DISCRETIONARY REVOLVING CREDIT AGREEMENT
Dated as of February 22, 1999
Sunrise International Leasing Corporation, a Delaware corporation (the
"Borrower"), located at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxxxx,
Xxxxxxxxx 00000 and National City Bank of Minneapolis, a national banking
association (the "Bank"), located at 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000, agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement the following terms
shall have the following meanings (such meanings to be equally applicable to
singular and plural forms of the terms defined):
(a) "Affiliate" means any of the following Persons:
(i) any director, officer or employee of the
Borrower;
(ii) any person who, individually or with his
immediate family, beneficially owns or holds 5% or more of
voting interest of the Borrower; or
(iii)any company in which any Person described above
owns a 5% or greater equity interest.
(b) "Base Rate" means the rate established by the Bank from
time to time as its base rate.
(c) "Borrowing Base" with respect to any Note means an amount
equal to the sum of the following:
(i) 100% of the Present Value of the Eligible
Equipment Leases designated by the Borrower on the most recent
Borrowing Base Certificate for that Note; and
(ii) 100% of the Residual Value of the inventory
under Eligible Equipment Leases designated by the Borrower on
the most recent Borrowing Base Certificate for that Note;
provided, however, that the portion of the Borrowing Base attributable
to any Eligible Equipment Lease shall not, at any time, exceed the Net
Book Value of that lease.
(d) "Borrowing Base Certificate" with respect to any Note
means a certificate signed by the chief financial officer or corporate
controller of the Borrower which is delivered to the Bank pursuant to
Section 5.1(a) and which shows as of the date of determination (A) the
Eligible Equipment Leases for that Note, (B) the Net Book Value,
Present Value and Residual Value for such Eligible Equipment Leases,
(C) the original cost and the accumulated depreciation of the inventory
subject to such Eligible Equipment Leases, and (D) a payment aging for
such Eligible Equipment Leases.
(e) "Borrowing Base Value" for any Eligible Equipment Lease
means the portion of the Borrowing Base attributable to such lease.
(f) "Business Day" means any day other than a Saturday, Sunday
or a public holiday or the equivalent under the laws of the State of
Minnesota or the United States of America.
(g) "Debt" means (i) indebtedness for borrowed money or for
the deferred purchase price of property or services, (ii) obligations
as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as
capital leases, (iii) obligations under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred
to in clause (i) or (ii) above, and (iv) liabilities in respect of
unfunded vested benefits under plans covered by Title IV of ERISA.
(h) "Eligible Equipment Lease" means a lease (i) for which the
Borrower is the lessor and holds all financial servicing rights; (ii)
which has an original term of not more than 36 months or such longer
term as the Bank has approved in writing; (iii) all originals of which
have either been delivered to the Bank, or, prior to a UCC Filing Event
only, have been marked or otherwise segregated to show the Bank's
security interest; (iv) which has been approved by the Bank in its sole
discretion as to form and content; (v) which is subject to a perfected
security interest in favor of only the Bank as required by this
Agreement; (vi) which relates to inventory which is (A) owned by the
Borrower and (B) subject to a perfected security interest in favor of
only the Bank as required by this Agreement; (vii) with respect to
which the Borrower has directed that all contract payments be made to a
lockbox under the control of State Street Bank and Trust Company, or
other depository acceptable to the Bank; (viii) with respect to which
the Borrower has filed a UCC-1 Financing Statement, or equivalent
document under applicable law, to give public notice of the Borrower's
interest in the inventory under the lease; and (ix) under which the
lessee in required to obtain casualty insurance on the related
inventory; provided, however, that (A) no lease may be added as an
Eligible Equipment Lease at a time when the lease is in default, (B) no
lease may remain as an Eligible Equipment Lease if it has been in
default for more than 90 days, (C) no lease may be added as an Eligible
Equipment Lease at a time when the lessee of the lease is the lessee on
other Eligible Equipment Leases which have a Borrowing Base Value,
which when added to the Borrowing Base Value of the proposed lease,
would exceed $750,000.00 and (D) if the lease is subject to a Permitted
Encumbrance, the Borrower has obtained and delivered to the Bank a
recordable release of that lease from that Permitted Encumbrance. A
lease can be an Eligible Equipment Lease for only one Note at any time.
(i) "Event of Default" means one of the events specified in
Section 6.1.
(j) "Interest Coverage Ratio" for any time period means a
ratio the numerator of which is the sum of the Borrower's net income
during that period plus interest, depreciation, amortization and income
tax expense during that period and the denominator of which is interest
expense during that period.
