AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement is entered into as of
October 28, 1998 between PDS FINANCIAL CORPORATION ("Borrower"), a Minnesota
corporation, having its principal place of business at 0000 XxXxxx Xxxxx, Xxx
Xxxxx, Xxxxxx 00000, and XXXXXX FINANCIAL, INC., a Delaware corporation
("Lender").
WHEREAS, Borrower and Lender have heretofore entered into a Loan and
Security Agreement dated as of June 20, 1997 (the "Original Loan Agreement");
and
WHEREAS, Borrower and Lender desire to amend said Original Loan Agreement
by amending and restating it in its entirety;
NOW, THEREFORE, in consideration of the parties' mutual undertakings,
hereby evidenced, and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that the
provisions of the Original Loan Agreement are hereby amended and restated, so as
to be and read in their collective entirety as follows:
PRELIMINARY STATEMENT:
Lender understands that Borrower is engaged in the sale or lease of various
Eligible Equipment (this and all other capitalized terms are defined in Section
1.1 below), and that Borrower may from time to time offer to Lender the
opportunity to finance leases, installment sale contracts and other chattel
paper arising out of such business. This Agreement sets forth the terms and
conditions which will be applicable to any leases, installment sale contracts
and other chattel paper that Lender may, in its sole discretion, elect to
finance under an ongoing lease discounting facility, a residual financing
facility, and/or a non-recourse facility.
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement and in the other Loan
Documents, unless otherwise expressly indicated herein or therein, the following
terms shall have the following meanings (such definitions to be applicable both
to the singular and plural terms defined):
AAA: American Appraisal Associates.
ACH: Automated Clearing House.
ACQUISITION COST: all costs and expenses incurred by an End-User
(in the case of installment/conditional sales contracts) or by Borrower (in
the case of any Leases with Borrower as lessor) in connection with the
acquisition of any Eligible Equipment, including, without limitation, sales
or use taxes, freight or installation costs, and license fees, but
excluding any deposits (including security deposits) or down/advance
payments made by End-User, or manufacturer's discounts.
ADVANCE: a loan which is part of the Facility.
AFFILIATE: any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common
control with another Person. The term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise. For the purposes hereof, any
Person which owns or controls, directly or indirectly, 51% or more of the
securities of another Person shall be deemed to "control" such Person.
AGREEMENT or LOAN AND SECURITY AGREEMENT: this Amended and
Restated Loan and Security Agreement, as amended or supplemented at any
time.
AMORTIZATION SCHEDULE: a schedule approved by Lender for the
repayment of each Advance.
APPROVED CONTRACT TERM: without the prior written approval of
Lender, a period of time not less than 24 months and not more than 48
months.
ASSIGNMENT: an assignment of Contracts and Liens in the form of
EXHIBIT A executed by Borrower from time to time in favor of Lender in
conjunction with each Advance.
BANK: First Bank National Association.
BLOCKED ACCOUNT: the account at the Bank subject to the Blocked
Account Agreement, to which ACH payments from certain End-Users through the
Bank's EFT service are directed.
BLOCKED ACCOUNT AGREEMENT: the arrangement between Lender,
Borrower and the Bank in the form of EXHIBIT J, covering ACH billing of
payments from certain End-Users using the Bank's EFT service, directed to
the Blocked Account.
BORROWER LIEN: a Lien on Collateral granted by an End-User to
Borrower, which Lien has been assigned by Borrower to Lender pursuant to an
Assignment.
BORROWER'S OBLIGATIONS: (i) all liabilities, obligations and
covenants imposed upon Borrower pursuant to the terms of the Loan
Documents, and (ii) all costs of litigation, collection, reasonable
attorneys' fees and other costs expended or incurred in connection with the
enforcement of Lender's rights hereunder and with respect to the Contracts
and the Facility Equipment.
BUSINESS DAY: any day other than (i) a Saturday, (ii) Sunday or
(iii) other day on which The First National Bank of Chicago, Chicago,
Illinois is closed.
CASUALTY: an event in which any item of Facility Equipment or any
portion thereof is lost, damaged (and such damage cannot reasonably be
repaired by Borrower or an End-User of such Facility Equipment within 60
days), destroyed, stolen, confiscated, requisitioned or condemned
regardless of cause.
CASUALTY PAYMENTS: all proceeds of the Collateral which arise out
of any Casualty, including, without limitation, insurance claims, tort
claims, or reimbursement payments with respect to claims for indemnity.
CERTIFICATE OF ACCEPTANCE: a certificate of delivery and
acceptance executed by an End-User pursuant to a Contract with respect to
Facility Equipment, substantially in the form included in SCHEDULE 4.1.2.
CLOSING: the execution by Borrower and Lender of the Loan
Documents.
CLOSING CERTIFICATE: a certificate in the form of EXHIBIT C
executed by a Responsible Officer on behalf of Borrower.
CLOSING DATE: the date upon or as of which the Closing occurs.
COLLATERAL: the Property described in Section 3.2.
CONTRACT: (i) a lease of Eligible Equipment by and between
Borrower, as lessor, and an End-User, as lessee, or (ii) a note and
security agreement/conditional sale contract by and between Borrower, as
secured party, and an End-User, as debtor.
CONTRACT EVENT OF DEFAULT: the Event of Default described in
Section 8.3.1.
CONTRACT FUNDING REQUEST: a request for an Advance in the form of
EXHIBIT E delivered by Borrower to Lender, with all attachments as
specified therein.
CONTRACT PAYMENT LETTER: a letter in the form of EXHIBIT F.
CONTRACT PROCEEDS: funds received by Borrower with respect to any
Facility Contract or any Facility Equipment which is the subject of a
Facility Contract.
DEFAULT RATE: an annual rate equal to 2% plus the Facility Rate,
as applicable.
DEFAULT RATE PERIOD: a period of time commencing on the date that
Lender declares in writing to Borrower that a Borrower Event of Default has
occurred and that the Default Rate is applicable and ending on the date
that such Borrower Event of Default is cured or waived.
DISBURSEMENT DATE: any date on or after the Closing Date upon
which the proceeds of any Advance are disbursed.
EFT: Electronic Funds Transfer.
ELIGIBLE CONTRACT: a Contract (i) as to which the applicable
Facility Funding Amount will not exceed the sum of $2,000,000.00 nor be
less than $250,000.00 without the prior written approval of Lender, (ii)
which conforms to Lender's
credit underwriting standards, and (iii) meets all of the requirements
set forth in Section 5.9 and all subsections thereunder, and (iv) which
is in all other respects acceptable to Lender.
ELIGIBLE END-USER: an End-User (i) which is not in bankruptcy or
receivership or subject to a reorganization proceeding of any kind or
insolvent, (ii) which is not in default or breach under any of the terms of
the applicable Contract, and (iii) which, pursuant to underwriting
standards jointly agreed upon in writing between Borrower and Lender, is a
financially responsible and creditworthy commercial, Native American or
institutional entity (other than a Governmental Body), PROVIDED, HOWEVER,
that unless otherwise approved by Lender, Native American End-Users shall
not be considered Eligible End-Users under the Non-Recourse Facility.
ELIGIBLE EQUIPMENT: gaming or other equipment (i) which is new or
used, (ii) which is in good condition, repair and working order, (iii)
which is insured in the manner provided in the applicable Contract, (iv)
(A) which is owned by Borrower free and clear of all Liens except a Lender
Lien, or (B) in which the End-User thereof has granted Borrower a security
interest free and clear of all Liens except Permitted Liens, (v) which is
located within the continental United States, (vi) which is subject to an
Eligible Contract, and (vii) which is otherwise approved by Lender;
PROVIDED, HOWEVER, that under the Residual Financing Facility, new slot
machines shall be considered an additional Eligible Equipment criterion.
END-USER: the end-user under a Contract.
EQUIPMENT: equipment which has been approved by Lender, free and
clear of all liens and encumbrances, together with all substitutions and
replacements for such equipment, and all accessories, attachments, parts,
upgrades, features and peripheral equipment now or hereafter attached to or
used in connection therewith.
ESTIMATED RESIDUAL: as reflected on the Amortization Schedule to
each Promissory Note executed in conjunction with the Residual Financing
Facility, Borrower's estimated value, as of the end of the related primary
Contract term, of Facility Equipment.
EVENT OF DEFAULT: any Borrower Event of Default or Contract Event
of Default.
EVIDENCE OF INSURANCE: either (i) an original certificate of
insurance, (ii) documentation sufficient to establish coverage under a
previously approved policy of Borrower, or (iii) if approved in writing by
Lender, evidence of self-insurance by an End-User under a Facility
Contract.
FACILITY: the Advances which may be made by Lender to Borrower
under the Lease Discounting Facility, the Residual Financing Facility
and/or the Non-Recourse Facility, all pursuant to Article II and Section
4.2.
FACILITY CONTRACT: an Eligible Contract which is subject to an
Advance, along with all applicable related documentation. For the purposes
of this Agreement, all references to a schedule under a Facility Contract
shall be deemed to incorporate the terms and conditions of the related
master Lease.
FACILITY EQUIPMENT: any Eligible Equipment which is the subject
of a Facility Contract.
FACILITY FUNDING AMOUNT: with respect to Advances made on or
after October 28, 1998:
(i) with respect to each Eligible Contract which is proposed to
be made the subject of an Advance under the Lease
Discounting Facility or the Non-Recourse Facility, the
lesser of:
(A) the Acquisition Cost for each item of Facility
Equipment, or
(B) the present value of all assigned periodic
payments due thereunder for the Approved
Contract Term of each such Facility Contract,
using a discount rate to determine such
present value equal to the Facility Rate;
(ii) with respect to each Eligible Contract which is proposed to
be made the subject of an Advance under the Residual
Financing Facility, the lesser of:
(A) the difference between
(I) the present value of all assigned
periodic payments due thereunder
for the Approved Contract Term of
each such Facility Contract, using
a discount rate to determine such
present value equal to the Facility
Rate, and
(II) the Acquisition Cost for the related
items of Eligible Equipment; or
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(B) with respect to Eligible Contracts deemed "Core
Credits" by Lender, fifteen percent (15%) of
the related Eligible Equipment Acquisition
Cost; with respect to Eligible Contracts
deemed "High Quality Credits" by Lender,
thirty percent (30%) of the related Eligible
Equipment Acquisition Cost.
With respect to Advances made prior to October 28, 1998, the principal
amount set forth in the applicable Facility Note.
FACILITY NOTE: a full recourse promissory note in the form of
EXHIBIT G or a non-recourse promissory note in the form of EXHIBIT G1, as
applicable, executed by Borrower in favor of Lender in conjunction with
each Advance.
FACILITY RATE: unless otherwise agreed to in writing by and
between Lender and Borrower with respect to a particular Advance,
(i) with respect to each Lease Discounting Facility Advance made
on or after October 28, 1998, for the group of Eligible
Contracts deemed "High Quality" by Lender, a fixed per
annum interest rate equal to the sum of (A) 1.90%; PLUS
(B) the all-in rate for a maturity equal to the
weighted average term of the Contracts subject to the
applicable Advance, as set forth in Lender's HFI
CAPITAL MARKETS INDICATIONS report for the week in
which the applicable Disbursement Date occurs;
(ii) with respect to (1) each Lease Discounting Facility Advance
made on or after October 28, 1998, for the group of
Eligible Contracts deemed "Core Quality" by Lender, and
(2) each Residual Financing Facility Advance made on or
after October 28, 1998, a fixed per annum interest rate
equal to the sum of (A) 2.40%; PLUS (B) the all-in rate
for a maturity equal to the weighted average term of
the Contracts subject to the applicable Advance, as set
forth in Lender's HFI CAPITAL MARKETS INDICATIONS
report for the week in which the applicable
Disbursement Date occurs;
(iii) with respect to each Advance made prior to October 28,
1998, as reflected on the applicable Facility Note for
each Advance; and
(iv) with respect to each Non-Recourse Facility Advance, a rate
as Lender shall determine in its sole discretion on a
Eligible Contract by Eligible Contract basis.
FIXED CHARGE COVERAGE RATIO: with respect to Borrower, as
measured on a consolidated basis, the ratio for any twelve month trailing
period of (a) EBITDA during such period, to (b) the sum of Borrower's (i)
interest expense on indebtedness, plus (ii) subordinated principal debt
payments, plus (iii) taxes paid; during each period.
FULL RECOURSE FACILITY: the Lease Discounting Facility and/or the
Residual Financing Facility.
GAAP: generally accepted accounting principles as in effect from
time to time, which shall include the official interpretations thereof by
the Financial Accounting Standards Board, consistently applied.
GAMING AUTHORITIES: the governmental agencies and/or commissions
having jurisdiction over Borrower in the various states in which Borrower
does business.
GAMING LAWS: the statutes and regulations relating to gaming and
the operation of Gaming Device Goods promulgated by the various states and
Gaming Authorities in which Borrower does business.
GAMING DEVICE GOODS: Equipment consisting of electronic and
mechanical gaming devices with integral attachments.
