such period.
"Debt Service Coverage" - as at any date, the quotient, expressed
as a percentage (which may be in excess of 100%), determined by dividing Annual
EBDIT by Debt Service.
"Default" - an event which with notice or lapse of time or both
would constitute an Event of Default.
"Dollars" - and "$" - lawful money of the United States of
America.
"EBDIT" - for any period, as to any Person, on a consolidated
basis, the excess of (a) without duplication, the sum of (i) net income for such
period plus (ii) depreciation and other non-cash charges to income for such
period plus (iii) interest on all Indebtedness for such period plus (iv) taxes
accrued for such period plus (v) revenue from leases of Equipment which are
treated as direct finance, leverage or sales type leases, to the extent not
otherwise included in net income plus (vi) revenue from Residual Values to the
extent not otherwise included in net income over (b) the net amount of items
which are classified as extraordinary items in accordance with GAAP for such
period; as to all of the foregoing, as determined in accordance with GAAP,
consistently applied.
"Eligible Assignee" - (a) any of the following that have been
approved by the Agent and the Borrowers (such approval by the Borrowers not to
be unreasonably withheld):
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(i) a commercial bank organized under the laws of the United States, or any
state thereof; (ii) a commercial bank organized under the laws of any other
country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow, or a political subdivision of any such country, so long
as such bank is acting through a branch or agency located in the country in
which it is organized or another country that is described in this clause (ii);
(iii) the central bank of any country that is a member of the OECD which bank
has assumed the assets and liabilities of a Bank; and (iv) a finance company,
insurance company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business;
(b) any other Person approved by the Agent and reasonably acceptable to the
Borrowers; and (c) a Bank or an Affiliate of a Bank; provided, however, that
neither the Borrowers nor an Affiliate of the Borrowers shall qualify as an
Eligible Assignee under this definition; and provided, further, that the
Borrowers' approval under clause (a) or (b) shall not be required at any time
after the occurrence of a Default.
"Emerging Growth Credit Scoring Matrix" - the credit scoring
matrix utilized by the Borrowers and their Affiliates to assess the relative
creditworthiness of Obligors which are Emerging Growth Companies, a copy of
which has been delivered to the Agent on the Closing Date.
"Environmental Laws and Regulations" - all environmental, health
and safety laws, regulations, resolutions, and ordinances applicable to any of
the Borrowers or any other Loan Party, or any of their respective assets or
properties, including, without limitation: (i) all regulations, resolutions,
ordinances, decrees, and other similar documents and instruments of all decrees,
and other similar documents and instruments of all courts and governmental
authorities, bureaus and agencies, domestic and foreign, whether issued by
environmental regulatory agencies or otherwise, and (ii) all laws, regulations,
resolutions, ordinances and decrees relating to Environmental Matters.
"Environmental Matter(s)" - a release of any toxic or hazardous
waste or other chemical substance, pollutant or contaminant into the environment
or the generation, treatment, storage or disposal of any toxic or hazardous
wastes or other chemical substances.
"ERISA" - the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time, and the regulations thereunder.
"Eurodollar Base Rate" - with respect to any Eurodollar Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) quoted by the Reference Bank at approximately 10:00
a.m. New York time (or as soon thereafter as practicable) two Business Days
prior to the first day of such Interest Period for the offering by the Reference
Bank to leading banks in the Eurodollar interbank market of Dollar deposits
having a term comparable to such Interest Period and in an amount comparable to
the principal amount of the Eurodollar Loan made by the Banks to which such
Interest Period relates.
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"Eurodollar Business Day" - a Business Day on which dealings in
Dollar deposits are carried out in the interbank Eurodollar market.
"Eurodollar Loans" - Loans, or portions thereof, the interest on
which is determined on the basis of rates referred to in the definition of
"Eurodollar Rate" in this Article 1.
"Eurodollar Rate" - for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Agent to be equal to (x) the Eurodollar
Base Rate for such Loan for such Interest Period; divided by (y) 1 minus the
Reserve Requirement for such Loan for such Interest Period. The Agent shall use
its best efforts to advise the Borrowers of the Eurodollar Rate as soon as
practicable after each change in the Eurodollar Rate; provided, however, that
the failure of the Agent to so advise the Borrowers on any one or more occasions
shall not affect the rights of the Banks or the Agent or the obligations of the
Borrowers hereunder.
"Event of Default" - as defined in Article 8 hereof.
"Federal Funds Rate" - for any day, the weighted average of the
rates on overnight federal funds transactions with member banks of the Federal
Reserve System arranged by federal funds brokers as published by the Federal
Reserve Bank of New York for such day, or if such day is not a Business Day, for
the next preceding Business Day (or, if such rate is not so published for any
such day, the average rate charged to the Agent on such day on such transactions
as reasonably determined by the Agent).
"Fee" and "Fees" - as defined in Section 2.4 hereof
"Fleet"- Fleet Bank, N.A. in its individual capacity.
"Financial Statements" -
(a) the audited consolidated and unaudited consolidating balance
sheet of LCI and its Subsidiaries for the fiscal year then ended and the related
statements of operations or income and stockholders' equity and cash flow for
such fiscal year;
(b) the unaudited consolidated and consolidating balance sheet
of LCI and its Subsidiaries for the fiscal quarter then ended and the related
unaudited statements of operations or income and stockholders' equity and cash
flow for the quarter then ended;
(c) the audited consolidated and unaudited consolidating balance
sheet of LINC Group and its Subsidiaries for the fiscal year then ended and the
related statement of operations or income and stockholders equity and cash flow
for such fiscal year;
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(d) the unaudited consolidated and consolidating balance sheet
of LINC Group and its Subsidiaries for the fiscal quarter then ended, and the
related unaudited statements of operations or income and stockholders equity and
cash flow for the quarter then ended; and
(e) for purposes of any updating of representations and
warranties in Article 3 hereof, each annual financial statement delivered
pursuant to Section 5.1 hereof and each quarterly financial statement delivered
pursuant to Section 5.2 hereof.
"Financing Statements" - Uniform Commercial Code Financing
Statements duly executed and completed and in form necessary for perfection of a
security interest in the state in which such filing must be made.
"Foreign Leasing Subsidiary" - any Foreign Subsidiary (a) any
assets of which are included in the Borrowing Base, (b) with respect to which
the Agent has received such agreements, instruments and documents as the Agent
may reasonably require, including, without limitation, modifications of the
Exhibits to this Agreement to reflect the existence of any such Foreign Leasing
Subsidiary, and opinions of counsel relating thereto, and (c) is otherwise
acceptable to the Agent.
"Foreign Security Documents" - as defined in Section 2.21 hereof.
"Foreign Location" - the countries included in the United Kingdom
and Canada and such other countries as shall be approved in writing by the
Majority Banks.
"Foreign Subsidiary" - any Subsidiary of any of the Borrowers at
such time as such Subsidiary (a) leases Leased Property under a Lease in a
Foreign Location; (b) the corporate and organizational structure of which are
acceptable to the Agent and (c) is otherwise acceptable to the Agent.
"Foreign Subsidiary Loan(s)" - as defined in Section 2.9 hereof.
"GAAP" - whether used directly or indirectly through use of a
capitalized term, generally accepted accounting principles consistently applied
and in accordance with past practices provided that wherever "GAAP" is referred
to in this Agreement, a certified public accountant would, insofar as the use of
such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been properly applied.
"Guarantor(s) - as defined in Section 2.21 hereof.
"Guaranty(ies) - as defined in Section 2.21 hereof.
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"Indebtedness" - with respect to any Person, all (a) liabilities
or obligations, direct and contingent, which liabilities or obligations would,
in accordance with GAAP, be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person at the date as of which
Indebtedness is to be determined, including, without limitation, (i) contingent
liabilities which, in accordance with such principles, would be set forth in a
specific Dollar amount on the liability side of such balance sheet, (ii)
capitalized lease obligations of such Person, (iii) obligations in respect of
interest rate exchange, swap, cap and other agreements or arrangements designed
to provide protection against fluctuation in interest rates; (b) liabilities or
obligations of others for which such Person is directly or indirectly liable, by
way of guaranty (whether by direct guaranty, suretyship, discount, endorsement,
reimbursement of amounts drawn under letters of credit, take-or-pay agreement,
agreement to purchase or advance or keep in funds or other agreement having the
effect of a guaranty other than endorsements of negotiable instruments for
deposit or collection in the ordinary course of business) or otherwise whether
or not such liabilities would, in accordance with GAAP, be included in
determining total liabilities as shown on a balance sheet; and (c) without
duplication, liabilities or obligations secured by liens on any assets of such
Person, whether or not such liabilities or obligations shall have been assumed
by it.
"Intercompany Subordination Agreement" - as defined in Section
2.22 hereof.
"Intercreditor Agreement" - as defined in Section 2.22 hereof.
"Interest Period" - with respect to any Eurodollar Loan, each
period commencing on the date such Loan is made or converted from a Loan or
Loans of another type, or the last day of the next preceding Interest Period
with respect to such Loan, and ending one, two, three, four, five, six, nine or
twelve months later as the Borrowers may select as provided in Section 2.3
hereof (subject to availability of funds), except that each such Interest Period
which commences on the last Eurodollar Business Day of a calendar month (or on
any day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (i) any
Interest Period which commences prior to a Payment Date shall end no later than
such Payment Date if the aggregate principal amount of the Loans or portions
thereof to which such Interest Period would be applicable would include any
portion of the aggregate principal amount of the Loans which is due and payable
on such Payment Date; (ii) each Interest Period which would otherwise end on a
day which is not a Business Day shall end on the next succeeding Business Day
(or, in the case of an Interest Period for Eurodollar Loans, if such next
succeeding Eurodollar Business Day falls in the next succeeding calendar month,
on the next preceding Eurodollar Business Day); (iii) no more than five (5)
Interest Periods for Eurodollar Loans shall be in effect at the same time; (iv)
any Interest Period which commences before the Commitment Termination Date shall
end no later than the Commitment Termination Date; and (v) notwithstanding
clauses (i) and (iv) above, no Interest Period shall have a duration of less
than one month. In the event that the Borrowers fail to select the duration of
any Interest Period for any Loan within the time period and otherwise as
provided in Section 2.7 hereof, such
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Loans will be automatically converted into a Prime Rate Loan on the last day of
the preceding Interest Period for such Loan.
"Investment" - in any Person by any Borrower or any of its
Subsidiaries:
(a) the amount paid or committed to be paid, or the value of
property or services contributed or committed to be contributed, by any Borrower
or any Subsidiary for or in connection with the acquisition by such Borrower or
such Subsidiary of any stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of such Person; and
(b) the amount of any advance, loan or extension of credit to,
or guaranty or other similar obligation with respect to any Indebtedness of,
such Person by any Borrower or such Subsidiary and (without duplication) any
amount committed to be advanced, loaned, or extended to, or the payment of which
is committed to be assured by a guaranty or similar obligation for the benefit
of, such Person by such Borrower or such Subsidiary; provided, however, that for
the purposes of Section 7.9, a Foreign Subsidiary Loan shall not constitute an
"Investment."
"IRS" - Internal Revenue Service.
"Issuing Bank" - as defined in Section 2.33 hereof.
"Latest Balance Sheet" - as defined in Section 3.9 hereof.
"L/C" - any letter of credit issued by the Issuing Bank pursuant
to Section 2.33 hereof, in each case, as amended, supplemented or modified from
time to time.
"L/C Fees" - as defined in Section 2.33 hereof.
"L/C Obligations" - as of any date of determination, all the
existing liabilities (including all fees) of the Borrowers and the Account
Parties to the Issuing Banks and the Banks and the Agent in respect of all L/Cs,
whether such liability is contingent or fixed and shall be computed to include
the sum of the aggregate maximum amount then available to be drawn under all
L/Cs (assuming, whether or not such is the case, that such aggregate maximum
amount shall have been drawn) and the aggregate amount of any Unreimbursed
Drawings then outstanding.
"LFC" - LINC Finance Corporation, a Delaware corporation.
"LFC Intercreditor Agreement" - as defined in Section 2.22
hereof.
"LFC Subordinated Debt" - the $15,000,000 Principal Amount 10%
Senior Subordinated Note due September 30, 1999 issued by LFC pursuant to the
Note Purchase Agreement dated September 28, 1994 between LFC and Newcourt (as
assignee of Anthem
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Financial, Inc.) as the same may be amended, modified and supplemented to the
extent not prohibited by the terms of Section 7.12 hereof.
"LFC Subordinated Debt Documents" - Note Purchase Agreement dated
September 28, 1994 between LFC and Newcourt (as assignee of Anthem Financial,
Inc.), and all agreements, instruments and documents executed and delivered in
connection therewith, as the same may be amended, modified and supplemented to
the extent not prohibited by the terms of Section 7.12 hereof.
"Lien" - any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement intended as security under the Uniform Commercial Code of
any jurisdiction); provided that an agreement to xxxxx x Xxxx entered into after
the date of this Agreement shall not be deemed to be a "Lien" until the Lien is
actually granted so long as each of the Borrowers and their Subsidiaries are and
would be in compliance with the terms and conditions of this Agreement and no
Default or Event of Default then exists or would exist after giving effect to
such lien.
"LINC Capital Partners Division" and "LINC Capital Partners,
Inc." - a division and (subject to satisfaction of the conditions set forth in
subsection 7.7(b) hereof) a subsidiary of LCI, respectively, that engage in the
business of financing Emerging Growth Companies.
"LINC Group" - The LINC Group, Inc., a Delaware corporation.
"LINC Group Intercreditor Agreement" - as defined in Section 2.22
hereof.
"Loan" and "Loans" - as defined in Section 2.1 hereof. Loans of
different types made or converted from Loans of other types on the same day (or
of the same type but having different Interest Periods) shall be deemed to be
separate Loans for all purposes of this Agreement.
"Loan Business" - the business to be entered into by any one or
more of LCI and LINC Capital Partners, Inc. after the date hereof of making
Finished Goods Inventory Loans and Receivables Loans to Obligors.
"Loan Documents" - this Agreement, the Notes, the Temporary Loan
Note, the Security Documents, the Subordination Agreements, Interest Rate
Contracts (but only to the extent relating to the Loans) to which any Lender or
the Agent is a party, and all other instruments, agreements and documents
executed, issued and delivered to or for the benefit of the Agent or any Bank by
any Loan Party in connection with the Loans and the L/Cs at any time in
connection herewith or therewith, including all amendments, modifications and
supplements of or to all such documents.
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"Loan Party" - each of the Borrowers, each Subsidiary of any
Borrower, LINC Group, the Quantum Shareholders and any other Person which now or
hereafter executes and delivers to the Banks or the Agent any Loan Document.
"Loan Policy Manual" - the Borrowers' credit policy with respect
to the making of Finished Goods Inventory Loans and Receivables Loans, which
policy shall be delivered to the Banks and the Agent in accordance with Section
7.21 hereof, and shall be satisfactory to the Banks and the Agent in all
respects.
"Loan Scoring Model" - the loan scoring model utilized by the
Borrowers and their Affiliates to assess the relative creditworthiness of
Obligors in connection with the making of Finished Goods Inventory Loans and
Receivables Loans, a copy of which shall be delivered to the Agent no later than
30 days prior to any inclusion in the Borrowing Base of any Finished Goods
Inventory Notes or Receivables Notes, and which shall be satisfactory to the
Banks and the Agent in all respects.
"Majority Banks" - at any time while no Loans are outstanding
hereunder, Banks having at least 66% of the aggregate amount of the Commitments
and, at any time while Loans are outstanding hereunder, Banks holding at least
66% of the outstanding aggregate principal amount of the Loans hereunder,
provided, however, that for purposes of this definition Temporary Loans shall
not be deemed "Loans".
"Monthly Borrowing Base Report" - as defined in Section 5.9
hereof.
"Net Book Value" - with respect to Eligible Equipment, the
Invoiced Cost of such Eligible Equipment minus accumulated depreciation or any
valuation reserve in each case with respect to such Eligible Equipment
determined in accordance with GAAP.
"Newcourt" - Newcourt Financial Services, Inc. or any successor
or assign thereof accepted as such in accordance with the terms of any
applicable Loan Document.
"Non-Recourse Debt" - of any Person, and only so long as each of
the following terms continues to be satisfied, Indebtedness of such Person for
borrowed money which is secured by Liens on specific assets of such Person as to
which the lender or obligee thereof is to be repaid only out of such assets or
proceeds thereof and as to which such Person is not otherwise liable for
repayment in the event of a deficiency or default in payment, except for
liability for misrepresentations by such Person, defects in title caused by such
Person or impairment of the lender's Lien caused by such Person, failure to
insure or maintain or to cause any Lessee to insure or maintain such assets, and
except that any repayment made by such Person prior to a default in payment may
be from a source other than such specific assets or proceeds, and except that
for purposes of computations hereunder "Non-Recourse Debt" shall include the
"Non-Recourse Debt" portion of Partial Recourse Debt.
"Non-Recourse Lender" - a lender of Non-Recourse Debt.
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"Non-Recourse Liens" - Liens securing Non-Recourse Debt which
Liens are solely on assets financed with the proceeds of any such Non-Recourse
Debt, respectively.
"Note" - as defined in Section 2.12 hereof.
"Notice of Issuance" - as defined in Section 2.33 hereof.
"Obligations" - as defined in Section 2.21 hereof.
"Partial Recourse Debt" - as to any Person Indebtedness of such
Person for which such Person has only partial liability for repayment and
deficiency and the balance of which is Non-Recourse Debt.
"Participant" - as defined in Section 10.14 hereof.
"Participation" - as defined in Section 10.14 hereof.
"Participation Documents" - as defined in Section 10.14 hereof.
"Participating Bank" - as defined in Section 10.14 hereof.
"Payment Dates" - each Quarterly Date in each year commencing
with the first Quarterly Date after the Term Conversion Date.
"Payor" - as defined in Section 2.28 hereof.
"PBGC" - as defined in Section 3.17 hereof.
"Permanent Lender" - a lender of Permanent Secured Debt.
"Permanent Secured Debt" - as of any date of determination,
Indebtedness for borrowed money of any of the Borrowers or a Subsidiary which
meets each of the following conditions:
(a) (i) It is secured Indebtedness (whether recourse, Non-
Recourse or Partial Recourse Debt) which is incurred to finance or re-finance
Equipment in the ordinary course of business of the Basic Business, which
Indebtedness is secured only by such Equipment or Contracts to which such
Equipment may be subject or identified as collateral, and related amounts
payable under such Contracts and proceeds of the foregoing; (ii) the aggregate
net payments due during the initial terms respectively of such Contracts and the
related residual values of the related Equipment at any one time equal no less
than one hundred (100%) percent of the principal, interest and all other amounts
owing in respect of such Indebtedness during the term of such Indebtedness;
(iii) the repayment of all or any portion of such Indebtedness is scheduled to
coincide approximately with (and is not due prior to) the due date of Contract
Payments of the same or
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corresponding amount under such respective Contracts; (iv) the incurrence of
such Indebtedness occurs at a time when no Default or Event of Default is
continuing or would be created after giving effect to such Indebtedness, except
that Non-Recourse Debt (but only Non-Recourse Debt) may be incurred, following
not less than ten (10) Business Days' prior notice to the Agent, while a Default
or Event of Default (not created or potentially caused by the proposed
incurrence) exists if the proceeds of such Non-Recourse Debt are used
simultaneously with its incurrence to cure the existing Default or Event of
Default but only if the incurrence of such Indebtedness does not otherwise
impair the overall value of the Collateral or repayment of the Loans, all as
determined by the Agent in its reasonable judgment;
(b) (i) It is secured Indebtedness (whether recourse, Non-
Recourse or Partial Recourse Debt) which is incurred to finance or re-finance
the acquisition of Basic Business Assets (other than assets of the type
described in subsection (a) above) in the ordinary course of business of the
Obligor, which Indebtedness is secured only by such acquired Assets and the
proceeds thereof, (ii) the principal amount of such Indebtedness, interest and
fees and all other amounts owing in respect of such Indebtedness do not exceed
the fair market value of the Collateral therefor at the date of incurrence of
such Indebtedness (or subsequently unless such excess results from a change in
market value of Collateral which change was beyond each of the Borrower's or
Subsidiaries' control at the date of incurrence of such Indebtedness); (iii) the
incurrence of such Indebtedness occurs at a time when no Default or Event of
Default is continuing or would be created after giving effect to such
Indebtedness, except that Non-Recourse Debt may be incurred, following not less
than ten (10) Business Days' prior notice to the Agent, while a Default or Event
of Default (not created or potentially caused by the proposed incurrence) exists
if the proceeds of such Non-Recourse Debt are used simultaneously with its
incurrence to cure the existing Default or Event of Default but only if the
incurrence of such Indebtedness does not otherwise impair the overall value of
the Collateral or repayment of the Loans, all as determined by the Agent in its
reasonable judgment;
provided, however, that neither any Borrower nor any Subsidiary shall create,
incur, permit to exist or have outstanding any Indebtedness on terms and
conditions setting forth affirmative or negative covenants of any Borrower or
Subsidiary or events of default any of which can be reasonably construed to be
more restrictive than any of the covenants set forth in Articles 6 and 7 and
events of default set forth in Article 8 hereof, the breach of which could
result in a right of the lender thereunder to accelerate payment sooner than the
right of acceleration provided to the Agent and the Banks under this Agreement,
other than (A) with respect to Non-Recourse Debt, any covenant or default which
permits acceleration based on defaults under financed leases and Rental
Agreements; and (B) Non-Recourse Debt under Debt Instruments which would then be
excluded from Section 8.4 as a result of the terms of the parenthetical
following the phrase "Debt Instrument" as it appears in subsections 8.4(a), (b)
and (c) of this Agreement; and provided, further, that Permanent Secured Debt
shall at all times comply with and conform to the representations and warranties
set forth in Section 3.24 hereof and such representations and warranties shall
be deemed repeated as if made by the Borrowers as of the date of incurrence of
any Permanent Secured Debt.
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"Permitted Liens" - (i) pledges or deposits by any of the
Borrowers and their Subsidiaries under xxxxxxx'x compensation laws, unemployment
insurance laws, social security laws, or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the payment
of Indebtedness of any of the Borrowers and their Subsidiaries), or leases to
which any of the Borrowers and their Subsidiaries are parties as lessees, or
deposits to secure public or statutory obligations of any of the Borrowers and
their Subsidiaries or deposits of cash or U.S. Government Bonds to secure
surety, appeal, performance or other similar bonds to which any of the Borrowers
and their Subsidiaries are parties, or deposits as security for contested taxes
or import duties or for the payment of rent; (ii) Liens imposed by law, such as
carriers', warehousemen's, materialmen's and mechanics' liens, or Liens arising
out of judgments or awards against any of the Borrowers and their Subsidiaries
with respect to which any of the Borrowers and their Subsidiaries at the time
shall currently be prosecuting an appeal or proceedings for review; (iii) Liens
for taxes not yet subject to penalties for non-payment and Liens for taxes the
payment of which is being contested as permitted by Section 6.6 hereof; (iv)
minor survey exceptions, minor encumbrances, easements or reservations of, or
rights of others for rights of way, highways and railroad crossings, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties, or Liens
incidental to the conduct of the business of any of the Borrowers and their
Subsidiaries or to the ownership of their property which were not incurred in
connection with Indebtedness of any of the Borrowers and their Subsidiaries, all
of which Liens referred to in each of the preceding clauses (i) through (iv) do
not in the aggregate under any such clauses individually or under all such
clauses together materially detract from the value of the properties to which
they relate or materially impair their use in the operation of the business
taken as a whole of any of the Borrowers and their Subsidiaries, and as to all
the foregoing referred to in clauses (i) through (iv) only to the extent arising
and continuing in the ordinary course of business; (v) Permitted Borrowing Base
Encumbrances; and (vi) liens on Equipment, Contracts and other assets and
properties of any of the Borrowers and their Subsidiaries securing Permanent
Secured Debt incurred by any of the Borrowers or Subsidiary in the ordinary
course of business of the Basic Business in the amounts and to the extent
permitted to exist under the subsections of Section 7.1 hereof referring to such
Debt which Debt either (1) exists on the date hereof or (2) if incurred after
the date hereof, has been incurred only upon compliance with the terms and
conditions of Section 2.23 hereof, provided, that in any event (A) the assets to
which such liens attach shall be consistent with the definition of the
respective term Permanent Secured Debt; and (B) no such liens shall exist on or
be equal or prior to the Agent's Lien on assets and properties included in
computation of the Borrowing Base except for Permitted Borrowing Base
Encumbrances and as otherwise set forth on Exhibit S annexed hereto.
"Person" - an individual, a corporation, a partnership, a joint
venture, a trust or unincorporated organization, a joint stock company or other
similar organization, a government or any political subdivision thereof, a
court, or any other legal entity, whether acting in an individual fiduciary or
other capacity.
"Plan" - at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by any of the Borrowers or
any member of the Controlled Group for
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employees of any of the Borrowers, or by any of the Borrowers for any other
member of such Controlled Group or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which any of the Borrowers or any member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions.
"Pledge Agreements" - the Amended and Restated Quantum
Shareholder Pledge Agreements, the Amended and Restated LINC Group Pledge
Agreement, the Amended and Restated LCI Pledge Agreement and the LCI-LFC Pledge
Agreement.
"Post-Default Rate" - (i) in respect of any Loans, or any portion
of any Loans, not paid when due (whether at stated maturity, by acceleration or
otherwise and whether before or after judgment), a rate per annum during the
period commencing on the due date until such Loans are paid in full equal to, if
(a) such Loans are Prime Rate Loans, 2% above the Prime Rate as in effect from
time to time plus the Applicable Margin for Prime Rate Loans (but in no event
less than the interest rate in effect on the due date), or (b) if such Loans are
Eurodollar Loans, 2% above the rate of interest in effect thereon at the time of
such due date until the end of the then current Interest Period therefor plus
the Applicable Margin for Eurodollar Loans and, thereafter, 2% above the Prime
Rate as in effect from time to time plus the Applicable Margin for Prime Rate
Loans (but in no event less than the interest rate in effect on the due date);
and (ii) in respect of other amounts payable by any of the Borrowers hereunder
(other than interest on the Loans but including interest on Unreimbursed
Drawings) not paid when due (whether at stated maturity, by acceleration or
otherwise and whether before or after judgment), a rate per annum during the
period commencing on the due date until such other amounts are paid in full
equal to 2% above the Prime Rate as in effect from time to time plus the
Applicable Margin for Prime Rate Loans (but in no event less than the interest
rate in effect on the due date).
"Prime Rate" - the interest rate established from time to time by
Fleet as its prime rate at the Principal Office, but in any event not less than
the Federal Funds Rate as in effect from time to time plus one half (.5%)
percent. Notwithstanding the foregoing, each of the Borrowers acknowledges the
fact that Fleet may regularly make domestic commercial loans at rates of
interest less than the rates of interest referred to in the preceding sentence.
Each change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect at the time of such
change in the Prime Rate.
"Prime Rate Loans" - Loans (or in Section 2.32 hereof, Temporary
Loans), or portions thereof, which bear interest at a rate based upon the Prime
Rate.
"Principal Office" - the principal office of Fleet presently
located at 000 Xxxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and as also
defined in Section 9.8(b) hereof
"Projections" - in respect of any fiscal year, consolidated and
consolidating projections for the Borrowers and each of their Subsidiaries.
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"Purchase Money Security Interest" - as defined in Section 7.2
hereof.
"Quantum" - as defined in the preamble hereto.
"Quantum Shareholder Agreement" - the Shareholders' Agreement,
dated on or about September 17, 1991, by and among LCI and the individual
shareholders of Quantum named herein, as amended.
"Quantum Shareholders" - collectively, Xxxxxx X. Xxxxxx and R.E.
Xxxxx in their capacity as shareholders of Quantum.
"Quarterly Dates" - the last day of each calendar quarter, the
first of which shall be the first such day after the date of this Agreement,
provided that, in the event that any Eurodollar Loans are then outstanding and
if any such date is not a Eurodollar Business Day, the relevant Quarterly Date
shall be the next succeeding Eurodollar Business Day (or, if the next succeeding
Eurodollar Business Day falls in the next succeeding calendar month, then on the
next preceding Eurodollar Business Day).
"Recourse Debt" - Indebtedness of any Person, as to which such
Person is liable for repayment in full in the event of a deficiency or default
in payment.
"Reference Bank" - (i) for purposes of determining the rates
referred to in clause (a) of the definition of "Eurodollar Base Rate" in this
Article 1, the non-United States office or offices or international banking
facility or facilities of Fleet as Fleet may from time to time select and (ii)
for all other purposes hereunder, the Principal Office.
"Regulation D" - Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"Regulatory Change" - any change after the date of this Agreement
in United States federal, state or foreign laws or regulations (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks including any of the Banks
of or under any United States federal, state, or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Required Payment" - as defined in Section 2.20 hereof.
"Reserve Requirement" - for any Eurodollar Loans for any Interest
Period therefor, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding One Billion Dollars
against in the case of Eurodollar Loans, "Eurocurrency liabilities" (as such
term is
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used in Regulation D). Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks by reason of any Regulatory Change against (i) any category of
liabilities which includes deposits by reference to which the Eurodollar Rate
for Eurodollar Loans (as the case may be) is to be determined as provided in the
definition of "Eurodollar Rate" in this Article 1 or (ii) any category of
extensions of credit or other assets which include Eurodollar Loans.
"Sale and Assignment Agreement" - the Sale and Assignment
Agreement dated September 28, 1994 between LCI and LFC providing for the sale of
certain assets by LCI to LFC and the assumption by LFC of LCI's obligation to
repurchase defaulted leases and other obligations of LCI under LCI's servicing,
credit enhancement and other documents relating to Special Purpose Entities.
"Second Restated Agreement" - as defined in the Recitals herein.
"Security Agreements" - the Amended and Restated LES Security
Agreement, the Amended and Restated Quantum Security Agreement and the Amended
and Restated LCI Security Agreement.
"Security Documents" - as defined in Section 2.21 hereof.
"Servicing Agreement" - the Servicing Agreement dated September
28, 1994 between LCI and LFC relating to the allocation to LFC of certain
administrative expenses, including, without limitation, expenses for employees,
space and services, borne by LCI for the benefit of LFC in connection with the
servicing of LFC's portfolio of leases.
"Special Purpose Entity" - a Subsidiary or Affiliate of any
Borrower or other Person formed by or at the request of any Borrower for the
sole purpose of holding and/or assigning contract receivables and equipment
received directly or indirectly from such Borrower or any of its Subsidiaries
and issuing notes or other Indebtedness which are secured by such receivables
and equipment, and which Subsidiary or Affiliate or other Person is prohibited
by its Articles of Incorporation or (if not a corporation) other organizational
documents from engaging in any other business (and shall not be deemed a Special
Purpose Entity hereunder if it does engage in any other business).
"Standby L/C" - any L/C which is not a documentary L/C (i.e., not
issued for the benefit of a supplier of inventory to a Borrower or Account Party
in order to support payment of the purchase price of such inventory).
"Subordinated Debt" - (i) the Convertible Subordinated Debt; and
(ii) any unsecured Indebtedness for money borrowed by any of the Borrowers in an
amount and on terms and conditions satisfactory to the Majority Banks and which
is subordinated under terms satisfactory in form and substance to the Majority
Banks in their sole judgment, as evidenced by
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the Agent's written consent thereto given prior to the creation of such
Indebtedness, to such Borrower's Obligations and any other Loan Party's
Obligations, as the case may be, hereunder.
"Subordination Agreement(s)" - individually or collectively, as the
context requires, the Intercompany Subordination Agreement, the Intercreditor
Agreement, the LFC Intercreditor Agreement or the LINC Group Intercreditor
Agreement.
"Subordination Agreement Confirmation" - as defined in Section 2.22
hereof.
"Subsidiary" - with respect to any Person, any corporation,
partnership or joint venture whether now existing or hereafter organized or
acquired: (i) in the case of a corporation, of which a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership or joint
venture in which such Person is a general partner or joint venturer of which a
majority of the partnership or other ownership interests are at the time owned
by such Person and/or one or more of its Subsidiaries. Unless the context
otherwise requires, references in this Agreement to "Subsidiary" or
"Subsidiaries" shall be deemed to be references to a Subsidiary or Subsidiaries
of the Borrowers.
"Tax Agreement" - the Tax Agreement between LINC, LCI, LFC, Anthem
Equipment Leasing and Anthem Financial.
"Temporary Commitment" - as at any date of determination, the
agreement of the Temporary Lender to make Temporary Loans in the amount equal to
the lesser of (a) Five Million ($5,000,000) Dollars and (b) the Unused
Commitment of Fleet in its capacity as a Bank.
"Temporary Lender" - Fleet in its capacity as lender of the Temporary
Loans.
"Temporary Loan" - as defined in Section 2.32 hereof.
"Temporary Loan Note" - as defined in Section 2.32 hereof.
"Temporary Loan Obligations" - as at the date of any determination
thereof, total Indebtedness of the Borrowers outstanding in respect of (but
without duplication) Temporary Loans and includes interest thereon accrued to
such date and unpaid and all other amounts payable in respect of Temporary Loans
and the Temporary Commitment pursuant to this Agreement which has not been paid.
"Term Conversion Date" - the date, which shall be the then-current
Commitment Termination Date, on which the Borrowers shall have elected to
convert the then-outstanding principal balance of Loans to a term loan following
the determination by any Bank not to extend the then-current Commitment
Termination Date in accordance with the provisions of subsection 2.1(b) hereof
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"Term Period" - the period of time commencing on the Term Conversion
Date and expiring on the final date of repayment of the Loans which shall not in
any event be later than the third anniversary of the Term Conversion Date.
"Total Commitment" - the aggregate sum of the Commitments of the
Banks.
"Total Recourse Liabilities" - at any time, as to each of the
Borrowers and its Subsidiaries, the sum of (a) all liabilities of such Borrower
and its Subsidiaries, which, in accordance with GAAP, would be shown as
liabilities on such Borrower's or Subsidiary's balance sheet, including all
accounts payable, accrued expenses and the current portion of Subordinated Debt
but excluding (to the extent included therein) the non-current portion of
Subordinated Debt and deferred income taxes payable, and Non-Recourse Debt
(provided that the recourse portion of any limited or partial recourse
obligations shall be included in Total Recourse Liabilities); plus (b) all
liabilities for which such Borrower or any Subsidiary is contingently liable,
whether or not such contingent liabilities would, in accordance with GAAP, be
capitalized on such Borrower's balance sheet, including without limitation,
under or pursuant to (i) any or all guaranties or letters of credit or
repurchase or substitution or put obligations or other credit enhancements of
any type including, without limitation, guaranties of or letters of credit
supporting the residual value of Leased Property or Contracts sold by any
Borrower or any Subsidiary, and (ii) letters of credit and guaranties intended
to secure the payment or performance of an obligation of a Person other than
such Borrower or the Subsidiary contingently liable thereunder.
"Transaction Documents" - collectively, the LFC Subordinated Debt
Documents, the Sale and Assignment Agreement, the Servicing Agreement, the Tax
Agreement, and the Asset Purchase Agreement dated September 28, 1994 between
LCI, Anthem Equipment Leasing, Inc., and LINC Group.
"Type" or "type" - any Loan (other than a Temporary Loan) determined
with respect to the interest option applicable thereto, i.e., either a Prime
Rate Loan or a Eurodollar Rate Loan.
"Unreimbursed Drawings" - as defined in Section 2.33 hereof.
"Unused Commitment" - as at any date, the difference, if any, between:
(a) the amount of the Banks' Total Commitment as in effect on such date and (b)
the then aggregate outstanding principal amount of all Loans made by the Banks
and all L/C Obligations (excluding fees in respect of L/C Obligations).
"Upstream Payments" - any combination of dividends, distributions,
advances, and loans made by any of the Foreign Leasing Subsidiaries or Special
Purpose Entities to the Borrowers.
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Section 1.2 Borrowing Base Definitions.
--------------------------
In addition to the terms defined elsewhere in this Agreement, the
following terms relating to the Borrowing Base shall have the meanings indicated
for purposes of this Agreement (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"Account Debtor" - the party who is obligated on or under or with
respect to any Account Receivable.
"Account Receivable" - as to each of the following, to the extent
arising in the ordinary course of the Basic Business and recorded on books of
account in accordance with GAAP: (a) any right of LCI or Quantum to payment for
Equipment sold or rented under a Rental Agreement; (b) any right of LCI or
Quantum to payment of fees in respect of a sale described in the preceding
clause (a); and (c) any right of LCI or Quantum to payment for services rendered
by LCI or Quantum, respectively, but no Contract Payments shall be deemed to be
an Account Receivable; less that portion of the sum of money or other proceeds
due thereon that relate to sales, use or property taxes in conjunction with such
transactions.
"Balance of Payments" - at any date, the total unpaid regularly
scheduled rental payments under a Lease or the total unpaid regularly scheduled
payments under any other Contract, but not in any event including payments or
amounts due directly or indirectly on account of use, sales or property taxes,
maintenance, repairs, management fees, insurance and similar items and net of
any credits, customer deposits, rebates, offsets, holdbacks or other adjustments
or commissions payable to third parties that are adjustments to such payments,
and provided that the Balance of Payments with respect to an item of related
Equipment is that portion of the Balance of Payments attributable to such item
of Equipment.
"Borrowing Base" - at any time the excess of (i) sections (a) through
(g), as set forth immediately below, over (ii) the sum of Excludable Amounts:
(a) "Contract Receivables Clause" - 90% of the Present Value of the
Balance of Payments under Unfunded Eligible Contracts (other than Unfunded
Eligible Contracts which are Eligible Emerging Growth Contracts);
(b) "Emerging Growth Contract Clause" - 85% of the Present Value of
the Balance of Payments under Unfunded Eligible Contracts;
(c) "Residual Value Clause" - 50% of the Present Value of the
aggregate Residual Values of Eligible Residual Leased Property under Eligible
Contracts or Eligible Emerging Growth Contracts; provided, however, that (i) in
no event shall the Post-Computation Amounts included under this clause (c)
exceed at any one time 15% of the Total Commitment; (ii) in no event shall the
sum of advances against a Contract under clause (a) or (b) above and advances
against Eligible Residual Leased Property under the same Contract exceed 100%
of the
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original Invoiced Cost to the Borrower; (iii) in no event shall the Post-
Computation Amount included under this clause (c) in respect of Residual Values
owned by either LCI or a Foreign Leasing Subsidiary which Residual Values relate
to Equipment located in a Foreign Location exceed Two Million ($2,000,000)
Dollars; and (iv) the Contract covering such Eligible Residual Leased Property
is either a direct finance or a sales-type lease or an operating lease, but if
an operating lease, the Residual Value is less than fifteen (15%) percent of the
Invoiced Cost of the related Equipment;
(d) "Accounts Receivable Clause" - 85% of the value of Unfunded
Eligible Accounts Receivable;
(e) "Inventory Clause" - 50% of the Net Book Value of Eligible
Equipment (including spare parts that constitute finished goods and not work-in-
progress) owned by any Foreign Leasing Subsidiary or LCI, which Equipment is
not then (as of any date of determination hereunder) subject to, nor identified
nor committed to, a Lease or Rental Agreement, and is located on the applicable
Borrower's or Foreign Leasing Subsidiary's premises (or in a warehouse as to
which applicable Uniform Commercial Code financing statements have been filed)
and not on the related Lessee's or Obligor's premises; provided, however, that
no such Eligible Equipment may be included under this clause (e) for a period
longer than two hundred seventy (270) days, and in no event shall the Post-
Computation Amount of any Equipment included in this clause (e) exceed
$1,000,000;
(f) "Rental Equipment NBV Clause" - at any time, with respect to
Quantum, 85% of the lesser of (i) and (ii):
(i) the Invoiced Cost of all Eligible Equipment owned by Quantum;
(ii) the Net Book Value of such Eligible Equipment referred to in
the preceding clause (i);
provided, however, that (A) the reference to 85% shall be deemed
changed from time to time as and to the extent provided in subsection (4) below
of this definition of Borrowing Base; and (B) the reference to 85% (as it may be
changed pursuant to the immediately preceding clause (A)) shall be deemed to
read 50% in respect of any Eligible Equipment that has not been rented within
four months preceding any date of computation of the Borrowing Base hereunder;
(g) "Finished Goods Inventory Note and Receivables Note Clause" - at
any time, 80% of the principal balance of all Unfunded Finished Goods Inventory
Notes and Unfunded Receivables Notes which are Eligible Contracts, provided that
the aggregate Post-Computation Amount included under this clause (g) may not
exceed 10% of the Total Commitment;
The Borrowing Base shall be calculated in accordance with and
subject to the following principles:
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(1) No Multiple Inclusion; Assets and Values. At no time shall assets
covered by any of the clauses of the Borrowing Base be included under any other
clause. At no time shall the Post-Computation Amount originally included under
any clause of the Borrowing Base with respect to any Eligible Contract exceed
the lesser of the Invoiced Cost or the Net Book Value of any item of Equipment
individually or items of Equipment in the aggregate covered by such Eligible
Contract. At no time shall the amount originally included under any clause of
the Borrowing Base with respect to any Eligible Contract purchased by an
Applicable Company exceed the purchase price of such Eligible Contract. At no
time shall the amount included under any clause of the Borrowing Base with
respect to any Eligible Contract that includes a refinancing exceed the amount
refinanced plus the Invoiced Cost of any upgrade or other newly purchased
Equipment. At no time shall the amount included under any clause of the
Borrowing Base include the interest of a Person who is not the Applicable
Company so that any interest conveyed to another Person pursuant to an Obligor
Creditor Participation Agreement shall not in any event be eligible for
inclusion in the Borrowing Base.
(2) Certain Concentration Limits. At no time shall the Post-
Computation Amounts included in the Borrowing Base under all clauses thereof
pursuant to Eligible Contracts with a single Obligor (together with its
Affiliates) (including, without limitation, related amounts in the Residual
Value and Inventory Clauses) exceed 5% of the Total Commitment.
In addition, at no time shall the aggregate of the Post-Computation
Amounts of all assets included in the Borrowing Base related to lessees and
borrowers (i) who are rated "four" under the Emerging Growth Credit Scoring
Matrix or are rated "five" under the Credit Scoring Model or Loan Scoring Model
exceed an aggregate of 20% of the Post-Computation Amount of all assets included
in the Borrowing Base; and (ii) who are rated "five" under the Emerging Growth
Credit Scoring Matrix exceed an aggregate of 10% of the Post-Computation Amount
of all assets included in the Borrowing Base.
