U.S. $33,000,000 CREDIT AGREEMENT Dated as of March 15, 2007 between MERIT CAPITAL ADVANCE, LLC as Borrower and DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH as Lender
Execution
Version
---------------------------------------
U.S.
$33,000,000
Dated
as
of March 15, 2007
between
MERIT
CAPITAL ADVANCE, LLC
as
Borrower
and
DEUTSCHE
BANK AG CAYMAN ISLANDS BRANCH
as
Lender
---------------------------------------
TABLE
OF CONTENTS
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Page
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ARTICLE
I DEFININTIONS AND ACCOUNTING TERMS
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1
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SECTION
1.01. Certain
Defined Terms
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1
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ARTICLE
II AMOUNTS AND TERMS OF THE ADVANCES
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13
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SECTION
2.01. The
Commitment
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13
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SECTION
2.02. Advances
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14
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SECTION
2.03. Interest
Elections
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14
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SECTION
2.04. Termination,
Reduction and Extension of the Commitment
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15
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SECTION
2.05. Repayment
of Advances
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16
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SECTION
2.06. Prepayment
of Advances
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16
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SECTION
2.07. Commitment
Fee
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16
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SECTION
2.08. Interest
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17
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SECTION
2.09. Alternate
rate of Interest
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17
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SECTION
2.10. Increased
Costs
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18
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SECTION
2.12. Taxes
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19
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SECTION
2.13. Payments
Generally
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20
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ARTICLE
III CONDITIONS OF LENDING
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20
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SECTION
3.01. Condition
Precedent in Initial Advance
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20
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SECTION
3.02. Conditions
Precedent to Each Advance
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22
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ARTICLE
IV REPRESENTATIONS AND WARRANTIES
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22
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SECTION
4.01. Organization
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22
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SECTION
4.02. Authorization;
Enforceability
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22
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SECTION
4.03. Government
Approvals; No Conflicts
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23
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SECTION
4.04. No
Material Adverse Effect
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23
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SECTION
4.05. Litigation
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23
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SECTION
4.06. Compliance
with Laws and Agreements
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23
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SECTION
4.07. Investment
and Holding Company Status
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23
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SECTION
4.08. Margin
Regulations
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23
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SECTION
4.09. Solvency
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24
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ARTICLE
V COVENANTS OF THE BORROWER
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24
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SECTION
5.01. Certain
Covenants
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24
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i
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SECTION
5.02. Financial
Covenants
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27
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SECTION
5.03. Operating
Covenants
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28
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ARTICLE
VI EVENTS OF DEFAULT
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29
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SECTION
6.01. Events
of Default
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29
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ARTICLE
VII MISCELLANEOUS
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31
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SECTION
7.01. Amendments,
Etc
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31
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SECTION
7.02. Notices,
Etc
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31
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SECTION
7.03. No
Waiver; Remedies
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31
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SECTION
7.04. Costs,
Expenses and Indemnification
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32
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|
SECTION
7.05. Assignments
and Participations
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32
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|
SECTION
7.06. Governing
Law; Submission to Jurisdiction
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33
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SECTION
7.07. Severability
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33
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SECTION
7.08. Execution
in Counterparts
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34
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SECTION
7.09. Survival
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34
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SECTION
7.10. Waiver
of Jury Trial
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34
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SECTION
7.11. No
Fiduciary Relationship
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34
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SECTION
7.12. Confidentiality
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35
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SECTION
7.13. USA
PATRIOT Act
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35
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EXHIBITS
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Exhibit
A Form
of Security Agreement
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|
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Exhibit
B Form
of Notice of Borrowing
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ii
CREDIT
AGREEMENT dated as of March 15, 2007, between MERIT CAPITAL ADVANCE, LLC, a
Delaware limited liability company (the "Borrower"),
and
DEUTSCHE BANK AG Cayman Islands Branch ("DB"
or the
"Lender").
The
Borrower has requested that the Lender make Advances to it in an aggregate
principal amount up to but not exceeding $33,000,000 at any one time outstanding
for the purposes hereinafter set forth, and the Lender is prepared to make
such
Advances on and subject to the terms and conditions hereof. Accordingly, the
parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
AND ACCOUNTING TERMS
SECTION
1.01. Certain Defined Terms.
As used
in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of
the
terms defined), with terms not otherwise defined herein having the respective
meanings assigned thereto in the LLC Agreement referred to below:
"Account
Control Agreement"
means
an account control agreement in form and substance reasonably satisfactory
to
the Lender, entered into by the Borrower, the Lender and a financial institution
satisfactory to the Lender.
"Advance"
has the
meaning specified in Section 2.01.
"Affiliate"
means,
as to any Person, any other Person that, directly or indirectly, controls,
is
controlled by or is under common control with such Person; provided,
that, a
Person shall be deemed to control another Person if such Person and its
Subsidiaries own 10% or more of the Voting Shares of such other Person or
otherwise controls, by contract or otherwise, the operations or business
decisions of such other Person.
"Applicable
Lending Office"
means
the office of the Lender specified on the signature pages hereof, or such other
office of the Lender as the Lender may from time to time specify to the Borrower
by written notice in accordance with the provisions of
Section 7.02.
"Business
Day"
means
(a) a day on which banks are not required or authorized to close in New
York, New York, and (b) if the applicable Business Day relates to any
Advance, a day on which dealings in deposits are carried on in the London
interbank market.
"Change
in Control"
means
(a) the acquisition of ownership, directly or indirectly, beneficially or
of record, by any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof) other than LEAF Financial Corporation and
its
Subsidiaries,
of Equity Interests representing more than 50% of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests of the
Borrower, LEAF Ventures or the Servicer (other than, in the case of the
Servicer, in connection with the exercise by the Borrower of its right under
the
LEAF Services Agreement to purchase the Servicer, so long as Lender shall have
provided its prior written consent thereto), (b) Crit XxXxxx ceasing to be
the
Chairman or Chief Executive Officer of LEAF Financial Corporation and not being
replaced in such position by a similarly-qualified individual within 90 days
thereof, or (c) the acquisition of direct or indirect Control of the
Borrower, LEAF Ventures or the Servicer by any Person or group other than LEAF
Financial Corporation and its Subsidiaries (other than, in the case of the
Servicer, in connection with the exercise by the Borrower of its right under
the
LEAF Services Agreement to purchase the Servicer, so long as Lender shall have
provided its prior written consent thereto); provided
that
Conversion of the Class A Note shall not be deemed to cause a "Change in
Control".
"Closing
Date"
means
the date on which the conditions precedent set forth in Section 3.01 have been
satisfied. The Lender shall notify the Borrower of the Closing Date, and such
notice shall be conclusive and binding.
"Code"
means
the Internal Revenue Code of 1986, as amended from time to time.
"Collateral"
is
defined in the Security Agreement.
"Commitment"
has the
meaning specified in Section 2.01.
"Commitment
Fee Payment Date"
means
the first Business Day of each March, June, September and December.
"Commitment
Termination Date"
means
the date 18 months following the Closing Date, subject to the provisions of
Sections 2.04(b) and 2.04(d); provided,
that if
such day is not a Business Day, then the Commitment Termination Date shall
be
the immediately preceding Business Day.
"Contingent
Liabilities"
means,
with respect to any Person, (a) any agreement, undertaking or arrangement by
which such Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person
(the amount of obligation under any Contingent Liabilities shall be deemed
to be
the maximum outstanding amount of the debt, obligation or other
2
liability
guaranteed) and/or (b) liabilities that are contingent in nature which would
be
included as liabilities on the face of the balance sheet of such Person in
accordance with GAAP.
“Control”
means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling”
and
“Controlled”
have
meanings correlative thereto.
"Debt"
of any
Person means, without duplication:
(a) all
obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments;
(b) all
obligations, contingent or otherwise, relative to the face amount of all letters
of credit, whether or not drawn, and banker's acceptances issued for the account
of such Person;
(c) all
obligations of such Person as lessee under leases which have been or should
be,
in accordance with GAAP, recorded as capital leases;
(d) all
other
items which, in accordance with GAAP, would be included as liabilities on the
liability side of the balance sheet of such Person as of the date at which
Indebtedness is to be determined other than accounts payable, deferred revenue
and accrued operating expenses incurred in the ordinary course of business
in
each case to the extent not otherwise constituting Indebtedness under the other
terms of this definition;
(e) net
liabilities of such Person under all Swap Agreements;
(f) whether
or not so included as liabilities in accordance with GAAP, all obligations
of
such Person to pay the deferred purchase price of property or services, and
indebtedness (excluding prepaid interest thereon) secured by a lien on property
owned or being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;
and
(g) all
Contingent Liabilities of such Person in respect of any of the
foregoing.
“Debt
to Tangible Net Worth Ratio”
means,
as of any date of determination, the ratio of (a) all Indebtedness of the
Borrower and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) as of such date of determination to
(b) Tangible Net Worth as of such date of determination.
3
"Default"
means
an Event of Default or an event that, with notice or lapse of time or both,
would become an Event of Default.
“Delinquency
Ratio”
means,
as of any date of determination thereof, a fraction, expressed as a percentage,
(a) the numerator of which is an amount equal to the sum of the Unpaid Specified
Amounts of all Delinquent Assets as of such date, and (b) the denominator of
which is equal to the sum of the Unpaid Specified Amounts of all Merchant
Advance Contracts as of such date.
“Delinquent
Asset”
means,
on any date of determination, (a) any Merchant Advance Contract with respect
to
which, during the period from the date such Merchant Advance Contract was
originally entered into to such date of determination, the Borrower has received
less than 75% of the aggregate payments expected to be received by the Borrower
during such period, or (b) any Merchant Advance Contract with respect to which,
during the 30 day period ending on such date of determination, the Borrower
has
received less than 50% of the aggregate payments expected to be received by
the
Borrower during such period. For purposes of this definition, "payments expected
to be received by the Borrower" in relation to any Merchant Advance Contract
shall mean payments assumed to be received by the Borrower in the credit
analysis performed by the Borrower (or by the Servicer for the Borrower) on
or
before the date such Merchant Advance Contract was originally entered
into.
"Dollars"
and
"$"
means
lawful money of the United States of America.
"EBITDA"
means,
for any period, the sum, for the Borrower and its Subsidiaries (determined
on a
consolidated basis without duplication in accordance with GAAP), of the
following: (a) earnings (calculated before taxes, Interest Expense,
extraordinary and unusual items and income or loss attributable to equity in
Affiliates) for such period, plus
(b)
non-cash interest accrued on the Class A Note during such period, plus
(c)
depreciation and amortization (to the extent deducted in determining earnings)
for such period.
"EBITDA
Funding Condition"
means a
condition that shall be deemed to be satisfied on any date (a "Test
Date")
if
EBITDA for the period starting on the date hereof and ending on the last day
of
the period set forth below ending on or immediately prior to such Test Date
is
greater than or equal to the respective amount set forth below opposite such
period:
4
|
Period:
Date
Hereof To
|
Amount
|
|
March
31, 2007
|
($287,565)
|
|
April
30, 2007
|
($306,534)
|
|
May
31, 2007
|
($325,666)
|
|
June
30, 2007
|
($344,925)
|
|
July
31, 2007
|
($264,192)
|
|
August
31, 2007
|
($23,862)
|
|
September
30, 2007
|
$216,304
|
|
October
31, 2007
|
$456,349
|
|
November
30, 2007
|
$696,308
|
|
December
31, 2007
|
$936,222
|
|
January
31, 2008
|
$1,385,438
|
|
February
29, 2008
|
$1,994,298
|
|
March
31, 2008
|
$2,616,970
|
|
April
30, 2008
|
$3,070,925
|
|
May
31, 2008
|
$3,524,956
|
|
June
30, 2008
|
$3,979,070
|
|
July
31, 2008
|
$4,411,752
|
|
August
31, 2008
|
$4,810,165
|
"Environmental
Laws"
means
any and all present and future Federal, state, local and foreign laws, rules
or
regulations, and any orders or decrees, in each case as now or hereafter in
effect, relating to the regulation or protection of human health, safety or
the
environment or to emissions, discharges, releases or threatened releases of
Hazardous Materials into the indoor or outdoor environment, including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land
or
subsurface strata, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
"Equity
Interests"
means
shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity
interest.
"ERISA"
means
the Employee Retirement Income Security Act of 1974, as amended from time to
time, and the regulations promulgated and rulings issued
thereunder.
"ERISA
Affiliate"
means
any trade or business (whether or not incorporated) that, together with the
Borrower, is treated as a single employer under Section 414(b) or (c)
of
5
the
Code,
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code,
is
treated as a single employer under Section 414(m) of the Code.
"Eurocurrency
Liabilities"
has the
meaning assigned to that term in Regulation D of the Board of Governors of
the
Federal Reserve System, as in effect from time to time.
"Events
of Default"
has the
meaning specified in Section 6.01.
"Excluded
Taxes"
means,
with respect to the Lender or any other recipient of any payment to be made
by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of the
Lender, in which its applicable lending office is located and (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located.
"Federal
Funds Rate"
means a
fluctuating interest rate per annum equal for each day to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or,
if such day is not a Business Day, for the next preceding Business Day) by
the
Federal Reserve Bank of New York, or, if such rate is not so published for
any
day which is a Business Day, the average of the quotations for such day on
such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
"GAAP"
means,
as to any Person, generally accepted accounting principles in effect in the
jurisdiction of such Person.
"Governmental
Authority"
means
any nation, government, branch of power (whether executive, legislative or
judicial), state or municipality or other political subdivision thereof and
any
entity exercising executive, legislative, judicial, monetary, regulatory or
administrative functions of or pertaining to government.
"Guarantee"
by any
Person means any obligation, contingent or otherwise, of such Person directly
or
indirectly guaranteeing any Debt of any other Person and, without limiting
the
generality of the foregoing, any obligation, direct or indirect, contingent
or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for
the purchase or payment of) such Debt (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions
or
otherwise, other than agreements to purchase goods at an arm's length price
in
the ordinary course of
6
business)
or (ii) entered into for the purpose of assuring in any other manner the holder
of such Debt of the payment thereof or to protect such holder against loss
in
respect thereof (in whole or in part); provided,
that
the term Guarantee shall not include endorsements for collection or deposit
in
the ordinary course of business. The term "Guarantee"
used as
a verb has a corresponding meaning.
"Hazardous
Materials"
means
all explosive or radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances
or
wastes of any nature regulated pursuant to any Environmental Law.
"Indemnified
Taxes"
means
Taxes other than Excluded Taxes.
“Interest
Coverage Ratio”
means,
as of any date of determination, the ratio of (a) EBITDA for the period of
12 calendar months ending on or most recently ended prior to such date of
determination to (b) Interest Expense for such period; provided
that the
"Interest
Coverage Ratio"
as of
any date of determination prior to March 31, 2008 shall be the ratio of (x)
EBITDA for the period from the date hereof to the last day of the calendar
month
ending on or most recently ended prior to such date of determination to
(y) Interest Expense for such period.