GOOD FUNDS: United States dollars available to Lender in Federal
funds at or before 2:00 p.m. Chicago time on a Business Day.
GOVERNMENTAL BODY: any foreign, federal, state, municipal or
other government, or any department, commission, board, bureau, agency,
public authority or instrumentality thereof or any court or arbitrator.
INCIPIENT DEFAULT: any event or condition which, with the giving
of notice or the lapse of time, or both, would become an Event of Default.
INTANGIBLE COLLATERAL: as defined in Section 3.2(b).
LEASE: any lease agreement or master lease agreement pertaining
to Eligible Equipment between Borrower, as lessor and another Person, as
lessee.
LEASE DISCOUNTING FACILITY: the Lease Discounting Facility
described in SECTION 2.1.1.
LENDER LIEN: the Lien on the Collateral granted by Borrower to
Lender pursuant to Article III of this Agreement.
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LEVERAGE RATIO: with respect to Borrower, as measured on a
consolidated basis, total indebtedness (excluding subordinated debt,
non-recourse debt and deferred funds for pending transactions) to
Tangible Net Worth.
LIEN: any mortgage, deed of trust, hypothecation, pledge, security
interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement or any lease in the nature of any of the
foregoing.
LOAN DOCUMENTS: this Agreement, the Notes, the Warrant Agreement,
the Assignments, the Contract Funding Requests, the Closing Certificate,
UCC financing statements, and all other documents, instruments, and
certificates executed by Borrower pursuant to this Agreement.
LOAN REPAYMENT AMOUNT: with respect to an Advance at any time, the
aggregate unpaid principal of, and accrued interest (including any
interest accrued at the Default Rate) computed in accordance with the
Simple Interest Method, on such Advance.
LOCKBOX: the arrangement with the Bank, who will act as the agent
for collection of all remittances and proceeds due to Borrower from
End-Users subject to Facility Contracts, and which shall be identified
as follows:
PDS Financial Corporation
_________________________
LOCKBOX AGREEMENT: the agreement among Borrower, Lender and Bank,
substantially in the form attached hereto as EXHIBIT D, which shall set
forth the terms, conditions and provisions of the Lockbox.
NATIVE AMERICAN: pertaining to any Indian tribe or instrumentality
or entity thereof covered by the Indian Gaming Regulatory Act (IGRA), 25
U.S.C. Sections 2701-2721, or any similar successor legislation.
NON-RECOURSE FACILITY: the Non-Recourse Facility set forth in
SECTION 9.13 hereof.
NOTES: the Facility Note executed in conjunction with each Advance.
ORDINARY PREPAYMENT PREMIUM: (i) Five Percent (5%) of the amount
prepaid if prepaid prior to the first anniversary of the related
Disbursement Date, (ii) Four Percent (4%) of the amount prepaid if
prepaid after the first anniversary to the second anniversary of the
related Disbursement Date, (iii) Three Percent (3%) of the amount
prepaid if prepaid after the second anniversary to the third anniversary
of the related Disbursement Date; and (iv) Two Percent (2%) of the
amount prepaid if prepaid after the third anniversary of the related
Disbursement Date.
PDS-NEVADA GUARANTY: that certain Guaranty executed by Borrower on
behalf of Lender in connection with the PDS-Nevada Loan Agreement.
PDS-NEVADA LOAN AGREEMENT: that certain Amended and Restated Loan
and Security Agreement dated as of October 28, 1998 by and between
Lender and PDS FINANCIAL CORP. - NEVADA, as amended from time to time.
PERMITTED LIENS: any of the following Liens: (i) the Lender Lien;
(ii) the Contracts; (iii) any Borrower Lien; (iv) any Liens expressly
subordinate to (i), (ii) and/or (iii) above; and (v) Liens for taxes or
assessments and similar charges, which either are (A) not delinquent or
(B) being contested diligently and in good faith by appropriate
proceedings, and as to which Borrower has set aside adequate reserves on
its books.
PERMITTED SUBSTITUTION: the substitution by Borrower of an Eligible
Contract for a Facility Contract, in accordance with the provisions of
Section 3.3, using the form of Substitution Agreement set forth in
EXHIBIT M.
PERSON: any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party, Native American tribe or Governmental Body.
PROPERTY: all types of real, personal or mixed property and all
types of tangible or intangible property.
REPLACEMENT CONTRACT: a Facility Contract which is created by the
terminating of an existing Facility Contract and financing a portion of
the Eligible Equipment on a new Facility Contract with the same End-User
or an End-User meeting equivalent credit criteria as determined by
Lender.
RESIDUAL FINANCE FACILITY: the Residual Finance Facility described
in SECTION 2.1.2.
RESIDUALS: all proceeds (net of refurbishment costs, if any)
derived from the Equipment as a result of (i) extended or renewal
Contract payments, (ii) exercised purchase options, and/or (iii) sale or
lease of the Equipment to third parties; PROVIDED, HOWEVER, that with
respect to such extended or renewal Contract payments, or third-party
lease proceeds, such
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proceeds (including any estimated fair market value purchase option at
end of the renewal period as reflected in the most recent AAA report
referred to in Section 6.4(v) hereof) shall be discounted to present
value using a discount rate equal to the Facility Rate in effect at the
time of such re-lease.
RESPONSIBLE OFFICER: any of the Chairman, President, Treasurer,
Secretary or Vice President of Borrower.
SODAK: Sodak Gaming, Inc.
TANGIBLE NET WORTH shall mean, as measured on a consolidated basis,
the result of (i) Borrower's net worth, minus (ii) Borrower's intangible
assets; both as determined on a quarterly basis in accordance with GAAP.
UCC: the Uniform Commercial Code.
1.2 TIME PERIODS. In this Agreement and the other Loan Documents,
in the computation of periods of time from a specified date to a later
specified date (i) the word "from" means "from and including," (ii) the words
"to" and "until" each mean "to, but excluding" and (iii) the words "through,"
"end of" and "expiration" each mean "through and including." All references
in this Agreement and the other Loan Documents to "month," "quarter" or
"year" shall be deemed to refer to a calendar month, quarter or year.
1.3 ACCOUNTING TERMS. Unless otherwise specified in this
Agreement, all accounting terms used herein shall be construed, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered pursuant hereto shall be prepared in
accordance with GAAP.
1.4 REFERENCES. All references in this Agreement to an "Article,"
"Section," "subsection," "subparagraph," "clause," "Schedule" or "Exhibit,"
unless otherwise indicated, shall be deemed to refer to an Article, Section,
subsection, subparagraph, clause, Schedule or Exhibit, as applicable, of or
to this Agreement.
1.5 LENDER'S DISCRETION. Whenever the terms "satisfactory to,"
"determined by," "acceptable to," "shall elect," "shall request," or similar
terms are used in this Agreement or any of the other Loan Documents to apply
to Lender, except as otherwise specifically provided herein or therein, such
terms shall mean satisfactory to, at the election of, determined by,
acceptable to, or requested by, Lender, in its sole, but reasonable,
discretion.
1.6 STATEMENTS AS TO KNOWLEDGE. Any statements, representations or
warranties which are based upon the best knowledge of Borrower shall be
deemed to have been made after due inquiry with respect to the matter in
question.
ARTICLE II
FACILITIES AND PAYMENT/PREPAYMENT TERMS
2.1 THE FACILITIES.
2.1.1 THE LEASE DISCOUNTING FACILITY. The Lease Discounting
Facility is one or more full recourse Advances made by Lender from time to
time at its sole discretion to fund Eligible Contracts, subject to the
provisions of Article II and Section 4.2. Notwithstanding anything
contained herein to the contrary, the maximum combined amounts outstanding
under (i) the Lease Discounting Facility PLUS (ii) the Lease Discounting
Facility under the PDS-Nevada Loan Agreement, PLUS (iii) the Residual
Financing Facility, PLUS (iv) the Residual Financing Facility under the
PDS-Nevada Loan Agreement, shall not exceed Twenty Five Million Dollars
($25,000,000.00).
2.1.2 THE RESIDUAL FINANCING FACILITY. The Residual Financing
Facility is one or more full recourse Advances made by Lender from time to
time at its sole discretion to fund Eligible Contracts, subject to the
provisions of Article II and Section 4.2. No Contract shall be considered
for an Advance under the Residual Financing Facility unless it has already
been approved for an Advance under the Lease Discounting Facility.
Notwithstanding anything contained herein to the contrary, the maximum
combined amount outstanding under (i) the Residual Financing Facility plus
(ii) the Residual Financing Facility under the PDS-Nevada Loan Agreement,
at any one time, shall not exceed Five Million Dollars ($5,000,000.00).
2.1.3 THE NON-RECOURSE FACILITY. The Non-Recourse Facility
shall be as described in SECTION 9.13.
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2.2 VOLUNTARY TERMINATION OF FACILITY. Upon not less than sixty
(60) days' prior notice, either party may notify the other of its intention
not to seek/provide any further financing hereunder; PROVIDED, however, that
notwithstanding the foregoing, all of Borrower's Obligations shall survive
any expiration or termination of this Agreement and/or the termination of any
Facility Contract.
2.3 INTEREST RATE, COMPUTATION. Each Advance shall be indicated by
a Facility Note in the form of Exhibit G or G1, as applicable, which shall
bear interest at the Facility Rate noted thereon, which shall be computed on
the basis of a year consisting of 360 days and charged for the actual number
of days during the period for which interest is being charged.
2.4 SERVICING AND PAYMENTS. Borrower, at its sole cost and
expense, shall be responsible for the billing and collecting of the payments
due under any Facility Contract(s). All non ACH billing with respect to
Facility Contracts shall be accomplished by separate invoices (i.e., not
included in invoices to the same End-User for rentals or other payments due
under any other agreement between Borrower and End-User), and shall direct
the End-Users to forward all Facility Contract remittances (including, but
not limited to rents, renewal rents and Casualty Payments) to the Lockbox,
which shall be subject to the Lockbox Agreement, and at the Bank. All ACH
billing shall utilize the Bank's EFT service, with such ACH proceeds directed
to a suitable Blocked Account at the Bank, and subject to the Blocked Account
Agreement. The fees and expenses of such Lockbox and ACH/EFT service shall be
payable by Borrower. If the underlying End-Users in an Advance have a single
due date, Borrower shall pay to Lender the amounts due under the related
Facility Contracts within 15 days from such due date, whether or not such
amounts have been remitted by the respective End-Users. If the underlying
End-Users in an Advance have a multiple due dates, Borrower shall pay to
Lender the amounts due under the related Facility Contracts by the 10th of
the following month, whether or not such amounts have been remitted by the
respective End-Users. All payments made pursuant to this subsection 2.4 shall
be applied FIRST, to any accrued and unpaid fees and expenses then owed by
Borrower to Lender; SECOND, to accrued and unpaid interest then due Lender
calculated at the Facility Rate through the last date of such immediately
preceding month, and THIRD, to principal due Lender on the applicable
Advances until paid in full. In the event (i) Borrower fails to perform the
foregoing billing and collecting duties in a manner satisfactory to Lender in
its sole discretion, or (ii) of a Contract Event of Default which remains
uncured for more than ninety (90) days, then Lender may terminate Borrower's
authorization under this Section (in the event of a Contract Event of
Default, such termination shall only relate to the specific Contract in
default) and send notice of same to the Bank.
2.5 PREPAYMENT.
2.5.1 VOLUNTARY PREPAYMENT. No voluntary prepayment by
Borrower of any Advances shall be permitted; however, after the first
anniversary of the initial Disbursement Date, Borrower shall be permitted
to prepay any Advance (without liability for the Ordinary Prepayment
Premium) in the event the Loan Repayment Amount with respect thereto falls
to less than Five Percent (5%) of the original principal amount set forth
in the applicable Note.
2.5.2 MANDATORY PREPAYMENT.
2.5.2.1 TERMINATION OF CONTRACT. If an End-User
voluntarily terminates a Facility Contract before its scheduled
expiration by exercising an option to purchase the Facility
Equipment, Borrower shall prepay the associated Advance within
ten (10) Business Days of such termination by paying to Lender
the sum of (i) the Loan Repayment Amount with respect to such
Advance, (ii) the applicable Ordinary Prepayment Premium, and
(iii) any Residuals payable pursuant to Section 2.7.
Notwithstanding the foregoing, if Borrower elects to exercise its
right of Permitted Substitution with respect to such terminated
Facility Contract, no Ordinary Prepayment Premium shall be
payable with respect thereto.
2.5.2.2 CASUALTY. If any Equipment subject to an Advance
is lost or damaged, and cannot be repaired or replaced with
substantially similar Equipment by the first due date occurring
not less than thirty (30) days after such loss or damage,
Borrower shall prepay the associated Advance within ten (10)
Business Days thereafter by paying to Lender the Loan Repayment
Amount with respect to such Advance AND, to the extent Borrower
is able to collect sufficient proceeds from the insurance carrier
and/or the End-User, an amount to additionally reimburse Lender
for costs incident to breaking its corresponding debt, which
shall not exceed three percent (3%) of the principal amount
prepaid, and which shall be evidenced by a certificate prepared
by Lender showing, in reasonable detail, the calculation of such
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costs. No Ordinary Prepayment Premium shall be payable in respect
to a mandatory prepayment made pursuant to this subsection.