(k) "Loan Documents" means this Agreement, the Notes, the
Security Agreement and all other documents to be executed in connection
with this Agreement.
(l) "Loan Party" means any Person obligated under any Loan
Document.
(m) "Net Book Value" means, at any time, with respect to any
Eligible Equipment Lease, the original cost of the inventory subject to
that lease minus depreciation that has been, or under generally
accepted accounting principles should have been, accumulated with
respect to that inventory
(n) "Notes" means all of the Notes described in Section 2.2
(o) "Permitted Encumbrances" means all security interests and
other encumbrances on any of the Borrower's assets as of the date
hereof as disclosed in writing to the Bank contemporaneously with this
Agreement.
(p) "Person" means an individual, corporation, partnership,
joint venture, trust or unincorporated organization or governmental
agency or political subdivision thereof.
(q) "Present Value" means at any time, as to any Eligible
Equipment Lease, the remaining contractual payments then owing on that
lease discounted to present value using a discount rate equal to the
rate of interest then applicable to the Note for which that lease
constitutes a part of the Borrowing Base.
(r) "Residual Value" means, as to any Eligible Equipment
Lease, the Net Book Value of that lease minus the Present Value of that
lease.
(s) "Senior Recourse Debt" means the aggregate of the
consolidated Debt for borrowed money of the Borrower, determined and
computed in accordance with generally accepted accounting principles
consistently applied from year to year, provided that Debt shall be
included in this calculation only to the extent the Debt provides for
recourse to the Borrower.
(t) "Subsidiary" means any corporation of which more than 50%
of the outstanding capital stock having ordinary voting power to elect
a majority of the Board of Directors of such corporation (irrespective
of whether or not at the time capital stock or any other class or
classes of stock of such corporation shall or might have voting power
upon the occurrence of any contingency) is at the time directly or
indirectly owned by the Borrower, by the Borrower and one or more other
Subsidiaries, or by one or more other Subsidiaries.
(u) "Tangible Net Worth" means the aggregate of the
consolidated capital stock, paid in surplus and retained earnings of
the Borrower (excluding stock of the Borrower held by the Borrower),
determined and computed in accordance with generally accepted
accounting principles consistently applied from year to year, less the
book value of all assets of the Borrower that would be treated as
intangibles under generally accepted accounting principles including
without limitation, such items as goodwill, trademarks, tradenames,
service marks, copyrights, patents and licenses and less the book value
of all obligations owed to the Borrower by any of its Affiliates.
(v) "UCC Filing Event" means either an Event of Default or any
event which is, or which with the giving of notice or the elapse of
time will become, a default under any of the provisions of Sections
5.1(f), 5.1(g) and 5.1(h).
Section 1.2. Accounting and Other Terms. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
generally accepted accounting principles consistently applied as such principles
may change from time to time. Other terms defined herein shall have the meanings
ascribed to them herein.
ARTICLE II.
REVOLVING LOAN
Section 2.1. Discretionary Revolving Loan. The Borrower has requested
that the Bank make advances to the Borrower from time to time to permit the
Borrower to carry leases on inventory that it leases. THE BANK HAS NOT COMMITTED
TO PROVIDING ANY SUCH ADVANCES AND MAY, IN ITS DISCRETION, DECIDE NOT TO MAKE
ANY SUCH ADVANCES. If the Bank, in its discretion, agrees to make any such
advances requested by the Borrower, such advances (the "Advances") shall (A) not
exceed an aggregate principal amount outstanding of $6,500,000.00; (B) be made
in accordance with the terms of this Agreement; and (C) be made on or before
February 29, 2000 (the "Termination Date"). Each Advance shall be in an amount
of not less than $1,000,000.00 and of not more than the Borrowing Base for the
Note evidencing that Advance.
Section 2.2. The Notes. Each Advance made by the Bank shall be
evidenced by a separate promissory note (each a "Note" and collectively the
"Notes") which is in substantially the form of Exhibit A attached hereto
(appropriately completed) and is delivered to the Bank pursuant to Article III.
Each Note shall (A) have a final maturity date not later than 48 months after
the issue date of the Note and (B) bear a fluctuating interest rate equal to the
Base Rate.
