Exhibit 10.05
AMENDED AND RESTATED PROGRAM AGREEMENT
This Amended and Restated Program Agreement (the "Agreement") is entered
into as of March 10, 1999, by and among RoomSystems, Inc. ("RSi"), a Nevada
corporation; RoomSystems Corporation, dba RoomSystems Finance ("RSF" and
together with RSi and all affiliates of RSi and RSF, the "RSi Parties"), a
Nevada corporation; Xxxxx X. Xxxxxxx, individually ("Sunyich"); and AMRESCO
Leasing Corporation ("ALC"), a Nevada corporation.
RECITALS:
1. The parties hereto are parties to that certain Program Agreement (the
"Original Agreement") dated as of March 9, 1998, as amended by an Amendment
dated as of August 14, 1998.
2. This Agreement is intended to embody the terms and provisions of the
agreement among the parties hereto for the formation and operation of the
Program (as defined below) and this Agreement amends and restates the Original
Agreement in its entirety. The delegation of responsibilities for, and the
allocation of the profits, losses, expenses, deductions and credits pertaining
to, and the distribution of cash and property from, the Program are provided for
herein. All references to RSi in this Agreement shall include all affiliated
entities unless the context makes clear that a particular affiliated entity is
intended (e.g., RSi SPE as the owner of Equipment and lessor under Business
Leases).
3. Each party acknowledges that he or it has received adequate
consideration for entering into this Agreement and performing his or its
obligations hereunder, and that he or it will be benefited by the terms set
forth herein.
AGREEMENT:
Based on the recitals set forth above and the promises contained herein,
the parties agree as follows:
I. Overview
The Program will engage in the: (1) purchase by a wholly-owned, bankruptcy
remote subsidiary of RSi separately created for the Program ("RSi SPE") from RSi
of (a) certain fully-automated refreshment centers that do not include attached
room safes (each such refreshment center a "Standard Unit Refreshment Center")
and all related network computer systems and other related equipment (such
systems and equipment the "Standard Unit Equipment") and (b) certain
fully-automated refreshment centers that include attached room safes (each such
combined refreshment center/safe a "Safe Xxxx
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Xxxxxxxxxxx Xxxxxx") and all related network computer systems and other related
equipment (such systems and equipment the "Safe Unit Equipment"); (2) receipt by
RSi SPE of a nonrevocable license for a term which will end no earlier than the
end of the term of the last Business Lease (as defined below) originated under
this Agreement ("License") to use all intellectual property of RSi or RSi SPE
(or any of their affiliates) necessary to install and operate the Equipment (as
defined below) (such intellectual property the "Equipment Intellectual
Property"); (3) origination by RSi SPE of all leases (or revenue sharing
agreements) of the Equipment and Refreshment Centers to hotels and timeshares
located in the United States which provide for a sharing of revenues between RSi
and such hotels and timeshares (each lease or revenue sharing agreement, a
"Business Lease"), (4) short-term loan of funds by ALC to RSi SPE (as to each
loan, a "Lease Financing Loan"), secured by the following collateral: Business
Lease related to each Lease Financing Loan; all amounts held by the Custodian
(as defined in Paragraph III.A.6. below) pursuant to the lockbox arrangement
described in Paragraph III.A.6. herein; and the stock of RSi (such financing,
the "Business Lease Financing" and such collateral, the "Pledged Assets") and
(5) disposition of pools of Business Leases or Lease Financing Loans through
securitization or any other forms of transfer of such assets from ALC's balance
sheet (hereinafter collectively referred to as "Securitization"), in such format
and manner as determined by ALC in its sole discretion, but subject to the terms
and conditions of this Agreement ("Sole Discretion"). Each Standard Unit
Refreshment Center and each Safe Unit Refreshment Center shall be defined herein
as a "Refreshment Center" and all Standard Unit Equipment and all Safe Unit
Equipment shall be defined collectively as the "Equipment." RSi SPE will retain
ownership of the Equipment. RSi and RSi SPE will provide certain marketing,
lease origination, closing and servicing services, as more fully explained
herein.
Prior to each Securitization, ALC will fund each Business Lease Financing by
making Lease Financing Loans to RSi SPE with respect to each Transaction (as
defined in Paragraph III.A.3. below), subject to the terms and provisions of
this Agreement, including the specific requirements set forth on the attached
Exhibit A or as modified in writing by ALC and RSi (the "Guidelines") and a
Master Business Lease Financing Agreement between ALC and RSi SPE (the
"Financing Agreement"). For each Transaction approved by ALC through a
Transaction Approval (as defined in Paragraph III.A.3. below), (i) RSi SPE
will purchase the related Equipment from RSi before execution of the Business
Lease, obtain a License to use the Equipment Intellectual Property, and enter
into the Business Lease and (ii) the amount of the Lease Financing Loan will
be equal to the Loan Amount for the Business Lease (as defined in Paragraph
III.A.4. below). ALC will effect each Securitization with Business Leases or
Lease Financing Loans, the timing, format and substance of such to be
determined by ALC in its sole discretion. If ALC determines, in its
reasonable discretion, that a Transaction does not satisfy the requirements
of the Program as set forth more specifically in this Agreement and the
Financing Agreement, RSi SPE, upon obtaining written notice that ALC will not
provide Transaction Approval (as defined below), will cause RSi SPE to effect
a sale of the related Equipment and Business Lease to RSF prior to the
related Securitization.
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II. Conditions Precedent
ALC shall not be obligated to provide any Lease Financing Loans under this
Agreement unless, prior to May 31, 1999, RSi has completed all of the following
conditions precedent (each a "Condition"):
1. RSi receives a capital contribution subsequent to the date of this
Agreement of at least $8 million of additional equity (or subordinated
debt which is acceptable to ALC in its Sole Discretion); and,
2. RSi becomes a wholly-owned subsidiary of RSF and owns all the operating
assets (including Licenses for all Equipment Intellectual Property)
necessary or related to its business as carried on at the time of the
execution of this Agreement.
Upon satisfaction of each of the Conditions, the parties will proceed to
complete such documents and other agreements (including, but not limited to, the
Financing Agreement, Licenses for all Equipment Intellectual Property, and
Servicing Agreement) as ALC, in its reasonable discretion consistent with the
terms and conditions of this Agreement (including the Guidelines) ("Reasonable
Discretion"), determines are necessary to carry out the terms and conditions of
this Agreement and which will allow for Securitization.