2.5.2.3 CONTRACT EVENT OF DEFAULT. If Borrower prepays an
Advance pursuant to Section 8.3.3 with respect to a Contract
Event of Default, no Ordinary Prepayment Premium shall be payable
by Borrower to Lender in connection with any such prepayment, but
Borrower shall continue to be liable to Lender for any Residuals
payable pursuant to Section 2.7.
2.5.2.4 EARLY TERMINATION WITHOUT END-USER BUYOUT. If a
Facility Contract is voluntarily terminated by a End-User prior
to the scheduled expiration, without the exercise of a purchase
option, Borrower shall prepay the associated Advance within
thirty (30) days of such event by paying to Lender the sum of:
(i) Loan Repayment Amount, (ii) the applicable Ordinary
Prepayment Premium, and (iii) any Residuals payable pursuant to
Section 2.7. Notwithstanding the foregoing, if Borrower elects to
exercise its right of Permitted Substitution with respect to such
terminated Facility Contract, no Ordinary Prepayment Premium
shall be payable with respect thereto.
2.5.2.5 UPGRADES AND ADDITIONS. Borrower may agree with an
End-User under a Facility Contract that certain Facility
Equipment subject thereto shall be upgraded or that additional
Eligible Equipment should be added, resulting in a new Facility
Contract or replacement Facility Contract, so long as (i) no
Event of Default shall have occurred or is continuing hereunder,
(ii) the End-User shall have sought and obtained Lender's prior,
written consent at the time of the upgrade, (iii) the End-User
shall be deemed to be a "High Quality Credit" by Lender in its
sole discretion, (iv) the Facility Contract in question contains
upgrade provisions pre-approved by Lender and acknowledged by
End-User at the inception thereof, (v) an upgrade under such
Facility Contract may take place no more often than once per
year, commencing with the first anniversary date of such Facility
Contract, (vi) a maximum of twenty five percent (25%) of the
Facility Equipment subject to such Facility Contract, calculated
using the Acquisition Cost thereof, is upgraded at any one time,
and (vii) the upgradeable Facility Equipment shall be limited to
new slot machines.
(a) AMENDMENT OF FACILITY CONTRACT SCHEDULE TO
INCORPORATE UPGRADES/ADDITIONS. If Borrower and such End-
User amend such Facility Contract to increase the payments
payable thereunder in consideration of such upgrade or
addition, Borrower may request that Lender finance the
additional Contract Proceeds arising under such amendment
(the "Contract Amendment") attributable to such increase in
payments. Not later than ten (10) Business Days after such
request, Lender shall give Borrower written advice as to
whether Lender, in its sole discretion, has elected to
finance such additional Contract Proceeds. If Lender fails
to give such advice within such ten (10) day period, Lender
shall be deemed to have declined to finance such additional
Contract Proceeds and shall so advise Borrower in writing.
If Lender agrees to finance such additional Contract
Proceeds, Lender shall, subject to satisfaction of the
conditions precedent set forth in Section 4.2, make an
Advance in an amount as Lender shall determine. The
Disbursement Date with respect to such Advance shall be a
date agreed upon in writing by Lender and Borrower. If
Lender agrees to make such an Advance, the Contract
Amendment shall be considered a "Facility Contract" for all
purposes of this Agreement. If Borrower finances such
upgrades or additions through a source other than Lender and
does not prepay in accordance with this Section, Borrower
covenants and agrees that any security interest granted to a
source other than Lender shall not conflict with or prime
Lender's security interest.
(b) TERMINATION OF CONTRACT SCHEDULE/EXECUTION OF A
REPLACEMENT CONTRACT. If Borrower and such End-User agree
that the Equipment subject to a Facility Contract shall be
upgraded, and agree to terminate the related Facility
Contract and enter into a Replacement Contract schedule
incorporating a portion of the existing Equipment and the
upgrade/additional Equipment, Borrower shall offer Lender
the right of first refusal to finance the Replacement
Contract. Not later than ten (10) Business Days after such
request, Lender shall give Borrower written advice as to
whether Lender, in its sole discretion, has elected to
finance such Replacement Contract. If Lender fails to give
such advice within such ten (10) day period, Lender shall be
deemed to have declined to finance such additional Contract
Proceeds and shall so advise Borrower in writing. If Lender
agrees to finance such Replacement Contract, Borrower shall
pay to Lender the Loan Repayment Amount with respect to the
existing Facility Contract, and Lender shall, subject to
satisfaction of the conditions precedent set forth in
Section 4.2, make an Advance in an amount equal to the
lesser of (i) the present value of all payments due
thereunder (with the exception of any manufacturer's
discounts, deposits (including security deposits) or
down/advance payments made by End-User) for the Approved
Contract Term of each such Facility Contract, using a
discount rate to determine
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such present value equal to the Facility Rate, or (ii)
the sum of (A) One Hundred percent (100%) of the
Acquisition Cost for each item of Facility Equipment that
was not previously subject to the existing Facility
Contract and (B) the Loan Repayment Amount with respect
to the existing Facility Contract. The Disbursement Date
with respect to such Advance shall be a date agreed upon
in writing by Lender and Borrower. If Lender agrees to
make such an Advance, the Replacement Contract shall be
considered a "Facility Contract" for all purposes of this
Agreement.
If Lender elects not to finance a Replacement
Contract pursuant to this Section 2.5.2.5(b), Borrower
shall, prior to the next Facility Contract due date, pay
the Loan Repayment Amount with respect thereto. No
Ordinary Prepayment Premium shall be payable with respect
thereto so long as Borrower has fully complied with the
requirements of this Section 2.5.2.5(b).
2.5.3 NO OTHER PREPAYMENTS PERMITTED. No Advance may be
prepaid except as otherwise expressly provided in this Agreement.
2.5.4 INVOLUNTARY PREPAYMENT. Any prepayment of the
Advances received by Lender resulting from the exercise by Lender of any
remedy available to Lender subsequent to the occurrence of a Borrower
Event of Default and the acceleration of Borrower's Obligations shall be
deemed to be a mandatory prepayment, and the applicable Ordinary
Prepayment Premium shall be payable with respect thereto.
2.6 CONTRACT EXTENSIONS OR END-USER BUYOUT FINANCING. If, at the
end of the Approved Contract Term an End-User elects to (i) extend the
Contract, or (ii) purchase the Facility Equipment subject thereto with
financing provided by Borrower, Borrower shall offer to Lender the right of
first refusal to finance such Contract extension or such end-of-term purchase
option. Not later than ten (10) Business Days after such request, Lender
shall give Borrower written advice as to whether Lender, in its sole
discretion, has elected to provide such financing. If Lender fails to give
such advice within such ten (10) day period, Lender shall be deemed to have
declined such financing and shall so advise Borrower in writing. If Lender
agrees to provide such financing, Lender and Borrower shall mutually agree
regarding the terms thereof. All Contract Proceeds received by Borrower and
forwarded to Lender hereunder shall be subject to Section 2.7.
2.7 RESIDUAL PAYMENTS. Lender shall be entitled to receive 100% of
the Residuals attributable to any Facility Contract until Lender shall have
recovered the balloon payment/Estimated Residual amount set forth in the
applicable Amortization Schedule (which Lender shall have full recourse to
Borrower).
2.8 LATE CHARGES; DEFAULT RATE. If any payment of principal or
interest to be made by Borrower to Lender under the Facility becomes past due
for a period of 10 days, Borrower shall pay to Lender on demand a late charge
of five percent (5%) of the amount of such overdue payment. In addition,
during a Default Rate Period, Borrower's Obligations pertaining to the
Facility shall bear interest at the Default Rate.
2.9 PAYMENT AFTER BORROWER EVENT OF DEFAULT. Upon the occurrence
and during the continuation of a Borrower Event of Default, all Contract
Proceeds pertaining to Facility Contracts and/or Facility Equipment shall be
applied by Lender in such manner as Lender shall determine.
2.10 MAXIMUM INTEREST. Notwithstanding any provision to the
contrary herein contained, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Borrower to Lender in excess of the
maximum contract rate of interest permitted by applicable law. Lender and
Borrower have agreed that the interest laws of the state of Illinois shall
govern the relationship between them, but in the event of a final
adjudication to the contrary, NUNC PRO TUNC, Borrower shall be obligated to
pay to Lender only such interest as then shall be permitted by the applicable
laws of the state found to govern the contract relationship between Lender
and Borrower. All interest found in excess of that rate of interest allowed
and collected by Lender shall be applied to the Advances in such manner as to
prevent the payment and collection of interest in excess of the rate
permitted by applicable law.
2.11 METHOD OF PAYMENT; GOOD FUNDS. All payments which are to be
made by Borrower to Lender pursuant to the Loan Documents shall be made by
wire transfer to BANK OF AMERICA, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000; ABA #000000000, Xxxxxx Financial, Inc., Acct. #00-00000, Phone Advice
to Product Credit Manager -- Lease Portfolio
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Funding, Xxxxxx Sales Finance and to Product Business Manager -- Lease
Portfolio Funding, Xxxxxx Sales Finance: 000-000-0000. Payment shall not be
deemed to be received until Lender is in receipt of Good Funds.
ARTICLE III
NOTES; SECURITY INTEREST
3.1 NOTES. Borrower's Obligations described in clause (i) of the
definition of such term shall be evidenced by the Notes.
3.2 GRANT OF SECURITY INTEREST. As security for the payment and
performance of Borrower's Obligations, whether arising hereunder or under any
other agreement between Borrower and Lender, including, but not limited to
the PDS-Nevada Guaranty, Borrower hereby grants to Lender, subject to all
mandatory provisions of law, including without limitation, the Gaming Laws, a
Lien in the following described collateral (the "Collateral"), such Lien to
be superior and prior to all other Liens other than Permitted Liens:
(a) FACILITY EQUIPMENT. All of Borrower's right, title and
interest (including any residual interest) in and to the Facility
Equipment.
(b) THE CONTRACTS. All chattel paper and Contracts pertaining
to any Facility Equipment, including, without limitation, all of
Borrower's right, title and interest in, to and under each Facility
Contract relating to each item of Facility Equipment and the right to
receive all payments thereunder (collectively, the "Intangible
Collateral").
(c) LOCKBOX, LOCKBOX AGREEMENT, BLOCKED ACCOUNT AND BLOCKED
ACCOUNT AGREEMENT. The Lockbox, Lockbox Agreement, Blocked Account and
Blocked Account Agreement.
(d) BOOKS AND RECORDS. All of the books and records of
Borrower pertaining to the Property described in subparagraphs (a) -
(c) above.
(e) PROCEEDS. All attachments, additions, accessions,
upgrades, accessories and replacements pertaining to the items described
in subparagraphs (a) through (d) above, as applicable, including all
cash and non-cash proceeds (including Casualty Payments and other
insurance proceeds) pertaining thereto.
Lender shall not be required to look to the Collateral for the payment
of Borrower's Obligations under the Full Recourse Facility, but may proceed
against Borrower in such manner as Lender deems desirable. All of the
Collateral assigned to Lender hereunder shall secure the payment and
performance of all of Borrower's Obligations, and whether now existing or in
the future; provided, however, that upon the payment and performance in full
of all of Borrower's Obligations with respect to a Facility Contract (or the
exercise of a Permitted Substitution with respect thereto), the Loan
Documents applicable to such Facility Contract and such Facility Equipment
shall automatically terminate, Lender shall execute and deliver to Borrower
such UCC termination statements and other instruments as may be necessary to
release the applicable Lender Lien(s) in the related Collateral, and shall
return all items of chattel paper to Borrower with respect thereto.
ALL ADVANCES HERETOFORE MADE PURSUANT TO, AND SECURED BY, THE ORIGINAL
LOAN AGREEMENT SHALL HEREAFTER BE SECURED HEREBY, AND THE SECURITY INTEREST
GRANTED HEREBY SHALL BE DEEMED TO BE A CONTINUATION OF AN EXISTING SECURITY
INTEREST, RATHER THAN A RELEASE OR TERMINATION AND GRANT OF A NEW SECURITY
INTEREST.
3.3 SUBSTITUTION OF CONTRACTS. Within One Hundred Twenty (120)
days after a Contract Event of Default occurs, or immediately in the event of
a prepayment by an End-User with respect to a Facility Contract, or with the
prior, written agreement of Lender, in addition to any other remedy available
hereunder to Borrower with respect thereto, Borrower may substitute another
Eligible Contract for an existing Facility Contract ("Existing Facility
Contract"), provided (i) that Lender shall have the right to approve such
Eligible Contract at its sole discretion, (ii) that the present value
(determined using a discount rate which is equal to the Facility Rate which
is applicable to the Existing Facility Contract) of the payments remaining
under such Substitute Contract, is equal to or greater than the present value
(calculated as described above) of
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the remaining payments of such Existing Facility Contract, including any
payments which are past due under such Existing Facility Contract; and (iii)
that the number of payments remaining under such Substitute Contract equals
or exceeds the number of payments remaining under the Existing Facility
Contract. If such substitution occurs as a result of a Contract Event of
Default, such substitution shall be deemed to cure such Contract Event of
Default. As a precondition to any Permitted Substitution, Lender shall have
the right to verify the existence and terms of such Substitute Contract with
the applicable End-User.