“Interest
Expense”
means,
for any period, the total consolidated interest expense of the Borrower and
its
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP (excluding,
in any event, non-cash interest
accrued on the Class A Note during such period, to the extent deducted from
earnings in calculating EBITDA for such period).
"Interest
Payment Date"
means
with respect to any Advance, the last day of each Interest Period therefor
and,
in the case of any Interest Period that has a duration of more than three
months, the day three months after the first day of such Interest
Period.
"Interest
Period"
means,
with respect to any Advance, the period beginning on the date such Advance
is
made, or on the last day of the immediately preceding Interest Period, and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each Interest Period in respect of any Advance
shall be 1, 2, 3 or 6 months as the Borrower may select as provided in Section
2.03; provided,
however,
that
(i) each Interest Period that begins on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in
the
appropriate subsequent calendar month) shall end on the last Business Day of
the
appropriate subsequent calendar month, (ii) whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest
7
Period
shall be extended to occur on the next succeeding Business Day, except that
if
such extension would cause the last day of such Interest Period to occur in
the
next following calendar month, the last day of such Interest Period shall occur
on the next preceding Business Day and (iii) any Interest Period that would
otherwise extend beyond the Commitment Termination Date shall end on the
Commitment Termination Date.
"LEAF
Ventures"
means
LEAF Ventures, LLC.
"Lender"
means
Deutsche Bank AG Cayman Islands Branch, or any other Person that shall become
a
party pursuant to Section 7.05.
"Lien"
shall
mean any mortgage, lien, pledge, charge, encumbrance or other security interest
or any preferential arrangement that has the practical effect of creating a
security interest.
"LIBO
Rate"
means,
with respect to any Advance, for any Interest Period:
(a)
the
offered rate for deposits in Dollars with a maturity comparable to such Interest
Period appearing on Page 3750 of the Telerate Service (or on any successor
or
substitute page of such Service, or any successor to such Service, providing
rate quotations comparable to those currently provided on such page of such
Service, as determined by the Lender from time to time, for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market) as of approximately 11:00 a.m. (London time) on the
date two Business Days prior to the commencement of such Interest Period;
(b)
if
such date does not appear on said Page 3750 (or such successor), the offered
rate for deposits in Dollars with a maturity comparable to such Interest Period
appearing on the display designated on page "LIBO" on the Reuters Monitor Money
Rate Service (or on any successor or substitute page of such Service, providing
rate quotations comparable to those currently provided on such page of such
Service, as determined by the Lender from time to time, for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market) as of approximately 11:00 a.m. (London time) on the
date two Business Days prior to the commencement of such Interest Period;
and
(c)
in
the event that neither rate referred to in clauses (a) or (b) is available
at
such time for any reason, an interest rate per annum equal to the rate per
annum
at which deposits in Dollars are offered by the principal office of Deutsche
Bank AG in London, England to prime banks in the London interbank market at
approximately 11:00 a.m. (London time) on the date two Business Days before
the
8
first
day
of such Interest Period in the amount of the Advance if such Advance were to
be
outstanding for such Interest Period.
"LIBO
Rate Reserve Percentage"
for any
Interest Period for any Advance means the effective rate (expressed as a
percentage) at which reserve requirements (including, without limitation,
emergency, supplemental and other marginal reserve requirements) are imposed
on
the Lender during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those days
in
such Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to
such
Interest Period.
"LLC
Agreement"
means
the Limited Liability Company Agreement of the Borrower dated as of March 15,
2007, as amended, supplemented, amended and restated or otherwise modified
from
time to time.
"Loan
Documents"
means
this Agreement, the Security Agreement and each Account Control
Agreement.
"Material
Adverse Effect"
means a
material adverse effect on (i) the business or condition (financial or
otherwise), operations or prospects of the Borrower and its Subsidiaries taken
as a whole, (ii) the legality, validity or enforceability of any Loan Document
or (iii) the ability of the Borrower to perform its obligations under any Loan
Document.
"Monthly
Date"
means
the 15th
day each
calendar month (unless such day is not a Business Day, in which case
"Monthly
Date"
shall
mean the next succeeding Business Day).
"Multiemployer
Plan"
means a
multiemployer plan defined as such in Section 4001(a)(3) of ERISA to which
contributions have been made by the Borrower or any ERISA Affiliate and that
is
covered by Title IV of ERISA.
“Net
Loss Asset” means,
on
any date of determination, a Merchant Advance Contract (a) which on such date
shall have been deemed a loss by the Servicer in accordance with its usual
and
customary procedures or (b) with respect to which, during the 30 day period
ending on such date of determination, the Borrower has received less than 25%
of
the aggregate payments expected to be received by the Borrower during such
period. For purposes of this definition, "payments expected to be received
by
the Borrower" in relation to any Merchant Advance Contract shall mean payments
assumed to be received by the Borrower in the credit analysis performed by
the
Borrower (or by
9
the
Servicer for the Borrower) on or before the date such Merchant Advance Contract
was originally entered into.
“Net
Loss Ratio”
means,
as of any date of determination thereof, the percentage equivalent of a
fraction, (a) the numerator of which is an amount (not less than zero)
equal to the sum, without duplication, of the Unpaid Specified Amounts of all
Merchant Advance Contracts which on any date from the date hereof to the date
of
determination were Net Loss Assets, and (b) the denominator of which is equal
to
the sum of the Specified Amounts of all Merchant Advance Contracts entered
into
on or prior to such date (whether or not such Merchant Advance Contracts, or
any
amounts owing to the Borrower thereunder, remain outstanding on such
date).
"Notice
of Borrowing"
has the
meaning set forth in Section 2.02.
"Operating
Accounts"
means
account #XXXXXXXXX
(collections account), account
#XXXXXXXXX
(general account) and account
#XXXXXXXXX
(funding account), in each case, of the Borrower and held at Commerce Bank,
N.A., 0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000.
"Other
Taxes"
means
any and all present or future stamp or documentary taxes or any other excise
or
property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement.
"Par
Value of Merchant Advances"
means,
with respect to any date of determination, an amount equal to sum for each
outstanding Merchant Advance Contract (other than Merchant Advance Contracts
that were Net Loss Assets on such date) of the difference between the Purchase
Price for such Merchant Advance Contract, less
(if such
Merchant Advance Contract was a Delinquent Asset on such date) reserves in
an
amount for such Merchant Advance Contract determined by the Borrower
(provided
that the
Lender shall have the right in its sole discretion to increase such reserved
amount for such Merchant Advance Contract to an amount not in excess of the
Unpaid Specified Amount thereof), less
the
aggregate amount of payments received by the Borrower in respect of such
Merchant Advance Contract to the date of determination; provided
that
such difference for any Merchant Advance Contract shall not be less than
zero.
"PBGC"
means
the Pension Benefit Guaranty Corporation or any entity succeeding to any or
all
of its functions under ERISA.
10
"Permitted
Liens"
shall
mean, with respect to any Person:
(i) Liens
imposed by law which were incurred in the ordinary course of business, including
(but not limited to) carriers', warehousemen's and mechanics' liens and other
similar liens arising in the ordinary course of business and which (x) do not
in
the aggregate materially impair the use thereof in the operations of the
business of the Borrower or (y) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or
sale of the property subject to such liens and for which adequate reserves
have
been made if required in accordance with GAAP;
(ii) pledges
or deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other similar social security
legislation;
(iii) Liens
securing taxes, assessments and other governmental charges, the payment of
which
is not yet due or is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and for which such reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made;
(iv) Liens
in
favor of the Lender arising pursuant to the Security Agreement; and
(v) Liens
which
arise pursuant to a final judgment or judgments that do not constitute an Event
of Default under Section 6.01(f).
"Person"
means
an individual, partnership, corporation (including a business trust), limited
liability company, joint stock company, trust, unincorporated association,
joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Plan"
means
an employee benefit or other plan established or maintained by the Borrower
or
any ERISA Affiliate and that is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Purchase
Price"
means,
with respect to any Merchant Advance Contract to which the Borrower is a party,
the purchase price (howsoever defined) initially specified under such Merchant
Advance Contract to be payable by the Borrower to the counterparty thereto
in
exchange for the percentage specified therein of such counterparty’s future
credit card receivables.
11
"Security
Agreement"
means a
security agreement between the Borrower and the Lender in substantially the
form
of Exhibit A, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Servicer"
means
Merit Capital Manager, LLC.
"Solvent"
means,
with respect to any Person on a particular date, that (i) the fair value of
the
property of such Person is greater than the total amount of the liabilities,
including, without limitation, contingent liabilities, of such Person, (ii)
the
present fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its
debts as they become absolute and matured, (iii) such Person does not intend
to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay such debts and liabilities as they mature, and (iv)
such
Person is not engaged in business, and is not about to engage in business,
for
which such Person's property would constitute unreasonably small
capital.
"Specified
Amount"
means,
with respect to any Merchant Advance Contract to which the Borrower is a party,
the aggregate amount (howsoever defined) initially specified under such Merchant
Advance Contract to be payable to the Borrower from the future credit card
receivables which are the subject of such Merchant Advance Contract.
"Swap
Agreement"
means
any swap, forward, future or derivative transaction or option or similar
agreement involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial
or
pricing indices or measures of economic, financial or pricing risk or value
or
any similar transaction or any combination of these transactions; provided
that no
phantom stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants
of
the Borrower shall be a Swap Agreement.
"Subsidiary"
means,
with respect to any Person, any corporation, partnership, limited liability
company or other entity of which at least a majority of the Voting Shares is
at
the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
"Taxes"
means
any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any governmental authority.
“Tangible
Net Worth”
means,
as of any date, the sum for the Borrower and its Subsidiaries (determined on
a
consolidated basis without duplication in accordance with GAAP), of the
following:
12
(a)
the
total assets of the Borrower and its Subsidiaries which would be shown as assets
on a consolidated balance sheet of the Borrower and its Subsidiaries as of
such
date prepared in accordance with GAAP, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Subsidiaries, minus
(b)
the
total liabilities of the Borrower and its Subsidiaries which would be shown
as
liabilities on a consolidated balance sheet of the Borrower and its Subsidiaries
as of such date prepared in accordance with GAAP (excluding (i) the Class A
Note
and (ii) non-cash interest accrued on the Class A Note to such date),
minus
(c)
the
net book amount of all assets of the Borrower and its Subsidiaries (after
deducting any reserves applicable thereto) which would be shown as intangible
assets on a consolidated balance sheet of the Borrower and its Subsidiaries
as
of such date prepared in accordance with GAAP.
“Unpaid
Specified Amount”
means,
with respect to any Merchant Advance Contract and any date of determination,
the
Specified Amount for such Merchant Advance Contract, minus
an
amount equal to the sum, as of the close of business on the Business Day
immediately preceding such date of determination, of all amounts received by
the
Borrower on or prior to such day with respect to such Merchant Advance Contract
and allocable to the payment of such Specified Amount; provided
that the
Unpaid Specified Amount for any Merchant Advance Contract shall not be less
than
zero.
"Voting
Shares"
means,
at any time, as to any Person, the outstanding securities of such Person the
holders of which are ordinarily, in the absence of contingencies, entitled
to
vote for the election of directors (or persons performing similar functions)
of
such Person.
ARTICLE
II
AMOUNTS
AND TERMS OF THE ADVANCES
SECTION
2.01. The
Commitment. The
Lender agrees, on the terms and conditions hereinafter set forth, to make
advances to the Borrower (each, an "Advance")
in
Dollars from time to time on any Business Day during the period from the date
hereof until the Commitment Termination Date in an aggregate principal amount
not to exceed at any one time outstanding $33,000,000 (the "Commitment").
Within the foregoing limits and subject to the terms and conditions of this
Agreement, the Borrower may borrow, prepay and reborrow
13
hereunder.
Each Advance shall be in an amount not less than $500,000 or any whole multiple
of $1,000 in excess thereof.
SECTION
2.02. Advances.
To
request an Advance, the Borrower shall give the Lender an irrevocable written
notice substantially in the form of Exhibit B (a “Notice
of Borrowing”)
not
later than 12:00 noon (New York, New York time) on the second Business Day
prior to the date of such Advance. Each Notice of Borrowing shall be by
facsimile and shall specify the requested (i) date of such Advance, which
shall be a Business Day, (ii) amount of such Advance, (iii) initial
Interest Period for such Advance and (iv) the account to which the Lender is
to
credit the proceeds of such Advance (such account to be located in the United
States of America). The Lender will make the proceeds of each Advance available
to the Borrower by transmitting the amount thereof not later than 3:00 p.m.
(New York, New York time), in immediately available funds, to an account of
the
Borrower specified in the Notice of Borrowing provided by the Borrower pursuant
to this Section 2.02.
SECTION
2.03. Interest
Elections.
Each
Advance shall have an initial Interest Period as specified in the applicable
Notice of Borrowing. Thereafter, the Borrower may elect Interest Periods
therefor as provided in this Section 2.03. The Borrower may elect different
options with respect to different portions of the affected Advance, in which
case each such portion shall be considered a separate Advance (provided,
that
each such portion shall be in an amount not less than $500,000). To
make
an election pursuant to this Section 2.03, the Borrower shall notify the Lender
of such election in writing by facsimile, telex or cable by the time that a
notice of Advance would be required under Section 2.02 if the Borrower were
requesting an Advance resulting from such election to be made on the effective
date of such election. Each such written interest election request shall be
irrevocable and in a form approved by the Lender and signed by the Borrower.
Each such written interest election request shall specify the following
information:
(i)
the
Advance to which such interest election request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Advance (in which case the
information to be specified pursuant to clause (iii) of this paragraph
shall be specified for each resulting Advance);
(ii)
the
effective date of the election made pursuant to such interest election request,
which shall be a Business Day; and
(iii)
the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
14
If
any
such interest election request does not specify an Interest Period, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. If the Borrower fails to deliver a timely and complete interest
election request prior to the end of the Interest Period applicable thereto,
then, unless such Advance is repaid as provided herein, at the end of such
Interest Period, the Borrower shall be deemed to have selected an Interest
Period of the same duration and such Advance shall be continued on such basis.
SECTION
2.04. Termination,
Reduction and Extension of the Commitment
(a)
Unless previously terminated, the Commitment shall automatically terminate
on
the Commitment Termination Date.
(b)
The
Borrower shall have the right to terminate or reduce the unused Commitment
at
any time or from time to time; provided,
that
(i) the Borrower shall give irrevocable, written notice of each such
termination or reduction to the Lender at least three Business Days before
such
termination or reduction, (ii) each partial reduction shall be in an
aggregate amount of not less than $1,000,000 and (iii) the Borrower shall not
terminate or reduce the Commitment if, after giving effect to any concurrent
prepayment of the Advances pursuant to Section 2.06, at any time, the aggregate
outstanding principal amount of the Advances at such time would exceed the
Commitment.