III. Operation of the Program:
A. ACTIVITIES AND RESPONSIBLE PARTIES:
1. Marketing Activity:
RSi SPE will use its best efforts to enter into a Business Lease with
those businesses which desire to purchase or lease Refreshment Centers
or Equipment.
2. Lease Origination:
RSi SPE will be responsible for negotiating each Business Lease, which
Lease must be acceptable to ALC in ALC's Reasonable Discretion and
approved in writing by ALC as part of the Transaction Approval (as
defined below). RSi SPE shall arrange, subject to the terms and
conditions of the Guidelines and the Financing Agreement, for the time,
place and method of closing the Business Lease; provided that prior to
the closing of such Business Lease, RSi shall have transferred the
related Equipment to RSi SPE, and RSi or RSF, as applicable, shall have
transferred or granted to RSi SPE a License to use the Equipment
Intellectual Property.
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ALC and RSi agree that: (a) for each proposed Lease Financing Loan, the
related Business Lease pledged as collateral for such loan and the
lessee to such lease shall be underwritten by ALC subject to the
related Transaction Approval, the terms and conditions of this
Agreement including the Guidelines and the Financing Agreement; (b) the
standard form of the Business Lease which RSi proposes to use must be
acceptable to ALC in ALC's Reasonable Discretion; and (c) any proposed
changes to such standard form with respect to a specific Transaction
related to a Lease Financing Loan must be acceptable to ALC in ALC's
Reasonable Discretion and approved in writing by ALC.
3. Transaction Approval:
At the end of the Seasoning Period (as defined below) for each Business
Lease (being herein referred to as a "Transaction"), or sooner for all
Lease Financing Loans subject to ALC's Advance Funding Transaction
Approval Obligation (as defined below), RSi SPE will present to ALC for
its review a Transaction Submission Package relating to the Business
Lease which will include the information required in the Guidelines and
the Financing Agreement. Within seven (7) business days after the
submission of a Transaction Submission Package, ALC will determine, in
its Reasonable Discretion, whether the Transaction satisfies the
requirements for a Lease Financing Loan. Approval of issuance of a
Lease Financing Loan shall be memorialized in writing by ALC, in a form
set forth in the Financing Agreement, and executed by RSi SPE
("Transaction Approval"). For purposes of this Agreement, the
"Seasoning Period" shall be that period beginning on [***].
4. Lease Financing Loans:
ALC shall be required to fund a Lease Financing Loan or an Advance
Funded Lease Financing Loan to RSi SPE with respect to a Transaction
only upon satisfaction of all terms and conditions required under this
Agreement (including, but not limited to the Conditions and the
Guidelines), the Financing Agreement, and the Transaction Approval, as
determined by ALC in its Reasonable Discretion. Each Lease Financing
Loan and Advance Funded Lease Financing shall be subject to the terms
and conditions of the Financing Agreement.
The amount of each Lease Financing Loan shall equal the sum of the
Refreshment Center Loan Amount for all Refreshment Centers included in
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separately with the Commission.
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the applicable Business Lease securing the Lease Financing Loan (the
"Loan Amount"). The "Refreshment Center Loan Amount" for each (A)
Standard Unit Refreshment Center shall be equal to [***].
At each closing of a Lease Financing Loan, RSi and RSi SPE shall
provide standard representations and warranties (which shall not
include the representation set forth in Paragraph V.K.13. below)
regarding RSi and RSi SPE, the Transaction Submission Package, and the
related Business Lease to ALC, as set forth in the Financing Agreement
and other representations and warranties as ALC may reasonably request.
At the time of the Securitization, if required by ALC, RSi shall
provide the same and/or reasonable additional representations and
warranties which are identical to the representations and warranties
ALC delivers in connection with the Securitization.
5. Advance Funding Obligation:
Notwithstanding Section III.A.3. above (which provides that ALC need
not make a decision regarding Transaction Approval until after the
Seasoning Period for a Business Lease has expired), RSi SPE can request
advance funding for certain Lease Financing Loans prior to the
expiration of the Seasoning Period for the related Business Leases, and
ALC shall make its decision regarding Transaction Approval (such
obligation the "Advance Funding Transaction Approval Obligation") for
such Lease Financing Loans within seven (7) business days after ALC's
receipt of the related Transaction Submission Package, upon the
satisfaction of all terms and conditions of this Agreement, including
the following additional conditions: (a) RSi must have at least 10,000
installed Refreshment Centers which have completed the related
Seasoning Period and which have been funded by ALC through Lease
Financing Loans under the Program, (b) as of the date of the request
for such advance funding, the Business Leases (including Business
Leases then currently submitted for advance funding, but excluding all
other Business Leases that have not completed the related Seasoning
Period) related to all Lease Financing Loans funded or then currently
submitted for
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separately with the Commission.
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advance funding pursuant to [***]. Any Lease Financing Loan funded
by ALC in connection with the Advance Funding Transaction Approval
Obligation shall be defined herein as an "Advance Funded Lease
Financing Loan."
6. Pre-Securitization Period:
During the period of time between the funding of the Lease Financing
Loan for any Transaction under the Program and the related
Securitization of such Transaction (the "Pre-Securitization Period"),
ALC shall retain the Lease Financing Loan in accordance with the terms
and conditions of the Financing Agreement. A custodian designated by
ALC (the "Custodian") shall hold the Pledged Assets (excluding the
stock of RSI which ALC will hold) and collect directly from the lessee
to each Business Lease all revenues to which RSi SPE is entitled from
all of the Business Leases related to the Lease Financing Loans funded
during the Pre-Securitization Period through a lockbox arrangement or
as delivered to the Custodian by RSi SPE. On the 15th day of each
month, the Custodian will disburse or reserve such collected funds
(the "Collected Funds") in the following order and priority:
a. RSi (or any substitute servicer if RSi is no longer the servicer
pursuant to the terms of the Servicing Agreement [as defined
below]) shall be entitled [***].
b. [***]
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
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At the end of each calendar year, any amounts remaining
in the Property Tax Reserve, after payment of all applicable
property taxes for such year, will be released for and applied
to payments required under subparagraphs (c), (d) and (e) below.
c. [***]
d. A loss reserve account shall be established and held by the
Custodian for payment of any of the amounts due under
subparagraphs (a), (b) or (c) in the event that [***].
e. RSi SPE shall be entitled to [***].
The Custodian will provide an accounting to ALC, RSi and RSi SPE with
respect to each monthly remittance.
