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JSO/29833-10/165.3
LIMITED RECOURSE AGREEMENT
This LIMITED RECOURSE AGREEMENT ("Limited Recourse
Agreement") dated as of January 21, 1997 is made by TRANS LEASING
INTERNATIONAL, INC., a Delaware corporation ("Trans Leasing"), in
favor of FIRST UNION NATIONAL BANK OF NORTH CAROLINA ("Lender").
RECITALS
A. Lender has entered into a Revolving Credit and Term
Loan and Security Agreement dated as of December 20, 1996 (as the
same may from time to time be amended, modified, supplemented or
restated, the "Credit Agreement") with TL Lease Funding Corp. IV,
a Delaware corporation ("Borrower"), pursuant to which Lender
shall, from time to time, make loans (the "Loan") to the
Borrower. The Loan will initially be made on a revolving basis,
and on or prior to the Transition Date, will convert to a term
loan.
B. Trans Leasing is the sole shareholder of Borrower.
Trans Leasing will obtain substantial direct and indirect benefit
from the making of the Loan.
C. In consideration of the agreement of Lender to make
the Loan to Borrower, Trans Leasing is willing to agree, under
circumstances set forth herein, to contribute to Borrower either
Eligible Leases or cash; provided that in no event shall Trans
Leasing be required to contribute an aggregate amount in excess
of $3,750,000 hereunder, all as further set forth herein.
D. Capitalized terms used but not otherwise defined
herein shall have the meaning given to them in the Credit
Agreement.
AGREEMENT
NOW, THEREFORE, In consideration of the foregoing
Recitals and other good consideration, the receipt and adequacy
is hereby acknowledged, and intending to be legally bound, the
parties hereto do hereby agree as follows:
Section 1. Acknowledgment. Trans Leasing hereby
consents to Borrower's issuance of the Note and entry into the
Credit Agreement. Trans Leasing acknowledges that Lender has
agreed to make the Loan at the request of, and as an
accommodation to, Borrower.
Section 2. Agreement. Trans Leasing hereby
unconditionally, absolutely and irrevocably agrees, on the
Transition Date, to contribute to Borrower Additional Leases
and/or immediately available funds, such that the sum of (i) the
Discounted Lease Balances of the Additional Leases contributed
hereunder, plus (ii) the amount of any such immediately available
funds shall equal any Transition Date Covered Asset Base
Shortfall (as defined below); provided that Trans Leasing shall
not be required to pay or contribute an aggregate amount under
this Limited Recourse Agreement of more than the lesser of
$3,750,000 or five percent (5%) of the outstanding principal
amount of the Loan as of the Transition Date, taking into account
the Revolving Loan made pursuant to Section 3.1(f) of the Credit
Agreement, together with, without limitation, the prompt payment
of all expenses, including, without limitation, reasonable
attorneys' fees and legal expenses, incidental to the collection
of such amounts. Such amounts and all other obligations and
covenants to be performed by Trans Leasing under this Limited
Recourse Agreement shall hereinafter from time to time be
collectively referred to as the "Limited Recourse Obligations".
For purposes of this Limited Recourse Agreement:
"Transition Date Covered Asset Base Shortfall" means the amount
calculated as (i) the amount by which (A) the outstanding
principal amount of the Loan as of the Transition Date, taking
into account the Revolving Loan made on the Transition Date
pursuant to Section 3.1(f) of the Credit Agreement, exceeds (B)
the Asset Base reflected on the Asset Base Certificate delivered
pursuant to Section 3.2(b) of the Credit Agreement, minus (ii)
the Discounted Lease Balance of any Leases that became a
Defaulted Lease after (x) if the Conversion Date has occurred as
a result of the occurrence of an Early Amortization Event
pursuant to clause (2) of the definition thereof, the second
Determination Date preceding the Conversion Date or (y) in all
other cases, the Determination Date immediately preceding the
Conversion Date.
Section 3. Agreement Unconditional. The obligations
of Trans Leasing hereunder are irrevocable, absolute and uncondi
tional, irrespective of the value, genuineness, regularity,
validity or enforceability of the Obligations or any other circum
stance which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor.
