SBA AGREEMENT
SBA AGREEMENT ("Agreement") dated this 23rd day of December, 2004, by
and among the United States Small Business Administration ("SBA"), Rocky
Mountain Mezzanine Fund II, L.P. ("Rocky"), Xxxxxxx Xxxxxx Mezzanine Fund, L.P.
("Hanifen"), MorAmerica Capital Corporation ("MorAmerica") and NDSBIC, L.P.
("NDSBIC") (Rocky, Hanifen, MorAmerica and NDSBIC, collectively, the "Funds").
WHEREAS, the Funds are parties to a Contribution Agreement, dated as of
May 12, 2000 (the "Contribution Agreement"), providing for the allocation of
joint and several liability related to the sale of a portfolio company to
TransCore Holdings, Inc. ("TransCore"); and
WHEREAS, the Funds and TransCore are parties to an arbitration
proceeding, TransCore Holdings, Inc. v. Rocky Mountain Mezzanine Fund II, L.P.,
et al., JAMS Case No. 1410003193 (the "Arbitration"), pursuant to which an
interim award has been issued and further proceedings are pending;
WHEREAS, the Funds and TransCore have entered into a Settlement
Agreement dated as of the date hereof (the "Settlement Agreement") to completely
resolve all issues in the Arbitration, providing, in part, for payment by the
Funds to TransCore of the sum of $20,000,000;
WHEREAS, the Settlement Agreement is contingent on approval by SBA and
SBA is willing to approve release of the settlement payment to TransCore only if
the Funds enter into this Agreement.
NOW THEREFORE, in consideration of these premises and the mutual
agreements set forth herein, the parties hereby agree as follows:
1. The SBA has no objection to the Settlement Agreement and the payment
by each Fund of its portion of the settlement payment as required under the
Contribution Agreement.
2. Each of the Funds hereby agrees, jointly and severally, to reimburse
the SBA, on demand, for Losses incurred by SBA as a result of non-payment of any
Fund's SBA Debentures. The Funds' obligation hereunder is limited to fifty
percent (50%) of SBA's Losses, up to a maximum reimbursement obligation of
$7,500,000.
a. Losses shall mean the failure of any Fund to repay in full
all SBA Debentures, following administration of repayment by the SBA in
accordance with its normal procedures for similarly situated funds, and
following complete liquidation of a defaulting Fund's investments.
b. SBA Debentures means a Fund's indebtedness to the SBA
pursuant to its SBIC debenture program.
3. The parties agree, until the condition of Section 4 is met or until
this Agreement is terminated:
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a. SBA Debentures shall be repaid on their current payment
schedule (or pre-paid as negotiated with SBA). In addition, the Funds
will not take down new leverage, and, other than as deemed necessary by
SBA in order to maximize investment values, the SBA and the Funds will
not extend the maturity of existing SBA debentures.
b. Until the Escrow Agreement is fully funded, the Funds will
not make liquidating distributions to equity holders, provided that the
Funds may make tax distributions in the ordinary course of business. In
addition, MorAmerica shall be permitted to distribute dividends
required to qualify for regulated investment company status under the
Internal Revenue Code, to the extent otherwise permitted by SBA
regulations.
Except as expressly provided in this Agreement, each Fund shall otherwise be
free to operate in the normal course of business. Nothing in this Section 3 or
in any other provision of this Agreement shall limit any powers or rights of the
SBA under the Small Business Investment Act of 1958, as amended (the "Act"),
regulations promulgated by the SBA under the Act or the SBA Debentures
(including the right to accelerate payment of any SBA Debentures).
4. The parties agree, no later than January 31, 2005, to enter into an
escrow agreement (the "Escrow Agreement") for the purpose of assuring the
parties of payment of each Fund's liability hereunder. The Escrow Agreement
shall be maintained with an escrow agent acceptable to the parties, and shall
provide for an individual sub-account for each Fund. The Escrow Agreement shall
provide that escrowed funds may be released only (i) to the SBA to meet the
Funds' reimbursement obligation under Section 2, or (ii) to the Funds should
amounts remain in escrow after termination of this Agreement. The Contribution
Amount of a Fund is an amount equal to the Contribution Percentage (as defined
below) times $7,500,000. At such time as the escrow is fully funded with
$7,500,000:
a. all covenants under Section 3 of each Fund shall be
terminated;
b. the SBA's sole remedy with respect to the reimbursement
covenant of Section 2 shall be to withdraw funds from the Escrow
Agreement.
Contributions by any Fund may be made to the Escrow Agreement only (i) after
that Fund's SBA Debentures have been repaid, or (ii) as permitted by SBA in
writing.
5. SBA agrees, no less than annually, by April 30 of each year
commencing with 2005, to re-assess the need for this Agreement and to consider
modifications to or termination of this Agreement and the Escrow Agreement in
order to permit partial or full release of the obligations of the Funds
hereunder and return of the Escrowed Funds.
6. This Agreement shall be terminated, and any funds held pursuant to
the Escrow Agreement shall be released to the Funds on the earlier of:
a. Termination by agreement of the parties; or
b. Repayment in full of all SBA Debentures; or
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c. December 31, 2013.