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
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In the event that, at any time during the Pre-Securitization Period, a
Business Lease is in payment default for a period of 60 days or more,
ALC shall have the right, but not the obligation, at any time
thereafter while such lease is in default, to accelerate the payment of
the then unamortized principal balance (plus any accrued but unpaid
interest) on the Lease Financing Loan related to the defaulted Business
Lease. RSi shall repay the Lease Financing Loan promptly in accordance
with the terms and conditions of the Financing Agreement.
7. Equipment Servicing:
a. For the term of each Business Lease related to the Lease
Financing Loans, in consideration of the Servicing Fee, RSi shall
service all of the Equipment and the Business Leases, in
accordance with the terms and conditions of an agreement (the
"Servicing Agreement") between ALC and RSi which shall include,
among other things provisions for revenue optimization of the
Equipment, and all necessary maintenance and other services,
including billing and collection and software troubleshooting and
upgrades and the provisions of subparagraphs 6.(b) and 6.(c)
below. To secure RSi's obligations under the Servicing Agreement
during and after the Pre-Securitization Period, RSi and RSF will
pledge to ALC or its assigns (or cause its affiliates to pledge)
the Equipment Intellectual Property and the stock of RSi.
b. [***] In the event, for any reason, a Business Lease is in
default for a period of 60 days, RSi shall promptly take all
action necessary (including legal action) to gain possession
of the related Equipment and promptly use its best efforts to
re-lease or sell the Equipment. The proceeds of any sale of
the Equipment, up to the amount necessary to fully fund the
Loss Reserve up to the Reserve Cap for all Lease Financing
Loans, shall be paid over to the Custodian to be held in the
Loss Reserve. Any new Business Lease with respect to the
Equipment shall be pledged as security for the applicable
Lease Financing Loan and all revenue received for such new
Business Lease shall be disbursed or reserved pursuant to
Paragraph III.A.6. Similar requirements shall apply with
respect to any Securitization.
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
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c. During the term of this Agreement and the Servicing Agreement,
RSi will comply with all installation, maintenance and licensing
agreements (or any similar agreements) related to any Equipment
or any Business Leases.
8. Securitization Services:
a. The Program will engage in the Securitization of Business Leases
or Lease Financing Loans. Until cumulative funding of $25 million
of Lease Financing Loans is attained, ALC, at its sole
discretion, may choose to engage in a Securitization. When $25
million or more of funding of Lease Financing Loans is attained,
ALC will use its best efforts to engage in a Securitization. The
parties anticipate that either (i) RSi SPE will transfer or
contribute the Business Leases to a trust which, in turn, will
issue securities to investors ("Investors"), ALC and RSi or (ii)
ALC will transfer or contribute the Lease Financing Loans to a
trust which, in turn, will issue securities to Investors and ALC,
but not RSi except to the extent specifically set forth herein.
RSi and RSi SPE agree to cooperate with ALC in effecting the
Securitization in such format as ALC reasonably determines will
maximize the economic interests of ALC (and RSi if RSi is to
receive any securities from such Securitization) resulting from
such Securitization as anticipated in this Agreement and RSi and
RSi SPE will execute all documents reasonably necessary to
effectuate such Securitization. ALC will manage the
Securitization process by providing such services as may be
required as determined in ALC's sole and absolute discretion,
including, but not limited to, the following:
(i) assistance in the generation of a private placement
memorandum or prospectus and prospectus supplement, if any;
(ii)assistance in placement of securities with investors;
(iii) settlement date accounting;
(iv) proceeds distribution;
(v) assistance in presenting Business Leases/Lease Financing
Loans and proposed structure of the Securitization to rating
agencies and monoline insurance providers and responding to
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rating agency/monoline insurance providers' inquiries; and
(vi) all other aspects of the closing of the Securitization
process.
b. Any third party, including, but not limited to investment bankers
and legal counsel, to be used in the Securitization process shall
be selected by ALC.
c. ALC intends to work with one or more third parties on
Securitization file preparation for all Business Leases/Lease
Financing Loans, to ensure consistent presentation of lease
related information to rating agencies and investors. RSi agrees
to cooperate with any and all reasonable information requests of
ALC and its third parties relating to the sale of the Business
Leases/Lease Financing Loans in connection with a Securitization.
d. ALC agrees that, without RSi's written consent, ALC will not take
any action in carrying out a Securitization which will result in
RSi's receiving less than the Residual Profits set forth in
Paragraph III.A.6.
B. COSTS AND EXPENSE OF LEASE FINANCING LOANS:
ALC and RSi shall each pay their own legal fees and related costs
associated with each Lease Financing Loan.
C. DISTRIBUTION OF PROGRAM REVENUES AND SECURITIZATION PROFITS:
1. Unless RSi and ALC shall agree otherwise, all net proceeds and
profits from each Securitization of Lease Financing Loans
contemplated by the Program shall be paid only to ALC, and RSi
shall have no right to receive any amounts from any such
Securitization of Lease Financing Loans except as set forth
specifically herein. In the event of Securitization of Lease
Financing Loans, the lockbox arrangement set forth in Paragraph
III.A.6. shall continue until all Lease Financing Loans are
repaid in full.
2. Unless RSi and ALC shall agree otherwise, all gross revenues from
Business Leases included in any Securitization of Business Leases
(the "Securitized Leases") contemplated by the Program shall be
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held by a Custodian pursuant to a lockbox arrangement and shall
be distributed each month in the following order and priority:
a. [***]
b. [***]
c. [***]
d. [***]
e. [***]
3. Unless RSi and ALC shall agree otherwise, in a Securitization of
Business Leases (a) all cash proceeds from the sale of securities
created by the Securitization less (i) all Securitization Costs
required to be paid by the Program and/or reimbursed to RSi and
ALC and (ii) an amount equal to the unpaid principal balance of
the Lease Financing Loans (including any accrued but unpaid
interest thereon) for the Securitized Leases, which shall be paid
to ALC ("Securitization Profits") shall be distributed to ALC;
(b) RSi SPE shall receive securities which represent its right to
receive Residual Profits; and (c) ALC shall receive any other
securities not sold in such Securitization. ALC shall compute in
good faith Securitization Profits, which computations shall be
dispositive, absent manifest error.
4. ALC shall be entitled to reimbursement of all amounts payable as
"Securitization Costs" (defined as out-of-pocket expenses ALC
incurs in connection with services ALC shall be required to
perform pursuant to the Program described in this Agreement, in
the nature of but not limited to, printing costs, legal fees
(other than those of RSi SPE, which RSi SPE shall pay from its
own funds), rating agency fees, accounting fees, third party
underwriting and brokerage fees and preparation of rating agency
and investor books or packages, loan premiums, review counsel
fees, and other similar direct out-of-pocket costs, to the extent
ALC has advanced funds for the payment of such expenses). If
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
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RSi should voluntarily advance funds for any of such
Securitization Costs, RSi shall likewise be entitled to
reimbursement therefore, provided that such funding be advanced
by RSi only with the prior written consent of ALC.