(c)
The
Commitment once terminated or reduced under this Section 2.04 may not be
reinstated.
(d)
The
Borrower may, by written notice to the Lender not less 30 days and not more
than
45 days prior to the Commitment Termination Date then in effect (the
"Existing
Commitment Termination Date"),
request that the Lender extend the Commitment Termination Date to the date
falling 364 days after the Existing Commitment Termination Date. The Existing
Commitment Termination Date shall be extended (effective as of the Existing
Commitment Termination Date) to the date falling 364 days after the Existing
Commitment Termination Date, or, if such day is not a Business Day, the
immediately preceding Business Day, if in each case the Lender so agrees in
writing, in its sole and absolute discretion, not earlier than 20 nor later
than
10 days before the Existing Commitment Termination Date; provided,
that
without prejudice to the discretionary nature of any such extension, no such
extension shall be effective unless (i) no Event of Default or Default shall
have occurred and be continuing on the date of such request or on the Existing
Commitment Termination Date and (ii) each of the representations and warranties
made by the Borrower in Article IV hereof shall be true on and as of the date
of
such request and the Existing Commitment Termination Date with the same force
and effect as if made on and as of such dates. Each request for extension
hereunder by the Borrower shall constitute a certification by the Borrower
to
the effect set forth in clauses (i) and (ii) above (both as of the date of
such
request and, unless the Borrower otherwise notifies the Lender prior to
the
15
Existing
Commitment Termination Date, as of the Existing Commitment Termination Date).
If
any such extension of the Existing Commitment Termination Date shall not become
effective, then the Commitment shall automatically terminate on the Existing
Commitment Termination Date and the Commitment Termination Date shall remain
the
Existing Commitment Termination Date.
SECTION
2.05. Repayment
of Advances
.
The
Borrower hereby unconditionally promises to pay to the Lender the outstanding
principal amount of the Advances on the Commitment Termination Date.
SECTION
2.06. Prepayment
of Advances
(a)
The
Borrower shall have the right at any time and from time to time to prepay any
Advance in whole or in part without penalty or premium (but subject to the
requirements of Section 2.11) on the terms of this Section 2.06.
(b)
The
Borrower shall notify the Lender by facsimile of any optional prepayment
hereunder not later than 11:00 a.m. (New York, New York time) three Business
Days before the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Advance
or
portion thereof to be prepaid. Each partial prepayment of any Advance shall
be
in an amount not less than $500,000.
(c)
On or
before the date four Business Days following the last day (a "Calendar
Month End Date")
of
each calendar month, the Borrower shall prepay Advances to the extent the
aggregate outstanding amount of Advances as of such Calendar Month End Date
exceeds the sum of (i) the Par Value of Merchant Advances as of such Calendar
Month End Date plus
(ii) a
face amount not in excess of $1,000,000 of Financial Investments held by the
Borrower as of such Calendar Month End Date.
(d)
Amounts prepaid under this Section 2.06 may be reborrowed on and subject to
the
terms and conditions of this Agreement.
SECTION
2.07. Commitment
Fee.
The
Borrower agrees to pay to the Lender a commitment fee at a rate equal to 0.50%
per annum on the average daily unused amount of the Commitment during the period
from and including the Closing Date to but excluding the earlier of the date
the
Commitment terminates and the Commitment Termination Date. The accrued
commitment fee shall be payable on each Commitment Fee Payment Date and on
the
earlier of the date the Commitment terminates and the Commitment Termination
Date, commencing on the first such date to occur after the Closing Date.
The
commitment fee shall be computed on the basis of a year of 360 days and shall
be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
16
SECTION
2.08. Interest.
(a)
Each
Advance shall bear interest during each Interest Period therefor at a rate
per
annum equal to the LIBO Rate for such Interest Period plus
8.50%
per annum.
(b)
Notwithstanding the foregoing, during any period while any Event of Default
has
occurred and is continuing, the interest rate provided for in paragraph (a)
above shall automatically be increased by 2.00% per annum.
(c)
Accrued interest on each Advance shall be payable in arrears on each Interest
Payment Date for such Advance and upon termination of the Commitment;
provided,
that
(i) interest at the rate provided in paragraph (b) of this Section 2.08 shall
be
payable on demand and (ii) in the event of any repayment or prepayment of any
Advance, accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment.
(d)
The
Borrower agrees to pay to the Lender, so long as the Lender shall be required
under regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or the equivalent), additional interest
on
the unpaid principal amount of each Advance, from the date of such Advance
until
such principal amount is paid in full, at an interest rate per annum equal
at
all times to the remainder obtained by subtracting (i) the LIBO Rate for
the then current Interest Period for such Advance from (ii) the rate obtained
by
dividing such LIBO Rate by a percentage equal to 100% minus
the LIBO
Rate Reserve Percentage for such Interest Period, payable on each date on which
interest is payable on such Advance. A certificate of the Lender setting forth
the amount to which the Lender is then entitled under this Section 2.08(d)
shall
be conclusive and binding on the Borrower in the absence of manifest
error.
(e)
All
computations of interest based on the LIBO Rate and computations of interest
pursuant to Section 2.08(d) shall be made on the basis of a year of 360 days,
in
each case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest is payable.
SECTION
2.09. Alternate
Rate of Interest
.
If on
or prior to the commencement of any Interest Period for an Advance (an
“Affected
Interest Period”)
the
Lender determines (which determination shall be conclusive absent manifest
error) that:
(a) adequate and reasonable means do not exist for ascertaining the LIBO Rate
for such Affected Interest Period; or
(b)
the
LIBO Rate for such Interest Period will not adequately and fairly reflect the
cost to the Lender of making or maintaining such Advance for such Affected
Interest Period;
17
then
the
Lender shall give notice thereof (a “Rate
Determination Notice”)
to the
Borrower by facsimile as promptly as practicable thereafter. If such notice
is
given, during the thirty-day period following such Rate Determination Notice
(the “Negotiation
Period”),
the
Lender and the Borrower shall negotiate in good faith with a view to agreeing
upon a substitute interest rate basis for the Advances which shall reflect
the
cost to the Lender of funding the Advances from alternative sources (a
“Substitute
Basis”),
and
if such Substitute Basis is so agreed upon during the Negotiation Period, such
Substitute Basis shall apply in lieu of the LIBO Rate to all Interest Periods
commencing on or after the first day of the Affected Interest Period, until
the
circumstances giving rise to such notice have ceased to apply. If a Substitute
Basis is not agreed upon during the Negotiation Period, the Borrower may elect
to prepay the Loans pursuant to Section 2.06(a); provided,
however, that if the Borrower does not elect so to prepay, the Lender shall
determine (and shall certify from time to time in a certificate delivered by
the
Lender to the Borrower setting forth in reasonable detail the basis of the
computation of such amount) the rate basis reflecting the cost to the Lender
of
funding Advances for the Interest Period commencing on or after the first day
of
the Affected Interest Period, until the circumstances giving rise to such notice
have ceased to apply, and such rate basis shall be binding upon the Borrower
and
the Lender and shall apply in lieu of the LIBO Rate for the relevant Interest
Period.
SECTION
2.10. Increased
Costs.
If, due
to either (i) the introduction of or any change (other than any change by way
of
imposition or increase of reserve requirements included in the LIBO Rate Reserve
Percentage) in or in the interpretation of (to the extent any such introduction
or change occurs after the date hereof) any law or regulation or (ii) the
compliance with any guideline or request of any central bank or other
governmental authority adopted or made after the date hereof (whether or not
having the force of law) (collectively, the "New
Regulatory Developments"),
there
shall be any increase in the cost to the Lender of agreeing to make or making,
funding or maintaining Advances, the Borrower shall from time to time, within
30
days after delivery by the Lender to the Borrower of a certifi-cate as to the
amount of such increased cost, pay to the Lender the amount of the increased
costs set forth in such certificate (which certificate shall be conclusive
and
binding on the Borrower in the absence of manifest error); provided,
that
(i) the Lender shall specify in such certificate the New Regulatory
Development(s) causing the increased costs to be paid by the Borrower, and
(ii)
the Borrower shall not be required to pay to the Lender the amount of the
increased costs not attributable to the making and performance of this Agreement
and the transactions contemplated hereby by the Lender and/or the
Borrower.
SECTION 2.11. Break
Funding Payments.
In the
event of (a) the payment of any principal of any Advance on a day other than
the
last day of an Interest Period therefor (including as a result of an Event
of
Default), or (b) the failure to borrow, continue or prepay any Advance on the
date specified in any notice delivered pursuant hereto (collectively, the
"Breaking
Funding Events"),
then,
in any such event, the Borrower shall compensate the Lender for the loss, cost
and expense attributable to such event, which shall be deemed to include an
amount determined by
18
the
Lender to be equal to the excess, if any, of (i) the LIBO Rate in effect for
such Interest Period from the date of such payment or failure to the last day
of
such Interest Period (or, in the case of a failure to borrow or continue, the
duration of the Interest Period that would have resulted from such Advance
or
continuation), over (ii) the amount of interest that the Lender would earn
on
such principal amount for such period if the Lender were to invest such
principal amount for such period at the interest rate that would be bid by
the
Lender for Dollar deposits from other banks in the Eurodollar market at the
commencement of such period. A certificate of the Lender setting forth any
amount or amounts that the Lender is entitled to receive pursuant to this
Section 2.11 shall be delivered to the Borrower not later than one month after
the last day of such Interest Period (or, in the case of a failure to borrow
or
continue, the duration of the Interest Period that would have resulted from
such
Advance or continuation) with respect to each Break Funding Event and such
certificate shall be conclusive absent manifest error. The Borrower shall pay
the Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION
2.12. Taxes.
(a)
Any
and all payments by or on account of any obligation of the Borrower hereunder
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided,
that if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary
so
that after making all required deductions (including deductions applicable
to
additional sums payable under this Section 2.12) the Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant governmental authority in accordance with
applicable law.
(b)
Without limiting the generality of subsection (a) above, the Borrower shall
timely pay any Other Taxes to the relevant governmental authority in accordance
with applicable law.
(c)
The
Borrower shall indemnify the Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under
this Section 2.12) paid by the Lender on or with respect to any payment by
or on
account of any obligation of the Borrower hereunder and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether
or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed
or
asserted by the relevant governmental authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by the Lender shall
be
conclusive absent manifest error of the Lender.
(d)
As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the
Borrower to a governmental authority, the Borrower shall deliver to the Lender
the
19
original
or a certified copy of a receipt issued by such governmental authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Lender.
SECTION
2.13. Payments
Generally.
(a)
The
Borrower shall make each payment required to be made by it hereunder (whether
of
principal, interest or fees, or under Section 2.10, 2.11 or 2.12, or otherwise)
prior to 3:00 p.m. (New York, New York time) on the date when due, in Dollars
and immediately available funds, without deduction, set-off or counterclaim.
Any
amounts received after such time on any date may, in the discretion of the
Lender, be deemed to have been received on the next succeeding Business Day
for
purposes of calculating interest thereon. All such payments shall be made to
the
Lender at its office specified on its signature page hereto. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day and, in the case of any
payment accruing interest, interest thereon shall be payable for the period
of
such extension.
(b)
If at
any time insufficient funds are received by and available to the Lender to
pay
fully all amounts of principal, interest and fees then due hereunder, such
funds
shall be applied first, to pay interest then due hereunder, then to pay fees
and
other amounts hereunder, then to pay principal due hereunder.
(c)
The
Borrower agrees that at any time after the occurrence and during the continuance
of an Event of Default, in addition to (and without limitation of) any right
of
set-off, banker's lien, or counterclaim the Lender may otherwise have, the
Lender shall be entitled, at its option, to offset balances held by it for
the
account of the Borrower at any of its offices, and other obligations of the
Lender to the Borrower, in Dollars or in any other currency, against any
principal of or interest on any of the Lender's Advances to the Borrower
hereunder, or any other obligation of the Borrower hereunder, which is not
paid
when due (regardless of whether such balances or other obligations are then
due
to the Borrower), in which case it shall promptly notify the Borrower thereof;
provided,
that
failure to give such notice shall not affect the validity thereof.
ARTICLE
III
CONDITIONS
OF LENDING
SECTION
3.01. Condition
Precedent to Initial Advance.
The
obligation of the Lender to make its initial Advance is subject to the condition
precedent that the Lender shall have received, on or before the date of the
initial Advance, the following documents, each (unless otherwise specified
below) dated the Closing Date and in form and substance satisfactory to the
Lender:
20
(a)
A
copy of each of the LLC Agreement and the Unitholders Agreement, each duly
executed and delivered by the respective parties thereto, and certified copies
of (i) the certificate of formation or certificate of incorporation, as the
case
may be, of each of the Borrower, LEAF Financial Corporation, LEAF Ventures,
LLC
and Merit Capital Manager, LLC and of the resolutions of the Board of Directors
or equivalent of each such Person (or, as the case may be, its managing member)
authorizing such Person's entry into of each of the Transaction Documents to
which it is party and (in the case of the Borrower) the borrowings hereunder
and
(ii) of other documents evidencing other necessary corporate or limited
liability action with respect to this Agreement and the other Transaction
Documents.
(b)
Certificates of each of the Borrower, LEAF Financial Corporation, LEAF Ventures,
LLC and Merit Capital Manager, LLC certifying (i) the names and true signatures
of the officers of such Person (or, as the case may be, its managing member)
authorized to sign the Transaction Documents to which it is a party and any
other documents to be delivered hereunder or thereunder, (ii) the accuracy
of
the representations and warranties of such Person under the Transaction
Documents to which it is a party, (iii) the absence of Defaults and Events
of
Default under this Agreement and the Class A Note and (iv) such other matters
as
the Lender shall reasonably request.
(c)
A
favorable written opinion of Ledgewood, P.C., counsel to the Managing Member,
in
form and substance satisfactory to the Lender, covering such matters relating
to
this Agreement and the transactions contemplated hereby as the Lender may
reasonably request.
(d)
A
favorable written opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP, special
New York counsel for the Lender, covering such matters relating to the
transactions contemplated hereby as the Lender may require.
(e)
The
Security Agreement, duly executed and delivered by the Borrower and the Lender
with evidence of the perfection and first priority of the Liens created
thereby.
(f)
An
Account Control Agreement with respect to the Operating Accounts, duly executed
and delivered by the Borrower, the Lender and Commerce Bank, N.A.
(g)
The
Participation Agreement, duly executed and delivered by the Initial Class B
Member and the Lender.
(h)
The
LEAF Services Agreement, duly executed and delivered by the parties
thereto.
21
(i)
A
copy of the Class A Note, duly executed and delivered by the
Borrower.