Section 4. Contribution of Additional Leases;
Payments. Any contribution of Additional Leases pursuant to
Section 2 shall be made pursuant to an Assignment for Additional
Leases substantially in the form of Exhibit C to the Contribution
and Sale Agreement. All payments of cash to be made by Trans
Leasing hereunder shall be made by deposit into the Collection
Account.
Section 5. Representations and Warranties. Trans
Leasing hereby represents and warrants to Lender that:
(a) Trans Leasing is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, is duly qualified to do business and is
in good standing in every jurisdiction where the nature of
its business requires it to be so qualified (except where
the failure to so qualify would not have a material adverse
effect on Trans Leasing's condition, financial or
otherwise), and has the requisite power and authority to
execute and deliver this Limited Recourse Agreement and to
perform its obligations (including, without limitation,
payment of the Limited Recourse Obligations) hereunder.
(b) The execution, delivery and performance by Trans
Leasing of this Limited Recourse Agreement (i) are within
Trans Leasing's corporate powers and have been duly
authorized by all necessary corporate action; (ii) do not
contravene Trans Leasing's charter documents or any law or
any contractual restriction binding on or affecting Trans
Leasing or by which Trans Leasing's Property may be
affected, (iii) do not require any authorization or approval
or other action by, or any notice to or filing, registration
or recording with, any Governmental Authority or any other
Person, except such as have already been obtained or made
and (iv) do not, except as contemplated by the Credit
Agreement or this Limited Recourse Agreement, result in the
imposition or creation of any Lien on any Property of Trans
Leasing.
(c) This Limited Recourse Agreement constitutes the
legal, valid and binding obligation of Trans Leasing,
enforceable in accordance with its terms, except as the
enforceability thereof may be subject to or limited by bank
ruptcy, insolvency, reorganization, arrangement, moratorium
or other similar laws relating to or affecting the rights of
creditors and by general principles of equity.
(d) To the best of Trans Leasing's knowledge, there is
no action, suit or proceeding affecting Trans Leasing
pending or threatened before any court, arbitrator or
Governmental Authority which is reasonably likely to
materially adversely affect the ability of Trans Leasing to
perform its obligations under this Limited Recourse
Agreement.
(e) The financial statements of Trans Leasing dated as
of June 30, 1996 (audited) and September 30, 1996
(unaudited), copies of which have been furnished to Lender,
fairly present the financial position and results of
operations for Trans Leasing for the dates and periods
purported to be covered thereby, all in accordance with
GAAP.
(f) Trans Leasing is not insolvent as of the date
hereof and the incurrence of Trans Leasing's obligations
under this Limited Recourse Agreement will not cause Trans
Leasing: (i) to become insolvent; (ii) to be left with
unreasonably small capital for any business or transaction
in which Trans Leasing is presently engaged or plans to be
engaged; or (iii) to be unable to pay its debts as such
debts mature.
Section 6. Consents. Trans Leasing hereby agrees that
any or all of the following actions may be taken or things done
without notice to Trans Leasing and without affecting the
liability of Trans Leasing under this Limited Recourse Agreement:
(a) The time for Borrower's performance of or
compliance with any of the Obligations may be accelerated or
extended or such performance or compliance may be waived by
Lender (including, without limitation, the renewal,
extension, acceleration or other change in the time of
payment, or other terms of, the indebtedness, such as an
increase or decrease in the rate of interest thereon);
(b) Any of the acts referred to in the terms of the
Loan Documents may be performed, upon default thereunder, by
or on behalf of Lender; and
(c) The terms of any of the Obligations or any term or
condition in the Loan Documents may be amended as provided
for therein by Borrower or Lender, as the case may be, for
the purpose of adding any provisions thereto or changing in
any manner the rights or obligations of Borrower or Lender
thereunder.
Section 7. Due Diligence. Trans Leasing acknowledges
that it has, independently of and without reliance on Lender,
made its own credit analysis of Borrower and the Collateral and
performed its own legal review of this Limited Recourse
Agreement, the Loan Documents and all related filings, and Trans
Leasing is not relying on Lender with respect to any of the
aforesaid items. Trans Leasing further agrees that Lender shall
have no obligation to disclose to Trans Leasing information or
material with respect to Borrower acquired in the course of
Lender's relationship with Borrower.