In addition, at no time shall the Post-Computation Amount included in
the Borrowing Base of Eligible Contracts of Foreign Leasing Subsidiaries or of
any Borrower covering Eligible Equipment in a Foreign Location (including,
without limitation, Residual Values) in respect of such assets in all Foreign
Locations exceed in the aggregate Five Million ($5,000,000) Dollars.
In addition, at no time shall the Post-Computation Amount included in
all clauses of the Borrowing Base relating to software components of Eligible
Equipment or Contract Collateral or Eligible Contracts exceed in the aggregate
Five Million ($5,000,000) Dollars.
(3) Residual Component of Borrowing Base. In any event, without
duplication of amounts excluded from the Borrowing Base as Excludable Amounts,
there shall not be included in the Borrowing Base (or if for any reason
theretofore included, there shall be deducted from the Borrowing Base in the
Pre-Computation Amount relating to Residual Values to the extent of such Pre-
Computation Amount) (i) an amount equal to 100% of the
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Pre-Computation Amount of Residual Values relating to Equipment which Equipment
secures Indebtedness (other than the Indebtedness created hereunder and
Indebtedness which is Single Lessee Cross-Collateralized Financing) under which
a right to cross-collateralize the Equipment exists; (ii) to the extent then
otherwise included in the Residual Value Clause of the Borrowing Base, any
amount that exceeds One Million ($1,000,000) Dollars in Pre-Computation Amount
of Residual Values which Residual Values arise in association with any Single
Lessee Cross-Collateralized Financing; and (iii) the amount by which any
Permanent Secured Debt exceeds the amount of the present value (using the rate
provided for in such Permanent Secured Debt for computing present value) of the
lease receivables securing such Debt if such lease receivables relate to
Equipment the Residual Value of which is then included in the Borrowing Base.
(4) Change in Quantum Rental Equipment NBV Advance Rate. As of any
date of determination and only with respect to computations relating to Eligible
Equipment owned by Quantum: (A) in the event that the Quantum Yield is less than
nine (9%) percent for the two immediately preceding full fiscal quarters of
Quantum, the reference to "85%" as the advance rate percentage in clause (f)
(i.e., Rental Equipment NBV Clause) shall be deemed to read "80%"; (B) in the
event that the Quantum Yield is less than nine (9%) percent for the next
succeeding full fiscal quarter following any such reduction under the preceding
clause (A), the above-described reference to "80%" shall be deemed to read
"75%"; (C) following any reduction in the advance rate percentage described in
clause (A) or (B) above, and following the date (if any) on which the average
Quantum Yield shall have been at least nine (9%) percent for one full fiscal
quarter of Quantum, the above-described advance rate percentage shall be deemed
again to be "85%"; (D) the reference to "85%" as the advance rate percentage in
clause (f) (i.e., Rental Equipment NBV Clause) shall be deemed to read "50%"
with respect to any model of Eligible Equipment, every item of which model has
not been subject to, nor identified nor committed to, a Rental Agreement for a
period of four months or more prior to the date of any Monthly Borrowing Base
Report; and (E) changes in the advance rate percentage as set forth above shall
be made on each occasion when the foregoing conditions are met, and shall become
effective as of the date of delivery to the Banks and the Agent of any quarterly
Compliance Certificate showing relevant changes in the Quantum Yield or rental
status of Eligible Equipment, as applicable, provided that if a quarterly
Compliance Certificate is not delivered when due, or if it is not in compliance
with the other requirements in respect thereof (in the sole judgment of the
Agent), then the Agent may determine, in its reasonable judgment, the Quantum
Yield or rental status of Eligible Equipment, as applicable.
(5) Transportation Equipment, Non-UCC Assets and Fixtures. In no
event shall the Pre-Computation Amounts relating to transportation equipment,
including medical evacuation aircraft and helicopters, trucks and trailers, used
in connection with mobile diagnostic imaging equipment, or other assets the
perfection of the Agent's Lien on which cannot be effected by possession or
filing under the Uniform Commercial Code (such other assets, together with
transportation equipment, are hereinafter sometimes referred to collectively as
"Non-UCC Assets," provided, however, that in no event shall the term "Non-UCC
Assets" include any assets of any Foreign Leasing Subsidiary) exceed Four
Million ($4,000,000) Dollars in the aggregate with respect to all such items at
any one time included in the Borrowing Base, provided that no more
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than $1,000,000 of such $4,000,000 amount shall represent motor vehicles on
which the Agent's Lien is not perfected under clause (c) (i.e., Residual Value
Clause) of the Borrowing Base; and in no event shall the aggregate Post-
Computation Amount of that component of Eligible Equipment or Eligible Leased
Residual Property which is comprised of fixtures, if any, included in
computation of the Borrowing Base at any time exceed an amount equal to five
(5%) percent of the lesser of the Total Commitment or the Borrowing Base as then
in effect.
(6) Aggregate Rental Equipment. In no event shall the aggregate Post-
Computation Amount included under clause (f) (i.e., Rental Equipment NBV Clause)
and the Rental Payments portion of the Accounts Receivable Clause exceed Thirty
Million ($30,000,000) Dollars in the aggregate at any one time.
(7) Affiliates. In no event shall obligations of Lessees, Account
Debtors or other Obligors or lessees under Third Party Leases which are
Affiliates of LINC Group and/or either of the Borrowers be eligible for
inclusion under any clause of the Borrowing Base; provided, however, that
Obligors and lessees under Third Party Leases (together with their Affiliates)
in which the Borrowers, LINC Group and their Subsidiaries (individually and in
the aggregate) own less than fifteen (15%) percent of the voting securities (and
which Obligors and lessees under Third Party Leases are not in any event under
the control of the Borrowers, LINC Group and their Subsidiaries) shall not be
deemed to be ineligible as "Affiliates" for purposes of inclusion in the
Borrowing Base so long as none of the individual principals of LINC Group, any
Borrower or any of their Subsidiaries has any economic or voting interest in any
such entity.
(8) No Liens. Assets included in the Borrowing Base shall be subject
to no Liens other than the Agent's Lien under the Security Documents and
Permitted Borrowing Base Encumbrances, and all assets included in the Borrowing
Base shall be subject to a perfected first priority Lien and security interest
in favor of the Agent except to the extent of Permitted Borrowing Base
Encumbrances.
(9) Term Conversion. From and after the Term Conversion Date (if any):
(A) no assets not then included in the Borrowing Base may thereafter be added
under any clause of the Borrowing Base, and no Eligible Equipment, Eligible
Contract, Eligible Emerging Growth Contract or other assets included in any one
of the clauses under the Borrowing Base may be included in any other clause of
the Borrowing Base; (B) the amounts then included under clause (c) of the
Borrowing Base (i.e., Residual Value Clause) shall not be increased by virtue of
accretion or otherwise, and no effect shall be given to any increase in value of
such amounts included under the Residual Value Clause after the Term Conversion
Date; and (C) no Residual Values may be included in the Borrowing Base following
the Term Conversion Date other than Residual Values represented by Eligible
Residual Leased Property in existence on the Term Conversion Date and as (and
not greater than to the extent) described in the Borrowing Base Computation
delivered to the Banks on the Term Conversion Date.
(10) Compliance During Default. During the existence and continuance
of a Default or an Event of Default, failure of any asset included in the
Borrowing Base to satisfy
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any condition for continued inclusion for computation of the amount of the
Borrowing Base shall (as provided elsewhere in this Agreement) cause such asset
to cease to be included for purposes of computation of the amount of the
Borrowing Base, but such asset shall not cease to be deemed a part of the
Borrowing Base with respect to other provisions of this Agreement which require
compliance with certain more general covenants in respect of assets included in
the Borrowing Base unless and until the lease of the Agent's Lien thereon shall
have occurred upon the terms set forth in Section 2.23 hereof.
(11) Residuals/Past Maturity Payments. In no event shall any amount
relating to an item of Equipment be included under clause (c) (i.e., Residual
Value Clause) simultaneously with inclusion with respect to the same item of
Equipment as a past maturity payment under clause (d) (i.e., Accounts Receivable
Clause) of the Borrowing Base.
(12) GAAP. Inclusion under any clause of the Borrowing Base must be
consistent at all times (A) with the method of recording the subject amount,
item or transaction in the books of account of the applicable Borrower or
applicable Foreign Leasing Subsidiary and (B) GAAP.
(13) 365 Days. References to inclusion in the Borrowing Base for not
"more than 365 days" or similar phrases shall be deemed to mean the period
commencing on the date of the Borrowing Base Report which forms the basis for
inclusion in the Borrowing Base (which date is assumed to be the first day
(whether or not a Business Day) of a calendar month) and ending on the last day
(whether or not a Business Day) of the twelfth month thereafter.
(14) Captions. The captions and headings describing clauses and
sections of the Borrowing Base are for convenience only and shall not affect the
construction or interpretation of this Agreement.
"Contract" - a Lease, Equipment Note, CSA, Finished Goods Inventory
Note, Receivables Note, or Third Party Note, and "related Contract" means, with
reference to any Equipment or Contract Collateral, the Contract covering or
secured by such Equipment or Contract Collateral.
"Contract Collateral" - means all Obligor Finished Goods Inventory or
Obligor Accounts Receivable that secure the obligations of an Obligor to an
Applicable Company under a Contract that is a Receivables Note or a Finished
Goods Inventory Note.
"Contract Payments" - (i) in the case of a Lease, all rental payments,
security deposits, advance rental, indemnity payments and other amounts at any
time made or due or to become due (whether or not earned by performance) under
or pursuant to a Lease including, but not limited to, any proceeds of any
insurance and (ii) in the case of an Equipment Note, CSA, Third Party Lease,
Finished Goods Inventory Note or Receivables Note, all rental, debt service or
installment payments thereunder, including all security deposits, advance
rentals, indemnity payments, insurance proceeds, purchase price payments,
principal, interest, payments in connection
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with any purchase, renewal, termination, option or obligation and other amounts
at any time made, due or to become due, whether or not earned by performance,
under or pursuant to such Equipment Note, CSA, Third Party Note, Finished Goods
Inventory Note or Receivables Note, including, but not limited to, any proceeds
of any insurance.
"Contract Receivables Clauses" - clauses (a) and (b) of the Borrowing
Base.
"CSA" - a conditional sale agreement or similar arrangement providing
for the sale of Eligible Equipment by a Borrower, as vendor, to an Obligor and
for the retention of a Lien on such Eligible Equipment to secure amounts payable
by such Obligor under such CSA.
"Eligible Account Receivable" - an Account Receivable which meets each
of the following requirements:
(a) LCI or Quantum is the direct related obligee (i.e., the Account
Receivable was originated and generated by LCI or Quantum and not acquired by
transfer or assignment of any kind and was not a fee in connection with a
brokered transaction) and the related Account Debtor is not an Affiliate of any
Applicable Company, LINC Group or any of their Subsidiaries (except to the
extent otherwise permitted under subsection (7) of the definition of Borrowing
Base);
(b) the Account Receivable represents the billed but unpaid portion of
an Account Receivable, net of any credits, rebates, offsets, hold backs or other
adjustments or commissions payable to third parties that are adjustments to such
Accounts Receivables;
(c) if it arises from the sale or rental of Equipment or fees relating
thereto, such Equipment has been shipped or delivered to the Account Debtor
under such Account Receivable or if it constitutes fees for services rendered,
such services have been rendered in full;
(d) the Account Receivable arises from a bona fide agreement in an
arm's-length transaction entered into in the ordinary course of business of the
Basic Business and is a legal, valid, binding and enforceable obligation of the
Account Debtor, and is in full force and effect and complies with all applicable
laws and regulations and the charter and by-laws of such Account Debtor, and the
payment by the Account Debtor of such Account Receivable does not and will not
conflict with any agreement or other instrument binding upon or applicable to
such Account Debtor;
(e) it is not subject to any offset, counterclaim or other defense or
dispute on the part of such Account Debtor or to any claim on the part of such
Account Debtor denying liability thereunder in whole or in part, is subject to
no conditions precedent which are unsatisfied, and no agreement relating to such
Account Receivable imposes any obligation upon LCI or Quantum, as applicable
(other than any warranty of title under any such agreement or any agreement of
quiet enjoyment and other than certain maintenance obligations on the part of
LCI or Quantum, as applicable) while such related Account Debtor is not in
default or any other Person
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(including, without limitation, the original related obligee) which if not
performed would give rise to any right of offset, counterclaim or any other
defense on the part of such Account Debtor to payment of any part of such
Account Receivable;
(f) it is evidenced by an invoice sent to the Account Debtor for the
full purchase price or fee payment or monthly or quarterly rental payment under
an Eligible Rental Agreement dated not earlier than the date of shipment or
performance rendered to such Account Debtor and stating a due date for payment
of all payments due thereunder which date is prior to the expiration of ninety
(90) days following the date of invoice, and if there are payments related to
such transaction due more than ninety (90) days later than the date of invoice
such payments shall not at any time be Eligible Accounts Receivable (except in
the case of rental payments under Eligible Rental Agreements which will satisfy
the conditions of this clause (f) upon billing of each due payment);
(g) it is not evidenced by any negotiable or non-negotiable instrument
or chattel paper except with respect to rental payments under Eligible Rental
Agreements evidenced by such Eligible Rental Agreements;
(h) it is not owing by an Account Debtor who shall have failed to pay
in full an invoice or invoices evidencing 10% or more of the unpaid net amount
of all Accounts Receivable owing by such Account Debtor within ninety (90) days
after the due date of such invoice(s);
(i) payment under the invoice evidencing such Account Receivable is
not more than ninety (90) days overdue;
(j) Quantum or LCI is the lawful owner, free and clear of all Liens
(other than the Agent's Lien), of such Account Receivable and holds indefeasible
title to such Account Receivable, and such ownership interest is, except as
aforesaid, protected against all Persons whatsoever;
(k) the Agent's Lien is a first security interest in LCI's or
Quantum's interest therein, and such security interest is perfected against all
Persons whatsoever subject to no other Liens;
(l) the Account Debtor (if not an individual) is an entity duly
organized and existing in good standing under the laws of the jurisdiction of
its organization in the United States of America with full power and authority
to enter into the agreement giving rise to the Account Receivable and performed
its obligations thereunder or (if an individual) is a permanent resident or
citizen of the United States of America; provided, however, that the
requirements of this clause (1) shall not apply to Accounts Receivable included
in the Borrowing Base in an aggregate amount of up to Two Hundred Fifty Thousand
($250,000) Dollars;
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(m) no bankruptcy or insolvency proceeding shall have been commenced
by or against the Account Debtor and the Account Debtor shall not have taken any
corporate action relating to any such proceeding;
(n) the Account Debtor is not the United States of America or any
agency or instrumentality thereof or any entity entitled to full or partial
sovereign immunity or with respect to which an assignment of claims is subject
to consent;
(o) the Account Receivable is payable in the lawful currency of the
United States;
(p) if the Account Receivable does not conform with the terms of the
preceding clause (b), it is a right to payment representing an account
receivable which the Agent, acting in its sole discretion, has determined is
acceptable following delivery by LCI or Quantum of all agreements, instruments
and documents relating to such account receivable as may be requested by the
Agent; provided, however, that if and so long as the inclusion of any such
Account Receivable acceptable to the Agent would (after giving effect to any
proposed inclusion) result in the aggregate amount of all such Accounts
Receivable exceeding Five Hundred Thousand ($500,000) Dollars, then no such
Account Receivable shall be included except with the prior consent of the
Majority Banks; and
(q) none of the Applicable Companies knows of any fact or
circumstance that might render such Account Receivable less valuable than it
purports to be, nor has it taken any action that will impair the value of such
Account Receivable, or of any rights of any of the parties hereto with respect
to such Account Receivable.
Any Account Receivable which is at any time an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
immediately cease to be an Eligible Account Receivable.
"Eligible Contract" - a Contract that meets each of the following
requirements at all times:
(a) no Contract Payment is more than 90 days past due, and no other
material default exists by the Obligor under such Contract or under any security
or other documents executed in connection with such Contract or by any other
Obligor of its obligations with respect to such Contract, provided, however, in
respect of such material default which is not a failure to make a payment when
due, no default under the Contract shall be deemed to exist under this
subparagraph (a) until the earlier of the expiration of the aforementioned
ninety (90) day period or delivery of notice of default to the Lessee or Obligor
there under by the Applicable Company;
(b) it arises in the ordinary course of the Applicable Company's
business, is the legal, valid, binding and enforceable recourse obligation of
the Obligor under such Contract,
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is in full force and effect and complies with all applicable laws, and all of
the Applicable Company's procedures, requirements and conditions; and, with
respect to any Finished Goods Inventory Note or Receivables Note, complies with
all federal and state laws applicable thereto; and the obligations of the
Obligor have been duly authorized and have not been canceled or terminated and
the execution and delivery by such Obligor of and the performance of its
obligations under such Contract do not and will not conflict with or result in
any violation of or constitute a default under the charter or by-laws of such
Obligor;
(c) the Initial Term of the Contract has commenced and it is
noncancellable and non-prepayable during its Initial Term and it provides that
the Obligor under such Contract will pay all amounts due without set-off,
counterclaim, defense or abatement (provided, that such Contract will be an
Eligible Contract even if cancelable or prepayable by the Obligor thereunder if,
in the event of cancellation, the Obligor thereunder is unconditionally
obligated to make a lump-sum payment to the Applicable Company or its assignee
on the date of cancellation which is not less than, with respect to (i) a Lease,
CSA, or Equipment Note, 100% of the Present Value of the Balance of Payments
with respect thereto and (ii) a Finished Goods Inventory Note or a Receivables
Note, 100% of the principal balance thereof;
(d) no set-offs, counterclaims, defenses or disputes exist with the
Obligor or any Affiliate of the Obligor with respect to such Contract which
could have a material effect on such Contract, the Obligor has not denied
liability under such Contract in whole or in part, the payment of amounts due
under such Contract is subject to no conditions precedent that are unsatisfied,
and no agreement relating to such Contract imposes any obligation on the
Applicable Company (other than a warranty of title) that if not performed would
give rise to a right of offset, counterclaim or any other defense on the part of
such Obligor to payment of any part of such Contract (provided that disputes
regarding rental payments, principal payments, interest payments, maintenance,
taxes, insurance, non-cancellability and term (excluding disputes regarding
fewer than twenty days difference in commencement of the Contract term) shall in
any event be deemed to be material);
(e) such Contract, including all related security documents, (i)
constitutes a non-cancelable Lease or a non-cancelable Equipment Note, CSA,
Third Party Note, Finished Goods Inventory Note or Receivables Note, (ii) can be
assigned as collateral by the Applicable Company without the Obligor's consent,
(iii) cannot be assigned or transferred by the Obligor without the consent of
the Applicable Company, (iv) are marked in accordance with Section 6.16 and
satisfy the requirements of Section 6.17 hereof, (v) includes an obligation on
the part of the Obligor to maintain or cause to be maintained the Equipment or
Obligor Finished Goods Inventory at the Obligor's expense in good condition,
repair and working order, (vi) does not permit a balloon payment exceeding an
amount equal to 30% of the aggregate payments due thereunder and otherwise
provides for payments in substantially equal installments and (vii) is, in
respect of all other material terms therein substantially the same in form as
one of the forms delivered to the Agent on the Closing Date, or with respect to
Contracts entered into in connection with the Loan Business, delivered to the
Agent at least 30 days prior to inclusion in the Borrowing Base of any
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Contracts related to the Loan Business and contains no terms in contradiction or
in conflict with any of the foregoing;
(f) all Equipment covered by such Contract is at all times Eligible
Equipment, and all Contract Collateral securing such Contract, if any, is at all
times Eligible Contract Collateral;
(g) no bankruptcy or insolvency proceeding shall have been commenced
by or against the Obligor under such Contract or the lessee under a Third Party
Lease, such Obligor or lessee shall not have taken any corporate action relating
to any such proceeding and no foreclosure or similar proceeding shall have been
commenced by any holder of a Lien on the Equipment or Contract Collateral
related to or securing such Contract (whether such Lien is a Permitted Borrowing
Base Encumbrance or otherwise) and no such Contract has been classified by the
Applicable Company as "non-performing" (as determined by reference to such
Applicable Company's Credit Scoring Model, Emerging Growth Credit Scoring
Matrix, or Loan Scoring Model as delivered to the Agent);
(h) any Lease is a net-net-net lease with no more than 84 (but in
respect of any Contract proposed to be included as an Eligible Emerging Growth
Contract, 72) remaining months in the Initial Term; any Equipment Note, CSA or
Third Party Note has an original scheduled final maturity date not more than 84
(but in respect of any Contract proposed to be included as an Eligible Emerging
Growth Contract, 72) months in the future (computed as of the first date of
inclusion thereof in the computation of the Borrowing Base); in respect of
computation of Residual Value under clause (c) of the Borrowing Base, the
remaining useful life of the Eligible Leased Residual Property thereunder
exceeds the remaining minimum lease term; and any Finished Goods Inventory Note
or Receivables Note has an original scheduled final maturity date of not more
than 36 months in the future (computed as of the first date of inclusion thereof
in the computation of the Borrowing Base);
(i) the Agent has received or has available to it for inspection
pursuant to Section 2.25 hereof a photocopy of the file stamped "acknowledgment
copy" containing the recording information of Financing Statements filed with
respect to such Contract in all appropriate and necessary offices naming the
Obligor as debtor or lessee, the Applicable Company as Secured Party or lessor
and the Agent as assignee (or the equivalent in respect of each Foreign Leasing
Subsidiary);
(j) the Obligor under such Contract is not, and any lessee under a
Third Party Lease is not, the United States of America, any agency or
instrumentality of the United States of America, any entity entitled to full or
partial sovereign immunity or any entity as to which an assignment of claims is
subject to consent; provided that, so long as no consent to an assignment of
claims is required, the foregoing shall not preclude an Obligor or the lessee
under a Third Party Lease that has no right to terminate or discontinue making
payments in the event of nonappropriation of funds by any governmental agency or
body;
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(k) each Obligor under such Contract and each lessee under a Third
Party Lease is an entity duly organized and existing under the laws of its
jurisdiction of organization in, or an individual legally and permanently
residing in, the United States of America;
(l) payment under such Contract and under any Third Party Lease is to
be made in Dollars, and if such Contract is a Lease either (i) the rental
payments are not determined wholly or partly by the volume of use of the related
Equipment, or (ii) if the rental payments are determined partly by the volume of
use of the related Equipment, then only the guaranteed or fixed rental payments
are included in computing the Borrowing Base;
(m) no Applicable Company knows of any fact or circumstance that might
render such Contract less valuable than it purports to be, and no Applicable
Company has taken any action that will impair the value of such Contract, the
related Equipment or Contract Collateral, or the rights of any party with
respect to such Contract or the related Equipment or Contract Collateral, such
Contract has not in any event been rejected or refused as unacceptable for
inclusion in any securitization or under any warehousing loan agreement or under
any permanent financing except on the basis of concentration issues only
(including geographical, equipment type and Dollar amount);
(n) the Obligor under such Contract, any lessee under a Third Party
Lease and any Obligor Account Debtor are not Affiliates of any Applicable
Company, LINC Group or any of their Subsidiaries, except as and to the extent
otherwise permitted under subsection (7) of the definition of "Borrowing Base";
(o) in the case of a Lease, the Applicable Company holds good,
indefeasible and marketable title to the Contract, all related Contract Payments
and all Equipment covered by such Contract, and has granted to the Agent a valid
first priority perfected Lien on all of such Company's right, title and interest
in such Contract, Contract Payments and Equipment, subject to no Liens other
than Permitted Liens, and such Lease constitutes chattel paper;
(p) in the case of an Equipment Note, CSA, Finished Goods Inventory
Note or Receivables Note, the Applicable Company holds good and marketable title
to the Contract and all related Contract Payments, the Applicable Company has a
valid first priority perfected Lien on all Equipment or Contract Collateral
securing or covered by such Contract, and the Applicable Company has granted to
the Agent a first priority perfected Lien on all of the Applicable Company's
right, title and interest (including its rights of recourse) in such Contract,
Contract Payments, Equipment and Contract Collateral, subject to no Liens other
than Permitted Liens, and any CSA constitutes chattel paper;
(q) in the case of a Third Party Note, the Applicable Company holds
good and marketable title to the Contract and all related Contract Payments, the
Applicable Company has a valid first priority perfected Lien on the Third Party
Lease (including all payments to be made to the Obligor under the Third Party
Lease) and all Equipment covered by such Third Party Lease, and the Applicable
Company has granted to the Agent a valid first priority perfected
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Lien on all of the Applicable Company's right, title and interest in such Third
Party Note, Third Party Lease and Equipment, subject to no Liens other than
Permitted Liens, and the related Third Party Lease constitutes chattel paper;
(r) the Applicable Company's and Agent's Lien on the Equipment or
Contract Collateral related to any such Contract is created under and pursuant
to the UCC of an applicable jurisdiction, except that for motor vehicles the
appropriate endorsement on the certificate of title in favor of the Agent shall
have been effected if more than ten motor vehicles are included in computation
of the Borrowing Base at that time or, if ten or less motor vehicles are then
included in computation of the Borrowing Base, the Agent has requested in
writing that such endorsement be effected;
(s) the payment terms of such Contract shall not have been
restructured due to the Obligor's financial condition or inability to make
payment under the original Contract; provided however that any Contract which
has been so restructured shall not be disqualified as an Eligible Contract under
this subparagraph (s) from and after the 181st day following the date the first
payment is made under the restructured terms if the Obligor has remained current
with respect to all payments due under such restructured Contract for a period
of at least 180 consecutive days (for purposes of this subparagraph (s),
payments are "current" if made within ten (10) days following the scheduled date
when due);
(t) no potential or matured default or event of default under any
servicing agreement relating to the Leased Property subject to such Contract
shall have occurred and be continuing;
(u) prior to the execution of such Lease, the Lessee had no interest,
directly or indirectly, in the Equipment or the Lessee conveyed any such
interest or good title to or granted a first priority perfected security
interest in the Equipment to the applicable Borrower or applicable Foreign
Leasing Subsidiary;
(v) the Applicable Company has not and will not give or loan to any
Obligor, directly or indirectly, any unpaid rent or other amount due or to
become due under any Lease, Finished Goods Inventory Note or Receivables Note;
(w) such Contract constitutes the entire agreement of the parties
thereto and neither party thereto shall be bound except in accordance therewith;
(x) except with respect to amounts used to purchase Equipment from an
Obligor, and except indirectly as proceeds of any Finished Goods Inventory Loan
or Receivables Loan, no Obligor has received, nor will any Obligor receive
(except as directed by the applicable Borrower and agreed to by the Agent) from
or through the Applicable Company, directly or indirectly, any part of the
proceeds of the Loans;
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(y) if such Contract is a Finished Goods Inventory Note (i) such
Contract is secured by a valid and perfected first priority security interest
held by an Applicable Company in Eligible Contract Collateral owned by an
Obligor and created under and pursuant to the UCC of an applicable jurisdiction
which Eligible Contract Collateral is comprised, at least, of (A) all of such
Obligor's inventory and (B) all accounts receivable of such Obligor, (ii) the
face amount of such Note does not exceed 50% of the least of (A) the wholesale
value of Obligor Finished Goods Inventory securing such Note which Obligor
Finished Goods Inventory is Eligible Contract Collateral, (B) if such Obligor
Finished Goods Inventory was manufactured by the Obligor, the manufacturing cost
of such Obligor Finished Goods Inventory securing such Note which Obligor
Finished Goods Inventory is Eligible Contract Collateral, or (C) if such Obligor
Finished Goods Inventory was purchased by the Obligor from an unrelated third
party, such Obligor's purchase price for such Obligor Finished Goods Inventory
securing such Note which Obligor Finished Goods Inventory is Eligible Contract
Collateral, net of any taxes, delivery charges or discounts, and (iii) the
Obligor thereunder shall have also executed and delivered to the Applicable
Company a Receivables Note which is an Eligible Contract hereunder; and
(z) if such Contract is a Receivables Note (i) such Contract is
secured by a valid and perfected first priority security interest held by an
Applicable Company in Eligible Contract Collateral owned by an Obligor and
created under and pursuant to the UCC of an applicable jurisdiction, (ii) the
face amount of such Note does not exceed 85% of the aggregate value of the
Obligor Accounts Receivable securing such Note which Obligor Accounts Receivable
are Eligible Contract Collateral.
A Contract which initially was an Eligible Contract, but which
subsequently fails to meet any of the above requirements of paragraphs
(a) - (z), shall immediately cease to be an Eligible Contract.
"Eligible Contract Collateral" - any Contract Collateral which meets
each of the following requirements at all times:
(a) if such Contract Collateral consists of Obligor Accounts
Receivable:
(i) the Obligor is the direct related obligee and the related
Obligor Account Debtor is not an affiliate of such Obligor (i.e., the Obligor
originated and generated the Obligor Account Receivable and did not acquire it
by way of transfer or assignment of any kind, and such Account Receivable was
not a fee in connection with a brokered transaction);
(ii) if such Obligor Account Receivable arises from the sale of
equipment or inventory, such equipment or inventory has been shipped or
delivered to the Obligor Account Debtor under such Obligor Account Receivable;
(iii) such Obligor Account Receivable arises from a bona fide
agreement in an arm's-length transaction entered into in the ordinary course of
Obligor's business, and is a legal, valid, binding and enforceable obligation of
the Obligor Account Debtor, and is in full force
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and effect and complies with all applicable laws and regulations and the charter
and by-laws of such Obligor Account Debtor, and the payment by the Obligor
Account Debtor of such Obligor Account Receivable does not and will not conflict
with any agreement or other instrument binding upon or applicable to such
Obligor Account Debtor;
(iv) such Obligor Account Receivable represents the billed but
unpaid portion and is evidenced by an invoice sent to the Obligor Account Debtor
for the full purchase price dated not earlier than the date of shipment to such
Obligor Account Debtor and stating a due date for payment of all payments due
thereunder which date is prior to the expiration of ninety (90) days following
the date of invoice;
(v) the related Obligor is the lawful owner, free and clear of all
Liens (other than the Applicable Company's Lien), of such Obligor Account
Receivable and holds indefeasible title to such Obligor Account Receivable, and
such ownership interest is, except as aforesaid, protected against all Persons
whatsoever;
(vi) the Applicable Company's Lien with respect to such Obligor
Account Receivable is a first priority security interest in the Obligor's
interest therein, and such security interest is perfected against all Persons
whatsoever subject to no other Liens;
(vii) it is not evidenced by any negotiable or non-negotiable
instrument or chattel paper;
(viii) such Obligor Account Receivable meets the requirements of
clauses (e), (h), (i), (l), (m), (n), (o), and (q) of the definition of Eligible
Account Receivable; provided that for purposes of this clause (viii) (1) all
references therein (A) to "Account Debtor" shall be deemed to be to "Obligor
Account Debtor", (B) to "Accounts Receivable" shall be deemed to be to "Obligor
Accounts Receivable", (C) to "LCI" or "Quantum" shall be deemed to be to
"Obligor"; and (2) the proviso set forth in clause (l) shall not apply.
(ix) the Agent is the holder of a first priority security interest
in the Applicable Company's interest in such Obligor Account Receivable, and
such security interest is perfected against all Persons whatever subject to no
other Liens except for (1) Permitted Borrowing Base Encumbrances and (2)
Permitted Liens;
(x) if the Contract Collateral consists of Obligor Accounts
Receivable that are Healthcare Receivables, then such Healthcare Receivables
meet, in addition to other applicable requirements set forth in this Agreement,
each of the following requirements:
(A) it is a liability of a commercial insurance company, Blue
Cross/Blue Shield plan, health maintenance organization, preferred provider
organization or hospital corporation organized under the laws of any
jurisdiction in, and having its principal office in, the United States of
America;
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(B) the Obligor in respect of such Healthcare Receivable is not an
Affiliate of its related Healthcare Provider or any Loan Party;
(C) it is not a receivable arising in whole or in part under or whose
payment is wholly or partially administered under (1) the health insurance
program for the aged and disabled established by Title XVIII of the Social
Security Act (42 U.S.C. ss. 1395 et seq.) and any succeeding statutes (i.e.,
Medicare), (2) the medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. ss. 1396 et seq.) and any succeeding statutes
(i.e., Medicaid), or (3) the Civilian Health and Medical Program of the
Uniformed Services established by 10 U.S.C ss. 1071 et seq. (i.e., CHAMPUS);
(D) it is a Healthcare Receivable in which a Healthcare Provider
granted a first priority perfected security interest and assigned all of its
rights and interests to LCI pursuant to a Receivables Note, and notice of such
assignment to LCI has been duly and properly delivered by the Healthcare
Provider and LCI and received by the payor referred to in subsection (A) above;
and
(E) it has not been satisfied, has not been and is not subject to
being compromised, adjusted, modified, subordinated or rescinded and is net of
contractual allowances;
(b) if such Contract Collateral consists of Obligor Finished Goods
Inventory:
(i) such Obligor Finished Goods Inventory is personalty and does
not constitute fixtures;
(ii) such Obligor Finished Goods Inventory is located at all times
in one of the states of the United States of America or Washington, D.C.;
(iii) such Obligor Finished Goods Inventory is located at the related
Obligor's premises;
(iv) such Obligor Finished Goods Inventory is not installed in or
affixed to other equipment or inventory which is not Contract Collateral;
(v) such Obligor Finished Goods Inventory is in good condition,
repair and working order, is not obsolete and is insured in accordance with the
terms of the applicable Finished Goods Inventory Note and the security documents
related thereto;
(vi) if such Obligor Finished Goods Inventory consists in whole or
in part of software, the Applicable Company has or will have after foreclosure
against the related Obligor the right to remarket such Finished Goods Inventory
with the associated software remaining in place without obtaining any consent or
approval from the licensor of such software;
(vii) such Obligor Finished Goods Inventory does not constitute a
Non-UCC Asset;
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(viii) the Agent is the holder of a first priority security interest
in the Applicable Company's interest therein, and such security interest is
perfected against all Persons whatever subject to no other Liens except for (1)
Permitted Borrowing Base Encumbrances and (2) Permitted Liens;
The foregoing notwithstanding, any Contract Collateral which initially
was Eligible Contract Collateral, but which subsequently fails to meet any of
the requirements set forth above with respect to such Contract Collateral shall
immediately cease to be Eligible Contract Collateral.
"Eligible Emerging Growth Contract" - a Contract which (a) meets all
of the requirements of the definition of Eligible Contract and (b) which is
scored or rated using the Applicable Company Emerging Growth Credit Scoring
Matrix and the Obligor under such Contract is an Emerging Growth Company as of
the date of effectiveness under the certificate of delivery and acceptance
relating to a Contract or on the date of funding of an Equipment Note, Third
Party Note, CSA, Finished Goods Inventory Note or Receivables Note.
"Eligible Equipment" - any item of Equipment that meets each of the
following requirements at all times:
(a) such Equipment is personalty and does not constitute fixtures
except for fixtures that are immaterial in type or quantity;
(b) such Equipment is not used or intended for use primarily for
personal, family or household purposes and is not consumer goods, and does not
constitute gaming equipment;
(c) such Equipment is located at all times in one of the United States
of America or Washington, D.C.;
(d) such Equipment is located at either the Applicable Company's
premises (if it constitutes inventory) or the related Obligor's premises, except
for Equipment with a Net Book Value of up to $1,000,000 at any time that is
covered by a UCC-1 Financing Statement filed by the Applicable Company against
the warehouseman, manufacturer or other Person in possession of such Equipment;
(e) such Equipment is not installed in or affixed to other equipment
which is not Collateral;
(f) such Equipment is in good condition, repair and working order and
is insured in accordance with this Agreement and the Security Documents;
(g) if such Equipment includes software, the Applicable Company has or
will have after foreclosure against the related Obligor the right to remarket
such Equipment with the associated software remaining in place without obtaining
any consent or approval from the
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licensor of such software and such software is covered by a Contract that also
covers Equipment (other than software) related to the use of such software;
(h) if such Equipment is a motor vehicle, it has an appropriate
endorsement on the certificate of title and perfected lien in favor of the Agent
pursuant to the applicable motor vehicle laws and regulations in the State in
the United States of America in which such motor vehicle is registered, except
as and to the extent otherwise permitted under subsection (5) of the Borrowing
Base;
(i) if such Equipment is a Non-UCC Asset other than a motor vehicle,
the Agent shall have received notice from the Applicable Company not less than
ten (10) Business Days prior to the proposed date of inclusion of such Non-UCC
Asset in the Borrowing Base, which notice shall describe the subject Equipment,
its location and the legal requirements for perfection of the Applicable
Company's interest and Agent's lien thereon, and such Non-UCC Asset shall not be
deemed to be Eligible Equipment unless and until each of the Applicable
Company's Lien thereon and the Agent's Lien thereon have been created and
perfected to the satisfaction of the Agent (including, if required by the Agent,
the rendering of legal opinions) prior to inclusion in the Borrowing Base and
unless the Agent is satisfied in its sole discretion that enforcement of and
practical realization of the benefits of, the Agent's Lien are not subject to
consent, approval or other requirements or restrictions more onerous or
materially different in nature than are applicable in respect of assets included
in the Borrowing Base which do not constitute Non-UCC Assets;
(j) the Agent is the holder of a first security interest in the
Applicable Company's interest therein, and such security interest is perfected
against all Persons whatever subject to no other Liens except for (A) Permitted
Borrowing Base Encumbrances and (B) Permitted Liens; and "related Equipment"
shall mean, when used with reference to any Contract, the Eligible Equipment
covered by or securing the repayment of obligations under such Contract.
"Eligible Equipment Note" - an Eligible Contract which is an Equipment
Note.
"Eligible Foreign Lease" - a Contract (a) which is a Lease that meets
all of the requirements of the definition of Eligible Contract except for clause
(l) so long as the lessee is duly organized and existing under the laws of one
of the Foreign Locations; (b) the lessee under which meets all of the
requirements of the definition of Lessee; (c) which is a Lease of Equipment that
meets all of the requirements of Eligible Equipment other than the requirements
of clause (c) thereof; (d) which is a Lease of Equipment located in a Foreign
Location; (e) the lessor under which is a Foreign Leasing Subsidiary or LCI;
provided, however, that in respect of amounts included under clause (c) (i.e.,
Residual Values) of the Borrowing Base in respect of Eligible Foreign Leases,
the Lessor under such Eligible Foreign Lease need not be a Foreign Leasing
Subsidiary of LCI; (f) for which the applicable Foreign Leasing Subsidiary or
LCI has made arrangements pursuant to a currency swap agreement or similar
currency hedge agreement, in each case in form and substance satisfactory to the
Agent, providing, among other things, for the exchange of Contract Payments
thereunder into Dollars to the extent such Contract Payments are
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made in a foreign currency, and (g) the Equipment covered thereunder which shall
not be deemed to be Eligible Equipment unless and until the Agent's Lien thereon
has been created and perfected. The terms of this definition of Eligible Foreign
Lease constitute the exclusive terms under which a Lease entered into by a
Foreign Leasing Subsidiary or LCI may be eligible for inclusion in the Borrowing
Base, and in the event of any inconsistency between any portions of any
definitions used in this definition of Eligible Foreign Lease, including,
without limitation, the terms "Eligible Equipment" and "Eligible Lease", and
this definition of Eligible Foreign Lease, the terms of this definition of
Eligible Foreign Lease shall govern, and no Lease entered into by a Foreign
Leasing Subsidiary or LCI shall be eligible for inclusion under the Borrowing
Base unless such Lease satisfies the requirements of this definition in full.
"Eligible Lease" - an Eligible Contract which is a Lease.
"Eligible Residual Leased Property" - for purposes of computations
under the definition of "Residual Value", Leased Property which meets each of
the following requirements: (a) it is and continues to be subject to an Eligible
Contract or Eligible Emerging Growth Contract; (b) it meets all of the
requirements of the definition of Eligible Equipment except that the Applicable
Company's interest in the Equipment may be subject, and the security interest of
the Agent's Lien on the Equipment may be subordinate to a security interest
granted in connection with the incurrence of Indebtedness (but only if and to
the extent the incurrence of such Indebtedness shall have been consistent with
the terms of this Agreement) and constituting a Permitted Borrowing Base
Encumbrance; (c) it was purchased by the Applicable Company but in any event was
purchased for not more than its fair market value; (d) it has been delivered to
and accepted by the Lessee thereof; (e) the Initial Term of such Lease covering
such Leased Property has commenced and is continuing or has been renewed or
extended. Any Leased Property which is at any time Eligible Residual Leased
Property, but which subsequently fails to meet any of the foregoing
requirements, shall immediately cease to be Eligible Residual Leased Property.
"Eligible Rental Agreement" - a Rental Agreement between Quantum as
lessor and a Lessee, in each case, which meets all of the requirements of the
definition of Eligible Contract (other than the requirements of clauses (c),
(e)(i) and (v), and (h) except that such Rental Agreement shall satisfy the
requirements of Section 6.17 of this Agreement) or meets all of the requirements
of an Eligible Account Receivable. Any Rental Agreement which initially was an
Eligible Rental Agreement but subsequently fails to meet any of the foregoing
requirements shall immediately cease to be an Eligible Rental Agreement.
"Emerging Growth Company" - as of any date, a company which has less
than two consecutive years of earnings as reported in its most recent financial
statements.
"Equipment" - any equipment which, in the case of Equipment subject to
a Lease, is owned by an Applicable Company and rented, leased or refinanced by
an Applicable Company as lessor or lender in the ordinary course of its
business.
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"Equipment Note" - a loan agreement, security agreement and any
related agreement setting forth (i) an Obligor's agreement either to purchase
Equipment from a Borrower or to repay a loan from a Borrower, the proceeds of
which were used to purchase Eligible Equipment from such Borrower or refinance
such Eligible Equipment and all other obligations of such Obligor in connection
with such purchase or repayment, and (ii) granting to such Borrower a security
interest in such Eligible Equipment to secure all such obligations.