5. The amounts payable to ALC and RSi under subparagraph (4) above,
shall be reimbursed to ALC or RSi, as applicable, out of
Securitization Profits upon completion of each respective
Securitization.
6. Upon payment in full of all amounts owed to ALC and the Investors
pursuant to Paragraph III.C.2.c. in the event of a Securitization
of Business Leases or Paragraph III.A.6. in the event of a
Securitization of Lease Financing Loans, all funds remaining (if
any) in the applicable Loss Reserve shall be distributed to RSi
SPE.
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D. TERM OF THIS AGREEMENT:
1. The term of this Agreement shall continue from the effective date
of this Agreement until seven years following the date on which
the first Lease Financing Loan is funded, or until terminated (a)
by ALC, in its sole discretion, upon a failure by RSi SPE to
satisfy the production requirements of Paragraph III.F. below or
(b) by either party, in its sole discretion, upon a breach by the
other party of its obligations hereunder or under any other
agreement executed pursuant hereto.
2. Upon termination of this Agreement, (i) ALC shall have no further
obligation to provide Business Lease Financing, (ii) ALC's
exclusive right to provide Business Lease Financing under this
Agreement shall terminate, and (iii) in the event that RSi is in
breach of its obligations with respect to any Securitization as
set forth in this Agreement, all Lease Financing Loans which have
not been included in a Securitization shall become immediately
payable in full.
E. NON-ASSIGNABILITY:
RSi may not assign, sell, exchange, hypothecate or otherwise transfer
its rights, duties, obligations, privileges, entitlements or other
interest in this Agreement, the Residual Profits or any securities
issued to RSi from a Securitization to any other party without the
express written consent of ALC.
F. LEASE PRODUCTION/INTEREST RATE ADJUSTMENT:
RSi SPE shall originate Business Leases which result in at least $25
million in Lease Financing Loans in the period ending thirty-six months
from the date of this Agreement and at least $10 million in Lease
Financing Loans in each twelve month period beginning 12 months after
the date of this Agreement. Should RSi fail to meet this production
requirement at any time during the term of this Agreement, the Interest
Rate on all Lease Financing Loans held by ALC (i.e., not previously
included in a Securitization) shall be [***].
G. KEY PERSONNEL:
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
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Xxxxxx X. Xxxxxxx will xxxxx licenses to use any Equipment Intellectual
Property owned by Xx. Xxxxxxx and that relates to RSi, RSi SPE or the
Equipment.
H. EXCLUSIVITY:
During the term of this Agreement, (i) the RSi Parties hereby agree
that, with respect to each Business Lease to a hotel or timeshare
property located in the United States: (a) the RSi Parties shall
request Business Lease Financing from ALC, and (b) ALC shall have the
exclusive right to provide Business Lease Financing to the RSi Parties
pursuant to the terms and conditions of this Agreement; and (ii) upon
the satisfaction of each Condition, ALC agrees to provide Business
Lease Financing for each Transaction which satisfies the requirements
of this Agreement, the Guidelines and the Financing Agreement. In the
event that the Conditions or Guidelines are not satisfied at any time
during the term of this Agreement, ALC shall continue to have its
exclusive right to provide Business Lease Financing pursuant to the
terms and conditions of this Agreement, but shall not have the
obligation to provide Business Lease Financing. In the event that ALC
declines to exercise its right to provide Business Lease Financing for
any Business Lease, the RSi Parties may sell or finance, as the case
may be, such Business Lease to or with, as the case may be, a third
party.
I. RIGHT OF FIRST REFUSAL:
During the term of this Agreement ALC shall have an exclusive right of
first refusal ("Right of First Refusal") to provide financing, on a
program basis, for all Refreshment Centers, Equipment or any other
goods or equipment provided by any of the RSi Parties to all Customers
in all industries (other than hotel or timeshare industries which are
covered by the exclusivity provisions of Section III.H. above) pursuant
to a lease (or revenue sharing agreement) that provides for the sharing
of revenues between any of the RSi Parties and such Customer. If ALC
does not exercise its Right of First Refusal on a program basis in a
new industry within ninety (90) days from the date that ALC receives a
written notice from RSi requesting ALC to consider a financing program
in such industry, ALC shall not have a right of first refusal to
provide financing to the RSi Parties for Refreshment Centers, Equipment
or any other goods or equipment provided by any of the RSi Parties to
Customers in such industry. If ALC exercises its Right of First
Refusal, RSi and ALC shall document such financing program in a program
agreement specific to such industry.
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J. COVENANTS RELATING TO REFRESHMENT CENTERS AND BUSINESS LEASES:
During the term of this Agreement, the RSi Parties shall market
Refreshment Centers to Customers in the hotel industry through Business
Leases. Notwithstanding the foregoing, the RSi parties shall be allowed
to market Refreshment Centers to Customers through Equipment Purchase
(as defined below) or Standard Lease (as defined below) transactions.
IV. Traditional Equipment Financing:
A. General Description of Traditional Equipment Financing:
For the RSi Parties' customers or potential customers ("Customers") that
desire to have Refreshment Centers or Equipment installed on their
premises, but do not desire to enter into a Business Lease which provides
for the sharing of revenue between RSi and a Customer, such Customers must
either purchase the Equipment or Refreshment Centers from RSi (each such
purchase an "Equipment Purchase") or lease such Equipment or Refreshment
Centers from RSi or some other third party (any such lease which does not
provide for a sharing of revenues between RSi and such Customer shall be
referred to herein as a "Standard Lease"). Any financing requested or
obtained by a Customer to facilitate an Equipment Purchase, or any Standard
Lease requested or obtained by a Customer, shall be defined herein as
"Traditional Equipment Financing."