ARTICLE IV
CONDITIONS OF CLOSING; ADVANCES
4.1 CONDITIONS OF CLOSING. The Closing shall not take place unless
all of the conditions set forth in this Section 4.1 have been satisfied in a
manner, form and substance satisfactory to Lender:
4.1.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date,
the representations and warranties of Borrower set forth in the Loan
Documents shall be true and correct in all material respects.
4.1.2 DELIVERY. The following shall have been delivered to
Lender, each duly authorized and/or executed, as applicable:
(a) the Agreement, with all Exhibits and Schedules; and
the Closing Certificate;
(b) a certificate of the Secretary or an Assistant
Secretary of Borrower in the form of EXHIBIT H,
with all attachments noted therein;
(c) a certified copy of the forms of Contract used by
Borrower, to be attached to the Agreement as
SCHEDULE 4.1.2;
(d) the Lockbox Agreement and the Blocked Account
Agreement;
(e) the Warrant Agreement in the form of EXHIBIT O.
(f) a structuring fee equal to One Hundred Fifty Thousand
Dollars ($150,000.00) in Good Funds;
(g) an updated report from AAA or another appraisal firm
acceptable to Lender, setting forth current Fair
Market and Orderly Liquidation Values of the
principal types of Eligible Equipment subject to
this Agreement, which Lender may utilize in its
sole, but reasonable, discretion in determining
acceptable Estimated Residuals therefor; and
(h) such additional instruments, documents, certificates,
consents, financing statements, waivers and
opinions as Lender reasonably may request,
including, but not limited to, a Trust Agreement
substantially in the form of EXHIBIT N hereto, in
the event that Borrower will be retaining
possession of any original master leases
comprising Facility Contracts.
4.1.3 SECURITY INTERESTS. All UCC financing statements,
including UCC-1(s) naming Borrower as debtor and Lender as secured party
to be filed where applicable, using the collateral description
substantially in the form attached hereto as EXHIBIT B, shall have been
filed and confirmation thereof received by Lender.
4.1.4 OPINION OF COUNSEL. Lender shall have received (i)
from XXXXXX & XXXXXXX, LLP, counsel to Borrower, an updated opinion
dated as of the Closing Date, addressed to Lender, in substantially the
form previously furnished to Lender by Xxxxxx & Whitney, LLP in
conjunction with the Original Loan Agreement, and (ii) from external
counsel jointly acceptable to Borrower and Lender, opinions in form and
content acceptable to Lender, addressed to Lender, and covering
Borrower's compliance with Gaming Laws and Gaming Authorities in the
states of Nevada, Indiana, New Jersey and Mississippi, and covering the
necessary procedures to be followed by Lender with respect to the
exercise of the remedies set forth in this Agreement.
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4.1.5 PERFORMANCE; NO DEFAULT. Borrower shall have
performed and complied with all agreements and conditions contained in
the Loan Documents to be performed by or complied with prior to or at
the Closing Date.
4.1.6 APPROVAL OF LOAN DOCUMENTS AND SECURITY INTERESTS.
The approval and/or consent shall have been obtained from all
Governmental Bodies, Gaming Authorities and all other Persons whose
approval or consent is necessary or required to enable Borrower to (i)
enter into and perform its obligations under the Loan Documents, (ii)
grant to Lender the Lender Lien and (iii) consummate the Advances.
4.1.7 MATERIAL ADVERSE CHANGE. Since the issuance of
Borrower's most recent fiscal year-end financial statements, no event
shall have occurred which has a material adverse effect on (i) the
financial condition, Property, business, operations, ownership,
structure, prospects or profits of Borrower, (ii) the ability of
Borrower to perform its obligations under the Loan Documents, or (iii)
the Collateral.
4.1.8 SLOTSOURCE INVOICES. Lender shall have received,
reviewed and approved the sampling of invoices pertaining to
SLOTSOURCE's fourth quarter, 1997 sales.
4.2 PROCEDURES FOR AND CONDITIONS TO ADVANCES
4.2.1 DISCRETIONARY BORROWING/LENDING. NOTWITHSTANDING THE
OTHER PROVISIONS OF THIS AGREEMENT, ADVANCES SHALL BE MADE ONLY WHEN
BOTH (I) BORROWER, IN ITS SOLE DISCRETION, DESIRES TO BORROW MONEY FROM
LENDER, AND (II) LENDER, IN ITS SOLE DISCRETION, DESIRES TO LOAN MONEY
TO BORROWER; IT BEING AGREED THAT THIS AGREEMENT SHALL NOT BE CONSTRUED
AS IMPOSING ANY DUTY ON BORROWER TO BORROW FROM LENDER, NOR ANY DUTY ON
LENDER TO LOAN TO BORROWER. IN CONSTRUING THE PURPOSE AND INTENT OF THIS
AGREEMENT, THIS SECTION 4.2.1 SHALL TAKE PRECEDENCE OVER ALL OTHER
PROVISIONS.
4.2.2 PROCEDURE FOR ADVANCE(s). Subject to the
satisfaction of the terms and conditions set forth in this Section 4.2,
on or after the Closing Date Borrower may request Lender to disburse the
proceeds of any Advance as set forth by Borrower in the related Contract
Funding Request. The Contract Funding Request shall specify: (A) the
date such Advance is to be made, which shall be a Business Day not less
than 5 Business Days after the delivery to Lender of such Contract
Funding Request, (B) the amount of Advance, which shall not exceed the
applicable Facility Funding Amount, and without the written consent of
Lender, be not less than $500,000.00, and (C) the names of any unpaid
vendors or suppliers of the Eligible Equipment subject to the Contracts
included in the Contract Funding Request, and the amounts with respect
thereto. Lender shall not be obligated to consider making any Advance
(i) if an Incipient Default or Event of Default exists or will occur if
the requested Advance is made, (ii) any more frequently than twice each
month under the Facility, (iii) with respect to any Contract which
Lender determines is not an Eligible Contract or for an End-User which
Lender determines is not an Eligible End-User; or (iv) if, as a result
of such Advance, any guideline set forth in SCHEDULE 4.2.2, as jointly
amended by Borrower and Lender from time to time, would be violated as a
result thereof.
4.2.3 CONDITIONS OF ADVANCES. Lender shall not be
obligated to consider making any Advance(s) on or after the Closing Date
unless all of the conditions set forth in this Section 4.2 have been
satisfied in a manner, form and substance satisfactory to Lender,
including the following:
4.2.3.1 REPRESENTATIONS AND WARRANTIES. On the date of
such Advance, the representations and warranties of Borrower
set forth in the Loan Documents shall be true and correct in
all material respects. Lender shall have the right, as a
precondition to any Advance made more than one year after the
Closing Date, to require updated evidence of Borrower's and
Borrower's officers' authority to execute Advance
documentation.
4.2.3.2 DELIVERY OF DOCUMENTS. In addition to the
documents previously delivered to Lender pursuant to Section
4.1, the following shall have been delivered to Lender, each
duly authorized and executed:
(a) the Contract Funding Requests for the Advances to
be made, with all attachments noted therein;
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(b) a Gaming Device Goods remarketing agreement in
form and content acceptable to Xxxxxx, from
Sodak or another Gaming Device Goods
distributor acceptable to Lender;
(c) such additional instruments, documents,
certificates, consents, financing
statements, waivers and opinions as Lender
reasonably may request, including any
opinions of outside counsel of the type
described in Section 4.1.4(ii) if the
Eligible Equipment subject to such Advance
pertains to a state for which an opinion
has not previously been furnished.
The requirement of the Gaming Device Goods remarketing
agreement set forth in Section 4.2.3.2 shall be waived
for any Advance made prior to sixty (60) days from the
Closing Date so long as the aggregate Loan Repayment
Amount for all such Advances does not exceed Twelve
Million Dollars ($12,000,000.00); PROVIDED, HOWEVER, that
in the event Borrower fails to deliver to Lender such
Gaming Device Goods remarketing agreement by sixty (60)
days from the Closing Date, or in the event that such
Gaming Device Goods remarketing agreement expires or is
terminated by any party thereto, and is not replaced with
a similar agreement acceptable to Xxxxxx within sixty
(60) days from the effective date of such termination or
expiration, Lender shall have all or any of the following
options and/or remedies, in addition to its other
remedies set forth in this Agreement:
(a) immediately declare that no further Advances be
made hereunder or under the PDS-Nevada Loan
Agreement; and
(b) immediately require that Borrower make a
Mandatory Prepayment (including payment of
the related Ordinary Prepayment Premium)
of any Facility Contracts as to which
Borrower has failed to provide any
required instruments, documents,
certificates, consents, financing
statements, waivers and opinions as set
forth by Lender; and
(c) immediately require that Borrower make a
Mandatory Prepayment (including payment of
the related Ordinary Prepayment Premium)
of one or more Advances, in the inverse
order of maturity, to the extent necessary
to reduce the aggregate Loan Repayment
Amount for all remaining Advances to Ten
Million Dollars ($10,000,000.00).
Borrower's obligation to make such
Mandatory Prepayment shall be in addition
to Borrower's obligation pursuant to
Section 8.3.3 to continue to prepay
Facility Contracts as to which Contract
Events of Default have occurred.
4.2.3.3 SECURITY INTERESTS. All UCC financing statements,
including, but not limited to:
(a) in the case of Facility Contracts under which
Borrower is deemed by Lender to be the
owner of the Equipment, UCC-1(s) naming
Borrower as debtor, and Lender as secured
party, to be filed where the Equipment is
located and at Borrower's principal place
of business,
(b) UCC-1(s) naming End-User as debtor or lessee,
and Borrower as secured party or lessor,
to be filed in the state(s) where the
Equipment is located,
(c) In the event that Lender has not been named as
assignee on the UCC-1(s) referred to in
subsection 4.2.3.3(b), UCC-3(s), as
required, naming Lender as assignee to be
filed in the jurisdiction(s) where the
UCC-1(s) referred to in subsection
4.2.3.3(b) are filed, and
(d) all other filings and actions necessary to
perfect and maintain the Lender Lien as a
valid and perfected Lien in the Collateral,
shall have been filed and confirmation thereof received by
Lender.
4.2.3.4 CONFIRMATION WITH END-USERS AND VENDORS. Lender
or its agents, at Lender's discretion, shall have verified
with all End-Users the existence and terms of the related
Facility Contract, the delivery of the Facility Equipment, and
shall have verified that the vendors and/or Facility Equipment
suppliers have been paid, PROVIDED,
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HOWEVER, that at Lender's discretion, Lender shall have the
option to require the foregoing proof of payment subsequent to
the Disbursement Date of an Advance.
4.2.3.5 NO MATERIAL OMISSION ITEMS ON PREVIOUS
ADVANCES. All material missing and/or incomplete items to be
furnished by Borrower with respect to previous Advances shall
have been completed to Lender's reasonable satisfaction.
4.2.3.6 ADDITIONAL CONDITIONS. Borrower shall have
re-satisfied the conditions set forth in Sections 4.1.5
(PERFORMANCE; NO DEFAULT), 4.1.6 (APPROVAL OF LOAN DOCUMENTS
AND SECURITY INTERESTS), and 4.1.7 (MATERIAL ADVERSE CHANGE)
with respect to the requested Advance(s).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
5.1 ORGANIZATION, POWER, AUTHORITY, ETC. Borrower (i) is duly
organized, validly existing and in good standing under the laws of the state
of Minnesota, (ii) is qualified to do business in every jurisdiction in which
the character of the Property owned or leased by it or the business conducted
by it makes such qualification necessary and the failure to so qualify would
permanently preclude Borrower from enforcing its rights with respect to any
Facility Contract or Facility Equipment or would expose Borrower to any
material loss or liability, (iii) has the power and authority to carry on its
business, (iv) has the power and authority to execute and perform this
Agreement and the other Loan Documents, and (v) has duly authorized the
execution, delivery and performance of this Agreement and the other Loan
Documents.
5.2 VALIDITY, ETC., OF LOAN DOCUMENTS. This Agreement and the
other Loan Documents constitute the legal, valid and binding obligations of
Borrower and are enforceable against Borrower in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by equitable principles
(whether or not any action to enforce such document is brought at law or in
equity). The execution, delivery and performance of the Loan Documents by
Borrower (i) has not violated and will not violate any provision of law, any
order of any Governmental Body, or the Certificate of Incorporation or Bylaws
of Borrower (or the equivalent of the foregoing if Borrower is not a
corporation), or any indenture, agreement or other instrument to which
Borrower is a party, (ii) is not in conflict with, will not result in a
breach of or, with the giving of notice, or the passage of time, or both,
will not constitute a default under any such indenture, agreement or other
instrument, and (iii) will not result in the creation or imposition of any
Lien of any nature whatsoever upon any of the Property of Borrower, except
for Permitted Liens.