"Excludable Amounts" - in respect of the Borrowers and the Foreign
Leasing Subsidiaries in the aggregate: (a) all accrued but unpaid federal, state
and local taxes (not including deferred taxes or taxes which are reimbursable by
a Lessee or other Obligor); and (b) recourse liabilities, contingent or
otherwise (including accounts payable) in respect of acquisitions, purchases and
financing of or relating to Equipment which Equipment is included in any clause
of the Borrowing Base, including, without limitation (but without duplication):
(i) in respect of any such Equipment included in clause (c) (i.e., Residual
Value Clause) amounts equal to the amounts excluded under Section 3 of the
definition of Borrowing Base (which amounts the parties hereto intend shall not
in the first instance have been included in computation of the Borrowing Base);
provided, however, that except as set forth in the preceding terms of this
definition, "Excludable Amounts" shall not include recourse liabilities
comprised of the permanent financing obtained by the Borrowers or Foreign
Leasing Subsidiaries for lease receivables (which lease receivables are not
included in the Borrowing Base) generated by leases of Equipment which Equipment
is included as Eligible Residual Leased Property under the Residual Value
Clause; and (ii) in respect of any such Equipment included in clause (e) (i.e.,
Inventory Clause) of the Borrowing Base.
"Finished Goods Inventory Loan" - a loan made by an Applicable Company
to an Obligor which is in an industry satisfactory to the Majority Banks in the
ordinary course of such Applicable Company's Loan Business, which Loan is
evidenced by a Finished Goods Inventory Note.
"Finished Goods Inventory Note" - a loan agreement, security agreement
and any related agreement, in substantially the same form as one of the forms
delivered to the Agent prior to inclusion of any Finished Goods Inventory Notes
in computation of the Borrowing Base and satisfactory to the Agent, (a) setting
forth an Obligor's agreement to repay a Finished Goods Inventory Loan and all
other Obligations of such Obligor in connection with such agreement and (b)
granting to the Applicable Company a security interest in, among other things,
Obligor Finished Goods Inventory.
"Healthcare Provider" - a Person that has provided services or sold
merchandise to an Obligor and granted a security interest in the resulting
Healthcare Receivable to LCI.
"Healthcare Receivable" - (a) an account receivable billed by a
Healthcare Provider arising from the provision of health care services (and any
services or sales ancillary thereto) by the Healthcare Provider or physicians or
other professionals employed thereby including
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the right to payment of any interest or finance charges and other obligations
with respect to such account receivable;
(b) all security interests or liens and the property subject thereto
from time to time purporting to secure payment of such account receivables;
(c) all guarantees, indemnities and warranties and proceeds thereof,
proceeds of insurance policies, financing statements and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such account receivable;
(d) all cash collections with respect to any of the foregoing;
(e) all books and records with respect to any of the foregoing; and
(f) all proceeds of any of the foregoing.
"Initial Term" - with respect to a Lease, the period commencing on the
date specified in the Lease as the "Commencement Date" and ending on the last
day of the term thereof which is non-cancelable by the Lessee, and with respect
to any other Contract, the date on which a sum first becomes outstanding for the
principal or time sale price (but not before, in the case of an Equipment Note,
CSA or Third Party Note, the Obligor accepts the related Equipment as evidenced
by a certificate of delivery and acceptance or by a similar document) and ending
on the scheduled final payment date thereunder which is non-cancellable by the
Obligor.
"Invoiced Cost" - of any item of Eligible Equipment, the cost of such
Eligible Equipment to the applicable Borrower or applicable Foreign Leasing
Subsidiary, including sales and excise taxes, and all installation and delivery
costs, as evidenced by invoice(s) of the vendor(s) of such Eligible Equipment,
and, without duplication and in respect only of computations under clause (f) of
the Borrowing Base (i.e., Rental Equipment NBV Clause) and the Rental Payments
portion of the Accounts Receivable Clause with respect to Eligible Rental
Agreements under which Quantum is the lessor, the cost of refurbishment of the
related Eligible Equipment.
"Lease" - any document evidencing an agreement (including any
amendments, addenda, or supplements thereto) pursuant to which a Borrower, as
lessor, or a Foreign Leasing Subsidiary, as lessor, leases Leased Property to a
Lessee. Such term includes in its meaning both unitary leases and individual
lease schedules which incorporate into such schedules all terms and conditions
of a master lease pursuant to which such schedule is executed.
"Leased Property" - any item of Eligible Equipment which is at any
time covered by or leased under a Lease, and all replacements and substitutions
thereof, and additions, parts and accessories thereto, and all proceeds thereof.
"Lessee" - the party leasing Leased Property from a Borrower or a
Foreign Leasing Subsidiary under a Lease (including a Rental Agreement) and any
successors thereto;
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provided, however, that Affiliates of LINC Group or any Borrower may not
constitute Lessees for purposes of computation of the Borrowing Base, except as
otherwise permitted under the definition of Borrowing Base.
"Non-UCC Asset" - as defined in Section (5) of the definition of
Borrowing Base.
"Obligor" - any Lessee or other Person obligated in respect of a
Lease, any maker of an Equipment Note, any vendee under a CSA, any maker of a
Third Party Note or any other Person obligated in respect of a Contract
including any maker of a Finished Goods Inventory Note or Receivables Note, or
obligated under any other asset included in the Borrowing Base other than a
Company and, in each case, any successors thereto; provided, however, that
Affiliates of LINC Group or any Borrower may not constitute Obligors for
purposes of computation of the Borrowing Base, except as otherwise permitted
under the definition of Borrowing Base.
"Obligor Account Debtor" - the party who is obligated to an Obligor on
or under or with respect to any Obligor Accounts Receivable.
"Obligor Accounts Receivable" - trade receivables originated by and
owing to an Obligor and which are Contract Collateral under a Receivable Note.
"Obligor Creditor Participation Agreement" - for purposes, inter alia,
of determining compliance with the terms of subsection (3) of the definition of
"Permitted Borrowing Base Encumbrances", an agreement under which a Person, not
a Borrower, acquires an undivided percentage ownership interest in certain
Equipment and Contracts, in form and substance satisfactory to the Agent and
delivered to the Agent prior to inclusion under any Contract Receivable Clause
in the Borrowing Base of any asset subject to any such agreement, which
agreement shall in any event provide, among other things, that: (a) the
applicable Borrower has retained and shall continue to have exclusive and sole
control and authority as to servicing, collections and enforcement of rights and
remedies in respect of the entire Contract (and not solely in respect of the
Borrower's interest therein) which control and authority are not subject to the
need to obtain consent, waiver or approval from any other Person and are not
subject to veto or disapproval by any other Person, including, without
limitation, the holder of the balance of any interest in or rights in or under
such Contract; and (b) any Person who holds the balance of any rights and
interest in respect of Contracts or Equipment covered thereby to which the
Borrower has granted a participating interest shall have waived any right to
take any enforcement action or to exercise rights or remedies in relation
thereto.
"Obligor Finished Goods Inventory" - inventory owned by an Obligor
which has completed the manufacturing process of an Obligor or its supplier, is
in a state of readiness for delivery and shipment to a customer of such Obligor
except for packaging and crating and which is Contract Collateral under a
Finished Goods Inventory Note.
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"Permitted Borrowing Base Encumbrances" - Liens or encumbrances as and
to the extent (but only as and to the extent) described below on or affecting
the following respective assets included in the Borrowing Base under the
respective clauses referred to below or otherwise described:
(1) Residual Value Clause: with respect to the priority of the Agent's
Lien on Eligible Equipment covered by clause (c) (i.e., Residual Values), the
Agent's Lien may be junior and subject to a Lien in favor of a Permanent Lender
but only during the Initial Term and not thereafter, i.e., following release of
a Lien by a Permanent Lender on any assets included under a Residual Value
Clause, no other Liens may be imposed on such assets without the consent of the
Agent;
(2) Motor Vehicles, Fixtures and other Non-UCC Assets: with respect to
the perfection and priority of the Agent's Lien on Eligible Equipment
constituting motor vehicles, fixtures and other Non-UCC Assets, the Agent's Lien
shall be subject to the conditions stated in Section (5) of the definition of
Borrowing Base; and
(3) Assets included under the Contracts Receivable Clause and Emerging
Growth Contract Receivables Clause: with respect to the assets included under
the Contracts Receivables Clause and Emerging Growth Contract Receivables
Clause, but only relating to a Pre-Computation Amount included in the Borrowing
Base not to exceed Five Million ($5,000,000) Dollars in the aggregate at any one
time, the Agent's Lien may attach only to the extent of LCI's undivided
percentage ownership interest in such assets, the balance of such ownership
interest being held by an unaffiliated third party which may have granted to
another entity a security interest in its own ownership interest but only if and
so long as an Obligor Creditor Participation Agreement is in effect with respect
to such asset; provided that any Obligor Creditor Participation Agreement
otherwise in effect shall be deemed no longer to be in effect upon cessation or
termination of a Borrower's status as servicer, and accordingly the Borrower's
rights in the Contract(s) covered thereby shall cease to be eligible for
inclusion under the Borrowing Base.
(4) Assets included under the Contract Receivables Clause, Emerging
Growth Contract Receivables Clause, and Finished Goods Inventory and Receivables
Note Clause: Assets included in the Contract Receivables Clause, Emerging
Growth Contract Receivables Clause of the Finished Goods Inventory and
Receivables Note Clause of the Borrowing Base (but not in any event in respect
of Leases) may be subject to the Lien of a creditor of the Obligor which is
expressly subordinate to the Lien of the applicable Company and which pursuant
to an intercreditor agreement in substantially a form approved in advance by the
Agent require such creditor to stand still in the enforcement of its Lien until
the indebtedness of the Obligor to the applicable Borrower has been satisfied in
full.
"Post-Computation Amount" - as to any asset included in the Borrowing
Base and as of any date of recomputation, the net amount of such asset expressed
in Dollars following, as applicable, discounting to Present Value and
calculation based on any relevant percentage for
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inclusion set forth in the respective clause of the Borrowing Base, and thus
representing the amount that could actually be advanced in respect of such
asset.
"Pre-Computation Amount" - as to any asset to be included in the
Borrowing Base, the gross amount of such asset expressed in Dollars prior to, as
applicable, discounting and calculations based on any relevant percentage for
inclusion set forth in the respective clause of the Borrowing Base.
"Present Value" - at any time, with respect to the Balance of Payments
under Unfunded Leases, Unfunded Account Receivables, Eligible Residual Leased
Property (i.e., in respect of Residual Values), Unfunded Equipment Notes,
Unfunded CSAs or Unfunded Third Party Notes, the Present Value thereof,
determined by discounting at the rate per annum equal to the interest rate which
then applies to the Prime Rate Loans (or, if none are then outstanding, the
interest rate which would then apply) as it is in effect on the first Business
Day of the calendar month immediately preceding the date of any computation of
Present Value required to be made under this Agreement.
"Quantum Yield" - for any fiscal quarter as of any date of
determination, a quotient (expressed as a percentage) obtained by dividing (a)
as numerator, the aggregate net rental payment revenues during such quarter from
Lessees pursuant to Rental Agreements of Quantum as such revenues are shown in
the financial statements required to be delivered pursuant to Section 5.1 or 5.2
hereof, by (b) as denominator, the average net book value for such quarter of
the related Equipment that generated such rental revenues.
"Receivables Loan" - a loan made by an Applicable Company to an
Obligor which is in an industry satisfactory to the Majority Banks in the
ordinary course of an Applicable Company's Loan Business, which Loan is
evidenced by a Receivables Note.
"Receivables Note" - a loan agreement, promissory note, security
agreement and any related agreement, in form and substance substantially the
same as one of the forms delivered to the Agent prior to inclusion of any
Receivable Note in computation of the Borrowing Base and satisfactory to the
Agent, (a) setting forth an Obligor's agreement to repay a Receivables Loan and
all other obligations of such Obligor in connection with such agreement and (b)
granting to the Applicable Company a security interest in, among other things,
Obligor Accounts Receivable.
"Rental Agreement" - a Lease (a) which is an "operating lease" (as
such term is defined in FASB Statement No. 13), (b) in the case of Quantum has
an original term of less than one year, and (c) does not constitute any of the
following: a "sales type lease," a "direct financing lease," a "leveraged
lease"; in each case in accordance with applicable Financial Accounting
Standards Board Statements.
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"Rental Equipment Clauses" - individually or collectively, as the
context may require, clause (f) (i.e., Rental Equipment NBV Clause), of the
Borrowing Base and the Rental Payments portion of the Accounts Receivable Clause
of the Borrowing Base.
"Rental Equipment NBV Clause" - as defined in the definition of
Borrowing Base.
"Rental Payments" - rental payments made by a Lessee or due or to
become due from a Lessee under or pursuant to an Eligible Rental Agreement.
"Residual Realization Schedule" - a schedule to be delivered to the
Banks and the Agent on an annual basis entitled "Estimated Residual Value or Net
Book Value of Equipment at Lease Termination" which schedule shall be in form
and coverage acceptable to the Agent.
"Residual Value" - with respect to Eligible Residual Leased Property
covered under an Eligible Lease, an Eligible Foreign Lease or an Eligible
Emerging Growth Contract which is a Lease, the amount recorded on the applicable
Borrower's or applicable Foreign Leasing Subsidiary's books in accordance with
GAAP (subject to any qualifications set forth in this Agreement) as the
estimated residual value (meaning expected net proceeds from re-lease or sale
after the repayment of any related Indebtedness) of such Eligible Residual
Leased Property at the end of the Initial Term of such Lease, as the same may be
reduced from time to time to reflect any write downs; provided that, (A) without
duplication, there shall be deducted therefrom an amount equal to the sum of (1)
repayment of associated Indebtedness and (2) depreciation, all as recorded on
the applicable Borrower's or applicable Foreign Leasing Subsidiary's books in
accordance with GAAP; (B) in any event no Residual Value in respect of an item
of Equipment may, so long as it is subject to a particular Lease, be rewritten
to be recognized earlier; and (C) no residual value shall be attributed to
software or to fixtures.
"Single Lessee Cross-Collateralized Financing" - as defined in Section
3.24 hereof.
"Third Party Lease" - any document evidencing an agreement (including
any amendments, addenda, or supplements thereto) pursuant to which an Obligor,
as lessor, leases Eligible Equipment to another Person. Such term includes in
its meaning both unitary leases and individual lease schedules which incorporate
into such schedules all terms and conditions of a master lease pursuant to which
such schedule is executed.
"Third Party Note" - a recourse or a non-recourse loan and security
agreement, and all related agreements, setting forth obligations of an Obligor
to a Borrower to repay a loan from such Borrower, the proceeds of which were
used to finance Eligible Equipment subject to a Third Party Lease and as
collateral for which such Borrower has a first priority perfected Lien (that has
been assigned to the Agent) on all right, title and interest of the Obligor in
such Eligible Equipment and such Third Party Lease.
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"Unfunded" - with respect to any Lease, Equipment Note, CSA, Third
Party Lease, Finished Goods Inventory Note, Receivables Note or Contract Payment
or other obligation of any Obligor, such Contract, Contract Payment or other
obligation of any Obligor has not been sold, discounted or otherwise financed by
a Borrower or a Foreign Leasing Subsidiary or granted as a Lien by a Borrower or
Foreign Leasing Subsidiary to secure any obligations (whether with or without
recourse) to or with any Person (other than under this Agreement and the
Security Documents).
Section 1.3 Accounting Terms and GAAP.
(a) Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given to them in
accordance with GAAP as in effect on the date of this Agreement, except that
references in Article 5 to such principles shall be deemed to refer to such
principles as in effect on the date of the financial statements delivered
pursuant thereto. Notwithstanding the foregoing, in the event of any
modification after the date hereof of GAAP or any applicable accounting terms
which modification results in a more conservative interpretation or approach
than obtained prior to such modification, then the term "GAAP" and such
accounting terms shall be deemed used herein in their modified forms.
(b) All terms used in Article 9 of the UCC and not specifically
defined in this Agreement are used in this Agreement as defined in Article 9 of
the UCC.
(c) The term "including", when used in this Agreement, means
"including without limitation" and "including but not limited to".
(d) Unless otherwise indicated, any agreement defined or referred to
in this Agreement is intended to mean or refer to such agreement as amended or
supplemented from time to time or as the terms of such agreement are waived or
modified in accordance with its terms.
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Article 2. Commitments; Loans; Collateral.
Section 2.1 Loans; Credit Period; Term Conversion.
(a) Each Bank hereby agrees, on the terms and subject to the
conditions of this Agreement, to make loans (individually, a "Loan" and,
collectively, the "Loans") to the Borrowers during the Credit Period to (but not
including) the Commitment Termination Date in an aggregate principal amount at
any one time outstanding up to, but not exceeding, the lesser of the Commitment
of such Bank as then in effect or such Bank's pro rata share of the Borrowing
Base based on the proportion that such Bank's Commitment as then in effect bears
to the Total Commitment (such lesser amount in the aggregate with respect to all
of the Banks is hereinafter referred to as the "Borrowing Capacity"); provided,
however, that no Loan shall be made hereunder if, after giving effect to the
making of such Loan, the sum of the aggregate amount of all Loans (including
Temporary Loans) and the L/C Obligations then outstanding would exceed the
Borrowing Capacity. The Borrowers shall be jointly and severally liable for any
and all indebtedness, liabilities and obligations hereunder. Subject to the
terms of this Agreement, during the Credit Period the Borrowers may borrow,
prepay (as provided in Section 2.8 hereof) and reborrow the amount of the Total
Commitment by means of Prime Rate Loans or Eurodollar Loans, and during the
Credit Period and following the Term Conversion Date, the Borrowers may convert
Loans of one type into Loans of another type (as provided in Section 2.7
hereof).
(b) On or before the then-current Commitment Termination Date the
Banks, jointly or severally, may approve or disapprove, in their respective sole
and absolute discretion, an extension of the then-current Commitment Termination
Date which has been requested by the Borrowers, and each Bank may condition its
respective approval on the participation of any or all of the other Banks or the
Agent. If such an extension of the Credit Period is not granted by all of the
Banks, (i) the Credit Period will end on the then-current Commitment Termination
Date subject to the terms and conditions of this Agreement and (ii) the
Borrowers shall have the option, so long as no Default or Event of Default then
exists, to (A) convert the principal balance of the Loans outstanding on the
Commitment Termination Date (but not in excess of the Borrowing Base) to a term
loan on the then-current Commitment Termination Date, in which event such
Commitment Termination Date shall be the Term Conversion Date, and the remaining
balance shall be repaid in accordance with the terms of Sections 2.8 and 2.10
hereof or (B) repay in full all of the Obligations on the then-current
Commitment Termination Date. In the event that the Borrowers elect to convert
the outstanding principal balance of the Loans to a term loan in accordance with
clause (ii)(A) immediately above, the Borrowers shall execute and deliver to the
Agent such documents and instruments as the Agent shall require in its sole
discretion to effect the purposes of this Agreement.
Section 2.2 Optional and Mandatory
Changes in Commitment.
(a) The Borrowers jointly shall be entitled at their option, not more
than two times during each calendar year, to permanently reduce the Total
Commitment provided that
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the Borrowers shall give notice of such reduction to the Banks as provided in
Section 2.3 hereof and that any partial reduction of the Commitment shall be in
an amount equal to an integral multiple of Five Million ($5,000,000) Dollars.
The Borrowers jointly shall be entitled at their option to terminate the Total
Commitment provided that the Banks shall be given 30 days prior notice by the
Borrowers of such termination. Any such termination or reduction shall be
permanent and irrevocable.
(b) On the Term Conversion Date, the Total Commitment shall be
automatically and permanently reduced to an amount equal to the principal
balance of the Loans outstanding on the Term Conversion Date, which amount shall
not, in any event, exceed the Borrowing Base.
Section 2.3 Borrowing Notice;
Borrowing Computation.
(a) The Borrowers shall give the Agent written notice of each
reduction of the Total Commitment, each borrowing, conversion and prepayment of
each Loan and of the duration of each Interest Period applicable to each
Eurodollar Loan (in each case, a "Borrowing Notice"). Each such written notice
shall be effective only if received by the Agent not later than 11 a.m., New
York City time, on the date which is:
(i) In the case of each notice of reduction and each notice of
borrowing or prepayment of, or conversion into, Prime Rate Loans, two (2)
Business Days prior to the date of the related reduction, borrowing, prepayment
or conversion;
(ii) In the case of each notice of borrowing or prepayment of or
conversion into, Eurodollar Loans or the duration of an Interest Period for
Eurodollar Loans, three (3) Eurodollar Business Days prior to the date of the
related borrowing, prepayment, or conversion or the first day of such Interest
Period.
Each such notice of borrowing, conversion or prepayment shall specify the amount
(subject to Section 2.1 hereof) and type of the Loans to be borrowed, converted
or prepaid (and, in the case of a conversion, the type of Loans to result from
such conversion), the date of borrowing, conversion or prepayment (which shall
be a Business Day in the case of each borrowing or prepayment or conversion of
or into Prime Rate Loans, and a Eurodollar Business Day in the case of each
borrowing or prepayment of or conversion into Eurodollar Loans). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate.
(b) Each Borrowing Notice requesting a Loan shall be accompanied by a
Borrowing Computation which shall include a representation by the Borrower that
the borrowing requested shall not on the date of borrowing exceed the Borrowing
Availability, as measured by the most recent Monthly Borrowing Base Report
delivered to the Banks and the Agent in accordance with the terms of this
Agreement; provided, however, that any Borrowing Notice requesting an amount
which exceeds such Borrowing Availability as a result of an increase in the
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Borrowing Base since the most recent Borrowing Base Report, shall be accompanied
by a new Borrowing Base Report containing the same information as a Monthly
Borrowing Base Report reflecting such increase.
Section 2.4 Fees.
The Borrowers shall pay to the Agent non-refundable fees
(collectively, together with the fees referred to in subsection 2.32(f)(iv) of
this Agreement, the "Fees") as follows:
(a) The Borrowers shall pay to the Agent for the account of each Bank
a commitment fee (the "Commitment Fee") on the daily average amount of such
Bank's Unused Commitment, for the period from the date of this Agreement to and
including the earlier of the date such Bank's Commitment is terminated or the
Commitment Termination Date, at the rate of (i) one-quarter of one (1/4 of 1%)
percent on that portion of the Unused Commitment equal to or less than, in
Dollar amount, twenty-five percent of the Total Commitment then in effect, and
(ii) one-half of one (1/2 of 1%) percent per annum on the balance of the Unused
Commitment. The accrued Commitment Fee shall be payable quarterly in arrears on
the last day of each calendar quarter and on the earlier of the date the
Commitments are terminated or the Commitment Termination Date, and, in the event
the Borrowers reduce the Commitment as provided in subsection 2.2(a) hereof, on
the effective date of such reduction. For purposes of computation of the
Commitment Fee, under this subsection 2.4(a), the amount of the Unused
Commitment of each Bank shall be determined without giving effect to the
outstanding principal balance of any Temporary Loan.
(b) The Borrowers shall pay to the Agent an administrative fee for
services rendered by the Agent in its capacity as Agent hereunder and a
structuring fee for structuring this Agreement and the transactions contemplated
hereby and a fee for certain temporary increases prior to the date hereof, each
as set forth in a separate written agreement among the Borrowers and the Agent.
(c) Simultaneously with the execution and delivery of this Agreement,
the Borrowers shall pay to the Agent, for delivery to the applicable Bank, a fee
in an amount equal to one-eighth of one percent (1/8%) of (i) the increased
portion of the Commitment of each Bank (excluding, however, the Agent) which is
increasing its Commitment since June 1, 1997, and (ii) the Commitment of each
new Bank becoming a party to this Agreement.
Section 2.5 Lending Offices.
The Loans of each type made by each Bank shall be made and maintained
at such Bank's Applicable Lending Office for Loans of such type.
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Section 2.6 Borrowings.
The Borrowers shall give the Agent notice of each borrowing hereunder
as provided in Section 2.3 hereof. Not later than 12:00 noon New York City time
(subject to the provisions of subsection 9.8(b) hereof), on the date specified
for each borrowing hereunder, each Bank shall transfer to the Agent, by wire
transfer or otherwise, but in any event in immediately available funds, the
amount of the Loan to be made by it on such date, and the Agent, upon its
receipt thereof, shall disburse such sum to the Borrowers by depositing it in an
account of the Borrowers designated by it maintained with the Agent.
Section 2.7 Conversions of Loans.
The Borrowers shall have the right to convert Loans of one type into
Loans of another type from time to time, provided that: (i) the Borrowers shall
give the Agent notice of each such conversion as provided in Section 2.3 hereof,
(ii) Eurodollar Loans may be converted only on the last day of an Interest
Period for such Loans; and (iii) except as required by Sections 2.16 or 2.19
hereof, no Prime Rate Loan may be converted into a Eurodollar Loan if on the
proposed date of conversion a Default or an Event of Default exists. The Agent
shall use its best efforts to notify the Borrowers of the effectiveness of such
conversion, and the new interest rate to which the converted Loans are subject,
as soon as practicable after the conversion; provided, however, that any failure
to give such notice shall not affect the Borrowers' obligations, or the Agent's
or any Bank's rights and remedies, hereunder in any way whatsoever.
Section 2.8 Mandatory and Optional Prepayments.
(a) Notwithstanding any other provisions of this Agreement but in
addition to the provisions of subsection 2.8(b) below and subject to the last
sentence of this subsection (a), in the event that at any time the sum of the
outstanding principal amount of the Loans (including the Temporary Loans) and
the L/C Obligations shall at any time exceed the Borrowing Base, the Borrowers
shall, within fifteen (15) days following the date on which such excess first
exists (or, if sooner than such fifteenth day concurrently with delivery of the
Monthly Borrowing Base Report next due to be delivered following such excess),
prepay the Loans in an amount sufficient to reduce the sum of the aggregate
principal amount of the Loans to an amount not greater than the difference
between the Borrowing Base less the then outstanding L/C Obligations (but the
foregoing shall not be deemed to modify the terms of Section 2.33 hereof
requiring the payment by the Borrowers on demand for any Unreimbursed Drawings
together with interest thereon); provided, however, that if no Default or Event
of Default shall then have occurred and be continuing, the Borrowers may, at
their option, within such fifteen (15) day period, substitute other assets which
comply with the requirements for inclusion in the Borrowing Base, in lieu of or
in reduction of any prepayment required to be made pursuant to this subsection
2.8(a), but only if the Borrowers shall have delivered to the Agent within such
fifteen (15) day period a Borrowing Computation evidencing compliance with the
provisions of this subsection (a), including computations showing that such
substitutions are in an amount or of a value under the Borrowing Base such that
the above-described excess shall no longer exist, together with all other
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documents which would be required to be delivered to the Banks and the Agent in
connection with a Borrowing Computation under subsection 2.3(b) hereof in
confirmation of the provisions of subsection 2.1(a) hereof and notwithstanding
the terms of the preceding sentence, in the event that at any time the sum of
the outstanding principal amount of the Loans (including the Temporary Loans)
and the outstanding L/C Obligations shall exceed the Total Commitment, the
Borrowers shall immediately prepay the Loans and/or the L/C Obligations in an
aggregate amount sufficient so that no such excess exists.
(b) From and after the Term Conversion Date:
(i) In the event of the sale of any Equipment whose Residual
Value is then included in the computation under clause (c) of the Borrowing Base
(or was so included but is then included in the computation under clause (e) of
the Borrowing Base), the Borrowers shall prepay the Loans in an amount equal to
one hundred (100%) percent of the Present Value of the Residual Value thereof as
computed as of the Term Conversion Date (i.e., without giving effect to the
relevant percentage fifty (50%) percent applied for purposes of determining the
advance rate under the Borrowing Base), net of the cost of disposition, such
prepayment to be made within eight (8) days after the applicable Borrower's or
applicable Foreign Leasing Subsidiary's (if such Foreign Leasing Subsidiary was
the owner of such Equipment) consummation of such sale.
(ii) In the event that any Equipment whose Residual Value is then
included in the computation under clause (c) of the Borrowing Base (or was so
included but is then included in computation under clause (e) of the Borrowing
Base) is re-leased by the Borrowers following the expiration or termination of
the Initial Term of the related Lease, the Borrowers shall:
(A) prepay the Loans on the last day of each calendar month
(commencing on the first such day following the commencement of the re-lease) in
an amount equal to one-hundred (100%) percent of the aggregate rentals received
by the Borrowers under all re-leases described in this subsection (ii) during
the calendar month then ended; and
(B) in addition, the Borrowers shall, within one hundred twenty
(120) days following commencement of the term of such re-lease, prepay the Loans
in an amount which is equal to one hundred (100%) percent of the Present Value
of the Residual Value of such Equipment as such Present Value of the Residual
Value thereof was computed on the Term Conversion Date (i.e., without giving
effect to the relevant percentage fifty (50%) percent applied for purposes of
determining the advance rate under the Borrowing Base), less the amounts
theretofore paid pursuant to the preceding clause (A); provided that the
Borrowers shall be obligated to prepay to the Banks the full amount described in
this clause (B) not later than simultaneously with the grant to any Person,
other than the Agent and the Banks, of a Lien on such Equipment or any related
Contract or in the event any such other Person has such a Lien.
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(iii) In the event of any sale, lease or other disposition of
assets included under any clause of the Borrowing Base other than clause (c)
(i.e., Residual Value Clause), the Borrowers shall, as soon as possible but in
any event within eight (8) days following consummation of any such transaction,
prepay the Loans in an amount equal to one hundred (100%) percent of the
proceeds of such transaction net of the cost of disposition.
(iv) In the event of any refinancing of any asset included under
any clause of the Borrowing Base, the Borrowers shall repay the Loans in the
respective amounts set forth in the preceding paragraphs of this subsection
2.8(b), but such repayment shall be made on the earlier of the date of any such
refinancing or the respective date referred to in the preceding paragraphs.
(c) From and after the Term Conversion Date, the Borrowers shall
prepay the Loans in an amount equal to any surplus proceeds remaining after
realization on or foreclosure by any holder of its Lien on Eligible Residual
Leased Property included under clause (c) of the Borrowing Base (i.e., Residual
Value Clause) such prepayment to be made simultaneously with receipt by any
Borrower or the Agent of any such surplus proceeds. The Agent shall apply any
such proceeds actually received to prepayment of the Loans.
(d) The Borrowers shall have the right to prepay the Loans from
time to time in whole or in part. Any amount repaid during the Credit Period
may, subject to the terms and conditions hereof, including the limitations
imposed by Section 2.8, be reborrowed hereunder during the Credit Period. Loans
prepaid after the Commitment Termination Date may not be reborrowed.
(e) All prepayments of Eurodollar Loans shall be made together
with payment of all interest accrued on the amount prepaid. No premium or
penalty shall be required to be made with any prepayment, except as otherwise
provided in Section 2.20 hereof, including, without limitation, in respect of
Eurodollar Loans repaid on a day other than the last day of the Interest Period
relating thereto.
(f) Prepayments shall be applied first to reduction of Prime Rate
Loans and then to Eurodollar Loans, and the Borrowers shall be liable for any
payments due under Section 2.20 hereof as a result of any prepayment.
Section 2.9 Use of Proceeds of Loans.
(a) The Loans outstanding as of the date hereof under the Second
Restated Agreement shall be deemed to be outstanding under this Agreement. The
proceeds of the Loans hereunder shall be used by the Borrowers solely for (1)
financing Eligible Equipment and the other assets described in the Borrowing
Base, including, without limitation, the making of Finished Goods Inventory
Loans and Receivables Loans in the ordinary course of the Loan Business; (2)
other working capital purposes; (3) conversion and refinancing of Temporary
Loans; (4) the making of loans to Foreign Subsidiaries to finance the leasing of
Leased Property under
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a Lease in a Foreign Location (each such loan individually is hereinafter
referred to as a "Foreign Subsidiary Loan" and collectively as the "Foreign
Subsidiary Loans"); provided, however, that the aggregate outstanding principal
balance of all Foreign Subsidiary Loans to Foreign Subsidiaries, together with
the proceeds of Loans used by any Borrower to finance the leasing of Leased
Property under a Lease in a Foreign Location, shall not exceed on any date of
determination an amount equal to Eight Million ($8,000,000) Dollars, and
provided, further, however, that such $8,000,000 amount shall be inclusive of
any Foreign Subsidiary Loans made to Foreign Leasing Subsidiaries to, and
proceeds used by any Borrower to, finance Eligible Foreign Leases the payments
under which are included in the Borrowing Base.
(b) The Loans hereunder which are used to make Foreign Subsidiary
Loans or used by any Borrower to finance the leasing of Leased Property in a
Foreign Location shall be subject to the following terms and conditions:
(i) each Foreign Subsidiary Loan shall be evidenced by a single
promissory note made by the respective Foreign Subsidiary payable to the order
of the applicable Borrower in a face amount and otherwise in form and substance
acceptable to the Agent;
(ii) the proceeds of each Foreign Subsidiary Loan or Loan used by
any Borrower to finance the leasing of Leased Property in a Foreign Location
shall be used solely for financing acquisitions of Equipment for purposes of
Leases entered into with Lessees by the respective Foreign Subsidiary or any
Borrower as applicable;
(iii) each Foreign Subsidiary Loan shall be payable on demand;
and
(iv) with respect to Foreign Subsidiary Loans made to Foreign
Leasing Subsidiaries, the aggregate outstanding principal amount of Foreign
Subsidiary Loans made to any Foreign Leasing Subsidiary shall not exceed at any
one time the Post-Computation Amount of the assets owned by such Foreign Leasing
Subsidiary then included in the Borrowing Base.
Section 2.10 Principal Repayment Schedule.
(a) Subject to Section 2.8 hereof, the Borrowers shall pay to the
Agent for the account of each Bank the principal of the Loans made by such Bank
outstanding at the close of business on the Term Conversion Date (i) either in
full, or pursuant to the terms of subsection 2.1(b) above, in twelve (12) equal
consecutive quarterly installments on the Payment Dates (provided that the last
such payment shall be in an amount sufficient to repay in full the Obligations);
and (ii) in addition on other dates and in the amounts otherwise required under
Section 2.8 hereof, provided, that any amounts paid under Section 2.8 in excess
of required quarterly payments shall be applied to the next succeeding quarterly
payment.
(b) Except as set forth in Sections 2.16, 2.17 and 2.18 hereof, all
payments and repayments made pursuant to the terms hereof shall be applied first
to Prime Rate
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Loans, and shall be applied to Eurodollar Loans only to the extent any such
payment exceeds the principal amount of Prime Rate Loans outstanding at the time
of such payment.
(c) The Borrowers may request a Eurodollar Loan only if compliance
with the schedule set forth in subsection 2.10(a) hereof (with the payments
provided for therein being applied in accordance with subsection 2.10(b) hereof
would not result in any portion of the principal amount of such Eurodollar Loan
being paid prior to the last day of the Interest Period applicable thereto.
Section 2.11 Interest.
(a) The Borrowers shall pay to the Agent for the account of each Bank
the interest on the unpaid principal amount of each Loan for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the following rates per annum:
(i) During such periods such Loan is a Prime Rate Loan, the Prime
Rate plus the Applicable Margin; and
(ii) During such periods such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate for such Loan for such
Interest Period plus the Applicable Margin; provided that notwithstanding
anything contained herein or in any Note to the contrary, any Eurodollar Rates
for Loans outstanding on the date hereof the Interest Periods in respect of
which commenced prior to the date hereof under the Second Restated Agreement
shall continue in effect until the expiration or earlier termination of any such
Interest Period, respectively.
(b) Notwithstanding the foregoing, the Borrowers shall pay interest on
any Loan or any installment thereof, and on any other amount payable by the
Borrowers hereunder (other than interest) which shall not be paid in full when
due (whether at stated maturity, by acceleration or otherwise), and at any time
after an Event of Default shall have been declared and be continuing, for the
period commencing on the due date thereof or on the date of declaration of the
Event of Default, as applicable, until the same is paid in full or the Event of
Default has been cured, as applicable, at the applicable Post-Default Rate.
Except as provided in the next sentence, accrued interest on each Loan shall be
payable (i) monthly in arrears on the last day of each calendar month commencing
on the next such day following the making of the initial Loan hereunder and (ii)
upon the payment (other than a conversion of a Loan of one type into a Loan of
another type) or prepayment thereof (but only on the principal paid, prepaid or
converted). Interest which is payable at the Post-Default Rate shall be payable
from time to time on demand of the Agent.
(c) Promptly after the establishment of any interest rate provided for
herein or any change therein, the Agent will notify the Banks and the Borrowers
thereof, provided that the failure of the Agent to so notify the Borrowers or
the Banks shall not affect the obligations of the Borrowers hereunder or under
any of the Notes in any respect.
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(d) Anything in this Agreement or any of the Notes to the contrary
notwithstanding, the obligation of the Borrowers to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be made to any Bank to the extent that such Bank's receipt thereof
would not be permissible under the law or laws applicable to such Bank limiting
rates of interest which may be charged or collected by such Bank. Any such
payments of interest which are not made as a result of the limitation referred
to in the preceding sentence shall be made by the Borrowers to such Bank on the
earliest interest payment date or dates on which the receipt thereof would be
permissible under the laws applicable to such Bank limiting rates of interest
which may be charged or collected by such Bank. Such deferred interest shall
not bear interest. Any payment actually received by any Bank (and not returned
to the Borrowers) which, if considered interest the receipt of which would not
be permissible under the law or laws applicable to such Bank limiting rates of
interest which may be charged or collected by such Bank, shall be treated as a
principal payment hereunder (provided, however, that such application shall not
discharge the Borrowers' obligation set forth hereinabove to make interest
payments on the earliest permissible interest payment date) and if all principal
payments shall have been made, refunded to the Borrowers.
Section 2.12 Note.
The Loans made by each Bank shall be evidenced by a single joint and
several promissory note of the Borrowers in substantially the form of Exhibit
B-1 hereto (each, as amended, modified or supplemented including by any
endorsement thereto, together with any replacement or substitute therefor, a
"Note" and collectively, the "Notes") (other than Temporary Loans, which shall
be evidenced by a Temporary Loan Note as provided in Section 2.32 hereof, each
dated the date hereof, payable to the order of such Bank in a principal amount
equal to such Bank's Commitment as originally in effect and otherwise duly
completed. The Notes shall be subject to repayment as provided in Sections 2.1,
2.10, and 2.11 hereof. All Loans made by each Bank hereunder and all payments
and prepayments made on account of the principal thereof, and all conversions of
such Loans shall be recorded by each Bank on the schedule attached to its Note
(provided that any failure by any Bank to make any such endorsement shall not
affect the obligations of the Borrowers hereunder to repay the loans in
accordance with their respective terms as set forth herein).
Section 2.13 Payments.
All payments of principal, interest, fees and other charges (including
indemnities) payable by the Borrowers hereunder shall be made in Dollars, in
immediately available funds, to the Agent at the Principal Office not later than
12:00 p.m., New York City time (subject to Section 9.8(b) hereof), on the date
on which such payment shall become due (and the Agent or any Bank for whose
account any such payment is to be made, may but shall not be obligated to, debit
the amount of any such payment which is not made by such time to any ordinary
deposit account of the Borrowers with the Agent or such Bank, as the case may
be). Additional provisions relating to payments are set forth in Section 10.3
hereof. Each payment received by the Agent for the account of a Bank shall be
paid promptly to such Bank, in like
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funds, for the account of such Bank's Applicable Lending Office for the Loan in
respect to which such payment is made.
Section 2.14 Computations.
Interest on all (a) Eurodollar Loans and each Fee shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day
but excluding the last) occurring in the period for which payable and (b) Prime
Rate Loans shall be computed on the basis of a year of 365 days and actual days
elapsed (including the first day but excluding the last) occurring in the period
for which payable.
Section 2.15 Minimum Amounts of Borrowings,
Conversions, Prepayments and Interest Periods.
Except for borrowings, conversions and prepayments which exhaust the
full remaining amount of the Total Commitment (in the case of borrowings) or
result in the conversion or prepayment of all Loans of a particular type (in the
case of conversions or prepayments) or conversions made pursuant to Section 2.19
hereof, and except for mandatory prepayments, each borrowing, each conversion of
Loans of one type into Loans of another type and each repayment and prepayment
of principal of Loans hereunder shall be in an amount at least equal to One
Million ($1,000,000) Dollars (borrowings, conversions and prepayment of
different types of Loans at the same time hereunder to be deemed separate
borrowings, conversions and prepayments for purposes of the foregoing, one for
each type).
Section 2.16 Additional Costs.
(a) In the event that any existing or future law or regulation or
guideline or interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof, or compliance by
any Bank with any request or directive (whether or not having the force of law)
of any such authority shall impose, modify or deem applicable or result in the
application of, any capital maintenance, capital ratio or similar requirement
against loan commitments made by any Bank, and the result of any event referred
to above is to impose upon any Bank or increase any capital requirement
applicable as a result of the making or maintenance of, such Bank's Commitment
or the obligation of the Borrowers hereunder with respect to such Commitment
(which imposition of capital requirements may be determined by each Bank's
reasonable allocation of the aggregate of such capital increases or
impositions), then, upon demand made by such Bank as promptly as practicable
after it obtains knowledge that such law, regulation, guideline, interpretation,
request or directive exists and determines to make such demand, the Borrowers
shall immediately pay to such Bank from time to time as specified by such Bank
additional commitment fees which shall be sufficient to compensate such Bank for
such imposition of or increase in capital requirements together with interest on
each such amount commencing five (5) days from the date payment of such
additional costs is demanded until payment in full thereof at the Post-Default
Rate. A certificate setting forth in reasonable detail the amount necessary to
compensate such Bank as a result of an imposition of or increase in capital
requirements submitted
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by such Bank to the Borrowers shall be conclusive, as to the amount thereof.
For purposes of this Section 2.16, all references to any "Bank" shall be deemed
to include any participant in such Bank's Commitment.