Section 2.3. Making of Advances. The Borrower may request Advances
under this Agreement by giving notice to the Bank, specifying the date of the
requested Advance and the amount thereof. Each request for an Advance shall be
accompanied by an executed Borrowing Base Certificate showing a Borrowing Base
for that Advance in an amount not less than that Advance. Any request for an
Advance shall be deemed to be a representation that the Borrower's
representations and warranties contained in Section 4.1 are true and correct as
of the date of the Advance as though made on and as of such date and that no
event has occurred and is continuing, or will result from such Advance, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both. If the Bank
approves a requested Advance in it sole discretion, the Bank may disburse such
Advance by crediting immediately available funds in the amount of the Advance to
the Borrower's demand deposit account maintained with the Bank.
Section 2.4. Interest and Payments. The Borrower shall repay, and shall
pay interest on, the aggregate unpaid principal amount of all Advances in
accordance with the Notes, except that after and during the continuance of an
Event of Default the Borrower shall pay interest on the Notes at an annual rate
equal to 2.0% in excess of the rate of interest otherwise provided under the
Notes. All payments of principal, interest and fees under this Agreement shall
be made when due to the Bank in immediately available funds even if the Borrower
has not received payment from one or more lessees under an Eligible Equipment
Lease. All computations of interest shall be made by the Bank on the basis of
the actual number of days elapsed in a year of 360 days. Whenever any such
payment shall be due on a non-Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall be included in
the computation of interest. Each change to the fluctuating interest rate under
the Notes shall take effect on the same day as the related change to the Base
Rate. The Bank is expressly authorized to charge any principal or interest
payment, when due, to the Borrower's demand deposit account maintained at the
Bank, or, if that account shall not contain sufficient funds, to any other
account maintained by the Borrower at the Bank.
Section 2.5. Voluntary Prepayment. The Borrower may prepay any Note in
whole but not in part; provided, however, that a prepayment shall be made as of
a principal payment date on the Note and shall be accompanied by all interest
accrued to the date of prepayment and shall, if the amount prepaid is in excess
of 25% of the original principal amount of the Note, be accompanied by a
prepayment fee equal to 5.0% of the principal amount prepaid. Upon any
prepayment in full of a Note in accordance with this Section, the Bank will
release its security interest in all inventory and all Eligible Equipment Leases
that relate to that Note.
Section 2.6. Mandatory Prepayment. In the event that (A) a default,
including, without limitation, any payment default, occurs under an Eligible
Equipment Lease and is not cured within 90 days or (B) the inventory subject to
the Eligible Equipment Lease ceases for any reason to be under that lease, the
Borrower will, within 30 days of that event, provide a substitute Eligible
Equipment Lease acceptable to the Bank or prepay on the Note to which that
Eligible Equipment Lease relates an amount equal to the Borrowing Base Value of
that Eligible Equipment Lease. In the event that the lessee of an Eligible
Equipment Lease prepays any amount on that Eligible Equipment Lease, whether
through insurance proceeds, voluntary payments or otherwise, all such
prepayments shall immediately be paid to the Bank to be applied to the Note to
which that Eligible Equipment Lease relates. Any prepayments made under this
Section shall not be subject to the prepayment fee provided under Section 2.5.
Upon any partial prepayment or lease substitution under this Section, the Bank
will release its security interest in the related Eligible Equipment Lease and
inventory subject to that lease.
Section 2.7. Use of Proceeds. The proceeds of the Advances from the
Bank shall be used to refinance existing Debt owed to U.S. Bank National
Association.
ARTICLE III.
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to Initial Advance. If the Bank
determines to make any Advances in its discretion, the Borrower shall deliver to
the Bank prior to that Advance:
(a) The Note for that Advance, properly completed, executed
and delivered on behalf of the Borrower.
(b) A security agreement (the "Security Agreement"), in a form
acceptable to the Bank properly executed and delivered on behalf of the
Borrower, granting to the Bank a security interest in all of the
Eligible Equipment Leases which are part of the Borrowing Base for that
Advance, the inventory subject to such Eligible Equipment Leases and
other property described therein as security for the performance of the
Borrower's obligations under this Agreement and the Notes, together
with any UCC-1 Financing Statement or other document deemed necessary
or desirable by the Bank to perfect the security interest granted by
the Security Agreement.
(c) A certified copy of the resolutions of the Board of
Directors of the Borrower, approving the execution and delivery of the
Loan Documents to which it is a party and approving all other matters
contemplated by this Agreement.
(d) A certificate by the Secretary or any Assistant Secretary
of the Borrower certifying the names of the officer or officers of the
Borrower authorized to sign the Loan Documents to which it is a party,
together with a sample of the true signature of such officer.