(j)
Evidence satisfactory to the Lender that the Borrower shall have received a
Capital Contribution in the amount of $2,500,000 from the Initial Class B
Member, as provided in Section 3.3(a) of the LLC Agreement.
(k)
A
copy of the Budget, which shall be in form and substance satisfactory to the
Lender.
(l)
Such
other documents relating hereto as the Lender shall reasonably
request.
SECTION
3.02. Conditions
Precedent to Each Advance
.
The
obligation of the Lender to make each Advance (including, without limitation,
the initial Advance) shall be subject to the further conditions precedent that
(a) on the date of such Advance (i) the representations and warranties set
forth
in Article IV are true and correct on and as of the date of such Advance, before
and after giving effect to such Advance and to the application of the proceeds
thereof, as though made on and as of such date, (ii) no Default has occurred
and
is continuing, or would result from such Advance or from the application of
the
proceeds thereof and (iii) the EBITDA Funding Condition shall be satisfied
on
and as of the date of such Advance and (b) after giving effect to such Advance,
the aggregate outstanding amount of Advances shall not exceed the sum of (i)
the
Par Value of Merchant Advances plus
(ii) a
face amount not in excess of $1,000,000 of Financial Investments held by the
Borrower on such date. The giving of a Notice of Borrowing shall constitute
a
certification by the Borrower to the effect that the conditions set forth in
this Section 3.02 have been fulfilled (both as of the date of the Notice of
Borrowing and, unless the Borrower otherwise notifies the Lender prior to the
date of the applicable Advance, as of the date of such
Advance).
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
The
Borrower represents and warrants to the Lender that:
SECTION
4.01. Organization.
The
Borrower is duly organized, validly existing and in good standing under the
laws
of Delaware.
SECTION
4.02. Authorization;
Enforceability.
The
execution, delivery and performance of this Agreement by the Borrower are within
the Borrower's corporate powers and have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by the
Borrower and constitutes a legal, valid and binding obligation of
22
SECTION
4.03. Government
Approvals; No Conflicts.
The
execution, delivery and performance of this Agreement by the Borrower (a) do
not
require any consent or approval of, registration or filing with, or any other
action by, any governmental authority, (b) will not violate any applicable
law
or regulation or the certificate of formation or limited liability company
agreement of the Borrower and (c) will not violate or result in a default under
any loan agreement, indenture, or other agreement or instrument binding upon
the
Borrower or any of its Subsidiaries.
SECTION
4.04. No
Material Adverse Effect.
Since
the
date of this Agreement, no event or circumstance has occurred that could
reasonably be expected to have a Material Adverse Effect.
SECTION
4.05. Litigation.
There
are no actions, suits or proceedings by or before any arbitrator or governmental
authority now pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve this
Agreement or the transactions contemplated thereby.
SECTION
4.06. Compliance
with Laws and Agreements.
The
Borrower and each of its Subsidiaries is in compliance with all applicable
laws
(including without limitation Environmental Laws, tax laws and ERISA),
regulations and orders of any governmental authority applicable to it or its
property and all indentures, agreements and other instruments binding upon
it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION
4.07. Investment
and Holding Company Status.
The
Borrower is not an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940, as amended.
SECTION
4.08. Margin
Regulations.
The
Borrower is not engaged principally, or as one of its important activities,
in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock (within the meaning of
Regulation U or X of the Board of Governors of the Federal Reserve System),
and
no part of the proceeds of any Advance will be used to buy or carry any Margin
Stock.
23
SECTION
4.09. Solvency.
The
Borrower is and, after giving effect to each Advance and the use of the proceeds
thereof, will be Solvent.
ARTICLE
V
COVENANTS
OF THE BORROWER
So
long
as any principal of or interest on any Advance or any other amount payable
hereunder remains outstanding or the Commitment remains in effect, the Borrower
covenants and agrees that:
SECTION
5.01. Certain
Covenants.
(a)
The
Borrower will, and cause each of its Subsidiaries to, preserve and maintain
its
corporate existence and comply with all applicable laws, statutes, rules,
regulations and orders, including without limitation, those relating to federal
or State non-banking activities, licensing, usury, truth in lending, privacy,
credit reporting, equal opportunity, predatory lending, money-laundering and
terrorism financing, and all applicable Environmental Laws, tax laws and ERISA,
except to the extent such non-compliance could not reasonably be expected to
have a Material Adverse Effect or otherwise adversely affect the Lender. The
Borrower will, and will cause each of its Subsidiaries to, comply with
instructions provided from time to time by the Lender in connection with the
Lender's efforts to ensure the business of the Borrower and its
Subsidiaries
is at all times in compliance with all such applicable statutes, rules,
regulations and orders, except to the extent non-compliance with such statutes,
rules or regulations could not reasonably be expected to have a Material Adverse
Effect or otherwise adversely affect the Lender.
(b)
The
Borrower will, and cause each of its Subsidiaries to, promptly from time to
time
obtain and maintain in full force and effect all licenses, consents,
authorizations and approvals of, and make all filings and registrations with,
any Governmental Authority necessary in connection with the business of the
Borrower and its Subsidiaries, except to the extent the failure to obtain or
maintain any of the foregoing could not reasonably be expected to have a
Material Adverse Effect or otherwise adversely affect the Lender.
(c)
The
Borrower will, and cause each of its Subsidiaries to, timely file all required
tax returns, and pay and discharge all taxes, assessments and other governmental
charges imposed upon it and its property or any part thereof, or upon the income
or profits therefrom, as well as all claims for labor, materials or supplies
which if unpaid might by law become a lien or charge upon any property of the
Borrower or such Subsidiary, except (i) such items as are being contested in
good faith by appropriate proceedings and as to which appropriate reserves
are
being maintained and (ii) items the non-payment of which could not (either
individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect.
24
(d)
The
Borrower will, and cause each of its Subsidiaries to, keep adequate records
and
books of account, in which complete entries will be made in accordance with
GAAP, and permit representatives of the Lender, during normal business hours
and
upon reasonable notice, to examine, copy and make extracts from its books and
records, to inspect any of its property, and to discuss its business and affairs
with its officers, all to the extent reasonably requested by the
Lender.
(e)
The
Borrower will furnish to the Lender:
(i)
by
the dates the Managing Member is required to make delivery thereof to the
Members under the LLC Agreement (or, if delivered earlier, simultaneously with
the Managing Member's delivery thereof to such Members), copies of all financial
statements, monthly reports, notices and other informational materials required
to be delivered to such Members under the LLC Agreement;
(ii)
as
soon as possible and in any event within five Business Days after the occurrence
of any Default, a statement of the Borrower setting forth details of such
Default and the action which the Borrower has taken and proposes to take with
respect thereto;
(iii)
on
or before each Monthly Date:
(x)
a
copy of each Merchant Advance Contract entered into by the Borrower and not
previously provided to the Lender; and
(y)
a
certificate of a senior financial officer of the Borrower (i) setting forth
information in reasonable detail for each such Merchant Advance Contract as
to
the frequency and amount of payments to be received by the Borrower thereunder
assumed when such Merchant Advance Contract was originally entered into, (ii)
identifying each Merchant Advance Contract that was a Delinquent Asset or a
Net
Loss Asset as of the last day of the preceding calendar month and (iii) setting
forth in reasonable detail the calculations required to establish whether the
Borrower was in compliance with the requirements of Sections 5.02 and 5.03
for,
and satisfied the EBITDA Funding Condition during, such preceding calendar
month;
(iv)
on
the date Advances are prepaid (or required to be prepaid) under Section 2.06(c)
with respect to any Calendar Month End Date (or, if no such prepayment is
required under Section 2.06(c) with respect to any Calendar Month End Date,
on
or
25
before
the date four Business Days following such Calendar Month End Date), a
certificate of a senior financial officer of the Borrower (1) setting forth
a
calculation in reasonable detail (broken down by Merchant Advance Contract)
of
the Par Value of Merchant Advances as of such Calendar Month End Date and
setting forth the face amount of all Financial Investments held by the Borrower
as of such Calendar Month End Date and (2) identifying each Merchant Advance
Contract that is a Delinquent Asset or a Net Loss Asset as of such Calendar
Month End Date;
(v)
promptly upon the Borrower becoming aware thereof, written notice of the filing
or commencement of any action, suit or proceeding by or before any arbitrator
or
Governmental Authority against or affecting the Borrower or any Affiliate
thereof or any Member; and
(vi)
such
other information respecting the condition or operations, financial or
otherwise, of the Borrower and its Subsidiaries as the Lender may from time
to
time request.
(f)
The
Borrower will use the proceeds of the Advances solely to (1) finance the
Borrower's obligations under Merchant Advance Contracts and (2) pay service
fees
owing by the Borrower under the LEAF Services Agreement, in each case in
compliance with all applicable legal and regulatory requirements; provided,
that
the Lender shall have no responsibility as to the use of any of such
proceeds.
(g)
The
Borrower will not, and will not permit any of its Subsidiaries to, merge with
or
consolidate into any other Person or convey, transfer or lease all or
substantially all of its assets in a single transaction or series of
transactions to any Person.
(h)
The
Borrower will not create, and
will
not permit any of its Subsidiaries to, assume
or
suffer to exist any Lien on any of its property now owned or hereafter acquired
by it, except Permitted Liens.
(i)
The
Borrower will not at any time incur or permit to remain outstanding any
Indebtedness, other than (x) Indebtedness under this Agreement and (y)
Indebtedness under the Class A Note.
(j)
The
Borrower will not exercise its right under the LEAF Services Agreement to
acquire the Servicer, or acquire or permit any Subsidiary to acquire more than
five percent of any class of voting securities of, or 25 percent of the equity
of, any other Person.
The
Borrower will not permit its Subsidiaries to incur or have outstanding any
Indebtedness.
(k)
The
Borrower
will
not, and will not permit any of its Subsidiaries to, directly or indirectly
enter into any transaction with an Affiliate (other than the LEAF Services
26
Agreement) except in the ordinary course of and pursuant
to
the reasonable requirements of its business and upon commercially reasonable
terms that are no less favorable to it than those which might be obtained
in a
comparable arm's-length transaction at the time from a Person which is not
such
an Affiliate.
(l)
The
Borrower will at all times comply with the restrictions on its activities set
forth in the LLC Agreement.
(m)
The
Borrower will not, without the Lender’s prior written consent, have or maintain
any Deposit Accounts or Securities Accounts (each as defined in the Security
Agreement) other than the Operating Accounts, and will ensure that the Operating
Accounts and each other Deposit Account and Securities Account (as so defined)
is at all times subject to an Account Control Agreement unless maintained with
the Lender. The Borrower will ensure that all amounts payable to the Borrower
under any Merchant Advance Contract are paid directly into (i) an Operating
Account, (ii) a Deposit Account or Securities Account that is subject to an
Account Control Agreement or (iii) an account maintained with the
Lender.
(n)
The
Borrower will from time to time give, execute, deliver, file and/or record
any
financing statement, notice, instrument, document, agreement or other papers
that may be necessary or desirable to cause the Liens created by the Security
Agreement to be valid first and prior perfected Liens on the Collateral
purported to be covered thereby, subject to no equal or prior Lien.
SECTION
5.02. Financial
Covenants.
(a) Debt
to Tangible Net Worth Ratio.
The
Borrower
will
not
permit the Debt to Tangible Net Worth Ratio to exceed
the following respective ratios at any time during the following respective
periods:
|
Period
|
Ratio
|
|
Date
hereof to
March
31, 2008
|
10.0
to 1.0
|
|
April
1, 2008 and at
all
times thereafter
|
8.0
to 1.0
|
(b) Interest
Coverage Ratio.
The
Borrower will not permit the Interest Coverage Ratio at any time from and after
December 1, 2007 to be less than 1.50 to 1.00.
(c) Tangible
Net Worth.
The
Borrower will not permit Tangible Net Worth to be less than the following
respective amounts at any time during the following respective
periods:
27
|
Period
|
Amount
|
|
Date
hereof to
December
31, 2007
|
$2,000,000
|
|
January
1, 2008 and at
all
times thereafter
|
$3,000,000
|
SECTION
5.03. Operating
Covenants.
(a) Delinquency
Ratio.
The
Borrower will not permit the Delinquency Ratio as of the last day of any
calendar month to be greater than or equal to 9.8%.
(b) Net
Loss Ratio.
The
Borrower will not permit the Net Loss Ratio as of the last day of any calendar
month to be greater than or equal to 6.5%.
28
ARTICLE
VI
EVENTS
OF
DEFAULT
SECTION
6.01. Events
of Default.
If any
of the following events ("Events
of Default",
provided
that
such term shall exclude any of such events caused primarily by action or
omission of a Class A Member) shall occur and be continuing:
(a)
The
Borrower shall default in the payment when due of any principal of any Advance
when the same becomes due and payable; or the Borrower shall fail to pay any
interest on any Advance or any fee or other amount payable hereunder or under
the Fee Letter when due and such failure remains unremedied for three Business
Days; or
(b)
Any
representation or warranty made by the Borrower herein, in the Security
Agreement or in any Account Control Agreement or in any certificate or other
document delivered in connection herewith or therewith shall prove to have
been
incorrect when made or deemed made in any material respect; or
(c)
(i)
The Borrower shall fail to perform or observe any term, covenant or agreement
contained in Section 5.01(a), 5.01(b), 5.01(e), 5.01(f), 5.01(g), 5.01(h),
5.01(i), 5.01(j), 5.01(k), 5.01(l), 5.01(m), 5.02 or 5.03; or (ii) the Borrower
shall fail to perform or observe any other term or covenant in this Agreement,
the Security Agreement or any Account Control Agreement on its part to be
performed or observed and such failure remains unremedied for thirty days after
the earlier of (x) the date on which the Borrower has knowledge thereof or
(y)
the date on which written notice thereof shall have been given to the Borrower
by the Lender; or
(d)
The
Borrower or any of its Subsidiaries shall fail to pay any principal of or
premium or interest on any other Debt of the Borrower or any of its Subsidiaries
having an aggregate outstanding principal amount of $50,000 or more
("Material
Debt")
when
the same becomes due and payable, and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Material Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Material
Debt
and shall continue after the applicable grace period, if any, specified in
such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Material
Debt; or any such Material Debt shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Material Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
29
(e)
The
Borrower or any of its Subsidiaries shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors;
or
any proceeding shall be instituted by or against the Borrower or any of its
Subsidiaries seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency, moratorium or reorganization or relief of debtors, or liquidation
or
winding up, or seeking the entry of an order for relief or the appointment
of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and such proceeding shall remain undismissed
or
unstayed for a period of 60 days; or the Borrower or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set forth above
in this subsection (e); or
(f)
Any
judgment or order for the payment of money in excess of $50,000 shall be
rendered against the Borrower or any of its Subsidiaries, and either
(i) enforcement proceedings shall have been commenced by any creditor upon
such judgment or order and such proceedings shall not have been stayed or
(ii) there shall be any period of 30 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g)
A
Change in Control shall occur; or
(h)
The
Liens created by the Security Agreement shall, at any time with respect to
any
material portion of the Collateral intended to be covered thereby, not be valid
and perfected (to the extent perfection by filing, registration, recordation,
possession or control is required herein or therein) in favor of the Lender
free
and clear of all other Liens (other than Liens permitted under Section 5.01(h)
of this Agreement or under the Security Agreement); or except for expiration
in
accordance with its terms, the Security Agreement shall for whatever reason
be
terminated or cease to be in full force or effect in any material respect,
or
the enforceability thereof shall be contested by the Borrower; or
(i)
The
Borrower or any of its Subsidiaries shall incur liability to a Plan, a
Multiemployer Plan or the PBGC (or any combination of the foregoing) that either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; or
(j)
Any
action, suit or proceeding by or before any arbitrator or governmental authority
against or affecting the Borrower or any of its Subsidiaries that, if adversely
determined, could reasonably be expected, individually or in the aggregate,
to
result in a Material Adverse Effect, shall be commenced or threatened;
or
30
(k)
Any
Person shall initiate foreclosure proceedings with respect to any Lien on the
Equity Interests in the Borrower, LEAF Ventures or the Servicer;
then,
and
in any such event, the Lender may, by notice to the Borrower, (i) declare the
obligation of the Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and/or (ii) declare the Advances, all interest
thereon and all other amounts payable under this Agreement to be forthwith
due
and payable, whereupon the Advances, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided,
however,
that in
the event of an entry of an order for relief with respect to the Borrower under
the Federal Bankruptcy Code, (A) the obligation of the Lender to make Advances
shall auto-matically be terminated and (B) the Advances, all such interest
and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.01. Amendments,
Etc.