7. The following provisions provide for continuation of the Funds'
obligations under the Contribution Agreement.
a. In the event of any Losses due hereunder, each Fund agrees
that it shall be responsible for its Contribution Percentage of the
Losses and shall pay the required amount to SBA when due. In the event
that a Fund has not made its required share of any payment of Losses to
SBA, that Fund shall be liable for immediate payment to the other Funds
to the extent of the other Funds' overpayment.
b. Contribution Percentages shall be as set forth on Exhibit
A, which are the same percentages as computed under the Contribution
Agreement, omitting the individual parties to the Contribution
Agreement.
c. Until this Agreement is fully funded, each Fund shall
provide to the other Funds, promptly after filing with the SBA, a copy
of that Fund's quarterly and annual financial statements.
8. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original.
9. All notices or other communications given pursuant to this Agreement
shall be in writing and shall be given by personal delivery, by United States
mail or an established, commercial express delivery service (such as Federal
Express), postage or delivery charge prepaid, return receipt requested,
addressed to the person and address designated on the signature pages of this
Agreement. A notice or other communication shall be deemed received on the
earliest of the following: (i) the date of its delivery to the address specified
above, (ii) the date of its actual receipt by the person or entity specified
above, or (iii) in the case of refusal to accept or inability to deliver the
notice or other communication, the earliest of (a) the date of the attempted
delivery or refusal to accept delivery, (b) the date of the postmark on the
return receipt, or (c) the date of receipt of notice of refusal or notice of
non-delivery by the sending party. Any party may designate any other address in
substitution of the foregoing address(es) at any time by giving the other
parties ten (10) days written notice of the new address.
10. If any term, covenant or condition of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable, the remainder of this Agreement or such other documents, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition of this Agreement or such
other documents shall be valid and shall be enforced.
11. The failure of any party to insist upon strict performance of any
of the provisions contained herein shall not be deemed a waiver of any rights or
remedies that such party may have, and shall not be deemed a waiver of any
subsequent breach or default.
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12. This Agreement contains the entire agreement between and among the
parties hereto and supersedes all prior negotiations and agreements, oral or
written, with respect to the subject matter hereof.
13. This Agreement is not intended to create, nor shall it be in any
way construed to create any third-party beneficiary rights in any person not a
party hereto.
14. This Agreement shall inure to the benefit of and bind the
respective parties' successors and assigns. All obligations of the Funds
hereunder are the sole liability of the corporate entity, and no liability shall
accrue or be imposed on any shareholder, member, partner, officer, director,
employee or agent of the Funds.
15. This Agreement is made and delivered in, and shall be construed and
interpreted in accordance with the laws (without reference to the choice-of-law
provisions) of, the United States and the District of Colombia.
16. This Agreement may be amended only in writing executed by all
parties.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PARTIES NOTICE ADDRESS:
ROCKY MOUNTAIN MEZZANINE FUND II, L.P. ROCKY MOUNTAIN MEZZANINE FUND II, L.P.
0000 00xx Xxxxxx, Xxxxx 0000
By: Rocky Mountain Capital Partners, L.L.P., Xxxxxx, XX 00000
its general partner
/s/ Xxxx Xxxxx
-----------------------------
Xxxx Xxxxx, General Partner
XXXXXXX XXXXXX MEZZANINE FUND, X.X. XXXXXXX XXXXXX MEZZANINE FUND, L.P.
0000 00xx Xxxxxx, Xxxxx 0000
By: Xxxxxxx Xxxxxx Capital Partners, L.L.P., Xxxxxx, XX 00000
its general partner
/s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx, Managing Partner
MORAMERICA CAPITAL CORPORATION MORAMERICA CAPITAL CORPORATION
Attention: President
By: /s/ Xxxx Xxxxxx 000 Xxxxxx Xxxxxx, XX, Xxxxx 000
------------------------------ Cedar Rapids, IA 52401
Xxxx Xxxxxx, President
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx Xxxxx, CFO
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NDSBIC, L.P. NDSBIC, L.P.
Attention: President
By: InvestAmerica N.D., L.L.C., 000 Xxxxxx Xxxxxx, XX, Xxxxx 000
its general partner Xxxxx Xxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx Xxxxx, Executive Vice President
UNITED STATES SMALL BUSINESS ADMINISTRATION
Associate Administrator for Investment
/s/ Xxxxx X. Xxxxxx-Xxxxxxxx UNITED STATES SMALL BUSINESS ADMINISTRATION
By: ------------------------------------ 000 0xx Xx., XX, 0xx Xxxxx
Xxxxx X. Xxxxxx-Xxxxxxxx Xxxxxxxxxx, XX 00000
Acting Associate Administrator
SBA Investment Division cc: Xxxxxx Xxxxxxxxx, Esq.
Asst. General Counsel for SBIC
Enforcement
Office of the General Counsel
Small Business Administration
000 0xx Xx., XX, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
cc: Xxxxxx Xxxxxx, Director
SBIC Liquidation
Small Business Administration
000 0xx Xx., XX, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
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EXHIBIT A
CONTRIBUTION PERCENTAGES
Contribution Contribution
Percentage Amount
Xxxxxxx Xxxxxx Mezzanine Fund, L.P. 23.35% $1,751,325
Rocky Mountain Mezzanine Fund II, L.P. 59.73% 4,479,745
MorAmerica Capital Corporation 12.52% 939,009
NDSBIC, L.P. 4.40% 329,922
Total 100.0% $7,500,001