B. Exclusive Financing Source for Traditional Equipment Financing:
As part of the consideration for ALC's obligations under this Agreement,
the RSi Parties shall refer all Customers to ALC and shall recommend ALC as
the exclusive source of Traditional Equipment Financing to each of their
Customers (such recommendation obligation the "Recommendation
Requirement"). The RSi Parties shall not recommend to any of their
Customers any other company or person to provide Traditional Equipment
Financing unless: (a) ALC fails to provide such Customer with a written
approval for financing (the "Commitment Letter") within three (3) business
days following ALC's receipt of the Full Submission Package (as hereinafter
defined), or (b) the business installing the Equipment has less than three
(3) months operating history and the Customer will not provide ALC with a
guarantee of the Traditional Equipment Financing from a Guarantor (as
hereinafter defined). The Recommendation Requirement extends to all of the
RSi's Parties' Customers in the United States, including but not limited to
Customers in the hotel, hospital and timeshare industries.
Notwithstanding the foregoing paragraph, Customers shall be allowed to
unilaterally and independently select parties other than ALC to provide
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Traditional Equipment Financing.
The "Full Submission Package" shall include the following specified items
for the Customer which is obtaining the Traditional Equipment Financing and
for any other person or entity which intends to guarantee the Traditional
Equipment Financing ("Guarantor"):
1. Completed lease application of the Customer including complete
explanation of terms of current debt (the "Consolidated Debt Schedule
worksheet");
2. Current personal financial statement (no more than three months old)
for all equity holders that own more than 20% of the equity of the
Customer or Guarantor ("Controlling Owners").
3. Signed personal tax returns for all Controlling Owners for the
previous two years only if the related Customer does not otherwise
independently satisfy ALC's then current credit requirements;
4. Balance sheet and income statement of the Customer and Guarantor for
the previous two years (fiscal or calendar years whichever is
applicable);
5. Interim Income Statement of the Customer and Guarantor for the current
and trailing year to date periods ;
6. Signed tax returns of the Customer and Guarantor for the previous two
years (fiscal or calendar years whichever is applicable);
7. Twelve month pro-forma for any property location which is less than
six months old including a feasibility study.
RSi shall provide ALC with written notice that a Customer intends to
utilize or is considering utilizing Traditional Equipment Financing within
five (5) business days from the date RSi first becomes aware that such
Customer intends to utilize or is considering utilizing Traditional
Equipment Financing. RSi authorizes ALC to contact all Customers referenced
in any of the foregoing notices and to inform such Customers that ALC is
RSi's exclusive source of Traditional Equipment Financing.
The Recommendation Requirement shall automatically terminate upon the
earlier to occur of: (1) the date upon which Xxxxxxxx X. Xxxxx'x full-time
employment with ALC is terminated for any reason and (2) the date upon
which this Agreement is terminated as set forth herein.
In the event that ALC does not approve a Customer for Traditional Equipment
Financing, upon the request of RSi, ALC shall provide a copy of its entire
credit file (including any and all written underwriting analysis) to RSi,
and ALC hereby authorizes RSi to use all information included in such
credit file to attempt to locate other persons or entities to provide
Traditional Equipment Financing to such Customer.
16
C. Repurchase Obligation for Traditional Equipment Financing:
In the event that any Customer elects Traditional Equipment Financing from
ALC, and such Customer defaults on its lease or other agreement with ALC
(such Customer a "Defaulted Customer"), and ALC obtains the legal right to
recover and take possession of any Refreshment Centers subject to any such
lease or other agreement, RSi shall:
1. Within two weeks of ALC's request, initiate action to, and within
eight (8) weeks of such initiation, shall remove such Refreshment
Centers from the Customer's premises at RSi's own cost and expense
(subject to reimbursement as set forth below) and shall hold such
Refreshment Centers as a consignee of ALC; and
2. Use its best efforts to either: (a) purchase each such (i) Standard
Unit Refreshment Center from ALC for [***] (b) re-market and
re-sell each such Refreshment Center at the fair market value for
such equipment (such best efforts remarketing and re-sale
obligation the "Remarketing Obligation"). If RSi resells such
Refreshment Centers, RSi shall pay ALC all amounts received from
such sale or sales, less all of RSi's reasonable expenses incurred
in removing, remarketing and reinstalling such Refreshment Centers.
In the event that RSi satisfies its Remarketing Obligation by placing the
related Refreshment Centers at a Customer's premises pursuant to a Revenue
Sharing Agreement: (a) RSi shall pay ALC all amounts received by RSi under
such Revenue Sharing Agreement during the term of such agreement within
three (3) days of receipt of such amounts, until ALC receives all amounts
which it would have received from the Defaulted Customer under the
Traditional Equipment Financing if such Defaulted Customer had paid all
amounts required to be paid pursuant to the lease or other agreement,
provided, however, that RSi shall be entitled to offset from any payments
to ALC required by this paragraph, (i) RSi's reasonable expenses incurred
in removing, remarketing and reinstalling such Refreshment Centers (until
paid in full), (ii) an amount equal to the Property Tax Reserve for such
Refreshment Centers, and (iii) the related Servicing Fee for such
Refreshment Centers, and (b) such Revenue Sharing Agreement shall not be
subject to ALC's exclusive right to provide Hotel Lease Financing set forth
in Section III.H above.
D. Interest Rate Volume Credit for Traditional Equipment Financing:
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
17
As consideration for the Recommendation Requirement, ALC shall credit
twenty-five percent (25%) of the amount financed by ALC through Traditional
Equipment Financing (calculated based upon the cost of the Equipment
financed) against the cumulative volume amounts set forth in the interest
rate schedule included in Exhibit B to the Program Agreement.
E. RSi Commissions for Traditional Equipment Financing:
For each Traditional Lease Financing transaction entered into between ALC
and a Customer, ALC shall pay RSi a referral fee commission of fifty
one-hundredths percent (.50%) of the principal amount financed by ALC.
V. Additional Provisions
A. Further Assurances:
The parties shall execute such further agreements and take such action as
shall be necessary to facilitate and carry out the purposes and intent of
this Agreement. No person or entity not a party hereto shall have any
rights by reason of or be a third party beneficiary of this Agreement.
B. Choice of Law, Jurisdiction and Venue:
This Agreement shall be construed in accordance with the laws of the State
of Idaho, without regard to conflicts of law principles. The parties hereto
irrevocably (a) agree that any suit, action or other legal proceeding
arising out of or relating to this Agreement may be brought in a court of
record in the State of Idaho or in the courts of the United States of
America located in such state, (b) consent to the jurisdiction of each such
court in any such suit, action or proceeding, and (c) waive any objection
which it may have to the laying of venue of any such suit, action or
proceeding in any of such courts and any claim that any such suit, action
or proceeding has been brought in an inconvenient forum.
C. No Joint Venture:
This Agreement is not intended and shall not be construed as being a
partnership or joint venture for any purposes whatsoever.