(e) Favorable opinion of counsel to the Borrower in a form and
as to such matters as the Bank may request.
Section 3.2. Conditions Precedent to Each Advance. If the Bank
determines to make any Advances in its discretion, each Advance (including the
initial Advance) shall be subject to the further conditions precedent, that on
the date of such Advance:
(a) The representations and warranties contained in Section
4.1 of this Agreement are correct on and as of the date of such Advance
as though made on such date; and
(b) No event has occurred and is continuing, or will result
from such Advance, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. To induce
the Bank to make Advances, the Borrower represents and warrants as follows:
(a) Existence of Borrower. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of
the state indicated at the beginning of this Agreement. The Borrower
has not, in the past five years, operated under any name, including any
trade name or assumed name, other than the name indicated at the
beginning of this Agreement, the names of the Subsidiaries listed in
Section 4.1(k) and the following names, (i) International Leasing
Corporation, (ii) Cisco Systems Capital Corporation, (iii) Sun
Microsystems Finance, (iv) Internet Finance & Equipment Capital
Corporation, (v) Symmetricom Capital Corporation, (vi) Sonic Solutions
Capital Corporation, (vii) Digital Telecommunications Capital
Corporation and (viii) Sunrise Funding Corporation.
(b) Authority to Execute. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is a
party are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, do not and will not
conflict with any provision of law or of the charter or bylaws of the
Borrower or of any agreement or contractual restriction binding upon or
affecting the Borrower or any of its property, and need no further
shareholder or creditor consent.
(c) Binding Obligation. This Agreement is, and the other Loan
Documents when delivered hereunder will be, legal, valid and binding
obligations of the Loan Parties enforceable against such Persons in
accordance with their respective terms.
(d) Governmental Approval. No consent of, or filing with, any
governmental authority is required on the part of any Loan Party in
connection with the execution, delivery or performance of any Loan
Documents, except for Uniform Commercial Code financing statements
required to be filed to perfect the security interests granted under
the Security Agreement.
(e) Financial Statements. The audited financial statements of
the Borrower as of March 31, 1998 and the unaudited financial
statements as of December 31, 1998, copies of which have been furnished
to the Bank, have been prepared in conformity with generally accepted
accounting principles consistently applied and present fairly the
financial condition of the Borrower as of such dates, and the results
of the operations of the Borrower for the financial periods then ended,
and since such dates, there has been no materially adverse change in
such financial condition.
(f) Litigation. Except for claims asserted by former
salespersons as disclosed to the Bank in connection with this
Agreement, no litigation or governmental proceeding is pending or
threatened against the Borrower which may have a materially adverse
effect on the financial condition or operations of the Borrower.
(g) Taxes. The Borrower has filed all federal and state income
and excess profits tax returns which are required to be filed, and has
paid all taxes shown on such returns to be due and all other tax
assessments received by it to the extent that such assessments have
become due.
(h) ERISA. No plan (as that term is defined in the Employee
Retirement Income Security Act of 1974 ("ERISA")) of the Borrower (a
"Plan") which is subject to Part 3 of Subtitle B of Title 1 of ERISA
had an accumulated funding deficiency (as such term is defined in
ERISA) as of the last day of the most recent fiscal year of such Plan
ended prior to the date hereof, or would have had such an accumulated
funding deficiency on such date if such year were the first year of
such Plan, and no material liability to the Pension Benefit Guaranty
Corporation has been, or is expected by the Borrower to be, incurred
with respect to any such Plan. No Reportable Event (as defined in
ERISA) has occurred and is continuing in respect to any such Plan.
(i) Defaults. The Borrower is not in default in the payment of
principal or interest on any indebtedness for borrowed money and is not
in default under any instrument or agreement under or subject to which
any indebtedness for borrowed money has been issued, and no event has
occurred and is continuing which, with or without the lapse of time or
the giving of notice, or both, constitutes or would constitute an event
of default under any such instrument or agreement or an Event of
Default hereunder.
(j) Subsidiaries. The Borrower has no Subsidiaries other than
Sunrise Leasing Corporation and Sunrise Financial Resources, Inc.
(k) Patents, Trademarks, Etc. The Borrower has good and
marketable title to all patents, trademarks, processes, copyrights,
franchises and licenses title to which is necessary for the operation
of the Borrower's businesses.