(b) In the event that any Regulatory Change shall: (A) change the
basis of taxation of any amounts payable to any Bank under this Agreement or the
Notes in respect of any Loans including, without limitation, Eurodollar Loans
(other than taxes imposed on the overall net income of such Bank for any such
Loans by the United States or the jurisdiction in which such Bank has its
principal office); or (B) impose or modify any reserve, Federal Deposit
Insurance Corporation premium or assessment, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Bank (including any of such Loans or
any deposits referred to in the definition of "Eurodollar Rate" in Article I
hereof); or (C) impose any other conditions affecting this Agreement in respect
of Loans, including, without limitation, Eurodollar Loans (or any of such
extensions of credit, assets, deposits or liabilities); and the result of any
event referred to in clause (A), (B) or (C) above shall be to increase such
Bank's costs of making or maintaining any Loans, including, without limitation,
Eurodollar Loans, or its Commitment, or to reduce any amount receivable by such
Bank hereunder in respect of any of its Eurodollar Loans, or its Commitment
(such increases in costs and reductions in amounts receivable are hereinafter
referred to as "Additional Costs") in each case, only to the extent that such
Additional Costs are not included in the Eurodollar Rate applicable to such
Eurodollar Loans, then, upon demand made by such Bank as promptly as practicable
after it obtains knowledge that such a Regulatory Change exists and determines
to make such demand (a copy of which demand shall be delivered to the Agent),
the Borrowers shall pay to such Bank from time to time as specified by such
Bank, additional commitment fees or other amounts which shall be sufficient to
compensate such Bank for such increased cost or reduction in amounts receivable
by such Bank from the date of such change, together with interest on each such
amount from the date demanded until payment in full thereof at the Post-Default
Rate. All references to any "Bank" shall be deemed to include any participant
in such Bank's Commitment.
(c) Without limiting the effect of the foregoing provisions of this
Section 2.16, in the event that, by reason of any Regulatory Change, any Bank
either: (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Eurodollar
Loans, or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Borrowers (with a copy to the Agent), the obligation of such Bank
to make, and to convert Loans of any other type into, Loans of such type
hereunder shall be suspended until the date such Regulatory Change ceases to be
in effect (and all Loans of such type then outstanding shall be converted into
Prime Rate Loans or into Eurodollar Loans of another duration, as the case may
be, in accordance with Sections 2.7 and 2.19 hereof).
(d) Determinations by any Bank for purposes of this Section 2.16 of
the effect of any Regulatory Change on its costs of making or maintaining Loans
or on amounts
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receivable by it in respect of Loans, and of the additional amounts required to
compensate such Bank in respect of any Additional Costs, when set forth in a
written notice to the Borrowers, shall be conclusive, absent manifest error.
Section 2.17 Limitation on Types of Loans.
Anything herein to the contrary notwithstanding, if, on or prior to
the determination of an interest rate for any Eurodollar Loans for any Interest
Period therefor, the Majority Banks determine (which determination shall be
conclusive):
(a) by reason of any event affecting the money markets in the United
States or the interbank Eurodollar market, quotations of interest rates for the
relevant deposits are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest for such
Loans under this Agreement: or
(b) the rates of interest referred to in the definition of "Eurodollar
Base Rate" in Article I hereof upon the basis of which the rate of interest on
any Eurodollar Loans for such period is determined do not accurately reflect the
cost to the Bank of making or maintaining such Loans for such period;
then the Agent shall give the Borrowers and each Bank prompt notice thereof (and
shall thereafter give the Borrowers and each Bank prompt notice of the
cessation, if any, of such condition), and so long as such condition remains in
effect, the Banks shall be under no obligation to make new Loans of such type or
to convert Loans of any other type into Loans of such type and the Borrowers
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Loans of the affected type either prepay such Loans in accordance
with Section 2.8 hereof or convert such Loans into Loans of another type in
accordance with Section 2.7 hereof
Section 2.18 Illegality.
Notwithstanding any other provision in this Agreement, in the event
that it becomes unlawful for any Bank or its Applicable Lending Office to (1)
honor its obligation to make new Eurodollar Loans hereunder, or (ii) maintain
existing Eurodollar Loans hereunder, then the Bank shall promptly notify the
Borrowers thereof (with a copy to the Agent), describing such illegality in
reasonable detail (and shall thereafter promptly notify the Borrowers and the
Agent of the cessation, if any, of such illegality), and such Bank's obligation
to make new Eurodollar Loans and to convert other types of Loans into Eurodollar
Loans hereunder shall, upon written notice given by such Bank to the Borrowers,
be suspended until such time as such Bank may again make and maintain Eurodollar
Loans and to the extent that such Bank's maintaining existing outstanding
Eurodollar Loans has become unlawful, such Eurodollar Loans shall be converted
into Prime Rate Loans in accordance with Sections 2.7 and 2.19 hereof, provided
that to the extent that such illegality may be avoided by changing such Bank's
Applicable Office with respect to Eurodollar Loans, such Bank shall, if not
otherwise disadvantageous to said Bank in the sole judgment of said Bank, effect
such change.
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Section 2.19 Certain Conversions pursuant to Sections 2.16 and 2.18.
If the Loans of any Bank of a particular type are to be converted
pursuant to Section 2.16 or 2.18 hereof, such Loans shall be converted into
Prime Rate Loans, or Eurodollar Loans, as the case may be, on the last day(s) of
the then current Interest Period(s) for such Loans (prior to conversion) (or, in
the case of a conversion required by Section 2.16(b) or 2.18 hereof, on such
earlier date as such Bank may specify to the Borrowers) and, until the Bank
gives notice as provided below that the circumstances specified in Section 2.16
or 2.18 hereof which gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Loans have been so converted, all
payments and prepayments of principal which would otherwise be applied to such
Loans prior to conversion shall be applied instead to its post-conversion Loans;
and
(b) all Loans which would otherwise be made by the Bank as Loans prior
to such conversion shall be made instead as Loans of the type into which such
Loans shall have been converted, and all Loans of such Bank which would
otherwise be converted into Loans of the type prior to conversion shall be
converted instead into (or shall remain as) Loans of the type into which the
Loans shall have been converted.
Section 2.20 Indemnification.
The Borrowers shall pay to the Agent, upon the request of each Bank,
such amount or amounts as shall compensate such Bank for any loss (including
loss of profit), cost or expense incurred by such Bank (as reasonably determined
by such Bank) as a result of-
(a) any payment or prepayment or conversion of a Eurodollar Loan held
by such Bank on a date other than the last day of an Interest Period for such
Eurodollar Loan; or
(b) any failure by the Borrowers to borrow a Eurodollar Loan held by
such Bank on the date for such borrowing specified in the relevant Borrowing
Notice under Section 2.3 hereof,
such compensation to include, without limitation, an amount equal to: (i) any
loss or expense suffered by such Bank during the period from the date of receipt
of such early payment or prepayment or the date of such conversion or date of
intended borrowing to the last day of such Interest Period if the rate of
interest obtainable by such Bank upon the redeployment of an amount of funds
equal to such payment, prepayment or conversion or failure to borrow or convert
is less than the rate of interest applicable to such Eurodollar Loan for such
Interest Period, or (ii) any loss or expense suffered by such Bank in
liquidating Eurodollar or other deposits prior to maturity which correspond to
the payment, prepayment, conversion, failure to borrow or failure to convert.
The determination by each Bank of the amount of any such loss or expense, when
set forth in a written notice to the Borrowers, containing such Bank's
calculation thereof in reasonable detail, shall be presumed correct, in the
absence of manifest error.
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Section 2.21 Guaranties and Collateral.
In order to secure the due payment and performance by the Borrowers of
all of the Indebtedness, liabilities and obligations of the Borrowers to the
Banks (including Fleet in its capacity as Temporary Lender) and the Agent,
whether now existing or hereafter arising, under this Agreement and the other
Loan Documents (collectively, all of the Indebtedness, liabilities and
obligations of the Borrowers to the Banks and the Agent, whether now existing or
hereafter arising, whether or not currently contemplated, arising under the Loan
Documents, including, without limitation, the L/C Obligations, are herein
referred to, collectively, as the "Obligations"):
(a) LCI shall:
(i) by execution and delivery of the Confirmation Agreement
simultaneously with the execution and delivery of this Agreement confirm under
the Amended and Restated Borrower Security Agreement dated September 28, 1994
between LCI and the Agent (as amended, modified and supplemented from time to
time, the "Amended and Restated LCI Security Agreement") and the existing and
continuing grant to the Agent for the ratable benefit of the Banks of a Lien on
substantially all personal properties and assets of LCI whether now owned or
hereafter acquired and wherever located, of every kind and description, tangible
and intangible, other than the issued and outstanding shares of the capital
stock of LFC now or hereafter owned by LCI except to the extent described below;
(ii) amend and restate the Amended and Restated Borrower
Assignment of Leases dated September 28, 1994 between LCI and the Agent by
executing and delivering a Second Amended and Restated Assignment of Contracts
(as amended, modified and supplemented from time to time, the "Amended and
Restated LCI Assignment of Contracts";
(iii) by execution and delivery of the Confirmation Agreement
confirm (A) under the Amended and Restated Borrower Pledge Agreement dated
September 28, 1994 between, inter alia, LCI and the Agent (as amended, modified
and supplemented from time to time, the "Amended and Restated LCI Pledge
Agreement") the existing and continuing grant to the Agent for the ratable
benefit of the Banks of a first Lien on and pledge with the Agent for the
ratable benefit of the Banks of, and the grant of certain other liens with
respect to, the issued and outstanding shares of the capital stock now or
hereafter owned by it of each of its Subsidiaries other than LFC; and (B) under
the Pledge Agreement dated September 28, 1994 between, inter alia, LCI, the
Agent and Newcourt (as amended, modified and supplemented from time to time, the
"LCI-LFI Pledge Agreement") the existing and continuing grant to the Agent for
the ratable benefit of the Banks of a lien on the issued and outstanding shares
of the capital stock now or hereafter owned by it of LFC;
(iv) not later than simultaneously with the inclusion in the
Borrowing Base of any assets relating to an Eligible Foreign Lease or Residual
Values in respect of Equipment in a Foreign Location, execute and deliver all
assignment and security documents
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and other agreements, instruments and documents as the Agent may reasonably
require, in form and substance satisfactory to the Agent to grant a first
priority perfected security interest in the assets relating to the Eligible
Foreign Lease or such Residual Values sought to be included in the Borrowing
Base and agree to maintain documents relating to the Collateral to the extent
required by the Agent upon terms comparable to the terms of subsection 2.25(c)
hereof, provided, however, that no assets relating to an Eligible Foreign Lease
or such Residual Values shall be included in the Borrowing Base unless and until
the Agent's lien on such assets has been created and perfected to the
satisfaction of the Agent (which may include the rendering of legal opinions),
and unless and until the Agent is satisfied in its sole discretion that the
enforcement of and practical realization of the benefits of the Agent's Lien are
not subject to any consent, approval or other requirements or conditions to
enforcement more burdensome than are applicable in respect of other assets
included in the Borrowing Base; and
(v) execute and deliver or cause to be executed and delivered
such other agreements, instruments and documents as the Agent may reasonably
require in order to effect the purposes of the Amended and Restated LCI Security
Agreement, the Amended and Restated LCI Assignment of Contracts, the Amended and
Restated LCI Pledge Agreement, all of the agreements, instruments and documents
referred to in subsection (a)(iii) above, Section 2.21 and this Agreement.
(b) LES shall:
(i) by execution and delivery of the Confirmation Agreement
simultaneously with the execution and delivery of this Agreement confirm under
the Amended and Restated LES-Subsidiary Security Agreement dated September 28,
1994 between LES and the Agent (as amended, modified and supplemented from time
to time, the "Amended and Restated LES Security Agreement") and the Amended and
Restated LES-Subsidiary Assignment of Leases dated September 28, 1994 between
LES and the Agent (as amended, modified and supplemented from time to time, the
"Amended and Restated LES Assignment of Leases") the existing and continuing
grant to the Agent of a Lien on substantially all personal property and assets
of LES, whether now owned or hereafter acquired and wherever located, of every
kind and description, tangible and intangible; and
(c) Quantum shall:
(i) by execution and delivery of the Confirmation Agreement
confirm under the Amended and Restated Quantum-Subsidiary Security Agreement
dated September 28, 1994 between Quantum and the Agent (as amended, modified or
supplemented from time to time, the "Amended and Restated Quantum Security
Agreement") and the Amended and Restated Quantum-Subsidiary Assignment of Leases
dated September 28, 1994 between Quantum and the Agent (as amended, modified or
supplemented from time to time, the "Amended and Restated Quantum Assignment of
Leases") the existing and continuing grant to the Agent of a Lien on
substantially all personal property and assets of Quantum, whether now owned or
hereafter acquired and wherever located, of every kind and description, tangible
and intangible; and
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(ii) execute and deliver or cause to be executed and delivered
such other agreements, instruments and documents as the Agent may reasonably
require in order to effect the purposes of the Amended and Restated Quantum
Security Agreement, the Amended and Restated Quantum Assignment of Leases, this
Section 2.21 and this Agreement.
(d) Each of the Quantum Shareholders shall:
(i) by execution and delivery of the Confirmation Agreement
simultaneously with the execution and delivery of this Agreement, confirm under
the Amended and Restated Quantum Shareholder Pledge Agreements dated September
28, 1994, respectively executed by each of the Quantum Shareholders
(collectively, as amended, modified or supplemented from time to time, the
"Amended and Restated Quantum Shareholder Pledge Agreements") the existing and
continuing grant of a first lien on and security interest in, and pledge with
the Agent of, all of the issued and outstanding capital stock of Quantum owned
by each Quantum Shareholder (with the shares previously owned by Xxxx X. Xxxxx
having been transferred, subject to the Agent's Lien, to LCI); and
(ii) execute and deliver such other agreements, instruments and
documents as the Agent may reasonably require in order to effect the purposes of
each Amended and Restated Quantum Shareholder Pledge Agreement, this Section
2.21 and this Agreement.
(e) With respect to each Foreign Leasing Subsidiary, not later than
simultaneously with the making of any Foreign Subsidiary Loan to such Foreign
Leasing Subsidiary:
(i) the applicable Borrower and each other holder of capital
stock of such Foreign Leasing Subsidiary shall pledge and assign to the Agent,
for the ratable benefit of the Banks, and grant to the Agent, for the ratable
benefit of the Banks, a lien on and security interest in all of the issued and
outstanding capital stock of such Foreign Leasing Subsidiary, whether then or
thereafter issued to such Borrower or any other entity (which entity such
Borrower shall cause to execute such documents as the Agent may require in
respect of such pledge), by the execution and delivery to the Agent of a pledge
agreement and such other agreements, instruments and documents as the Agent may
require, provided that if and to the extent so agreed to by the Agent in its
sole discretion, fewer than all of the issued and outstanding shares of capital
stock of such Foreign Subsidiary shall be pledged to the Agent; and
(ii) such Foreign Leasing Subsidiary shall (1) execute and
deliver or cause to be executed and delivered such security and assignment
documents and other agreements, instruments, guaranties and documents as the
Agent may reasonably require, in form and substance satisfactory to the Agent,
to guaranty the obligations of the Foreign Leasing Subsidiary and to grant a
first priority perfected security interest in, and pledge and assignment of,
substantially all of the assets of such Foreign Leasing Subsidiary (including
but not limited to its leases) to the Agent, and (2) (A) agree to have and
maintain documents relating to the Collateral to the extent required by the
Agent upon terms comparable to the terms of subsection 2.25(c)
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hereof, (B) if required at any time by the Agent, enter into any subordination
agreements comparable to the Subordination Agreement referred to in Section 2.22
hereof, and (C) enter into any lock-box arrangements as provided in Section 2.26
and as otherwise reasonably requested by the Agent; and
(iii) the applicable Borrower shall pledge and assign to the
Agent all promissory notes issued by any Foreign Leasing Subsidiary to such
Borrower and Security Documents required by the Agent to be executed in favor of
such Borrower in respect of such notes, all upon terms and conditions
satisfactory to the Agent.
All of the foregoing agreements, instruments and documents referred to
in subsection (e) above, together with the agreements, instruments and documents
referred to in subsection 2.21 (a)(iii) hereof, collectively, the "Foreign
Security Documents", and no assets of any Foreign Leasing Subsidiary shall be
included in the Borrowing Base unless and until the Agent's lien on such assets
has been created and perfected to the satisfaction of the Agent (which may
include the rendering of legal opinions), and unless and until the Agent is
satisfied in its sole discretion that the enforcement of and practical
realization of the benefits of the Agent's Lien are not subject to any consent,
approval or other requirements or conditions to enforcement more burdensome than
are applicable in respect of other assets included in the Borrowing Base and
located in the United States.
(f) With respect to each Applicable Company making Finished Goods
Inventory Loans or Receivables Loans, not later than the date of inclusion in
the Borrowing Base of the related Finished Goods Inventory Note or Receivables
Note:
(i) such Applicable Company shall pledge and assign to the Agent,
for the ratable benefit of the Banks, and grant to the Agent, for the ratable
benefit of the Banks, a lien on and security interest in such Finished Goods
Inventory Note or Receivables Note by the delivery to the Agent of such Note
duly endorsed "Pay to the order of [the Agent]" and such other agreements,
instruments and documents as the Agent may require with respect thereto;
(ii) such Applicable Company shall (A) execute and deliver or
cause to be executed and delivered such security and assignment documents and
other agreements and instruments, as the Agent may reasonably require, in form
and substance satisfactory to the Agent, to assign to the Agent for the ratable
benefit of the Banks all of such Applicable Company's liens and security
interests in any Contract Collateral securing such Finished Goods Inventory Note
or Receivables Note pledged hereunder; and (B) prior to inclusion in computation
of the Borrowing Base of such Finished Goods Inventory Loans and Receivables
Loans, enter into lock-box arrangements with respect thereto as provided in
Section 2.26 and may be otherwise reasonably requested by the Agent;
(g) LINC Group shall:
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(i) by execution and delivery of the Confirmation Agreement
simultaneously with the execution and delivery of this Agreement, confirm under
the Guaranty dated June 15, 1990 in favor of the Banks and the Agent (a
"Guaranty") the guarantee to the Banks and the Agent by LINC Group (in such
capacity, a "Guarantor") of the due payment and performance of all of the
Obligations;
(ii) by execution and delivery of the Confirmation Agreement
simultaneously with the execution and delivery of this Agreement, confirm under
the Second Amended and Restated LINC Group Pledge Agreement dated September 28,
1994 (as amended, modified and supplemented from time to time, the "Second
Amended and Restated LINC Group Pledge Agreement") the existing and continuing
grant by LINC Group to the Agent, for the ratable benefit of the Banks, of a
first lien on and security interest in and pledge with the Agent of, and the
grant of certain other liens with respect to, all of the issued and outstanding
shares of capital stock of LCI;
(iii) execute and deliver such other agreements, instruments and
documents as the Agent may reasonably require in order to effect the purposes of
the Amended and Restated LINC Group Pledge Agreement, this Section 2.21 and this
Agreement;
(h) The due payment and performance of the Obligations shall be
guaranteed to the Banks and the Agent by each of LES and any other guarantor
referred to in the Confirmation Agreement which guarantor executed a guaranty on
June 15, 1990 in favor of the Agent (hereinafter referred to individually
together with LINC Group as a "Guarantor" and collectively as the "Guarantors"),
by the execution and delivery to the Agent, simultaneously with the execution
and delivery of this Agreement, (i) by each of such other guarantors, of the
Confirmation Agreement, and (ii) by LES of a guaranty in form and substance
satisfactory to the Agent (all of the foregoing guaranties, hereinafter referred
to individually, together with the Guaranty referred to in the preceding
subsection (g), as a "Guaranty" and collectively as the "Guaranties) which
Guaranty made by LES shall be in replacement and substitution for, and shall
constitute a restatement of, its direct obligations under the promissory notes
issued pursuant to the Second Restated Agreement.
The Guaranties, the Security Agreements, the Pledge Agreements, and the other
aforesaid agreements, instruments, and documents described in this Section 2.21
and the Foreign Security Documents are sometimes hereinafter referred to
collectively as the "Security Documents", and the collateral covered thereby is
sometimes referred to as the "Collateral".
Section 2.22 Subordination.
Simultaneously with the execution and delivery of this Agreement, by
execution and delivery of a Subordination Agreement Confirmation in form and
substance satisfactory to the Agent (the "Subordination Agreement Confirmation")
the Borrowers shall confirm and acknowledge the terms of:
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(a) the Subordination and Intercreditor Agreement dated September 28,
1994 (as amended, modified or supplemented from time to time, the "Intercreditor
Agreement") by and among LCI, each of the Quantum Shareholders, the Agent on
behalf of the Banks and Newcourt as successor to Anthem Financial relating to
the first liens of the Agent on behalf of the Banks, and the second liens of
Newcourt on the capital stock of Quantum and other Subsidiaries of LCI;
(b) the Subordination and Intercreditor Agreement dated September 28,
1994 by and among LCI, the Agent, Newcourt and LFC (as amended, modified or
supplemented from time to time, the "LFC Intercreditor Agreement") relating to
the first lien of Newcourt and the second lien of the Agent on behalf of the
Banks on the capital stock of LFC;
(c) the Intercreditor Agreement dated September 28, 1994 by and among
LCI, LINC, the Agent and Newcourt (as amended, modified or supplemented from
time to time, the "LINC Group Intercreditor Agreement") relating to the first
lien of the Agent on behalf of the Banks and the second lien of Newcourt on the
capital stock of LCI; and
(d) the Subordination Agreement dated June 15, 1990 by and among LCI,
LINC Group and certain Affiliates of LINC Group relating to intercompany
obligations (the "Intercompany Subordination Agreement").
Section 2.23 Release of Agent's Lien.
------------------------
(a) In the ordinary course of its business, a Borrower or a Foreign
Leasing Subsidiary may seek to finance specific assets with Indebtedness to be
incurred after the date of this Agreement. In the event that on any date the
Borrowing Base exceeds the outstanding principal amount of the Loans, then,
subject to the other terms and conditions of this Agreement, the Agent shall at
its election either subordinate or release the Agent's and the Banks' lien on
and security interest in certain properties and assets of the Borrower or
applicable Foreign Leasing Subsidiary proposed to be used as collateral for such
indebtedness and such assets and properties so subordinated or released shall be
deemed excluded from the Borrowing Base (or, if applicable, shall continue to be
included in the appropriate clause of the Borrowing Base subject to Permitted
Borrowing Base Encumbrances), but only upon and subject to the following
conditions:
(i) the Agent shall have received the Borrowing Base Report
most recently required to have been delivered hereunder together with a
representation and warranty by each of the Borrowers or an officer thereof
acceptable to the Agent to the effect that there exists excess in the Borrowing
Base after giving effect to the exclusion of the assets and properties in which
the Agent's Lien is then to be subordinated or released;
(ii) no Default or Event of Default then exists hereunder or
would exist after giving effect to the proposed subordination or release (except
if and to the extent otherwise permitted by the Agent under Section 7.7 hereof);
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(iii) the Borrowers shall provide the Agent with at least five
(5) Business Days' prior written notice of any such proposed Indebtedness and
shall provide the Agent with the following pertaining to such proposed
Indebtedness:
(A) the identity of the lender of the Indebtedness;
(B) the amount and terms of the proposed Indebtedness;
(C) the specific assets being financed by the Indebtedness; and
(D) such other information as the Agent may reasonably request;
(iv) the Borrowers shall cause to be delivered to the Agent, not
later than five (5) Business Days prior to any proposed subordination or release
of the Agent's Lien, all Uniform Commercial Code amendment statements (if
appropriate) and any other agreements, instruments and documents necessary or
desirable in connection with such subordination or release, and such other
agreements, instruments and documents relating to such Indebtedness as the Agent
may request, including a letter substantially in the form of Annex A to the
Security Agreements, and all of the foregoing shall be satisfactory in form and
substance to the Agent; and
(v) the Borrowers shall bear and pay on demand all costs and
expenses incurred by the Agent and the Banks (including legal fees) in
connection with the review, preparation and filing of any and all of the
foregoing; and
(b) Simultaneously with any prepayment by the Borrowers pursuant to
and made in accordance with the provisions of subsection 2.8(b) hereof and
Section 7.8 hereof which prepayment results in receipt by the Banks of the
maximum balance that could be represented by the Loan made on the basis of the
assets so sold and released, so long as no Default or Event of Default then
exists hereunder (except if and to the extent otherwise permitted by the Agent
under Section 7.8 hereof), the Agent shall release the Agent's Lien on the
assets so sold or re-leased as described in such subsection 2.8(b). The
Borrowers shall prepare all Uniform Commercial Code or comparable release
statements and documents as necessary or desirable in connection with such
release, all in form and substance satisfactory to the Agent, and the Borrowers
shall bear and pay on demand all costs and expenses incurred by the Agent and
the Banks (including legal fees) in connection with the review, preparation and
filing of any and all of the foregoing.
Section 2.24 Rights of the Agent and the
Banks as Second Lienholder.
Whether or not an Event of Default then exists or the Banks and the
Agent have accelerated the maturity of the Loans, the Agent shall be entitled to
take such actions as may
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be appropriate from time to time in regard to Collateral included under Clause
(c) of the Borrowing Base.
Section 2.25 Required Borrowing Documentation.
(a) Each of the Borrowers and each applicable Foreign Leasing
Subsidiary, on or prior to the date of delivery of each Borrowing Computation,
shall have taken the following actions and shall have and maintain at all times
on its premises full and complete records relating to assets included in the
Borrowing Base, including, without limitation, the borrowing agreements,
instruments and documents, in each case with respect to the assets to be
included in the respective clauses of the Borrowing Base referred to below:
(i) Contract Receivables Clauses and Residual Value Clause: Each
applicable Borrower and each applicable Foreign Leasing Subsidiary shall have
(with respect to the Borrowers, in each case by means of actual possession in
its Chicago, Illinois office referred to in Section 10.9 hereof or Foster City,
California office, and with respect to each applicable Foreign Leasing
Subsidiary, by means of actual possession in the Borrowers' Chicago, Illinois
office referred to in Section 10.9 hereof or an office of the applicable Foreign
Leasing Subsidiary located in the United Kingdom and approved by the Agent), and
maintain possession of: counterpart number 1 of each Eligible Contract and
Eligible Emerging Growth Contract (other than an Eligible Contract or an
Eligible Emerging Growth Contract which is an Equipment Note or a Third Party
Note) (and each other executed original of such Eligible Contract or Eligible
Emerging Growth Contract other than the counterpart held by the Lessee) included
under the Contract Receivables Clauses, such counterpart number 1 bearing in
each case a legend acceptable to the Agent relating to the financing hereunder;
the original or a counterpart copy of the Certificate of Delivery and Acceptance
relating thereto; an original of each Eligible Contract or Eligible Emerging
Growth Contract which is an Equipment Note or Third Party Note; in the case of a
Lease, the applicable Borrower's or Foreign Leasing Subsidiary's, as the case
may be, purchase order, manufacturer's or other vendor's invoice and evidence of
payment thereof and any xxxx of sale covering the related Equipment (reflecting
title to the Equipment in the name of the applicable Borrower or applicable
Foreign Leasing Subsidiary) and bills of sale from the manufacturer of the
Equipment and all owners thereof prior to the applicable Borrower or applicable
Foreign Leasing Subsidiary;
(ii) Accounts Receivable Clause: Each applicable Borrower shall have
(in each case by means of actual possession in its Chicago, Illinois office
referred to in Section 10.9 hereof or its Foster City, California office) and
maintain possession of (a) with respect to Accounts Receivable arising from
sales of Equipment by the applicable Borrower, such Borrower's copy of the xxxx
of sale and invoice covering the Equipment; and (b) with respect to Accounts
Receivable comprised of Rental Payments, the documents required under subsection
(iv) below;
(iii) Inventory Clause: LCI shall have (by means of actual possession
in its Chicago, Illinois office referred to in Section 10.9 hereof) and maintain
possession of written
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evidence of the presence or return of Equipment to a location under the control
of LCI, as applicable; and
(iv) Rental Equipment Clauses: Quantum shall have (in each case by
means of actual possession in its Chicago, Illinois office referred to in
Section 10.9 hereof, or its Foster City, California office) and maintain
possession of: counterpart number 1, if any, of each Rental Agreement (and each
of the executed originals, if any, of such Rental Agreement other than the
counterpart held by the Lessee), such counterpart number 1 bearing in each case
a legend acceptable to the Agent relating to the financing thereunder;
(v) Finished Goods Inventory Note and Receivables Note Clause: Each
Applicable Company shall have delivered possession of each original Finished
Goods Inventory Note and Receivables Note to the Agent, duly endorsed "Pay to
the order of [The Agent], as Agent", and shall have (by means of actual
possession in its Chicago, Illinois office referred to in Section 10.9 hereof) a
fully executed original of each security agreement related thereto.
(b) With respect to each of the foregoing, the applicable Borrower or
Foreign Leasing Subsidiary shall have (in each case by means of actual
possession in its Chicago, Illinois office referred to in Section 10.9 hereof,
or its Foster City, California office) and maintain together with the foregoing
documents, respectively, all exhibits, schedules, annexes, amendments and
supplements relating thereto including, without limitation, original executed
copies thereof.
(c) (i) With respect to the Contract Receivables Clauses, Accounts
Receivable Clause, Rental Equipment NBV Clause and Finished Goods Inventory Note
and Receivables Note Clause, each Applicable Company (with respect to the
Borrowers, by means of actual possession in the Chicago, Illinois office
referred to in Section 10.9 hereof or the Foster City, California office and
with respect to each applicable Foreign Leasing Subsidiary, by means of actual
possession in the Borrowers' Chicago, Illinois office referred to in Section
10.9 hereof or an office of the applicable Foreign Leasing Subsidiary located in
the United Kingdom and approved by the Agent) shall maintain photocopies (and
acknowledgment copies when received) of the Financing Statements (informational
or otherwise) filed by the Applicable Company as lessor/secured party against
the Lessee, Account Debtor or other Obligor, as the case may be, relating to the
underlying item(s) of Equipment, Obligor Finished Goods Inventory or Obligor
Accounts Receivable and other assets as appropriate, and, in each case, assigned
to the Agent. All of such Financing Statements shall have been filed in the
appropriate filing offices as necessary for perfection of a security interest in
favor of the Applicable Company (and the Agent as assignee) prior to the date of
inclusion of any related asset in the Borrowing Base; provided however, that
unless and until otherwise required by the Majority Banks and the Agent from and
after notice to such effect given to the Borrowers: (A) Quantum shall not be
obligated to file Financing Statements naming the Lessee as debtor and Quantum
as secured party with respect to Rental Agreements having an original term of
fewer than seven (7) months; and (B) notwithstanding the foregoing terms of
clause (A), no such Financing Statements shall be required to be filed in
respect of any Rental Agreement under which the aggregate amount of Accounts
Receivable arising pursuant thereto is less than One Hundred Thousand ($100,000)
Dollars; and
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(ii) with respect to clause (a) of the Borrowing Base (i.e., Contract
Receivables Clause), each applicable Foreign Leasing Subsidiary shall maintain
possession of all documents and take all other actions necessary to maintain the
perfection and first priority security interest of the Agent in any underlying
items of Equipment and other assets as appropriate.
(d) Each of the Borrowers and applicable Foreign Leasing Subsidiaries
shall during all business hours provide the Banks, the Agent and the Agent's
representatives full access to all of the agreements, instruments and documents
referred to in this Section 2.25.
(e) From and after the date of occurrence of any Event of Default
under any of Sections 8.1, 8.2, 8.5, 8.6, 8.7 or 8.10, the Agent may in the
exercise of its sole discretion, require any of the Borrowers and, if
applicable, Foreign Leasing Subsidiaries, to deliver to the Agent originals, or
if permitted by the Agent, photocopies of all of the agreements, instruments and
documents referred to in this Section 2.25.
(f) Whether or not specific reference is made in this Section 2.25 to
a Foreign Leasing Subsidiary, the foregoing obligations shall be applicable to
each applicable Foreign Leasing Subsidiary in respect of its assets included in
the Borrowing Base.
Section 2.26 Lock-box Arrangements.
(a) Simultaneously with the execution and delivery of this Agreement
in the case of the Borrowers, and prior to the making of any Foreign Subsidiary
Loan in the case of any Foreign Leasing Subsidiary, each of the Borrowers and
each Foreign Leasing Subsidiary, as applicable, at its own expense, will: (i)
establish and maintain at all times with (A) in the case of the Borrowers, the
Agent or, subject to the terms of subsection (b) below, LaSalle National Bank,
The First National Bank of Chicago or CoreStates Bank, N.A., and (B) in the case
of the Foreign Leasing Subsidiaries, with Fleet Bank, N.A. or such other bank as
is acceptable to the Agent, lock-box arrangements separately (with respect to
each of the Borrowers and each applicable Foreign Leasing Subsidiary) into which
the Borrowers and applicable Foreign Leasing Subsidiaries, respectively, shall
deposit all payments made under contracts included under the Contract
Receivables Clause, Accounts Receivable Clause, Residual Value Clause, Rental
Equipment Clause, Finished Goods Inventory Note and Receivables Note Clause
except that in respect of the Residual Value Clause, payments shall be required
to be deposited only from and after the date of realization of a Residual Value
that remains included under any clause of the Borrowing Base and in any event
from and after the Term Conversion Date; and (ii) notify forthwith all obligors
who have obligations which initially arise after the date of this Agreement in
respect of assets included under the above-referenced clauses of the Borrowing
Base, and notify all Lessees or other Obligors under existing Eligible
Contracts, Eligible Foreign Leases, Eligible Emerging Growth Contracts,
Equipment Notes, CSAs, Third Party Notes or Finished Goods Inventory Note and
Receivables Note Clause, as applicable, to be included in the Borrowing Base, to
make payments only to the above-mentioned lock-box accounts; except that in the
event that there were in effect prior to the date of this Agreement lock-box
arrangements between any of the Borrowers or Foreign Leasing Subsidiaries and
any Bank which lock-box accounts have not been assigned to or assumed by LFC
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with respect to specific Contracts, Foreign Leases, as applicable, such
arrangements may continue in effect (subject to modification as required in
connection with the provisions of this Agreement) so that payments are made by
the aforementioned obligors to such other Bank in lieu of redirection of such
payments to the lock-box maintained with the Agent as aforesaid. Amounts
deposited in the lock-box accounts shall be disbursed for the applicable
Borrower or applicable Foreign Leasing Subsidiary on request (A) except from and
after the date of occurrence of an Event of Default until said Event of Default
is cured to the satisfaction of the Majority Banks, and (B) except that from and
after the Term Conversion Date no such amounts shall be disbursed to any
Borrower or Foreign Leasing Subsidiary unless the obligations of the Borrowers
under Section 2.8 hereof shall then be satisfied in full, whether from amounts
deposited in the lock-box or otherwise.
(b) Each of the Borrowers, each Foreign Leasing Subsidiary and each
Bank hereby confirms and acknowledges that (1) any payments received by any Bank
pursuant to lock-box arrangements existing prior to the date hereof and any
payments received by LaSalle National Bank or The First National Bank of Chicago
or CoreStates Bank, N.A. pursuant to arrangements made as of the date of this
Agreement shall be received by each such Bank as agent for the Agent to be held
in escrow for application and direction exclusively pursuant to the terms and
conditions of this Agreement (including, for application to repayment of the
Loans as directed from time to time by the Agent in a manner not inconsistent
with the provisions of this Agreement), and (ii) the terms and conditions of
this Agreement shall govern and control in the event of any inconsistency
between this Agreement and any agreements, instruments and documents entered
into between any Bank and any Borrower or Foreign Leasing Subsidiary relating to
lock-box arrangements. Notwithstanding the provisions of subsection (a) above,
at the request of the Agent, all such payments shall be turned over to the Agent
from and after the date of notice to such effect given by the Agent in its sole
discretion following the occurrence of any Event of Default hereunder, and each
Borrower, each Foreign Leasing Subsidiary and each Bank, if so required by the
Agent's notice, shall forthwith deliver notices to all obligors under assets
included in the Borrowing Base that all payments shall be delivered directly to
the lock-box accounts maintained with the Agent. Each Borrower, each Foreign
Leasing Subsidiary and each Bank shall, from time to time at the request of the
Agent, execute and deliver such documentation as the Agent may reasonably
request in order to confirm the terms and conditions of this Section 2.26.
Section 2.27 Pro Rata Treatment Among Banks.
Except as otherwise provided herein: (i) each borrowing from the Banks
under Section 2.1 hereof will be made from the Banks and each payment of each
Fee (other than the administrative fee and the structuring fee referred to in
Section 2.4(b) hereof and the fee provided for in subsection 2.32(f) hereof)
shall be made for the account of the Banks pro rata according to their
respective Unused Commitments; (ii) each partial reduction of the Total
Commitment shall be applied to the Commitments of the Banks pro rata according
to each Bank's respective Commitment; (iii) each conversion of Loans of a
particular type under Section 2.21 hereof (other than conversions provided for
by Section 2.18 or 2.19 hereof) will be made pro rata among the Banks holding
Loans of such Type according to the respective principal amounts of
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such Loans held by such Banks; (iv) each payment and prepayment of principal of
or interest on Loans (including of a particular Type) will be made to the Agent
for the account of the Banks holding Loans (and, if relevant, of such Type pro
rata in accordance with the respective unpaid principal amounts of such Loans
held by such Banks; and (v) Interest Periods for Loans of a particular Type
shall be allocated among the Banks holding Loans of such Type pro rata according
to the respective principal amounts of such Loans held by such Banks.
Notwithstanding the foregoing provisions of this Section 2.27, in order to
reflect the assignments of Loans and Commitments being made concurrently with
the execution and delivery of this Agreement, the Banks shall, as of the date
hereof, make appropriate adjustments among themselves in order that the amount
of Loans outstanding to the Borrowers from each Bank under the Second Restated
Agreement are in principal amounts, as of the date hereof, which are in the same
proportion to the outstanding principal amount of all Loans that each Bank's
Commitment, respectively, bears to the aggregate Commitment of all the Banks,
after giving effect to any changed amount of the Commitments of any Bank and the
inclusion of new Banks hereunder; provided, however, that (except in respect of
the outstanding Loans assigned by The Northern Trust Company to European
American Bank and to CoreStates Bank, N.A.) the foregoing adjustments shall not
be made as of the date hereof in respect of Loans bearing interest at a rate
subject to an Interest Period outstanding immediately prior to the date hereof
but such adjustments shall be made on the first day on which the foregoing
adjustments can be made without incurring "breakage costs" in respect of each
respective Interest Period, so that the foregoing adjustments shall be made as
of the date hereof only in respect of borrowings from and after the date hereof
or borrowings that are not subject to an Interest Period (except in respect of
the outstanding Loans assigned by The Northern Trust Company to European
American Bank and CoreStates Bank, N.A. as to which the pro rata shares of such
assigned Banks shall be based on the respective portions assigned to them of the
Loans outstanding from The Northern Trust Company).
Section 2.28 Non-Receipt of Funds by the Agent.
Unless the Agent shall have been notified by a Bank or the Borrowers
(the "Payor") prior to the date on which such Bank is to make payment to the
Agent of the proceeds of a Loan to be made by it hereunder or the Borrowers are
to make a payment to the Agent for the account of one or more of the Banks, as
the case may be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient of such payment shall, on demand, repay to the Agent the
amount made available to it together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day (when the recipient is a Bank) or
equal to the rate of interest applicable to such Loan (when the recipient is the
Borrowers).
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Section 2.29 Sharing of Payments and Set-Off Among Banks.
Each of the Borrowers hereby agrees that, in addition to (and without
limitation to any right of set-off, banker's lien or counterclaim a Bank may
otherwise have, each Bank shall be entitled, at its option, to offset balances
held by it at any of its offices (including, without limitation, under any lock-
box arrangements) against any principal of or interest on any of its Loans
hereunder, or any Fee payable to it, which is not paid when due (regardless of
whether such balances are then due to the Borrowers), in which case it shall
promptly notify the Borrowers and the Agent thereof, provided that its failure
to give such notice shall not affect the validity thereof. If a Bank shall
effect payment of any principal of or interest on Loans held by it under this
Agreement through the exercise of any right of set-off, banker's lien,
counterclaim or similar right, it shall promptly purchase from the other Banks
participation in the Loans held by the other Banks in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end that
all the Banks shall share the benefit of such payment pro rata in accordance
with the unpaid principal and interest on the Loans held by each of them, each
of which Banks shall have a Lien on its ratable portion of the amounts described
hereinabove received from the Borrowers. To such end all the Banks shall make
appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored. Each of
the Borrowers agrees that any Bank so purchasing a participation in the Loans
held by the other Banks may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Bank were a direct holder of Loans in the amount of such participation.
Nothing contained herein shall require any Bank to exercise any such right or
shall affect the right of any Bank to exercise and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of any of the Borrowers.
Section 2.30 Lending Offices.
The Loans of each type made by each Bank shall be made and maintained
at such Bank's Applicable Lending Office for Loans of such type.
Section 2.31 Several Obligations.
The failure of any Bank to make any Loan to be made by it on the date
specified therefor shall not relieve the other Banks of their respective
obligations to make their Loans on such date, but no Bank shall be responsible
for the failure of the other Banks to make Loans to be made by such other Banks.
Section 2.32 Temporary Loans.
(a) Temporary Commitment; Borrowings.
(i) Intent. The obligations of the Banks hereunder shall be absolute
and unconditional and shall not be affected by any circumstance including,
without limitation, (A) any setoff, counterclaim, recoupment, defense or other
right which such Bank may have against the
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Temporary Lender or any Loan Party; (B) the occurrence or continuance of a
Default or Event of Default (unless, during any period while the Temporary
Lender continues to be the same entity as the Agent, the Agent has knowledge of
the existence of a Default not theretofore communicated in writing to all of the
Banks and not cured or waived; "knowledge" being deemed exclusively to mean the
receipt by the Agent of a notice from a Bank or the Borrowers specifying such
Default and stating that such notice is a "Notice of Default"); (C) any adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party; (D) any breach of any
Loan Document by any of the Borrowers or any other Loan Party; or (E) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
(ii) Conditions of Commitment. Subject to the terms and conditions of
this Agreement, the Temporary Lender may make advances (each, a "Temporary
Loan", and collectively, the "Temporary Loans") to the Borrowers from time to
time from the date of execution and delivery of this Agreement to the Commitment
Termination Date (exclusive of the last day thereof) in an aggregate principal
amount for all Temporary Loans at any time outstanding not to exceed the
Temporary Commitment as then in effect; provided, however, that no Temporary
Loan shall be made without the consent of the Majority Banks if the Temporary
Lender shall have received notice from any of the Borrowers pursuant to Section
5.7 hereof or from the Majority Banks that a Default or an Event of Default
shall then exist. Subject to the terms of this Agreement, during the Credit
Period, the Borrowers may borrow, repay and reborrow Temporary Loans in
accordance with and subject to the terms and conditions of this Section 2.32.