D. Effective Date of the Agreement:
This Agreement shall be effective as of February 6, 1999.
E. Notices:
18
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when
received by the other party at the address as follows:
(1) if to RSi:
RoomSystems, Inc.
000 Xxxxx 0000X.
Xx. Xxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
19
(2) if to ALC:
AMRESCO Leasing Corporation
000 X. Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
with a copy to:
Xxxxx & Xxxxxx LLP
0000 X Xxxxxx, XX
Xxxxx 000X
Xxxxxxxxxx, XX 00000
Attention: Xxx Xxxxx, Esq.
or such other address as may hereafter be furnished to the other party by
like notice. Any such demand, notice or communication hereunder shall be
deemed to have been received on the date delivered to or received at the
premises of the addressee (as evidenced, in the case of registered or
certified mail, by the date noted on the return receipt).
F. Parties Represented by Counsel:
Each party acknowledges that it has had the opportunity to consult with
legal counsel in the preparation and review of this Agreement. The
parties therefore stipulate that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement to favor any party
against the other.
G. Indemnification:
1. The RSi Parties agree to defend, indemnify, pay and hold harmless
ALC and the officers, directors, counsel, agents and affiliates of
ALC (collectively, the "Indemnitees") from and against any and all
losses, liabilities, damages and claims, whether based on any
federal, state or foreign laws, statutes, rules and regulations,
on common law or equitable cause or on contract or otherwise, that
may be imposed on, incurred by or asserted against any such
Indemnitee, in any manner relating to, arising out of or resulting
from this Agreement, or the transactions contemplated hereby
(collectively, the "Indemnified Liabilities"); provided, however,
that none of the RSi Parties shall have any obligation to any
Indemnitee hereunder with respect to Indemnified Liabilities to
the extent such Indemnified Liabilities arise from the gross
negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the RSi
Parties shall contribute the maximum that they are permitted to
pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the
Indemnitee or any of them.
2. ALC agrees to defend, indemnify, pay and hold harmless the RSi
Parties and the officers, directors, counsel, agents and
affiliates of the RSi Parties (collectively, the "Indemnitees")
from and against any and all losses, liabilities, damages and
claims, whether based on any federal, state or foreign laws,
statutes, rules and regulations, on common law or equitable cause
or on contract or otherwise, that may be imposed on, incurred by
or asserted against any such Indemnitee, in any manner relating
to, arising out of or resulting from ALC's disclosure of
information, or representations, regarding the Equipment or
Refreshment Centers to third parties (collectively, the
"Indemnified Liabilities"); provided, however, that ALC shall have
no obligation to any Indemnitee hereunder with respect to
Indemnified Liabilities to the extent such
20
Indemnified Liabilities arise from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a
court of competent jurisdiction. To the extent that the undertaking to
defend, indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or
public policy, ALC shall contribute the maximum that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitee or any of them.
H. Waiver of Jury Trial and Consequential and Punitive Damages:
THE PARTIES, INCLUDING ANY ASSIGNEES, HEREBY WAIVE (A) THEIR RIGHT TO
TRIAL BY JURY OF DISPUTES, CLAIMS OR CONTROVERSIES BETWEEN THEMSELVES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENTS,
INSTRUMENTS OR TRANSACTIONS RELATING TO THIS AGREEMENT, WHETHER ARISING
IN CONTRACT, TORT OR OTHERWISE; AND (B) THEIR RIGHT TO ANY CONSEQUENTIAL
OR PUNITIVE DAMAGES.
I. Confidentiality:
21
The parties, without the prior written consent of the other party, will
not disclose or use, and will direct their agents and representatives not
to disclose or use any Confidential Information (as defined below) at any
time or in any manner other than in connection with the parties'
participation in the Program. For purposes of this Paragraph,
"Confidential Information" means all information which has or will be
disclosed by any party to this Agreement in connection with the Program
and all terms contained in this Agreement, provided that Confidential
Information shall not include information which is publicly available,
was acquired by any party to this Agreement from third parties or is
required to be disclosed by law. Notwithstanding the foregoing, (i) ALC
shall be allowed to disclose Confidential Information to statistical
rating agencies, monoline insurers, investment bankers and other parties
involved in a Securitization or the providing of financing to ALC and
(ii) RSi shall be allowed to disclose the general existence of the
Program, ALC's agreement to provide Business Lease Financing and RSi's
relationship with ALC, but RSi shall have no authorization, without ALC's
express written consent, to disclose the structure or financial terms of
the Program or any Business Lease Financing. Upon the written request of
any party to this Agreement ("Requesting Party"), the party to whom such
request is directed ("Recipient Party") will promptly return to the
Requesting Party all originals and all copies of Confidential
Information, and the Recipient Party will promptly destroy all written
information prepared by such Recipient Party or any of its agents or
representatives which contain or refer to Confidential Information.
J. Payment of Attorney's Fees:
If it is determined in a judicial proceeding that a party to this
Agreement has failed to perform under any provision of this Agreement,
and if the other party shall employ attorneys or incur other expenses for
the enforcement, performance or observance of the terms of this Agreement
on the part of the nonperforming party, then such other party, shall be
reimbursed by the nonperforming party, on demand, for reasonable
attorneys' fees and other out-of-pocket expenses.
K. Warranties, Representations and Covenants of RSi and RSF:
1. Each of RSi and RSF is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation with full power and authority to own its
properties and conduct its business as such properties are
presently owned and such business is presently conducted.
2. Each of RSi and RSF is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership
or leasing of its properties or the conduct of its business
requires such qualifications,
22
except where the failure to be so qualified or to have obtained
such licenses or approvals would not have a material adverse
effect on the transactions contemplated by this Agreement.
3. The execution and delivery of this Agreement by each of RSi and
RSF in the manner contemplated herein and the performance and
compliance with the terms hereof by it (i) shall not violate: (I)
its articles of incorporation or bylaws, or (II) any laws that
could have any material adverse effect whatsoever upon the
validity, performance or enforceability of any of the terms of
this Agreement applicable to RSi or RSF, and (ii) will not
constitute a material default (or an event that, with notice or
lapse of time or both, would constitute a material default) under,
or result in the breach of, any material contract, agreement or
other instrument to which RSi or RSF is a party or that may be
applicable to it or any of its assets.
4. The execution and delivery of this Agreement by each of RSi and
RSF in the manner contemplated herein and the performance and
compliance with the terms hereof by it do not require the consent
or approval of any governmental authority, or if such consent or
approval is required, it has been obtained.