5.3 OTHER AGREEMENTS. Borrower is not a party to any agreement or
instrument materially adversely affecting its present or proposed business,
properties, or assets, and Borrower is not in default in the performance,
observance or fulfillment of any material obligation, covenant or condition
set forth in any agreement or instrument to which it is a party, which
default would have a material adverse effect on the ability of Borrower to
consummate any of the transactions contemplated by the Loan Documents or to
perform any of its obligations under any of the Loan Documents.
5.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of Borrower and its chief executive office are at 0000 XxXxxx Xxxxx, Xxx
Xxxxx, Xxxxxx 00000. Borrower has not done business under any name other than
PDS FINANCIAL CORPORATION or PROGRESSIVE DISTRIBUTION SYSTEMS, INC. D/B/A PDS
LEASING SERVICES.
5.5 PRIORITY. The Lender Lien is subject to no prior Liens other
than Permitted Liens, and all Borrower Liens have been or will be assigned to
Lender pursuant to an Assignment.
5.6 FINANCIAL STATEMENTS. Borrower has delivered to Lender the
financial statements described on SCHEDULE 5.6. Such financial statements
present fairly the financial condition and results of operations of Borrower
as of the dates and for the periods indicated therein. All of the foregoing
financial statements, except as otherwise indicated therein, have been
prepared in accordance with GAAP.
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5.7 LITIGATION. Except as set forth in SCHEDULE 5.7, there are no
actions, suits, arbitrations, proceedings or claims (whether or not
purportedly on behalf of Borrower) pending or to the best knowledge of
Borrower, threatened, against Borrower or maintained by Borrower, at law or
in equity or before any Governmental Body which, if adversely determined,
would have a material adverse effect on the ability of Borrower to consummate
any of the transactions contemplated by the Loan Documents or perform any of
its obligations under any of the Loan Documents.
5.8 NECESSARY PROPERTY. Borrower has all necessary rights in its
Property (including all patents or trademarks) which are necessary to conduct
the business of Borrower as now conducted.
5.9 VALIDITY AND ENFORCEABILITY OF CONTRACTS. At the time a
Contract is assigned to Lender (and thereupon becomes a Facility Contract)
and, unless expressly limited to that point in time, at all future times with
respect to each of the Facility Contracts, all rights assigned as part of the
Facility Contracts, including without limitation all Facility Equipment
covered thereby:
(i) Any modifications of a Contract from the form approved
by Lender, as attached to this Agreement as part of SCHEDULE 4.1.2, are
identified in the Contract by amendment or conspicuous markings,
letterings or title heading (E.G., "Additional Provisions"), and the
existence of such modifications are noted by Borrower in the related
Contract Funding Request; all Contracts with non-Native American
End-Users have been originated by Borrower (or other entity acceptable
to Lender) as either lessor or secured party; all Contracts with Native
American End-Users have been originated either by Borrower, Sodak (or
other entity acceptable to Lender) as either lessor or secured party;
all Contracts arise from a bona fide non-cancelable contract for
Eligible Equipment with an Eligible End-User for an Approved Contract
Term; and all Equipment described in the Contracts is in all respects in
accord with the requirements of the Contracts and has been delivered to
and unqualifiedly accepted by the End-User thereunder; unless
specifically agreed to by Lender in writing, none of the Equipment,
after delivery and acceptance by the End-User, is a fixture under the
applicable laws of any state where such Equipment is or may be located
nor is located outside the United States;
(ii) All Contracts and related Equipment comply with all
applicable laws and regulations, including, without limitation,
interest/usury, truth-in-lending, Gaming Laws and disclosure laws; all
Contracts are genuine, valid, binding and enforceable in accordance with
their terms, accurately describe the related Equipment and the Payments
due under the Contracts, and are in all respects what they purport to
be; all Contracts, the related Equipment and all proceeds thereof are
not subject to any lien, claim or security interest except the interest
of the End-User, which shall be assigned to Lender contemporaneously
herewith, and Permitted Liens; all Contracts, and related rights,
agreements, documents and instruments are assignable to Lender without
consent of any person, including without limitation, any End-User or any
Governmental Body or agency and no such assignment will delegate, create
or impose any duty, obligation or liability on Lender; and all Contracts
with a Native American End-User contain valid and enforceable (i)
waivers of sovereign immunity, (ii) representations and warranties from
Sodak (or another Native American gaming lessor acceptable to Lender)
enforceable by Lender in the event that sovereign immunity is asserted
by the Native American End-User as a defense to payment or enforcement
proceedings, and (iii) opinion(s) of counsel to such Native American
End-User in form acceptable to Borrower and Lender;
(iii) At the time of Borrower's assignment of the Contracts,
and subject to compliance with all mandatory provisions of law,
including without limitation, the Gaming Laws, Borrower has (A) good
title to all of the Contracts, including the right to receive the
payments due thereunder, (B) either good title to or a first, prior and
perfected lien in all related Equipment; (B) all legal power, right and
authority to sell the Contracts and grant the security interest
described herein to Lender; (C) not sold, transferred, encumbered,
assigned or pledged any part of the Contracts or related Equipment to
any other Person; and (D) paid in full all vendors of the Equipment
subject to the Contracts, or will agree to have Lender pay such vendors
with the proceeds of the applicable Advance;
(iv) All counterparts of all Contracts have been clearly
marked to indicate that only one thereof is the "Original" and
assignable, and such counterpart shall be the counterpart delivered to
Lender at the time of Borrower's assignment of the Contract;
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(v) Except for any master leases, Borrower has provided
Lender with an original of all material agreements entered into in
connection with the Contracts, and the Equipment related to such
Contracts; the Contract constitutes the entire agreement and there are
no oral representations, warranties or agreements related thereto; the
Contracts employ substantially standard pricing and documentation
(including, without limitation, provisions concerning payment terms,
assignment, maintenance, termination, renewal, insurance and stipulated
loss provisions) which have been approved by Lender; the Contracts
contain no purchase option to the End-User which has not been disclosed
in writing to Lender;
(vi) Each party to each Contract has all the legal capacity,
power and right required for it to enter into such Contract and any
supplemental agreements, and to perform its obligations thereunder; all
such actions have received all corporate or governmental authorization
required by any applicable charter, by-law constitution, law, rule or
regulation;
(vii) None of the following existed at the time of Borrower's
assignment to Lender of the Contracts: (i) any payment owing with
respect to any Contract is past due more than ten (10) days, (ii) any
End-User is otherwise in default under a Contract, or (iii) any End-User
has canceled or terminated or given notice of or attempted to cancel or
terminate any Contract;
(viii) There exist no setoffs, abatements, recoupments,
claims, counterclaims or defenses on the part of any End-User under the
Contracts to any claims against or obligations of any End-User
thereunder, nor do the Contracts by their terms give rise to any such
right of setoff, abatement, recoupment, claims, counterclaims or
defenses against Borrower or assignee of Borrower;
(ix) Borrower has not done anything that might impair the
value of the Contracts or any Equipment covered by the Contracts;
(x) All sales, gross receipts, property or other taxes,
assessments, fines, fees and other liabilities relating to the
Contracts, the related Equipment, or the proceeds thereof have been paid
when due and all filings in respect of any such taxes, assessments,
fines, fees and other liabilities have been timely made;
(xi) Borrower is not in default which has continued beyond
any applicable grace periods or cure rights of any of its obligations
under the Contracts, including without limitation, any obligation to
repair, maintain or replace any Equipment or to provide service as
provided in the Contracts;
(xii) The Contracts have not been altered, modified, changed
or amended except as such alterations, modifications, changes or
amendments are set forth in writing and provided to Lender prior to
Borrower's assignment of the Contracts; nor will Borrower agree to any
alterations, modifications, changes or amendments after Borrower's
assignment without Lender's prior written consent or as specifically set
forth in this Agreement with respect to upgrades or early terminations;
(xiii) At the time of Borrower's assignment of the
Contracts, no amounts have been prepaid on the Contracts except advance
payments which are required by the express written terms of the
Contracts;
(xiv) Borrower has not withheld any information or material
facts in connection with any Contracts or Equipment which would make any
information furnished to Lender misleading and Borrower has no knowledge
of any Contract Event of Default or of any fact which may impair the
validity, value or enforceability of any Contract or Equipment;
(xv) To the best of Borrower's knowledge, any credit
information provided to Lender by Borrower with respect to any End-User is
true and correct in all material respects;
(xvi) All Equipment covered by the Contract (A) is in good
condition and repair and suitable for the purposes for which it is
intended; (B) is covered by comprehensive physical damage insurance for
the full insurable value thereof, unless otherwise mutually agreed to by
Borrower and Lender, and, if applicable, general public liability
coverage. Borrower, "its assigns and/or collateral assigns" have been
named as "Loss Payee" and, if applicable, as "Additional Insured" on any
policies procured by the End-User. Said insurance is in full force and
effect, and has not lapsed or been cancelled by the End-User or the
respective insurers;
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(xvii) The Contract will not be canceled or terminated or
attempted to be canceled or terminated prior to the full term indicated for
such Contract, except as may be specifically set forth in this Agreement;
(xviii) Borrower has not breached any representation, warranty
or guarantee under the Contract or any agreement, document or instrument
related thereto;
(xix) Upon recording financing statements with respect to the
Contracts and the related Equipment, and Lender's possession of the
original chattel paper with respect thereto, Lender's security interest
therein shall be perfected and shall have priority over all other liens,
claims, rights of other persons and security interests with respect
thereto; and
(xx) Borrower has not filed any UCC-1 or other document in the
public records against any End-User or End-User Guarantor concerning any
proposed Facility Contract or Equipment EXCEPT those which have been
disclosed and either assigned or subordinated to Lender's interest in the
Facility Contracts and the related Equipment and Proceeds, and there are no
other UCC-1's or other public record filings concerning any part of any
Facility Contracts or Equipment whether executed by or in favor of
Borrower.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees with Lender as follows:
6.1 PAYMENT OF BORROWER'S OBLIGATIONS. Borrower shall pay and
perform all of Borrower's Obligations as and when the same become due,
payable and/or performable, as applicable.
6.2 PRESERVATION OF EXISTENCE. Borrower shall maintain its
existence and rights in full force and effect to the extent necessary to
perform its obligations under the Loan Documents.
6.3 LEGAL REQUIREMENTS. Borrower (i) promptly and faithfully shall
comply with, conform to and obey all applicable present and future laws,
ordinances, rules, regulations and other requirements that could materially
adversely affect the conduct of its operations, including, but not limited
to, maintain its gaming licenses in the States where it is currently
operating its business, and (ii) shall use or cause the portion of the
Collateral consisting of Facility Equipment to be used in a manner and for
the use contemplated by the manufacturer thereof, and in material compliance
with all laws, rules and regulations of every Governmental Body having
jurisdiction over such Facility Equipment.
6.4 FINANCIAL STATEMENTS AND OTHER REPORTS/MATERIALS. Borrower
shall maintain full and complete books of account and other records
reflecting the results of Borrower's operations, all in accordance with GAAP,
and shall furnish or cause to be furnished to Lender:
(i) Within 120 days after the end of each year, the
consolidated audited financial statements for such year for Borrower
certified (without qualification as to the opinion or scope of examination)
by a firm of independent certified public accountants selected by Borrower
and satisfactory to Lender;
(ii) Within 60 days after the end of each quarter, consolidated
quarterly financial statements of Borrower;
(iii) Within 30 days after the end of each quarter, (I) computer
diskettes/tapes containing all backup data regarding Facility Contracts and
Facility Equipment, in format set forth in EXHIBIT K, and (II) an aged
inventory report and asset tracking report in such form as reasonably
acceptable to Lender;
(iv) Within 30 days after the end of each month: (I) a
delinquency report in the form attached hereto as EXHIBIT L, (II) a true
and correct copy of the Bank, Lockbox and ACH statements for the preceding
month, (III) if applicable, a report setting forth any change in the
identity or location of Facility Equipment from that previously disclosed
to Lender; (IV) a report setting forth leasing, remarketing activities and
insurance settlements with respect to Facility Equipment, and (V) a report
identifying the Facility Contracts which terminated during the previous
thirty (30) days;
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(v) Every 18 months, commencing the Closing Date, at
Borrower's expense, a new report from AAA or another appraisal firm
acceptable to Lender, setting forth current Fair Market and Orderly
Liquidation Values of the principal types of Eligible Equipment subject to
this Agreement, which Lender may utilize in its sole, but reasonable,
discretion in determining an acceptable Estimated Residual therefor;
(vi) Within 10 days after receipt thereof by Borrower, copies
of all financial statements from any End-User(s) who comprise greater than
ten percent (10%) of the aggregate Loan Repayment Amount on all Facility
Contracts; and
(vii) promptly at Lender's request, such additional information,
documents, downloads and reports as Lender shall advise Borrower from time
to time.