No
amendment or waiver of any provision of this Agreement, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless
the
same shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. This Agreement and the documents referred to herein
and
therein constitute the entire agreement of the parties with respect to the
subject matter hereof and thereof.
SECTION
7.02. Notices,
Etc.
All
notices and other communications provided for hereunder shall be in writing
(including facsimile, telegraphic, telex or cable communication) and mailed,
submitted by facsimile, telegraphed, telexed, cabled or deliv-ered, to the
respective addresses set forth on the signature pages hereof or at such other
address as shall be desig-nated by any party in a written notice to the other
party. All such notices and communications shall, (a) when submitted by
facsimile, telegraphed, telexed or cabled, be effective when submitted by
facsimile, delivered to the telegraph company, confirmed by telex answerback
or
delivered to the cable company, respectively, or (b) when submitted by mail,
upon receipt, except in any such case that notices and communications to the
Lender pursuant to Article II shall not be effective until received by the
Lender.
SECTION
7.03. No
Waiver; Remedies. No failure on the part of the Lender to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof;
31
nor
shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The reme-dies herein
provided are cumulative and not exclusive of any remedies provided by
law.
SECTION
7.04. Costs,
Expenses and Indemnification.
(a)
The
Borrower agrees to pay and reimburse on demand all reasonable costs and expenses
incurred by the Lender in connection with the preparation, negotiation,
execution and delivery, administration, modification, amendment or enforcement
of this Agreement and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Lender with respect thereto and with respect to advising the Lender
as
to its rights and responsibilities under or in connection with this Agreement.
(b)
The
Borrower hereby agrees to indemnify the Lender and each of its Affiliates and
their respective officers, directors, employees, agents, advisors and
representatives (each, an "Indemnified
Party")
from
and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, fees and disbursements of counsel), joint or
several, that may be incurred by or asserted or awarded against any Indemnified
Party (the "Indemnities"),
in
each case arising out of or in connection with or relating to any investigation,
litigation or proceeding or the preparation of any defense with respect thereto
arising out of or in connection with or relating to this Agreement or the
transactions contemplated hereby or thereby or any use made or proposed to
be
made with the proceeds of the Advances, whether or not such investigation,
litigation or proceeding is brought by the Borrower, any of its shareholders
or
creditors, an Indemnified Party or any other Person, or an Indemnified Party
is
otherwise a party thereto, and whether or not any of the conditions precedent
set forth in Article III are satisfied or the other transactions contemplated
by
this Agreement are consummated, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court
of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct; provided,
however,
the
Borrower's obligation to indemnify any Indemnified Party, other than the Lender,
under this Section 7.04(b) shall be subject to its receipt of written demand
for
the Indemnities of such Indemnified Party, such demand to set forth evidence
of
such Indemnified Party's payment or liability for such Indemnities. The Lender
shall have no liability for any special, indirect, consequential or punitive
damages in connection with any matter relating hereto.
SECTION
7.05. Assignments
and Participations.
(a)
The Lender may assign
to another Person all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of the
32
Commitment
and the Advances);
provided,
that
any such partial assignment shall be in an amount at least equal to
$1,000,000.
(b)
The
Lender may sell participations to one or more banks or other entities in or
to
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment and the Advances);
provided,
however,
that
the Lender's obligations under this Agreement (including, without limitation,
its Commitment hereunder) shall remain unchanged.
(c)
The
Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 7.05, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrower or any of its Affiliates furnished to the Lender by
or
on behalf of the Borrower.
(d)
Notwithstanding any other provision set forth in this Agreement, the Lender
may
at any time create a security interest in all or any portion of its rights
under
this Agreement (including, without limitation, the Advances) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
(e)
All
amounts payable by the Borrower to the Lender under Sections 2.08(e), 2.10,
2.11 and 7.04 shall be determined as if the Lender had not sold or agreed
to sell any participa-tions in the Advances or its Commitment and as if the
Lender were funding each of such Advances and Commitment in the same way that
it
is funding the portion of such Advances and Commitment in which no
participations have been sold.
SECTION
7.06. Governing
Law; Submission to Jurisdiction.
(a)
This
Agreement shall be governed by, and construed in accordance with, the law of
the
State of New York. The Borrower hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and
of
any New York state court sitting in New York County for the purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby.
(b)
The
Borrower irrevocably waives, to the fullest extent permitted by applicable
law,
any objection that it may now or hereafter have to the laying of the venue
of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum.
SECTION
7.07. Severability.
In case any provision in this Agreement shall be held to be invalid, illegal
or
unenforceable, such provision shall be severable from the rest of this
Agreement, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
33
SECTION
7.08. Execution
in Counterparts
.
This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and
the
same agreement.
SECTION
7.09. Survival.
This
Agreement and the documents referred to herein and therein, which constitute
the
entire agreement of the parties with respect to the subject matter hereof and
thereof, shall cease to be effective upon the termination of the Commitment
and
the final payment in full of all amounts due and payable hereunder; provided,
that
the obligations of the Borrower under Sections 2.08(e), 2.10, 2.11, 2.12 and
7.04 shall survive the termination of the Commitment and the repayment in full
of all amounts due and payable hereunder. Each representation and warranty
made
or deemed to be made herein or pursuant hereto shall survive the making of
such
representation and warranty, and the Lender shall not be deemed to have waived,
by reason of making any Advance, any Default or Event of Default that may arise
by reason of such representation or warranty proving to have been false or
misleading.
SECTION
7.10. Waiver
of Jury Trial
.
EACH OF
THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION
7.11. No
Fiduciary Relationship
.
The
Borrower acknowledges that the Lender has no fiduciary relationship with, or
fiduciary duty to, the Borrower arising out of or in connection with this
Agreement, and the relationship between the Lender and the Borrower is solely
that of creditor and debtor. This Agreement does not create a joint venture
among the parties.
34
SECTION
7.12.
Confidentiality.
The
Lender agrees to maintain the confidentiality of the Information (as defined
below) of the Borrower, except that Information may be disclosed (a) to the
Lender's and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority,
(c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to the Borrower, (e) in
connection with the exercise of any remedies hereunder or any suit, action
or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 7.12, to any assignee of or participant in, or any
prospective assignee of or participant in, any of the Lender's rights or
obligations under this Agreement, (g) with the consent of the Borrower or
(h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 7.12 or (ii) becomes
available to the Lender from a source other than the Borrower. For the purposes
of this Section, “Information”
in
relation to the Borrower means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Lender on a nonconfidential basis prior to disclosure by
the
Borrower; provided
that, in
the case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential.
Any
Person required to maintain the confidentiality of Information as provided
in
this Section 7.12 shall be considered to have complied with its obligation
to do
so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 7.13. USA
PATRIOT Act.
The
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA
PATRIOT
Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
"Act"),
it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow the Lender to identify the Borrower in accordance
with the Act.
35
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers thereunto duly authorized, as of the date first above
written.
MERIT
CAPITAL ADVANCE, LLC
By: LEAF
Ventures, LLC
Its
Managing Member
By: LEAF
Financial Corporation
Its
Managing Member
By:______________________________________
Name:
Title:
Address
for Notices:
c/o
LEAF
Financial Corporation
0000
Xxxxxx Xxxxxx, 0xx
Xxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Crit XxXxxx
Telecopy:
(000) 000-0000
DEUTSCHE
BANK AG Cayman Islands Branch
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
Applicable
Lending Office:
Cayman
Islands
Address
for Notices:
00
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxx Xxxxx
Telecopy:
(000) 000-0000
NY3:#7401722v15
36
EXHIBIT
A
[FORM
OF SECURITY AGREEMENT]
SECURITY
AGREEMENT dated as of March 15, 2007, between Merit Capital Advance, LLC, a
limited liability company duly organized and validly existing under the laws
of
Delaware (the "Grantor"),
and
Deutsche Bank AG Cayman Islands Branch (the "Secured
Party")
.
The
Grantor may from time to time obtain credit and other financial accommodations
from the Secured Party (by means of loans under the Credit Agreement referred
to
below, or otherwise).
To
induce
the Secured Party to extend such credit and other financial accommodations,
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Grantor has agreed to grant a security interest
in
the Collateral (as hereinafter defined) as security for the Secured Obligations
(as so defined).
Accordingly,
the parties hereto agree as follows:
Section
1. Definitions,
Etc.
1.01 Certain
Uniform Commercial Code Terms.
As used
herein, the terms "Accession",
"Account",
"As-Extracted
Collateral",
"Chattel
Paper",
"Commodity
Account",
"Commodity
Contract",
"Deposit
Account",
"Document",
"Electronic
Chattel Paper",
"Equipment",
"Fixture",
"General
Intangible",
"Goods",
"Instrument",
"Inventory",
"Investment
Property",
"Letter-of-Credit
Right",
"Payment
Intangible",
"Proceeds",
"Promissory
Note",
"Software"
and
"Tangible
Chattel Paper"
have
the respective meanings set forth in Article 9 of the NYUCC, and the terms
"Certificated
Security",
"Entitlement
Holder",
"Financial
Asset",
"Instruction",
"Securities
Account",
"Security",
"Security
Certificate",
"Security
Entitlement"
and
"Uncertificated
Security"
have
the respective meanings set forth in Article 8 of the NYUCC.
1.02 Additional
Definitions.
In
addition, as used herein:
"Casualty
Event"
means,
with respect to any property of any Person, any loss of or damage to, or any
condemnation or other taking of, such property for which such Person receives
insurance proceeds, or proceeds of a condemnation award or other
compensation.
"Collateral"
has the
meaning assigned to such term in Section 3.
"Collateral
Account"
has the
meaning assigned to such term in Section 4.01(a).
"Contingent
Secured Obligations"
means
obligations of the Grantor in respect of (a) letters of credit issued by the
Secured Party for the account of the Grantor under any Credit Document, (b)
acceptances created for the benefit of the Grantor by the Secured Party under
any Credit Document, and (c) any other claim that may be payable to the
Secured Party by the Grantor under any Credit Document that is not yet due
and
payable.
Security
Agreement
2
"Copyright
Collateral"
means
all Copyrights of the Grantor, whether now owned or hereafter acquired by the
Grantor, including each Copyright identified in Annex 4.
"Copyrights"
means
all copyrights, copyright registrations and applications for copyright
registrations, including all renewals and extensions thereof, all rights to
recover for past, present or future infringements thereof and all other rights
whatsoever accruing thereunder or pertaining thereto.
"Credit
Agreement"
means
that certain Credit Agreement dated as of the date hereof between the Grantor,
as borrower, and the Secured Party, as lender, as the same may be amended,
supplemented, amended and restated or otherwise modified from time to
time.
"Credit
Documents"
means
collectively, this Agreement, the Credit Agreement and any other document or
instrument now existing or hereafter entered into that relates to any Financial
Accommodation at any time made available by the Secured Party to the Grantor
(including any promissory note evidencing any thereof, and any document or
instrument providing for the grant of a lien upon any property of the Grantor
as
collateral security for the obligations of the Grantor in respect of any
Financial Accommodation).
"Default"
means
any of the following events: (a) any of the Secured Obligations shall have
been declared, or shall become, due and payable prior to the stated maturity
therefor, (b) the Grantor shall commence any bankruptcy or insolvency
proceeding, or there shall be commenced against the Grantor any bankruptcy
or
insolvency proceeding and the same shall not be dismissed within 60 days,
(c) the Grantor shall fail to pay when due any principal amount in respect
of a Secured Obligation, (d) the Grantor shall fail to pay any interest,
fees, commissions, indemnities, costs and other expenses in respect of any
Secured Obligations for three or more business days after the date on which
such
amounts first become due or (e) any event of default or termination
(however described) under any Credit Document shall occur and be
continuing.
"Financial
Accommodation"
means
any loan, advance, letter of credit or overdraft, securities lending, discount
or purchase of notes, security or other instrument or property, acceptance,
issuance or confirmation of any letter of credit, guarantee or indemnity,
interest rate, currency, equity or other similar type of swap or protection
agreement, foreign exchange agreement, cash management arrangement or any other
kind of agreement under which the Grantor may be indebted or obligated to the
Secured Party in any manner, whether now existing or hereafter arising, whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or not secured, and
however acquired by the Secured Party.
"Foreign
Subsidiary"
means
any subsidiary of the Grantor with respect to which the Secured Party determines
that a pledge of more than 66-2/3% of the total number of shares of voting
stock of such subsidiary would result in material adverse tax consequences
under
Section 956 of the Code.
Security
Agreement
"Initial
Pledged Shares"
means
the Shares of each Issuer beneficially owned by the Grantor on the date hereof
and identified in Annex 3 (Part A).