5. Assuming due authorization, execution and delivery by each other
party hereto, this Agreement and all of the obligations of each of
RSi and RSF hereunder are the legal, valid and binding obligations
of RSi and RSF, as the case may be, and are enforceable in
accordance with the terms of this Agreement, except as such
enforcement may be limited by applicable debtor relief laws.
6. Each of RSi and RSF has the full power and authority to enter into
and consummate all transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of
this Agreement, and has duly executed and delivered this
Agreement, and has taken all requisite corporate action to make
this Agreement valid, binding and enforceable upon RSi and RSF in
accordance with its terms.
7. The execution and delivery of this Agreement by each of RSi and
RSF in the manner contemplated herein and the performance and
compliance with the terms hereof by it do not require the consent
or approval of any governmental authority, or if such consent or
approval is required, it has been obtained.
8. Each of RSi's and RSF's execution and delivery of this Agreement
and all other related documents, their performance and compliance
with the terms hereof and thereof will not constitute a violation
of, any law, any order or
23
decree of any court, or any order, regulation or demand of any
federal, state or local governmental or regulatory authority.
9. No action, suit or other proceeding or investigation is pending
or, to the best of RSi's and RSF's knowledge, threatened before
any court or any federal, state or local governmental or
regulatory authority (A) asserting the invalidity of this
Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or (C) seeking any
determination or ruling that would materially and adversely affect
the ability of RSi or RSF to perform its obligations under this
Agreement.
10. No consent, approval, authorization or order of, registration or
filing with or notice to, any court or any federal, state or local
governmental or regulatory authority is required for the
execution, delivery and performance by RSi or RSF of this
Agreement (other than those that have been obtained or will be
obtained prior to the effective date of this Agreement and other
than any such actions, approvals, etc., under any state securities
laws or "Blue Sky" statutes, as to which neither RSi nor RSF makes
such representation or warranty).
11. Neither RSi nor RSF is infringing upon, or otherwise violating the
rights of any third party with respect to any patent, copyright,
trademark, service xxxx, trade name or other xxxx, license,
invention, or design, registered or unregistered (collectively,
"Intellectual Property"). The use of any computer software
programs, source codes, hardware schematics and working drawings,
operating manuals, procedural documentation, performance data,
customer lists, guidelines, applications, files, records,
memoranda, reports, information (including sales, business,
financial, accounting, forecasts, projections, media and other
information) or other similar items (collectively, "General
Intangibles") by RSi and RSF in connection with their respective
businesses and operations or the transactions contemplated under
this Agreement does not, and will not, violate or otherwise
infringe the rights of any third party. RSi and RSF own and
possess all Intellectual Property and General Intangibles
necessary for the conduct of their businesses and operations,
including, without limitation, the development, manufacture, sale,
maintenance and operation of the Equipment and neither RSi nor RSF
is aware of any claim to the contrary or challenge by any person
to the rights of RSi and RSF with respect to such Intellectual
Property and General Intangibles, except as otherwise disclosed in
writing to ALC.
12. RSi and RSF will pay all taxes, assessments and other governmental
impositions related to their properties, businesses and operations
other than property taxes on the Equipment.
24
13. As of the date of this Agreement, the average revenue per day of
all of RSi installed Refreshment Centers (excluding revenue
generated from room safes) in [***].
14. Without the written consent of ALC, RSi and RSF will not, nor will
either of them permit any of their subsidiaries or affiliates to:
(a) enter into any transaction of merger or consolidation or
amalgamation, unless the person or entity resulting from such
merger or consolidation (if not RSi or RSF) shall expressly
assume, by supplemental agreement satisfactory in form to ALC and
executed and delivered to ALC, the due and punctual performance
and observance of each and every covenant and condition of this
Agreement to be performed and observed by the RSi Parties, (b)
liquidate, wind-up or dissolve itself (or suffer any liquidation
or dissolution), or (c) convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or
a substantial part of its assets, whether now owned or hereafter
acquired (including without limitation) receivables, but excluding
any inventory or other assets sold or disposed of in the ordinary
course of business). RSi and RSF shall not be in breach of the
covenant reflected in item (c) in the preceding sentence unless
ALC provides RSi with notice of the violation of such covenant
within ninety (90) days from the date that ALC receives financial
statements from RSi that make such violation reasonably and
clearly apparent.
L. Warranties and Representations of ALC:
1. ALC is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
with full power and authority to own its properties and conduct
its business as such properties are presently owned and such
business is presently conducted.
2. ALC is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or leasing
of its properties or the conduct of its business requires such
qualifications, except where the failure to be so qualified or to
have obtained such licenses or approvals would not have a material
adverse effect on the transactions contemplated by this Agreement.
3. The execution and delivery of this Agreement by ALC in the manner
contemplated herein and the performance and compliance with the
terms hereof by it (i) shall not violate: (I) its articles of
incorporation or bylaws, or (II) any laws that could have any
material adverse effect whatsoever
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
25
upon the validity, performance or enforceability of any of the
terms of this Agreement applicable to ALC, and (ii) will not
constitute a material default (or an event that, with notice or
lapse of time or both, would constitute a material default) under,
or result in the breach of, any material contract, agreement or
other instrument to which ALC is a party or that may be applicable
to it or any of its assets.
4. The execution and delivery of this Agreement by ALC in the manner
contemplated herein and the performance and compliance with the
terms hereof by it do not require the consent or approval of any
governmental authority, or if such consent or approval is
required, it has been obtained.
5. Assuming due authorization, execution and delivery by each other
party hereto, this Agreement and all of the obligations of ALC
hereunder are the legal, valid and binding obligations of ALC,
enforceable in accordance with the terms of this Agreement, except
as such enforcement may be limited by applicable debtor relief
laws.
6. ALC has the full power and authority to enter into and consummate
all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement, and
has taken all requisite corporate action to make this Agreement
valid, binding and enforceable upon ALC in accordance with its
terms.
7. The execution and delivery of this Agreement by ALC in the manner
contemplated herein and the performance and compliance with the
terms hereof by it do not require the consent or approval of any
governmental authority, or if such consent or approval is
required, it has been obtained.
8. ALC's execution and delivery of this Agreement and all other
related documents, its performance and compliance with the terms
hereof and thereof will not constitute a violation of, any law,
any order or decree of any court, or any order, regulation or
demand of any federal, state or local governmental or regulatory
authority.