Section 8. Waiver. Trans Leasing hereby expressly
waives discharge due to any disability of Borrower, any defenses
of Borrower to its obligations under the Loan Documents not
arising under the express terms of the Loan Documents or from a
material breach thereof by Lender which under the law has the
effect of discharging Borrower from any of the Obligations, the
benefit of any act or omission by Lender which directly or
indirectly results in or aids the discharge of Borrower from any
of the Obligations by operation of law or otherwise, and any
requirement that Lender exhaust any right, power or remedy or
proceed against Borrower or any other Person liable for, any of
the Obligations, or any portion thereof. Trans Leasing
specifically agrees that it will not be necessary or required,
and Trans Leasing shall not be entitled to require, that Lender
file suit or proceed to assert or obtain a claim for personal
judgment against Borrower for the Obligations or to make any
effort at collection or enforcement of the Obligations from
Borrower or file suit or proceed to obtain or assert a claim for
personal judgment against Borrower or make any effort at
collection of the Obligations from Borrower or exercise or assert
any other right or remedy to which Lender is or may be entitled
in connection with the Obligations or assert or file any claim
against the assets of Borrower, before or as a condition of
enforcing the liability of Trans Leasing under this Limited
Recourse Agreement.
Section 9. Certain Rights. Lender may pursue its
rights and remedies under this Limited Recourse Agreement against
Trans Leasing notwithstanding (a) any action taken by Lender to
enforce any rights or remedies under the Credit Agreement or (b)
unless all Obligations have been paid in full, any payment
received under the Credit Agreement. In pursuing its rights
under this Limited Recourse Agreement, Lender need not join Trans
Leasing in any suit against Borrower or join Borrower in any suit
against Trans Leasing.
Section 10. Notice. Lender shall provide Trans
Leasing with a copy of any notice of default to Borrower as
provided under the Credit Agreement, provided, however, the
failure of Lender to provide such notice to Trans Leasing will
not exonerate Trans Leasing of any obligations under this Limited
Recourse Agreement. Any notice or other communication herein
required or permitted to be given shall be in writing and may be
delivered in person, with receipt acknowledged, or sent by
telecopy or by United States mail, registered or certified,
return receipt requested, or by Federal Express or other
nationally recognized overnight courier service, postage prepaid
and confirmation of receipt requested: if to Trans Leasing, at
its address at 3000 Dundee Road, Northbrook, Illinois 60062,
Attention: Chief Financial Officer; and if to Lender, at its
address at One First Union Center TW-6, 301 South College Street,
Charlotte, North Carolina 28288-0610, Attention: Christopher R.
Snyder, Asset Securitization Division (Facsimile No. (704)
374-3254) or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section 10.
Every notice, demand, request, consent, approval, declaration or
other communication hereunder shall be deemed to have been duly
given or served on the date on which the same shall have been
personally delivered, with receipt acknowledged, or sent by
telecopy, three (3) Business Days after the same shall have been
deposited in the United States mail or on the next succeeding
Business Day if the same has been sent by Federal Express or
other nationally recognized overnight courier service. Failure
or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the
persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
Section 11. Reinstatement. Notwithstanding any
provision in any Loan Document to the contrary, the liability of
Trans Leasing hereunder shall be reinstated and revived and the
rights of Lender shall continue if and to the extent that for any
reason any payment by or on behalf of Borrower is rescinded or
must be otherwise restored by Lender, which rescission or
required restoration results in the occurrence of a Transition
Date Covered Asset Base Shortfall as of the Transition Date,
whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such amount had not
been paid. The determination as to whether any such payment must
be rescinded or restored shall be made by Lender in its sole
discretion; provided, however, that if Lender chooses to contest
any such matter at the request of Trans Leasing, Trans Leasing
agrees to indemnify and hold harmless Lender from all costs and
expenses (including, without limitation, reasonable attorneys'
fees) reasonably related to such request.
Section 12. No Waiver, Amendments, Etc. No failure on
the part of Lender to exercise, no delay in exercising and no
course of dealing with respect to, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law. This Limited Recourse Agreement may
not be amended or modified except by written agreement, executed
in accordance with the provisions of the Credit Agreement and no
consent or waiver hereunder shall be valid unless in writing and
executed in accordance with the provisions of the Credit
Agreement.