"Intellectual
Property"
means,
collectively, all Copyright Collateral, all Patent Collateral and all Trademark
Collateral, together with (a) all inventions, processes, production
methods, proprietary information, know how and trade secrets; (b) all
licenses or user or other agreements granted to the Grantor with respect to
any
of the foregoing, in each case whether now or hereafter owned or used;
(c) all information, customer lists, identification of suppliers, data,
plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and automatic
machinery software and programs; (d) all field repair data, sales data and
other information relating to sales or service of products now or hereafter
manufactured; (e) all accounting information and all media in which or on
which any information or knowledge or data or records may be recorded or stored
and all computer programs used for the compilation or printout of such
information, knowledge, records or data; (f) all licenses, consents,
permits, variances, certifications and approvals of governmental agencies now
or
hereafter held by the Grantor; and (g) all causes of action, claims and
warranties now or hereafter owned or acquired by the Grantor in respect of
any
of the items listed above.
"Issuers"
means,
collectively, (a) the respective Persons identified on Annex 3 (Part
A) under the caption "Issuer",
(b) any other Person that shall at any time be a subsidiary of the Grantor,
and (c) the issuer of any equity securities hereafter owned by the
Grantor.
"Motor
Vehicles"
means
motor vehicles, tractors, trailers and other like property, if the title thereto
is governed by a certificate of title or ownership.
"NYUCC"
means
the Uniform Commercial Code as in effect from time to time in the State of
New York.
"Patent
Collateral"
means
all Patents of the Grantor, whether now owned or hereafter acquired by the
Grantor, including each Patent identified in Annex 5, and all income,
royalties, damages and payments now or hereafter due and/or payable under or
with respect thereto.
"Patents"
means
all patents and patent applications, including the inventions and improvements
described and claimed therein together with the reissues, divisions,
continuations, renewals, extensions and continuations in part thereof, all
income, royalties, damages and payments now or hereafter due and/or payable
with
respect thereto, all damages and payments for past or future infringements
thereof and rights to xxx therefor, and all rights corresponding thereto
throughout the world.
"Person"
means
any individual, corporation, company, voluntary association, partnership,
limited liability company, joint venture, trust, unincorporated organization
or
government (or any agency, instrumentality or political subdivision
thereof).
Security
Agreement
"Pledged
Shares"
means,
collectively, (i) the Initial Pledged Shares and (ii) all other Shares
of any Issuer now or hereafter owned by the Grantor, together in each case
with
(a) all certificates representing the same, (b) all shares,
securities, moneys or other property representing a dividend on or a
distribution or return of capital on or in respect of the Pledged Shares, or
resulting from a split-up, revision, reclassification or other like change
of
the Pledged Shares or otherwise received in exchange therefor, and any warrants,
rights or options issued to the holders of, or otherwise in respect of, the
Pledged Shares, and (c) without prejudice to any provision of any of the
Credit Documents prohibiting any merger or consolidation by an Issuer, all
Shares of any successor entity of any such merger or consolidation.
"Secured
Obligations"
means,
collectively, the obligations of the Grantor to the Secured Party in respect
of
the principal of and interest on any loan or other extension of credit made
by
the Secured Party to, and each promissory note (if any) constituting part of
or
delivered by the Grantor to the Secured Party under, the Credit Documents,
and
all other amounts from time to time owing to the Secured Party by the Borrower
under the Credit Documents or in respect of any Financial Accommodation from
time to time made available by the Secured Party to the Grantor, together with
in each case interest thereon and expenses related thereto, including any
interest or expenses accruing or arising after the commencement of any case
with
respect to the Grantor under the United States Bankruptcy Code or any other
bankruptcy or insolvency law (whether or not such interest or expenses are
allowed or allowable as a claim in whole or in part in such case).
"Shares"
means
shares of capital stock of a corporation, limited liability company interests,
partnership interests and other ownership or equity interests of any class
in
any Person.
"Trademark
Collateral"
means
all Trademarks of the Grantor, whether now owned or hereafter acquired by the
Grantor, including each Trademark identified in Annex 6, together, in each
case, with the product lines and goodwill of the business connected with the
use
of, and symbolized by, each such trade name, trademark and service xxxx.
Notwithstanding the foregoing, the Trademark Collateral does not and shall
not
include any Trademark that would be rendered invalid, abandoned, void or
unenforceable by reason of its being included as part of the Trademark
Collateral.
"Trademarks"
means
all trade names, trademarks and service marks, logos, trademark and service
xxxx
registrations, and applications for trademark and service xxxx registrations,
including all renewals of trademark and service xxxx registrations, all rights
to recover for all past, present and future infringements thereof and all rights
to xxx therefor, and all rights corresponding thereto throughout the
world.
Section
2. Representations
and Warranties.
The
Grantor represents and warrants to the Secured Party that:
2.01 Organizational
Matters; Enforceability, Etc. The
Grantor is duly organized, validly existing and in good standing under the
laws
of the jurisdiction of its organization. The execution, delivery and performance
of this Agreement, and the grant of the
Security
Agreement
5
security
interests pursuant hereto, (a) are within the Grantor's powers and have
been duly authorized by all necessary corporate or other action, (b) do not
require any consent or approval of, registration or filing with, or any other
action by, any governmental authority or court, except for (i) such as have
been obtained or made and are in full force and effect and (ii) filings and
recordings in respect of the security interests created pursuant hereto,
(c) will not violate any applicable law or regulation or the charter, by
laws or other organizational documents of the Grantor or any order of any
governmental authority or court binding upon the Grantor or its property,
(d) will not violate or result in a default under any indenture, agreement
or other instrument binding upon the Grantor or any of its assets, or give
rise
to a right thereunder to require any payment to be made by any such person,
and
(e) except for the security interests created pursuant hereto, will not
result in the creation or imposition of any lien, charge or encumbrance on
any
asset of the Grantor.
This
Agreement has been duly executed and delivered by the Grantor and constitutes,
a
legal, valid and binding obligation of the Grantor, enforceable against the
Grantor in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the enforcement of creditors'
rights and (b) the application of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
The
Grantor is not (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
2.02 Title.
The Grantor is the sole beneficial owner of the Collateral and no lien exists
upon the Collateral (and no right or option to acquire the same exists in favor
of any other Person) other than (a) the security interest created or
provided for herein, which security interest constitutes a valid first and
prior
perfected lien on the Collateral, and (b) the liens (if any) expressly
permitted by the Credit Documents.
2.03 Names,
Etc.The
full
and correct legal name, type of organization, jurisdiction of organization,
organizational ID number (if applicable) and mailing address of the Grantor
as
of the date hereof are correctly set forth in Annex 1.
2.04 Changes
in Circumstances.
The
Grantor has not (a) within the period of four months prior to the date
hereof, changed its location (as defined in Section 9 307 of the NYUCC),
(b) except as specified in Annex 1, heretofore changed its name, or
(c) except as specified in Annex 2, heretofore become a "new debtor"
(as defined in Section 9 102(a)(56) of the NYUCC) with respect to a
currently effective security agreement previously entered into by any other
Person.
2.05 Pledged
Shares.
The
Initial Pledged Shares constitute (a) 100% of the issued and outstanding Shares
of each Issuer beneficially owned by the Grantor on the date hereof (other
than
any Shares held in a Securities Account referred to in Annex 7), whether or
not registered in the name of the Grantor. Annex 3 (Part A) correctly
identifies, as at the date hereof, the respective Issuers of the Initial Pledged
Shares and (in the case of any corporate Issuer) the
Security
Agreement
6
respective
class and par value of such Shares and the respective number of such Shares
(and
registered owner thereof) represented by each such certificate. The Initial
Pledged Shares are, and all other Pledged Shares in which the Grantor shall
hereafter grant a security interest pursuant to Section 3 will be,
(i) duly authorized, validly existing, fully paid and non assessable (in
the case of any Shares issued by a corporation) and (ii) duly issued and
outstanding (in the case of any equity interest in any other entity), and none
of such Pledged Shares are or will be subject to any contractual restriction,
or
any restriction under the charter, by laws, partnership agreement or other
organizational instrument of the respective Issuer thereof, upon the transfer
of
such Pledged Shares (except for any such restriction contained herein or in
the
Credit Documents, or under such organizational instruments).
2.06 Promissory
Notes.
Annex 3
(Part B) sets forth a complete and correct list of all Promissory Notes (other
than any held in a Securities Account referred to in Annex 7) held by the
Grantor on the date hereof.
2.07 Intellectual
Property.
Annexes
4, 5 and 6, respectively, set forth a complete and correct list of all copyright
registrations, patents, patent applications, trademark registrations and
trademark applications owned by the Grantor on the date hereof (or, in the
case
of any supplement to said Annexes 4, 5 and 6, effecting a pledge thereof, as
of
the date of such supplement).
Except
pursuant to licenses and other user agreements entered into by the Grantor
in
the ordinary course of business that are listed in said Annexes 4, 5 and 6
(including as supplemented by any supplement effecting a pledge thereof), the
Grantor has done nothing to authorize or enable any other Person to use any
Copyright, Patent or Trademark listed in said Annexes 4, 5 and 6 (as so
supplemented), and all registrations listed in said Annexes 4, 5 and 6 (as
so
supplemented) are, except as noted therein, in full force and
effect.
To
the
Grantor's knowledge, (i) except as set forth in said Annexes 4, 5 and 6 (as
supplemented by any supplement effecting a pledge thereof), there is no
violation by others of any
right
of the Grantor with respect to any Copyright, Patent or Trademark listed in
said
Annexes 4, 5 and 6 (as so supplemented), respectively, and (ii) the Grantor
is not infringing in any respect upon any Copyright, Patent or Trademark of
any
other Person; and no proceedings alleging such infringement have been instituted
or are pending against the Grantor and no written claim against the Grantor
has
been received by the Grantor, alleging any such violation, except as may be
set
forth in said Annexes 4, 5 and 6 (as so supplemented).
The
Grantor does not own any Trademarks registered in the United States of America
to which the last sentence of the definition of Trademark Collateral
applies.
2.08 Deposit
Accounts and Securities Accounts.
Annex 7
sets forth a complete and correct list of all Deposit Accounts, Securities
Accounts and Commodity Accounts of the Grantor on the date hereof.
2.09 Commercial
Tort Claims.
Annex 8 sets forth a complete and correct list of all commercial tort
claims of the Grantor in existence on the date hereof.
Security
Agreement
7
2.10 Fair
Labor Standards Act.
Any
goods now or hereafter produced by the Grantor or any of its subsidiaries
included in the Collateral have been and will be produced in compliance with
the
requirements of the Fair Labor Standards Act, as amended.
Section
3. Collateral.
As
collateral security for the payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Secured Obligations, the Grantor
hereby pledges and grants to the Secured Party as hereinafter provided a
security interest in all of the Grantor's right, title and interest in, to
and
under the following property, in each case whether tangible or intangible,
wherever located, and whether now owned by the Grantor or hereafter acquired
and
whether now existing or hereafter coming into existence (all of the property
described in this Section 3 being collectively referred to herein as
"Collateral"):
(a) all
Accounts:
(b) all
As-Extracted Collateral;
(c) all
Chattel Paper;
(d) all
Deposit Accounts;
(e) all
Documents;
(f) all
Equipment;
(g) all
Fixtures;
(h) all
General Intangibles;
(i) all
Goods
not covered by the other clauses of this Section 3;
(j) the
Pledged Shares;
(k) all
Instruments, including all Promissory Notes;
(l) all
Intellectual Property;
(m) all
Inventory;
(n) all
Investment Property not covered by other clauses of this Section 3,
including all Securities, all Securities Accounts and all Security Entitlements
with respect thereto and Financial Assets carried therein, and all Commodity
Accounts and Commodity Contracts;
(o) all
Letter-of-Credit Rights;
(p) all
commercial tort claims, as defined in Section 9-102(a)(13) of the NYUCC,
arising out of the events described in Annex 8;
Security
Agreement
(q) all
other
tangible and intangible personal property whatsoever of the Grantor;
and
(r) all
Proceeds of any of the Collateral, all Accessions to and substitutions and
replacements for, any of the Collateral, and all offspring, rents, profits
and
products of any of the Collateral, and, to the extent related to any Collateral,
all books, correspondence, credit files, records, invoices and other papers
(including all tapes, cards, computer runs and other papers and documents in
the
possession or under the control of the Grantor or any computer bureau or service
company from time to time acting for the Grantor),
IT
BEING
UNDERSTOOD, HOWEVER, that (A) in the case of any of the foregoing that
consists of general or limited partnership interests in a general or limited
partnership, the security interest hereunder shall be deemed to be created
only
to the maximum extent permitted under the applicable organizational instrument
pursuant to which such partnership is formed, (B) in no event shall the
security interest granted under this Section 3 attach to any lease,
license, contract, property rights or agreement to which the Grantor is a party
(or to any of its rights or interests thereunder) if the grant of such security
interest would constitute or result in either (i) the abandonment,
invalidation or unenforceability of any right, title or interest of the Grantor
therein or (ii) in a breach or termination pursuant to the terms of, or a
default under, any such lease, license, contract, property rights or agreement
(other than to the extent that any such term would be rendered ineffective
by
Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code as
in effect in the relevant jurisdiction, and (C) the security interest
created hereby in Shares constituting voting stock of any Issuer that is a
Foreign Subsidiary shall be limited to that portion
of such voting stock that does not exceed 65% of the aggregate issued and
outstanding voting stock of such Issuer.
Section
4. Cash
Proceeds of Collateral.
4.01 Collateral
Account.
The
Secured Party will cause to be established at a banking institution to be
selected by the Secured Party a cash collateral account (the "Collateral
Account"),
that
(i) to
the
extent of all Investment Property or Financial Assets (other than cash) credited
thereto shall be a Securities Account in respect of which the Secured Party
shall be the Entitlement Holder, and
(ii) to
the
extent of any cash credited thereto shall be a Deposit Account in respect of
which the Secured Party shall be the depositary bank's customer,
and
into
which the Grantor agrees to deposit from time to time the cash proceeds of
any
of the Collateral (including proceeds of insurance thereon) required to be
delivered to the Secured Party pursuant to any of the Credit Documents, or
pursuant hereto, and into which the Grantor may from time to time deposit any
additional amounts that it wishes to provide as additional collateral security
hereunder. The Collateral Account, and any money or other property from time
to
time
Security
Agreement
9
therein,
shall constitute part of the Collateral hereunder and shall not constitute
payment of the Secured Obligations until applied as hereinafter
provided.
4.02 Proceeds
of Casualty Events.
Without
limiting the generality of the provisions of the foregoing Section 4.01,
promptly following the occurrence of any Casualty Event affecting the property
of Grantor (whether or not such property is Collateral under this Agreement)
resulting in a loss in excess of $10,000, the Grantor shall give prompt notice
thereof to the Secured Party and shall cause the proceeds of insurance,
condemnation award or other compensation received as a result of such Casualty
Event to be paid to the Secured Party, for deposit into the Collateral Account,
as additional collateral security for the payment of the Secured Obligations.