Except as otherwise expressly set forth in this Section 2.32 or elsewhere in
this Agreement, Temporary Loans: (A) shall be subject to and governed by and
entitled to all of the benefits of all terms and conditions of this Agreement
applicable to Loans, and (B) shall constitute Loans for all purposes of the Loan
Documents, except where the context otherwise indicates.
(iii) Borrowings. Minimum borrowings of Temporary Loans shall be in a
principal amount of not less than One Hundred Thousand ($100,000) Dollars or
such lesser amount as shall exhaust the remaining amount of the Temporary
Commitment. All Temporary Loans shall be Prime Rate Loans, and no Temporary Loan
may be a Eurodollar Loan.
(b) Use of Proceeds.
The proceeds of the Temporary Loans shall be used by the Borrowers
solely for such purposes as are permitted for all Loans under Section 2.9
hereof.
(c) Conversion.
Each Temporary Loan shall be refinanced by conversion into a Loan made
pursuant to the provisions of Section 2.1 hereof, the proceeds of which Loan
shall be used to refinance such Temporary Loan. Each such conversion and
refinancing shall be made, all without demand on or notice to any of the
Borrowers on the earliest of the following: (1) the Commitment Termination Date
or any earlier termination of the Commitments or the Temporary Commitment;
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or (ii) upon occurrence of the earlier of a Default or an Event of Default under
this Agreement; (iii) at such time or times as the aggregate outstanding
principal amount of the Temporary Loans has exceeded Five Million ($5,000,000)
Dollars for ten (10) consecutive Business Days with the conversion to occur
within two (2) Business Days thereafter and the Agent shall have delivered
prompt telephonic notice (confirmed thereafter by telecopy or otherwise in
writing) to the Banks so stating the basis for the conversion; (iv) at the
election of the Temporary Lender as set forth in subsection 2.32(h) hereof, or
(v) at the election of the Borrowers by means of delivery of a Borrowing Notice
in accordance with the applicable provisions of this Loan Agreement. Each such
conversion and refinancing shall be for the full outstanding principal amount of
the Temporary Loans, unless otherwise elected by the Temporary Lender or the
Borrowers pursuant to clauses (iv) or (v), respectively. The advances to be
made respectively by the Banks under this subsection (c) shall be in the amounts
set forth in subsection 2.32(h) hereof and such amounts shall be advanced to the
Agent for the account of the Temporary Lender. All such advances by the Banks
pursuant to this subsection 2.32 (including under subsection 2.32(h)) shall
constitute Loans under the Total Commitment. Any Temporary Loan not converted
and refinanced as set forth in this Section 2.32 (despite the obligations of
conversion and refinancing set forth herein) shall be due and payable in full by
the Borrowers on demand by the Temporary Lender, and shall, if the Loans are
then due and payable, be repaid to the Temporary Lender prior to repayment of
the Loans to the Banks.
(d) Temporary Loan Note; Temporary Loan Records.
(i) The Temporary Loans made by the Temporary Lender shall be
evidenced by a single joint and several promissory note of the Borrowers (the
"Temporary Loan Note") in substantially the form of Exhibit B-2 hereto, dated
the date hereof payable to the order of the Temporary Lender in the principal
amount of Five Million ($5,000,000) Dollars and otherwise duly completed.
(ii) The Temporary Lender will maintain a record in which appropriate
entries will be made from time to time showing the unpaid principal of the
Temporary Loans made, the interest accrued thereon and payments made in respect
of the principal of and interest on such Loans and debits and credits in respect
of other amounts payable by the Borrowers from time to time to the Temporary
Lender pursuant to this Agreement. The entries made by the Temporary Lender in
such record shall constitute prima facie evidence of (a) the Borrowers'
obligations in respect of the Temporary Loans made hereunder, (b) payments of
principal and interest made by the Borrowers in respect of such Loans and (c)
any other amounts owing by the Borrowers to the Temporary Lender hereunder and
payments made thereon. Notwithstanding the foregoing, the failure by the
Temporary Lender to make such entries shall not affect the rights of the
Temporary Lender or the obligations of the Borrowers hereunder.
(e) Application for Temporary Loan.
Application for a Temporary Loan (each, a "Temporary Loan Borrowing
Notice") shall be made to the Temporary Lender by telecopy notice which must be
received by the Temporary Lender before 12:00 noon, New York City time, on the
Business Day of the
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requested date for borrowing (a) setting forth the amount then to be borrowed,
and (b) otherwise being in compliance with the requirements of a Borrowing
Notice under subsection 2.3(b) hereof. On the date for borrowing proposed in
such application, subject to satisfaction of the applicable conditions precedent
set forth in Article 4 hereof, the Temporary Lender will advance to the
Borrowers, and the Borrowers will borrow from the Temporary Lender, the amount
specified in such Temporary Loan Borrowing Notice and the Borrowers will then be
indebted to the Temporary Lender in such principal amount. The Temporary Lender
will credit the amount of the Temporary Loan to an account on its books in the
name of the Borrowers or will transmit such amount upon the Borrowers' order.
(f) Interest Rates on Temporary Loans; Interest Payment Dates; Fees.
(i) Subject to subsection (f)(ii) below, the Borrowers shall pay to
the Temporary Lender interest on the unpaid principal amount of each Temporary
Loan for the period commencing on the date of such Temporary Loan until such
Temporary Loan shall be paid in full, at the rate per annum equal to the Prime
Rate plus the Applicable Margin.
(ii) Notwithstanding the foregoing, the Borrowers shall pay interest
on the Temporary Loans or any installment or portion thereof, and on any other
amount payable by the Borrowers under this Section 2.32 (other than interest)
which shall not be paid in full when due (whether at stated maturity, by
acceleration or otherwise), and at any time after an Event of Default shall have
been declared and be continuing, for the period commencing on the due date
thereof or on the date of declaration of the Event of Default, as applicable,
until the same is paid in full at the applicable Post-Default Rate.
(iii) Interest on each Temporary Loan shall be payable monthly in
arrears commencing on the last day of the first calendar month following the
making of each Temporary Loan and on the date of payment in full, except that
unpaid interest accrued on a Temporary Loan through any date of conversion into
a Loan shall be payable on the last day of the calendar month during which any
such conversion occurs.
(iv) The Borrowers shall pay to the Temporary Lender for its own
account a commitment fee on the daily average unused amount of the Temporary
Commitment for the period from the date of this Agreement to and including the
earlier of the date on which the Temporary Commitment is terminated or the
Commitment Termination Date, at the rate of three-eighths of one percent (3/8 of
1%) per annum on the unused Temporary Commitment. Such fee shall be payable
quarterly in arrears on the first day of each calendar quarter and on the
earlier of the date the Temporary Commitment is terminated or the Commitment
Termination Date. Each of the Borrowers acknowledges that the foregoing fee is
payable notwithstanding the provisions of this Agreement limiting the
outstanding principal amount of all loans, inclusive of Temporary Loans, to the
Total Commitment.
(g) Prepayments of Temporary Loans.
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(i) Subject to the provisions of this subsection (g), the Borrowers
shall be permitted to repay and prepay Temporary Loans in whole at any time or
in part from time to time without premium or penalty. Partial prepayments
hereunder may not be in an amount which is less than Fifty Thousand ($50,000)
Dollars and which is not a whole multiple of Fifty Thousand ($50,000) Dollars or
such lesser amount as shall prepay the Temporary Loan or Loans in full.
(ii) The Borrowers shall prepay the Temporary Loans in any event upon
which, and in the manner in which, such prepayment is required by Section 2.8
hereof
(iii) All prepayments shall be made to the Temporary Lender and shall
be made together with interest accrued on the amount prepaid and any additional
amount which is payable pursuant to Section 2.16 or 2.20 hereof or otherwise.
(iv) The Borrowers may not prepay the whole or any part of the
Temporary Loan Obligations except in accordance with the specific provisions of
this Agreement.
(h) Conversion and Refinancing by Banks at Election of Temporary
Lender.
At any time (whether or not a Default or an Event of Default exists)
the Temporary Lender may, in its sole discretion, determine that it desires to
convert the Temporary Loans into Loans under Section 2.1 hereof and desires the
Banks to refinance the Temporary Loans. At such time, the Temporary Lender
shall notify the Borrowers and the Agent of such fact, the Agent shall then
notify the Banks of such determination and, unless any of the events described
in Section 8.6 have occurred (in which event the procedures of subparagraph (1)
immediately below shall apply), thereafter the Banks shall on the second
Business Day after the giving of such notice by the Temporary Lender, advance
funds to the Agent for the account of the Temporary Lender in an amount equal to
the product of (i) the percentage that such Bank's Commitment represents of the
Total Commitment multiplied by (ii) the aggregate outstanding principal balance
of the Temporary Loans to be refinanced by the Banks, which funds shall be
remitted by the Agent to the Temporary Lender to be applied by the Temporary
Lender to refinance the Temporary Loans; provided, however, that no Bank shall
be required to advance funds to the Agent in an aggregate amount in excess of
the amount of such Bank's Unused Commitment as in effect on such date.
(i) Participation in Temporary Loans. If, prior to the conversion of
Temporary Loans into Loans pursuant to Section 2.32(c) hereof, any of the events
described in Section 8.6 shall have occurred, then each Bank shall, on the date
such Loan was to have been made, purchase from the Temporary Lender an undivided
participating interest in the Temporary Loan in an amount equal to (i) the
percentage that such Bank's Commitment represents of the Total Commitment
multiplied by (ii) the aggregate outstanding principal balance of the Temporary
Loans. Upon request, each Bank will immediately transfer to the Temporary
Lender, in immediately available funds, the amount of its participation and upon
receipt thereof the
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Temporary Lender will deliver to such Bank a Temporary Loan Participation
Certificate dated the date of receipt of such funds and in such amount.
Section 2.33 L/Cs.
(a) Amount and Expiration.
(i) Subject to the terms and conditions of this Agreement, any of the
Banks may issue one or more Standby L/Cs (in such capacity, each Bank which
issues an L/C is sometimes hereinafter referred to as an "Issuing Bank" in
respect of such L/Cs issued by it) for the account of an Account Party,
provided, however, that no L/C shall be issued if, after giving effect to the
issuance of such L/C (i) the aggregate amount of all L/C Obligations and the
aggregate amount of all Loans (including Temporary Loans) then outstanding would
exceed the lesser of the Borrowing Base or the Total Commitment, and (ii) the
aggregate amount of all L/C Obligations then outstanding would exceed Five
Million ($5,000,000) Dollars. Subject to the foregoing, the Borrowers may
request the issuance of L/Cs under this Section 2.33, repay any drawings
thereunder and request the issuance of additional L/Cs under this Section 2.33.
The Borrowers shall be jointly and severally liable for any indebtedness,
liabilities and obligations of any Account Party under or arising in connection
with any L/C. For all purposes of this Agreement, reference to the "Issue" or
"issuance" of any L/C or any L/C being "issued" shall include the amendment,
supplement or modification of any L/C, including, without limitation, any
increase in the amount thereof, or any extension or renewal thereof
(ii) No L/C shall have an expiration date later than the date which is
sixty (60) days prior to the then-scheduled Commitment Termination Date. No L/C
may by its terms be automatically renewable, unless consented to in writing by
the Agent in the exercise of its sole discretion, subject to the foregoing
restriction regarding expiration dates.
(b) Notice and Issuance, Use of L/Cs.
(i) The Borrowers shall give notice to the Issuing Bank that wishes to
issue the L/C and to the Agent of a request for issuance of any L/C not less
than four (4) Business Days prior to the proposed issuance date (which
prescribed time period may be waived at the option of the Issuing Bank and the
Agent in the exercise of their sole discretion). Each such notice (a "Notice of
Issuance") shall specify the requested (A) date of such issuance (which shall be
a Business Day), (B) maximum amount of such L/C, (C) expiration date of such
L/C, (D) purpose of such L/C, (E) name and address of the beneficiary of such
L/C, (F) account party which shall be an Account Party and (G) form of such L/C
(which shall be acceptable to both of the Issuing Bank and the Agent in their
respective sole discretion). Upon acceptance of the form of the proposed L/C by
the Issuing Bank and the Agent and upon fulfillment of the applicable conditions
set forth in Article 4 hereof, and subject to execution by the Account Party of
any customary Standby L/C application or agreement or other documents required
by the Issuing Bank (in each case, and collectively, the "Application
Documents"), the Issuing Bank shall make such Standby L/C available to the
Borrowers at its office referred to in Section 10.9 hereof or as otherwise
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agreed with the Borrowers in connection with such issuance. The Agent shall
promptly notify each Bank of the stated amount and the expiration of each L/C.
(ii) Each Notice of Issuance shall be accompanied by a Borrowing
Computation which shall include a representation that the issuance of the L/C
requested shall not on the date of issuance exceed the Borrowing Availability,
as measured as provided (in respect of Loans) in subsection 2.3(b) hereof, and
the proviso set forth in such subsection 2.3(b) shall be applicable as well to
any Notice of Issuance.
(iii) The L/Cs shall be requested and issued solely for the purpose of
facilitating the purchase of Equipment acquired from the beneficiaries of such
L/Cs and for other purposes in each case in the ordinary course of business of
the applicable Account Party's Basic Business.
(c) Reimbursement Obligations.
The respective account party under each L/C, and the Borrowers,
jointly and severally in respect of each and every L/C, shall be obligated to
reimburse the Agent, for the account of the Issuing Bank, in immediately
available funds at the Principal Office upon demand for drafts drawn and all
amounts paid or disbursed under each such L/C (all such amounts so drawn, paid
or disbursed until reimbursed are hereinafter referred to as "Unreimbursed
Drawings"), with interest on the amount so paid or disbursed from and including
the date paid or disbursed until reimbursement in full at the Post-Default Rate.
All such interest shall be payable on demand, and shall be computed on the basis
of a year of 360 days and actual days elapsed (including the first day but
excluding the last) occurring in the period for which payable.
(d) General Unconditional Obligations.
The obligations of the Borrowers and each Account Party under this
Agreement and the Application Documents and any other agreement, instrument or
document relating to reimbursement or payment of L/C Obligations shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement and the Application Documents, under
all circumstances whatsoever, including, without limitation, the following
circumstances, whether relating to any one or more L/Cs:
(i) any agreement between the Borrowers or any Account Party and
any beneficiary or any agreement or instrument relating thereto (the
"Beneficiary Documents") proving to be forged, fraudulent, invalid,
unenforceable or insufficient in any respect;
(ii) any amendment or waiver of or any consent to departure from
all or any of the Beneficiary Documents;
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(iii) the existence of any claim, set off, defense or other
rights which any Borrower or any Account Party may have at any time against any
beneficiary or any transferee of any L/C (or any persons or entities for whom
any beneficiary or any such transferee may be acting), the Issuing Bank, any
other Bank, the Agent or any other person or entity, whether in connection with
the Agreement, the Beneficiary Documents or any unrelated transaction;
(iv) any demand presented under any L/C (or any endorsement
thereon) proving to be forged, fraudulent, invalid, unenforceable or
insufficient in any respect or any statement therein being inaccurate in any
respect whatsoever;
(v) payment by the Issuing Bank under any L/C against
presentation of a demand which does not comply with the terms of such L/C,
including, without limitation, the circumstances referred to in clause (iv)
above or the failure of any document to bear reference or to bear adequate
reference to such L/C;
(vi) the use to which any L/C may be put or any acts or omission
of any beneficiary in connection therewith; or
(vii) any other circumstances or happening whatsoever, whether or
not similar to any of the foregoing.
(e) Participation by Banks.
(i) On the date of issuance of each L/C the Issuing Bank shall be
deemed irrevocably and unconditionally to have sold and transferred to each Bank
(excluding, for all purposes of this subsection (e), the Issuing Bank, which
shall retain a portion equal to its pro rata share of the Total Commitment)
without recourse or warranty, and each Bank shall be deemed to have irrevocably
and unconditionally purchased and received from the Issuing Bank (in each case
subject to subsection 2.33(i) hereof), an undivided interest and participation,
to the extent of such Bank's pro rata share of the Total Commitment in effect on
the date of such issuance, in such L/C, the related Application Documents and
all L/C Obligations relating to such L/C and all Loan Documents securing,
guaranteeing, supporting, or otherwise benefitting the payment of such L/C
Obligation. The Issuing Bank shall furnish to any Bank, upon request, copies of
any L/C and any Application Documents as may be requested by such Bank.
(ii) In the event that any reimbursement obligation under subsection
2.33(c) hereof is not paid when due to the Issuing Bank with respect to any L/C,
the Issuing Bank shall promptly notify the Agent to that effect, and the Agent
shall promptly notify the Banks of the amount of such reimbursement obligation
and each such Bank shall immediately pay to the Agent, for immediate payment to
the Issuing Bank, in lawful money of the United States and in immediately
available funds, an amount equal to such Bank's ratable portion of the amount of
such unpaid reimbursement obligation. The obligation of each Bank to make
payments hereunder shall be absolute and unconditional and irrevocable and shall
be made under all circumstances (except as otherwise expressly provided in
subsection (i) above), including, without limitation, any of the
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circumstances referred to in Section 2.33(i)(B) and shall not be subject to any
conditions set forth in Article 4 hereof or otherwise affected by any
circumstance including, without limitation, (A) the occurrence or continuance of
a Default or Event of Default (unless, during any period while the Issuing Bank
continues to be the same entity as the Agent, a new L/C is issued while the
Agent has knowledge of the existence of a Default not theretofore communicated
in writing to all of the Banks and not cured or waived, "knowledge" being deemed
exclusively to mean the receipt by the Agent of a notice from a Bank or any of
the Borrowers specifying such Default and stating that such notice is a "Notice
of Default"); (B) any adverse change in the business condition (financial or
otherwise), operations, performance, properties or prospects of any Loan Party;
(C) any breach of this Agreement by any of the Borrowers or any other Loan Party
or Bank; (D) any set-off, counterclaim, recoupment, defense or other right which
such Bank may have against the Issuing Bank or any Loan Party; or (E) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. Each Borrower and each Account Party agrees that any Bank
purchasing a participation in any L/C from the Issuing Bank hereunder may, to
the fullest extent permitted by law, exercise all of its rights of payment with
respect to such participation as fully as if such Bank were the direct creditor
of such Borrower or Account Party in the amount of such participation.
(iii) Promptly after the Issuing Bank receives a payment on account of
a reimbursement obligation with respect to any L/C as to which any other Bank
has funded its participation pursuant to subsection 2.33(e)(ii) above, the
Issuing Bank shall promptly pay to the Agent, and the Agent shall promptly pay
to each Bank which funded its participation therein, in lawful money of the
United States and in the kind of funds so received, an amount equal to such
Bank's ratable share thereof.
(iv) If any payment received on account of any reimbursement
obligation with respect to a L/C and distributed to a Bank as a participant
under subsection 2.33(e)(iii) is thereafter recovered from the Issuing Bank in
connection with any bankruptcy or insolvency proceeding relating to any Borrower
or any Account Party or otherwise, each Bank which received such distribution
shall, upon demand by the Agent, repay to the Issuing Bank such Bank's ratable
share of the amount so recovered together with an amount equal to such Bank's
ratable share (according to the proportion of (i) the amount of such Bank's
required repayment to (ii) the total amount so recovered) of any interest or
other amount paid or payable by the Issuing Bank in respect of the total amount
so recovered.
(f) Fees.
The Borrowers shall pay to the Agent for the pro rata account of each
Bank (computed ratably on the basis of each Bank's Commitment hereunder) a non-
refundable letter of credit fee on the face amount of each L/C as in effect on
its date of issuance (collectively "L/C Fees", and such shall be deemed included
within the term "Fee" as used in this Agreement), which fee shall be at the rate
of two and one-quarter (2-1/4%) percent per annum on such face amount of each
Standby L/C payable quarterly in advance, in respect of each Standby L/C,
commencing on the date of issuance of such L/C and continuing on the last day of
each calendar quarter
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thereafter. In addition, the Borrowers shall pay on demand to the Issuing Bank
for the account exclusively of the Issuing Bank (notwithstanding the provisions
of subsection 2.27(i) of this Agreement), such standard fees, charges and
expenses as are customarily charged or incurred by the Issuing Bank from time to
time in connection with the issuance, amendment, transfer, administration or
cancellation of or payment under any or all L/Cs.
(g) Collateral.
The L/C Obligations shall constitute a portion of the Obligations, and
all L/C Obligations of the Borrowers or of any Account Party shall be secured by
the Security Documents.
(h) Additional Costs; Capital Requirements.
(i) ln the event that any existing or future law or regulation or
guideline or interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof, or compliance by
any Bank with any request or directive (whether or not having the force of law)
of any such authority shall impose, modify or deem applicable or result in the
application of, any capital maintenance, capital ratio or similar requirement
against letters of credit or guaranties issued by or participation therein of,
or assets held by or deposits in or for the account of, any Bank or any
corporation controlling such Bank or impose on any Bank any other condition
regarding this Agreement or any L/C or participation therein or the issuance or
acquisition of or participation in such Bank's Commitment relating to L/Cs or
similar contingent obligations or the obligation of the Borrowers hereunder with
respect to such Commitment (which imposition of capital requirements may be
determined by each Bank's reasonable allocation of the aggregate of such capital
increases or impositions), then, upon demand made by such Bank as promptly as
practicable after it obtains knowledge that such law, regulation, guideline,
interpretation, request or directive exists and determines to make such demand,
the Borrowers shall immediately pay to such Bank from time to time as specified
by such Bank additional commitment fees which shall be sufficient to compensate
such Bank in light of such circumstances together with interest on each such
amount commencing five (5) days from the date payment of such additional costs
is demanded until payment in full thereof at the Post-Default Rate. A
certificate setting forth in reasonable detail the amount necessary to
compensate such Bank as aforesaid submitted by such Bank to the Borrowers shall
be conclusive, as to the amount thereof. For purposes of this subsection (h)
all references to any "Bank" shall be deemed to include any participant in such
Bank's Commitment.
(ii) In the event that any Regulatory Change shall: (A) change
the basis of taxation of any amounts to any Bank under this Agreement in respect
of L/Cs or L/C Obligations (other than taxes imposed on the overall net income
of such Bank for any such Loans by the United States or the jurisdiction in
which such Bank has its principal office); or (B) impose or modify any reserve,
Federal Deposit Insurance Corporation premium or assessment, special deposit or
similar requirements relating to any extensions of credit, letters of credit or
guaranties issued by or participation therein of, or other assets of, or any
deposits with or other liabilities of, such Bank; or (C) impose any other
conditions affecting this Agreement in respect of L/Cs or L/C
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Obligations (or any of such extensions of credit, assets, deposits or
liabilities); and the result of any event referred to in clause (A), (B) or (C)
above shall be to increase such Bank's costs of issuing, maintaining,
participating in, or acquiring L/Cs and other Commitments of similar type, or
its Commitment, or to reduce any amount receivable by such Bank hereunder in
respect of any of the foregoing or its Commitment (such increases in costs and
reductions in amounts receivable are hereinafter referred to as "Additional
Costs"), then, upon demand made by such Bank as promptly as practicable after it
obtains knowledge that such a Regulatory Change exists and determines to make
such demand (a copy of which demand shall be delivered to the Agent), the
Borrowers shall pay to such Bank from time to time as specified by such Bank,
additional commitment fees or other amounts which shall be sufficient to
compensate such Bank for such increased cost or reduction in amounts receivable
by such Bank from the date of such change, together with interest on each such
amount from the date demanded until payment in full thereof at the Post-Default
Rate. All references to any "Bank" shall be deemed to include any participant
in such Bank's Commitment.
(i) Non-Liability.
Each Borrower and each Account Party assumes all risks of the acts or
omissions of any beneficiary or transferee of any L/C with respect to its use of
such L/C. Neither the Agent, the Issuing Bank nor any other Bank, nor any of
their respective officers or directors, shall be liable or responsible for: (A)
the use that may be made of any L/C or any acts or omissions of any beneficiary
or transferee in connection therewith; (B) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent or
forged; (C) payment by the Issuing Bank against presentation of documents that
do not comply with the terms of a L/C, including failure of any documents to
bear any reference or adequate reference to a L/C, except that the Borrowers and
the respective Account Party shall have a claim against the Issuing Bank, and
such Issuing Bank shall be liable to the Borrowers and such Account Party, to
the extent of any direct, but not consequential, damages suffered by the
Borrowers or such Account Party that the Borrowers or such Account Party proves
were caused by (1) the Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any L/C comply with the terms of
the L/C or (2) the Issuing Bank's willful failure to make lawful payment under a
L/C after the presentation to it of a draft and certificates strictly complying
with the terms and conditions of the L/C. In furtherance and not in limitation
of the foregoing, the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary. The Uniform Customs
and Practice for Documentary Credits as most recently published by the
International Chamber of Commerce shall be deemed a part of this Section 2.33 as
if incorporated herein in all respects and shall apply to the L/Cs.
(j) Indemnification.
The Borrowers jointly and severally agree to indemnify and save
harmless the Agent and each Bank including the Issuing Bank, from and against
any and all claims,
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demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) which such Agent or Bank may incur or be subject to
as a consequence, direct or indirect, of the issuance of any L/C or any action
or proceeding relating to a court order, injunction, or other process or decree
restraining or seeking to restrain the Issuing Bank or the Agent from paying any
amount under any applicable L/C except that no such Person shall be entitled to
indemnification for matters caused solely by such Person's gross negligence or
willful misconduct.
(k) Cash Collateralization.
If any Event of Default shall have been declared and be continuing,
the Borrower shall on the Business Day it receives notice from the Agent or the
Majority Banks, deposit in an account with the Agent, for the ratable benefit of
the Banks, an amount in cash equal to the L/C Obligations as of such date. Such
deposit shall be held by the Agent as collateral for the payment and performance
of the Obligations. The Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal over such account. Other than any
interest earned on the investment of such deposits in investments permitted
under subsection 7.9(a) hereof, which investments shall be made at the option
and sole discretion of the Agent, such deposit shall not bear interest. Interest
or profits, if any, on such investment shall accumulate in such account. Moneys
in such account shall (a) automatically be applied by the Agent to reimburse the
Issuing Bank for L/C disbursements, (b) to be held for the satisfaction of the
reimbursement obligations of the Borrowers for the L/C Obligations at such time
and (c) if the maturity of the Loans has been accelerated, be applied to satisfy
the Obligations.
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Article 3. Representations and Warranties.
Each of the Borrowers hereby represents and warrants to the Banks and
the Agent that:
Section 3.1 Organization.
(a) Each Borrower and each other Corporate Loan Party is duly
organized and validly existing under the laws of its state of organization and
has the power to own its assets and to transact the business in which it is
presently engaged and in which it proposes to be engaged. Exhibit D annexed
hereto accurately and completely lists the state of incorporation of the
Borrowers and each Corporate Loan Party, the authorized and outstanding shares
of common stock of each such corporation, and the owners of the outstanding
shares of common stock of each of the Borrowers and each Corporate Loan Party,
and the business in which each of such entities is engaged. All of the shares
which are issued and outstanding have been duly and validly issued and are fully
paid and non-assessable, and are owned by the Persons referred to on Exhibit D,
free and clear of any Lien except as stated on Exhibit D or otherwise provided
for herein. Except as set forth on Exhibit D, there are not outstanding any
warrants, options, contracts or commitments of any kind entitling any Person to
purchase or otherwise acquire any shares of capital stock of any Borrower or any
Corporate Loan Party nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of, the
Borrowers or any Corporate Loan Party. Except as set forth on Exhibit D,
neither any Borrower nor any Corporate Loan Party has any Subsidiary.
(b) Except as set forth on Exhibit E annexed hereto, each Borrower and
each other Corporate Loan Party is in good standing in its state of
incorporation and in each state in which it is qualified to do business. There
are no jurisdictions other than as set forth on Exhibit E hereto in which the
character of the properties owned by any Borrower or any of the Subsidiaries or
in which the transaction of the business of either any Borrower or any of the
Subsidiaries as now conducted requires or will require any Borrower or any of
the Subsidiaries to qualify to do business, except jurisdictions in which the
failure to so qualify would not have a material adverse effect on the Collateral
in the Borrowing Base or on the business, operations, financial condition, or
properties of any Borrower or any of the Subsidiaries.
Section 3.2 Power, Authority, Consents.
Each Borrower and each Loan Party has the power to execute, deliver
and perform the Loan Documents and the Transaction Documents to be executed by
it or him; each Borrower has the power to borrow hereunder and has taken all
necessary corporate action to authorize the borrowing hereunder on the terms and
conditions of this Agreement, and each Borrower and each Loan Party has taken
all necessary action, corporate or otherwise, to authorize the execution,
delivery and performance of the Loan Documents and the Transaction Documents to
be executed by it or him. No consent or approval of any Person (including,
without limitation, any stockholder of any Borrower), no consent or approval of
any landlord or mortgagee, no waiver
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of any Lien or right of distraint or other similar right and no consent,
license, approval, authorization or declaration of any governmental authority,
bureau or agency, is or will be required in connection with the execution,
delivery or performance by any Borrower or any other Loan Party, or the
validity, enforcement or priority, of the Loan Documents or any Lien created and
granted thereunder, or the Transaction Documents, except as set forth on Exhibit
F annexed hereto, each of which either has been duly and validly obtained on or
prior to the date of this Agreement and is now in full force and effect, or is
designated on Exhibit F as waived by the Agent, provided, however, that waiver
with respect to any consent which individually is material shall require the
approval of the Majority Banks.
Section 3.3 No Violation of Law or Agreements.
The execution and delivery by each Borrower and each other Loan Party
of each Loan Document and Transaction Document to which it is a party and
performance by it or him hereunder and thereunder, does not and will not violate
any provision of law (including, without limitation, the Xxxxxxxx Act Sections
13 and 14 of the Securities and Exchange Act of 1934 and the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, and Regulations U, G and X of the Board of
Governors of the Federal Reserve System and the rules and regulations
promulgated thereunder) and does not and will not, except as set forth on
Exhibit G annexed hereto, conflict with or result in a breach of any order,
writ, injunction, ordinance, resolution, decree, or other similar document or
instrument of any court or governmental authority, bureau or agency, domestic or
foreign, or any certificate of incorporation or by-laws of any Borrower or such
other Loan Party, or partnership agreement of any Loan Party or create (with or
without the giving of notice or lapse of time, or both) a default under or
breach of any agreement, instrument, document, bond, note or indenture to which
any Borrower or any other Loan Party is a party, or by which it is bound or any
of its properties or assets is affected, or result in the imposition of any Lien
of any nature whatsoever upon any of the properties or assets owned by or used
in connection with the business of any Borrower or any other Loan Party, except
for the Liens created and granted pursuant to the Security Documents.
Section 3.4 Due Execution, Validity, Enforceability.
This Agreement and each other Loan Document and Transaction Document
to which any Loan Party is a party has been duly executed and delivered by the
Loan Party which is a party thereto and each constitutes the valid and legally
binding obligation of each Borrower or such Loan Party which is a party thereto,
enforceable in accordance with its terms, except that the remedy of specific
performance and other equitable remedies are subject to judicial discretion and
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in effect,
relating to or affecting the enforcement of creditors' rights generally; but
such laws shall not materially interfere with the practical benefits of the
Security Documents or the security interests or Liens created thereby, except
for (a) possible delay, (b) situations which may arise under Chapter 11 of the
Bankruptcy Code and (c) equitable orders of the Bankruptcy Court.
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Section 3.5 Properties, Priority of Liens.
All of the properties and assets owned by each Borrower and each of
the Subsidiaries and all of the properties and assets owned by any other Loan
Party which properties or assets are covered by a Security Document executed by
such Loan Party are owned by each of them, respectively, free and clear of any
Lien of any nature whatsoever, except as provided for in the Security Documents
and as permitted by Section 7.2 hereof. The Liens which have, simultaneously
with the execution and delivery either of the Loan Agreement dated June 15,
1990, as amended, by and among, inter alia, LCI, certain lenders and the Agent
or of the First Amended and Restated Loan Agreement dated as of December 23,
1992, as amended, by and among, inter alia, the Borrowers, certain lenders and
the Agent, the Second Restated Agreement, this Agreement or any amendment of any
of them, been created and granted by the Security Documents constitute valid
perfected Liens on the properties and assets covered by the Security Documents,
subject to no prior or equal Lien except as permitted by Section 7.2 hereof.
Section 3.6 Judgments, Actions, Proceedings.
Except as set forth on Exhibit H annexed hereto, there are no
outstanding judgments, actions or proceedings pending before any court or
governmental authority, bureau or agency, with respect to or, to the best of
each Borrower's knowledge, threatened against or affecting any Borrower, any
Corporate Loan Party or any of the Subsidiaries, involving, in the case of any
court proceeding, a claim in excess of One Hundred Thousand ($100,000) Dollars
individually or Two Hundred and Fifty Thousand ($250,000) Dollars in the
aggregate, nor, to the best of each Borrower's knowledge, is there any
reasonable basis for the institution of any such action or proceeding which is
probable of assertion, nor are there any such actions or proceedings in which
any Borrower, any Corporate Loan Party or any of the Subsidiaries is a plaintiff
or complainant, other than actions instituted by or on behalf of any Borrower
for collection of overdue amounts payable to any Borrower in each case in an
amount less than $250,000 but not exceeding in respect of all such actions in
the aggregate $750,000.
Section 3.7 No Defaults, Compliance With Laws.
Except as set forth on Exhibit I annexed hereto, neither any Borrower,
any Corporate Loan Party nor any of the Subsidiaries is in material default
under any agreement, ordinance, resolution, decree, bond, note, indenture, order
or judgment to which it is a party or by which it is bound, or any other
agreement or other instrument by which any of the properties or assets owned by
it or used in the conduct of its business is affected, and each Borrower, each
Corporate Loan Party and each of the Subsidiaries has complied and is in
compliance in all respects with all applicable laws, ordinances and regulations
non-compliance with which could have a material adverse effect on the business,
operations, financial condition or properties of any Borrower, any Corporate
Loan Party or any Subsidiary or on the ability of any Borrower or any other Loan
Party to perform its obligations under the Loan Documents to which it is a
party.
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Section 3.8 Burdensome Documents.
Except as set forth on Exhibit J annexed hereto, neither any Borrower
nor any of the other Loan Parties is a party to or bound by, nor are any of the
properties or assets owned by any Borrower or any of the Subsidiaries used in
the conduct of their respective businesses affected by, any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment which
materially and adversely affects its business, assets or condition, financial or
otherwise.
Section 3.9 Financial Statements.
(a) Each of the Financial Statements is correct and complete and
presents fairly the consolidated financial position of LCI or LINC Group,
respectively, and their respective Subsidiaries, as at its date, and has been
prepared in accordance with generally accepted accounting principles (provided
that unaudited quarterly financial statements are subject to year-end audit
adjustments). Neither LCI nor LINC Group, nor any of their respective
Subsidiaries, has any material obligation, liability or commitment, direct or
contingent, which is not reflected in the Financial Statements. There has been
no material adverse change in the financial position or operations of LCI, LINC
Group or any of their Subsidiaries since the date of the latest balance sheet
included in the Financial Statements (the "Latest Balance Sheet"). Each of
LCI's and LINC Group's fiscal year is the twelve-month period ending on December
31 in each year.
(b) The Projections have been prepared in conformity with GAAP. The
assumptions made in preparing the Projections are reasonable and all material
assumptions with respect to the Projections are set forth therein. The
Projections present fairly LCI's estimate of the financial position and results
of operations of LCI and its Subsidiaries as of the dates and for the periods
indicated.
Section 3.10 Tax Returns.
Each Corporate Loan Party and each of the Borrowers and its
Subsidiaries has filed all federal, state and local tax returns required to be
filed by it and has not failed to pay any taxes, or interest and penalties
relating thereto, on or before the due dates thereof, except for certain amounts
which may have been overdue but have since been paid although the Borrowers are
not aware of any such overdue amounts. Except to the extent that reserves
therefor are reflected in the Financial Statements, (a) there are no material
federal, state or local tax liabilities of any Borrower or the Subsidiaries due
or to become due for any tax year ended on or prior to the date of the Latest
Balance Sheet relating to such entity, whether incurred in respect of or
measured by the income of such entity, which are not properly reflected in the
Latest Balance Sheet, and (b) there are no material claims pending or, to the
knowledge of any Borrower, proposed or threatened against any Corporate Loan
Party or any Borrower or its Subsidiaries for past federal, state or local
taxes, except those, if any, as to which proper reserves are reflected in the
Financial Statements.
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Section 3.11 Intangible Assets.
Each Corporate Loan Party and each of the Borrowers and its
Subsidiaries possesses, owns or has rights to use all necessary patents,
trademarks and service marks, trademark and service xxxx rights, trade names,
trade name rights and copyrights to conduct its business as now conducted and as
proposed to be conducted, without any conflict with the patents, trademark and
service xxxx rights, trade names, trade name rights and copyrights of any other
Person, a complete listing of which is set forth on Exhibit K attached hereto.
None of the Borrowers or any of the Foreign Leasing Subsidiaries has used any
trade names or assumed names except in connection with advertising and in any
event, not in connection with the incurrence of any obligations or liabilities
of any kind.
Section 3.12 Regulation U.
The proceeds received by the Borrowers or any Subsidiary from the
Loans have been and will be used in part for payment of Indebtedness which was
incurred for the purpose of purchasing margin stock as such term is defined in
(S) 221.3 of Regulation U of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II, Part 221, but the Loans are not secured directly
or indirectly by margin stock and accordingly the Loans do not constitute a
regulated credit under Regulation U.
Section 3.13 Name Changes.
Except as set forth on Exhibit L annexed hereto, neither any Borrower
nor any of the Subsidiaries has within the six-year period immediately preceding
the date of this Agreement changed its name, been the surviving entity of a
merger or consolidation, or acquired all or substantially all of the assets of
any Person.
Section 3.14 Full Disclosure.
None of the Financial Statements nor any certificate, opinion, or any
other statement made or furnished in writing to the Agent or any Bank by or on
behalf of any Borrower or any of the Subsidiaries in connection with this
Agreement or the transactions contemplated herein, contains any untrue statement
of a material fact, or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading, as of the date such
statement was made. There is no fact known to any Borrower, any Corporate Loan
Party which has, or would in the now foreseeable future have, a material adverse
effect on the business, prospects or condition, financial or otherwise, of any
Borrower or any of the Subsidiaries, which fact has not been set forth herein,
in the Financial Statements, or a certificate, opinion, or other written
statement so made or furnished to the Agent and the Banks.
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Section 3.15 Employee Grievances.
-------------------
Except as set forth on Exhibit M annexed hereto, there are no actions
or proceedings pending or, to the best of the knowledge of each of the
Borrowers, threatened against the Borrowers or any of the Subsidiaries, by or on
behalf of, or with, its employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate material.
Section 3.16 Condition of Assets.
-------------------
(a) All of the assets and properties of the Borrowers and the
Subsidiaries, which are reasonably necessary for the operation of their
respective businesses, are in good working condition, ordinary wear and tear
excepted, and are able to serve the function for which they are currently being
used.
(b) Each of the Borrowers has no current knowledge and no reason to
believe that any of the assets and properties of the Borrowers and the
Subsidiaries subject to a Contract are not in good working condition, ordinary
wear and tear excepted, or are not able to serve the function for which they are
currently being used.
Section 3.17 ERISA.
-----
(a) Except as set forth on Exhibit N annexed hereto, each of the
Borrowers do not have and has never had, any Plan in connection with which there
could arise a direct or contingent liability of each of the Borrowers to the
Pension Benefit Guaranty Corporation ("PBGC"), the Department of Labor or the
Internal Revenue Service ("IRS"). Each of the Borrowers is not a participating
employer (i) in any Plan under which more than one employer makes contributions
as described in Section 4063 and 4064 of ERISA, or (ii) in a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
(b) Each of the Plans is operated and administered in all respects in
accordance with applicable laws including, but not limited to, all applicable
provisions of ERISA and the Code, and each of the Borrowers has made all
requisite premium payments to the PBGC. Each of the Borrowers is and at all
times has been in full compliance with all applicable provisions of ERISA.
(c) Except as set forth on Exhibit N hereto, no "Reportable Event", as
defined in Section 4043(b) of ERISA in respect of any of the Plans has occurred.
Each of the Borrowers has not received any notice from the PBGC that any of the
Plans is being involuntarily terminated or from the Secretary of the Treasury
that any partial or full termination of any of the Plans has occurred and no
event shall have occurred, and except as set forth on Exhibit N there exists as
of the date of this Agreement no condition or set of circumstances which present
a risk of the involuntary termination of any of the Plans. Except as set forth
on Exhibit N no termination proceedings with respect to any of the Plans have
been commenced.
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(d) No unpaid or contingent liability to the PBGC has been or is
expected to be incurred, directly or indirectly, by any Borrower (other than for
payment of PBGC premiums in the ordinary course). No event has occurred and
there exists no condition or set of circumstances which presents a risk of the
termination or partial termination of any Plan which could result, directly or
indirectly, in a liability on the part of any Borrower to the PBGC.
(e) No "prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Code has occurred with respect to any of the Plans.
(f) Each of the Borrowers has made all required contributions under
the Plans for all periods through and including December 31, 1996 or adequate
accruals therefor have been provided for in the Financial Statements. No
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived has occurred with respect to any of the Plans.
(g) The actuarial value of vested benefits required to be funded under
or with respect to the Plans did not as of the last valuation date, which in the
case of any individual Plan was not earlier than December 31, 1996, exceed the
actuarial value of the assets of the Plans allocable to such vested and non-
vested benefits by more than $10,000.
(h) Each of the Borrowers is not a participating employer (i) in any
Plan under which more than one employer makes contributions as described in
Section 4063 and 4064 of ERISA, or (ii) in a multiemployer plan as defined in
Section 4001 (a)(3) of ERISA.
(i) For the purposes of this Agreement, all references to "ERISA"
shall be deemed to refer to the Employee Retirement Income Security Act of 1974,
as heretofore amended and as it may hereafter be amended or modified, and all
regulations promulgated thereunder, and all references to any of the Borrowers
in this Section 3.17 or in any other Section of this Agreement relating to
ERISA, shall be deemed to refer to any of the Borrowers and all other entities
which are part of a controlled or affiliated group or under common control with
any of the Borrowers within the meaning of Sections 414(b), 414(c) and 415(h) of
the Internal Revenue Code of 1986, and Section 4001(a)(2) of ERISA.