All of the items described in clauses (ii), (iii) and (iv) of this Section
6.4 shall be certified by a Responsible Officer. In the alternative, with
respect to the requirements set forth in clauses (i) and (ii) of this
Section 6.4, Borrower may furnish or cause to be furnished to Lender copies
of Borrower's 10-K and 10-Q within ten (10) days of Borrower's filing of
same with the Securities and Exchange Commission.
6.5 REMOVAL OF FACILITY EQUIPMENT. Promptly after a Responsible
Officer learns that any Facility Equipment has been moved by a End-User from
one location to another, Borrower will inform Lender or will cause such
End-User to inform Lender of such move and will execute such additional
financing statements as Lender reasonably may request.
6.6 DAMAGE TO EQUIPMENT. Promptly after a Responsible Officer
learns that any Facility Equipment is damaged, and if such Facility Equipment
can be repaired in accordance with the terms of the applicable Facility
Contract so as to restore the same to good and working order, Borrower shall
cause such repairs to be made in accordance with the terms of such Facility
Contract.
6.7 BOOKS AND RECORDS; INSPECTIONS.
6.7.1 BOOKS AND RECORDS. Borrower shall keep and maintain, or
cause to be kept and maintained, complete and accurate books and records
and make all necessary entries therein to reflect the transactions
contemplated hereby and all payments, credits, adjustments and calculations
relative thereto.
6.7.2 INSPECTIONS/AUDITS. Upon reasonable prior notice, Lender
shall have full and complete access to the books and records of Borrower
pertaining to the Collateral. In addition, from time to time, but not more
often than twice each year (and upon the occurrence and during the
continuation of a Borrower Event of Default as often as Lender in its sole
discretion deems necessary in order to monitor the business activities of
Borrower), representatives of Lender shall have the right to conduct an
audit of the books and records of Borrower. Borrower shall pay to Lender on
demand the actual, reasonable, out-of-pocket travel expenses incurred by
Lender for any employee of Lender who may conduct or assist in conducting
any such audit.
6.8 MAINTENANCE. Borrower, pursuant to the applicable Facility
Contract, shall cause all Facility Equipment to be maintained and serviced so as
to keep such Facility Equipment in good operating condition, ordinary wear and
tear from normal use excepted.
6.9 NOTICE OF DEFAULTS; CHANGE IN BUSINESS AND ADVERSE EVENTS.
Borrower, immediately after any Responsible Officer becomes aware thereof,
shall give Lender written notice of the occurrence of (i) any Event of
Default or any Incipient Default, accompanied by a statement of such
Responsible Officer setting forth what action Borrower proposes to take in
respect thereof, (ii) any change in the (A) executive officers or key
employees of Borrower, or (B) location of the chief place of business of
Borrower or any sale or purchase outside the regular course of business of
Borrower, (iii) any event which may have a material adverse effect on the (A)
enforceability of the Lender Lien, (B) ability of Borrower to perform any of
its obligations under any of the Loan Documents or (C) Borrower's compliance
with the Gaming Laws of any state and/or Lender's ability to exercise its
remedies hereunder with respect to any Facility Equipment constituting Gaming
Device Goods, (iv) any material default in payment or performance by
Borrower or any End-User under any Facility Contract or (v) any material
damage to or irreparable malfunction of any Facility Equipment.
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6.10 INSURANCE/MAINTENANCE. All Facility Equipment shall be covered
by comprehensive physical damage insurance for the full insurable value
thereof, unless otherwise mutually agreed to by Borrower and Lender, and
general public liability coverage, and Borrower "and/or its assigns,
including collateral assigns," shall be named and continue to be named as
"Loss Payee" and "Additional Insured" as its interests may appear. Said
insurance shall continue to be in full force and effect, and shall not lapse
or be cancelled by the End-Users. Borrower, pursuant to the applicable
Facility Contract, will cause the End-User under each Facility Contract to
maintain all Facility Equipment in accordance with the terms of all insurance
policies which are or may be in effect with respect thereto so as not to
alter or impair any of the benefits or coverage to which Borrower or the
applicable End-User is entitled under any such insurance policies.
6.11 TAXES. Pursuant to the Contracts, Borrower or End-Users will
pay the personal property taxes levied or assessed on the Facility Equipment,
and Borrower shall cause the End-Users to file all personal property tax
returns relating to the Equipment. Borrower will xxxx and collect from the
End-Users all sales and use tax that is due and payable during the terms of
the Facility Contracts, and shall remit any sales and use taxes it receives
from the End-Users to the appropriate taxing jurisdiction. Notwithstanding
the above, in the event an End-User shall fail to remit the necessary taxes
to the taxing jurisdiction or to Borrower within the time prescribed or file
the necessary tax returns, Borrower promptly shall remit to the appropriate
taxing jurisdiction the amount of such overdue taxes, and shall indemnify and
hold harmless Lender for all such overdue and/or unpaid taxes, and any fines,
penalties and late charges related thereto, or related to a failure or delay
in filing the related tax returns.
6.12 CONTRACTS. With respect to each of the Contracts, Borrower
shall: (i) perform all acts necessary to preserve the validity and
enforceability of each such Contract; (ii) take all actions reasonably
necessary to assist Lender in collecting when due all amounts owing to
Borrower with respect to each such Contract; (iii) at all times keep accurate
and complete records of performance by Borrower and the End-User under each
such Contract; and (iv) upon request of Lender verify with the End-User under
each Facility Contract the payments due to Borrower under such Facility
Contract, except that (A) prior to the occurrence of a Borrower Event of
Default or Incipient Default, such requests shall not occur any more
frequently than once each year and (B) after the occurrence and during the
continuation of an Incipient Default or a Borrower Event of Default, such
requests may occur as often as Lender shall require.
ARTICLE VII
NEGATIVE COVENANTS
Until Borrower's Obligations are paid and performed in full, Borrower:
7.1 LIENS. Shall not create or incur or suffer to exist any Lien
on the Collateral other than Permitted Liens.
7.2 BORROWING. Shall not create, incur, assume or suffer to exist
any indebtedness which is secured by Liens on the Collateral other than the
Advances or Permitted Liens.
7.3 MODIFICATIONS OF FACILITY CONTRACTS. Shall not, without the
prior, written consent of Lender: amend, supplement, modify, compromise or
waive any of the terms of any Facility Contract (i) if the effect of such
amendment, supplement, modification, compromise or waiver is to (A) reduce or
waive the amount of any payment thereunder, (B) extend the term thereof
(except as otherwise permitted pursuant to Section 7.4), or (C) waive any
provisions thereof with respect to taxes, insurance or maintenance, or (ii)
unless such amendment, supplement, modification, compromise or waiver is with
respect to (A) the removal of any Facility Equipment and, in connection with
such removal, Borrower complies with the provisions of Section 6.5, (B) a
Permitted Substitution and if, in connection with such Permitted Substitution
any prepayment of any portion of the Facility shall occur, Borrower shall
comply with the terms of subsection 2.5; or (C) an upgrade or early
termination permitted by Section 2.5.2.
7.4 EXTENSIONS OF FACILITY CONTRACTS; FUTURE CONTRACTS OF FACILITY
EQUIPMENT. Shall not, without the prior written consent of Lender: (i) extend
the term of any Facility Contract unless as of the end of the Approved
Contract Term of such Facility Contract, such Contract no longer will be a
Facility Contract as a result of any such extension or (ii) re-lease any
Facility Equipment unless such re-lease is for the purpose of mitigating
damages arising from a Contract Event of Default.
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7.5 MAINTENANCE OF PERFECTED LENDER LIEN. Shall not change the
location of its chief executive office or principal place of business, except
if Borrower has (i) given Lender at least 30 days prior written notice
thereof and (ii) caused to be filed all UCC financing statements which in the
opinion of Lender are necessary or advisable to maintain the perfection of
the applicable Lender Lien.
7.6 MERGER AND ACQUISITION. Shall not, without the prior, written
consent of Lender, which consent will not be unreasonably withheld or
delayed, consolidate with or merge into any Person, or acquire all or
substantially all of the stock or Property of any Person.
7.7 SALE OR TRANSFER OF ASSETS. Shall not sell, lease, assign,
exchange, transfer or otherwise dispose of any Property except (i)
dispositions of Property (other than Equipment), which is not necessary to
the continued operation of the business of Borrower, (ii) disposition of the
real estate now owned or hereafter acquired by Borrower, provided no
Incipient Default or Event of Default is in existence or will occur as a
result of the consummation of any such sale, (iii) the leasing of real
property, (iv) dispositions of Property in the ordinary course of Borrower's
business, or (v) disposition of any obsolete or unusable Property, provided
that if such Property is necessary to the continued operation of the business
of Borrower, such Property promptly is replaced with Property of like
function and value to such Property when the same was not obsolete or
unusable, as applicable.
7.8 DELINQUENCY COVENANT. Shall not allow Facility Contract Total
Delinquency to be greater than twelve percent (12%) of the Aggregate
Portfolio Outstandings. All terms in this subsection not otherwise defined
shall have the meanings set forth in EXHIBIT L (Form of Monthly Delinquency
Report).
7.9 TRANSACTIONS WITH AFFILIATES. Shall not, except for (i)
transactions in the normal course of business, which transactions comply with
the provisions of clauses (y) and (z) of this Section 7.9, and (ii) purchases
of Equipment from PDS FINANCIAL CORPORATION-NEVADA, which purchases shall
comply with the provisions of clauses (y) and (z) of this Section 7.9, sell,
lease, assign, transfer or otherwise dispose of any Property to any Affiliate
or lease Property, render or receive services or purchase assets from any
Affiliate, except with the prior written consent of Lender, which consent
shall not unreasonably be withheld or delayed, and except that Borrower may
enter into any such transaction with any such Affiliate in the ordinary
course of business if (y) the monetary or business consideration arising
therefrom would be substantially as advantageous to Borrower as the monetary
or business consideration which would be obtained by Borrower in a comparable
arm's-length transaction with a Person which is not an Affiliate and (z) no
other provision of this Agreement would be violated as a result thereof.
7.10 TANGIBLE NET WORTH. Shall not allow Borrower's Tangible Net
Worth to be less than $7,000,000 as of 12/31/98, and less than $8,000,000 as
of 12/31/99 and thereafter.
7.11 FIXED CHARGE COVERAGE RATIO. Shall not allow Borrower's Fixed
Charge Coverage Ratio to be less than the amounts set forth in the following
table, as of the times specified:
1998 1999 2000 AND LATER
---- ---- --------------
1.75 to 1:00 at 12/31/98 2.00 to 1.00 at 12/31/99 as Lender shall specify
7.12 LEVERAGE RATIO. Shall not allow Borrower's Leverage Ratio on a
consolidated basis to exceed 7:1 in any reporting period.
7.13 RESIDUAL ADVANCE LOAN REPAYMENT AMOUNT TO ACQUISITION COST
RATIO. Shall not allow the aggregate Loan Repayment Amount with respect to
Residual Financing Facility Advances, at any time, measured quarterly, to
exceed twenty percent (20%) of Acquisition Cost of the related Residual
Financing Facility Equipment. In such case, not later than the next due date
under the related Residual Financing Facility Note(s), Borrower will be
required to remit a principal payment on the related Residual Financing
Facility Advance(s) in the amount of any such shortfall. At Borrower's
request, Lender shall furnish to Borrower a schedule setting forth, in
reasonable detail, Lender's calculation of such amounts to satisfy the
foregoing covenant.
7.14 INVENTORY FINANCE LINE. Shall maintain an inventory finance
line with a financial institution reasonably acceptable to Lender and
Borrower in an amount not less than Three Million Dollars ($3,000,000.00).
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ARTICLE VIII
BORROWER AND CONTRACT EVENTS OF DEFAULT -- DEFINITIONS AND REMEDIES
8.1 BORROWER EVENTS OF DEFAULT -- DEFINITION. The occurrence of any
of the following shall constitute a Borrower Event of Default hereunder:
(a) DEFAULT IN PAYMENT. If Borrower shall fail to remit to
Lender when due any payment that Borrower is required to make hereunder
or under any other agreement between Borrower and Lender, including, but
not limited to the PDS-Nevada Guaranty, when and as the same shall
become due and payable, and such failure shall continue for a period of
10 days after such payment becomes due.
(b) BREACH OF REPRESENTATION OR WARRANTY. If any
representation made by Borrower to Lender in any Loan Document or in any
report, certificate, opinion, financial statement (other than those
financial statements provided by and pertaining to any End-User) or
other document or statement furnished pursuant thereto, or under any
other agreement between Borrower and Lender, including, but not limited
to the PDS-Nevada Guaranty, shall be false or misleading in any material
respect when made, or any warranty given by Borrower shall be breached
by Borrower, unless (i) the fact, circumstance or condition is made true
within ten (10) Business Days after notice thereof is given to Borrower
by Lender, and (ii) in Lender's judgment, such cure removes any adverse
effect on Lender.