To
the extent the Secured Party shall receive proceeds of any such Casualty Event
resulting in a loss of $10,000 or less, the Secured Party will, so long as
no
Default shall have occurred and be continuing, promptly remit such proceeds
to
the Grantor.
4.03 Withdrawals.
The
balance from time to time in the Collateral Account shall be subject to
withdrawal only as provided in this Section 4.03 and Section 4.04
below. The Secured Party shall (except as otherwise provided in the last
sentence of this Section 4.03) remit the collected balance standing to the
credit of the Collateral Account to or upon the order of the Grantor as the
Grantor
shall from time to time instruct, provided
that
(A) deposits in the Collateral Account that constitute any proceeds of
insurance, condemnation award or other compensation in respect of any Casualty
Event affecting any property of Grantor shall be subject to withdrawal only
as
provided in Section 4.04 below and (B) at any time following the
occurrence and during the continuance of a Default, the Secured Party may in
its
discretion apply or cause to be applied (subject to collection) the balance
from
time to time standing to the credit of the Collateral Account (regardless of
the
origin thereof) to the prepayment of the principal of the Secured Obligations
(and/or to provide cover for Contingent Secured Obligations).
4.04 Restoration
or Replacement of Property.
With
respect to any proceeds that are required to be paid into the Collateral Account
pursuant to Section 4.02 above, the Grantor may, at its option, to be
exercised by delivery of notice to the Secured Party within 60 days of the
receipt of such proceeds, elect to apply any proceeds of insurance, condemnation
award or other compensation received as a result of such Casualty Event either
(A) to the rebuilding or replacement of the property affected by such
Casualty Event (the "Damaged
Property")
or
(B) to the prepayment of such of the Secured Obligations as shall be
selected by it.
If
the
Grantor elects to rebuild or replace the Damaged Property, any such proceeds
(and any earnings thereon) held in the Collateral Account shall be applied
by
the Grantor to the rebuilding and replacement of the Damaged Property and such
proceeds shall be advanced to the Grantor by the Secured Party in periodic
installments upon compliance by the Grantor with such reasonable conditions
to
disbursement as may be imposed by the Secured Party, including, but not limited
to, reasonable retention amounts and receipt of lien releases.
Following
the occurrence and the continuation of any Default, the Secured Party shall
have
no obligation to release any of such proceeds to the Grantor for rebuilding
or
replacement of Damaged Property. All insurance proceeds remaining after the
payment for rebuilding and replacement of Damaged Property pursuant to this
Section 4.04 may, at the option
Security
Agreement
10
of
the
Secured Party, be applied to the prepayment of the principal of the Secured
Obligations s (and/or to provide cover for Contingent Secured
Obligations).
4.05 Investment
of Balance in Collateral Account.
The
cash balance standing to the credit of the Collateral Account shall be invested
from time to time in such short-term U.S. government (or U.S.
government-guaranteed) obligations as the Secured Party shall determine, which
investments shall be held in the name and be under the control of the Secured
Party (and credited to the Collateral Account), provided
that at
any time after the occurrence and during the continuance of a Default, the
Secured Party may in its discretion at any time and from time to time elect
to
liquidate any such investments and to apply or cause to be applied the proceeds
thereof to the payment of the Secured Obligations then due and payable in the
manner specified in Section 5.09.
Section
5. Further
Assurances; Remedies.
In
furtherance of the grant of the security interest pursuant to Section 3,
the Grantor hereby agrees with the Secured Party as follows:
5.01 Delivery
and Other Perfection.
The
Grantor shall promptly from time to time give, execute, deliver, file, record,
authorize or obtain all such financing statements, continuation statements,
notices, instruments, documents, agreements or consents or other papers as
may
be necessary or desirable in the judgment of the Secured Party to create,
preserve, perfect, maintain the perfection of or validate the security interest
granted pursuant hereto or to enable the Secured Party to exercise and enforce
its rights hereunder with respect to such security interest, and without
limiting the foregoing, shall:
(a) if
any of
the Pledged Shares, Investment Property or Financial Assets constituting part
of
the Collateral are received by the Grantor, forthwith (x) deliver to the
Secured Party the certificates or instruments representing or evidencing the
same, duly endorsed in blank or accompanied by such instruments of assignment
and transfer in such form and substance as the Secured Party may reasonably
request, all of which thereafter shall be held by the Secured Party, pursuant
to
the terms of this Agreement, as part of the Collateral and (y) take such
other action as the Secured Party may reasonably deem necessary or appropriate
to duly record or otherwise perfect the security interest created hereunder
in
such Collateral;
(b) promptly
from time to time deliver to the Secured Party any and all Instruments
constituting part of the Collateral, endorsed and/or accompanied by such
instruments of assignment and transfer in such form and substance as the Secured
Party may request; provided
that
(other than in the case of the promissory notes described in Annex 3 (Part
B))
so long as no Default shall have occurred and be continuing, the Grantor may
retain for collection in the ordinary course any Instruments received by the
Grantor in the ordinary course of business and the Secured Party shall, promptly
upon request of the Grantor, make appropriate arrangements for making any
Instrument delivered by the Grantor available to the Grantor for purposes of
presentation, collection
Security
Agreement
11
or
renewal (any such arrangement to be effected, to the extent requested by the
Secured Party, against trust receipt or like document);
(c) promptly
from time to time enter into such control agreements, each in form and substance
reasonably acceptable to the Secured Party, as may be required to perfect the
security interest created hereby in any and all Deposit Accounts, Investment
Property, Electronic Chattel Paper and Letter-of-Credit Rights, and will
promptly furnish to the Secured Party true copies thereof;
(d) promptly
from time to time upon the request of the Secured Party, execute and deliver
such short-form security agreements as the Secured Party may reasonably
deem
necessary or desirable to protect the interests of the Secured Party in respect
of that portion of the Collateral consisting of Intellectual
Property;
(e) promptly
upon request of the Secured Party, cause the Secured Party to be listed as
the
lienholder on any certificate of title or ownership covering any Motor Vehicle
(other than Motor Vehicles constituting Inventory) and within 120 days of
such request deliver evidence of the same to the Secured Party;
(f) keep
full
and accurate books and records relating to the Collateral, and stamp or
otherwise xxxx such books and records in such manner as the Secured Party may
reasonably require in order to reflect the security interests granted by this
Agreement; and
(g) permit
representatives of the Secured Party, upon reasonable notice, at any time during
normal business hours to inspect and make abstracts from its books and records
pertaining to the Collateral, and permit representatives of the Secured Party
to
be present at the Grantor's place of business to receive copies of
communications and remittances relating to the Collateral, and forward copies
of
any notices or communications received by the Grantor with respect to the
Collateral, all in such manner as the Secured Party may require.
5.02 Other
Financing Statements or Control.
Except
as otherwise permitted under the Credit Documents, the Grantor shall not
(a) file or suffer to be on file, or authorize or permit to be filed or to
be on file, in any jurisdiction, any financing statement or like instrument
with
respect to any of the Collateral in which the Secured Party is not named as
the
sole secured party, or (b) cause or permit any Person other than the
Secured Party to have "control" (as defined in Section 9-104, 9-105, 9-106
or 9-107 of the NYUCC) of any Deposit Account, Electronic Chattel Paper,
Investment Property or Letter-of-Credit Right constituting part of the
Collateral.
5.03 Preservation
of Rights.
The
Secured Party shall not be required to take steps necessary to preserve any
rights against prior parties to any of the Collateral.
5.04 Special
Provisions Relating to Certain Collateral.
(a) Pledged
Shares.
Security
Agreement
12
(i) The
Grantor will cause the Pledged Shares to constitute at all times (1) 100% of
the
total number of Shares of each Issuer other than a Foreign Subsidiary then
outstanding owned by the Grantor and (2) in the case of any Issuer that is
a Foreign Subsidiary, 65% of the total number of shares of voting stock of
such
Issuer and 100% of the total number of shares of all other classes of capital
stock of such Issuer then issued and
outstanding owned by the Grantor.
(ii) So
long
as no Default shall have occurred and be continuing, the Grantor shall have
the
right to exercise all voting, consensual and other powers of ownership
pertaining to the Pledged Shares for all purposes not inconsistent with the
terms of this Agreement, the Credit Documents or any other instrument or
agreement referred to herein or therein, provided
that the
Grantor agrees that it will not vote the Pledged Shares in any manner that
is
inconsistent with the terms of this Agreement, the Credit Documents or any
such
other instrument or agreement; and the Secured Party shall execute and deliver
to the Grantor or cause to be executed and delivered to the Grantor all such
proxies, powers of attorney, dividend and other orders, and all such
instruments, without recourse, as the Grantor may reasonably request for the
purpose of enabling the Grantor to exercise the rights and powers that it is
entitled to exercise pursuant to this Section 5.04(a)(ii).
(iii) Unless
and until a Default shall have occurred and be continuing, the Grantor shall
be
entitled to receive and retain any dividends, distributions or proceeds on
the
Pledged Shares paid in cash out of earned surplus.
(iv) If
a
Default shall have occurred and be continuing, whether or not the Secured Party
exercises any available right to declare any Secured Obligations due and payable
or seeks or pursues any other relief or remedy available to it under applicable
law or under this Agreement, the Credit Documents or any other agreement
relating to such Secured Obligation, all dividends and other distributions
on
the Pledged Shares shall be paid directly to the Secured Party and retained
by
it in the Collateral Account as part of the Collateral, subject to the terms
of
this Agreement, and, if the Secured Party shall so request in writing, the
Grantor agrees to execute and deliver to the Secured Party appropriate
additional dividend, distribution and other orders and documents to that end,
provided
that if
such Default is cured, any such dividend or distribution theretofore paid to
the
Secured Party shall, upon request of the Grantor (except to the extent
theretofore applied to the Secured Obligations), be returned by the Secured
Party to the Grantor.
(b) Intellectual
Property.
(i) For
the
purpose of enabling the Secured Party to exercise rights and remedies under
Section 5.05 at such time as the Secured Party shall be lawfully entitled
to exercise such rights and remedies, and for no other purpose, the Grantor
hereby grants to the Secured Party, to the extent assignable, an irrevocable,
non exclusive license (exercisable without payment of royalty or other
compensation to the Grantor) to use, assign, license or sublicense any of the
Intellectual Property now owned or hereafter acquired by the Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded
Security
Agreement
13
or stored and to all computer programs used for the
compilation or printout thereof.
(ii) Notwithstanding
anything contained herein to the contrary, but subject to any provision of
the
Credit Documents that limit the rights of the Grantor to dispose of its
property, so long as no Default shall have occurred and be continuing, the
Grantor will be permitted
to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose
of
or take other actions with respect to the Intellectual Property in the ordinary
course of the business of the Grantor. In furtherance of the foregoing, so
long
as no Default shall have occurred and be continuing, the Secured Party shall
from time to time, upon the request of the Grantor, execute and deliver any
instruments, certificates or other documents, in the form so requested, that
the
Grantor shall have certified are appropriate in its judgment to allow it to
take
any action permitted above (including relinquishment of the license provided
pursuant to clause (i) immediately above as to any specific Intellectual
Property). Further, upon the payment in full of all of the Secured Obligations
and the expiration and termination of all obligations of the Secured Party
to
make available any Financial Accommodation to the Grantor, or earlier expiration
of this Agreement or release of the Collateral, the Secured Party shall grant
back to the Grantor the license granted pursuant to clause (i) immediately
above. The exercise of rights and remedies under Section 5.05 by the
Secured Party shall not terminate the rights of the holders of any licenses
or
sublicenses theretofore granted by the Grantor in accordance with the first
sentence of this clause (ii).
(c) Chattel
Paper.
The
Grantor will (i) deliver to the Secured Party each original of each item of
Chattel Paper at any time constituting part of the Collateral, and
(ii) cause each such original and each copy thereof to bear a conspicuous
legend, in form and substance reasonably satisfactory to the Secured Party,
indicating that such Chattel Paper is subject to the security interest granted
hereby and that purchase of such Chattel Paper by a Person other than the
Secured Party without the consent of the Secured Party would violate the rights
of the Secured Party.
5.05 Remedies.
(a) Rights
and Remedies Generally upon Default.
If a
Default shall have occurred and is continuing, the Secured Party shall have
all
of the rights and remedies with respect to the Collateral of a secured party
under the NYUCC (whether or not the Uniform Commercial Code is in effect in
the jurisdiction where the rights and remedies are asserted) and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted, including the right, to the fullest extent permitted by law, to
exercise all voting, consensual and other powers of ownership pertaining to
the
Collateral as if the Secured Party were the sole and absolute owner thereof
(and
the Grantor agrees to take all such action as may be appropriate to give effect
to such right); and without limiting the foregoing:
(i) the
Secured Party in its discretion may, in its name or in the name of the Grantor
or otherwise, demand, xxx for, collect or receive any money or other property
at
any time payable or receivable on account of or in exchange for any of the
Collateral, but
Security
Agreement
14
shall
be
under no obligation to do so;
(ii) the
Secured Party may make any reasonable compromise or settlement deemed
desirable with respect to any of the Collateral and may extend the time of
payment, arrange for payment in installments, or otherwise modify the terms
of,
any of the Collateral;
(iii) the
Secured Party may require the Grantor to notify (and the Grantor hereby
authorizes the Secured Party so to notify) each account debtor in respect of
any
Account, Chattel Paper or General Intangible, and each obligor on any
Instrument, constituting part of the Collateral that such Collateral has been
assigned to the Secured Party hereunder, and to instruct that any payments
due
or to become due in respect of such Collateral shall be made directly to the
Secured Party or as it may direct (and if any such payments, or any other
Proceeds of Collateral, are received by the Grantor they shall be held in trust
by the Grantor for the benefit of the Secured Party and as promptly as possible
remitted or delivered to the Secured Party for application as provided
herein);
(iv) the
Secured Party may require the Grantor to assemble the Collateral at such place
or places, reasonably convenient to the Secured Party and the Grantor, as the
Secured Party may direct;
(v) the
Secured Party may apply the Collateral Account and any money or other property
therein to payment of the Secured Obligations;
(vi) the
Secured Party may require the Grantor to cause the Pledged Shares to be
transferred of record into the name of the Secured Party or its nominee (and
the
Secured Party agrees that if any of such Pledged Shares is transferred into
its
name or the name of its nominee, the Secured Party will thereafter promptly
give
to the Grantor copies of any notices and communications received by it with
respect to such Pledged Shares); and
(vii) the
Secured Party may sell, lease, assign or otherwise dispose of all or any part
of
the Collateral, at such place or places as the Secured Party deems best, and
for
cash or for credit or for future delivery (without thereby assuming any credit
risk), at public or private sale, without demand of performance or notice of
intention to effect any such disposition or of the time or place thereof (except
such notice as is required by applicable statute and cannot be waived), and
the
Secured Party or anyone else may be the purchaser, lessee, assignee or recipient
of any or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right
or equity of redemption (statutory or otherwise), of the Grantor, any such
demand, notice and right or equity being hereby expressly waived and released.