Section 3.18 The Convertible Subordinated Debt Document.
------------------------------------------
The copies of the Convertible Subordinated Debt Indenture dated as of
June 15, 0000 xxxxxxx XXX xxx Xxxxxx Xxxxxx Trust Company of New York, as
trustee and all agreements, instruments and documents executed and delivered in
connection therewith, including all exhibits, annexes, and schedules annexed
thereto, and all amendments, modifications and supplements heretofore made to
any of the foregoing (collectively, all of the foregoing are referred to as the
"Convertible Subordinated Debt Documents") heretofore delivered by the Borrowers
to the Agent are true, complete and accurate copies thereof. None of the
parties to the Convertible Subordinated Debt Documents waived compliance by any
of the parties thereto with any term, covenant or condition thereof and no party
thereto has breached any covenant set forth therein or failed to perform any of
its obligations thereunder and no event of default or potential event of
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default now exists thereunder or will exist after giving effect to the
transactions contemplated hereby and by the Transaction Documents.
Section 3.19 Transaction Documents.
---------------------
The copies of the Transaction Documents and all agreements,
instruments and documents executed and delivered in connection therewith,
including all exhibits, annexes, and schedules annexed thereto, and all
amendments, modifications and supplements heretofore made to any of the
foregoing heretofore delivered by the Borrowers to the Agent are true, complete
and accurate copies thereof. None of the parties to the Transaction Documents
and all other documents described in this Section 3.19 waived compliance by any
of the parties thereto with any term, covenant or condition thereof and no party
thereto has breached any covenant set forth therein or failed to perform any of
its obligations thereunder and no event of default or potential event of default
now exists thereunder or will exist after giving effect to the transactions
contemplated hereby and by the Transaction Documents. The "Collaboration
Agreement" referred to in the Transaction Documents has been terminated.
Section 3.20 Intentionally Omitted.
---------------------
Section 3.21 Intentionally Omitted.
---------------------
Section 3.22 Finders or Brokers.
------------------
Neither LINC Group nor any of the Borrowers nor any of their
respective Affiliates has employed or agreed to employ or made use of the
services of any investment banker, broker, finder, intermediary or similar
Person in connection with the transactions contemplated by the Loan Documents
who might be entitled to a fee or any commission in connection with or upon
consummation of any thereof which fee or commission has not yet been paid.
Section 3.23 Investment Company Act; Public
Utility Holding Company Act.
---------------------------
Neither the LINC Group nor any of the Borrowers nor any Subsidiary of
either of them is (i) an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended or (ii) a "public utility holding company" or a "holding company" or
a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
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Section 3.24 Non-Recourse Debt;
Cross-Collateralization.
-----------------------
(a) There is no Non-Recourse Debt evidenced by loan documents that
provide that (i) the Non-Recourse Lender's security interest in any specific
item of equipment, Contract, replacement lease and receivables financed under
such Non-Recourse Debt will not be released until the applicable Borrower has
fully repaid Indebtedness owed to the Non-Recourse Lender not incurred to
finance such specific equipment, Contracts, and receivables or (ii) a default
under the Non-Recourse Debt loan documents will also constitute a default for
the benefit of said Non-Recourse Lender under other loan documents made or
entered into by any Borrower.
(b) From and after the date of execution and delivery of the Loan
Agreement, the representations and warranties made in each letter delivered to
and accepted by the Agent pursuant to subsection 2.23(a)(iv) hereof, including
each letter substantially in the form of Annex A to the Security Agreements,
shall be deemed to supersede the foregoing provisions of subsection (a) in
respect of the assets and financing agreements described in each such Annex A
letter respectively. The letter dated on or about the date hereof (replacing
the letter dated November 13, 1990) from Xxxxx Xxxxxx to the Banks (annexed
hereto as Schedule 4) regarding the meaning of Non-Recourse Debt shall be deemed
a representation and warranty by each of the Borrowers made under this Agreement
and shall be deemed incorporated herein.
(c) Notwithstanding the foregoing or any other provisions contained in
this Agreement to the contrary, financing provided to any Borrower by any
lending entity which entity (i) finances the purchase and leasing of specific
equipment by such Borrower to a particular Lessee and (ii) requires that such
equipment and the lease and lease receivables relating thereto serve as
collateral not only for such financing but also for financing provided by such
entity for the purchase and leasing of other specific equipment by any Borrower
to the same Lessee (i.e., cross-collateralization with respect to equipment and
leases relating to the same Lessee financed by the same lender), shall not, in
and of itself, be deemed to contravene the terms of the foregoing subsections
(a) or (b) (any and all financing provided by a single lending entity which
substantially conforms with the foregoing description is herein sometimes
referred to collectively with any and all financing provided by an affiliate of
such lending entity which financing substantially conforms with the foregoing
description, as "Single Lessee Cross-Collateralized Financing"), nor to preclude
such equipment and leases, if otherwise eligible in all respects, from being
included under such clause of the Borrowing Base as may be applicable, subject
to the limitations set forth in respect of Residual Values associated with
Single Lessee Cross-Collateralized Financing as set forth in Section (3) of the
definition of "Borrowing Base".
(d) The letter dated on or about the date hereof (replacing the letter
dated October 31, 1990) from the Borrowers to the Agent (annexed hereto as
Schedule 5) regarding the "Form of Request for Acknowledgment of Subordination
to Lender and Release ("Annex A") and Form of Acknowledgment of Subordination to
New Lender and Release ("Annex B") (which letter describes the circumstances
under which the replacement or substitution of equipment may occur)
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shall be deemed a representation and warranty by each of the Borrowers made
under this Agreement and shall be deemed incorporated herein.
Section 3.25 Borrowing Base Reports.
----------------------
The information set forth in each Borrowing Base Report is true,
correct and complete and each asset included in the Borrowing Base conforms with
and satisfies the requirements for such item set forth in this Agreement,
including, without limitation, under the respective definitions applicable to
such assets.
Section 3.26 Licenses and Approvals.
-----------------------
Each Borrower and each of the Subsidiaries has all necessary licenses,
permits and governmental authorizations, including, without limitation,
licenses, permits and authorizations relating to Environmental Matters, to own
and operate its properties and to carry on its business as now conducted.
Section 3.27 No Material Adverse Change from Projections.
-------------------------------------------
There has been no material adverse change from the facts on which the
most recently delivered Projections were based.
Section 3.28 Obligations.
-----------
After giving effect to the transactions contemplated by the Loan
Documents: (a) neither any Borrower nor any Foreign Leasing Subsidiary (i) will
be a party to or be bound by any franchise, agreement, deed, contract or other
instrument, or be subject to any corporate restriction, which is so unusual or
burdensome, so as to cause, in the foreseeable future, a material and adverse
effect upon, or impair the financial condition, operations, business, prospects,
assets or property of such Borrower or such Foreign Leasing Subsidiary or (ii)
intends to incur or believes that it will incur debts beyond the ability of such
Borrower or such Foreign Leasing Subsidiary to pay such debts as they become due
and (b) each Borrower and each Foreign Leasing Subsidiary (i) owns and will own
assets and property, the fair saleable value of which are (A) greater than the
total amount of liabilities (including contingent liabilities) of each Borrower
or such Foreign Leasing Subsidiary respectively (B) greater than the amount that
will be required to pay the probable liabilities of such Borrower's or Foreign
Leasing Subsidiary's then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to such Borrower or such Foreign Leasing Subsidiary, respectively and
(ii) has and will have capital that is not unreasonably small in relation to its
business as presently conducted or as proposed to be conducted. Each Borrower
presently anticipates that future expenditures needed to meet the provisions of
federal or state statutes, orders, rules or regulations will not be so
burdensome as to affect or impair in a materially adverse manner the financial
condition, operations, business, prospects, assets or property of any Borrower
or any Foreign Leasing Subsidiary.
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Section 3.29 Corporate Structure of LINC Group.
---------------------------------
The corporate structure of LINC Group and its Subsidiaries is as set
forth on Exhibit P.
Section 3.30 Advertising, Origination and Servicing.
--------------------------------------
The form and content of each Eligible Contract and all documents
related to the transaction evidenced thereby, including without limitation, the
security related thereto, and all advertising, origination and servicing
activities, procedures and materials used in connection therewith comply fully
with any and all applicable laws, ordinances, rules and regulations, federal,
state and/or local, with respect to the extension of credit and charging of
interest, including without limitation, as applicable, the Federal Consumer
Credit Protection Act, the Federal Fair Credit Reporting Act, the Federal Trade
Commission Act, the Federal Equal Credit Opportunity Act, any state or local
consumer credit protection act or statute, and all federal, state and local laws
related to licensing, usury, truth in lending, consumer protection, equal credit
opportunity, fair debt collection, unfair and deceptive trade practices,
rescission rights and disclosures, and with all rules and regulations
thereunder, all as amended, and any disclosures required with respect to any
such transaction were and will continue to be made properly and in a timely
manner.
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Article 4. The Closing; Conditions to the Loans.
---------- -------------------------------------
Section 4.1 Conditions Precedent.
---------------------
The effectiveness of this Agreement and the obligation of each Bank to
make and continue to maintain its Loans hereunder shall be subject to the
fulfillment (to the satisfaction of the Banks and the Agent) of the following
conditions precedent:
(a) Each of the Borrowers shall have executed and delivered to each
Bank its Note including to the Temporary Lender, the Temporary Note.
(b) LCI shall have executed and delivered to the Agent (i) the
Confirmation Agreement and the Agent shall continue to have possession of the
certificates evidencing the capital stock pledged by LCI, accompanied by stock
powers endorsed in blank and irrevocable proxies relating thereto, (ii) the
Subordination Agreement Confirmation, (iii) the Foreign Security Documents
required to be delivered pursuant to subsection 2.21(a)(iii), if applicable,
which documents shall be satisfactory to the Agent in its sole discretion, and
(iv) all other Loan Documents or Transaction Documents to which it is a party.
(c) LINC Group shall have executed and delivered to the Agent (i) the
Confirmation Agreement, and the Agent shall continue to have possession of the
certificates evidencing the capital stock pledged by LINC Group, accompanied by
stock powers endorsed in blank and irrevocable proxies relating thereto, and
(ii) the Subordination Agreement Confirmation and all other Loan Documents to
which it is a party.
(d) Quantum shall have executed and delivered to the Agent (i) the
Confirmation Agreement, (ii) evidence satisfactory to the Agent of the transfer
by Xxxx Xxxxx of his shareholdings in Quantum to LCI (subject to the Agent's
Lien) and (iii) all other Loan Documents or Transaction Documents to which it is
a party.
(e) Each of the Quantum Shareholders shall have executed and delivered
to the Agent (i) the Confirmation Agreement and (ii) the Subordination Agreement
Confirmation.
(f) LES shall have executed and delivered to the Agent (i) its
Guaranty, (ii) the Confirmation Agreement, and (iii) the Subordination Agreement
Confirmation.
(g) Each of the Foreign Leasing Subsidiaries shall have executed and
delivered to the Agent the Foreign Security Documents required to be delivered
pursuant to subsection 2.21 (e)(ii) hereof, if applicable, which documents shall
be satisfactory to the Agent in its sole discretion.
(h) Each of the Borrowers shall have:
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(i) duly executed and delivered to the Agent appropriate Uniform
Commercial Code financing statements in order to enable the Agent to perfect and
preserve its security interest in the Collateral covered by the Security
Documents executed by it, including Uniform Commercial Code financing or
assignment statements naming each Lessee or other Obligor included in the
Borrowing Base as debtor, the applicable Borrower as secured party and the Agent
as assignee;
(ii) delivered to the Agent the evidence of insurance on the
Collateral and such Borrower's liability insurance policies, naming the Agent as
loss payee or additional insured as required by the Security Documents;
(iii) delivered to the Agent each of the other
documents and instruments required to be delivered in connection with a
Borrowing Computation;
(iv) delivered to the Agent all fixture filings in form and
substance satisfactory to the Agent and in appropriate form for filing relating
to all Equipment included in computation of the Borrowing Base which constitutes
or may constitute fixtures (except as may otherwise be provided in the
definition of the Borrowing Base), which filings shall conform with the list of
all locations in which such filings must be made set forth on the schedules to
the Security Documents or otherwise; and
(v) otherwise duly complied with all of the terms and conditions
of the Security Documents.
(i) No event of default or potential event of default exists or will
exist with respect to the Convertible Subordinated Debt or under the LFC
Subordinated Debt Documents as a result of the execution and delivery of the
Loan Documents and performance thereunder.
(j) The Banks and the Agent shall have received, all in form and
substance satisfactory to the Banks and the Agent, the Projections for calendar
years 1997 and 1998 certified as true and complete by the Borrowers.
(k) The Banks and the Agent shall have received a Borrowing
Computation, Borrowing Base Report and all other documents required to be
delivered together with a Borrowing Computation, and the Borrowing Base shall be
sufficient to enable the Borrowers to maintain the Loans.
(l) Xxxxx Xxxxxx, counsel to the Borrowers and Subsidiaries, shall
have delivered his opinion with respect to the transactions contemplated by this
Agreement to, and in form and substance satisfactory to, the Agent.
(m) The Borrowers, LINC Group and the Subsidiaries of LINC Group
shall have executed and delivered to the Agent the Subordination Agreement
Confirmation and the
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Agent shall have received a copy of all promissory notes and other instruments,
if any, evidencing the subordinated debt covered by the Intercompany
Subordination Agreement.
(n) The Agent shall have received the list of insurance required to
be in effect under Section 6.8 hereof to the extent different from the list
previously delivered to the Agent and the Banks.
(o) The Agent shall have received the following:
(i) Copies of the Convertible Subordinated Debt Documents and
LFC Subordinated Debt Documents, certified as true and complete by the
Borrowers;
(ii) All of the consents, approvals and waivers referred to on
Exhibit F annexed hereto, except only those which, as stated on Exhibit F, shall
not be delivered;
(iii) The certificate of incorporation or similar organizational
document of each of the Borrowers and each Foreign Leasing Subsidiary, certified
as of a recent date by the Secretary of State of their respective states of
incorporation or appropriate authority;
(iv) Certificates certified by the Secretary of State of
Illinois reflecting the Borrowers' qualification to do business under their
assumed names in the State of Illinois, and any assumed name certificates from
other states listing names under which the Borrowers may transact business;
(v) The by-laws or similar document of each of the Borrowers and
each Foreign Leasing Subsidiary, certified as true and complete by their
respective secretaries or assistant secretaries or appropriate authorities;
(vi) All corporate action taken by each Corporate Loan Party
(including the shareholders of each Corporate Loan Party) to authorize the
execution, delivery and performance of this Agreement and each of the other Loan
Documents to which it is a party and which it is executing simultaneously
herewith;
(vii) Good standing certificates or telegrams as of dates not
more than sixty (60) days and two (2) days, respectively, prior to the date of
this Agreement, with respect to each of the Borrowers from the Secretary of
State of each of their respective states of incorporation and from such other
states of qualification as the Agent may request and similar certificates from
the appropriate authorities with respect to the Foreign Leasing Subsidiaries;
(viii) An incumbency certificate (with specimen signatures) with
respect to each of the Borrowers and LINC Group;
(ix) The forms of Contract and related documents, security
agreement, purchase orders and documents used in connection with all of the
foregoing used by
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any Borrower or any Foreign Leasing Subsidiary in connection with its business,
including, without limitation, any form of documents used by LINC Capital
Partners Division;
(x) A copy of the Quantum Shareholders' Agreement, certified as
true and complete by the Borrowers; and
(xi) A copy of the Credit Policy Manual, the Credit Scoring
Model and the Emerging Growth Credit Scoring Matrix.
(p) The Agent shall have received results of lien searches, audits,
analysis, surveys, reviews and inspections with respect to the Collateral in
form and substance satisfactory to the Agent including, without limitation, a
field examination (at the Borrowers' expense) by an outside accounting firm or
consulting firm, subject to approval by the Agent, of the operations of each
Borrower with results satisfactory to the Agent and the Lenders.
(q) The Agent shall have received the fees referred to in Section
2.4(b) hereof, pursuant to a separate agreement executed by the Borrowers and
the Agent, and the Agent shall be satisfied as to payment of all other fees and
expenses relating to the Loan Documents due on or before the date of this
Agreement.
(r) (i) The Borrowers and the Foreign Leasing Subsidiaries shall
have complied and shall then be in compliance with all of the terms, covenants
and conditions of this Agreement and the other Loan Documents;
(ii) There shall exist no Event of Default or Default hereunder;
and
(iii) The representations and warranties contained in Article 3
of this Agreement shall be true and correct on the date hereof,
and the Agent shall have received a certificate to the foregoing effect dated
the date of this Agreement, certifying, inter alia, that the conditions set
forth in this subsection are satisfied on such date.
(s) The Agent shall have received evidence that each of the Borrowers
shall have satisfied its obligations under Section 2.26(a) hereof.
(t) All legal matters incident to the effectiveness of this Agreement
shall be reasonably satisfactory to the Agent and counsel to the Agent.
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Section 4.2 Conditions to Subsequent Loans and L/Cs.
---------------------------------------
The obligation of each Bank to make each Loan subsequent to its
initial Loan and the obligation of the Issuing Bank to issue each L/C shall be
subject to the fulfillment (to the satisfaction of the Agent) of the following
conditions precedent:
(a) In respect of each requested Loan, the Agent shall have received
a Borrowing Notice in accordance with Section 2.3 hereof, together with a
Borrowing Computation with respect to such Loan and all other documents required
to be delivered in connection with a Borrowing Computation and Borrowing Notice.
(b) (i) The Borrowers and the Foreign Leasing Subsidiaries shall have
complied and shall then be in compliance with all the terms, covenants and
conditions of this Agreement and the other Loan Documents and no Default or
Event of Default shall have occurred and be continuing;
(ii) In respect of each requested L/C, the Issuing Bank and the
Agent shall have received a Notice of Issuance in accordance with Section 2.33
hereof together with (A) a Borrowing Computation with respect to such L/C, (B)
all other documents required to be delivered in connection with a Notice of
Issuance and Borrowing Computation, (C) all Application Documents, and the
Issuing Bank shall have been paid any and all fees then due in accordance with
the terms of Section 2.33 hereof,
(iii) None of the events described in subsection 8.1l(b)(i)
shall have occurred (provided that this clause (iii) shall be deemed of no force
or effect if the conditions of subsection 8.1l(b)(ii) shall have been satisfied
in full prior to the date of the proposed subsequent Loan or L/C (as the case
may be));
(iv) The representations and warranties contained in Article 3
hereof shall be true and with the same effect as though such representations and
warranties had been made at the time of the making of such Loan or L/C (as the
case may be) except for changes which were made in the ordinary course of
business, not material and not prohibited by this Loan Agreement; and
(v) The Agent shall have received a certificate to the foregoing
effect dated the date of such Loan or L/C (as the case may be) and effective as
of such date, certifying, inter alia that the conditions set forth in this
subsection (b) are satisfied as of such date (provided that such shall not be
required to be delivered in connection with a conversion of a Loan from one type
into another type which conversion does not result in an increase in the
outstanding principal amount of the Loans).
(c) All legal matters incident to such proposed Loan or L/C shall be
satisfactory to the Agent and counsel to the Agent.
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Article 5. Delivery of Financial Reports, Documents and Other
Information.
While the Commitments are outstanding and so long as any Loan
remains outstanding and so long as any L/C Obligations remain outstanding and so
long as the Borrowers are indebted to the Banks or the Agent and until payment
in full of the Notes and full and complete performance of all of its other
obligations arising hereunder, LINC Group and each of the Borrowers, as
applicable, shall deliver to each Bank the following, provided, however, that
documents under Sections 5.3, 5.6, 5.7 and 5.8 shall be required to be delivered
only to the Agent:
Section 5.1 Annual Financial Statements and Budgets.
(a) Annually, as soon as available, but in any event within one
hundred five (105) days after the last day of each of LINC Group's or the
Borrowers' (as applicable) fiscal years, consolidated and consolidating balance
sheets of LINC Group, each of the Borrowers (the consolidating balance sheet of
LCI shall set forth separately the financial information for LINC Capital
Partners Division), respectively, in each case together with their respective
Subsidiaries, as at such last day of the fiscal year applicable to such entity,
and consolidated and consolidating statements of operations or income, cash
flows, and stockholders' equity (such consolidating statements of LCI shall set
forth separately the financial information for LINC Capital Partners Division),
for such fiscal year, each prepared in accordance with GAAP and, as to the
consolidated statements, certified without qualification by KPMG Peat Marwick or
another firm of independent certified public accountants satisfactory to the
Agent (provided that any of the "Big Six" accounting firms, or their successors
by merger, shall be deemed satisfactory), as fairly presenting the financial
position and the results of operations of LINC Group and the Borrowers,
respectively, in each case together with their respective Subsidiaries, as at
and for the year ending on each of its respective dates and as having been
prepared in accordance with generally accepted accounting principles as to such
consolidating statements;
(b) Annually, as soon as available, but in any event within one-
hundred twenty (120) days after the last day of each of the Borrowers' fiscal
years, a Residual Realization Report for the Borrowers in form acceptable to the
Agent, and a Borrowing Base Report, each reviewed by KPMG Peat Marwick or
another firm of independent certified public accountants satisfactory to the
Agent (provided that any of the "Big Six" accounting firms, or their successors
by merger, shall be deemed satisfactory);
(c) Annually, as soon as available, but in any event within one
hundred twenty (120) days after the last day of each fiscal year of the
Borrowers and all in form and substance acceptable to the Agent: an analysis of
all Equipment owned and/or managed by the Borrowers; a list of the fifteen (15)
largest customers of each of the Borrowers and of LINC Capital Partners
Division; and a description of guarantees and contingent liabilities;
(d) Annually, as soon as available, but in any event within
ninety (90) days after the last day of each respective fiscal year of the
Borrowers and each of the Borrowers'
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Subsidiaries, the annual budget of the Borrowers and each such Subsidiary for
the then-current fiscal year and Projections for the then-current and the
immediately following fiscal year; and
(e) Promptly upon receipt thereof, copies of all other reports
submitted to any of the Borrowers by its independent accountants in connection
with any annual or interim audit or review of the books of such Borrowers made
by such accountants.
Section 5.2 Quarterly Financial Statements.
As soon as available, but in any event within sixty (60) days
after the end of the first three fiscal quarterly periods applicable to LINC
Group and each of the Borrowers, consolidated and consolidating balance sheets
of LINC Group and each of the Borrowers (the consolidating balance sheet of LCI
shall set forth separately the financial information for LINC Capital Partners
Division), in each case together with their respective Subsidiaries, as of the
last day of such applicable quarter and consolidated and consolidating
statements of income and changes in shareholders equity, and consolidated cash
flow (such consolidating statements of LCI shall set forth separately the
financial information for LINC Capital Partners Division), and on a comparative
basis with figures for the corresponding period of the immediately preceding
fiscal year, all in reasonable detail, each of such statements to be certified
in a certificate of the president, chief financial officer or treasurer of LINC
Group and each of the Borrowers, respectively, as fairly presenting the
financial position and the results of operations of LINC Group and each of the
Borrowers in each case together with their respective subsidiaries, as at its
respective date and for such Applicable Quarter and as having been prepared in
accordance with generally accepted accounting principles consistently applied
(subject to year-end audit adjustments), which certificates shall also contact a
detailed calculation indicating compliance with the covenants contained in
Section 6.9 and Article 7 hereof and shall be accompanied by the delinquency
certificates described in Section 5.11.
Section 5.3 Other Information.
Promptly after a written request therefor, such other financial
data or information evidencing compliance with the requirements of this
Agreement, the Notes and the other Loan Documents, or otherwise relating to the
business, affairs and conditions of the Borrowers and its Subsidiaries as the
Agent may reasonably request from time to time.
Section 5.4 No Default Certificate.
At the same time as it delivers the financial statements required
under the provisions of Sections 5.1 and 5.2, a Compliance Certificate
(including financial covenant calculations) of the president, chief executive or
financial officer or treasurer of the Borrowers.
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Section 5.5 Certificate of Accountants.
At the same time as it delivers the financial statements required
under the provisions of Section 5.1, a certificate of the independent certified
public accountants of LINC Group and the Borrowers to the effect that during the
course of their audit of the operations of LINC Group and the Borrowers and
their respective Subsidiaries and their respective condition as of the end of
the fiscal year, nothing has come to their attention which would indicate that
an Event of Default or Default hereunder has occurred or that there was any
violation of the covenants of the Borrowers contained in Section 6.9 or Article
7 of this Agreement, or, if such cannot be so certified, specifying in
reasonable detail the exceptions, if any, to such statement.
Section 5.6 Copies of Documents.
Promptly upon their becoming available, copies of any (a)
financial statements, projections, non-routine reports, notices (other than
routine correspondence) and requests for waivers, in each case, delivered by the
Borrowers or any of the Subsidiaries to any lending institution (other than the
Banks) to which any of the Borrowers owes Recourse Debt or Partial Recourse Debt
in excess of $100,000 in principal amount; (b) correspondence or notices
received by any of the Borrowers from any federal, state or local governmental
authority which regulates the operations of any of the Borrowers or any of its
Subsidiaries, relating to an actual or threatened change or development which
would be materially adverse to any of the Borrowers or any Subsidiary, (c)
written reports submitted by any of the Borrowers or any of their Subsidiaries
by its independent accountants in connection with any annual or interim audit of
the books of any of the Borrowers or its Subsidiaries made by such accountants;
(d) any appraisals received by any of the Borrowers or any of their Subsidiaries
with respect to the properties or assets of any of the Borrowers or its
Subsidiaries; and (e) copies of any non-routine notices received by LFC from any
holder of the LFC Subordinated Debt.
Section 5.7 Notices of Defaults.
(a) Promptly, notice of the occurrence of a Default or an Event
of Default hereunder, or a default or an event of default under any of the
Transaction Documents, or an event which would constitute or cause a material
adverse change in the condition, financial or otherwise, of the operations of
any of the Borrowers or any of the Subsidiaries.
(b) Promptly, notice of any bankruptcy or insolvency proceeding
(including, without limitation, appointment of any receiver, trustee,
liquidator, custodian or conservator) which shall have been commenced by or
against any Obligor, or of any action, corporate or otherwise, relating to, or
acquiesced in, with respect to any such proceeding taken by an Obligor.
Section 5.8 ERISA Notices.
(a) Concurrently with such filing, a copy of each Form 5500
which is filed with respect to each Plan with the IRS; and
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(b) Promptly, upon their becoming available, copies of: (i) all
correspondence with the PBGC, the Secretary of Labor or any representative of
the IRS with respect to any Plan, relating to an actual or threatened change or
development which would be materially adverse to any of the Borrowers or any
Subsidiary; (ii) copies of all actuarial valuations received by any of the
Borrowers with respect to any Plan; and (iii) copies of any notices of Plan
termination filed by any Plan Administrator (as those terms are used in ERISA)
with the PBGC and of any notices from PBGC to any of the Borrowers with respect
to the intent of the PBGC to institute involuntary termination proceedings.
Section 5.9 Borrowing Base Reports and Supporting Documents.
(a) Monthly, as soon as all the following are available, but in
any event, within thirty (30) days after the end of each immediately preceding
calendar month a Borrowing Base Report (a "Monthly Borrowing Base Report"),
provided that the Monthly Borrowing Base Report shall not be required to be
accompanied by the supporting documents specified in the following clauses (i),
(ii), (iv) and (vi)-(ix), which supporting documents shall only be required to
accompany each quarterly Borrowing Base Report, setting forth a listing of all
Contracts which are then included in the Borrowing Base with respect to which
any event resulting in a required prepayment hereunder shall have occurred
(whether or not waived by the Borrowers or applicable Foreign Leasing
Subsidiary); evidence satisfactory to the Banks and the Agent that the
provisions of this Agreement (including, without limitation, Sections 6.16 and
6.17 hereof) have been complied with in respect of such assets, in each case
dated as at the first day of the month succeeding the month which is the subject
of the Report, and calculated based on the assumption that all amounts owing
under the Contract Receivables Clause, Emerging Growth Contract Clause, the
Accounts Receivable Clause, the Rental Equipment NBV Clause, and the Finished
Goods Inventory and Receivables Clause are current; and the following additional
information:
(i) Contract Receivables Clause and Emerging Growth
Contract Clause: (A) in the case of a Lease, Lease number, Lessee, Invoiced Cost
of Equipment, Present Value of the Balance of Payments during the remainder of
the Initial Term, and delinquency status; and (B) in the case of an Equipment
Note, CSA or Third Party Note, contract number, Obligor, Invoiced Cost of
Equipment, Present Value of the Balance of Payments during the remainder of its
term, and delinquency status; and (C) in respect of any of the foregoing, a
listing of those assets that have been included in computation of the Borrowing
Base for more than 365 days;
(ii) Residual Value Clause: Lessee; lease number; write-
down, if any, of the original booked Residual Value; original Invoiced Cost of
Equipment;
(iii) Accounts Receivable Clause: accounts receivable
summary by aging category and accounts receivable type; list of accounts
receivable greater than 90 days past due and not yet charged off,
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(iv) Inventory Clause: for equipment with net book value in
excess of $100,000, date of inclusion in Borrowing Base under applicable clause;
type of Equipment; net book value; number of days Equipment has been in
inventory;
(v) Rental Equipment NBV Clause: summary of rental
equipment included in the Borrowing Base, with the summary to set forth
separately the equipment models that have not been subject to, nor identified
nor committed to, a Rental Agreement for a period of greater than four months;
(vi) Finished Goods Inventory and Receivables Note Clause:
Contract number, Obligor, principal balance and delinquency status; and analysis
by industry of Obligors based on approximate percentage of different industries
represented;
(vii) With respect to all clauses of the Borrowing Base:
whether the subject Equipment constitutes a motor vehicle or a fixture or an
aircraft; the identity of any holder of a Lien other than the Agent;
(viii) Recourse Liabilities: with respect to the Borrowers
and each Foreign Leasing Subsidiary separately in respect of all Excludable
Amounts, the amount, the lender or other obligee or payee, and the assets to
which such Liabilities relate or (if contingent) may relate; and
(ix) Sales, Use and Property Taxes: the amount of sales,
use and property taxes billed to Lessees or other obligors and not paid in full
within ninety (90) days following the invoice date or due and unpaid by any
Borrower or any Foreign Leasing Subsidiary; if requested by the Majority Banks,
a detailed description of the nature, obligor and aging of such amounts due.
(b) Monthly, from and after the Term Conversion Date, a detailed
report regarding all cash receipts arising from transactions relating to assets
included under any clause of the Borrowing Base.
Section 5.10 Insurance Coverage.
All material changes in insurance coverage for both property and
life insurance, but in any event any change effecting a reduction in coverage or
in the amount of coverage.
Section 5.11 Accounts Receivable Aging Report; Other
Information.
(a) Monthly, as soon as available, but in any event within 30 days
following the end of each month, a detailed aged accounts receivable aging
report showing accounts receivable (including rental agreements) and the balance
of payments on Contracts past due for each of the Borrowers as the last day of
the immediately preceding month in the following
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categories: 0-30 days; 31-60 days; 61-90 days; 91-120 days; and 121 days and
over and, in each case, to specify separately receivables owned by each Borrower
and each Subsidiary, third party receivables financed by any Borrower and
securitized receivables not reflected on the balance sheet of any Borrower and
any Subsidiary separately; and in respect of any Contracts included in the
Borrowing Base for more than 365 days, detail indicating by name of the Obligor
under any such Contract, the amount included in respect of such Obligor and its
Affiliates in each clause of the Borrowing Base, and the period of inclusion, in
excess of such 365 days, measured in 30 day increments;
(b) Within ten (10) Business Days' following consummation of any
securitization transaction and portfolio/pool financings, a list of all assets
submitted in the bid for inclusion in any such transaction.
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Article 6. Affirmative Covenants.
While the Commitments are outstanding and so long as any Loan
remains outstanding and so long as any L/C Obligations remain outstanding and so
long as the Borrowers are indebted to the Banks and the Agent, and until payment
in full of the Notes and full and complete performance of all of its other
obligations arising hereunder, each of the Borrowers shall and shall cause each
of the Subsidiaries to do or cause to be done each of the following:
Section 6.1 Books and Records.
Keep proper books of record and account in a manner consistent
with past practice and generally accepted accounting principles in which full,
true and correct entries shall be made of all dealings or transactions in
relation to its business and activities.
Section 6.2 Inspections and Audits.
Permit the Banks and the Agent to make or cause to be made, at
the Borrowers' expense, inspections and audits of any books, records and papers
of the Borrowers and each of their Subsidiaries and to make extracts therefrom
and copies thereof, or to make inspections and examinations of any properties
and facilities of the Borrowers and their Subsidiaries, on reasonable notice, at
all such reasonable times and as often as the Agent may reasonably require, and
in any event on an annual basis, in order to assure that each of the Borrowers
is and will be in compliance with its obligations under the Loan Documents or to
evaluate the Banks' investment in the then outstanding Notes.
Section 6.3 Maintenance and Repairs.
Maintain or cause to be maintained by the Lessees or other
Obligors, as the case may be, in good repair, working order and condition,
subject to normal wear and tear, all material properties and assets from time to
time owned by it and used in or necessary for the operation of its business, and
make all reasonable repairs, replacements, additions and improvements thereto.
Section 6.4 Continuance of Business.
Do, or cause to be done, all things reasonably necessary to
preserve and keep in full force and effect its corporate existence and all
permits, rights and privileges necessary for the proper conduct of its business
and continue to engage in the same line of business (as defined in Section 7.7
hereof), including, without limitation, the qualification of each of the
Borrowers and each Subsidiary to do business as a foreign corporation in each
jurisdiction in which failure to so qualify could have a material adverse effect
on the business, operations, financial conditions or properties of any of the
Borrowers or any such Subsidiary.
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Section 6.5 Copies of Corporate Documents.
Subject to the prohibitions set forth in Section 7.12 hereof,
promptly deliver to the Agent copies of any amendments or modifications to its
and any of its Subsidiaries' certificate of incorporation and by-laws, certified
with respect to the certificate of incorporation by the Secretary of State of
its state of incorporation and, with respect to the by-laws, by the secretary or
assistant secretary of the corporation.
Section 6.6 Perform Obligations.
(a) Pay and discharge all of its obligations and liabilities,
including, without limitation, all taxes, assessments and governmental charges
upon its income and properties, when due, unless and to the extent only that
such obligations, liabilities, taxes, assessments and governmental charges shall
be contested in good faith and by appropriate proceedings and that, to the
extent required by generally accepted accounting principles then in effect,
proper and adequate book reserves relating thereto are established by the
Borrowers, and then only to the extent that a bond is filed in cases where the
filing of a bond is necessary to avoid the creation of a Lien against any of its
properties.
(b) Perform all its obligations under each of the Contracts.
Section 6.7 Notice of Litigation.
Promptly notify the Agent in writing of any litigation, legal
proceeding or dispute, other than disputes in the ordinary course of business
or, whether or not in the ordinary course of business, involving amounts in
excess of Two Hundred Fifty Thousand ($250,000) Dollars, affecting any of the
Borrowers or any of the Subsidiaries whether or not fully covered by insurance,
and regardless of the subject matter (excluding, however, any actions relating
to workmen's compensation claims or negligence claims relating to use of motor
vehicles, if fully covered by insurance, subject to deductibles).
Section 6.8 Insurance.
(a) Maintain with or at responsible insurance companies such
insurance on such of its properties, in such amounts and against such risks as
is customarily maintained by similar businesses each such policy with loss
payable endorsements naming the Agent as loss payee, or in respect of liability
insurance, additional named insured and in each case referring to "the Agent as
Agent; Attn: Leasing Division", with such endorsements to be effective
regardless of breach by the lessee or warranties, declaration or conditions in
such policy and stating that the insurer shall give the Agent thirty (30) days
written notice of any nonpayment or nonrenewal thereof, all in form and
substance satisfactory to the Agent; file with the Agent upon its request a
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, dates of the
expiration thereof and the properties and risks covered thereby, the first of
which lists is as set forth on Exhibit Q annexed hereto; and, within
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30 days after notice in writing from the Agent, obtain such additional insurance
as the Agent may reasonably request;
(b) Maintain at its own expense or cause others to maintain all
risk insurance on each item of Equipment in an amount, if maintained by a Lessee
or other Obligor, at least equal to the stipulated loss value thereof as set
forth in the Contract, as the case may be, and if maintained by any Borrower or
Foreign Leasing Subsidiary, equal to amounts customarily maintained by lessors
or secured parties, as the case may be, in comparable positions and liability
insurance with respect to each item of Equipment in amounts customarily
maintained by similar businesses;
(c) Carry all insurance available through the PBGC or any
private insurance companies covering its obligations to the PBGC;
(d) Take the actions described in Section 6.17 hereof relating
to insurance maintained by Lessees or other Obligors, as the case may be.
Section 6.9 Financial Covenants.
(a) With respect to LCI and its Subsidiaries including LFC and
its Subsidiaries, on a consolidated basis, at the end of each calendar quarter
commencing with the quarter ending March 31, 1997, have minimum Adjusted
Tangible Net Worth in an amount not less than (i) Eighteen Million ($18,000,000)
Dollars plus seventy-five (75%) percent of consolidated net income (with no
deduction for losses) commencing from the calendar quarter ending March 31, 1997
and subsequent quarters thereto;
(b) With respect to LCI and its Subsidiaries including LFC and
its Subsidiaries, on a consolidated basis, at all times maintain a maximum ratio
of (i) Total Recourse Liabilities to (ii) Adjusted Tangible Net Worth not in
excess of 4:1;
(c) With respect to LCI and its Subsidiaries excluding LFC and
its Subsidiaries, on a consolidated basis, at the conclusion of each twelve-
month period ending on the last day of each calendar quarter have Debt Service
Coverage for the twelve-month period then ended of not less than 2:1; and
(d) With respect to LCI and its Subsidiaries excluding LFC and
its Subsidiaries, on a consolidated basis, at the conclusion of each twelve-
month period ending on the last day of each calendar quarter have Cash Flow
Coverage for the twelve-month period then ended of not less than 1.05:l.
Section 6.10 Reportable Events.
(a) Promptly notify the Agent in writing of the occurrence of
any Reportable Event, as defined in Section 4043 of ERISA, if a notice of such
Reportable Event is
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required under ERISA to be delivered to the PBGC within 30 days after the
occurrence thereof, together with a description of such Reportable Event and a
statement of the action the Borrowers intend to take with respect thereto,
together with a copy of the notice thereof given to the PBGC.
(b) Promptly notify the Agent in writing if the Borrowers or any
other Loan Party receives: any notice of any violation or administrative or
judicial complaint or order having been filed or about to be filed against any
of the Borrowers or such other Loan Party alleging violations of any
Environmental Law and Regulation, or (ii) any notice from any governmental body
or any other Person alleging that any of the Borrowers or such other Loan Party
is or may be subject to any Environmental Liability; and promptly upon receipt
thereof, provide the Agent with a copy of such notice together with a statement
of the action the Borrowers or such other Loan Party intends to take with
respect thereto.
Section 6.11 Comply with ERISA.
Comply with all applicable provisions of ERISA now or hereafter
in effect.
Section 6.12 Upgrades and Add-ons.
The Borrowers shall deliver to the Agent, not later than
simultaneously with any upgrade of or add-on to any Equipment included in the
Borrowing Base, from any lender which has a Lien on such Equipment but does not
finance such upgrade or ad-on, the written agreement of such lender to the
effect that such lender's Lien in the lease payment or receivables arising in
connection with such Equipment inclusive of such upgrades and add-ons shall not
include the payments or receivables attributable to such upgrade or add-on.
Section 6.13 Intentionally Omitted
Section 6.14 Intentionally Omitted
Section 6.15 Environmental Compliance
Operate all property owned or leased by it such that no
obligation, including a cleanup obligation, shall arise under any Environmental
Law and Regulation, which obligation would constitute a Lien or charge (prior to
that in favor of the Agent) on any property of any of the Borrowers or any other
Loan Party; provided, however, that in the event that any such claim is made or
any such obligation arises, the Borrowers or such other Loan Party shall, at
their own cost and expense, immediately satisfy such claim or obligation.
Section 6.16 Possession of Leases.
(a) Clearly and conspicuously xxxx each file and the first page
of each Equipment schedule (each such schedule itself (if related to a lease and
not a CSA) a Lease incorporating the terms of a Master Lease), included in any
of the Contract Receivables Clauses
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of the Borrowing Base to indicate that a security interest in the lease or CSA,
as the case may be, to be perfected by possession may only be perfected by
possession of the counterpart copy marked "Counterpart No. 1"; (b) at all times
maintain possession of said counterpart copy of each Lease or CSA, as the case
may be, included in any of the Contract Receivables Clauses of the Borrowing
Base marked "Counterpart No. l."; (c) maintain in each Master Lease a statement
to the effect that only the Equipment schedule marked "Counterpart 1", and not
such Master Lease, constitutes chattel paper the possession of which can perfect
a security interest; (d) eliminate all legends stamped on any Lease or any CSA
included in any of the Contract Receivables Clauses of the Borrowing Base
indicating any interests of any Person in such Lease other than the Agent upon
inclusion of such Lease in the Borrowing Base, and endorse each such Lease file
and Equipment schedule (each such schedule itself a Lease incorporating the
terms of a Master Lease) and each such CSA, upon inclusion in the Borrowing
Base, with the following legend imposed by indelible stamp or typed within the
Equipment Schedule:
THIS [LEASE] [CONDITIONAL SALES AGREEMENT] (AND EQUIPMENT
SCHEDULE [AND MASTER LEASE] THE TERMS OF WHICH IT INCORPORATES)
HAS BEEN ASSIGNED TO, IS SUBJECT TO THE SECURITY INTEREST OF, AND
IS HELD IN TRUST FOR THE BENEFIT OF [FLEET BANK, N.A.] AS AGENT,
PURSUANT TO THE TERMS AND CONDITIONS OF A SECURITY AGREEMENT AND
RELATED DOCUMENTS (AS THE SAME MAY BE AMENDED);
and (e) deliver the original, duly endorsed "Pay to the Order of [the Agent]",
of each Equipment Note, each Third Party Note, each Receivables Note and each
Finished Goods Inventory Note included in any of the Contract Receivables
Clauses or the Finished Goods Inventory Note and Receivables Note Clause of the
Borrowing Base to the Agent, who shall maintain possession thereof.