(l) Use of Proceeds For Securities Transactions. No proceeds
of any Advance will be used to acquire any security in any transaction
which is subject to Sections 13 and 14 of the Securities Exchange Act
of 1934.
(m) Regulation U. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any
Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin
stock.
(n) Year 2000 Planning. The Borrower has undertaken a formal
review of its recordkeeping systems and its operations to determine the
Borrower's vulnerability to recordkeeping and operational difficulties
attributable to the need to change computer coding after 1999. Except
as has been disclosed to the Bank in writing contemporaneously with the
execution of this Agreement, the Borrower does not anticipate that it
will face any substantial recordkeeping or operational difficulties
attributable to the need to change such computer coding.
ARTICLE V.
COVENANTS OF THE BORROWER
Section 5.1 Affirmative Covenants. So long as any Note shall remain
unpaid, or, if no Note remains unpaid, until the Termination Date, the Borrower
will, unless the Bank shall give its prior written consent:
(a) Financial Reporting. Furnish to the Bank: (i) as soon as
available and in any event within 45 days after the end of each quarter
of each fiscal year of the Borrower, balance sheets of the Borrower as
of the end of such quarter and statements of income and retained
earnings of the Borrower for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, certified
by the chief financial officer or corporate controller of the Borrower;
(ii) as soon as available and in any event within 90 days after the end
of each fiscal year of the Borrower, (A) a copy of the Form 10-K for
such year for the Borrower, containing financial statements for such
year certified in a manner acceptable to the Bank by independent public
accountants acceptable to the Bank and (B) if available, a budget and
projections prepared by the Borrower in a form acceptable to the Bank
for the following fiscal year; (iii) promptly upon the sending or
filing thereof copies of all public reports issued by the Borrower to
any of its security holders, to the Securities and Exchange Commission
or to any national securities exchange; (iv) promptly upon the filing
or receiving thereof, copies of all reports which the Borrower files
under ERISA or which the Borrower receives from the Pension Benefit
Guaranty Corporation if such report shows any material violation or
potential violation by the Borrower of its obligations under ERISA; (v)
such other information concerning the conditions or operations,
financial or otherwise, of the Borrower as the Bank from time to time
may reasonably request; (vi) within 30 days after the end of each
month, a Borrowing Base Certificate (in the form of Exhibit C) for each
Note, a Cash Settlement Certificate (in the form of Exhibit D) and a
payments aging on all Eligible Equipment Leases.
(b) Visitation Rights. At any reasonable time and from time to
time, permit the Bank or any agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Borrower, and to discuss
the affairs, finances and accounts of the Borrower with any of its
officers or directors. The Borrower will reimburse the Bank for its
reasonable costs and expenses of conducting such periodic examinations,
provided that, in the absence of an Event of Default, the Borrower will
be required to compensate the Bank for the costs of no more than two
examinations at a cost of $500.00 each in any calendar year.
(c) Notification of Default, Etc. Notify the Bank as promptly
as practicable (but in any event not later than 5 Business Days) after
the Borrower obtains knowledge of: (i) the occurrence of any event
which constitutes an Event of Default or which would constitute an
Event of Default with the passage of time or the giving of notice or
both; or (ii) the commencement of any litigation or governmental
proceedings of any type which could materially adversely affect the
financial condition or business operations of the Borrower.
(d) Compliance Certificate. At the time each quarterly
financial statement is required to be provided to Bank under this
Agreement, the Borrower will provide to Bank a certificate of the chief
financial officer or corporate controller of the Borrower substantially
in the form of Exhibit B attached hereto (appropriately completed). If
that certificate shows that an Event of Default or any event which
would constitute an Event of Default with the passage of time or the
giving of notice or both, has occurred, the certificate shall state in
reasonable detail the circumstances surrounding such event and action
proposed by the Borrower to cure such event.
(e) Keeping of Financial Records and Books of Account.
Maintain proper financial records in accordance with generally accepted
accounting principles consistently applied which fully and correctly
reflect all financial transactions and all assets and liabilities of
the Borrower. The Borrower will take all steps necessary to avoid
recordkeeping and operational difficulties attributable to the need to
change computer coding after 1999.
(f) Tangible Net Worth. Maintain at all times Tangible Net
Worth of not less than $27,000,000.00 plus 75% of positive net income
earned by the Borrower in each fiscal year starting after March 31,
1999, calculated on a cumulative basis.
(g) Debt Ratio. Maintain at all times a ratio of Senior
Recourse Debt to Tangible Net Worth of not more than 4.0 to 1.