Section 13. Compromise and Settlement. No compromise,
settlement, release, renewal, extension, indulgence, change in,
waiver or modification of any of the Obligations or the release
or discharge of Borrower from the performance of any of the
Obligations (other than payment in full of all Obligations) shall
release or discharge Trans Leasing from this Limited Recourse
Agreement.
Section 14. Insolvency. The voluntary or involuntary
liquidation, dissolution, sale or other disposition of all or
substantially all the assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, or other proceeding affecting Borrower or the
disaffirmance of any of the Loan Documents shall not release or
discharge Trans Leasing from this Limited Recourse Agreement.
Section 15. Expenses. In addition to its Limited
Recourse Obligations, Trans Leasing hereby agrees to pay all
reasonable costs and expenses, including, without limitation,
reasonable attorneys' fees, reasonably paid or incurred by Lender
in collecting or enforcing any or all of the Limited Recourse
Obligations or in connection with the enforcement of this Limited
Recourse Agreement and in which Lender is the prevailing party.
Section 16. Entire Agreement. This Limited Recourse
Agreement and all documents mentioned or contemplated herein
constitute and contain the entire agreement of the parties and
supersede any and all prior and contemporaneous agreements,
negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the
subject matter hereof.
Section 17. Severability. If any provision of this
Limited Recourse Agreement is held to be unenforceable for any
reason, it shall be adjusted, if possible, rather than voided in
order to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Limited
Recourse Agreement shall be deemed valid and enforceable to the
full extent possible.
Section 18. Assignment; Governing Law. Neither Trans
Leasing nor the Lender shall have the right to assign its rights
hereunder or any interest herein. This Limited Recourse
Agreement shall be governed by, and construed in accordance with,
the laws of the State of Illinois as applied to contracts made
and performed entirely within the State of Illinois by residents
of such State.
Section 19. Actions by Lender. Lender shall have the
power to enforce this Limited Recourse Agreement against Trans
Leasing to the full extent of Trans Leasing's obligations
hereunder.
Section 20. Consent to Jurisdiction. Trans Leasing
and Lender each hereby irrevocably consents to the personal
jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, and in Cook County, Illinois,
in any action, claim or other proceeding arising out of any
dispute in connection with this Limited Recourse Agreement.
Trans Leasing and Lender each hereby irrevocably consents to the
service of a summons and complaint and other process in any
action, claim or proceeding brought by Trans Leasing or Lender in
connection with this Limited Recourse Agreement, any rights or
obligations hereunder or thereunder, or the performance of such
rights and obligations, on behalf of itself or its Property by
registered mail or personal delivery to the address set forth in
Section 10.
Section 21. Waiver of Jury Trial. TRANS LEASING AND
LENDER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS LIMITED
RECOURSE AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 22. General Interpretive Principles. For
purposes of this Limited Recourse Agreement except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Limited Recourse
Agreement have the meanings assigned to them in this Limited
Recourse Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "paragraphs", and other subdivisions without
reference to a document are to designated Articles, Sections,
Subsections, paragraphs and other subdivisions of this Limited
Recourse Agreement;
(d) a reference to a Subsection without further
reference to a Section is a reference to such Subsection as
contained in the same Section in which the reference appears, and
this rule shall also apply to paragraphs and other subdivisions;
(e) the words "herein", "hereof", "hereunder" and
other words of similar import refer to this Limited Recourse
Agreement as a whole and not to any particular provision; and
(f) the term "include" or "including" shall mean
without limitation by reason of enumeration.
Section 23. Termination. Subject to Section 11, this
Limited Recourse Agreement shall terminate (a) if there is no
Transition Date Asset Base Shortfall on the Transition Date, on
the Transition Date, and (b) if there is a Transition Date Asset
Base Shortfall on the Transition Date, upon the payment and
contribution of the amount required under Section 2.
* * * * *
IN WITNESS WHEREOF, Trans Leasing has executed and
delivered this Limited Recourse Agreement as of the date first
written above.
TRANS LEASING INTERNATIONAL, INC.
By: /s/ Norman Smagley
Name: Norman Smagley
Title: Vice President - Finance
APPROVED AND ACCEPTED
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Bill A. Shirley
Name: Bill A. Shirley
Title: Vice President