9. No action, suit or other proceeding or investigation is pending
or, to the best of ALC's knowledge, threatened before any court or
any federal, state or local governmental or regulatory authority
(A) asserting the invalidity of this Agreement, (B) seeking to
prevent the consummation of any of the transactions contemplated
by this Agreement, or (C) seeking any determination or ruling that
would materially and adversely affect the ability of ALC to
perform its obligations under this Agreement.
26
10. No consent, approval, authorization or order of, registration or
filing with or notice to, any court or any federal, state or local
governmental or regulatory authority is required for the
execution, delivery and performance by ALC of this Agreement
(other than those that have been obtained or will be obtained
prior to the effective date of this Agreement and other than any
such actions, approvals, etc., under any state securities laws or
"Blue Sky" statutes, as to which ALC makes no such representation
or warranty).
M. Counterparts
This Agreement may be executed in counterparts, so that when all parties
have signed this form of Agreement, such signatures taken together form
one complete agreement.
VII. Liquidated Damages
If any of the RSi Parties breach any obligations under Sections III.H., III.I.,
III.J. or V.K.14. (any obligation in any such section, a "Liquidated Damage
Obligation"), ALC shall be relieved of all of its obligations under this
Agreement, the RSi Parties shall pay ALC Liquidated Damages (defined below),
within sixty (60) days of RSi's receipt of notice of such breach if such breach
is not cured within such sixty (60) day period, and the outstanding amounts of
all Lease Financing Loans advanced by ALC under the Program shall be immediately
due and payable (such amount the "Accelerated Amount"). For purposes of this
Agreement, "Liquidated Damages" shall be equal to 50% of the present value of
the Projected Annual Spread Income calculated as of the date the first breach of
any Liquidated Damage Obligation occurs, utilizing a discount rate of 10% per
annum, and a term which begins in the year in which such breach occurs
(including such year), and which ends in the year 2005. The "Projected Annual
Spread Income" shall be equal to the projected units for each year shown below
multiplied by [***]:
YEAR PROJECTED UNITS
---- ---------------
[***]
The Liquidated Damages shall be reduced by sixty-six and two-thirds percent (66
2/3%) from the amounts set forth above if both Xxxxxxxx Xxxxx and Xxxxxxx Xxxx
are not
*** Reflects portions of this document that have been omitted and filed
separately with the Commission.
27
employed on a full-time basis by ALC (or AMRESCO Commercial Finance,
Inc. or AMRESCO, INC.) on the date the related breach of a Liquidated Damage
Obligation occurs, unless (1) both Xxxxx Xxxxx and Xxxxxx X. Xxxxxxx are not
employed by RSi on such date (unless RSi replaces either Messrs. Xxxxx or
Sunyich with a successor that holds a substantially similar position and that is
acceptable to ALC in its reasonable and good faith judgment), and/or (2) ALC
replaces either Xxxxxxxx Xxxxx or Xxxxxxx Xxxx with a successor that holds a
substantially similar position and that is acceptable to RSi in its reasonable
and good faith judgment, in which event, the Liquidated Damages shall not be
reduced from the amounts set forth above. The RSi Parties and ALC expressly
acknowledge and agree that it would be extremely difficult to determine ALC's
actual damages as a result of any breach of a Liquidated Damage Obligation, and
that the Liquidated Damages are a fair and reasonable estimate of such actual
damages in light of the magnitude of the actual or anticipated harm that will be
caused to ALC by any such breach. The RSi Parties acknowledge and agree that
their obligation to pay Liquidated Damages are joint and several.
VIII. Pledge and Grant of Security Interest
As collateral security for the prompt and complete payment and performance when
due of each Liquidated Damage Obligation, and of the RSi Parties' obligation to
pay Liquidated Damages and the Accelerated Amount, the RSi Parties hereby pledge
and grant to ALC, a continuing security interest in, and lien on, all of the
RSi's Parties' right, title and interest in and to the following (collectively,
the "Collateral"): all Pledged Assets, Residual Profits, Collected Funds,
Refreshment Centers, Equipment, Intellectual Property, Equipment Intellectual
Property, Licenses, Business Leases, accounts, goods, inventory, documents,
chattel paper, deposit accounts, equipment, general intangibles, contracts,
certificates of title, fixtures, credits, claims, demands, assets and other
personal property of the RSi Parties, whether now owned, existing, hereafter
acquired, held, used, or sold, and any other property, rights and interests of
the RSi Parties which at any time relate to, arise out of or in connection with
the foregoing or which shall come into the possession or custody or under the
control of the Secured Party or any of its agents, representatives, associates
or correspondents, in connection with the foregoing; any and all additions and
accessions, replacements, substitutions, and improvements, of or to all of the
foregoing and all products, rents, profits, offspring, and proceeds thereof. For
purposes of the foregoing sentence, any term not otherwise defined herein shall
have the meaning ascribed to such term under the Uniform Commercial Code (or any
comparable law in effect in any relevant jurisdiction) the laws of which govern
the attachment or perfection of security interests hereunder. Without limiting
the generality of the foregoing, this Agreement also secures the payment of all
amounts which constitute part of the Liquidated Damage Obligations, the
Liquidated Damages, and the Accelerated Amount that would be owed by the RSi
Parties to ALC, but for the fact they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
any of the RSi Parties.
28
All rights of ALC and security interests hereunder, shall be absolute and
unconditional irrespective of: (a) any change in the time, manner, amount or
place of payment of, or any other term of, all or any of the Liquidated Damage
Obligations, the Liquidated Damages or the Accelerated Amount, or any other
amendment or waiver of or any consent to any departure from this Agreement; (b)
any exchange, release or non-perfection of all or any part of the Collateral or
any other collateral, or any release from, amendment to, waiver of, or consent
to departure from any or all of the Liquidated Damage Obligations, the
Liquidated Damages or the Accelerated Amount, or (c) to the fullest extent
permitted by law, any other circumstances which might otherwise constitute a
defense available to, or a discharge of the RSi Parties.
At the request of ALC, the RSi Parties shall execute all Financing Statements
and other documents and shall deliver items (including but not limited to stock
certificates) to ALC required to perfect ALC's security interests granted
pursuant to this Section VIII.
29
This Agreement has been executed and delivered as of the date first above
written.
AMRESCO Leasing Corporation
By: /s/
------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
ROOMSYSTEMS, INC.
By: /s/
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: CEO and Chairman of the Board
ROOMSYSTEMS CORPORATION
By: /s/
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: CEO, Chairman of the Board
and President
/s/
------------------------------------------
Xxxxxx X. Xxxxxxx, individually only as to
Paragraph III.G.
30