(h) Interest Coverage Ratio. Maintain as of the end of each
fiscal quarter an Interest Coverage Ratio of not less than 4.50 to 1 as
calculated on a rolling four-quarter basis.
(i) Maintenance of Insurance. Maintain such insurance with
reputable insurance carriers as is normally carried by companies
engaged in similar businesses and owning similar property, including a
blanket casualty insurance policy insuring personal property in which
the Bank has a security interest.
(j) Maintenance of Properties, Etc. Maintain and preserve all
of its properties, necessary or useful in the proper conduct of its
business, in good working order and condition, ordinary wear and tear
excepted.
(k) Payment of Taxes. Pay all taxes, assessments and
governmental charges of any kind payable by it as such taxes,
assessments and charges become due and before any penalty shall be
imposed, except as the Borrower shall contest in good faith and by
appropriate proceedings providing such reserves as are required by
generally accepted accounting principles.
(l) Compliance with ERISA. Cause each Plan to comply and be
administered in accordance with those provisions of ERISA which are
applicable to such Plan.
(m) Preservation of Corporate Existence, Etc. Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and qualify and remain
qualified, as a foreign corporation in each jurisdiction in which such
qualification is necessary or desirable in view of its business and
operations or the ownership of its properties.
(n) UCC Filing Event. Within five Business Days after the Bank
notifies the Borrower of a UCC Filing Event, the Borrower will deliver
to the Bank (A) executed and recordable UCC-3 assignments (or
equivalent documents under applicable law) assigning to the Bank all of
the UCC-1 Financing Statements or equivalent documents held by the
Borrower with respect to Eligible Equipment Leases as described in
Section 1.1(i)(viii) and (B) all originals of all Eligible Equipment
Leases.
Section 5.2. Negative Covenants. So long as any Note shall remain
unpaid, or, if no Note remains unpaid, until the Termination Date, the Borrower
will not, unless the Bank shall give its prior written consent:
(a) Liens. Create or suffer to exist any mortgage, pledge,
lien, security interest or other encumbrance with respect to any
Collateral under the Security Agreement except Permitted Encumbrances.
(b) Merger, Etc. Merge or consolidate with any other Person;
sell, divest, transfer, convey, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or a substantial
portion of its assets (whether now owned or hereafter acquired) to any
other Person.
(c) Transactions with Affiliates. Engage in any transaction
(including, without limitation, loans or financial accommodations of
any kind) with any Affiliate provided that such transactions are
permitted if they are on terms no less favorable to the Borrower than
would be obtainable if no such relationship existed.
(d) Change in Nature of Business. Make any material change in
the nature of the business of the Borrower, taken as a whole, as
carried on at the date hereof, or sell or divest any line or division
of its business.
ARTICLE VI.
DEFAULT
Section 6.1. Events of Default. "Events of Default" in this Agreement
means any of the following events:
(a) Failure of the Borrower to pay the principal of any Note
when due or, if payable on demand, upon demand, provided that the
Borrower may use a five day grace period with respect to such a failure
not more frequently than twice in each calendar year;
(b) Failure of the Borrower to pay any interest or fees
required to be paid hereunder or under any Note when due, provided that
the Borrower may use a five day grace period with respect to such a
failure not more frequently than twice in each calendar year;
(c) Any representation or warranty made by, or on behalf of,
any Loan Party in, or pursuant to, any Loan Document shall prove to
have been incorrect in any material respect when made;
(d) Default in performance of any other covenant or agreement
of any Loan Party in, or pursuant to, any Loan Document and continuance
of such default or breach for a period of 30 days after written notice
thereof to such Person by the Bank;
(e) Any Loan Party shall generally not pay its or his debts as
such debts become due, or shall admit in writing its or his inability
to pay its or his debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by
or against any Loan Party seeking to adjudicate it or him a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, custodianship, protection, relief, or
composition of it or him or its or his debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief, or the appointment of a
receiver, custodian, trustee, or other similar official for it or him
or for any substantial part of its or his property; or any Loan Party
shall take any corporate action to authorize any of the actions set
forth above in this
subsection; and in the case of a proceeding of the type described in
this paragraph commenced against any Loan Party, that proceeding shall
not be dismissed within 60 days or that Loan Party shall consent to
that proceeding;
(f) The Borrower shall fail to pay any Debt (but excluding
Debt evidenced by any Note) of the Borrower or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other default under any
agreement or instrument relating to any such Debt, or any other event,
shall occur and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such
default or event is to cause the automatic acceleration of the maturity
of such Debt; or any such Debt shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(g) The entry against any Loan Party of a final judgment,
decree or order for the payment of money in excess of $100,000.00 and
the continuance of such judgment, decree or order unsatisfied for a
period of 30 days without a stay of execution;
(h) Any Reportable Event (as defined in ERISA) shall have
occurred and continue for 30 days; or any Plan shall have been
terminated by the Borrower not in compliance with ERISA, or a trustee
shall have been appointed by a court to administer any Plan, or the
Pension Benefit Guaranty Corporation shall have instituted proceedings
to terminate any Plan or to appoint a trustee to administer any Plan.