Section 6.17 Lessee Insurance Policies.
Prior to inclusion of any asset in the Borrowing Base, the Pre-
Computation value of which exceeds $100,000, require each Obligor who is
required to maintain insurance on any asset in the Borrowing Base and to its
insurance policy issuer, to deliver to the Borrowers a loss payee endorsement
which shall name the applicable Borrower and its successors and assigns as loss
payee as their interests may appear; provided that, at the Agent's request, the
Borrowers shall require the Obligor to cause the Agent specifically to be named
as loss payee with respect to Equipment related to a Contract included in the
Contract Receivables Clause.
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Section 6.18 Motor Vehicles.
No later than 45 days after the date hereof, deliver certificates
of title with respect to any motor vehicles owned by the Borrowers and included
in the Borrowing Base in form sufficient for filing (with applicable fees paid)
to the applicable state authorities to enable such authorities to endorse the
Lien of the Agent thereon.
Section 6.19 Credit Scoring Models.
(a) Consistently adhere to the Credit Scoring Model, Emerging
Growth Credit Scoring Matrix, or Loan Scoring Model, as applicable, and adhere
to the Credit Policy Manual and Loan Policy Manual in respect of all Contracts;
and
(b) Subject to the provisions of Section 7.20 hereof, no later
than 10 days after any amendment, modification or other revision of the Emerging
Growth Credit Scoring Matrix, the Credit Scoring Model, the Loan Scoring Model,
the Credit Policy Manual or the Loan Policy Manual deliver a copy thereof, as so
amended, modified or revised, to the Agent.
Section 6.20 Finished Goods Inventory Loans; Receivables Loans.
To the extent relevant to any Borrower, maintain all necessary
licenses, permits or certificates necessary to maintain its authority to do
business in each jurisdiction in which any Finished Goods Inventory Loan or
Receivables Loan may be originated by such Borrower, and maintain all licenses
necessary to originate such Loans in such jurisdiction.
Section 6.21 Origination and Servicing of Loans.
(a) Conduct a substantial part of all negotiations relating to
each Finished Goods Inventory Loan and Receivables Loan in the State of
Illinois.
(b) Fund all Finished Goods Inventory Loans and Receivables
Loans in the State of Illinois.
(c) Maintain, with respect to those Borrowers making Finished
Goods Inventory Loans and Receivables Loans, their only offices in the State of
Illinois with its principal office in Illinois.
(d) Require approval of the terms of all Finished Goods
Inventory Loans and Receivables Loans by the relevant Borrower's principal
office in Illinois.
(e) Require payment of principal and interest under any Finished
Goods Inventory Note and Receivables Note to be made at the relevant Borrower's
principal office located in Illinois.
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(f) Require all Finished Goods Inventory Notes and Receivables
Notes, and all documents and instruments executed in connection therewith to
contain a choice of law provision set forth conspicuously in bold face
capitalized type designating the law of the State of Illinois as the law
governing such Note and the transaction evidenced thereby and under which
disputes shall be determined.
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Article 7. Negative Covenants.
------------------
While the Commitments are outstanding and so long as any Loan remains
outstanding and so long as any L/C Obligations remain outstanding and so long as
the Borrowers are indebted to the Banks and the Agent and until payment in full
of the Notes and full and complete performance of all of their other obligations
arising hereunder and under the Loan Documents, the Borrowers shall not and
shall not permit any of their Subsidiaries to do, agree to do, or permit to be
done, any of the following; provided, however, that the following covenants
(other than the covenant in Section 7.19) shall not apply to LFC and its
Subsidiaries except as and to the extent expressly set forth in Section 7.19
below:
Section 7.1 Indebtedness.
------------
Create, incur, permit to exist or have outstanding any Indebtedness,
except:
(a) Indebtedness of the Borrowers to the Banks and the Agent under
this Agreement and the Notes;
(b) (i) In each case, as to any of the following incurred and
continuing in the ordinary course of business: taxes, assessments and
governmental charges, non-interest bearing accounts payable, Equipment payables
and accrued liabilities, in any case not more than ninety 90 days past due from
the original due date thereof, or if such liabilities are more than ninety (90)
days past due such liabilities are as of such ninetieth day being contested in
good faith and by appropriate proceedings and to the extent required by
generally accepted accounting principles then in effect, proper and adequate
book reserves relating thereto are established by the applicable Borrowers and
then only to the extent that a bond is filed in cases where the filing of a bond
is necessary to avoid the creation of a Lien against any of its properties;
provided, however, that non-interest bearing accounts payable and other accrued
liabilities excluding those specifically listed above in this clause (i) which
in the aggregate do not exceed Two Hundred Fifty Thousand ($250,000) Dollars at
any one time may be more than ninety (90) days past due from the original due
date thereof so long as no such liability or liabilities individually or in the
aggregate could have a material adverse effect on any of the Borrowers or any of
their Subsidiaries and in each case each such liability shall have been incurred
and shall be continuing in the ordinary course of business; and
(ii) non-interest bearing deferred liabilities other than for borrowed
money (e.g., prepaid income, deferred compensation and deferred taxes), and non-
interest bearing liabilities which are not shown as liabilities on the balance
sheets of any of the Borrowers or any of their Subsidiaries and other than for
borrowed money such as under maintenance contracts and agreements to purchase
equipment pursuant to a lease naming a Borrower or Subsidiary as lessor, and
liabilities to employees of any Borrower or any Subsidiary, in each case as to
any of the above incurred and continuing in the ordinary course of business;
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(c) Indebtedness secured by the security interests referred to in
subsection 7.2(c) hereof and capitalized lease obligations, in each case
incurred only if, after giving effect thereto, the limit on capital expenditures
set forth in Section 7.13 hereof would not be breached;
(d) Subordinated Debt; provided, however, that none of the Borrowers
shall make any payment of principal, interest, premium or fees in respect of the
Subordinated Debt if any Default or Event of Default hereunder then exists or
would exist after giving effect to any such payment;
(e) Permanent Secured Debt, now existing or hereafter incurred (to the
extent permitted under the definition of such term, including compliance with
the representations made in Section 3.24 hereof);
(f) Obligations of LCI to repurchase certain lease receivables and
equipment from Special Purpose Entities, whether in the form of guaranties or
otherwise; provided, however, that such obligations may only be satisfied in the
event that LFC defaults in its obligations with respect thereto under the Sale
and Assignment Agreement or the Servicing Agreement, which obligations are
unsecured or secured by cash collateral in amounts acceptable to the Agent;
(g) Indebtedness of any Special Purpose Entity which Subsidiary is
formed after the date of this Agreement; provided, however, that the Borrowers
shall have delivered to the Agent such agreements, instruments and documents
relating to any Special Purpose Entities as the Agent may reasonably request
from time to time, and the Borrowers shall notify the Agent at least seven (7)
Business Days prior to the consummation of any securitization transaction
involving a Special Purpose Entity;
(h) With respect to Foreign Subsidiaries, Indebtedness to the
Borrowers comprised of the Foreign Subsidiary Loans upon and subject to the
terms and conditions set forth in this Agreement;
(i) Indebtedness under the Convertible Subordinated Debt Documents in
existence on the date hereof;
(j) As specifically permitted under subsection 7.9(b) hereof;
(k) Unsecured debt for borrowed money not to exceed Two Million
($2,000,000) Dollars in the aggregate; and
(l) As permitted on Exhibit R annexed hereto.
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Section 7.2 Liens.
-----
Create, or assume or permit to exist, any Lien on any of the
properties or assets of any of the Borrowers or any of their Subsidiaries,
whether now owned or hereafter acquired, except:
(a) Those created and granted by the Security Documents;
(b) Permitted Liens;
(c) Purchase money mortgages or security interests, conditional sale
arrangements and other similar security interest on motor vehicles and equipment
acquired by any of the Borrowers or any Subsidiary (but excluding from the right
under this subsection (c) to grant such purchase money and similar Liens or
arrangements any such motor vehicles and equipment purchased for the purpose of
lease or similar transaction as part of the Basic Business except that the
exclusion in this parenthetical shall not apply to Permitted Borrowing Base
Encumbrances or in respect of assets not included in the Borrowing Base on which
a manufacturer has a purchase money security interest prior to payment to such
manufacturer of the purchase price thereof) (hereinafter referred to
individually as a "Purchase Money Security Interest") with the proceeds of the
Indebtedness referred to in this subsection 7.2(c); provided, however, that:
(i) The transaction in which any Purchase Money Security
Interest is imposed to be created is not then prohibited by this Agreement;
(ii) Any Purchase Money Security Interest shall attach only to
the property or asset acquired in such transaction and shall not extend to or
cover any other assets or properties of the Borrowers; and
(iii) The Indebtedness secured or covered by any
Purchase Money Security Interest shall not exceed the lesser of the cost or fair
market value of the property or asset acquired and shall not be renewed,
extended or prepaid from the proceeds of any borrowing by the Borrowers or any
Subsidiary;
(d) The interests of the lessor under any capitalized lease permitted
hereunder;
(e) The liens of Newcourt permitted under the Subordination Agreements
to which Newcourt is a party; and
(f) As set forth on Exhibit S annexed hereto.
(g) In the case of a Lease, the interests of the Lessee under such
Lease;
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(h) In the case of an Equipment Note or CSA, the interests of the
Obligor in the Equipment securing or covered by such Equipment Note or CSA and
any other Lien in the Equipment granted by the Obligor to another Person so long
as such Lien is subordinate to the interest of the Applicable Company and the
Agent on terms such that the subordinate Lienholder cannot exercise any remedies
prior to payment in full of all of the Obligor's obligations to the Applicable
Company and, as assigned, the Agent and otherwise substantially similar to a
form of intercreditor agreement submitted to and approved in advance by the
Agent;
(i) In the case of a Third Party Note, the interests of the Obligor
and lessee in the Third Party Lease, and any other Lien in the Equipment granted
by the Obligor to another Person so long as such Lien is subordinate to the
interests of the Applicable Company and the Agent on terms such that the
subordinate Lienholder cannot exercise any remedies prior to payment in full of
all of the Obligor's obligations to the Applicable Company and, as assigned, the
Agent and otherwise substantially similar to a form of intercreditor agreement
submitted to and approved in advance by the Agent;
(j) In the case of Equipment sold to an Applicable Company, with or
without a related Contract, a subordinate interest retained by the seller upon
the sale, on a discounted basis, of such Equipment and Eligible Contract so long
as the purchase agreement between the Borrower and such seller is assignable to
and has been assigned to the Agent and the interest of the seller is subordinate
on terms such that the seller cannot exercise any remedies prior to recovery in
full of all interests of the Borrower and, as assigned, the Agent in such
Equipment and Eligible Contract.
Section 7.3 Guaranties.
----------
Except as set forth in Section 7.1 hereof, assume, endorse, be or
become liable for, or guarantee, the obligations of any Person, except by the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business. For the purposes hereof, the term "guarantee" shall include
any agreement, whether such agreement is on a contingency or otherwise, to
purchase, repurchase or otherwise acquire Indebtedness of any other Person, or
to purchase, sell or lease, as lessee or lessor, property or services, in any
such case primarily for the purpose of enabling another person to make payment
of Indebtedness (other than purchases, sales, leases and guarantees to vendors
relating to the business transactions of Foreign Leasing Subsidiaries in the
aggregate not to exceed Two Million ($2,000,000) Dollars, in each case in the
ordinary course of the applicable Borrower's or any Foreign Leasing Subsidiary's
business), or to make any payment (whether as an advance, capital contribution,
purchase of an equity interest or otherwise) to assure a minimum equity, asset
base, working capital or other balance sheet or financial condition, in
connection with the Indebtedness of another Person, or to supply funds to or in
any manner invest in another Person in connection with such Person's
Indebtedness.
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Section 7.4 Mergers, Acquisitions.
Merge or consolidate with any Person (whether or not the
applicable Borrower or any Subsidiary is the surviving entity) or become a
general partner of any partnership or acquire all or substantially all of the
assets or any of the capital stock of any Person or acquire any portion of the
assets in the form of a lease portfolio of any Person, (a) except that the
Borrowers may make Investments in the form of formation of Subsidiaries upon the
terms set forth in Section 7.9 hereof; and (b) except that the Borrowers may
acquire assets in the form of a lease portfolio of a Person so long as (i) the
purchase price (including assumption of Indebtedness and stock issuances) does
not exceed Twenty-Million ($20,000,000) Dollars, annually, individually or in
the aggregate in respect of all such acquisitions, (ii) at least eighty (80%)
percent of the Contracts purchased (measured by aggregate dollar amount payable
thereunder) satisfy the Borrowers' criteria for originations as set forth in the
Credit Policy Manual, the Credit Scoring Model, the Emerging Growth Credit
Scoring Matrix, (iii) the Banks shall have received a detailed description of
the proposed acquisition of a lease portfolio not later than seven (7) Business
Days prior to the proposed consummation of any such acquisition; and (iv) no
Default or Event of Default exists as of the date of any such acquisition.
Section 7.5 Redemptions, Distributions.
(a) Purchase, redeem, retire or otherwise acquire, directly or
indirectly, or make any sinking fund payments with respect to, any shares of any
class of stock of any of the Borrowers or any of the Subsidiaries now or
hereafter outstanding or set apart any sum for any such purpose; provided,
however, that the Borrowers may purchase or repurchase shares of the capital
stock of Quantum from the individual shareholders of Quantum but only upon the
following terms and conditions:
(i) the Borrowers shall have delivered to the Banks and
the Agent not less than seven (7) days prior notice of the Borrowers' intention
to make such a purchase, which notice shall specify the amount of the payment
(in cash or other consideration) to be made and the proposed date of the
payment;
(ii) no Default or Event of Default then exists or, as of
the date of proposed payment, would exist after giving effect to any such
payment, as confirmed in writing by the Borrowers delivered to the Agent;
(iii) the aggregate amount of all such payments while any of
the Obligations is outstanding shall not exceed Two Hundred Fifty Thousand
($250,000) Dollars; or,
(b) Declare or pay any dividends or make any distribution of any
kind on any Borrower's or Subsidiary's outstanding stock, or set aside any sum
for any such purpose, except that:
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(i) any Borrower may declare or pay any dividend payable solely
in shares of its common stock;
(ii) Special Purpose Entities and Foreign Leasing Subsidiaries
may and shall pay Upstream Payments to the applicable Borrower in an amount
requisite to, and for the purpose of enabling such Borrower to use the proceeds
thereof to, satisfy its obligations under subsection 2.8(b) hereof to the extent
permitted by applicable law;
(iii) subject to the terms of subsection 7.9(b) hereof, in the
event that the Adjusted Tangible Net Worth of LCI and its Subsidiaries other
than LFC, on a consolidated basis, based upon audited financial statements,
exceeds the minimum Adjusted Tangible Net Worth required to be maintained
hereunder as in effect on any date of determination hereunder then LCI may
declare or pay a dividend in an amount not greater than the lesser of (1) the
amount of such excess on the date(s) of such payment or declaration and (2) the
amount of any dividend or liquidating distribution received by LCI from LFC,
provided that in any event (x) no Default or Event of Default exists or would
exist after giving effect thereto as confirmed in writing by the Borrowers to
the Agent; and (y) LCI may not declare or pay such dividend prior to the
termination and repayment in full of the LFC Subordinated Debt;
(iv) LFC shall declare and pay dividends to LCI on a quarterly
basis, after the termination of and repayment in full of the LFC Subordinated
Debt, in an amount not less than all cash of LFC in excess of any amounts
necessary to provide for the payment of obligations of LFC reflected on LFC's
balance sheet to unrelated third parties (such as, for example, sales and use
taxes and security deposits);
(v) the Borrowers may declare or pay a dividend to LINC Group
for the purpose of enabling LINC Group to repurchase shares of its capital stock
or stock options with respect thereto; provided, however, that (A) the amount of
all dividends declared and paid for such purpose may not exceed One Million
($1,000,000) Dollars per fiscal year in the aggregate in accordance with the
terms of any agreements in effect on the date hereof and (B) no Default or Event
of Default then exists or would exist after giving effect thereto, as confirmed
in writing by the Borrowers delivered to the Agent; and
(vi) any Subsidiary of LCI may declare and pay dividends to LCI,
provided that no Default or Event of Default exists or would exist after giving
effect thereto as confirmed in writing by the Borrowers to the Agent.
Section 7.6 Stock Issuance.
Issue any additional shares or any right or option to acquire any
shares, or any security convertible into any shares, of the capital stock of any
Borrower or any of its Subsidiaries.
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Section 7.7 Changes in Business.
Make any material change in its business which is the Basic
Business, or in the nature of its operation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution); or convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, assets or business except in the
ordinary course of business of the Basic Business (subject at all times to and
conditioned on the continuing lien on and security interest in all proceeds
thereof in favor of the Agent) and for a fair consideration; or dispose of any
shares of its stock or any Indebtedness, whether now owned or hereafter
acquired, or discount, sell, pledge, hypothecate or otherwise dispose of any
such stock or accounts receivable (except in the ordinary course of business of
the Basic Business and for a fair consideration); provided, however, that:
(a) the proceeds of any sale or lease of Equipment which results
in an obligation to make a prepayment under Section 2.8 hereof shall be applied
as and within the period set forth in such Section 2.8;
(b) LCI shall be entitled at its option to transfer to LINC
Capital Partners, Inc. (LCI's wholly-owned Subsidiary) the assets held in the
LINC Capital Partners Division of LCI upon and subject to the following terms
and conditions: (i) the Agent shall have received at least ten Business Days'
prior written notice of LCI's intention to effect such a transfer; (ii) the
Agent shall have received such agreements, instruments and documents (including
substitute promissory notes) as the Agent may reasonably request in order to
confirm that LINC Capital Partners, Inc. is a party to and bound by the Loan
Agreement and the Notes in the same manner as if LINC Capital Partners, Inc. had
been named a Borrower hereunder and in such event the Banks and the Agent shall
execute and deliver, if required by the Agent, an amendment to the Loan
Agreement and new Notes in confirmation of the foregoing, in each case, in form
and substance satisfactory to the Agent, and (iii) the Agent and its counsel
shall be satisfied in the exercise of their sole discretion that the Banks and
the Agent shall suffer no adverse effect as a result of any such transfer to
LINC Capital Partners, Inc. and the execution and delivery of the agreements,
instruments and documents relating thereto;
(c) in any event, without limiting the generality of the
foregoing, none of the Borrowers nor their Foreign Leasing Subsidiaries shall
cease to engage in the Basic Business; and
(d) during the continuance of any Default or Event of Default,
sales of assets which sales otherwise constitute the Basic Business shall not be
permitted unless the proceeds of any such sale are used simultaneously to prepay
the Obligations hereunder and cure the existing Defaults and Events of Default
and such sales would not otherwise impair the overall value of the Collateral or
repayment of the Loans in the judgment of the Agent in its sole discretion.
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Section 7.8 Prepayments.
Make any voluntary or optional prepayment of any amounts
outstanding under: (a) any Subordinated Debt except for the Convertible
Subordinated Debt, provided that prepayments of the Convertible Subordinated
Debt shall only be allowed if no Event of Default hereunder then exists or would
exist after giving effect to such prepayment; or (b) any other Indebtedness that
is permitted to be incurred hereunder if after giving effect to the prepayment
under any such other Indebtedness a Default or an Event of Default would then
exist hereunder (except any prepayment required as a result of a Contract
termination).
Section 7.9 Investments.
Make, or suffer to exist, any Investment in any Person,
including, without limitation, any shareholder, director, officer or employee of
any of the Borrowers or any of their Subsidiaries, except:
(a) Investments in:
(i) obligations issued or guaranteed by the United States
of America;
(ii) certificates of deposit, bankers acceptances and other
"money market instruments" issued by any bank or trust company organized under
the laws of the United States of America or any State thereof and having capital
and surplus in an aggregate amount not less than Two Hundred Fifty Million
($250,000,000) Dollars;
(iii) open market commercial paper bearing investment grade
credit rating issued by Standard & Poor's Corp. or by another nationally
recognized credit rating firm; and
(iv) repurchase agreements entered into with any bank or
trust company organized under the laws of the United States of America or any
State thereof and having capital and surplus in an aggregate amount not less
than One Hundred Million ($100,000,000) Dollars relating to United States of
America government obligations;
in each case maturing or being due or payable in full not more than 180 days
after the Borrowers' acquisition thereof;
(b) Investments made on or following the date of execution and
delivery of this Agreement, but only upon and subject to the following terms and
conditions:
(i) Investments by the Borrowers in any one or more of
their respective Subsidiaries which Subsidiaries exist on the date of this
Agreement, provided that (A) no Investment may be made in LFS or LFC other than
the Investments existing on the date hereof
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as described in Exhibit T hereto; (B) notwithstanding any of the foregoing, the
Borrowers may make or have, as applicable, Investments in an aggregate amount
not to exceed $3,000,000 at any time in (i) Subsidiaries that are Special
Purpose Entities, and (ii) Subsidiaries that are not Special Purpose Entities
but only in an aggregate amount not to exceed $1,000,000 (of such maximum
$3,000,000) at any time; and (C) in no event shall any of the terms of this
Agreement be construed to permit either of the Borrowers to borrow from any
Subsidiary or Affiliate except for the other Borrower.
(ii) (A) All of the foregoing Investments in the form of
Indebtedness and the repayment of such Indebtedness shall be subject to the
terms and conditions of the Subordination Agreement; (B) neither any of the
Borrowers nor any Subsidiary shall be permitted to make at any time any
contribution or other similar payment to any Person, including, without
limitation, to any of the Borrowers or any Subsidiary, relating to such Person's
payment on any guaranty or similar obligation; (C) the maximum amount of
Indebtedness described in the preceding clauses of subsection (i) shall be
deemed at all times to include equity investments (and not solely loans) made by
any of the Borrowers in any of the Subsidiaries or LINC Group or its Affiliates;
and
(iii) No Investment shall be made under this subsection (b)
on a date when a Default or Event of Default exists or would exist after giving
effect to the making of such Investment;
(c) Finished Goods Inventory Loans and Receivables Loans made in
the ordinary course of the Applicable Companies' Basic Business to Obligors in
industries acceptable to the Agent and in accordance with customary lending
practices, the Loan Policy Manual and the Loan Scoring Matrix;
(d) Investments in the form of secured or unsecured loans to
officers of any of the Borrowers in the aggregate principal amount at any time
outstanding not to exceed $500,000; and
(e) Investments existing on the date of execution and delivery
of this Agreement described on Exhibit T annexed hereto, but only in the amunts
and to the extent set forth thereon.
Section 7.10 Fiscal Year.
-----------
Change its fiscal year or change the fiscal year of LINC Group.
Section 7.11 ERISA Obligations.
-----------------
(a) Be or become obligated to the PBGC other than in respect of
annual premium payments in excess of Fifty Thousand ($50,000) Dollars.
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(b) Be or become obligated to the IRS with respect to excise or
other penalty taxes provided for in those provisions of Section 4975 the Code,
as in effect or hereafter amended or supplemented, in excess of Fifty Thousand
($50,000) Dollars.
Section 7.12 Amendment of Documents.
----------------------
Modify, amend, supplement or terminate, or agree to modify,
amend, supplement or terminate its certificate of incorporation or by-laws, any
of the documents relating to the Convertible Subordinated Debt, the Quantum
Shareholders' Agreement, the non-recourse provisions of any Non-Recourse Debt,
the subordination provisions of any agreements or instruments of Indebtedness,
any documents relating to transactions with affiliates (other than arm's length
transactions with affiliates insuring in the ordinary course of business as
permitted in subsection 7.16), or any of the Transaction Documents; provided,
however, that the Transaction Documents may be amended so long as any such
amendment is immaterial or not adverse to the Borrowers, the Agent or the Banks
in the judgment of the Agent, and so long as a copy of any such proposed
amendment is provided to the Agent prior to the execution thereof, provided,
further, that (a) any amendment, modification or supplement to the Note Purchase
Agreement shall have been consented to by the Agent; and (b) in no event shall
the Transaction Documents be amended in any respect to modify the subordination
provisions thereof or the defined terms in such documents which would affect or
modify the subordination provisions therein.
Section 7.13 Capital Expenditures.
--------------------
Make or be or become obligated to make capital expenditures, as
defined in accordance with GAAP, in the aggregate for the Borrowers and the
Subsidiaries in excess of (a) One Million ($1,000,000) Dollars for the fiscal
year ending in 1997 and (b) Five Hundred Thousand ($500,000) Dollars in any
subsequent single fiscal year.
Section 7.14 Rental Obligations.
------------------
Enter into, or permit to remain in effect, any lease, as lessee
(other than capitalized leases which are governed by Section 7.13 hereof, if,
after giving effect thereto, the aggregate amount of all rentals and other
obligations, including, without limitation, all percentage rents and additional
rent, due from the Borrowers and the Subsidiaries thereunder (net of sub-lease
rents received) in any single calendar year would exceed One Million Two Hundred
Fifty Thousand ($1,250,000) Dollars.
Section 7.15 Management Fees.
---------------
Except as otherwise permitted in subsections 7.16(b) or (c), pay,
or be or become obligated to pay, any management fees (including, without
limitation, advisory and consulting fees and fees in respect of services
rendered in connection with the management or supervision of the management of
any of the Borrowers or their Affiliates) to any shareholder, director, officer
or employee of any of the Borrowers or Person controlled by the shareholder,
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director or officer except in an aggregate amount in any single fiscal year not
exceeding $5,000 with respect to all the Borrowers.
Section 7.16 Transactions with Affiliates.
----------------------------
Except as expressly permitted by this Agreement, directly or
indirectly: (i) make any Investment in an Affiliate; (ii) transfer, sell, lease,
assign or otherwise dispose of any assets to an Affiliate; (iii) merge into or
consolidate with or purchase or acquire assets from an Affiliate; or (iv) enter
into any other transaction directly or indirectly with or for the benefit of any
Affiliate (including, without limitation, guarantees and assumptions of
obligations of an Affiliate; provided, however, that (a) payments on Investments
expressly permitted by Section 7.9 hereof may be made subject to the terms
thereof, (b) any Affiliate who is an individual may serve as an employee or
director of any of the Borrowers or any Subsidiary and receive reasonable
compensation for his or her services in such capacity, except that LCI may pay
for his services in such capacity, (c) any Borrowers or any Subsidiary may enter
into any transaction with an Affiliate providing for the leasing of property,
the rendering or receipt of services (so long as such services are not in the
nature of management or consulting services) or the purchase or sale of product,
inventory and other assets in the ordinary course of business if the monetary or
business consideration arising therefrom would be substantially as advantageous
to such Borrower or a Subsidiary as the monetary or business consideration which
would obtain in a comparable arm's length transaction with a Person not an
Affiliate, and (d) any Subsidiary or any Borrower may enter into any transaction
with another Subsidiary or any Borrower may enter into any transaction with
another Subsidiary or any Borrower which is not prohibited by this Agreement or
any of the other Loan Documents.
Section 7.17 Changes in Calculation of Net Book Value.
----------------------------------------
Change the basis on which any of the Borrowers calculate net book
value, depreciation policy (it being understood that Quantum's depreciation
policy is seven (7) years to zero salvage value), residual value estimations,
expense capitalization or other factors significantly affecting the calculation
of net book value or Invoiced Cost with respect to Equipment from any of the
methods or policies described in Exhibit U annexed hereto, except if such change
is required for compliance with generally accepted accounting principles, and in
any event, the policies respecting all such calculations shall be subject to
approval by the Agent which shall receive (30) days notice from the Borrowers of
any change that affects residual values.
Section 7.18 Matters Regarding Quantum.
-------------------------
(a) Fail to deliver to the Agent prompt notice regarding any
dispute between any Borrower or any of its directors or officers, on the one
hand, and Quantum or any of its directors or officers, on the other hand; or
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(b) Fail to file Financing Statements naming each Lessee as
debtor/lessee, Quantum as secured party/lessor, and the Agent as assignee upon
the terms and conditions set forth in Section 2.25(c) hereof.
Section 7.19 Business of LFC.
---------------
Permit LFC or any of its Subsidiaries to (a) engage in any
business other than the run-off, winding-up and managing of its existing
portfolio of equipment leases, equipment financings and equipment Residual
Values acquired by LFC pursuant to the Sale and Assignment Agreement or owned by
its Subsidiaries on the date hereof (including, without limitation, renewing,
extending or refinancing leases included in such existing portfolio or owned by
its Subsidiaries), (b) incur any Indebtedness other than the LFC Subordinated
Debt and other than of the type described in subsection 7.1(b) hereof
(excluding, however, liabilities for new equipment payables) or create any Liens
other than Permitted Liens (so long as Permitted Liens are consistent with the
preceding limitation on incurrence of Indebtedness), (c) make any Investments
(which term shall not be deemed to refer to any interest of LFC in residuals of
its currently existing portfolio entered into in the ordinary course of
business) other than Investments in instruments of the type set forth in
subsection 7.9(a) hereof or (d) replace or refinance the LFC Subordinated Debt
or from and after final repayment of all obligations under the LFC Subordinated
Debt, take any action in contravention of the other provisions of this Article
7, which provisions shall, after such repayment of the obligations under the LFC
Subordinated Debt, be deemed applicable to LFC and LFC's Subsidiaries.
Section 7.20 Credit Scoring Models and Policies.
----------------------------------
Amend, modify or otherwise revise the Credit Policy Manual, the
Credit Scoring Model or the Emerging Growth Credit Scoring Matrix, and after
acceptance thereof by the Banks and the Agent, the Loan Policy Manual or the
Loan Scoring Model, in any material way or in a manner adverse to the Banks or
the Agent.
Section 7.21 Limitations on Loans.
--------------------
(a) Include any Finished Goods Inventory Loan or Receivables
Loan in computation of the Borrowing Base, unless and until each Applicable
Company shall have executed and delivered to the Banks and the Agent (i) a copy
of its Loan Policy Manual and Loan Scoring Model, and (ii) if requested by the
Agent a note assignment agreement supplementing the LCI Assignment of Contracts
pledging to the Agent all of such Applicable Company's right, title and interest
in and to any and all Finished Goods Inventory Notes, Receivables Notes and
Contract Collateral.
(b) (i) Make, or commit to make, any Finished Goods Inventory
Loan or Receivables Loans (A) other than in the ordinary course of business, and
in accordance with its customary lending practices as set forth in the Loan
Policy Manual and the Loan Scoring Model,
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and (B) unless the Applicable Company reasonably believes that such Loan
constitutes, or upon funding will constitute, an Eligible Contract.
(ii) Other than in the ordinary course of business,
consistent with its credit policy as set forth in the Loan Scoring Model and the
Loan Policy Manual, grant any extension of the time of payment of any Finished
Goods Inventory Loan or Receivables Loan, compromise or settle any Finished
Goods Inventory Loan or Receivables Loan for less than the full amount thereof,
release, in whole or in part, any person or property liable for the payment
thereof, or allow any credit or discount whatsoever thereon.
(iii) Fail to file upon making a Finished Goods Inventory
Loan or a Receivables Loan, all required financing statements in order to assure
that the Applicable Company receives a first priority perfected security
interest in the Contract Collateral related thereto.
Section 7.22 Certain Inactive Subsidiaries.
-----------------------------
Permit or suffer any Subsidiary (excluding LFC and Quantum) to
engage in any business activities or to acquire any assets (other than
immaterial assets not exceeding $250,000 in the aggregate in market value) or
have any Investments or incur any Indebtedness or liabilities except in order to
maintain corporate existence and except as otherwise in existence on the date of
this Agreement as set forth on Exhibit D or on Exhibit T annexed hereto.
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Article 8 Events of Default.
--------- -----------------
If any one or more of the following events ("Events of Default")
shall occur and be continuing, the Commitments shall terminate (except for the
obligation under Section 2.32 hereof to convert the Temporary Loans into Loans
made under Section 2.1 hereof and except for the obligations of the Banks under
Section 2.33 hereof in respect of the purchase of participation in the L/Cs from
the Issuing Bank) and the entire unpaid balance of the principal of and interest
on the Notes or the Temporary Loan Note outstanding and all other obligations
and Indebtedness of the Borrowers to the Banks and the Agent arising hereunder
and under the other Loan Documents shall immediately become due and payable upon
written notice to that effect given to the Borrowers by the Agent (except that
in the case of the occurrence of any Event of Default described in Section 8.6
no such notice shall be required), without presentment or demand for payment,
notice of non-payment, protest or further notice or demand of any kind, all of
which are expressly waived by each of the Borrowers. References in this Article
8 to Subsidiaries shall be deemed to include LFC and LFC's Subsidiaries in
respect of provisions of this Agreement expressly applicable to them and
otherwise from and after the final repayment of all obligations under the LFC
Subordinated Debt, notwithstanding any provision contained in this Article 8 to
the contrary.
Section 8.1 Payments.
--------
Failure to make any payment or mandatory prepayment of principal
upon any Notes or the Temporary Loan Note or to make any payment of any Fee when
due, or, to make any payment or mandatory prepayment of interest within five (5)
Business Days after such payment or prepayment is due; or failure to reimburse
any Unreimbursed Drawing when due; or,
Section 8.2 Covenants.
---------
Failure to perform or observe any of the agreements of any of the
Borrowers or the Subsidiaries contained in Section 6.9 or 6.17 or Article 7
hereof, or,
Section 8.3 Other Covenants.
---------------
(a) Failure by any of the Borrowers to perform or observe any
other term, condition or covenant of this Agreement or of any of the other Loan
Documents to which it is a party, including, without limitation, the Notes, the
Temporary Loan Note, or any of the Security Documents, which shall remain
unremedied for a period of 15 days after notice thereof shall have been given to
the Borrowers by the Agent or for a longer period of time not to exceed an
additional 30 days as is needed to complete action expeditiously begun within
such initial 15 day period, to remedy such failure, but such longer period shall
be permitted only if in the judgment of the Agent such additional 30 days is a
reasonable period to complete actions begun within the initial 15 day period to
remedy such failure and only if there is no adverse impact upon the Collateral
or the Banks' and the Agent's interest therein in the reasonable judgment of the
Agent; or,
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(b) Failure by any Subsidiary to perform or observe any term,
condition or covenant of any of the Loan Documents to which it is a party,
including, without limitation, the Security Documents, which shall remain
unremedied for a period of 15 days after notice thereof shall have been given to
the Borrowers by the Agent or for a longer period of time not to exceed an
additional 30 days as is needed to complete action expeditiously begun with in
such initial 15 day period, to remedy such failure, but such longer period shall
be permitted only if in the judgment of the Agent such additional 30 days is a
reasonable period to complete actions begun within the initial 15 day period to
remedy such failure and only if there is no adverse impact on the Collateral or
the Agent's and the Banks' interest therein in the reasonable judgment of the
Agent; or,
Section 8.4 Other Defaults.
---------------
(a) Failure to perform or observe any term, condition or
covenant of any bond, note, debenture, loan agreement, indenture, guaranty,
trust agreement, mortgage or similar instrument to which any Borrower or any
Subsidiary (other than LFC or its Subsidiaries except to the extent referred to
in Section 8.12 hereof) is a party or by which it is bound, or by which any of
its properties or assets may be affected including, without limitation, any of
the Indebtedness covered by any documents relating to the Convertible
Subordinated Debt or to the Partial Recourse Documents (collectively a "Debt
Instrument") (other than Non-Recourse Debt that does not exceed One Million
($1,000,000) Dollars in the aggregate), so that, as a result of any such failure
to perform the Indebtedness included therein or secured or covered thereby may
be declared or may become due and payable prior to the date on which such
Indebtedness would otherwise become due and payable; or,
(b) Any event or condition referred to in any Debt Instrument
(other than documents relating to Non-Recourse Debt all of which Debt does not
exceed One Million ($1,000,000) Dollars in the aggregate) shall occur or fail to
occur, so that, as a result thereof, the Indebtedness included therein or
secured or covered thereby may be declared or may become due and payable prior
to the date on which such Indebtedness would otherwise become due and payable;
or,
(c) Failure to pay any Indebtedness for borrowed money due at
final maturity or pursuant to demand under any Debt Instrument (other than
documents relating to Non-Recourse Debt all of which Debt does not exceed One
Million ($1,000,000) Dollars in the aggregate); provided, however, that the
provisions of this Section 8.4 shall not be applicable to any Debt Instrument
which relates to or evidences Indebtedness which, on the date this Section 8.4
would otherwise be applicable thereto, is in principal amount of less than
$500,000 unless and until the aggregate principal amount of all such Debt
Instruments otherwise excluded from the provisions of Section 8.4 and in respect
of which the conditions of clause (a), (b) or (c) then apply, would exceed One
Million ($1,000,000) Dollars; or,
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Section 8.5 Representations and Warranties.
------------------------------
Any representation or warranty made in writing to the Banks or
the Agent in any of the Loan Documents or in connection with the making of the
Loans, or any certificate, statement or report made or delivered in compliance
with this Agreement, shall have been false or misleading in any material respect
when made or delivered; or,
Section 8.6 Bankruptcy.
----------
(a) Any Borrower or any of the Subsidiaries other than LFC and
its Subsidiaries shall make an assignment for the benefit of creditors, file a
petition in bankruptcy, be adjudicated insolvent, petition or apply to any
tribunal for the appointment of a receiver, custodian, or any trustee for it or
a substantial part of its assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, or any Borrower or any Subsidiary other than LFC and its Subsidiaries
shall take any corporate action to authorize any of the foregoing actions; or
there shall have been filed any such petition or application, or any such
proceeding shall have been commenced against it, which remains undismissed for a
period of thirty (30) days or more; or any order for relief shall be entered in
any such proceeding; or any Borrower or any of the Subsidiaries other than LFC
and its Subsidiaries by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
the appointment of a custodian, receiver or any trustee for it or any
substantial part of any of its properties, or shall suffer any custodianship,
receivership or trusteeship to continue undischarged for a period of thirty (30)
days or more; or,
(b) Any Borrower or any of the Subsidiaries other than LFC and
its Subsidiaries shall generally not pay its debts as such debts become due; or,
(c) Any Borrower or any of the Subsidiaries other than LFC and
its Subsidiaries shall have concealed, removed, or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or shall have made any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid
during any period while either any such Borrower or any of such Subsidiaries is
insolvent; or shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its property through legal proceedings or distraint
which is not vacated within thirty (30) days from the date thereof, or,
Section 8.7 Judgments.
---------
Any judgment against any of the Borrowers or any of the
Subsidiaries other than LFC and its Subsidiaries or any attachment, levy or
execution against any of its properties for any amount in excess of $250,000
shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of sixty (60) days or more; or,
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Section 8.8 ERISA.
-----
(a) With respect to any Borrower, the termination of any Plan or
the institution by the PBGC of proceedings for the involuntary termination of
any Plan, in either case, by reason of, or which results or could result in, a
"material accumulated funding deficiency" under Section 412 of the Code; or,
(b) Failure by any Borrower to make required contributions, in
accordance with the applicable provisions of ERISA, to each of the Plans
hereafter established or assumed by it; or,
Section 8.9 Ownership of Stock of the Borrowers.
-----------------------------------
(a) LINC Group shall at any time own, beneficially and of
record, less than 100% of all of the issued and outstanding shares of capital
stock of LCI having ordinary voting rights for the election of directors, or
permit any Lien thereon other than the Agent's Lien, except as permitted by
Section 7.2 hereof; or
(b) LCI shall at any time own, beneficially and of record, less
than 100% of all the issued and outstanding shares of capital stock of LFC or
less than 80% of all the issued and outstanding shares of capital stock of
Quantum, in each case having ordinary voting rights for the election of
directors, or permit any Lien thereon other than the Agent's Lien, except as
permitted by Section 7.2 hereof; or
Section 8.10 Liens.
-----
Any of the Liens created and granted to the Agent under the Security Documents
shall fail to be valid, first, perfected Liens, subject to no prior or equal
Lien, except as permitted by Section 7.2 hereof, except that, upon the
conditions set forth in the following clauses (a) and (b), no default under this
Section 8.10 will be deemed to exist until the violation of any of the terms of
this Section 8.10 first occurs in respect of Collateral which has in the
aggregate a value (as determined by the Agent) of Five Hundred Thousand
($500,000) Dollars or more, but only if (a) any collateral having an aggregate
value below Five Hundred Thousand ($500,000) Dollars which fails to be subject
to the Liens in favor of the Agent is withdrawn from the Borrowing Base
immediately upon any of the Borrower's awareness of the occurrences of the event
which gave rise to the failure hereunder, and (b) the failure was caused by the
related Lessee or Obligor and not by any Borrower or its Subsidiaries; or
Section 8.11 LINC Group.
----------
(a) Ownership of the issued and outstanding shares of capital
stock of LINC Group shall change or such shares shall have been transferred such
that Xxxxxx X. Xxxxxxxxx, Xxxxx Xxxxxx and A. Luc Pols shall cease in the
aggregate to have and retain voting control, with in any event at least fifty-
one (51 %) percent of the voting stock of LINC Group, at
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all times being held by Xxxxxx X. Xxxxxxxxx; except that upon at least ten (10)
days' prior written notice to the Agent, Xxxxxx X. Xxxxxxxxx or Xxxxx Xxxxxx or
A. Xxx Xxxx may transfer shares of LINC Group to his children or spouse or
trusts for the benefit of any of them so long as (i) Xxxxxx X. Xxxxxxxxx
continues at all times to have voting control with respect to the stock of LINC
Group; (ii) prior to any such transfer to children, spouse, or trusts, any such
aforementioned transferee of Xxxxxx X. Xxxxxxxxx, Xxxxx Xxxxxx or A. Xxx Xxxx
agrees in writing not to make any further transfers and to be bound by the
provisions and prohibitions set forth in this Section 8.1l(b), and (iii) a
legend is placed on any stock certificates transferred to any children, spouse
or trusts to such effect; or
(b) (i) Xxxxxx X. Xxxxxxxxx or Xxxxx Xxxxxx shall cease for any
reason whatsoever, including, without limitation, death or disability (as such
cessation shall be determined in the sole and absolute judgment of the Majority
Banks) to be executive officers of each of the Borrowers or to actively
participate in the management of each of the Borrowers, or (ii) if such
cessation shall occur as a result of the death or such disability, no successor
satisfactory to the Majority Banks, in their sole discretion, shall have become
and shall have commenced to perform the duties of an executive officer of each
of the Borrowers within sixty (60) days after such cessation; provided, however,
that if any satisfactory successor or successors shall have been so elected and
shall have commenced performance of such duties within such period, the name of
such successor or successors shall be deemed to have been inserted in place of
either of Xxxxxx X. Xxxxxxxxx or Xxxxx Xxxxxx or both in this Section 8.11; or
Section 8.12 LFC Reimbursement for Special Purpose Entities.