In the event of any sale, assignment, or other disposition of any of the
Trademark Collateral, the goodwill connected with and symbolized by the
Trademark Collateral subject to such disposition shall be included. The Secured
Party may, without notice or publication, adjourn any public or private sale
or
cause the same to be adjourned from time to time by
Security
Agreement
announcement
at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the sale may be so adjourned.
The
Proceeds of each collection, sale or other disposition under this
Section 5.05, including by virtue of the exercise of any license granted to
the Secured Party in Section 5.04(b), shall be applied in accordance with
Section 5.09.
(b) Certain
Securities Act Limitations.
The
Grantor recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state securities laws, the
Secured Party may be compelled, with respect to any sale of all or any part
of
the Collateral, to limit purchasers to those who will agree, among other things,
to acquire the Collateral for their own account, for investment and not with
a
view to the distribution or resale thereof. The Grantor acknowledges that any
such private sales may be at prices and on terms less favorable to the Secured
Party than those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such private sale
shall
be deemed to have been made in a commercially reasonable manner and that the
Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the issuer thereof to register it for public sale.
(c) Notice.
The
Grantor agrees that to the extent the Secured Party is required by applicable
law to give reasonable prior notice of any sale or other disposition of any
Collateral, ten business days' notice shall be deemed to constitute reasonable
prior notice.
5.06 Deficiency.
If the
proceeds of sale, collection or other realization of or upon the Collateral
pursuant to Section 5.05 are insufficient to cover the costs and expenses
of such realization and the payment in full of the Secured Obligations, the
Grantor shall remain liable for any deficiency.
5.07 Locations;
Names, Etc.Without
at least 30 days' prior written notice to the Secured Party, the Grantor
shall not (i) change its location (as defined in Section 9-307 of the
NYUCC), (ii) change its name from the name shown as its current legal name
on Annex 1, or (iii) agree to or authorize any modification of the
terms of any item of Collateral that would result in a change thereof from
one
Uniform Commercial Code category to another such category (such as from a
General Intangible to Investment Property), if the effect thereof would be
to
result in a loss of perfection of, or diminution of priority for, the security
interests created hereunder in such item of Collateral, or the loss of control
(within the meaning of Section 9-104, 9-105, 9-106 or 9-107 of the NYUCC)
over such item of Collateral.
5.08 Private
Sale.
The
Secured Party shall incur no liability as a result of the sale of the
Collateral, or any part thereof, at any private sale pursuant to
Section 5.05 conducted in a commercially reasonable manner. The Grantor
hereby waives any claims against the Secured Party arising by reason of the
fact
that the price at which the Collateral may have been sold at such a private
sale
was less than the price that might have been obtained at a public sale or was
less than the aggregate
amount of the Secured Obligations, even if the Secured Party accepts the first
offer received and does not offer the Collateral to more than one
offeree.
Security
Agreement
5.09 Application
of Proceeds.
Except
as otherwise herein expressly provided and except as provided below in this
Section 5.09, the Proceeds of any collection, sale or other realization of
all or any part of the Collateral pursuant hereto, and any other cash at the
time held by the Secured Party under Section 4 or this Section 5,
shall be applied by the Secured Party:
First,
to the
payment of the costs and expenses of such collection, sale or other realization,
including reasonable out of pocket costs and expenses of the Secured Party
and
the fees and expenses of its agents and counsel, and all expenses incurred
and
advances made by the Secured Party in connection therewith;
Next,
to the
payment in full of the Secured Obligations (or, in the case of any Contingent
Secured Obligations, to the provision of cover as provided below), in such
order
as the Secured Party shall in its sole discretion determine; and
Finally,
to the
payment to the Grantor, or its successors or assigns, or as a court of competent
jurisdiction may direct, of any surplus then remaining.
For
purposes hereof, whenever this Agreement contemplates that cover shall be
provided for Contingent Secured Obligations, such cover shall be effected by
the
payment to the Secured Party of any amount that will be deposited into a
Collateral Account to be held by the Secured Party as collateral security for
the payment of such Contingent Secured Obligations as and when they become
due
and payable.
5.10 Attorney
in Fact.
Without
limiting any rights or powers granted by this Agreement to the Secured Party
while no Default has occurred and is continuing, upon the occurrence and during
the continuance of any Default the Secured Party is hereby appointed the
attorney in fact of the Grantor for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments that
the Secured Party may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney in fact is irrevocable and coupled with
an
interest. Without limiting the generality of the foregoing, so long as the
Secured Party shall be entitled under this Section 5 to make collections in
respect of the Collateral, the Secured Party shall have the right and power
to
receive, endorse and collect all checks made payable to the order of Grantor
representing any dividend, payment or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the
same.
5.11 Perfection
and Recordation.
The
Grantor authorizes the Secured Party to file Uniform Commercial Code
financing statements describing the Collateral as "all assets" or "all personal
property and fixtures"
of the Grantor (provided that no such description shall be deemed to modify
the
description of Collateral set forth in Section 3).
5.12 Termination.
When
all Secured Obligations shall have been paid in full and all obligations of
the
Secured Party to make available any Financial Accommodation to the Grantor
shall
have expired or terminated, this Agreement shall terminate, and the Secured
Party shall forthwith cause to be assigned, transferred and delivered, against
receipt but without any recourse, warranty or representation whatsoever, any
remaining Collateral and money received in respect thereof, to or on the order
of the Grantor and to be released and canceled all licenses
Security
Agreement
17
and
rights referred to in Section 5.04(b). The Secured Party shall also, at the
expense of the Grantor, execute and deliver to the Grantor upon such termination
such Uniform Commercial Code termination statements, certificates for
terminating the liens on the Motor Vehicles and such other documentation as
shall be reasonably requested by the Grantor to effect the termination and
release of the liens on the Collateral as required by this
Section 5.12.
5.13 Further
Assurances.
The
Grantor agrees that, from time to time upon the written request of the Secured
Party, the Grantor will execute and deliver such further documents and do such
other acts and things as the Secured Party may reasonably request in order
fully
to effect the purposes of this Agreement. The Secured Party shall release any
lien covering any asset that has been disposed of in accordance with the
provisions of the Credit Documents.
Section
6. Miscellaneous.
6.01 Notices.
All
notices, requests, consents and demands hereunder shall be in writing and
telecopied or delivered to the intended recipient at the "Address for Notices"
specified in the Credit Agreement or, as to any party, at such other address
as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed
to
have been duly given when transmitted by telecopier or personally delivered
or,
in the case of a mailed notice, upon receipt, in each case given or addressed
as
aforesaid.
6.02 No
Waiver.
No
failure on the part of Secured Party to exercise, and no course of dealing
with
respect to, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise
by
the Secured Party of any right, power or remedy hereunder preclude any other
or
further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein are cumulative and are not exclusive of
any
remedies provided by law.
6.03 Amendments,
Etc. The
terms
of this Agreement may be waived, altered or amended only by an instrument in
writing duly executed by the Grantor and the Secured Party.
6.04 Expenses.
The
Grantor agrees to reimburse the Secured Party for all reasonable costs and
expenses incurred by it (including the reasonable fees and expenses of legal
counsel) in connection with (i) any Default and any enforcement or
collection proceeding resulting therefrom, including all manner of participation
in or other involvement with (w) performance by the Secured Party of any
obligations of the Grantor in respect of the Collateral that the Grantor has
failed or refused to perform, (x) bankruptcy, insolvency, receivership,
foreclosure, winding up or liquidation proceedings, or any actual or attempted
sale, or any exchange, enforcement, collection, compromise or settlement in
respect of any of the Collateral, and for the care of the Collateral and
defending or asserting rights and claims of the Secured Party in respect
thereof, by litigation or otherwise, including expenses of insurance,
(y) judicial or regulatory proceedings and (z) workout, restructuring
or other negotiations or proceedings (whether or not the workout, restructuring
or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 6.04, and all such costs and expenses shall
Security
Agreement
18
be
Secured Obligations entitled to the benefits of the collateral security provided
pursuant to Section 3.6.05 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the Grantor and the Secured Party (provided
that the
Grantor shall not assign or transfer its rights or obligations hereunder without
the prior written consent of the Secured Party).
6.06 Counterparts.
This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and either of the parties
hereto may execute this Agreement by signing any such counterpart.
6.07 Governing
Law; Submission to Jurisdiction; Etc.
(a) Governing
Law.
This
Agreement shall be construed in accordance with and governed by the law of
the
State of New York.
(b) Submission
to Jurisdiction.
The
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement
against the Grantor or its properties in the courts of any
jurisdiction.
(c) Waiver
of Venue.
The
Grantor hereby irrevocably and unconditionally waives, to the fullest extent
it
may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of
or
relating to this Agreement in any court referred to in paragraph (b) of
this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Service
of Process.
Each
party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 6.01. Nothing in this Agreement will affect
the right of any party to this Agreement to serve process in any other manner
permitted by law.
6.08 WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
Security
Agreement
19
INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.6.09 Captions.
The
captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation
of
any provision of this Agreement.
6.10 Agents
and Attorneys in Fact.
The
Secured Party may employ agents and attorneys in fact in connection herewith
and
shall not be responsible for the negligence or misconduct of any such agents
or
attorneys in fact selected by it in good faith.
6.11 Severability.
If any
provision hereof is invalid and unenforceable in any jurisdiction, then, to
the
fullest extent permitted by law, (a) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Secured Party in order to carry out the intentions
of
the parties hereto as nearly as may be possible and (b) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other
jurisdiction.
Security
Agreement
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be
duly executed and delivered as of the day and year first above
written.
Grantor:
MERIT
CAPITAL ADVANCE, LLC
By: LEAF
Ventures, LLC
Its
Managing Member
By: LEAF
Financial Corporation
Its
Managing Member
By:______________________________________
Name:
Title:
Secured
Party:
DEUTSCHE
BANK AG Cayman Islands Branch
By
________________________
Title:
By
________________________
Title:
Security
Agreement
ANNEX 1
FILING
DETAILS
[See
Sections 2.03 and 2.04 and 5.07]
|
Legal
name:
|
Merit
Capital Advance, LLC
|
|
Type
of organization:
|
limited
liability company
|
|
Jurisdiction
of organization:
|
Delaware
|
|
Organizational
ID number (if applicable):
|
4251811
|
|
Mailing
address:
|
000
X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxxxxx 00000
|
Annex
1 to Security Agreement
ANNEX
2
NEW
DEBTOR EVENTS
[See
Section 2.04]
None.
Annex 2
to Security
Agreement
ANNEX
3
PLEDGED
SHARES AND PROMISSORY NOTES
[See
definition of "Issuers" in Section 1.02 and Sections 2.05, 3(a), 3(b)
and 5.01(b)]
None.
Annex 3
to Security
Agreement
ANNEX
4
LIST
OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS
FOR COPYRIGHT REGISTRATIONS
[See
definition of "Copyright Collateral" in Section 1.02 and
Section 2.06]
None.
Annex 4
to Security
Agreement
ANNEX
5
LIST
OF PATENTS AND PATENT APPLICATIONS
[See
definition of "Patent Collateral" in Section 1.02 and
Section 2.06]
None.
Annex 5
to Security
Agreement
ANNEX
6
LIST
OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK
AND SERVICE XXXX REGISTRATIONS AND
APPLICATIONS
FOR TRADEMARK AND SERVICE XXXX REGISTRATIONS
[See
definition of "Trademark Collateral" in Section 1.02 and
Section 2.06]
None.
Annex 6
to Security
Agreement
ANNEX
7
LIST
OF DEPOSIT ACCOUNTS, AND SECURITIES ACCOUNTS AND COMMODITY
ACCOUNTS
[See
Sections 2.05 and 2.08]
|
Name
of Account
|
Financial
Institution
Where
Account is held
|
Type
of Account
|
|
collections
account
|
Commerce
Bank, N.A.
0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
|
deposit
account
|
|
general
account
|
Commerce
Bank, N.A.
0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
|
deposit
account
|
|
funding
account
|
Commerce
Bank, N.A.
0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
|
deposit
account
|
Annex 7
to Security
Agreement
ANNEX
8
LIST
OF COMMERCIAL TORT CLAIMS
[See
Sections 2.09 and 3(p)]
None.
Annex 8
to Security
Agreement
EXHIBIT
B
[FORM
OF NOTICE OF BORROWING]
___________
__,
____
DEUTSCHE
BANK AG CAYMAN ISLANDS BRANCH
as
Lender
under the Credit Agreement referred to below
Ladies
and Gentlemen:
The
undersigned refers to the Credit Agreement dated as March 15, 2007 (as amended,
supplemented or otherwise modified, the “Credit
Agreement”;
the
terms defined therein being used herein as therein defined), between Merit
Capital Advance, LLC (the “Borrower”)
and
Deutsche Bank AG Cayman Islands Branch (the “Lender”),
and
hereby gives you notice, irrevocably, pursuant to Section 2.02 of the
Credit Agreement, that the Borrower hereby wishes to borrow an Advance under
the
Credit Agreement, and in that connection sets forth below the information
relating to such Advance:
|
(i)
|
The
Business Day of the Advance is _________ __,
____.
|
|
(ii)
|
The
aggregate amount of the Advance is
$_________.
|
|
(iii)
|
The
initial Interest Period of the Advance is [one/two/three/six]
months.
|
|
(iv)
|
The
Lender shall credit the proceeds of the Advance to [specify
account].
|
(v) The
Par
Value of Merchant Advances on the date hereof is $________.1
Attach a calculation in reasonable detail of the Par Value of Merchant
Advances.
|
(vi)
|
The
face amount of Financial Investments held by the Borrower on the
date
hereof is $________.2
Attach a list of Financial Investments held by the Borrower showing
the
face amount thereof.
|
|
(vii)
|
The
sum of (i) the Par Value of Merchant Advances plus
(ii) a face amount up to $1,000,000 of Financial Investments held
by the
Borrower on the date hereof is
$________.
|
1. Attach
a calculation in reasonable detail of the Par Value of Merchange
Advances.
2. Attach
is a list of Financial Investments held by the Borrower showing the face amount
thereof.
The
undersigned hereby certifies that the conditions precedent set forth in
Section 3.02 of the Credit Agreement have been fulfilled as of the date
hereof and will be fulfilled as of the
date
of
the Advance3,
and
that the representations and warranties of the Borrower set forth in
Article 4 of the Credit Agreement are true on the date hereof and will be
true as of the
date
of
the Advance.
Very
truly yours,
MERIT
CAPITAL ADVANCE, LLC
By: [______]
Its
Managing Member
By___________________________
Name:
Title:
3.
Attach a calculation in reasonable detail demonstrating staisfaction of
the
EBITDA Funding Condition.
Form
of Notice of Borrowing