Section 6.2 Rights and Remedies. If any Event of Default shall occur
and be continuing, the Bank may exercise any or all of the following rights and
remedies:
(a) Declare the Notes, all interest thereon, and all other
obligations under, or pursuant to, any Loan Document to be immediately
due and payable, and upon such declaration such Notes, interest and
other obligations shall immediately be due and payable, without
presentment, demand, protest or any notice of any kind, all of which
are expressly waived;
(b) Exercise any right or remedy under the Security Agreement,
or any other right or remedy of a secured party under the Uniform
Commercial Code as in effect in Minnesota;
(c) Exercise any other right or remedy available to the Bank
at law or in equity.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. No Waiver; Cumulative Remedies. No failure or delay on the
part of the Bank in exercising any right or remedy under, or pursuant to, any
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy or power preclude other or further exercise
thereof, or the exercise of any other right, remedy or power. The remedies in
the Loan Documents are cumulative and are not exclusive of any remedies provided
by law.
Section 7.2. Amendments and Waivers. No amendment or waiver of any
provision of any Loan Document shall be effective unless such amendment or
waiver is in writing and is signed by the Bank, and such amendment or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given.
Section 7.3. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier communication)
and mailed or telecopied or delivered, if to the Borrower, at its address stated
in the preamble hereof, Attention: Xxxxxxx X. Xxxxxxxx; and if to the Bank, at
its address stated in the preamble hereof, Attention: Xxxx Xxxx; or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other party. All such notices and communications shall, when
mailed or telecopied, be effective when deposited in the mails or transmitted by
telecopier, respectively, addressed as aforesaid, except that notices to the
Bank pursuant to the provisions of Article II shall not be effective until
received by the Bank.
Section 7.4. Costs and Expenses. The Borrower agrees to pay on demand
all costs and expenses of the Bank in connection with the preparation of the
Loan Documents, including reasonable attorneys fees and legal expenses, as well
as all costs and expenses of the Bank, including reasonable attorneys fees and
expenses, in connection with the administration and enforcement of the Loan
Documents (whether suit is commenced or not).
Section 7.5. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Document,
irrespective of whether or not the Bank shall have made any demand under any
Loan Document and although such obligations may be unmatured. The Bank agrees
promptly to notify the Borrower after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Bank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Bank may have.
Section 7.6. Governing Law. All Loan Documents shall be governed by the
laws of the State of Minnesota. Any term used in this Agreement and not
otherwise defined shall have the definition given that term in the Uniform
Commercial Code as in effect in the State of Minnesota from time to time. If any
term in this Agreement shall be held to be illegal or unenforceable, the
remaining portions of this Agreement shall not be affected, and this Agreement
shall be construed and enforced as if this Agreement did not contain the term
held to be illegal or unenforceable. The Borrower hereby irrevocably submits to
the jurisdiction of the Minnesota District Court, Fourth District, and the
Federal District Court, District of Minnesota, Fourth Division, over any action
or proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court.
Section 7.7. Binding Effect; Assignment. All Loan Documents shall be
binding upon and inure to the benefit of the Loan Parties and the Bank and their
respective successors and assigns. No Loan Party shall have the right to assign
its rights or interest under any such agreement without the prior written
consent of the Bank.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
Sunrise International Leasing Corporation
By /s/ Xxxxxxx X. Xxxxxxxx
Its Executive Vice President
National City Bank of Minneapolis
By /s/ Xxxx Xxxx
Its Vice President
EXHIBIT A
PROMISSORY NOTE
$____________ Dated: ____________, ______
For value received, Sunrise International Leasing Corporation, a
Delaware corporation (the "Borrower") promises to pay to the order of National
City Bank of Minneapolis (the "Bank"), at its offices in Minneapolis, Minnesota,
in lawful money of the United States of America, the principal amount of
______________________________________________________ Dollars
($____________________) together with interest on any and all principal amounts
remaining unpaid hereon from the date of this Note until said principal amounts
are fully paid at a fluctuating annual rate equal to the rate of interest
established by the Bank from time to time as its base rate (the "Base Rate").