(c) BREACH OF COVENANT. If Borrower shall fail to duly
observe or perform any covenant, condition or agreement set forth in (i)
Articles VI or VII of the Agreement, or (ii) the PDS-Nevada Guaranty, on
its part to be performed or observed for ten (10) Business Days after a
Responsible Officer has knowledge thereof.
(d) BANKRUPTCY, RECEIVERSHIP, INSOLVENCY, ETC.
(i) If Borrower shall (A) apply for or consent to the
appointment of a receiver, trustee or liquidator for it or any
of its Property, (B) be unable to pay its debts as they
mature, (C) make a general assignment for the benefit of
creditors, (D) be adjudicated a bankrupt or insolvent or (E)
file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors
or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation
law or statute, or file an answer admitting the material
allegations of a petition filed against it in any proceeding
under any such law, or if action shall be taken by Borrower
for the purpose of effecting any of the foregoing, or
(ii) If any Governmental Body of competent
jurisdiction shall enter an order appointing, without consent
of Borrower, a custodian, receiver, trustee or other officer
with similar powers with respect to Borrower or with respect
to any substantial part of the Property belonging to Borrower,
or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to
take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or
liquidation of Borrower, or if any petition for any such
relief shall be filed against Borrower, and such petition
shall not be dismissed within 45 days.
(e) NON-PAYMENT OF OTHER INDEBTEDNESS. Default by Borrower
(other than in payment of Borrower's Obligations) in the (i) payment
when due (subject to any applicable grace period or cure period),
whether by acceleration or otherwise, of any indebtedness, where the
amount thereof is in excess of $500,000, or (ii) performance or
observance of any obligation or condition with respect to any
indebtedness of Borrower, where the amount of such indebtedness is in
excess of $500,000 (other than in payment of Borrower's Obligations) if
the effect of such default is to accelerate the maturity of any such
indebtedness or to permit the holder thereof to cause such indebtedness
to become due and payable prior to its expressed maturity.
(f) OTHER MATERIAL OBLIGATIONS. Default in the payment when
due, or in the performance or observance of, any material obligation of,
or condition agreed to by, Borrower with respect to any purchase or
lease of goods or services, where (i) the amount with respect to any
such purchase or lease of goods or services is in excess of $500,000 and
(ii) any grace
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period or cure period with respect to any such payment, performance or
observance has lapsed (except such default in payment, performance or
observance shall not be deemed to constitute a default hereunder if the
existence of any such default is being contested by Borrower in good
faith and by appropriate proceedings diligently pursued).
(g) PDS-NEVADA LOAN AGREEMENT. If an Event of Default shall
have occurred under the PDS-Nevada Loan Agreement.
In any such event, in addition to Lender's other remedies under this
Agreement, Lender, by notice to Borrower, may declare that no further
Advances shall be made.
8.2 BORROWER EVENTS OF DEFAULT -- REMEDIES. If a Borrower Event of
Default shall have occurred, and has not been cured by Borrower (or by
Lender, at its option) within an applicable cure period, or a Material
Adverse Change occurs of the type set forth in Section 4.1.7 (i) or (ii),
then Lender shall have the right to do any or all of the following:
(a) If Lender has not already done so pursuant to Section
2.4, complete and deliver to the End-Users the Contract Payment Letters
to commence direct billing and collection with respect to the Facility
Contracts (including directing the Bank to sweep any ACH payments from
End-Users under Facility Contracts to an account controlled by Lender),
and deduct from such receipts and remittances a fee equal to five
percent (5%) of the aggregate monthly receipts ("Administration Fee")
from the payment on the Facility Contracts as compensation for the
additional administrative burden;
(b) (i) exercise of any of Borrower's rights under any of
the Facility Contracts, or (ii) by written notice, require Borrower to
exercise on behalf of Lender as secured party under this Agreement any
and all of the rights available to Borrower under any Facility Contract
to the extent not already exercised by Borrower, whereupon Borrower
shall immediately take all requested action;
(c) proceed against Borrower for all rights and remedies
Lender may have in law or in equity under the Loan Documents;
(d) declare the entire amount of Borrower's Obligations and
Administration Fee due and payable immediately, and exercise in respect
of the Facility Equipment all the rights and remedies of a secured party
upon default under the UCC, including, at any reasonable time, to enter
Borrower's premises and take physical possession of any master leases to
which the related Facility Contracts pertain.
Lender shall not take any action or exercise any right that
would disturb any End-User's full and quiet enjoyment of all of such
End-User's rights under that Facility Contract. Lender will give Borrower
reasonable notice of the time and place of any public sale of any Collateral
or of the time after which any public or private sale of such Collateral or
any other intended disposition thereof is to be made. Unless otherwise
provided by law, the requirement of reasonable notice shall be met if such
notice is delivered at least ten (10) days before, or mailed, postage
prepaid, to Borrower, at least twenty (20) days before the time of such sale
or disposition.
Notwithstanding the foregoing, to the extent that a breach
occurs under Section 8.1(b), and such breach relates to a single Facility
Contract, Borrower shall have twenty (20) days from receipt of demand by
Lender to prepay the Facility Contract pursuant to the terms of the Mandatory
Prepayment clause set forth at Section 2.5.4. Borrower's failure to prepay
such Facility Contract within said twenty (20) day period shall then
constitute a Borrower Event of Default under Section 8.1(a). Furthermore, if
the Borrower Event of Default pertains solely to a breach of a covenant set
forth in Section 7.8 (Delinquency Covenants), Lender's sole remedy shall be
to commence direct billing and collection of Facility Contracts, subject to
all mandatory provisions of law, including without limitation, the Gaming
Laws, as set forth more fully in Section 8.2 (a) and (b).
All actual costs and expenses incurred by Lender in connection
with the enforcement and/or exercise of any of its rights or remedies
(including, without limitation, reasonable attorneys fees) hereunder shall
(i) be payable by Borrower to Lender immediately upon demand, (ii) constitute
a portion of Borrower's Obligations and (iii) be secured by the Lender Lien.
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8.3 CONTRACT EVENTS OF DEFAULT.
8.3.1 DEFINITION: The occurrence of a default by any End-User
pursuant to the terms of a Facility Contract, which default entitles
Borrower to accelerate or terminate such Facility Contract or to
repossess the related Facility Equipment, shall constitute a Contract
Event of Default.
8.3.2 ACCELERATION. Upon the occurrence of a Contract Event of
Default, Lender, at any time (unless such Contract Event of Default
shall have been cured by Borrower), at its option, by notice to Borrower
and/or End-User, may terminate such Facility Contract and accelerate all
payments due thereunder.
8.3.3 CONTRACT EVENT OF DEFAULT -- REMEDIES. Upon the
occurrence of a Contract Event of Default, Borrower shall, if known to
Borrower, immediately deliver to Lender written notice thereof, which
notice shall identify the Facility Contract which is in default and the
applicable Advance, and describe the nature of such default and the
actions Borrower proposes to undertake with respect to such default. If
any payment(s) under a Facility Contract becomes 120 days past due,
whether or not such payment(s) have been cured by Borrower, then
Borrower shall prepay in full the unpaid portion of the Advance
pertaining to such Facility Contract and remit to Lender such Residuals
as may be due pursuant to Section 2.7, or exercise its right of
substitution pursuant to Section 3.3.
Lender, with respect to the Facility Equipment subject
to such Facility Contract, shall have and may exercise against Borrower
all the rights and remedies of a secured party under the Illinois UCC
and/or the UCC applicable to the location of the related Facility
Equipment, and any other applicable laws, subject to all mandatory
provisions of law, including without limitation, the Gaming Laws. Lender
will give Borrower reasonable notice of the time and place of any public
sale of any Collateral or of the time after which any public or private
sale of such Collateral or any other intended disposition thereof is to
be made. Unless otherwise provided by law, the requirement of reasonable
notice shall be met if such notice is delivered at least ten (10) days
before, or mailed, postage prepaid, to Borrower at least twenty (20)
days before the time of such sale or disposition. Solely with respect to
the Full Recourse Facility (and with respect to the Non-Recourse
Facility only as set forth in SECTION 9.13), Lender shall have full
recourse to Borrower for any deficiency between the Sale Proceeds
thereof and the Loan Repayment Amount for the related Advance. For the
purposes hereof, Sale Proceeds shall mean the gross proceeds received by
Borrower with respect to any sale of Facility Equipment, less any
reasonable remarketing fees paid or reasonable costs incurred by
Borrower with respect to any such sale. In addition to the foregoing, at
Lender's election, Lender may complete and deliver one or more Contract
Payment Letters in order to commence direct billing and collection with
respect to one or more Contracts subject to a Contract Event of Default,
and deduct the Administration Fee with respect thereto. Furthermore:
(i) Lender only shall be entitled to exercise the rights
and remedies set forth in this Section 8.3.3 with respect to
the Facility Contract, the End-User and the Facility Equipment
which are the subject of such Contract Event of Default;
(ii) the expenses and other payments to which any
proceeds of the Collateral shall be applied in accordance with
the provisions of subsections 8.6 & 8.7 shall be so applied to
payment of Borrower's Obligations pertaining to the Facility
Contract which is the subject of such Contract Event of
Default, and
(iii) upon payment and performance in full of all of
Borrower's Obligations pertaining to the Facility Contract
which is the subject of such Contract Event of Default, both
(A) the Contract Event of Default with respect to such
Facility Contract, and (B) any related Borrower Event of
Default shall be deemed to be cured.
8.5 POWER OF ATTORNEY. In order to permit Lender to exercise the
rights and remedies set forth herein, Borrower hereby irrevocably appoints
Lender as its attorney-in-fact and agent with full power of substitution, in
the name of Lender or in the name of Borrower, to perform any of the
following acts upon the occurrence of a Borrower Event of Default, subject to
all mandatory provisions of law, including without limitation, the Gaming
Laws: (i) receive, open and examine all mail addressed to Borrower and retain
any such mail relating to the Collateral and return to Borrower only that
mail which is not so related; (ii) endorse the name of Borrower on any checks
or other instruments or evidences of payment or other documents, drafts, or
instruments arising in connection with or pertaining to the Collateral, to
the extent that any such items come into the possession of Lender; (iii)
compromise, prosecute or defend any action, claim, or proceeding concerning
the
23
Collateral; (iv) perform any and all acts which Borrower is obligated to
perform under the Loan Documents; (v) exercise such rights as Borrower might
exercise with respect to the Collateral, including, without limitation, the
leasing or other utilization thereof and the collection of any such rents or
other payments applicable thereto; (vi) give notice of the existence of the
Lender's Lien, including, without limitation, notification to End-Users
and/or other account debtors of the existence of such Lender's Lien with
respect to the rents and other payments due to Borrower relative to the
Collateral; or (vii) execute in Borrower's name and file any notices,
financing statements and other documents or instruments Lender determines are
necessary or required to carry out fully the intent and purpose of the Loan
Documents or to perfect the Lender Lien.
Borrower hereby ratifies and approves all that Lender shall do
or cause to be done by virtue of the power of attorney granted herein and
agrees that neither Lender nor any of Lender's employees, agents, officers,
or its attorneys will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law made while acting in good faith pursuant
to the provisions of this subparagraph, unless such act, omission, error of
judgment or mistake of fact or law is determined by a court of competent
jurisdiction in a decision which no longer is subject to appeal to be the
result of the gross negligence or the willful or wanton misconduct of Lender
or any such employees, agents, officers or attorneys of Lender. The
appointment of Lender as Borrower's attorney-in-fact is a power coupled with
an interest, and therefore shall remain irrevocable until all of Borrower's
Obligations have been paid and performed in full.
8.6 EXPENSES. All actual costs and expenses incurred by Lender in
connection with the enforcement and/or exercise of any of its rights or
remedies (including, without limitation, reasonable attorneys fees) hereunder
shall (i) be payable by Borrower to Lender immediately upon demand, (ii)
constitute a portion of Borrower's Obligations and (iii) be secured by the
Lender Lien.
8.7 APPLICATION OF FUNDS. Any funds received by Lender pursuant to
the exercise of any rights accorded to Lender pursuant to or by the operation
of any of the terms of any of the Loan Documents shall be applied by Lender
in the following order of priority:
(i) EXPENSES: First to the payment of all (A) actual fees
and expenses, including, without limitation, court costs, fees of
appraisers, title charges, costs of maintaining and preserving the
Collateral, costs of sale, reasonable attorney's fees, and all other
costs incurred by Lender in exercising any rights accorded to Lender
pursuant to the Loan Documents or by applicable law and (B) Liens
superior to the Liens of Lender, except such superior Liens subject to
which any sale of the Collateral may have been made;
(ii) BORROWER'S OBLIGATIONS. Next, to the payment of
Borrower's Obligations, in such order as Lender may determine; and
(iii) SURPLUS. Any surplus, to the Person or Persons legally
entitled thereto.