(a) LFC shall fail to satisfy its obligations under the Sale and
Assignment Agreement arising out of the assumption by LFC of the obligations of
LCI under its servicing, credit enhancement and other documents relating to
Special Purpose Entities, including, without limitation, the obligation to
repurchase defaulted leases, or (b) an "Event of Default" under the Servicing
Agreement shall have occurred and be continuing.
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Article 9. The Agent.
Section 9.1 Appointment, Powers and Immunities.
Each Bank hereby irrevocably appoints and authorizes the Agent to act
as its agent hereunder, under the Security Documents and the other Loan
Documents with such powers as are specifically delegated to the Agent by the
terms of this Agreement, the Security Documents and the other Loan Documents
together with such other powers as are reasonably incidental thereto. The Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement, the Security Documents and the other Loan Documents and shall
not be a trustee for any Bank, nor is the Agent acting in a fiduciary capacity
of any kind under the Loan Documents or in respect thereof or in respect of any
Bank. The Agent shall not be responsible to the Banks for any recitals,
statements, representations or warranties contained in this Agreement, the
Security Documents, or the other Loan Documents in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement, the Security Documents or the other Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Security Documents or the other Loan Documents or any other
document referred to or provided for herein or therein or for the collectibility
of the Loans or for the validity, effectiveness or value of any interest or
security covered by the Security Documents or for the value of any Collateral or
for the validity or effectiveness of any assignment, mortgage, pledge, security
agreement, financing statement, document or instrument, or for the filing,
recording, re-filing, continuing or re-recording of any thereof or for any
failure by any of the Borrowers or any of the other Loan Parties to perform any
of its obligations hereunder or under the other Loan Documents, except that the
Agent shall undertake to file continuation statements for the Financing
Statements filed naming the Agent as secured party, subject to the next
sentence. The Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder, under the Security
Documents or the other Loan Documents or in connection herewith or therewith,
except for its or their own gross negligence or willful misconduct.
Section 9.2 Reliance by Agent.
The Agent shall be entitled to rely upon any certification, notice or
other communication (including any thereof by telephone, telex, telegram or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the proper person or persons, and upon advice and statements
of legal counsel, independent accountants and other experts selected by the
Agent. As to any matters not expressly provided for by this Agreement, the
Security Documents or the other Loan Documents, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder, under the
Security Documents or the other Loan Documents in accordance with instructions
signed by the Majority Banks, or such other number of Banks as is specified in
Section 10.6 hereof, and such instructions of the Majority Banks
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or other number of Banks as aforesaid and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.
Section 9.3 Events of Default.
The Agent shall not be deemed to have knowledge of the occurrence of a
Default (other than the non-payment of principal of or interest on Loans) unless
the Agent has received notice from a Bank or any of the Borrowers specifying
such Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default, the
Agent shall give notice thereof to the Banks (and shall give each Bank notice of
each such non-payment). The Agent shall (subject to Section 9.7 hereof) take
such action with respect to such Default as shall be directed by the Majority
Banks, except as otherwise provided in Section 10.6 hereof.
Section 9.4 Rights as a Bank.
With respect to its Commitments and the Loans made by it, the Agent in
its capacity as a Bank hereunder shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not acting as the
Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to and generally engage in any kind of banking, trust or other
business with any of the Borrowers or its Affiliates, as if it were not acting
as the Agent, and the Agent may accept fees and other consideration from the
Borrowers or its Affiliates, for services in connection with this Agreement, the
Security Documents or any of the other Loan Documents or otherwise without
having to account for the same to the Banks.
Section 9.5 Indemnification.
The Banks shall indemnify the Agent (to the extent not reimbursed by
the Borrowers under Sections 10.1 and 10.2 hereof (or under applicable
provisions of other Loan Documents)), ratably in accordance with the aggregate
principal amount of the Loans made by the Banks (or, if no Loans are at the time
outstanding, ratably in accordance with their respective Commitments), for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement, the Security Documents or
any of the other Loan Documents or any other documents contemplated by or
referred to herein or therein or the transactions contemplated by or referred to
herein or therein or the transactions contemplated hereby and thereby
(including, without limitation, the costs and expenses which the Borrowers are
obligated to pay under Sections 10.1 and 10.2 hereof, but excluding, unless a
Default has occurred and is continuing, normal administrative costs and expenses
incident to the performance of its agency duties hereunder or under the Security
Documents) or the enforcement of any of the terms hereof or of the Security
Documents, or of any such other documents, provided that no Bank shall be liable
for any of the
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foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
Section 9.6 Non-Reliance on Agent and Other Banks.
(a) Each Bank agrees that it has, independently and without reliance
on the Agent or any other Bank, and based on such documents and information as
it has deemed appropriate, made its own credit analysis of each of the Borrowers
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement,
the Security Documents or the other Loan Documents.
(b) Each Bank acknowledges that any statements, written or oral, as to
the financial condition or credit worthiness of any of the Borrowers or any of
their Affiliates or the value or composition of the collateral, and any related
matters made by any of the Borrowers or any of their Affiliates or Fleet in
anticipation of the closing of the transactions contemplated by this Agreement
or made on or after the date of this Agreement, including, without limitation,
any audits or reviews of Borrowing Base Reports are and shall be based on
documents and material made available to Fleet by any of the Borrowers and
Persons affiliated with it or acting on their behalf and, accordingly, the
accuracy and completeness and thoroughness of such documents and materials and
the conclusions drawn therefrom are the sole responsibility of the Borrowers and
persons acting on their behalf. Any past or future review of these materials
was and shall be undertaken by Fleet for its own benefit and internal use as a
Bank hereunder, and any characterization thereof, or conclusions drawn therefrom
if any, were or are or shall be shared with other Banks solely as a courtesy.
Fleet disclaims any responsibility or liability, express or implied, for the
data set forth therein, and any characterization of, or conclusions by and from,
such data as to the financial condition or credit analysis of any of the
Borrowers or any other Loan Party, the value or composition of the Collateral
and any appraisal of it, or any other matter.
(c) The Agent shall not be required to keep itself informed as to the
performance or observance by any of the Borrowers of this Agreement, the
Security Documents or the other Loan Documents or any other document referred to
or provided for herein or therein or to inspect the properties or books of any
of the Borrowers. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder or under the Security Documents, or the other Loan Documents, the
Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial condition or
business of any of the Borrowers, which may come into the possession of the
Agent or any of its Affiliates.
Section 9.7 Failure to Act.
Except for action expressly required of the Agent hereunder, or under
the Security Documents, the Agent shall in all cases be fully justified in
failing or refusing to act
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hereunder or thereunder unless it shall be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.
Section 9.8 Resignation or Removal of Agent.
(a) The Agent may resign at any time by giving not less than 10 days
prior written notice thereof to the Banks and the Borrowers, and the Agent may
be removed at any time with or without cause by the Majority Banks upon not less
than 10 days prior written notice thereof executed by the Majority Banks and
delivered to the Banks, the Agent and the Borrowers. In the event of any such
resignation by Fleet, LaSalle National Bank shall, without further action being
required hereunder, become the successor Agent. For purposes of this Section
9.8, in the event that one or more Banks abstains or otherwise chooses not to
participate the selection of any successor Agent, the term Majority Banks shall
be deemed to mean Banks having the same percentage of the aggregate amount of
the Commitments (if no Loans are then outstanding hereunder) or the Loans (if
any Loan is then outstanding hereunder), as the case may be, as if the
abstaining Bank's Commitment or Loans, as the case may be, were not included, so
that in no event shall the abstention of one or more Banks cause the voting
percentage necessary to constitute the Majority Banks amongst those Banks voting
to be higher than if the abstaining Bank or Banks had not abstained. Each of
the Borrowers, the Banks and the retiring Agent shall at the Borrowers' joint
and several expense thereupon execute and deliver Uniform Commercial Code
statements reflecting such change. Upon any removal of the Agent, the Majority
Banks shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the Majority Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks, after consultation
with the Borrowers, appoint a successor Agent which shall be one of the Banks.
Upon the acceptance of any appointment as Agent hereunder or under the Security
Documents by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder and under the Security Documents. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article 9 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent.
(b) In the event that a successor Agent is named, the Principal Office
shall be the office of the successor Agent designated by notice of the successor
Agent to the Banks and the Borrowers and, in the event that such Principal
Office is in a time zone other than the time zone in which New York City is in,
all references to New York City time shall mean the respective hour in the time
zone in which the successor Agent's designated Principal Office is located.
Section 9.9 Sharing of Collateral and Payments.
(a) Prior to any acceleration by the Agent and the Banks of the
Obligations:
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(i) in the event that any Bank shall obtain payment in respect of
a Note (which term for the purposes of this Section 9.9 shall be deemed to
include any L/C Obligations), or interest thereon, whether voluntarily or
involuntarily, and whether through the exercise of a right of banker's lien,
set-off or counterclaim against any Borrower or any other Loan Party or
otherwise, in a greater proportion than any such payment obtained by any other
Bank in respect of the corresponding Note held by it, then the Bank so receiving
such greater proportionate payment shall purchase for cash from the other Bank
or Banks such portion of each such other Bank's or Banks' Loan as shall be
necessary to cause such Bank receiving the proportionate overpayment to share
the excess payment with each Bank; and
(ii) in the event that any Bank shall obtain payment in respect
of any Interest Rate Contract to which such Bank is a party, whether voluntarily
or involuntarily, and whether through the exercise of a right of banker's lien,
set-off or counterclaim against any Borrower or any other Loan Party or
otherwise, such Bank shall be permitted to retain the full amount of such
payment and shall not be required to share such payment with any other Bank.
(b) Upon or following any acceleration by the Agent and the Banks of
the Obligations, in the event that any Bank shall obtain payment in respect of a
Note, or interest thereon, or in respect of an Interest Rate Contract to which
such Bank is a party, or receive any Collateral or proceeds thereof with respect
to any Note or any Interest Rate Contract to which it is a party, whether
voluntarily or involuntarily, and whether through the exercise of a right of
banker's lien, set-off or counterclaim against any Borrower or any other Loan
Party or otherwise, in a greater proportion than any such payment obtained by
any other Bank in respect of the aggregate amount of the corresponding Note held
by such Bank and any Interest Rate Contract to which such Bank is a party, then
the Bank so receiving such greater proportionate payment or such greater
proportionate amount of Collateral, shall purchase for cash from the other Bank
or Banks such portion of each such other Bank's or Banks' Loan, or shall provide
the other Banks with the benefits of any such Collateral, or the proceeds
thereof, as shall be necessary to cause such Bank receiving the proportionate
overpayment to share the excess payment or benefits of such Collateral or
proceeds ratably with each Bank. For the purposes of this subsection 9.9(b),
payments on Notes received by each Bank and receipt of Collateral by each Bank
shall be in the same proportion as the proportion of: (A) the sum of: (x) the
Obligations owing to such Bank in respect of the Note held by such Bank, plus
(y) the Obligations owing to such Bank in respect of Interest Rate Contracts to
which such Bank is party, if any, to (B) the sum of: (x) the Obligations owing
to all of the Banks in respect of all of the Notes, plus (y) the Obligations
owing to all of the Banks in respect of all Interest Rate Contracts to which any
Bank is a party;
provided, however, that, with respect to subsections 9.9(a)(i) and (b) above, if
all or any portion of such excess payment or benefits is thereafter recovered
from the Bank that received the proportionate overpayment, such purchase of
Loans or payment of benefits, as the case may be, shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
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Article 10. Miscellaneous Provisions.
Section 10.1 Fees and Expenses; Indemnity.
The Borrowers will promptly pay, jointly and severally, all costs of
the Agent and the Banks in preparing the Loan Documents and all costs and
expenses of the issue of the Notes and the Temporary Loan Note and of the
Borrowers' and the other Loan Parties' performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with (including, without limitation, all costs of filing or recording
any assignments, mortgages, financing statements and other documents), and the
reasonable fees and expenses and disbursements of special counsel to the Agent
and the Banks in connection with the preparation, execution and delivery,
administration, interpretation and enforcement of this Agreement, the Notes, the
Temporary Loan Note, the Security Documents, the other Loan Documents and all
other agreements, instruments and documents relating to this transaction, the
consummation of the transactions contemplated by all such documents, the
preservation of all rights of the Agent and the Banks, the negotiation,
preparation and execution and delivery of any amendment, modification or
supplement of or to, or any consent or waiver under, any such document (or any
such instrument which is proposed but not executed and delivered) and with any
claim or action threatened, made or brought against the Agent or any of the
Banks arising out of or relating to any extent to this Agreement, the Security
Documents, the other Loan Documents or the transactions contemplated hereby or
thereby. In addition, the Borrowers will promptly (and in any event within 30
days after its receipt of an invoice or statement therefor) pay, jointly and
severally, all costs and expenses (including, without limitation, reasonable
fees and disbursements of counsel) suffered or incurred by the Agent or the
Banks in connection with their respective enforcement of the payment of the
Notes or the Temporary Loan Note held by each of them it or any other sum due to
it under this Agreement or any of the other Loan Documents or any of its other
rights hereunder or thereunder. In addition to the foregoing, the Borrowers
shall, jointly and severally, indemnify the Agent and each Bank and each of
their respective directors, officers, employees, attorneys, agents and
Affiliates against, and hold each of them harmless from, any loss, liabilities,
damages, claims, costs and expenses (including reasonable attorneys' fees and
disbursements) suffered or incurred by it arising out of, resulting from or in
any manner connected with, the execution, delivery and performance of each of
the Loan Documents, the Loans and any and all transactions related to or
consummated in connection with the Loans, including, without limitation, losses,
liabilities, damages, claims, costs and expenses suffered by the Agent or any of
the Banks or any of their respective directors, officers, employees, attorneys,
agents or Affiliates in investigating, preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect of
any commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law or any other statute of any
jurisdiction, or any regulation, or at common law or otherwise, which is alleged
to arise out of or is based upon (1) any untrue statement or alleged untrue
statement of any material fact of any of the Borrowers and their affiliates in
any document or schedule filed with the Securities and Exchange Commission or
any other governmental body; (2) any omission or alleged omission to state any
material fact required to be stated in such document or schedule, or necessary
to make the statements made therein, in light of the circumstances under which
made, not misleading; (3) any
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acts, practices or omission or alleged acts, practices or omissions of any of
the Borrowers or its agents related to the making of any acquisition, purchase
of shares or assets pursuant thereto, financing of such purchases or the
consummation of any other transactions contemplated by any such acquisitions
which are alleged to be in violation of any federal securities law or of any
other statute, regulation or other law of any jurisdiction applicable to the
making of any such acquisition, the purchase of shares or assets pursuant
thereto, the financing of such purchases or the consummation of the other
transactions contemplated by any such acquisition; or (4) any withdrawals,
termination or cancellation of any proposed such acquisition for any reason
whatsoever provided however that the foregoing shall not include any legal fees
for litigation determined adversely to the Agent or the Banks if such adverse
determination was solely due to its gross negligence, or willful misconduct.
The indemnity set forth herein shall be in addition to any other obligations or
liabilities of any of the Borrowers to the Agent and the Banks hereunder or at
common law or otherwise. The provisions of this Section 10.1 shall survive the
payment of the Notes, the Temporary Loan Note, and the termination of this
Agreement.
Section 10.2 Taxes.
If, under any law in effect on the date of the closing of any Loan
hereunder, or under any retroactive provision of any law subsequently enacted,
it shall be determined that any Federal, state or local tax (including, without
limitation, any stamp, documentary, recording or similar tax) is payable in
respect of the issuance of any of the Notes or the Temporary Loan Note, or in
connection with the filing or recording of any assignments, mortgages, financing
statements, or other documents (whether measured by the amount of indebtedness
secured or otherwise) as contemplated by this Agreement, then the Borrowers will
pay, jointly and severally, any such tax and all interest and penalties, if any,
and will indemnify the Banks and the Agent against and save each of them
harmless from any loss or damage resulting from or arising out of the nonpayment
or delay in payment of any such tax. If any such tax or taxes shall be assessed
or levied against any Bank or any other holder of its respective Note, such
Bank, or such other holder, as the case may be, may notify the Borrowers and
make immediate payment thereof, together with interest or penalties in
connection therewith, and shall thereupon be entitled to and shall receive
immediate reimbursement therefor from the Borrowers, jointly and severally.
Notwithstanding any other provision contained in this Agreement, the covenants
and agreements of the Borrowers in this Section 10.2 shall survive payment of
the Notes and the Temporary Loan Note and the termination of this Agreement.
Section 10.3 Payments.
As set forth in Section 2.13 hereof, all payments by any of the
Borrowers on account of principal, interest, fees and other charges (including
any indemnities) shall be made to the Agent at the Principal Office, in lawful
money of the United States of America in immediately available funds, by wire
transfer or otherwise, not later than 12:00 P.M. New York City time on the date
such payment is due. Any such payment made on such date but after such time
shall, if the amount paid bears interest, be deemed to have been made on and
interest shall continue to accrue and be payable thereon until the next
succeeding Business Day. If any payment
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of principal or interest becomes due on a day other than a Business Day on which
banks in New York, New York are required or permitted by law to remain closed,
such payment may be made on the next succeeding Business Day on which such banks
are open and such extension shall be included in computing interest in
connection with such payment (except that if a successor Agent is named pursuant
to Section 9.8(b) whose designated Principal Office is not in New York, New
York, the foregoing reference to New York, New York, shall mean the city in
which said successor Agent's Principal Office is located). All payments
hereunder and under the Note and the Temporary Loan Note shall be made without
set-off or counterclaim and in such amounts as may be necessary in order that
all such payments shall not be less than the amounts otherwise specified to be
paid under this Agreement and the Notes and the Temporary Loan Note (after
withholding for or on account of (i) any present or future taxes, levies,
imposts, duties or other similar charges of whatever nature imposed by any
government or any political subdivision or taxing authority thereof, other than
any tax (except those referred to in clause (ii) below) on or measured by the
net income of the respective Bank or the Agent to which such payment is due
pursuant to applicable federal, state and local income tax laws, and (ii)
deduction of amounts equal to the taxes on or measured by the net income of such
Bank or the Agent payable by the Bank with respect to the amount by which the
payments required to be made under this sentence exceed the amounts otherwise
specified to be paid in this Agreement and the Notes and the Temporary Loan
Note). Upon payment in full of any Note, the Bank shall xxxx the Note "Paid" and
return it to the Borrowers.
Section 10.4 Survival of Agreements and
Representations; Waiver of
Trial by Jury.
All agreements, representations and warranties made herein shall
survive the delivery of this Agreement and the Notes and the Temporary Loan
Note. Each of the Borrowers waives trial by jury in any litigation in any court
with respect to, in connection with, or arising out of, this Agreement, the
Notes, the Temporary Loan Note, the Security Documents, any of the other Loan
Documents, or any instrument or document delivered pursuant to this Agreement,
or the validity, protection, interpretation, collection or enforcement thereof.
Section 10.5 Lien on and Set-off of Deposits.
As security for the due payment and performance of all the
Obligations, each of the Borrowers hereby grants to the Agent for the ratable
benefit of the Banks a Lien on any and all deposits or other sums at any time
credited by or due from the Agent or any Bank to any of the Borrowers, whether
in regular or special depository accounts or otherwise, and any and all monies,
securities and other property of any of the Borrowers, and the proceeds thereof,
now or hereinafter held or received by or in transit to any Bank or the Agent
from or for any of the Borrowers, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and any such deposits, sums, monies,
securities and other property, may at any time after the occurrence and during
the continuance of any Event of Default be set-off, appropriated and applied by
any
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Bank or the Agent against any of the Obligations, whether or not any of such
Obligations is then due or is secured by any collateral, or, if it is so
secured, whether or not the collateral held by the Agent is considered to be
adequate.
Section 10.6 Modifications, Consents and
Waivers, Entire Agreement.
No modification, amendment or waiver of or with respect to any
provision of this Agreement, any Notes, the Security Documents, or any of the
other Loan Documents and all other agreements, instruments and documents
delivered pursuant hereto or thereto, nor consent to any departure by the
Borrower or any other Loan Party from any of the terms or conditions thereof,
shall in any event be effective unless it shall be in writing and signed by the
Agent and the Majority Banks; provided, however, that notwithstanding the
foregoing, without the written consent of each Bank affected thereby (and of the
Agent if expressly required in this Agreement or any of the other Loan
Documents), in no event shall any amendment, modification, waiver or consent:
(a) Be effective with respect to Article 3 (it being understood that a
waiver of any Default or Event of Default under Section 8.5 hereof shall not
constitute an amendment or modification of any Section therein), Article 9 or
Sections 2.1 or 10.6 hereof;
(b) Extend the final maturity of any Loan or Note or extend the stated
expiration of any L/C beyond the Commitment Termination Date (it being
understood that any waiver of the application of any prepayment of or the method
of application of any prepayment to the amortization of, the Loans shall not
constitute any such extension) or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest or fees thereon (other than
as a result of waiving the applicability of any post-default increase in
interest rates) or be effective with respect to Section 8.1;
(c) Reduce the percentage specified in the definition of Majority
Banks;
(d) Reduce the amount or extend the payment date for the mandatory
payments required under Section 2.8 or 2.10, or increase the amount of the
Commitment of any Bank hereunder (it being understood that a waiver of any
Default or Event of Default shall not constitute a change in the terms of any
Commitment of any Bank);
(e) Extend the Commitment Termination Date;
(f) Increase any of the advance rate percentages set forth in the
definition of "Borrowing Base" herein;
(g) Release or permit the release of all or substantially all or any
substantial part of the Collateral (other than as contemplated by Section 2.23
hereof), or release any guarantor from any guaranty of the Obligations or
release any Subsidiary from any guaranty issued to the Agent after the date
hereof in each case except as expressly provided in the Loan Documents;
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(h) Without the consent of the Issuing Bank, amend, modify, or waive
any provision of Section 2.33 or alter its rights or obligations with respect to
L/Cs; or
(i) Consent to any assignment or transfer by any Borrower of the
Obligations.
Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on any Borrower in any
case shall, of itself, entitle it to any other or further notice or demand in
similar or other circumstances. This Agreement and the other Loan Documents
embody the entire agreement and understanding among the Banks, the Agent and the
Borrowers and supersede all prior agreements and understandings relating to the
subject matter hereof, provided that the Agent and the Banks shall be entitled
to enforce any and all of their rights arising as a result of a breach of the
terms of the Second Restated Agreement which terms exist prior to the date
hereof as if the Second Restated Agreement had not been superseded. Without
limiting the generality of Article 9 hereof, no Bank shall have any claim or
right of action of any kind whatsoever against the Agent in respect of any
action or refraining from action which the Agent is instructed to take or
refrain from (including, without limitation, foreclosure on the Agent's Lien) by
the requisite Banks as set forth in this Section 10.6.
Section 10.7 Remedies Cumulative.
Each and every right granted to the Agent and each Bank hereunder or
under any other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be exercised from time
to time. No failure on the part of the Agent or any Bank or any holder of any
Note or the Temporary Loan Note to exercise, and no delay in exercising, any
right shall operate as a waiver thereof, nor shall any single or partial
exercise of any right preclude any other or future exercise thereof or the
exercise of any other right. The due payment and performance of any of the
Borrowers' indebtedness, liabilities and obligations under any Note or the
Temporary Loan Note and this Agreement and the other Loan Documents shall be
without regard to any counterclaim, right of offset or any other claim
whatsoever which any of the Borrowers may have against any Bank or the Agent and
without regard to any other obligation of any nature whatsoever which any Bank
or the Agent may have to any of the Borrowers, and no such counterclaim required
under federal law or offset shall be asserted by any of the Borrowers in the any
action, suit or proceeding instituted by any Bank or the Agent for payment or
performance of any of the Borrower's indebtedness, liabilities or obligations
under the Notes, the Temporary Loan Note, this Agreement, the Security
Documents, the other Loan Documents or otherwise.
Section 10.8 Further Assurances.
At any time and from time to time, upon the request of the Agent, each
of the Borrowers shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and do such
other acts and things as the Agent may reasonably request in order to fully
effect the purposes of this Agreement, the Notes,
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the Temporary Loan Note, the Security Documents, the other Loan Documents and
any other agreements, instruments and documents delivered pursuant hereto or in
connection with the Loans, including, without limitation, the execution and
delivery to the Agent of mortgages in form and substance satisfactory to the
Agent covering all real property or interests therein acquired by any of the
Borrowers or any of their Subsidiaries (provided that any mortgage or owned
property may be subject to a first mortgage if herein permitted), and all leases
of real property entered into by any of the Borrowers or any of their
Subsidiaries as tenant or lessee, after the date of this Agreement, promptly
after such acquisition or the entering into of any such lease.
Section 10.9 Notices.
-------
All notices, requests, reports and other communications pursuant
to this Agreement shall be in writing, either by letter (delivered by hand or
commercial messenger service or sent by certified mail, return receipt
requested, except for routine reports delivered in compliance with Article 5
hereof which may be sent by ordinary first-class mail) or telegram, addressed as
follows:
(a) If to any of the Borrowers, which notice shall be deemed
delivered to and binding upon all of the Borrowers:
LINC Capital, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Treasurer
with a copy to:
General Counsel
LINC Capital, Inc.,
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
(b) If to the Agent:
Fleet Bank, N.A.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Leasing Division
with a copy (other than in the case of Borrowing Notices
and reports and other documents delivered in compliance
with Article 5 hereof) to:
Winston & Xxxxxx
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000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxxxx-Xxxxxxxxx, Esq.
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or such commercial messenger
service to such party at its address specified above, or, if sent by mail, on
the third Business Day after the day deposited in the mail, postage prepaid, or
in the case of telegraphic notice, when delivered to the telegraph company,
addressed as aforesaid. Any party may change the person or address to whom or
which notices are to be given hereunder, by notice duly given hereunder;
provided, however, that any such notice shall be deemed to have been given
hereunder only when actually received by the party to which it is addressed.
Notwithstanding any other provision contained in this Agreement or any of the
other Loan Documents, the Banks and the Agent shall be entitled to rely on any
instruction or authorization contained in any notice given, executed and
delivered by any one of the Borrowers pursuant to this Agreement, and any such
notice shall be and be deemed to be given on behalf of and binding on each of
the Borrowers. Each of the Borrowers hereby appoints each of the other Borrowers
as its agent for delivering and receiving notices pursuant to this Agreement.
Section 10.10 Counterparts.
------------
This Agreement may be signed in any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
Section 10.11 Construction, Governing Law; Consent to
---------------------------------------
Jurisdiction.
------------
(a) THE HEADINGS USED IN THIS AGREEMENT AND THE TABLE OF
CONTENTS ARE FOR CONVENIENCE ONLY AND SHALL NOT BE DEEMED TO CONSTITUTE A PART
HEREOF. ALL USES HEREIN OF THE MASCULINE GENDER OR OF SINGULAR OR PLURAL TERMS
SHALL BE DEEMED TO INCLUDE USES OF THE FEMININE OR NEUTER GENDER OR PLURAL OR
SINGULAR TERMS, AS THE CONTEXT MAY REQUIRE. THIS AGREEMENT, THE NOTES, THE
TEMPORARY LOAN NOTE, THE SECURITY DOCUMENTS, THE OTHER LOAN DOCUMENTS AND ALL
OTHER DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH
AND THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) EACH OF THE BORROWERS IRREVOCABLY CONSENTS THAT ANY LEGAL
ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING
TO THIS AGREEMENT, THE NOTES, THE TEMPORARY LOAN NOTE OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN ANY COURT OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. EACH OF THE BORROWERS, BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENTS
AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS
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IN ANY SUCH ACTION OR PROCEEDING. EACH OF THE BORROWERS FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS
RELATING TO ANY SUCH ACTION OR PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR
BY MAIL IN THE MANNER PROVIDED FOR IN SECTION 10.9 HEREOF. EACH OF THE BORROWERS
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION
OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. NONE OF THE BORROWERS SHALL BE
ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED
UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK UNLESS SUCH DEFENSE
IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING IN THIS
SECTION 10.11 SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF
ANY BANK TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OF THE
BORROWERS IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW.
Section 10.12 Severability.
------------
The provisions of this Agreement are severable, and if any clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Agreement is independent
and compliance by any of the Borrowers with any of them shall not excuse non-
compliance by any of the Borrowers with any other. None of the Borrowers shall
take any action the effect of which shall constitute a breach or violation of
any provision of this Agreement.
Section 10.13 Binding Effect; No
Assignment or Delegation.
------------------------
This Agreement shall be binding upon and inure to the benefit of
each of the Borrowers and its successors and to the benefit of the Banks and the
Agent and their respective successors and assigns. The rights and obligations of
each of the Borrowers under this Agreement shall not be assigned or delegated
without the prior written consent of the Agent, and any purported assignment or
delegation without such consent shall be void. Each of the Borrowers and the
Subsidiaries also acknowledge and confirm that each Bank may hereafter sell or
assign or grant participation in the Loans to one or more lenders in accordance
with Section 10.14 and 10.15 hereof, so long as such other lenders are engaged
in business in (but not necessarily only in) the United States.
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Section 10.14 Participations by Banks.
-----------------------
(a) Each Bank ("Participating Bank") may singly or collectively
enter into participations (the "Participations") to one or more banks or other
entities ("Participant") in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Loans owing to it, and the Note or Notes held by it) but
excluding any participation relating to the Temporary Loan Note; provided,
however, that
(i) the Participating Bank's obligations under this
Agreement (including, without limitation, its Commitment to the Borrowers
hereunder) shall remain unchanged;
(ii) the Participating Bank shall remain solely
responsible to the other parties hereto for the exercise of its rights and the
performance of its obligations hereunder (including, without limitation,
retaining sole and exclusive authority for voting and consenting in regard to
any matters arising hereunder) and the Participant Bank shall not undertake or
be entitled to undertake any of such rights, responsibilities or obligations;
(iii) the Participating Bank shall remain the holder of any
such Note or Temporary Loan Note, any other Loan Document which it may possess
hereunder, and any Collateral a security interest in which can be perfected by
possession, and none of the Security Documents or UCC financing statements,
shall be marked, modified, or amended in any manner;
(iv) each of the Borrowers, the Agent and the other Banks
shall continue to deal solely and directly with the Participating Bank in
connection with such Bank's rights and obligations under this Agreement, and the
loan documents evidencing the Participation (the "Participation Documents")
shall not represent or imply that the Participant has entered into a multi-
lender arrangement, joint venture, or tenancy in common with any or all of the
Banks and the Agent nor shall the Agent, any Loan party (other than the
Participating Bank, if so required by the Participant) be obligated to give the
Participant any Notice of any Default or Event of Default hereunder, or any
notice of, or opportunity to participate in any determination concerning any
consent or waiver, amendment of any Loan Document, substitution of collateral,
enforcement of any remedies, or any other rights of the Agent and Banks
hereunder;
(v) the Agent shall be notified of the Participation, but
such notification shall not be deemed to create any obligation of any kind
whatsoever of the Agent to the Participant;
(vi) the Participation Documents shall not create or imply
any right of recourse in the Participant against any of the Borrowers
notwithstanding (a) any reference in the Participation Documents to a sale,
fractional transfer, or assignment of the Participating Bank's ownership
interest in the Loan, Notes, or Temporary Loan Note, or (b) any provision in the
Participation Documents as to the creation of an agency or trust relationship
between the
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Participating Bank and the Participant, repurchase obligations of the
Participating Bank, order of application loan payments received, offset rights
of any of the Borrowers or the Participating Bank or the Participant, the
segregation of loan payments or collateral in the Participation;
(vii) each of the Borrower's consent to the Participation
shall have been obtained, but such consent shall not be deemed to create any
right of recourse of the Participant to any of the Borrowers;
(b) Any Bank may, in connection with any Participation, disclose
to the Participant or proposed Participant Bank, any information relating to any
of the Borrowers furnished to the Bank by or on behalf of any of the Borrowers;
provided that, (i) prior to any such disclosure, the Participant or proposed
Participant shall agree to preserve the confidentiality of any confidential
information relating to any of the Borrowers received by it from said Bank; (ii)
other than with respect to the Participating Bank and the Participant, such
disclosure shall not create or imply any relationship between the Participant
and any Bank hereunder, nor does any Bank providing such confirmation make any
representation or warranty or assume any responsibility with respect to such
information.
Section 10.15 Assignments by Banks.
--------------------
(a) Each Bank may assign to one or more banks or other entities
that are Eligible Assignees (each, an "Assignee") all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Loans owing to it, and the Note or Notes held by
it) by the execution and delivery to the Agent of an Assignment and Acceptance;
provided, however that: (i) each such assignment shall be of a constant, and not
a varying, percentage of all of the assigning Bank's rights and obligations
under this Agreement; (ii) the amount of the Commitment of the assigning Bank
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than $5,0000,000 and shall be an integral multiple of $500,000; (iii)
such assignee shall have complied with the provisions of Section 10.16 hereof,
if applicable; and (iv) the Bank assignor or assignee shall have paid to the
Agent a $3,500 assignment administration fee. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least three (3)
Business Days after the execution thereof: (x) the Assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder, and (y) the Bank assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Bank's rights and obligations under this Agreement, such Bank shall cease to be
a party hereto).
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(b) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any of the Borrowers or the performance or observance by any of the Borrowers
of any of its obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such Assignee confirms that it has
received a copy of this Agreement, together with copies of such financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such Assignee will, independently and without reliance upon the
Agent, such assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee confirms that it is an Eligible Assignee; (vi) such Assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Bank.
(c) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an Assignee, together with any Note subject to such
assignment and the written consent of the Borrowers and the Agent to such
Assignment, the Agent shall: (i) accept such Assignment and Acceptance, and (ii)
give prompt notice thereof to each of the Borrowers. Within five Business Days
after its receipt of such notice, each of the Borrowers, at its own expense,
shall execute and deliver to the Agent in exchange for the surrendered Note a
new Note to the order of such Assignee in an amount equal to the Commitment
assumed by it pursuant to such Assignment and Acceptance plus, if the Assignee
is already a Bank under this Agreement, the amount of its Commitment before
giving effect to the assignment, and, if the assigning Bank has retained a
Commitment hereunder, a new Note to the order of the assigning Bank in an amount
equal to the Commitment retained by it hereunder. Such new Note(s) shall be in
an aggregate principal amount equal to the aggregate principal amount of such
surrendered Note, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit A.
(d) Any Bank may, in connection with any assignment or proposed
assignment pursuant to this Section 10.15, disclose to the Assignee or proposed
assignee, any information relating to any of the Borrowers furnished to such
Bank by or on behalf of the Borrowers; provided that (i) prior to any such
disclosure, the Assignee or proposed assignee shall agree to preserve the
confidentiality of any confidential information relating to any of the Borrowers
received by it from such Bank, and (ii) such disclosure shall not create or
imply any relationship between the Assignee and any Bank hereunder, nor does any
Bank providing such
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information make any representation or warranty or assume any responsibility
with respect to such information.
Section 10.16 Delivery of Tax Forms.
---------------------
Each Bank that is not organized under the laws of the United
States or a state thereof shall:
(a) deliver to the Borrowers and the Agent, on or prior to the
date of the execution and delivery of this Agreement or the date on which it
becomes a Bank hereunder, (i) two accurate and duly completed executed copies of
United States IRS Form 1001 or 4224, or successor applicable form, as the case
may be, and (ii) an accurate and complete IRS Form W-8 or W-9, or successor
applicable form, as the case may be;
(b) deliver to the Borrowers and the Agent two further accurate
and complete executed copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers; and
(c) obtain such extensions of time for filing and completing
such forms or certifications as may reasonably be requested by the Borrowers or
the Agent;
unless in any such case under clause (b) above an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank so advises the
Borrowers and the Agent. Such Bank shall certify (i) in the case of a Form 1001
or 4224 that is provided pursuant to Section 10.14(a), that it is entitled to
receive payments under this Agreement without deduction or withholding of any
United States Federal income taxes; (ii) in the case of an IRS Form 1001 or 4224
that is provided pursuant to Section 10.14(b), to the extent legally entitled to
do so, that it is entitled to receive payments under this Agreement without, or
at a reduced rate of, deduction or withholding of any United States Federal
income taxes; and (iii) and in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax. Each Person
not organized under the laws of the United States or a state thereof that is an
assignee hereunder shall, prior to the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
Section 10.14.
Section 10.17 Domicile of Loans.
-----------------
Each Bank may transfer and carry its Loans at, to or for the
account of any office, subsidiary or affiliate of such Bank. Notwithstanding
anything to the contrary contained herein, to the extent that a transfer of
Loans pursuant to this Section 10.17 would, at the time of such transfer, result
in increased costs under Section 2.16 or 10.3 hereof from those being charged by
the respective Bank prior to such transfer, then the Borrowers shall not be
obligated to pay such
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increased costs (although the Borrowers shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective transfer.)
Section 10.18 Scope of Agent's Lien.
Each Bank agrees that the Agent's Lien on the Collateral shall
secure only the Obligations and shall not secure any other obligation,
liability, or indebtedness of any of the Borrowers or any other Loan Party
having rights in the Collateral, notwithstanding the provisions of any agreement
between any Bank and any of the Borrowers or other Loan Party, and whether or
not the Agent or any of the other Banks are aware of such agreement.
Section 10.19 Effective Date of Representations and Warranties.
Notwithstanding any other provision of this Agreement or any of
the Security Documents, all representations and warranties which were made prior
to the date hereof in the Second Restated Agreement, any amendments or
supplements thereto or the Security Documents, shall remain effective and be
deemed to be and remain effective from and after the original date on which such
representations and warranties were made.
Section 10.20 Relief from Bankruptcy Stay.
Each of the Borrowers agrees that, in the event that any
Borrower, any Loan Party or any of the persons or parties constituting any
Borrower or a Loan Party shall (i) file with any bankruptcy court of competent
jurisdiction or be the subject of any petition under Title II of the U. S. Code,
as amended ("Bankruptcy Code"), (ii) be the subject of any order for relief
issued under the Bankruptcy Code, (iii) file or be the subject of any petition
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or other relief for debtors, (iv)
have sought or consented to or acquiesced in the appointment of any trustee,
receiver, conservator, or liquidator, or (v) be the subject of an order,
judgment, or decree entered by any court of competent jurisdiction approving a
petition filed against such readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency, or relief for debtors, the Banks and the Agent shall
thereupon be entitled and each of the Borrowers irrevocably consents to
immediate and unconditional relief from any automatic stay imposed by Section
362 of the Bankruptcy Code, or otherwise, on or against the exercise of the
rights and remedies otherwise available to the Banks and the Agent as provided
for herein, in the Notes, the Temporary Loan Notes, other loan documents
delivered in connection herewith and as otherwise provided by law, and each of
the Borrowers hereby irrevocably waives any right to object to such relief and
will not contest any motion by any Bank or the Agent seeking relief from the
automatic stay and each of the Borrowers will cooperate with the Banks and the
Agent, in any manner requested by the Agent, in their efforts to obtain relief
from any such stay or other prohibition.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on the date first above written.
LINC CAPITAL, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Title: CFO
-----------------------------
LINC QUANTUM ANALYTICS, INC.
By: /s/ M. Xxxxxx X' Xxxxx
--------------------------------
Title: VP & Treasurer
-----------------------------
Commitment: FLEET BANK, N.A.
---------- as Agent and as a Bank
$25,000,000
(including $5,000,000 sublimit
for Temporary Loans)
By: /s/ Xxxxxx Xxxxx
--------------------------------
Title: Vice President
-----------------------------
Lending Office for Prime Rate
Loans and Eurodollar Loans and
Temporary Loans:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx, Leasing and
Transportation Finance
Address for Notices:
Fleet Bank, N.A.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx, Leasing and
Transportation Finance
Telecopier: (000) 000-0000
Commitment: CORESTATES BANK, N.A.
----------
$20,000,000
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Title: Assistant Vice President
-----------------------------
Lending Office for Prime Rate
Loans and Eurodollar Loans:
CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Bldg., 11th Floor
P. O. Box 7618, FC: 1-8-11-24
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx
Assistant Vice President
Address for Notices:
CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Bldg., 11th Floor
P. O. Box 7618, FC: 1-8-11-24
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx
Assistant Vice President
Telecopier: (000) 000-0000
Commitment: LASALLE NATIONAL BANK
-----------
$13,000,000
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Title: Commercial Lending Officer
-----------------------------
Lending Office for Prime Rate
Loans:
000 Xxxxx XxXxxxx Xxxxxx
XxXxxxx and Xxxxx Streets
Chicago, IL 60603
Lending Office for Eurodollar
Loans:
000 Xxxxx XxXxxxx Xxxxxx
XxXxxxx and Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Address for Notices:
000 Xxxxx XxXxxxx Xxxxxx
XxXxxxx and Xxxxx Streets
Chicago, IL 60603
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
Commitment: THE FIRST NATIONAL BANK OF CHICAGO
-----------
$10,000,000
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Title: AVP
--------------------------
Lending Office for Prime Rate
Loans:
1 First Xxxxxxxx Xxxxx
Xxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Lending Office for Eurodollar
Loans:
1 First Xxxxxxxx Xxxxx
Xxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxxxx
Address for Notices:
1 First Xxxxxxxx Xxxxx
Xxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Telecopier No. (000) 000-0000
Commitment: EUROPEAN AMERICAN BANK
-----------
$7,000,000
By: /s/ Xxxxx Xxxxx
----------------------------
Title: Vice President
-------------------------
Lending Office for Prime Rate
Loans:
000 Xxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Lending Office for Eurodollar
Loans:
000 Xxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Address for Notices:
000 Xxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
ACKNOWLEDGED
The undersigned hereby confirms the accuracy of the representations and
warranties made in respect of it under the Loan Documents and agrees to be bound
by and observe each of the covenants, conditions and agreements applicable to it
under this Loan Agreement:
THE LINC GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Title: CFO
---------------------------------