Each change in the fluctuating interest rate shall take effect simultaneously
with the corresponding change in the Base Rate.
Principal and interest shall be paid in monthly installments on the
last day of each month, starting on the last day of the first full month after
the date hereof and ending on the last day of the 48th full month after the date
hereof. Each monthly installment shall be equal to the aggregate amount of all
payments due during that month under each Eligible Equipment Lease then included
in the Borrowing Base for this Note under the Loan Agreement; provided, however,
that the last such installment shall be in the amount necessary to repay in full
the unpaid principal amount hereof together with all accrued but unpaid
interest. Each installment shall be applied first to interest then due and then
to principal. The monthly installment due under this Note shall be calculated
each month without regard to whether the Borrower actually receives all payments
due under each Eligible Equipment Lease during that month.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Discretionary Revolving Credit Agreement dated as of February
22, 1999 (the "Loan Agreement") between the Borrower and the Bank, which Loan
Agreement, among other things, contains provisions for the acceleration of the
maturity of this Note upon the happening of certain stated events, for an
increase to the interest rate upon the happening of certain stated events, and
also for mandatory and voluntary prepayments of the principal amount due under
this Note upon stated terms and conditions.
Sunrise International Leasing Corporation
By______________________________________
Its________________________________
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
I, the _________________________ of Sunrise International Leasing
Corporation (the "Borrower"), hereby provide this Compliance Certificate in
accordance with Section 5.1(d) of the Discretionary Revolving Credit Agreement
(the "Agreement") dated as of February 22, 1999 between the Borrower and
National City Bank of Minneapolis.
I certify that as of the date hereof:
(1) The representations and warranties of the Borrower contained
in Article IV of the Agreement are correct as though made on
the date hereof.
(2) No event has occurred and is continuing which constitutes an
Event of Default under the Agreement or would constitute an
Event of Default but for the requirement that notice be given
or time elapse or both.
I further certify that as of _____________________, ____:
(1) Tangible Net Worth as defined in the Agreement was
$______________ compared to a minimum in the Agreement of
$27,000,000.00 plus 75% of positive net income earned by the
Borrower in each fiscal year starting after March 31, 1999,
calculated on a cumulative basis.
(2) The ratio of Senior Recourse Debt to Tangible Net Worth as
defined in the Agreement was _______________________ compared
to a maximum in the Agreement of 4.0 to 1.
(3) The Interest Coverage Ratio as defined in the Agreement was
____ to 1 compared to a minimum in the Agreement of 4.50 to 1.
Dated: ____________________________ ____________________________________
Title: ____________________________
EXHIBIT C
BORROWING BASE CERTIFICATE
For Note No. ___________________
(Or Proposed New Advance In the Principal Amount of $_________________)
A. Present Value of Eligible Equipment Leases Payments ________________
B. Residual Value of Eligible Equipment Leases ________________
C. Subtotal (A+B) ________________
D. Original Cost of Equipment ________________
E. Less Accumulated Depreciation ________________
F. Subtotal (D-E) (Net Book Value) ________________
G. Total Borrowing Base (Lesser of C or F) ________________
H. Note Balance (or Proposed Advance Amount) ________________
I Total (G-H) (Must be zero or positive at all times) ________________
Dated: ____________________________ ____________________________________
Title: _______________________________
Exhibit D
Cash Settlement Certificate
Sunrise International Leasing Corporation
Monthly Cash Settlement Certificate
For the Month Ending _____________
Dated _____________
I. Lease Receivables
a) Monthly payments paid by the lessees during the month:________________
b) Monthly payments paid by SILC during the month:_______________________
c) Total monthly payments due during the month on Eligible Equipment
Leases: ________
II. Residuals
d) Proceeds from sale of equipment coming off lease during the month:
________________
e) Proceeds from insurance on equipment damaged during the month:
________________
f) Residual amount of equipment subject to release during the month:
________________
g) Total residual amount of equipment coming off lease during the month:
________________
III Cash Settlement
h) Total cash due (c+d+e): __________________________
i) Interest due on the Note: __________________________
j) Principal payment on the Note (h minus i) __________________________
k) Beginning principal balance __________________________
l) Ending principal balance __________________________