ARTICLE IX
MISCELLANEOUS
9.1 RIGHTS, REMEDIES AND POWERS. Each and every right, remedy and
power granted to Lender hereunder shall be cumulative and in addition to any
other right, remedy or power not specifically granted herein or now or
hereafter existing in equity, at law, by virtue of statute or otherwise and
may be exercised by Lender from time to time concurrently or independently as
often and in such order as Lender may deem expedient. Any failure or delay on
the part of Lender in exercising any such right, remedy or power, or
abandonment or discontinuance of steps to enforce the same, shall not operate
as a waiver thereof or affect Lender's right thereafter to exercise the same,
and any single or partial exercise of any such right, remedy or power shall
not preclude any other or further exercise thereof or the exercise of any
other right, remedy or power. Acceptance of payments in arrears shall not
waive or affect any right to accelerate Borrower's Obligations.
9.2 MODIFICATIONS, WAIVERS AND CONSENTS. Any modification or
waiver of any provision of this Agreement, or any consent to any departure by
Borrower therefrom, shall not be effective in any event unless the same is in
writing and signed by Lender, and then such modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
given. Any notice to or demand on Borrower in any event not specifically
required of Lender hereunder shall not
24
entitle Borrower to any other or further notice or demand in the same,
similar or other circumstances unless specifically required hereunder.
9.3 COMMUNICATIONS. All notices, consents, approvals and other
communications under the Loan Documents shall be in writing and shall be (i)
delivered in person, (ii) sent by telephonic facsimile ("FAX") or (iii)
mailed, postage prepaid, either by (A) registered or certified mail, return
receipt requested, or (B) overnight express carrier, addressed in each case
as follows:
To Lender: Xxxxxx Financial, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Group President - Xxxxxx Sales Finance, LPF
FAX No.: (000) 000-0000
Borrower: PDS Financial Corporation
Attention: Xxxxx Xxxxxx, CEO and President
0000 XxXxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
FAX No.: (000) 000-0000
with a copy to: Xxxxxx & Whitney, LLP
Attention: Xxxxx X. Xxxxxxx, Esq.
Pillsbury Center South
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
FAX No.: (000) 000-0000
Xxxxxx & Xxxxxxxx
Attention: Xxxx Xxxxxx, Esq.
000 X. Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx, Xxxxxx 00000
FAX No.: (000) 000-0000
or to such other address, as to either of the parties hereto, as such party
shall designate in a written notice to the other party hereto. All notices
sent pursuant to the terms of this Section 9.3 shall be deemed received (i)
if sent by FAX during regular business hours, on the day sent if a Business
Day, or if such day is not a Business Day (or a Business Day after regular
business hours), then on the next Business Day, (ii) if sent by overnight,
express carrier, on the next Business Day immediately following the day sent,
or (iii) if sent by registered or certified mail, on the fifth Business Day
following the day sent.
9.4 SEVERABILITY. If any provision of this Agreement is prohibited
by, or is unlawful or unenforceable under, any applicable law of any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to the extent of such prohibition without invalidating the remaining
provisions hereof; provided, however, that where the provisions of any such
applicable law may be waived, they hereby are waived by Borrower to the full
extent permitted by law so that this Agreement shall be deemed to be an
agreement which is valid and binding in accordance with its terms.
9.5 SURVIVAL. The warranties, representations, covenants and
agreements set forth herein shall survive the making of the Advances and the
execution and delivery of the Loan Documents and shall continue in full force
and effect until Borrower's Obligations have been paid and performed in full.
9.6 ATTORNEYS' FEES AND OTHER EXPENSES. Borrower agrees to pay to
Lender on demand any actual out-of-pocket costs or expenses, together with
reasonable attorneys' fees, incurred by Lender in connection with the
enforcement or collection against Borrower of any provision of any of the
Loan Documents, whether or not suit is instituted, including, but
25
not limited to, such actual costs or expenses arising from the enforcement or
collection against Borrower of any provision of any of the Loan Documents in
any state or Federal bankruptcy or reorganization proceeding. In addition, in
the event that Borrower elects to submit a Contract Funding Request
containing one or more Contracts which have deviations from the standard form
approved by Lender and attached to this Agreement as part of SCHEDULE 4.1.2,
Lender reserves the right to charge a reasonable fee, based on a rate of
$125.00 per hour, as an offset against the related Advance, for its internal
counsel to review such Contract(s).
9.7 INDEMNITY. Borrower agrees to indemnify and save Lender and
its successors, assigns, agents and servants harmless of and from any claims,
actions, suits, losses, costs, liabilities, damages or expenses (including
actual expenses and reasonable attorneys' fees) incurred by Lender in
connection with the transactions contemplated by this Agreement, including
without limitation: (i) any loss, cost, liability, damage or expense
(including actual expenses and reasonable attorneys' fees) incurred in
connection with the Facility Contracts; (ii) the delivery, ownership,
alteration, operation, maintenance, return or other disposition of the
Collateral, including, without limitation, disposition and/or remarketing
pursuant to the Gaming Device Goods remarketing agreement referenced in
Section 4.2.3.2(b); (iii) from any documentation deficiencies or changes to
the basic format of the Facility Contract; (iv) from the existence of any
party having an interest, lien or claim in the Facility Contract(s), and/or
the Facility Equipment covered thereby, and/or the proceeds thereof, which
interest, lien or claim is prior to the interest therein assigned to Lender
hereby; (v) the construction of Lender and Borrower as having the
relationship of joint venturers or partners, or (vi) the determination that
Lender or Borrower has acted as agent for the other. Borrower's obligations
with respect to the indemnity set forth in this Section 9.7 shall survive
repayment of all amounts due pursuant to the Loan Documents, the cancellation
of the Notes and the release and/or cancellation of any and all of the Loan
Documents. Lender agrees to promptly notify Borrower of any matters in
respect of which this indemnity may apply. If notified in writing of any
action or claim brought or threatened against Lender based on a claim for
which Borrower is to provide indemnity and given full authority, information,
and assistance for the defense of same by Lender, Borrower shall, without
limitation, defend those actions or claims at its expense and pay the costs
and damages and attorneys' fees awarded in any such action or arising from
any such claim, provided that Borrower shall have the right to control the
defense and settlement of all such actions and claims. Lender will take all
such actions (at the expense of Borrower) as may be reasonably requested by
Borrower to assist Borrower in connection with such defense or settlement.
Nothing herein is intended to indemnify Lender for consequences of its
actions or failure to act.
9.8 BINDING EFFECT. This Agreement shall be binding upon the
successors and assigns of Borrower and shall inure to the benefit of the
successors and assigns of Lender.
9.9 ASSIGNMENTS; PARTICIPATIONS. Lender shall be entitled to sell,
securitize, assign or transfer any portion of its interest in the Facility;
provided, however, Lender hereby agrees to deliver to Borrower notice of such
proposed sale, securitization, assignment or transfer not less than 30 days
prior to the proposed date for the consummation thereof, which notice shall
include, if available, a description of the financial institution(s) to which
such sale, securitization, assignment or transfer is proposed to be made. In
connection with any such sale, securitization, assignment or transfer, Lender
may disclose such information with respect to Borrower, its business and
financial affairs and the Facility as Lender reasonably deems necessary,
unless any such information which has been provided by Borrower to Lender is
confidential in nature, in which case such confidential information shall not
be disclosed without the prior written consent of Borrower, which consent
shall not unreasonably be withheld or delayed.
9.10 FURTHER ASSURANCES. Each of Borrower and Lender agrees that upon
the request of the other party hereto at any time and from time to time after
the execution of this Agreement it shall execute and deliver such further
instructions, documents, and certificates and take such further actions as such
party reasonably may request.
9.11 GOVERNING LAW, CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EXCEPT WITH RESPECT TO ENFORCEMENT OF SECURITY INTERESTS IN GAMING DEVICE
GOODS (WHICH SHALL BE GOVERNED BY THE STATE IN WHICH SUCH GAMING DEVICE GOODS
ARE SITUATED), THIS AGREEMENT, EACH OF THE OTHER LOAN DOCUMENTS, AND ANY
ASSIGNMENT EXECUTED IN CONNECTION THEREWITH SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF ILLINOIS. BORROWER DOES
HEREBY SUBMIT, AT LENDER'S ELECTION, TO THE EXCLUSIVE JURISDICTION AND VENUE
OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING A SITUS WITHIN THE
00
XXXXXX XX XXXX XXX XXX XXXXX XX XXXXXXXX WITH RESPECT TO ANY DISPUTE, CLAIM,
OR SUIT, WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR ANY RELATED NOTE OR ANY OF BORROWER'S OBLIGATIONS OR
INDEBTEDNESS HEREUNDER. BORROWER EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS
AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO THE
LAST KNOWN ADDRESS OF BORROWER, WHICH SERVICE SHALL BE DEEMED COMPLETED
WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. BORROWER HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF XXXX, STATE OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY
RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING,
ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR
OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED
TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM
OR THE TAKING OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER
APPROPRIATE JURISDICTION.
9.12 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
THIS WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES WHICH
ARISE OUT OF ANY OF THE LOAN DOCUMENTS OR PERTAIN TO THE TRANSACTIONS
CONTEMPLATED THEREBY. THIS WAIVER IS IRREVOCABLE, AND MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND SUCH WAIVER SET FORTH HEREIN SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
9.13 NON-RECOURSE FACILITY. At Lender's discretion, from time to
time Lender may consider the financing of individual Eligible Contracts on a
non-recourse basis, PROVIDED, HOWEVER, that at no time shall the sum of:
(i) the Loan Repayment Amount with respect to the Non-Recourse
Facility, and
(ii) any amounts outstanding under that certain Limited Recourse
Promissory Note dated August 27, 1997 executed by Borrower
in Lender's favor, in the original principal amount of
$9,477,427.68,
exceed Fifteen Million Dollars ($15,000,000). In the event that Lender elects
to make an Advance with respect to such Contracts, all of the provisions of
this Agreement with respect to the Facility and Advances thereunder shall
apply to such non-recourse Advances (including, without limitation, all of
the conditions, representations, warranties and covenants set forth in
Articles III, IV, V, VI and VII hereof, Borrower's servicing obligations, and
all of the definitions applicable to Non-Recourse Facility Advances), with
the specific exception of the following, which shall control in the event of
any conflict:
9.13.1 NON-RECOURSE NOTE. In conjunction with each
non-recourse Advance, the form of Non-Recourse Note set forth in Exhibit
G1 ("Non-Recourse Note") shall be utilized.
9.13.3 BORROWER'S LIABILITY. Anything in this Agreement or any
exhibits hereto, any certificate, opinion or documents of any nature
whatsoever to the contrary notwithstanding, neither Lender nor its
successors or assigns shall have any claim, remedy or right to proceed
(at law or in equity) against Borrower or any incorporator, shareholder,
director, officer, or employee of Borrower for the payment of any
deficiency or any other sum owing on account of the indebtedness
evidenced by any Non-Recourse Note or for the payment of any liability
of any nature whatsoever with respect to any Non-Recourse Note,
Non-Recourse Facility Contract or Non-Recourse Facility Equipment or any
obligations of Borrower under this Agreement with respect to any
Non-Recourse Note, Non-Recourse Facility Contract or Non-Recourse
Facility Equipment (EXCEPT THAT LENDER SHALL NOT BE PROHIBITED FROM
ASSERTING A CLAIM AGAINST BORROWER PERSONALLY WHICH CLAIM IS FOR ACTUAL
DAMAGES DIRECTLY RESULTING FROM THE BORROWER'S FAILURE TO REMIT ANY
CONTRACT PROCEEDS TO LENDER, OR THE OTHER BORROWER EVENTS OF DEFAULT
DESCRIBED IN SUBSECTIONS (b) AND (c) OF SECTION 8.1), from any source
other than the Collateral pertaining to such Non-Recourse Facility
Contract, including the sums due and to become due under any
Non-Recourse Facility Contract; and Lender by acceptance of a
Non-Recourse Note waives and releases any liability of Borrower for and
on account of such indebtedness or such liability, EXCEPT AS PROVIDED
ABOVE, and Lender, its successors and assigns and the holders of any
Non-Recourse Note agree to look either to the End-User pertaining to
such Non-Recourse Facility Contract or to the Collateral pertaining to
such Non-Recourse Facility Contract,
27
including the sums due and to become due under such Non-Recourse
Facility Contract for the payment of said indebtedness or the
satisfaction of such liability.
9.13.4 AGGREGATE TO TOTAL FACILITY. No Advances made
pursuant to this Section 9.13 shall aggregate towards the maximum
available amounts under any other Facility hereunder.
9.13.5 ADDITIONAL ELIGIBILITY CRITERIA. Solely with
respect to the Non-Recourse Facility, (i) the Eligible Contract
criteria/definition shall additionally include a requirement that the
related End-User has been notified of, and has acknowledged, the
collateral assignment of such Contract to Lender, and (ii) Native
American End-Users shall not be considered Eligible End-Users.
This Agreement has been executed and delivered by each of the parties hereto by
a duly authorized officer of each such party on the date first set forth above.
XXXXXX FINANCIAL, INC. PDS FINANCIAL CORPORATION
By: /s/ By: /s/ Xxxxx Xxxxxx
___________________________ ___________________________
Xxxxx Xxxxxx
Title: Senior Vice President Title: CEO and President
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